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| QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 |
2022
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| TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 |
An Illinois Corporation | I.R.S. Employer Identification No. | |||||
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Title of Each Class | Trading Symbol(s) | Name of Each Exchange on Which Registered | ||||||||
Common Shares, Without Par Value |
| ABT |
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| ||||||
Large Accelerated Filer | Accelerated Filer | |||||
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Non-Accelerated Filer |
| Smaller reporting company | ||||
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| Emerging growth company |
| | | | | | | | | | | | |
| | Three Months Ended | | Nine Months Ended | ||||||||
| | September 30 | | September 30 | ||||||||
|
| 2021 |
| 2020 |
| 2021 |
| 2020 | ||||
Net sales | | $ | 10,928 | | $ | 8,853 | | $ | 31,607 | | $ | 23,907 |
| | | | | | | | | | | | |
Cost of products sold, excluding amortization of intangible assets | |
| 4,423 | |
| 3,966 | |
| 13,771 | |
| 10,510 |
Amortization of intangible assets | |
| 520 | |
| 510 | |
| 1,533 | |
| 1,624 |
Research and development | |
| 672 | |
| 580 | |
| 1,980 | |
| 1,722 |
Selling, general and administrative | |
| 2,767 | |
| 2,302 | |
| 8,276 | |
| 7,126 |
Total operating cost and expenses | |
| 8,382 | |
| 7,358 | |
| 25,560 | |
| 20,982 |
| | | | | | | | | | | | |
Operating earnings | |
| 2,546 | |
| 1,495 | |
| 6,047 | |
| 2,925 |
| | | | | | | | | | | | |
Interest expense | |
| 133 | |
| 137 | |
| 402 | |
| 410 |
Interest (income) | |
| (10) | |
| (10) | |
| (32) | |
| (37) |
Net foreign exchange (gain) loss | |
| 4 | |
| (7) | |
| 7 | |
| (3) |
Other (income) expense, net | |
| (74) | |
| (46) | |
| (214) | |
| (25) |
Earnings from continuing operations before taxes | |
| 2,493 | |
| 1,421 | |
| 5,884 | |
| 2,580 |
Tax expense (benefit) on earnings from continuing operations | |
| 393 | |
| 189 | |
| 802 | |
| 267 |
Earnings from continuing operations | |
| 2,100 | |
| 1,232 | |
| 5,082 | |
| 2,313 |
| | | | | | | | | | | | |
Earnings from discontinued operations, net of tax | | | — | | | — | | | — | | | 20 |
| | | | | | | | | | | | |
Net Earnings | | $ | 2,100 | | $ | 1,232 | | $ | 5,082 | | $ | 2,333 |
| | | | | | | | | | | | |
Basic Earnings Per Common Share — | | | | | | | | | | | | |
Continuing operations | | $ | 1.18 | | $ | 0.69 | | $ | 2.85 | | $ | 1.30 |
Discontinued operations | |
| — | |
| — | |
| — | |
| 0.01 |
Net earnings | | $ | 1.18 | | $ | 0.69 | | $ | 2.85 | | $ | 1.31 |
| | | | | | | | | | | | |
Diluted Earnings Per Common Share — | | | | | | | | | | | | |
Continuing operations | | $ | 1.17 | | $ | 0.69 | | $ | 2.83 | | $ | 1.29 |
Discontinued operations | |
| — | |
| — | |
| — | |
| 0.01 |
Net earnings | | $ | 1.17 | | $ | 0.69 | | $ | 2.83 | | $ | 1.30 |
| | | | | | | | | | | | |
Average Number of Common Shares Outstanding Used for Basic Earnings Per Common Share | |
| 1,774,516 | |
| 1,774,475 | |
| 1,776,870 | |
| 1,772,166 |
Dilutive Common Stock Options | |
| 14,483 | |
| 13,378 | |
| 14,407 | |
| 12,381 |
Average Number of Common Shares Outstanding Plus Dilutive Common Stock Options | |
| 1,788,999 | |
| 1,787,853 | |
| 1,791,277 | |
| 1,784,547 |
| | | | | | | | | | | | |
Outstanding Common Stock Options Having No Dilutive Effect | | | 2,740 | |
| — | | | 2,694 | |
| — |
Three Months Ended | Nine Months Ended | ||||||||||||||||||||||
