UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

WASHINGTON, D.C. 20549

FORM 10-Q

(Mark One)

x☒QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the quarterly period ended March 31, ~~2019~~2020

o☐TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the transition period from to

Commission File No. 1-2189

ABBOTT LABORATORIES

An Illinois Corporation		I.R.S. Employer Identification No.
		36-0698440

100 Abbott Park Road

Abbott Park, Illinois60064-6400

Telephone: ~~(224)~~ (224) 667-6100

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		New York Stock Exchange Chicago Stock Exchange, Inc.

Indicate by check mark whether the registrant: (l) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of l934 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 x⌧ No o◻

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~~229.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files).Yes x⌧ No o◻

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company, or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company,” and “emerging growth company” in Rule 12b-2 of the Exchange Act.


Large Accelerated Filerx	☒	Accelerated Filero	☐
Non-Accelerated Filer	☐	Smaller reporting company	☐
~~Non-Accelerated Filer~~ o	~~Smaller reporting company~~ o

	Emerging growth companyo	☐

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. o◻

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes o☐ No x☒

As of March 31, ~~2019,~~2020, Abbott Laboratories had ~~1,764,181,262~~1,768,845,326 common shares without par value outstanding.

Table of Contents

Abbott Laboratories

Table of Contents

	~~Page~~

Part I - Financial Information
	Page
Item 1. Financial Statements and Supplementary Data

Condensed Consolidated Statement of Earnings	3
Condensed Consolidated Statement of Comprehensive Income	4
Condensed Consolidated Balance Sheet	5
Condensed Consolidated Statement of Shareholders’ Investment	6
Condensed Consolidated Statement of Cash Flows	7
Notes to the Condensed Consolidated Financial Statements	8

Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations	1917

Item 4. Controls and Procedures	2422

Part II - Other Information

Item 1. Legal Proceedings	2422

Item 1A. Risk Factors	22

Item 2. Unregistered Sales of Equity Securities and Use of Proceeds	23

Item 6. Exhibits	24

Signature	25

~~Item 6. Exhibits~~

~~Signature~~

Table of Contents

Abbott Laboratories and Subsidiaries

Condensed Consolidated Statement of Earnings

(Unaudited)

(dollars in millions except per share data; shares in thousands)

Three Months Ended March 31

2019

2018

Net sales

$
7,535

$
7,390

Cost of products sold, excluding amortization of intangible assets

3,160

3,067

Amortization of intangible assets

486

584

Research and development

672

589

Selling, general and administrative

2,478

2,542

Total operating cost and expenses

6,796

6,782

Operating earnings

739

608

Interest expense

171

227

Interest (income)

(23
)
(28
)
Net foreign exchange (gain) loss

6

(3
)
Net loss on extinguishment of debt

—

14

Other (income) expense, net

(47
)
(33
)
Earnings from continuing operations before tax

632

431

Tax expense (benefit) on earnings from continuing operations

(40
)
22

Earnings from continuing operations

672

409

Earnings from discontinued operations, net of tax

—

9

Net Earnings

$
672

$
418

Basic Earnings Per Common Share —

Continuing operations

$
0.38

$
0.23

Discontinued operations

—

0.01

Net earnings

$
0.38

$
0.24

Diluted Earnings Per Common Share —

Continuing operations

$
0.38

$
0.23

Discontinued operations

—

—

Net earnings

$
0.38

$
0.23

Average Number of Common Shares Outstanding Used for Basic Earnings Per Common Share

1,763,278

1,753,412

Dilutive Common Stock Options

13,295

11,866

Average Number of Common Shares Outstanding Plus Dilutive Common Stock Options

1,776,573

1,765,278

Outstanding Common Stock Options Having No Dilutive Effect

4,011

—


	Three Months Ended March 31
	2020		2019
Net sales	$	7,726	$	7,535

Cost of products sold, excluding amortization of intangible assets		3,281		3,160
Amortization of intangible assets		561		486
Research and development		578		672
Selling, general and administrative		2,548		2,478
Total operating cost and expenses		6,968		6,796

Operating earnings		758		739

Interest expense		139		171
Interest (income)		(18)		(23)
Net foreign exchange (gain) loss		5		6
Other (income) expense, net		(1)		(47)
Earnings from continuing operations before tax		633		632
Tax expense (benefit) on earnings from continuing operations		89		(40)
Earnings from continuing operations		544		672

Earnings from discontinued operations, net of tax		20		—

Net Earnings	$	564	$	672

Basic Earnings Per Common Share —
Continuing operations	$	0.31	$	0.38
Discontinued operations		0.01		—
Net earnings	$	0.32	$	0.38

Diluted Earnings Per Common Share —
Continuing operations	$	0.30	$	0.38
Discontinued operations		0.01		—
Net earnings	$	0.31	$	0.38

Average Number of Common Shares Outstanding Used for Basic Earnings Per Common Share		1,768,901		1,763,278
Dilutive Common Stock Options		11,677		13,295
Average Number of Common Shares Outstanding Plus Dilutive Common Stock Options		1,780,578		1,776,573

Outstanding Common Stock Options Having No Dilutive Effect		4,035		4,011

The accompanying notes to the condensed consolidated financial statements are an integral part of this statement.

Table of Contents

Abbott Laboratories and Subsidiaries

Condensed Consolidated Statement of Comprehensive Income

(Unaudited)

(dollars in millions)

Three Months Ended March 31

2019

2018

Net Earnings

$
672

$
418

Foreign currency translation gain (loss) adjustments

122

333

Net actuarial gains (losses) and amortization of net actuarial (losses) and prior service (cost) and credits, net of taxes of $7 in 2019 and $17 in 2018

23

23

Net gains (losses) for derivative instruments designated as cash flow hedges,
net of taxes of $(8) in 2019 and $(20) in 2018

(29
)
(32
)
Other comprehensive income

116

324

Comprehensive Income

$
788

$
742


	Three Months Ended March 31
	2020		2019
Net Earnings	$	564	$	672
Foreign currency translation gain (loss) adjustments		(1,144)		122
Net actuarial gains (losses) and amortization of net actuarial (losses) and prior service (cost) and credits, net of taxes of $15 in 2020 and $7 in 2019		57		23
Net gains (losses) for derivative instruments designated as cash flow hedges, net of taxes of $48 in 2020 and $(8) in 2019		166		(29)
Other comprehensive income (loss)		(921)		116
Comprehensive Income (Loss)	$	(357)	$	788

March 31,

December 31,

2019

2018

Supplemental Accumulated Other Comprehensive Income (Loss) Information, net of tax:

Cumulative foreign currency translation (loss) adjustments

$
(4,790
)
$
(4,912
)
Net actuarial (losses) and prior service (cost) and credits

(2,703
)
(2,726
)
Cumulative gains (losses) on derivative instruments designated as cash flow hedges

23

52

Accumulated Other Comprehensive Income (Loss)

$
(7,470
)
$
(7,586
)


	March 31,		December 31,
	2020		2019
Supplemental Accumulated Other Comprehensive Income (Loss) Information, net of tax:
Cumulative foreign currency translation (loss) adjustments	$	(6,068)	$	(4,924)
Net actuarial (losses) and prior service (cost) and credits		(3,483)		(3,540)
Cumulative gains (losses) on derivative instruments designated as cash flow hedges		165		(1)
Accumulated Other Comprehensive Income (Loss)	$	(9,386)	$	(8,465)

The accompanying notes to the condensed consolidated financial statements are an integral part of this statement.

Table of Contents

Abbott Laboratories and Subsidiaries

Condensed Consolidated Balance Sheet

(Unaudited)

(dollars in millions)

March 31,
2019

December 31,
2018

Assets

Current Assets:

Cash and cash equivalents

$
3,022

$
3,844

Short-term investments

239

242

Trade receivables, less allowances of $331 in 2019 and $314 in 2018

5,345

5,182

Inventories:

Finished products

2,641

2,407

Work in process

536

499

Materials

908

890

Total inventories

4,085

3,796

Prepaid expenses and other receivables

1,718

1,568

Total Current Assets

14,409

14,632

Investments

867

897

Property and equipment, at cost

15,905

15,706

Less: accumulated depreciation and amortization

8,279

8,143

Net property and equipment

7,626

7,563

Intangible assets, net of amortization

18,472

18,942

Goodwill

23,209

23,254

Deferred income taxes and other assets

3,027

1,885

$
67,610

$
67,173

Liabilities and Shareholders’ Investment

Current Liabilities:

Short-term borrowings

$
201

$
200

Trade accounts payable

3,045

2,975

Salaries, wages and commissions

886

1,182

Other accrued liabilities

4,130

3,780

Dividends payable

566

563

Income taxes payable

277

305

Current portion of long-term debt

8

7

Total Current Liabilities

9,113

9,012

Long-term debt

18,845

19,359

Post-employment obligations, deferred income taxes and other long-term liabilities

8,523

8,080

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: 2019: 1,973,472,506; 2018: 1,971,189,465

23,461

23,512

Common shares held in treasury, at cost — Shares: 2019: 209,291,244; 2018: 215,570,043

(9,679
)
(9,962
)
Earnings employed in the business

24,613

24,560

Accumulated other comprehensive income (loss)

(7,470
)
(7,586
)
Total Abbott Shareholders’ Investment

30,925

30,524

Noncontrolling Interests in Subsidiaries

204

198

Total Shareholders’ Investment

31,129

30,722

$
67,610

$
67,173


	March 31,		December 31,
	2020		2019
Assets
Current Assets:
Cash and cash equivalents	$	3,377	$	3,860
Short-term investments		291		280
Trade receivables, less allowances of $389 in 2020 and $384 in 2019		5,292		5,425
Inventories:
Finished products		2,873		2,784
Work in process		615		560
Materials		1,080		972
Total inventories		4,568		4,316
Prepaid expenses and other receivables		1,970		1,786
Total Current Assets		15,498		15,667
Investments		790		883
Property and equipment, at cost		16,707		16,799
Less: accumulated depreciation and amortization		8,800		8,761
Net property and equipment		7,907		8,038
Intangible assets, net of amortization		16,265		17,025
Goodwill		22,927		23,195
Deferred income taxes and other assets		3,390		3,079
	$	66,777	$	67,887
Liabilities and Shareholders’ Investment
Current Liabilities:
Short-term borrowings	$	204	$	201
Trade accounts payable		3,181		3,252
Salaries, wages and commissions		949		1,237
Other accrued liabilities		4,408		4,035
Dividends payable		637		635
Income taxes payable		165		226
Current portion of long-term debt		1,264		1,277
Total Current Liabilities		10,808		10,863
Long-term debt		16,804		16,661
Post-employment obligations, deferred income taxes and other long-term liabilities		8,738		9,062
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 Issued at stated capital amount — Shares: 2020: 1,978,112,501 ; 2019: 1,976,855,085		23,731		23,853
Common shares held in treasury, at cost — Shares: 2020: 209,267,175 ; 2019: 214,351,838		(9,913)		(10,147)
Earnings employed in the business		25,786		25,847
Accumulated other comprehensive income (loss)		(9,386)		(8,465)
Total Abbott Shareholders’ Investment		30,218		31,088
Noncontrolling Interests in Subsidiaries		209		213
Total Shareholders’ Investment		30,427		31,301
	$	66,777	$	67,887

The accompanying notes to the condensed consolidated financial statements are an integral part of this statement.