September 30 | September 30 | ||||||||||||||||||||||
2022 | 2021 | 2022 | 2021 | ||||||||||||||||||||
Net sales | $ | 10,410 | $ | 10,928 | $ | 33,562 | $ | 31,607 | |||||||||||||||
Cost of products sold, excluding amortization of intangible assets | 4,629 | 4,423 | 14,549 | 13,771 | |||||||||||||||||||
Amortization of intangible assets | 498 | 520 | 1,517 | 1,533 | |||||||||||||||||||
Research and development | 782 | 672 | 2,163 | 1,980 | |||||||||||||||||||
Selling, general and administrative | 2,731 | 2,767 | 8,275 | 8,276 | |||||||||||||||||||
Total operating cost and expenses | 8,640 | 8,382 | 26,504 | 25,560 | |||||||||||||||||||
Operating earnings | 1,770 | 2,546 | 7,058 | 6,047 | |||||||||||||||||||
Interest expense | 141 | 133 | 404 | 402 | |||||||||||||||||||
Interest (income) | (55) | (10) | (95) | (32) | |||||||||||||||||||
Net foreign exchange (gain) loss | 19 | 4 | 16 | 7 | |||||||||||||||||||
Other (income) expense, net | (93) | (74) | (253) | (214) | |||||||||||||||||||
Earnings before taxes | 1,758 | 2,493 | 6,986 | 5,884 | |||||||||||||||||||
Taxes on earnings | 323 | 393 | 1,086 | 802 | |||||||||||||||||||
Net Earnings | $ | 1,435 | $ | 2,100 | $ | 5,900 | $ | 5,082 | |||||||||||||||
Basic Earnings Per Common Share | $ | 0.82 | $ | 1.18 | $ | 3.35 | $ | 2.85 | |||||||||||||||
Diluted Earnings Per Common Share | $ | 0.81 | $ | 1.17 | $ | 3.32 | $ | 2.83 | |||||||||||||||
Average Number of Common Shares Outstanding Used for Basic Earnings Per Common Share | 1,752,968 | 1,774,516 | 1,756,209 | 1,776,870 | |||||||||||||||||||
Dilutive Common Stock Options | 10,685 | 14,483 | 11,638 | 14,407 | |||||||||||||||||||
Average Number of Common Shares Outstanding Plus Dilutive Common Stock Options | 1,763,653 | 1,788,999 | 1,767,847 | 1,791,277 | |||||||||||||||||||
Outstanding Common Stock Options Having No Dilutive Effect | 5,445 | 2,740 | 2,655 | 2,694 |
| | | | | | | | | | | | |
| | Three Months Ended | | Nine Months Ended | ||||||||
| | September 30 | | September 30 | ||||||||
|
| 2021 |
| 2020 |
| 2021 |
| 2020 | ||||
Net Earnings | | $ | 2,100 | | $ | 1,232 | | $ | 5,082 | | $ | 2,333 |
Foreign currency translation gain (loss) adjustments | |
| (391) | |
| 112 | |
| (762) | |
| (677) |
Net actuarial gains (losses) and amortization of net actuarial losses and prior service costs and credits, net of taxes of $18 and $54 in 2021 and $14 and $42 in 2020 | |
| 78 | |
| 28 | |
| 211 | |
| 122 |
Net gains (losses) for derivative instruments designated as cash flow hedges and other, net of taxes of $50 and $98 in 2021 and $(43) and $(24) in 2020 | |
| 139 | |
| (104) | |
| 257 | |
| (24) |
Other comprehensive income (loss) | | | (174) | | | 36 | | | (294) | | | (579) |
Comprehensive Income | | $ | 1,926 | | $ | 1,268 | | $ | 4,788 | | $ | 1,754 |
| | | | | | | | | | | | |
| | | | | | | | | | | | |
| | | | | | | | September 30, | | December 31, | ||
| | | | | | | | 2021 | | 2020 | ||
Supplemental Accumulated Other Comprehensive Income (Loss) Information, net of tax: | | | | | | | | | | | | |
Cumulative foreign currency translation (loss) adjustments | | | | | | | | $ | (5,621) | | $ | (4,859) |
Net actuarial (losses) and prior service (costs) and credits | | | | |
| | |
| (3,660) | |
| (3,871) |
Cumulative gains (losses) on derivative instruments designated as cash flow hedges and other | | | | |
| | |
| 41 | |
| (216) |
Accumulated other comprehensive income (loss) | | | | | | | | $ | (9,240) | | $ | (8,946) |
Three Months Ended | Nine Months Ended | ||||||||||||||||||||||