Table of Contents

Abbott Laboratories and Subsidiaries

Condensed Consolidated Statement of Shareholders’ Investment

(Unaudited)

(in millions except shares and per share data)

Three Months Ended March 31

2019

2018

Common Shares:

Balance at January 1

Shares: 2019: 1,971,189,465; 2018: 1,965,908,188

$
23,512

$
23,206

Issued under incentive stock programs

Shares: 2019: 2,283,041; 2018: 3,422,819

76

102

Share-based compensation

237

225

Issuance of restricted stock awards

(364
)
(310
)
Balance at March 31

Shares: 2019: 1,973,472,506; 2018: 1,969,331,007

$
23,461

$
23,223

Common Shares Held in Treasury:

Balance at January 1

Shares: 2019: 215,570,043; 2018: 222,305,719

$
(9,962
)
$
(10,225
)
Issued under incentive stock programs

Shares: 2019: 6,544,927; 2018: 6,402,695

303

292

Purchased

Shares: 2019: 266,128; 2018: 240,217

(20
)
(14
)
Balance at March 31

Shares: 2019: 209,291,244; 2018: 216,143,241

$
(9,679
)
$
(9,947
)

Earnings Employed in the Business:

Balance at January 1

$
24,560

$
23,978

Impact of adoption of new accounting standards

—

15

Net earnings

672

418

Cash dividends declared on common shares (per share — 2019: $0.32; 2018: $0.28)

(568
)
(493
)
Effect of common and treasury share transactions

(51
)
(62
)
Balance at March 31

$
24,613

$
23,856

Accumulated Other Comprehensive Income (Loss):

Balance at January 1

$
(7,586
)
$
(6,062
)
Impact of adoption of new accounting standard

—

5

Other comprehensive income (loss)

116

324

Balance at March 31

$
(7,470
)
$
(5,733
)

Noncontrolling Interests in Subsidiaries:

Balance at January 1

$
198

$
201

Noncontrolling Interests’ share of income, business combinations, net of distributions
and share repurchases

6

1

Balance at March 31

$
204

$
202


	Three Months Ended March 31
	2020		2019
Common Shares:
Balance at January 1
Shares: 2020: 1,976,855,085; 2019: 1,971,189,465	$	23,853	$	23,512
Issued under incentive stock programs
Shares: 2020: 1,257,416; 2019: 2,283,041		53		76
Share-based compensation		245		237
Issuance of restricted stock awards		(420)		(364)
Balance at March 31
Shares: 2020: 1,978,112,501; 2019: 1,973,472,506	$	23,731	$	23,461

Common Shares Held in Treasury:
Balance at January 1
Shares: 2020: 214,351,838; 2019: 215,570,043	$	(10,147)	$	(9,962)
Issued under incentive stock programs
Shares: 2020: 5,333,626; 2019: 6,544,927		253		303
Purchased
Shares: 2020: 248,963; 2019: 266,128		(19)		(20)
Balance at March 31
Shares: 2020: 209,267,175; 2019: 209,291,244	$	(9,913)	$	(9,679)

Earnings Employed in the Business:
Balance at January 1	$	25,847	$	24,560
Impact of adoption of new accounting standard		(5)		—
Net earnings		564		672
Cash dividends declared on common shares (per share — 2020: $0.36; 2019: $0.32)		(641)		(568)
Effect of common and treasury share transactions		21		(51)
Balance at March 31	$	25,786	$	24,613

Accumulated Other Comprehensive Income (Loss):
Balance at January 1	$	(8,465)	$	(7,586)
Other comprehensive income (loss)		(921)		116
Balance at March 31	$	(9,386)	$	(7,470)

Noncontrolling Interests in Subsidiaries:
Balance at January 1	$	213	$	198
Noncontrolling Interests’ share of income, business combinations, net of distributions and share repurchases		(4)		6
Balance at March 31	$	209	$	204

The accompanying notes to condensed consolidated financial statements are an integral part of this statement.

Table of Contents

Abbott Laboratories and Subsidiaries

Condensed Consolidated Statement of Cash Flows

(Unaudited)

(dollars in millions)

Three Months Ended March 31

2019

2018

Cash Flow From (Used in) Operating Activities:

Net earnings

$
672

$
418

Adjustments to reconcile net earnings to net cash from operating activities -

Depreciation

267

268

Amortization of intangible assets

486

584

Share-based compensation

226

212

Amortization of inventory step-up

—

32

Trade receivables

(170
)
(53
)
Inventories

(286
)
(171
)
Other, net

(483
)
(182
)
Net Cash From Operating Activities

712

1,108

Cash Flow From (Used in) Investing Activities:

Acquisitions of property and equipment

(335
)
(275
)
Acquisitions of businesses and technologies, net of cash acquired

(78
)
(25
)
Sales (purchases) of other investment securities, net

2

(5
)
Other

15

67

Net Cash (Used in) Investing Activities

(396
)
(238
)

Cash Flow From (Used in) Financing Activities:

Net borrowings (repayments) of short-term debt and other

13

6

Repayments of long-term debt

(500
)
(5,979
)
Purchases of common shares

(217
)
(128
)
Proceeds from stock options exercised

127

137

Dividends paid

(565
)
(491
)
Net Cash (Used in) Financing Activities

(1,142
)
(6,455
)

Effect of exchange rate changes on cash and cash equivalents

4

35

Net Decrease in Cash and Cash Equivalents

(822
)
(5,550
)
Cash and Cash Equivalents, Beginning of Year

3,844

9,407

Cash and Cash Equivalents, End of Period

$
3,022

$
3,857


	Three Months Ended March 31
	2020		2019
Cash Flow From (Used in) Operating Activities:
Net earnings	$	564	$	672
Adjustments to reconcile net earnings to net cash from operating activities -
Depreciation		267		267
Amortization of intangible assets		561		486
Share-based compensation		233		226
Trade receivables		(104)		(170)
Inventories		(437)		(286)
Other, net		(369)		(483)
Net Cash From Operating Activities		715		712

Cash Flow From (Used in) Investing Activities:
Acquisitions of property and equipment		(360)		(335)
Acquisitions of businesses and technologies, net of cash acquired		—		(78)
Sales (purchases) of other investment securities, net		(36)		2
Other		3		15
Net Cash (Used in) Investing Activities		(393)		(396)

Cash Flow From (Used in) Financing Activities:
Net borrowings (repayments) of short-term debt and other		51		13
Repayments of long-term debt		(1)		(500)
Purchases of common shares		(236)		(217)
Proceeds from stock options exercised		89		127
Dividends paid		(638)		(565)
Net Cash (Used in) Financing Activities		(735)		(1,142)

Effect of exchange rate changes on cash and cash equivalents		(70)		4

Net Decrease in Cash and Cash Equivalents		(483)		(822)
Cash and Cash Equivalents, Beginning of Year		3,860		3,844
Cash and Cash Equivalents, End of Period	$	3,377	$	3,022

The accompanying notes to the condensed consolidated financial statements are an integral part of this statement.

Table of Contents

Abbott Laboratories and Subsidiaries

Notes to the Condensed Consolidated Financial Statements

March 31, ~~2019~~2020

(Unaudited)

Note 1 — Basis of Presentation

The accompanying unaudited, condensed consolidated financial statements have been prepared pursuant to rules and regulations of the Securities and Exchange Commission and, therefore, do not include all information and footnote disclosures normally included in audited financial statements. However, in the opinion of management, all adjustments (which include only normal adjustments) necessary to present fairly the results of operations, financial position and cash flows have been made. It is suggested that these statements be read in conjunction with the financial statements included in Abbott’s Annual Report on Form 10-K for the year ended December 31, ~~2018.~~2019. The condensed consolidated financial statements include the accounts of the parent company and subsidiaries, after elimination of intercompany transactions.

Note 2 — New Accounting Standards

Recently Adopted Accounting Standards

In ~~February~~June 2016, the Financial Accounting Standards Board (FASB) issued Accounting Standards Update (ASU) ~~2016-02,~~ ~~Leases~~, which requires lessees to measure and recognize a lease asset and liability on the balance sheet for most leases, including operating leases. Abbott adopted the new standard as of January 1, 2019 using the modified retrospective approach and applied the standard’s transition provisions as of January 1, 2019. As a result, no changes were made to the December 31, 2018 Consolidated Balance Sheet. Abbott elected to apply the package of practical expedients related to transition. These practical expedients allowed Abbott to carry forward its historical assessments of whether any existing contracts are or contain leases, the lease classification for each lease existing at January 1, 2019, and whether any initial direct costs for such leases qualified for capitalization.

The new lease accounting standard does not have a material impact on the amounts reported in the Condensed Consolidated Statement of Earnings but does have a material impact on the amounts reported in the Condensed Consolidated Balance Sheet. Adoption of the new standard resulted in the recording of approximately $850 million of new right of use (ROU) assets and additional liabilities for operating leases on the Condensed Consolidated Balance Sheet as of January 1, 2019.

~~Recent Accounting Standards Not Yet Adopted~~

~~In June 2016, the FASB issued ASU~~ 2016-13, Financial Instruments —– Credit Losses, which changes the methodology to be used 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 of the financial asset. Abbott adopted the standard on January 1, 2020 and recorded a cumulative adjustment that was not significant to Earnings employed in the business in the Condensed Consolidated Balance Sheet.

Recent Accounting Standards Not Yet Adopted

In December 2019, the FASB issued ASU 2019-12, Income Taxes (Topic 740): Simplifying the Accounting for Income Taxes, which among other things, eliminates certain exceptions in the current rules regarding the approach for intraperiod tax allocations and the methodology for calculating income taxes in an interim period, and clarifies the accounting for transactions that result in a step-up in the tax basis of goodwill. The ~~new~~ standard ~~will be~~becomes effective for Abbott atin the ~~beginning~~first quarter of ~~2020, with~~2021 and early adoption is permitted. Abbott ~~is currently assessing the impact~~does not expect adoption of this new standard to have a material impact on its condensed consolidated financial statements.

Note 3 — Revenue

Abbott’s revenues are derived primarily from the sale of a broad line of health care products under short-term receivable arrangements. Abbott has ~~four~~4 reportable segments: Established Pharmaceutical Products, Diagnostic Products, Nutritional Products, and ~~Cardiovascular and Neuromodulation Products. Diabetes Care is a non-reportable segment and is included in Other.~~Medical Devices.

Table of Contents

Abbott Laboratories and Subsidiaries

Notes to the Condensed Consolidated Financial Statements

March 31, ~~2019~~2020

(Unaudited)

The following table provides revenues by sales category:

	Three Months Ended March 31, 2019						Three Months Ended March 31, 2018

													Three Months Ended March 31, 2020						Three Months Ended March 31, 2019
(in millions)	U.S.		Int’l		Total		U.S.		Int’l		Total		U.S.		Int’l		Total		U.S.		Int’l		Total
Established Pharmaceutical Products —
Key Emerging Markets	$	—	$	752	$	752	$	—	$	793	$	793	$	—	$	813	$	813	$	—	$	752	$	752
Other	—		240		240		—		251		251			—		231		231		—		240		240
Total	—		992		992		—		1,044		1,044			—		1,044		1,044		—		992		992


Nutritionals —
Pediatric Nutritionals	453		576		1,029		448		546		994			518		571		1,089		453		576		1,029
Adult Nutritionals	294		469		763		310		452		762			294		521		815		294		469		763
Total	747		1,045		1,792		758		998		1,756			812		1,092		1,904		747		1,045		1,792


Diagnostics —
Core Laboratory	249		812		1,061		228		791		1,019			267		722		989		249		812		1,061
Molecular	40		68		108		39		79		118			65		74		139		40		68		108
Point of Care	109		26		135		110		31		141			103		35		138		109		26		135
Rapid Diagnostics	326		211		537		323		236		559			368		192		560		326		211		537
Total	724		1,117		1,841		700		1,137		1,837			803		1,023		1,826		724		1,117		1,841

Cardiovascular and Neuromodulation —

Medical Devices -
Rhythm Management	233		257		490		264		271		535			228		246		474		252		262		514
Electrophysiology	193		236		429		182		209		391			164		224		388		174		231		405
Heart Failure	143		41		184		114		39		153			152		51		203		143		41		184
Vascular	266		443		709		286		453		739			230		395		625		266		443		709
Structural Heart	136		188		324		109		184		293			136		182		318		136		188		324
Neuromodulation	152		41		193		168		44		212			137		40		177		152		41		193
Diabetes Care														186		566		752		152		414		566
Total	1,123		1,206		2,329		1,123		1,200		2,323			1,233		1,704		2,937		1,275		1,620		2,895


Other	160		421		581		94		336		430			8		7		15		8		7		15

Total	$	2,754	$	4,781	$	7,535	$	2,675	$	4,715	$	7,390	$	2,856	$	4,870	$	7,726	$	2,754	$	4,781	$	7,535

Remaining Performance Obligations

As of March 31, ~~2019,~~2020, the estimated revenue expected to be recognized in the future related to performance obligations that are unsatisfied (or partially unsatisfied) was approximately ~~$3.0~~$3.4 billion in the Diagnostics segment and approximately ~~$390~~$400 million in the ~~Cardiovascular and Neuromodulation~~Medical Devices segment. Abbott expects to recognize revenue on approximately 60 percent of these remaining performance obligations over the next 24 months, approximately 1617 percent over the subsequent 12 months and the remainder thereafter.

These performance obligations primarily reflect the future sale of reagents/consumables in contracts with minimum purchase obligations, extended warranty or service obligations related to previously sold equipment, and remote monitoring services related to previously implanted devices. Abbott has applied the practical expedient described in Accounting Standards Codification (ASC) 606-10-50-14 and has not included remaining performance obligations related to contracts with original expected durations of one year or less in the amounts above.

Other Contract Assets and Liabilities

Abbott discloses Trade receivables separately in the Condensed Consolidated Balance Sheet at ~~their~~the net ~~realizable value.~~amount expected to be collected. Contract assets primarily relate to Abbott’s conditional right to consideration for work completed but not billed at the reporting date. Contract assets at the beginning and end of the period, as well as the changes in the balance, were not significant.

Contract liabilities primarily relate to payments received from customers in advance of performance under the contract. Abbott’s contract liabilities arise primarily in the ~~Cardiovascular and Neuromodulation~~Medical Devices reportable segment when payment is received upfront for various multi-period extended service arrangements.

Table of Contents

Abbott Laboratories and Subsidiaries

Notes to the Condensed Consolidated Financial Statements

March 31, ~~2019~~2020

(Unaudited)

Changes in the contract liabilities during the period are as follows:


(in millions)
Contract Liabilities
Balance at December 31, 2018	$	259
Balance at December 31, 2019				$	294
Unearned revenue from cash received during the period	109				105
Revenue recognized that was included in contract liability balance at beginning of period	(86		)
Balance at March 31, 2019	$	282
Revenue recognized related to contract liability balance					(94)
Balance at March 31, 2020				$	305

Note 4 — Supplemental Financial Information

Shares of unvested restricted stock that contain non-forfeitable rights to dividends are treated as participating securities and are included in the computation of earnings per share under the two-class method. Under the two-class method, net earnings are allocated between common shares and participating securities. Earnings from Continuing Operations allocated to common shares for the three months ended March 31, 2020 and 2019 ~~and 2018~~ were ~~$668~~$541 million and ~~$406~~$668 million, respectively. Net earnings allocated to common shares for the three months ended March 31, 2020 and 2019 were $561 million and ~~2018 were~~ $668 million, ~~and $415 million,~~ respectively.

Other, net in Net cash from operating activities in the Condensed Consolidated Statement of Cash Flows for the first three months of 2020 includes $320 million of pension contributions and the payment of cash taxes of approximately $125 million. The first three months of 2019 includes $313 million of pension contributions and the payment of cash taxes of approximately $185 million.

Earnings from discontinued operations, net of tax, in the first quarter of 2020 include the recognition of $20 million of tax benefits as a result of the resolution of various tax positions related to the previous sale of a business that was reported as a discontinued operation.

The following summarizes the activity for the first three months of ~~2018 includes~~2020 related to the ~~payment~~allowance for doubtful accounts as of ~~cash taxes~~March 31, 2020:


(in millions)
Allowance for Doubtful Accounts
Balance at December 31, 2019	$	228
Impact of adopting ASU 2016-13		7
Provisions/charges to income		21
Amounts charged off and other deductions		(15)
Balance at March 31, 2020	$	241

The allowance for doubtful accounts reflects the current estimate of ~~approximately $220 million.~~credit losses expected to be incurred over the life of the accounts receivables. Abbott considers various factors in establishing, monitoring, and adjusting its allowance for doubtful accounts including the aging of the accounts and aging trends, the historical level of charge-offs, and specific exposures related to particular customers. Abbott also monitors other risk factors and forward-looking information, such as country risk, when determining credit limits for customers and establishing adequate allowances.

The components of long-term investments as of March 31, ~~2019~~2020 and December 31, ~~2018~~2019 are as follows:


					March 31,		December 31,
(in millions)					2020		2019
Long-term Investments	March 31,		December 31,
(in millions)	2019		2018
Equity securities	$	832	$	856	$	741	$	836
Other	35		41			49		47
Total	$	867	$	897	$	790	$	883

Abbott’s long-term investments as of March 31, 2020, declined versus the balance as of December 31, 2019, due in part to the impairment of an investment for approximately $50 million.

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Abbott Laboratories and Subsidiaries

Notes to the Condensed Consolidated Financial Statements

March 31, 2020

(Unaudited)

Abbott's equity securities as of March 31, ~~2019,~~2020, include approximately ~~$328~~$289 million of investments in mutual funds that are held in a rabbi trust and were acquired as part of the St. Jude Medical, Inc. (St. Jude Medical) business acquisition. These investments, which are specifically designated as available for the purpose of paying benefits under a deferred compensation plan, are not available for general corporate purposes and are subject to creditor claims in the event of insolvency.

Abbott also holds certain investments as of March 31, ~~2019~~2020 with a carrying value of approximately ~~$325~~$275 million that are accounted for under the equity method of accounting and other equity investments with a carrying value of approximately ~~$170~~$162 million that do not have a readily determinable fair value. The ~~$170~~$162 million carrying value includes cumulative unrealized gains of approximately $50 million.

In the first quarter of 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 R&D line of ~~Abbott’s~~Abbott's Condensed Consolidated Statement of Earnings.

~~Abbott Laboratories and Subsidiaries~~

~~Notes to the Condensed Consolidated Financial Statements~~

~~March 31, 2019~~

~~(Unaudited)~~

Note 5 — Changes in Accumulated Other Comprehensive Income (Loss)

The changes in accumulated other comprehensive income (loss), net of income taxes, are as follows:

	Three Months Ended March 31
	Cumulative Foreign Currency Translation Adjustments						Net Actuarial (Losses) and Prior Service (Costs) and Credits						Cumulative Unrealized Gains (Losses) on Marketable Equity Securities					Cumulative Gains (Losses) on Derivative Instruments Designated as Cash Flow Hedges

																								Three Months Ended March 31
																																Cumulative Gains
																																(Losses) on
																												Net Actuarial				Derivative
																								Cumulative Foreign				(Losses) and Prior				Instruments
																								Currency Translation				Service (Costs)				Designated as
																								Adjustments				and Credits				Cash Flow Hedges
(in millions)	2019			2018			2019			2018			2019		2018			2019			2018			2020		2019		2020		2019		2020		2019
Balance at December 31	$	(4,912	)	$	(3,452	)	$	(2,726	)	$	(2,521	)	$	—	$	(5	)	$	52		$	(84	)
Impact of adoption of new accounting standard	—			—			—			—			—		5			—			—
Balance at January 1																								$	(4,924)	$	(4,912)	$	(3,540)	$	(2,726)	$	(1)	$	52
Other comprehensive income (loss) before reclassifications	122			333			(1		)	(10		)	—		—			(17		)	(52		)		(1,144)		122		7		(1)		176		(17)
Amounts reclassified from accumulated other comprehensive income	—			—			24			33			—		—			(12		)	20				—		—		50		24		(10)		(12)
Net current period comprehensive income (loss)	122			333			23			23			—		—			(29		)	(32		)		(1,144)		122		57		23		166		(29)
Balance at March 31	$	(4,790	)	$	(3,119	)	$	(2,703	)	$	(2,498	)	$	—	$	—		$	23		$	(116	)	$	(6,068)	$	(4,790)	$	(3,483)	$	(2,703)	$	165	$	23

Reclassified amounts for foreign currency translation are recorded in the Condensed Consolidated Statement of Earnings as Net foreign exchange (gain) loss; and amounts for cash flow hedges are recorded as Cost of products sold. Net actuarial losses and prior service cost are included as a component of net periodic benefit costs; see Note 1312 for additional details.

Note 6 — Goodwill and Intangible Assets

The total amount of goodwill reported was ~~$23.2~~$22.9 billion at March 31, ~~2019~~2020 and ~~$23.3~~$23.2 billion at December 31, ~~2018.~~2019. Foreign currency translation adjustments decreased goodwill by approximately ~~$45~~$268 million in the first three months of ~~2019.~~2020. The amount of goodwill related to reportable segments at March 31, ~~2019~~2020 was ~~$3.0~~$2.8 billion for the Established Pharmaceutical Products segment, $286 million for the Nutritional Products segment, ~~$3.7~~$3.6 billion for the Diagnostic Products segment, and ~~$15.2~~$16.1 billion for the ~~Cardiovascular and Neuromodulation Products~~Medical Devices segment. There was no0 reduction of goodwill relating to impairments in the first three months of ~~2019.~~2020.

The gross amount of amortizable intangible assets, primarily product rights and technology was ~~$25.7~~$27.3 billion as of March 31, ~~2019~~2020 and $27.6 billion as of December 31, ~~2018,~~2019, and accumulated amortization was ~~$10.8~~$12.3 billion as of March 31, ~~2019~~2020 and ~~$10.4~~$11.9 billion as of December 31, ~~2018.~~2019. Foreign currency translation adjustments ~~increased~~decreased intangible assets by ~~$16~~$204 million infor the first three months of ~~2019.~~2020. Abbott’s estimated annual amortization expense for intangible assets is approximately $2.1 billion in 2020, $2.0 billion in ~~2019, $2.2~~2021, 2022, and 2023 and $1.9 billion in ~~2020, $2.1 billion in 2021, $2.0 billion in 2022 and $2.0 billion in 2023. Amortizable intangible assets are amortized over 2 to 20 years (weighted average 12 years).~~2024.

Indefinite-lived intangible assets, which relate to in-process R&D acquired in a business combination, were approximately ~~$3.6~~$1.2 billion and $1.3 billion as of March 31, ~~2019~~2020 and December 31, ~~2018.~~2019, respectively.

Table of Contents

Abbott Laboratories and Subsidiaries

Notes to the Condensed Consolidated Financial Statements

March 31, 2020

(Unaudited)

Note 7 — Restructuring Plans

From 2017 to ~~2019,~~2020, Abbott management approved restructuring plans as part of the integration of the acquisitions of St. Jude Medical into the ~~cardiovascular and neuromodulation~~Medical Devices segment, and Alere Inc. (Alere) into the ~~diagnostics~~Diagnostic Products segment, in order to leverage economies of scale and reduce costs. In the first three months of ~~2019,~~2020, charges of ~~$35~~$9 million were recognized, of which ~~$16~~$3 million is recorded in Cost of products sold, $2$1 million is recorded in Research and development and ~~$17~~$5 million as Selling, general and administrative expense. The following summarizes the activity for the first three months of ~~2019~~2020 related to these actions and the status of the related accrual as of March 31, ~~2019:~~2020:

(in millions)

Accrued balance at December 31, 2018

$
41

Restructuring charges recorded in 2019

35

Payments and other adjustments

(15
)
Accrued balance at March 31, 2019

$
61


(in millions)
Accrued balance at December 31, 2019	$	46
Restructuring charges recorded in 2020		9
Payments and other adjustments		(18)
Accrued balance at March 31, 2020	$	37

~~Abbott Laboratories and Subsidiaries~~

~~Notes to the Condensed Consolidated Financial Statements~~

~~March 31, 2019~~

~~(Unaudited)~~

From ~~2016~~2017 to ~~2018,~~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. In the first three months of 2020, charges of $23 million were recognized, of which $1 million is recorded in Cost of products sold, $1 million is recorded in Research and development and $21 million as Selling, general and administrative expense. The following summarizes the activity for the first three months of ~~2019~~2020 related to these restructuring actions and the status of the related accrual as of March 31, ~~2019:~~2020:


(in millions)
Accrued balance at December 31, 2018	$	70
Accrued balance at December 31, 2019				$	79
Restructuring charges recorded in 2020					23
Payments and other adjustments	(8		)		(8)
Accrued balance at March 31, 2019	$	62
Accrued balance at March 31, 2020				$	94

Note 8 — Incentive Stock ~~Programs~~Program

In the first three months of ~~2019,~~2020, Abbott granted ~~4,010,886~~3,956,637 stock options, ~~663,273~~568,471 restricted stock awards and ~~6,295,318~~5,042,550 restricted stock units under its incentive stock ~~programs.~~program. At March 31, ~~2019,~~2020, approximately ~~126~~112 million shares were reserved for future grants. Information regarding the number of options outstanding and exercisable at March 31, ~~2019~~2020 is as follows:

	Outstanding		Exercisable

					Outstanding		Exercisable
Number of shares	33,426,839		24,138,209			32,412,976		23,330,203
Weighted average remaining life (years)	6.7		5.9			6.5		5.5
Weighted average exercise price	$	47.05	$	40.52	$	53.83	$	44.69
Aggregate intrinsic value (in millions)	$	1,099	$	952	$	849	$	798

The total unrecognized share-based compensation cost at March 31, ~~2019~~2020 amounted to approximately ~~$663~~$687 million which is expected to be recognized over the next three years.

Note 9 — Debt and Lines of Credit

On February 24, 2019, Abbott redeemed the $500 million outstanding principal amount of its 2.80% Notes due 2020.

In February 2018, the board of directors had authorized the early redemption of up to $5 billion of outstanding long-term notes. After the repayment of the 2.80% Notes and other debt repayments that totaled $3.8 billion in 2018, approximately $700 million of the authorization remains available.

Note 10 ~~— Leases~~

~~Leases where Abbott is the Lessee~~

Abbott has entered into operating leases as the lessee for office space, manufacturing facilities, R&D laboratories, warehouses, vehicles and equipment. Finance leases are not significant. Abbott’s operating leases generally have remaining lease terms of 1 year to 10 years. Some leases include options to extend beyond the original lease term, generally up to 10 years and some include options to terminate early. These options have been included in the determination of the lease liability when it is reasonably certain that the option will be exercised.