September 30 | September 30 | ||||||||||||||||||||||
2022 | 2021 | 2022 | 2021 | ||||||||||||||||||||
Net Earnings | $ | 1,435 | $ | 2,100 | $ | 5,900 | $ | 5,082 | |||||||||||||||
Foreign currency translation gain (loss) adjustments | (1,008) | (391) | (1,429) | (762) | |||||||||||||||||||
Net actuarial gains (losses) and amortization of net actuarial losses and prior service costs and credits, net of taxes of $11 and $36 in 2022 and $18 and $54 in 2021 | 56 | 78 | 172 | 211 | |||||||||||||||||||
Net gains (losses) for derivative instruments designated as cash flow hedges and other, net of taxes of $50 and $96 in 2022 and $50 and $98 in 2021 | 213 | 139 | 186 | 257 | |||||||||||||||||||
Other comprehensive income (loss) | (739) | (174) | (1,071) | (294) | |||||||||||||||||||
Comprehensive Income | $ | 696 | $ | 1,926 | $ | 4,829 | $ | 4,788 |
September 30, 2022 | December 31, 2021 | ||||||||||
Supplemental Accumulated Other Comprehensive Income (Loss) Information, net of tax: | |||||||||||
Cumulative foreign currency translation (loss) adjustments | $ | (7,268) | $ | (5,839) | |||||||
Net actuarial (losses) and prior service (costs) and credits | (2,498) | (2,670) | |||||||||
Cumulative gains (losses) on derivative instruments designated as cash flow hedges and other | 321 | 135 | |||||||||
Accumulated other comprehensive income (loss) | $ | (9,445) | $ | (8,374) |
| | | | | | |
| | September 30, | | December 31, | ||
|
| 2021 |
| 2020 | ||
Assets | | | | | | |
Current Assets: | | | | | | |
Cash and cash equivalents | | $ | 9,302 | | $ | 6,838 |
Short-term investments | |
| 390 | |
| 310 |
Trade receivables, less allowances of $507 in 2021 and $460 in 2020 | |
| 6,405 | |
| 6,414 |
Inventories: | | | | | | |
Finished products | |
| 3,048 | |
| 3,030 |
Work in process | |
| 710 | |
| 712 |
Materials | |
| 1,503 | |
| 1,270 |
Total inventories | |
| 5,261 | |
| 5,012 |
Prepaid expenses and other receivables | |
| 2,134 | |
| 1,867 |
Total Current Assets | |
| 23,492 | |
| 20,441 |
Investments | |
| 812 | |
| 821 |
Property and equipment, at cost | | | 19,182 | | | 18,793 |
Less: accumulated depreciation and amortization | |
| 10,351 | |
| 9,764 |
Net property and equipment | |
| 8,831 | |
| 9,029 |
Intangible assets, net of amortization | |
| 13,312 | |
| 14,784 |
Goodwill | |
| 23,299 | |
| 23,744 |
Deferred income taxes and other assets | |
| 4,049 | |
| 3,729 |
| | $ | 73,795 | | $ | 72,548 |
| | | | | | |
Liabilities and Shareholders’ Investment | | | | | | |
Current Liabilities: |
| | |
| | |
Short-term borrowings | | $ | 197 | | $ | 213 |
Trade accounts payable | |
| 4,017 | |
| 3,946 |
Salaries, wages and commissions | |
| 1,470 | |
| 1,416 |
Other accrued liabilities | |
| 5,264 | |
| 5,165 |
Dividends payable | |
| 797 | |
| 798 |
Income taxes payable | |
| 368 | |
| 362 |
Current portion of long-term debt | |
| 754 | |
| 7 |
Total Current Liabilities | |
| 12,867 | |
| 11,907 |
Long-term debt | |
| 17,446 | |
| 18,527 |
Post-employment obligations, deferred income taxes and other long-term liabilities | |
| 8,844 | |
| 9,111 |
Commitments and Contingencies | | | | | | |
Shareholders’ Investment: | | | | | | |
Preferred shares, 1 dollar par value Authorized — 1,000,000 shares, NaN issued | |
| — | |
| — |
Common shares, without par value Authorized — 2,400,000,000 shares | |
| 24,285 | |
| 24,145 |
Common shares held in treasury, at cost — Shares: 2021: 214,816,885; 2020: 209,926,622 | |
| (10,999) | |
| (10,042) |
Earnings employed in the business | |
| 30,376 | |
| 27,627 |
Accumulated other comprehensive income (loss) | |