For all of its asset classes Abbott elected the practical expedient allowed under FASB ASC No. 842, “Leases” to account for each lease component (e.g., the right to use office space) and the associated non-lease components (e.g., maintenance services) as a single lease component. Abbott also elected the short-term lease accounting policy for all asset classes; therefore, Abbott is not recognizing a lease liability or ROU asset for any lease that, at the commencement date, has a lease term of 12 months or less and does not include an option to purchase the underlying asset that Abbott is reasonably certain to exercise.

As Abbott’s leases typically do not provide an implicit rate, the interest rate used to determine the present value of the payments under each lease typically reflects Abbott’s incremental borrowing rate based on information available at the lease commencement date. Abbott’s incremental borrowing rates at January 1, 2019 were used for operating leases that commenced prior to January 1, 2019.

~~Abbott Laboratories and Subsidiaries~~

~~Notes to the Condensed Consolidated Financial Statements~~

~~March 31, 2019~~

~~(Unaudited)~~

~~The following table provides information related to Abbott’s operating leases:~~

Three Months Ended

(in millions)

March 31, 2019

Operating lease cost (a)

$
74

Cash paid for amounts included in the measurement of operating lease liabilities

$
63

ROU assets arising from obtaining new operating lease obligations

$
34

Weighted average remaining lease term — operating leases

8 years

Weighted average discount rate — operating leases

4.2
%

~~(a)~~ ~~Includes short-term lease expense and variable lease costs, which were immaterial in the quarter.~~

~~Future minimum lease payments under non-cancellable operating leases as of March 31, 2019 were as follows:~~

(in millions)

2019

$
174

2020

191

2021

142

2022

111

2023

83

Thereafter

318

Total future minimum lease payments — undiscounted

1,019

Less: imputed interest

(168
)
Present value of lease liabilities

$
851

~~The following table summarizes the amounts and location of operating lease ROU assets and lease liabilities as of March 31, 2019:~~

(in millions)

March 31, 2019

Balance Sheet Caption

Operating Lease - ROU Asset

$
833

Deferred income taxes and other assets

Operating Lease Liability:

Current

$
196

Other accrued liabilities

Non-Current

655

Post-employment obligations, deferred income taxes and other long-term liabilities

Total Liability

$
851

~~Leases where Abbott is the Lessor~~

Certain assets, primarily Diagnostics instruments, are leased to customers under contractual arrangements that typically include an operating or sales-type lease as well as performance obligations for reagents and other consumables. Sales-type leases are not significant. Contract terms vary by customer and may include options to terminate the contract or options to extend the contract. Where instruments are provided under operating lease arrangements, some portion or the entire lease revenue may be variable and subject to subsequent non-lease component (e.g. reagent) sales. The allocation of revenue between the lease and non-lease components is based on stand-alone selling prices. Operating lease revenue represented less than 3 percent of Abbott’s total net sales in the first quarter of 2019.

Assets related to operating leases are reported within Net property and equipment on the Condensed Consolidated Balance Sheet. The original cost and the net book value of such assets were $2.8 billion and $1.1 billion, respectively, as of March 31, 2019.

~~Abbott Laboratories and Subsidiaries~~

~~Notes to the Condensed Consolidated Financial Statements~~

~~March 31, 2019~~

~~(Unaudited)~~

~~Note 11~~ — Financial Instruments, Derivatives and Fair Value Measures

Certain Abbott foreign subsidiaries enter into foreign currency forward exchange contracts to manage exposures to changes in foreign exchange rates primarily for anticipated intercompany purchases by those subsidiaries whose functional currencies are not the U.S. dollar. These contracts, with gross notional amounts totaling ~~$5.4~~$7.0 billion at March 31, ~~2019~~2020 and ~~$5.1~~$6.8 billion at December 31, ~~2018~~2019 are designated as cash flow hedges of the variability of the cash flows due to changes in foreign exchange rates and are recorded at fair value. Accumulated gains and losses as of March 31, ~~2019~~2020 will be included in Cost of products sold at the time the products are sold, generally through the next twelve to eighteen months.

Abbott enters into foreign currency forward exchange contracts to manage currency exposures for foreign currency denominated third-party trade payables and receivables, and for intercompany loans and trade accounts payable where the receivable or payable is denominated in a currency other than the functional currency of the entity. For intercompany loans, the contracts require Abbott to sell or buy foreign currencies, primarily European currencies, in exchange for primarily U.S. dollars and other European currencies. For intercompany and trade payables and receivables, the currency exposures are primarily the U.S. dollar and European currencies. At March 31, ~~2019~~2020 and December 31, ~~2018,~~2019, Abbott held the gross notional amount of ~~$10.6~~$9.5 billion and ~~$13.6~~$9.1 billion, respectively, of such foreign currency forward exchange contracts.

Abbott has designated a yen-denominated, 5-year term loan of approximately $554 million and $546 million as of March 31, 2020 and December 31, 2019, respectively, as a hedge of the net investment in certain foreign subsidiaries. The change in the value of the debt, which is due to changes in foreign exchange rates, is recorded in Accumulated other comprehensive income (loss), net of tax.

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Abbott Laboratories and Subsidiaries

Notes to the Condensed Consolidated Financial Statements

March 31, 2020

(Unaudited)

Abbott is a party to interest rate hedge contracts totaling approximately $2.9 billion at March 31, ~~2019~~2020 and December 31, ~~2018~~2019 to manage its exposure to changes in the fair value of fixed-rate debt. These contracts are designated as fair value hedges of the variability of the fair value of fixed-rate debt due to changes in the long-term benchmark interest rates. The effect of the hedge is to change a fixed-rate interest obligation to a variable rate for that portion of the debt. Abbott records the contracts at fair value and adjusts the carrying amount of the fixed-rate debt by an offsetting amount.

The following table summarizes the amounts and location of certain derivative financial instruments as of March 31, ~~2019~~2020 and December 31, ~~2018:~~2019:

	Fair Value - Assets						Fair Value - Liabilities

												Fair Value - Assets					Fair Value - Liabilities
												March 31,		Dec. 31,			March 31,		Dec. 31,
(in millions)	March 31, 2019		Dec. 31, 2018			Balance Sheet Caption	March 31, 2019		Dec. 31, 2018		Balance Sheet Caption	2020		2019		Balance Sheet Caption	2020		2019		Balance Sheet Caption


Interest rate swaps designated as fair value hedges	$	—	$	—		Deferred income taxes and other assets	$	57	$	100	Post-employment obligations, deferred income taxes and other long-term liabilities	$	216	$	48	Deferred income taxes and other assets	$	—	$	—	Post-employment obligations, deferred income taxes and other long-term liabilities


Foreign currency forward exchange contracts:
Hedging instruments	111		81			Prepaid expenses and other receivables	36		44		Other accrued liabilities		247		110	Prepaid expenses and other receivables		92		56	Other accrued liabilities
Others not designated as hedges	42		33			Prepaid expenses and other receivables	53		51		Other accrued liabilities		117		38	Prepaid expenses and other receivables		97		33	Other accrued liabilities

	$	153	$	114	��		$	146	$	195
Debt designated as a hedge of net investment in a foreign subsidiary													—		—	n/a		554		546	Long-term debt
												$	580	$	196		$	743	$	635

The following table summarizes the activity for foreign currency forward exchange contracts designated as cash flow hedges, debt designated as a hedge of net investment in a foreign subsidiary and certain other derivative financial instruments, as well as the amounts and location of income (expense) and gain (loss) reclassified into income for the three months ended March 31, ~~2019~~2020 and ~~2018.~~2019.

	Gain (loss) Recognized in Other Comprehensive Income (loss)						Income (expense) and Gain (loss) Reclassified into Income

													Gain (loss) Recognized in Other				Income (expense) and Gain (loss)
													Comprehensive Income (loss)				Reclassified into Income
(in millions)	2019			2018			2019		2018			Income Statement Caption	2020		2019		2020		2019		Income Statement Caption


Foreign currency forward exchange contracts designated as cash flow hedges	$	(19	)	$	(86	)	$	15	$	(30	)	Cost of products sold	$	227	$	(19)	$	11	$	15	Cost of products sold


Debt designated as a hedge of net investment in a foreign subsidiary														(8)		—		—		—	n/a

Interest rate swaps designated as fair value hedges	n/a			n/a			43		(106		)	Interest expense		n/a		n/a		168		43	Interest expense

~~Gains~~Losses of ~~$49~~$165 million and ~~losses~~gains of ~~$48~~$49 million were recognized in the three months ended March 31, ~~2019~~2020 and ~~2018,~~2019, respectively, related to foreign currency forward exchange contracts not designated as a hedge. These amounts are reported in the Condensed Consolidated Statement of Earnings on the Net foreign exchange (gain) loss line.

Table of Contents

Abbott Laboratories and Subsidiaries

Notes to the Condensed Consolidated Financial Statements

March 31, ~~2019~~2020

(Unaudited)

The interest rate swaps are designated as fair value hedges of the variability of the fair value of fixed-rate debt due to changes in the long-term benchmark interest rates. The hedged debt is marked to market, offsetting the effect of marking the interest rate swaps to market.

The carrying values and fair values of certain financial instruments as of March 31, ~~2019~~2020 and December 31, ~~2018~~2019 are shown in the following table. The carrying values of all other financial instruments approximate their estimated fair values. The counterparties to financial instruments consist of select major international financial institutions. Abbott does not expect any losses from non-performance by these counterparties.

	March 31, 2019						December 31, 2018

													March 31, 2020				December 31, 2019
													Carrying		Fair		Carrying		Fair
(in millions)	Carrying Value			Fair Value			Carrying Value			Fair Value			Value		Value		Value		Value

Investment Securities:

Long-term Investment Securities:
Equity securities	$	832		$	832		$	856		$	856		$	741	$	741	$	836	$	836
Other	35			35			41			41				49		49		47		47
Total Long-term Debt	(18,853		)	(20,311		)	(19,366		)	(19,871		)		(18,068)		(20,998)		(17,938)		(20,772)
Foreign Currency Forward Exchange Contracts:
Receivable position	153			153			114			114				364		364		148		148
(Payable) position	(89		)	(89		)	(95		)	(95		)		(189)		(189)		(89)		(89)
Interest Rate Hedge Contracts:
(Payable) position	(57		)	(57		)	(100		)	(100		)

Receivable position														216		216		48		48

The fair value of the debt was determined based on significant other observable inputs, including current interest rates.

The following table summarizes the bases used to measure certain assets and liabilities at fair value on a recurring basis in the balance sheet:

Basis of Fair Value Measurement

(in millions)

Outstanding
Balances

Quoted
Prices in
Active
Markets

Significant
Other
Observable
Inputs

Significant
Unobservable
Inputs

March 31, 2019:

Equity securities

$
340

$
340

$
—

$
—

Foreign currency forward exchange contracts

153

—

153

—

Total Assets

$
493

$
340

$
153

$
—

Fair value of hedged long-term debt

$
2,797

$
—

$
2,797

$
—

Interest rate swap derivative financial instruments

57

—

57

—

Foreign currency forward exchange contracts

89

—

89

—

Contingent consideration related to business combinations

70

—

—

70

Total Liabilities

$
3,013

$
—

$
2,943

$
70

December 31, 2018:

Equity securities

$
320

$
320

$
—

$
—

Foreign currency forward exchange contracts

114

—

114

—

Total Assets

$
434

$
320

$
114

$
—

Fair value of hedged long-term debt

$
2,743

$
—

$
2,743

$
—

Interest rate swap derivative financial instruments

100

—

100

—

Foreign currency forward exchange contracts

95

—

95

—

Contingent consideration related to business combinations

71

—

—

71

Total Liabilities

$
3,009

$
—

$
2,938

$
71


			Basis of Fair Value Measurement
			Quoted		Significant
			Prices in		Other		Significant
	Outstanding		Active		Observable		Unobservable
(in millions)	Balances		Markets		Inputs		Inputs
March 31, 2020:
Equity securities	$	304	$	304	$	—	$	—
Interest rate swap derivative financial instruments		216		—		216		—
Foreign currency forward exchange contracts		364		—		364		—
Total Assets	$	884	$	304	$	580	$	—

Fair value of hedged long-term debt	$	3,064	$	—	$	3,064	$	—
Foreign currency forward exchange contracts		189		—		189		—
Contingent consideration related to business combinations		67		—		—		67
Total Liabilities	$	3,320	$	—	$	3,253	$	67

December 31, 2019:
Equity securities	$	357	$	357	$	—	$	—
Interest rate swap derivative financial instruments		48		—		48		—
Foreign currency forward exchange contracts		148		—		148		—
Total Assets	$	553	$	357	$	196	$	—

Fair value of hedged long-term debt	$	2,890	$	—	$	2,890	$	—
Foreign currency forward exchange contracts		89		—		89		—
Contingent consideration related to business combinations		68		—		—		68
Total Liabilities	$	3,047	$	—	$	2,979	$	68

~~Abbott Laboratories and Subsidiaries~~

~~Notes to the Condensed Consolidated Financial Statements~~

~~March 31, 2019~~

~~(Unaudited)~~

The fair value of foreign currency forward exchange contracts is determined using a market approach, which utilizes values for comparable derivative instruments. The fair value of debt was determined based on the face value of the debt adjusted for the fair value of the interest rate swaps, which is based on a discounted cash flow analysis using significant other observable inputs. The fair value of the contingent consideration was determined based on independent appraisals at the time of acquisition, adjusted for the time value of money and other changes in fair value.

Table of Contents

Abbott Laboratories and Subsidiaries

Notes to the Condensed Consolidated Financial Statements

March 31, 2020

(Unaudited)

Note 1211 — Litigation and Environmental Matters

Abbott has been identified as a potentially responsible party for investigation and cleanup costs at a number of locations in the United States and Puerto Rico under federal and state remediation laws and is investigating potential contamination at a number of company-owned locations. Abbott has recorded an estimated cleanup cost for each site for which management believes Abbott has a probable loss exposure. No individual site cleanup exposure is expected to exceed $4 million, and the aggregate cleanup exposure is not expected to exceed $10 million.

Abbott is involved in various claims and legal proceedings, and Abbott estimates the range of possible loss for its legal proceedings and environmental exposures to be from approximately ~~$95~~$90 million to ~~$140~~$125 million. The recorded accrual balance at March 31, ~~2019~~2020 for these proceedings and exposures was approximately ~~$115~~$110 million. This accrual represents management’s best estimate of probable loss, as defined by FASB ASC No. 450, “Contingencies.” Within the next year, legal proceedings may occur that may result in a change in the estimated loss accrued by Abbott. While it is not feasible to predict the outcome of all such proceedings and exposures with certainty, management believes that their ultimate disposition should not have a material adverse effect on Abbott’s financial position, cash flows, or results of operations.

Note 1312 — Post-Employment Benefits

Retirement plans consist of defined benefit, defined contribution, and medical and dental plans. Net periodic benefit costs, other than service costs, are recognized in the Other (income) expense, net line of the Condensed Consolidated Statement of Earnings. Net cost recognized in continuing operations for the three months ended March 31 for Abbott’s major defined benefit plans and post-employment medical and dental benefit plans is as follows:

	Defined Benefit Plans						Medical and Dental Plans

													Defined Benefit Plans				Medical and Dental Plans
													March 31,		March 31,		March 31,		March 31,
(in millions)	March 31, 2019			March 31, 2018			March 31, 2019			March 31, 2018			2020		2019		2020		2019

Service cost - benefits earned during the period	$	64		$	78		$	6		$	7		$	85	$	64	$	12	$	6
Interest cost on projected benefit obligations	84			78			13			12				75		84		12		13
Expected return on plan assets	(178		)	(171		)	(7		)	(8		)		(192)		(178)		(7)		(7)
Net amortization of:
Actuarial loss, net	33			54			6			8				63		33		8		6
Prior service cost (credit)	—			—			(8		)	(11		)		—		—		(7)		(8)
Net cost — continuing operations	$	3		$	39		$	10		$	8
Net cost - continuing operations													$	31	$	3	$	18	$	10

Abbott funds its domestic defined benefit plans according to IRS funding limitations. International pension plans are funded according to similar regulations. In the first three months of 2020 and 2019, ~~and 2018, $313~~$320 million and ~~$14~~$313 million, respectively, were contributed to defined benefit plans and $11 million was contributed to the post-employment medical and dental benefit plans in each year.

Note 1413 — Taxes on Earnings

Taxes on earnings from continuing operations reflect the estimated annual effective rates and include charges for interest and penalties. In the first three months of 2020, taxes on earnings from continuing operations include approximately $47 million in excess tax benefits associated with share-based compensation. Earnings from discontinued operations, net of tax, in the first three months of 2020 reflect the recognition of $20 million of net tax benefits primarily as a result of the resolution of various tax positions related to prior years. In the first three months of 2019, taxes on earnings from continuing operations include a $78 million reduction to the transition tax related to the Tax Cut and Jobs Act (TCJA) and approximately $65 million in excess tax benefits associated with share-based compensation. The $78 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 the quarter. This adjustment decreased the cumulative net tax expense related to the TCJA to $1.51 billion. In the first three months of 2018, taxes on earnings from continuing operations include approximately $65 million in excess tax benefits associated with share-based compensation and a $15 million adjustment to the transition tax liability for associated effects related to state tax. Earnings from discontinued operations, net of tax, in the first three months of 2018 reflect the recognition of $9 million of net tax benefits primarily ~~as a result of the resolution of various tax positions related to prior years which decreased the gross amount of unrecognized tax benefits by $16 million.~~

~~Abbott Laboratories and Subsidiaries~~

~~Notes to the Condensed Consolidated Financial Statements~~

~~March 31, 2019~~

~~(Unaudited)~~

Tax authorities in various jurisdictions regularly review Abbott’s income tax filings. Abbott believes that it is reasonably possible that the recorded amount of gross unrecognized tax benefits may decrease between ~~$185~~$230 million and ~~$430~~$520 million, including cash adjustments, within the next twelve months as a result of concluding various domestic and international tax matters. In the U.S., Abbott’s federal income tax returns through 2016 are settled except for the federal income tax returns of the former Alere consolidated group which are settled through ~~2014~~2015 and the former St. Jude Medical consolidated group which are settled through 2013.

Table of Contents

Abbott Laboratories and Subsidiaries

Notes to the Condensed Consolidated Financial Statements

March 31, 2020

(Unaudited)

Note 1514 — Segment Information

Abbott’s principal business is the discovery, development, manufacture and sale of a broad line of health care products. Abbott’s products are generally sold directly to retailers, wholesalers, hospitals, health care facilities, laboratories, physicians’ offices and government agencies throughout the world.

Abbott’s reportable segments are as follows:

Established Pharmaceutical Products — International sales of a broad line of branded generic pharmaceutical products.

Nutritional Products — Worldwide sales of a broad line of adult and pediatric nutritional products.

Diagnostic Products — Worldwide sales of diagnostic systems and tests for blood banks, hospitals, commercial laboratories, physician offices and alternate-care testing sites. For segment reporting purposes, the Core Laboratories Diagnostics, Rapid Diagnostics, Molecular Diagnostics and Point of Care Diagnostics divisions are aggregated and reported as the Diagnostic Products segment.

~~Cardiovascular and Neuromodulation~~ ~~Products~~Medical Devices — Worldwide sales of ~~cardiac~~ rhythm management, electrophysiology, heart failure, vascular, structural heart, neuromodulation and ~~neuromodulation~~diabetes care products. For segment reporting purposes, the Cardiac ~~Arrhythmias &~~Rhythm Management, Electrophysiology and Heart Failure, Vascular, Neuromodulation, ~~and~~ Structural Heart and Diabetes Care divisions are aggregated and reported as the ~~Cardiovascular and Neuromodulation~~Medical Devices segment.

~~Non-reportable segments includes Diabetes Care.~~

Abbott’s underlying accounting records are maintained on a legal entity basis for government and public reporting requirements. Segment disclosures are on a performance basis consistent with internal management reporting. Intersegment transfers of inventory are recorded at standard cost and are not a measure of segment operating earnings. The cost of some corporate functions and the cost of certain employee benefits are charged to segments at predetermined rates that approximate cost. Remaining costs, if any, are not allocated to segments. In addition, intangible asset amortization is not allocated to operating segments, and intangible assets and goodwill are not included in the measure of each segment’s assets.

The following segment information has been prepared in accordance with the internal accounting policies of Abbott, as described above, and is not presented in accordance with generally accepted accounting principles applied to the consolidated financial statements.

~~Abbott Laboratories and Subsidiaries~~


	Three Months Ended March 31
	Net Sales to				Operating
	External Customers				Earnings
(in millions)	2020		2019		2020		2019
Established Pharmaceutical Products	$	1,044	$	992	$	181	$	159
Nutritional Products		1,904		1,792		459		380
Diagnostic Products		1,826		1,841		405		434
Medical Devices		2,937		2,895		803		847
Total Reportable Segments		7,711		7,520		1,848		1,820
Other		15		15
Net sales	$	7,726	$	7,535
Corporate functions and benefit plans costs						(132)		(102)
Net interest expense						(121)		(148)
Share-based compensation (a)						(233)		(226)
Amortization of intangible assets						(561)		(486)
Other, net (b)						(168)		(226)
Earnings from continuing operations before taxes					$	633	$	632

(a)

Approximately 50 percent of the annual net cost of share-based awards will typically be recognized in the first quarter due to the timing of the granting of share-based awards.

(b)

Other, net includes integration costs associated with the acquisition of St. Jude Medical and Alere, and restructuring charges. Other, net for the three months ended March 31, 2019 also includes a charge associated with an R&D asset acquired and immediately expensed.

~~Notes to the Condensed Consolidated Financial Statements~~

~~March 31, 2019~~

~~(Unaudited)~~

Three Months Ended March 31

Net Sales to
External Customers

Operating
Earnings

(in millions)

2019

2018

2019

2018

Established Pharmaceutical Products

$
992

$
1,044

$
159

$
167

Nutritional Products

1,792

1,756

380

365

Diagnostic Products

1,841

1,837

434

443

Cardiovascular and Neuromodulation Products

2,329

2,323

694

724

Total Reportable Segments

6,954

6,960

1,667

1,699

Other

581

430

Net sales

$
7,535

$
7,390

Corporate functions and benefit plans costs

(102
)
(152
)
Non-reportable segments

154

92

Net interest expense

(148
)
(199
)
Share-based compensation (a)

(226
)
(212
)
Amortization of intangible assets

(486
)
(584
)
Other, net (b)

(227
)
(213
)
Earnings from continuing operations before taxes

$
632

$
431

~~(a)~~ ~~Approximately 50 percent of the annual net cost of share-based awards will typically be recognized in the first quarter due to the timing of the granting of share-based awards.~~

~~(b)~~ Other, net for the three months ended March 31, 2019 includes a charge associated with an R&D asset acquired and immediately expensed, as well as restructuring charges and integration costs associated with the acquisitions of St. Jude Medical and Alere. Other, net for the three months ended March 31, 2018 includes inventory step-up amortization, restructuring charges and integration costs associated with the acquisitions of St. Jude Medical and Alere.

Table of Contents

Item 2.Management’s Discussion and Analysis of Financial Condition and Results of Operations

Financial Review - Results of Operations

Abbott’s revenues are derived primarily from the sale of a broad line of health care products under short-term receivable arrangements. Patent protection and licenses, technological and performance features, and inclusion of Abbott’s products under a contract ~~most~~ impact which products are sold; price controls, competition and rebates ~~most~~ impact the net selling prices of products; and foreign currency translation impacts the measurement of net sales and costs. Abbott’s primary products are ~~nutritional products, branded generic pharmaceuticals,~~medical devices, diagnostic testing products, nutritional products and branded generic pharmaceuticals.

During the first quarter of 2020, the coronavirus (COVID-19) pandemic affected Abbott’s diversified health care businesses in various ways. As is further described below, some businesses faced challenges, others have been relatively stable, and still others are performing at the levels required to successfully meet new demands. Beginning in February, cardiovascular and neuromodulation ~~products.~~procedures and routine core laboratory diagnostic testing volumes declined in China as that country implemented quarantine restrictions and postponed non-emergency health care activities. As March progressed, procedures and routine testing volumes in China steadily improved from the low levels seen in February. As COVID-19 spread geographically, the impact initially expanded to certain countries in Asia and Europe beginning in late February, and more broadly across Europe and the U.S. during the last few weeks of March. As the health care industry in these countries shifted their focus to fighting COVID-19, the impact on cardiovascular and neuromodulation device procedures and routine diagnostic testing volumes was similar to what was experienced in China in February. Due to the critical nature of these products, Abbott anticipates increased demand when health care services return to more normal levels.

Abbott has mobilized its teams across multiple fronts to develop and launch three new diagnostic tests for COVID-19. In March, Abbott launched a molecular test to detect COVID-19 on its ID NOW™ rapid point-of-care platform in the U.S. pursuant to an Emergency Use Authorization (EUA). Abbott also launched a molecular test on its m2000™ RealTime lab-based platform to detect COVID-19 pursuant to an EUA in the U.S. and CE Mark. In April, Abbott launched a serology blood test on its ARCHITECT^® i1000SR and i2000SR laboratory instruments for the detection of an antibody to determine if someone was previously infected. The serology test was granted an EUA in the U.S. on April 26, 2020 and CE Mark on April 24, 2020.