| (9,240) | |
| (8,946) |
Total Abbott Shareholders’ Investment | |
| 34,422 | |
| 32,784 |
Noncontrolling Interests in Subsidiaries | |
| 216 | |
| 219 |
Total Shareholders’ Investment | |
| 34,638 | |
| 33,003 |
| | $ | 73,795 | | $ | 72,548 |
September 30, 2022 | December 31, 2021 | ||||||||||
Assets | |||||||||||
Current Assets: | |||||||||||
Cash and cash equivalents | $ | 9,594 | $ | 9,799 | |||||||
Short-term investments | 313 | 450 | |||||||||
Trade receivables, less allowances of $520 in 2022 and $519 in 2021 | 6,408 | 6,487 | |||||||||
Inventories: | |||||||||||
Finished products | 3,407 | 3,081 | |||||||||
Work in process | 726 | 694 | |||||||||
Materials | 1,601 | 1,382 | |||||||||
Total inventories | 5,734 | 5,157 | |||||||||
Prepaid expenses and other receivables | 2,796 | 2,346 | |||||||||
Total Current Assets | 24,845 | 24,239 | |||||||||
Investments | 764 | 816 | |||||||||
Property and equipment, at cost | 19,306 | 19,364 | |||||||||
Less: accumulated depreciation and amortization | 10,617 | 10,405 | |||||||||
Net property and equipment | 8,689 | 8,959 | |||||||||
Intangible assets, net of amortization | 10,850 | 12,739 | |||||||||
Goodwill | 22,284 | 23,231 | |||||||||
Deferred income taxes and other assets | 5,369 | 5,212 | |||||||||
$ | 72,801 | $ | 75,196 | ||||||||
Liabilities and Shareholders’ Investment | |||||||||||
Current Liabilities: | |||||||||||
Trade accounts payable | $ | 4,133 | $ | 4,408 | |||||||
Salaries, wages and commissions | 1,426 | 1,625 | |||||||||
Other accrued liabilities | 5,475 | 5,181 | |||||||||
Dividends payable | 820 | 831 | |||||||||
Income taxes payable | 394 | 306 | |||||||||
Current portion of long-term debt | 1,117 | 754 | |||||||||
Total Current Liabilities | 13,365 | 13,105 | |||||||||
Long-term debt | 15,297 | 17,296 | |||||||||
Post-employment obligations, deferred income taxes and other long-term liabilities | 8,255 | 8,771 | |||||||||
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: 2022: 1,985,919,440; 2021: 1,985,273,421 | 24,560 | 24,470 | |||||||||
Common shares held in treasury, at cost — Shares: 2022: 242,345,663; 2021: 221,191,228 | (14,555) | (11,822) | |||||||||
Earnings employed in the business | 35,115 | 31,528 | |||||||||
Accumulated other comprehensive income (loss) | (9,445) | (8,374) | |||||||||
Total Abbott Shareholders’ Investment | 35,675 | 35,802 | |||||||||
Noncontrolling Interests in Subsidiaries | 209 | 222 | |||||||||
Total Shareholders’ Investment | 35,884 | 36,024 | |||||||||
$ | 72,801 | $ | 75,196 |
| | | | | | |
| | Three Months Ended September 30 | ||||
|
| 2021 |
| 2020 | ||
Common Shares: | | | | | | |
Balance at June 30 | | | | | | |
Shares: 2021: 1,982,553,488; 2020: 1,979,594,379 | | $ | 24,153 | | $ | 23,893 |
Issued under incentive stock programs | | |
| | |
|
Shares: 2021: 550,366; 2020: 1,172,844 | |
| 26 | |
| 48 |
Share-based compensation | |
| 113 | |
| 101 |
Issuance of restricted stock awards | |
| (7) | |
| (5) |
Balance at September 30 | | |
| | |
|
Shares: 2021: 1,983,103,854; 2020: 1,980,767,223 | | $ | 24,285 | | $ | 24,037 |
| | | | | | |
Common Shares Held in Treasury: | | | | | | |
Balance at June 30 | | | | | | |
Shares: 2021: 209,736,139; 2020: 209,064,380 | | $ | (10,340) | | $ | (9,904) |
Issued under incentive stock programs | | |
| | |
|
Shares: 2021: 545,860; 2020: 664,727 | | | 26 | |
| 32 |
Purchased | |
| | | |
|
Shares: 2021: 5,626,606; 2020: 5,989 | |
| (685) | |
| (1) |
Balance at September 30 | | |
| | |
|
Shares: 2021: 214,816,885; 2020: 208,405,642 | | $ | (10,999) | | $ | (9,873) |