Abbott is continually implementing business continuity plans in the face of the global crisis. Due to the critical nature of its products and services, Abbott is generally exempt from governmental orders in the U.S. and other countries requiring businesses to cease operations. To protect its employees, the majority of its office-based work is being conducted remotely and the company has implemented strict travel restrictions. Abbott has taken aggressive steps to limit exposure and enhance the safety of its facilities for employees working to continue to supply healthcare products to hospital and other customers.

With respect to Abbott’s financial position, at the end of the first quarter of 2020, Abbott’s cash and cash equivalents and short-term investments totaled approximately $3.7 billion and existing credit agreements are in place that would provide additional access to $5 billion, if needed.

Due to uncertainties regarding the duration and impact of the current COVID-19 pandemic, Abbott is unable to predict the extent to which the COVID-19 pandemic may have a material effect on its business, financial condition or results of operations.

Table of Contents

The following table details sales by reportable segment for the three months ended March 31. Percent changes are versus the prior year and are based on unrounded numbers.

	Net Sales to External Customers

											Net Sales to External Customers
											Three Months		Three Months
											Ended		Ended				Impact of		Total Change
											March 31,		March 31,		Total		Foreign		Excl. Foreign
(in millions)	Three Months Ended March 31, 2019		Three Months Ended March 31, 2018		Total Change		Impact of Foreign Exchange		Total Change Excl. Foreign Exchange		2020		2019		Change		Exchange		Exchange


Established Pharmaceutical Products	$	992	$	1,044	(4.9	)%	(10.3	)%	5.4	%	$	1,044	$	992	5.2	%	(4.1)	%	9.3	%
Nutritional Products	1,792		1,756		2.0		(3.7	)	5.7			1,904		1,792	6.3		(1.0)		7.3
Diagnostic Products	1,841		1,837		0.2		(4.2	)	4.4			1,826		1,841	(0.8)		(1.5)		0.7
Cardiovascular and Neuromodulation Products	2,329		2,323		0.2		(3.4	)	3.6
Medical Devices												2,937		2,895	1.4		(1.5)		2.9
Total Reportable Segments	6,954		6,960		(0.1	)	(4.7	)	4.6			7,711		7,520	2.5		(1.8)		4.3
Other	581		430		35.4		(7.4	)	42.8			15		15	5.3		(1.1)		6.4
Net sales	$	7,535	$	7,390	2.0		(4.8	)	6.8		$	7,726	$	7,535	2.5		(1.8)		4.3


Total U.S.	$	2,754	$	2,675	2.9		—		2.9		$	2,856	$	2,754	3.7		—		3.7


Total International	$	4,781	$	4,715	1.4		(7.6	)	9.0		$	4,870	$	4,781	1.8		(2.8)		4.6

Note: In order to compute results excluding the impact of foreign 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.

Net sales growth in ~~2019,~~2020, excluding the impact of foreign exchange, was driven by growth in ~~all of Abbott’s businesses. The increase in~~ the ~~Other category reflects growth in Abbott’s Diabetes Care business where sales in the first three months of 2019 increased 34.4 percent in total~~Established Pharmaceuticals and ~~42.0 percent, excluding the effects of foreign exchange, to $566 million. The Diabetes Care sales growth was led by FreeStyle~~® ~~Libre~~®, Abbott’s continuous glucose monitoring system with worldwide sales of $379 million, which reflected an increase versus the prior year of 70.2 percent in total and 80.1 percent, excluding the effects of foreign exchange.Nutritional Products reportable segments.

Excluding the impact of foreign exchange, total net sales increased ~~6.8~~4.3 percent in the first quarter of ~~2019.~~2020. Abbott’s net sales were unfavorably impacted by changes in foreign exchange rates in the first quarter as the relatively stronger U.S. dollar decreased total international sales by ~~7.6~~2.8 percent and total sales by ~~4.8~~1.8 percent.

Table of Contents

The table below provides detail by sales category for the three months ended March 31. Percent changes are versus the prior year and are based on unrounded numbers.


																	Impact of		Total Change
											March 31,		March 31,		Total		Foreign		Excl. Foreign
(in millions)	March 31, 2019		March 31, 2018		Total Change		Impact of Foreign Exchange		Total Change Excl. Foreign Exchange		2020		2019		Change		Exchange		Exchange
Established Pharmaceutical Products —
Key Emerging Markets	$	752	$	793	(5.2	)%	(12.5	)%	7.3	%	$	813	$	752	8.1	%	(5.0)	%	13.1	%
Other Emerging Markets	240		251		(4.2	)	(3.3	)	(0.9	)		231		240	(3.7)		(1.0)		(2.7)


Nutritionals —
International Pediatric Nutritionals	576		546		5.4		(5.8	)	11.2			571		576	(0.8)		(1.0)		0.2
U.S. Pediatric Nutritionals	453		448		1.2		—		1.2			518		453	14.3		—		14.3
International Adult Nutritionals	469		452		3.9		(7.2	)	11.1			521		469	11.2		(2.6)		13.8
U.S. Adult Nutritionals	294		310		(5.5	)	—		(5.5	)		294		294	0.1		—		0.1


Diagnostics —
Core Laboratory	1,061		1,019		4.1		(5.8	)	9.9			989		1,061	(6.8)		(1.9)		(4.9)
Molecular	108		118		(8.4	)	(3.3	)	(5.1	)		139		108	29.1		(1.2)		30.3
Point of Care	135		141		(4.8	)	(0.6	)	(4.2	)		138		135	2.4		(0.3)		2.7
Rapid Diagnostics	537		559		(4.0	)	(2.6	)	(1.4	)		560		537	4.3		(1.1)		5.4

Cardiovascular and Neuromodulation —

Medical Devices -
Rhythm Management	490		535		(8.5	)	(3.3	)	(5.2	)		474		514	(7.9)		(1.4)		(6.5)
Electrophysiology	429		391		9.8		(3.3	)	13.1			388		405	(4.0)		(1.1)		(2.9)
Heart Failure	184		153		20.9		(1.7	)	22.6			203		184	9.9		(0.7)		10.6
Vascular (a)	709		739		(4.1	)	(3.7	)	(0.4	)		625		709	(11.9)		(1.1)		(10.8)
Structural Heart	324		293		10.3		(4.7	)	15.0			318		324	(1.8)		(1.6)		(0.2)
Neuromodulation	193		212		(8.9	)	(1.8	)	(7.1	)		177		193	(8.7)		(0.9)		(7.8)

Diabetes Care												752		566	32.9		(2.7)		35.6

(a) Vascular Product Lines:
Coronary and Endovascular												603		675	(10.7)		(1.2)		(9.5)

(a) Vascular Product Lines:

Coronary and Endovascular

675

691

(2.3
)
(3.9
)
1.6

Key Emerging Markets for the Established Pharmaceutical Products business include India, Russia, Brazil and China, along with several other markets that represent the most attractive long-term growth opportunities for Abbott’s branded generics product portfolio. Excluding the unfavorable effect of foreign exchange, sales in the Key Emerging Markets increased ~~7.3~~13.1 percent compared to the first three months of ~~2018 due to~~2019 led by growth ~~across several geographies including~~in Russia and ~~China. Sales growth~~various countries in Latin America and southeast Asia. Other Emerging Markets, ~~was negatively impacted~~excluding the effect of foreign exchange, decreased by 2.7 percent in the first three months of ~~2019 by the recent discontinuation of a non-core, low-margin agreement under which Abbott supplied product to a third party.~~2020.

~~The 11.2 percent increase in~~ International Pediatric Nutritional sales, excluding the effect of foreign exchange, ~~was primarily driven by broad-based growth~~were relatively flat in the first three months of 2020 versus the comparable 2019 period. Growth across Abbott’s pediatric products in various countries in Asia and Latin America ~~across Abbott’s portfolio,~~along with higher consumer purchases in several countries in advance of shelter in place restrictions related to the COVID-19 pandemic were offset by challenging market dynamics in the Greater China infant category, including ~~Similac~~® ~~and PediaSure~~®~~. In~~ the unfavorable impact of COVID-19. U.S.~~, the 1.2 percent increase in~~ Pediatric Nutritional sales ~~reflects growth~~increased 14.3 percent primarily due to increased demand in ~~Pedialyte~~® ~~and PediaSure.~~late March in advance of shelter in place restrictions related to the COVID-19 pandemic. The ~~11.1~~13.8 percent increase in International Adult Nutritional sales, excluding the effect of foreign exchange, reflects continued growth of the ~~Ensure~~Glucerna^® and ~~Glucerna~~Ensure^® brands in ~~various~~several countries. ~~In the~~ U.S. Adult Nutritional ~~business,~~sales were relatively flat due to the ~~decline reflects Abbott’s discontinuation~~timing of ~~a non-core product line during~~retailer stocking for promotional programs.

In the ~~third quarter of 2018.~~

~~The 4.4~~Diagnostics segment, Core Laboratory sales decreased 4.9 percent, ~~increase in Diagnostics sales,~~ excluding the effect of foreign exchange, as the volume of routine testing performed in hospital and other laboratories was ~~primarily driven~~negatively impacted by ~~above-market growth in Core Laboratory in~~COVID-19. In April 2020, Abbott launched a lab-based serology blood test for the ~~U.S., and internationally where Abbott is achieving continued adoption~~detection of ~~its Alinity~~® ~~family of diagnostic instruments.~~the antibody, IgG, that identifies if a person was previously infected with COVID-19. The ~~5.1~~30.3 percent ~~decrease~~increase in Molecular Diagnostics sales, excluding the effect of foreign exchange, reflects higher volumes due to the ~~negative impact~~launch in ~~the quarter~~March 2020 of ~~certain non-governmental organization (NGO) purchasing patterns in Africa. During the quarter, Abbott obtained CE Mark~~Abbott’s RealTime SARS-CoV-2 test for ~~its “Alinity m” (molecular) diagnostics system and several testing assays.~~use on Abbott’s m2000 RealTime System to detect COVID-19.

In Rapid Diagnostics, sales ~~growth~~increased 5.4 percent, excluding the effect of foreign exchange, as increased testing for flu in ~~several areas, including double-digit growth in cardio-metabolic testing and Abbott’s ID-NOW~~ TM ~~infectious disease testing platform,~~the U.S. was ~~more than~~partially offset by the ~~negative~~unfavorable impact of COVID-19 on routine diagnostic testing performed in ~~2019~~various countries outside of ~~certain NGO purchasing patterns in Africa and an unfavorable comparison versus~~ the ~~first three months~~U.S. In late March, Abbott launched a molecular test for the detection of ~~2018 when sales were higher due to a stronger flu season.~~COVID-19 that is run on Abbott’s point-of-care ID NOW instruments.

Excluding the effect of foreign exchange, total ~~Cardiovascular and Neuromodulation Products~~Medical Devices sales grew ~~3.6~~2.9 percent; the increase was driven by double-digit growth in ~~Electrophysiology,~~Diabetes Care and Heart Failure partially offset by the impact of the COVID-19 pandemic on Abbott’s other medical device businesses. Growth in Diabetes Care sales was driven by continued growth of FreeStyle Libre^®, Abbott’s continuous glucose monitoring system, internationally and ~~Structural Heart.~~ ~~The growth~~ in ~~Electrophysiology reflects higher sales in both~~ the U.S. ~~and internationally. In January~~FreeStyle Libre sales totaled $604 million in the first quarter of 2020, which reflected a 62.5 percent increase, excluding the effect of foreign exchange, over the first three months of 2019 ~~Abbott announced U.S. FDA approval~~when Libre sales totaled $379 million.

Table of ~~its TactiCath~~® ~~contact force ablation catheter, Sensor Enabled™, which is designed to help physicians treat atrial fibrillation, a form of irregular heartbeat.~~Contents

In Heart Failure, sales growth was driven by ~~rapid U.S.~~continued market adoption of ~~Abbott’s~~Abbott's HeartMate 3^® Left Ventricular Assist Device ~~following FDA approval in October 2018 as a destination (long-term use) therapy~~(LVAD) for people living with advanced heart ~~failure.~~failure as well as increased sales of Abbott’s CentriMag™ circulatory support system for use in acute hospital care. In ~~March 2019,~~Abbott’s other cardiovascular and neuromodulation businesses, revenues were negatively impacted by reduced procedure volumes due to the COVID-19 pandemic.

In April 2017, Abbott ~~announced new data~~received a warning letter from the U.S. Food and Drug Administration (FDA) related to its ~~MOMENTUM 3 clinical study, the largest randomized controlled trial to assess outcomes~~manufacturing facility in ~~patients receiving a heart pump to treat advanced heart failure,~~Sylmar, CA which ~~demonstrated HeartMate 3 improved survival and clinical outcomes in this patient population.~~

~~Growth in Structural Heart~~ was ~~broad-based across several areas~~acquired by Abbott on January 4, 2017 as part of the ~~business, including MitraClip~~®~~, Abbott’s market-leading device for the minimally invasive treatment~~acquisition of ~~mitral regurgitation (MR),~~St. Jude Medical. This facility manufactures implantable cardioverter defibrillators, cardiac resynchronization therapy defibrillators, and monitors. Abbott prepared and executed a ~~leaky heart valve. During the quarter,~~comprehensive plan of corrective actions. On April 28, 2020, Abbott received ~~U.S.~~a letter from the FDA ~~approval for a new, expanded indication for MitraClip to treat clinically significant secondary MR as~~indicating that, based on the FDA’s evaluation, it appeared that Abbott had addressed the items in the warning letter. As a result, ~~of underlying heart failure. This new indication expands~~ the ~~number of people with MR that can be treated with the MitraClip device.~~warning letter is considered closed.

In Vascular, excluding the effect of foreign exchange, revenues were basically flat as the 1.6 percent increase in coronary and endovascular product sales, which includes drug-eluting stents, balloon catheters, guidewires, vascular imaging/diagnostics products, vessel closure, carotid and other coronary and peripheral products, was offset primarily by a reduction in royalty revenue. In Rhythm Management, the 5.2 percent decline in revenues, excluding the effect of foreign exchange, reflects an 11.6 percent decrease in U.S. sales partially offset by a 1.0 percent increase in international sales. ~~The 7.1 percent decline in Neuromodulation sales, excluding the effect of foreign exchange, reflects a 9.6 percent decline in U.S. sales partially offset by international growth of 2.1 percent.~~

The gross profit margin percentage was 50.3 percent for the first quarter of 2020 compared to 51.6 percent for the first quarter of ~~2019 compared to 50.6 percent for the first quarter of 2018.~~2019. The ~~increase~~decrease primarily reflects the ~~favorable comparison versus the prior year from lower~~increase in intangible amortization expense and the unfavorable effect of foreign exchange on gross margin in ~~2019.~~2020.

Research and development expenses ~~increased $83~~decreased $94 million, or ~~14.2~~14.1 percent, in the first quarter of ~~2019. In~~2020. The 2020 decrease in R&D expense was primarily driven by the immediate expensing of an R&D asset valued at $102 million in the first quarter of 2019, in conjunction with the acquisition of Cephea Valve Technologies, Inc. in the first quarter of 2019, Abbott acquired an R&D asset valued at $102 million, which was immediately expensed. In the first quarter of 2018, Abbott acquired an R&D asset valued at $25 million, which was immediately expensed. The 2019 increase in R&D expense was also driven by higher R&D spending in various businesses, including Cardiovascular and Neuromodulation, partially offset by the favorable effect of foreign exchange. For the three months ended March 31, ~~2019,~~2020, research and development expenditures totaled ~~$261~~$309 million for the ~~Cardiovascular and Neuromodulation Products~~Medical Devices segment, ~~$142~~$134 million for the Diagnostic Products segment, ~~$45~~$46 million for the Nutritional Products segment and $43 million for the Established Pharmaceutical Products segment.

Selling, general and administrative (SG&A) expenses for the first quarter of ~~2019 decreased 2.6~~2020 increased 2.8 percent due primarily to ~~lower acquisition-related integration costs and the favorable effect of foreign exchange on SG&A expenses, partially offset by~~ higher selling and marketing costs to drive ~~continued~~ growth across various businesses.

Restructuring Plans

The results for the first three months of ~~2019~~2020 reflect charges under approved restructuring plans as part of the integration of the acquisitions of St. Jude Medical and ~~Alere.~~Alere or as a part of various cost reduction programs. Abbott recorded employee related severance and other charges of ~~$35~~$32 million in the first three months of ~~2019~~2020 related to these initiatives, of which ~~$16~~$4 million is recognized in Cost of products sold, $2 million is recognized in Research and development and ~~$17~~$26 million is recognized in ~~Selling, general and administrative expense.~~SG&A. See Note 7 to the financial statements, “Restructuring Plans,” for additional information regarding these charges.

Other (Income) Expense, net

Other (income) expense, net ~~increased $14~~decreased $46 million in the first quarter of ~~2019~~2020 from ~~$33~~$47 million of income in ~~2018~~2019 to ~~$47~~$1 million in ~~2019.~~2020. The ~~increase~~decrease in income in the first quarter of ~~2019~~2020 as compared to ~~2018~~2019 was due to an ~~increase in the income related to the non-service cost component of the net periodic benefit cost associated with Abbott’s pension and postretirement benefit plans partially offset by the~~ impairment of an equity ~~investments~~investment of approximately $50 million in ~~2019.~~2020.

Interest Expense, net

Interest expense, net decreased ~~$51~~$27 million in the first quarter of ~~2019~~2020 due to a reduction in interest expense resulting from the ~~repayment of debt in 2018, as well as the~~ favorable impact of the euro debt ~~refinancing~~financing in ~~September 2018 partially offset by lower interest income due to lower cash balances.~~November of 2019 and the repayment of debt in 2019.

Taxes on Earnings ~~from Continuing Operations~~

Tax authorities in various jurisdictions regularly review Abbott’s income tax filings. Abbott believes that it is reasonably possible that the recorded amount of gross unrecognized tax benefits may decrease between ~~$185~~$230 million and ~~$430~~$520 million, including cash adjustments, within the next twelve months as a result of concluding various domestic and international tax matters. In the U.S., ~~Abbott’s~~Abbott's federal income tax returns through 2016 are settled except for the federal income tax returns of the former Alere consolidated group which are settled through ~~2014~~2015 and the former St. Jude Medical consolidated group which are settled through 2013.

Liquidity and Capital Resources March 31, ~~2019~~2020 Compared with December 31, ~~2018~~2019

The reduction of cash and cash equivalents from ~~$3.8~~$3.9 billion at December 31, ~~2018~~2019 to ~~$3.0~~$3.4 billion at March 31, ~~2019~~2020 primarily reflects ~~repayment of $500 million of debt,~~ the payment of dividends and capital expenditures, partially offset by cash generated from operations in the first three months of ~~2019.~~2020. Working capital was ~~$5.3~~$4.7 billion at March 31, ~~2019~~2020 and ~~$5.6~~$4.8 billion at December 31, ~~2018.~~2019. The ~~$300 million~~ decrease in working capital in ~~2019~~2020 primarily reflects the decrease in cash and cash equivalents partially offset by an increase in ~~inventory and accounts receivable.~~inventory.

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In the Condensed Consolidated Statement of Cash Flows, Net cash from operating activities for the first three months of ~~2019~~2020 totaled ~~$712~~$715 million, ~~a decrease~~an increase of ~~$396~~$3 million over the prior year ~~due primarily to~~as the ~~timing~~negative impact of ~~$313 million of pension contributions in 2019 and~~ an increased investment in working capital ~~partially~~was offset by lower cash taxes paid and higher operating earnings. Other, net in Net cash from operating activities for the first three months of 2020 was a use of $369 million and includes $320 million of pension contributions and the payment of cash taxes of approximately $125 million. Other, net in Net cash from operating activities for the first three months of 2019 was a use of $483 million and includes $313 million of pension contributions and the payment of cash taxes of approximately $185 million. Other, net in Net cash from operating activities for the first three months of 2018 was a use of $182 million and includes the impact of approximately $220 million of cash taxes paid. Other, net in Net cash from operating activities for the first three months of 2018 also includes $14 million of pension contributions as a pension contribution of $270 million was made in December 2017.

~~On February 16, 2018,~~In September 2019, the board of directors authorized the early redemption of up to $5 billion of outstanding long-term notes. ~~Redemptions~~This bond redemption authorization superseded the board’s previous authorization under ~~this authorization total $4.3 billion, including the redemption of the $500 million outstanding principal amount of the 2.80% Notes due 2020 on February 24, 2019. Approximately~~which $700 million had not yet been redeemed. In December 2019, Abbott redeemed $2.850 billion of debt. After this redemption, $2.15 billion of the $5 billion debt redemption authorization remains available.

At March 31, ~~2019,~~2020, Abbott’s long-term debt rating was ~~BBB+~~A- by Standard & Poor’s Corporation and ~~Baa1~~A3 by Moody’s Investors Service. Abbott expects to maintain an investment grade rating. Abbott has readily available financial resources, including lines of credit of $5.0 billion which expire in 2023.

In ~~September 2014,~~October 2019, the board of directors authorized the repurchase of up to ~~$3.0~~$3 billion of Abbott’s common shares from time to time. ~~Under~~The new authorization is in addition to the $270 million unused portion of the share repurchase program authorized in 2014, Abbott repurchased 36.2 million shares at a cost of $1.7 billion in 2015, 10.4 million shares at a cost of $408 million in 2016 and 1.9 million shares at a cost of $130 million in 2018 for a total of approximately $2.2 billion.2014.

On April 27, 2016, the board of directors authorized the issuance and sale for general corporate purposes of up to 75 million common shares that would result in proceeds of up to $3 billion. No shares have been issued under this authorization.

In the first quarter of ~~2019,~~2020, Abbott declared a quarterly dividend of ~~$0.32~~$0.36 per share on its common shares, which represents an increase of approximately 1412.5 percent over the ~~$0.28~~$0.32 per share dividend declared in the first quarter of ~~2018.~~2019.

Recently ~~Issued~~Adopted Accounting Standards ~~Not Yet Adopted~~

In June 2016, the Financial Accounting Standards Board (FASB) issued Accounting Standards Update (ASU) 2016-13, Financial Instruments —– Credit Losses,which changes the methodology to be used 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 of the financial asset. Abbott adopted the standard on January 1, 2020 and recorded a cumulative adjustment that was not significant to Earnings employed in the business in the Condensed Consolidated Balance Sheet.

Recently Issued Accounting Standards Not Yet Adopted

In December 2019, the FASB issued ASU 2019-12, Income Taxes (Topic 740): Simplifying the Accounting for Income Taxes, which among other things, eliminates certain exceptions in the current rules regarding the approach for intraperiod tax allocations and the methodology for calculating income taxes in an interim period, and clarifies the accounting for transactions that result in a step-up in the tax basis of goodwill. The ~~new~~ standard ~~will be~~becomes effective for Abbott atin the ~~beginning~~first quarter of ~~2020, with~~2021 and early adoption is permitted. Abbott ~~is currently assessing the impact~~does not expect adoption of this new standard ~~on its consolidated financial statements.~~

~~Lease Accounting Standard~~

~~In February 2016, the FASB issued ASU 2016-02,~~ ~~Leases~~~~, which requires lessees~~ to measure and recognize a lease asset and liability on the balance sheet for most leases, including operating leases. Abbott adopted the new standard as of January 1, 2019 using the modified retrospective approach and applied the standard’s transition provisions as of January 1, 2019. As a result, no changes were made to the December 31, 2018 Consolidated Balance Sheet. Abbott elected to apply the package of practical expedients related to transition. These practical expedients allowed Abbott to carry forward its historical assessments of whether any existing contracts are or contain leases, the lease classification for each lease existing at January 1, 2019, and whether any initial direct costs for such leases qualified for capitalization.

~~The new lease accounting standard does not~~ have a material impact on the amounts reported in the Condensed Consolidated Statement of Earnings but does have a material impact on the amounts reported in the Condensed Consolidated Balance Sheet. Adoption of the new standard resulted in the recording of approximately $850 million of new right of use (ROU) assets and additional liabilities for operating leases on the Condensed Consolidated Balance Sheet as of January 1, 2019.its condensed consolidated financial statements.

Legislative Issues

Abbott’s primary markets are highly competitive and subject to substantial government regulations throughout the world. Abbott expects debate to continue over the availability, method of delivery, and payment for health care products and services. It is not possible to predict the extent to which Abbott or the health care industry in general might be adversely affected by these factors in the future. A more complete discussion of these factors is contained in Item 1, Business, and Item 1A, Risk Factors, in the ~~2018~~2019 Annual Report on Form 10-K.