| | | | | | |
Earnings Employed in the Business: | | | | | | |
Balance at June 30 | | $ | 29,053 | | $ | 25,669 |
Net earnings | |
| 2,100 | |
| 1,232 |
Cash dividends declared on common shares (per share — 2021: $0.45; 2020: $0.36) | |
| (799) | |
| (641) |
Effect of common and treasury share transactions | |
| 22 | |
| 6 |
Balance at September 30 | | $ | 30,376 | | $ | 26,266 |
| | | | | | |
Accumulated Other Comprehensive Income (Loss): | | | | | | |
Balance at June 30 | | $ | (9,066) | | $ | (9,080) |
Other comprehensive income (loss) | |
| (174) | |
| 36 |
Balance at September 30 | | $ | (9,240) | | $ | (9,044) |
| | | | | | |
Noncontrolling Interests in Subsidiaries: | | | | | | |
Balance at June 30 | | $ | 229 | | $ | 220 |
Noncontrolling Interests’ share of income, business combinations, net of distributions and share repurchases | |
| (13) | |
| (11) |
Balance at September 30 | | $ | 216 | | $ | 209 |
Three Months Ended September 30 | |||||||||||
2022 | 2021 | ||||||||||
Common Shares: | |||||||||||
Balance at June 30 | |||||||||||
Shares: 2022: 1,985,676,735; 2021: 1,982,553,488 | $ | 24,429 | $ | 24,153 | |||||||
Issued under incentive stock programs | |||||||||||
Shares: 2022: 242,705; 2021: 550,366 | 12 | 26 | |||||||||
Share-based compensation | 123 | 113 | |||||||||
Issuance of restricted stock awards | (4) | (7) | |||||||||
Balance at September 30 | |||||||||||
Shares: 2022: 1,985,919,440; 2021: 1,983,103,854 | $ | 24,560 | $ | 24,285 | |||||||
Common Shares Held in Treasury: | |||||||||||
Balance at June 30 | |||||||||||
Shares: 2022: 234,456,992; 2021: 209,736,139 | $ | (13,720) | $ | (10,340) | |||||||
Issued under incentive stock programs | |||||||||||
Shares: 2022: 528,436; 2021: 545,860 | 31 | 26 | |||||||||
Purchased | |||||||||||
Shares: 2022: 8,417,107; 2021: 5,626,606 | (866) | (685) | |||||||||
Balance at September 30 | |||||||||||
Shares: 2022: 242,345,663; 2021: 214,816,885 | $ | (14,555) | $ | (10,999) | |||||||
Earnings Employed in the Business: | |||||||||||
Balance at June 30 | $ | 34,487 | $ | 29,053 | |||||||
Net earnings | 1,435 | 2,100 | |||||||||
Cash dividends declared on common shares (per share — 2022: $0.47; 2021: $0.45) | (822) | (799) | |||||||||
Effect of common and treasury share transactions | 15 | 22 | |||||||||
Balance at September 30 | $ | 35,115 | $ | 30,376 | |||||||
Accumulated Other Comprehensive Income (Loss): | |||||||||||
Balance at June 30 | $ | (8,706) | $ | (9,066) | |||||||
Other comprehensive income (loss) | (739) | (174) | |||||||||
Balance at September 30 | $ | (9,445) | $ | (9,240) | |||||||
Noncontrolling Interests in Subsidiaries: | |||||||||||
Balance at June 30 | $ | 226 | $ | 229 | |||||||
Noncontrolling Interests’ share of income, business combinations, net of distributions and share repurchases | (17) | (13) | |||||||||
Balance at September 30 | $ | 209 | $ | 216 |
6
Abbott Laboratories and Subsidiaries
| | | | | | |
| | Nine Months Ended September 30 | ||||
|
| 2021 |
| 2020 | ||
Common Shares: | | | | | | |
Balance at January 1 | | | | | | |
Shares: 2021: 1,981,156,896; 2020: 1,976,855,085 | | $ | 24,145 | | $ | 23,853 |
Issued under incentive stock programs | | | | | | |
Shares: 2021: 1,946,958; 2020: 3,912,138 | |
| 91 | |
| 167 |
Share-based compensation | | | 536 | | | 451 |
Issuance of restricted stock awards | | | (487) | | | (434) |
Balance at September 30 | | | | | | |
Shares: 2021: 1,983,103,854; 2020: 1,980,767,223 | | $ | 24,285 | | $ | 24,037 |
| | | | | | |
Common Shares Held in Treasury: | | | | | | |