Private Securities Litigation Reform Act of 1995 — A Caution Concerning Forward-Looking Statements

Under the safe harbor provisions of the Private Securities Litigation Reform Act of 1995, Abbott cautions ~~investors~~ that any forward-looking statements ~~or projections~~ made by Abbott ~~including those made in this document,~~ are subject to risks and uncertainties, including the impact of the COVID-19 pandemic on Abbott's operations and financial results, that may cause actual results to differ materially from those ~~projected.~~indicated in the forward-looking statements. Economic, competitive, governmental, technological and other factors that may affect ~~Abbott’s~~Abbott's operations are discussed in Item 1A, ~~Risk Factors,~~"Risk Factors'', in the ~~2018~~2019 Annual Report on Form ~~10-K.~~10-K and in Item 1A, “Risk Factors”, in the quarterly report for the quarter ended March 31, 2020. Abbott undertakes no obligation to release publicly any revisions to forward-looking statements as a result of subsequent events or developments, except as required by law.

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PART I. FINANCIAL INFORMATION

Item 4.Controls and Procedures

(a)

Evaluation of disclosure controls and procedures. The President and Chief Executive Officer, Robert B. Ford, and Chief Financial Officer, Robert E. Funck, Jr., evaluated the effectiveness of Abbott Laboratories’ disclosure controls and procedures as of the end of the period covered by this report, and concluded that Abbott Laboratories’ disclosure controls and procedures were effective to ensure that information Abbott is required to disclose in the reports that it files or submits with the Securities and Exchange Commission (the “Commission”) under the Securities Exchange Act of 1934 (the “Exchange Act”) is recorded, processed, summarized and reported, within the time periods specified in the Commission’s rules and forms, and to ensure that information required to be disclosed by Abbott in the reports that it files or submits under the Exchange Act is accumulated and communicated to Abbott’s management, including its principal executive officer and principal financial officer, as appropriate to allow timely decisions regarding required disclosure.

(b)

Changes in internal control over financial reporting. During the quarter ended March 31, 2020, there were no changes in Abbott’s internal control over financial reporting (as defined in Rule 13a-15(f) under the Exchange Act) that have materially affected, or are reasonably likely to materially affect, Abbott’s internal control over financial reporting.

~~(a)~~~~Evaluation of disclosure controls and procedures.~~ The Chief Executive Officer, Miles D. White, and Chief Financial Officer, Brian B. Yoor, evaluated the effectiveness of Abbott Laboratories’ disclosure controls and procedures as of the end of the period covered by this report, and concluded that Abbott Laboratories’ disclosure controls and procedures were effective to ensure that information Abbott is required to disclose in the reports that it files or submits with the Securities and Exchange Commission (the “Commission”) under the Securities Exchange Act of 1934 (the “Exchange Act”) is recorded, processed, summarized and reported, within the time periods specified in the Commission’s rules and forms, and to ensure that information required to be disclosed by Abbott in the reports that it files or submits under the Exchange Act is accumulated and communicated to Abbott’s management, including its principal executive officer and principal financial officer, as appropriate to allow timely decisions regarding required disclosure.

~~(b)~~~~Changes in internal control over financial reporting.~~ During the quarter ended March 31, 2019, there were no changes in Abbott’s internal control over financial reporting (as defined in Rule 13a-15(f) under the Exchange Act) that have materially affected, or are reasonably likely to materially affect, Abbott’s internal control over financial reporting.

PART II. OTHER INFORMATION

Item 1.Legal Proceedings

Abbott is involved in various claims, legal proceedings and investigations, including those described in our Annual Report on Form 10-K for the year ended December 31, ~~2018.~~2019.

Item 1A. Risk Factors

There have been no material changes in our risk factors from those disclosed in our Annual Report on Form 10-K for the year ended December 31, 2019, except for the following:

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 routine diagnostic testing and medical device procedures or increased difficulty in serving customers, disrupt manufacturing and supply chains, and negatively affect our operations as well as the operations of our 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. Due to uncertainties regarding the duration and impact of the current COVID-19 pandemic, Abbott is unable to predict the extent to which the COVID-19 pandemic may have a material effect on its business, financial condition or results of operations.

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Item 2.Unregistered Sales of Equity Securities and Use of Proceeds

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

January 1, 2019 — January 31, 2019

89,083
(1)
$
71.457

—

$
795,235,049
(2)
February 1, 2019 — February 28, 2019

789
(1)
$
73.110

—

$
795,235,049
(2)
March 1, 2019 — March 31, 2019

7,454
(1)
$
78.730

—

$
795,235,049
(2)
Total

97,326
(1)
$
72.027

—

$
795,235,049
(2)


						(d) Maximum
						Number (or
					(c) Total Number	Approximate
					of Shares (or	Dollar Value) of
	(a) Total				Units) Purchased	Shares (or Units)
	Number of		(b) Average		as Part of	that May Yet Be
	Shares (or		Price Paid per		Publicly	Purchased Under
	Units)		Share (or		Announced Plans	the Plans or
Period	Purchased		Unit)		or Programs	Programs
January 1, 2020 - January 31, 2020	2,957	⁽¹⁾	$	85.89	0	$	3,270,234,923	⁽²⁾
February 1, 2020 - February 29, 2020	0	⁽¹⁾	$	0	0	$	3,270,234,923	⁽²⁾
March 1, 2020 - March 31, 2020	0	⁽¹⁾	$	0	0	$	3,270,234,923	⁽²⁾
Total	2,957	⁽¹⁾	$	85.89	0	$	3,270,234,923	⁽²⁾

(1) These shares include the shares deemed surrendered to Abbott to pay the exercise price in connection with the exercise of employee stock options ~~— 89,083~~– 2,957 in January, ~~789~~0 in February, and ~~7,454~~0 in March.

These shares do not include the shares surrendered to Abbott to satisfy tax withholding obligations in connection with the vesting of restricted stock or restricted stock units.

(2) On September 11, 2014, ~~Abbott announced that its~~the board of directors ~~approved~~authorized the ~~purchase~~repurchase of up to $3 billion of ~~its~~Abbott common shares, from time to ~~time.~~time (the “2014 Plan”). On October 11, 2019, the board of directors authorized the repurchase of up to $3 billion of Abbott common shares, from time to time (the “2019 Plan”). The 2019 Plan is in addition to the unused portion of the 2014 Plan.

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Item 6.Exhibits


Exhibit No.		Exhibit

3.1		By-Laws of Abbott Laboratories, as amended and restated, effective April 24, 2020, filed as Exhibit 3.1 to the Abbott Laboratories Current Report on Form 8-K filed on February 27, 2020.

31.1		Certification of Chief Executive Officer Required by Rule 13a-14(a) (17 CFR 240.13a-14(a)).

31.2		Certification of Chief Financial Officer Required by Rule 13a-14(a) (17 CFR 240.13a-14(a)).

Exhibits 32.1 and 32.2 are furnished herewith and should not be deemed to be “filed” under the Securities Exchange Act of 1934.

32.1		Certification of Chief Executive Officer Pursuant to 18 U.S.C. Section 1350, as Adopted Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.

32.2		Certification of Chief Financial Officer Pursuant to 18 U.S.C. Section 1350, as Adopted Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.

101		The following financial statements and notes from the Abbott Laboratories Quarterly Report on Form 10-Q for the quarter ended March 31, ~~2019,~~2020, formatted in Inline XBRL: (i) Condensed Consolidated Statement of Earnings; (ii) Condensed Consolidated Statement of Comprehensive Income; (iii) Condensed Consolidated Balance Sheet; (iv) Condensed Consolidated Statement of ~~Shareholders’~~Shareholders' Investment; (v) Condensed Consolidated Statement of Cash Flows; and (vi) Notes to the Condensed Consolidated Financial Statements.

104		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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SIGNATURE

Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized.


ABBOTT LABORATORIES


By:	/s/ ~~Brian B. Yoor~~Robert E. Funck, Jr.
	~~Brian B. Yoor~~Robert E. Funck, Jr.
	Executive Vice President, Finance and Chief Financial Officer

	Date: ~~May 1, 2019~~April 29, 2020

	March 31, 2019			December 31, 2018
Assets
Current Assets:
Cash and cash equivalents	$	3,022		$	3,844
Short-term investments	239			242
Trade receivables, less allowances of $331 in 2019 and $314 in 2018	5,345			5,182
Inventories:
Finished products	2,641			2,407
Work in process	536			499
Materials	908			890
Total inventories	4,085			3,796
Prepaid expenses and other receivables	1,718			1,568
Total Current Assets	14,409			14,632
Investments	867			897
Property and equipment, at cost	15,905			15,706
Less: accumulated depreciation and amortization	8,279			8,143
Net property and equipment	7,626			7,563
Intangible assets, net of amortization	18,472			18,942
Goodwill	23,209			23,254
Deferred income taxes and other assets	3,027			1,885
	$	67,610		$	67,173
Liabilities and Shareholders’ Investment
Current Liabilities:
Short-term borrowings	$	201		$	200
Trade accounts payable	3,045			2,975
Salaries, wages and commissions	886			1,182
Other accrued liabilities	4,130			3,780
Dividends payable	566			563
Income taxes payable	277			305
Current portion of long-term debt	8			7
Total Current Liabilities	9,113			9,012
Long-term debt	18,845			19,359
Post-employment obligations, deferred income taxes and other long-term liabilities	8,523			8,080
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: 2019: 1,973,472,506; 2018: 1,971,189,465	23,461			23,512
Common shares held in treasury, at cost — Shares: 2019: 209,291,244; 2018: 215,570,043	(9,679		)	(9,962		)
Earnings employed in the business	24,613			24,560
Accumulated other comprehensive income (loss)	(7,470		)	(7,586		)
Total Abbott Shareholders’ Investment	30,925			30,524
Noncontrolling Interests in Subsidiaries	204			198
Total Shareholders’ Investment	31,129			30,722
	$	67,610		$	67,173

(in millions)
Accrued balance at December 31, 2018	$	41
Restructuring charges recorded in 2019	35
Payments and other adjustments	(15		)
Accrued balance at March 31, 2019	$	61

	Three Months Ended
(in millions)	March 31, 2019
Operating lease cost (a)	$	74

Cash paid for amounts included in the measurement of operating lease liabilities	$	63

ROU assets arising from obtaining new operating lease obligations	$	34

Weighted average remaining lease term — operating leases	8 years

Weighted average discount rate — operating leases	4.2		%

(in millions)
2019	$	174
2020	191
2021	142
2022	111
2023	83
Thereafter	318
Total future minimum lease payments — undiscounted	1,019
Less: imputed interest	(168		)
Present value of lease liabilities	$	851

			Basis of Fair Value Measurement
(in millions)	Outstanding Balances		Quoted Prices in Active Markets		Significant Other Observable Inputs		Significant Unobservable Inputs
March 31, 2019:
Equity securities	$	340	$	340	$	—	$	—
Foreign currency forward exchange contracts	153		—		153		—
Total Assets	$	493	$	340	$	153	$	—

Fair value of hedged long-term debt	$	2,797	$	—	$	2,797	$	—
Interest rate swap derivative financial instruments	57		—		57		—
Foreign currency forward exchange contracts	89		—		89		—
Contingent consideration related to business combinations	70		—		—		70
Total Liabilities	$	3,013	$	—	$	2,943	$	70

December 31, 2018:
Equity securities	$	320	$	320	$	—	$	—
Foreign currency forward exchange contracts	114		—		114		—
Total Assets	$	434	$	320	$	114	$	—

Fair value of hedged long-term debt	$	2,743	$	—	$	2,743	$	—
Interest rate swap derivative financial instruments	100		—		100		—
Foreign currency forward exchange contracts	95		—		95		—
Contingent consideration related to business combinations	71		—		—		71
Total Liabilities	$	3,009	$	—	$	2,938	$	71

	Three Months Ended March 31
	Net Sales to External Customers				Operating Earnings
(in millions)	2019		2018		2019			2018
Established Pharmaceutical Products	$	992	$	1,044	$	159		$	167
Nutritional Products	1,792		1,756		380			365
Diagnostic Products	1,841		1,837		434			443
Cardiovascular and Neuromodulation Products	2,329		2,323		694			724
Total Reportable Segments	6,954		6,960		1,667			1,699
Other	581		430
Net sales	$	7,535	$	7,390
Corporate functions and benefit plans costs					(102		)	(152		)
Non-reportable segments					154			92
Net interest expense					(148		)	(199		)
Share-based compensation (a)					(226		)	(212		)
Amortization of intangible assets					(486		)	(584		)
Other, net (b)					(227		)	(213		)
Earnings from continuing operations before taxes					$	632		$	431

(a) Vascular Product Lines:
Coronary and Endovascular		675		691		(2.3	)	(3.9	)	1.6

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
January 1, 2019 — January 31, 2019	89,083	(1)	$	71.457	—	$	795,235,049	(2)
February 1, 2019 — February 28, 2019	789	(1)	$	73.110	—	$	795,235,049	(2)
March 1, 2019 — March 31, 2019	7,454	(1)	$	78.730	—	$	795,235,049	(2)
Total	97,326	(1)	$	72.027	—	$	795,235,049	(2)