Balance at January 1 | | | | | | |
Shares: 2021: 209,926,622; 2020: 214,351,838 | | $ | (10,042) | | $ | (10,147) |
Issued under incentive stock programs | | | | | | |
Shares: 2021: 5,524,291; 2020: 6,211,326 | |
| 265 | |
| 295 |
Purchased | | | | | | |
Shares: 2021: 10,414,554; 2020: 265,130 | | | (1,222) | | | (21) |
Balance at September 30 | | | | | | |
Shares: 2021: 214,816,885; 2020: 208,405,642 | | $ | (10,999) | | $ | (9,873) |
| | | | | | |
Earnings Employed in the Business: | | | | | | |
Balance at January 1 | | $ | 27,627 | | $ | 25,847 |
Impact of adoption of new accounting standard | | | — | | | (5) |
Net earnings | | | 5,082 | | | 2,333 |
Cash dividends declared on common shares (per share — 2021: $1.35; 2020: $1.08) | |
| (2,403) | |
| (1,922) |
Effect of common and treasury share transactions | |
| 70 | |
| 13 |
Balance at September 30 | | $ | 30,376 | | $ | 26,266 |
| | | | | | |
Accumulated Other Comprehensive Income (Loss): | | | | | | |
Balance at January 1 | | $ | (8,946) | | $ | (8,465) |
Other comprehensive income (loss) | |
| (294) | |
| (579) |
Balance at September 30 | | $ | (9,240) | | $ | (9,044) |
| | | | | | |
Noncontrolling Interests in Subsidiaries: | | | | | | |
Balance at January 1 | | $ | 219 | | $ | 213 |
Noncontrolling Interests’ share of income, business combinations, net of distributions and share repurchases | |
| (3) | |
| (4) |
Balance at September 30 | | $ | 216 | | $ | 209 |
Nine Months Ended September 30 | |||||||||||
2022 | 2021 | ||||||||||
Common Shares: | |||||||||||
Balance at January 1 | |||||||||||
Shares: 2022: 1,985,273,421; 2021: 1,981,156,896 | $ | 24,470 | $ | 24,145 | |||||||
Issued under incentive stock programs | |||||||||||
Shares: 2022: 646,019; 2021: 1,946,958 | 36 | 91 | |||||||||
Share-based compensation | 572 | 536 | |||||||||
Issuance of restricted stock awards | (518) | (487) | |||||||||
Balance at September 30 | |||||||||||
Shares: 2022: 1,985,919,440; 2021: 1,983,103,854 | $ | 24,560 | $ | 24,285 | |||||||
Common Shares Held in Treasury: | |||||||||||
Balance at January 1 | |||||||||||
Shares: 2022: 221,191,228; 2021: 209,926,622 | $ | (11,822) | $ | (10,042) | |||||||
Issued under incentive stock programs | |||||||||||
Shares: 2022: 4,808,575; 2021: 5,524,291 | 261 | 265 | |||||||||
Purchased | |||||||||||
Shares: 2022: 25,963,010; 2021: 10,414,554 | (2,994) | (1,222) | |||||||||
Balance at September 30 | |||||||||||
Shares: 2022: 242,345,663; 2021: 214,816,885 | $ | (14,555) | $ | (10,999) | |||||||
Earnings Employed in the Business: | |||||||||||
Balance at January 1 | $ | 31,528 | $ | 27,627 | |||||||
Net earnings | 5,900 | 5,082 | |||||||||
Cash dividends declared on common shares (per share — 2022: $1.41; 2021: $1.35) | (2,475) | (2,403) | |||||||||
Effect of common and treasury share transactions | 162 | 70 | |||||||||
Balance at September 30 | $ | 35,115 | $ | 30,376 | |||||||
Accumulated Other Comprehensive Income (Loss): | |||||||||||
Balance at January 1 | $ | (8,374) | $ | (8,946) | |||||||
Other comprehensive income (loss) | (1,071) | (294) | |||||||||
Balance at September 30 | $ | (9,445) | $ | (9,240) | |||||||
Noncontrolling Interests in Subsidiaries: | |||||||||||
Balance at January 1 | $ | 222 | $ | 219 | |||||||
Noncontrolling Interests’ share of income, business combinations, net of distributions and share repurchases | (13) | (3) | |||||||||
Balance at September 30 | $ | 209 | $ | 216 |
| | | | | | |
| | Nine Months Ended September 30 | ||||
|
| 2021 |
| 2020 | ||
Cash Flow From (Used in) Operating Activities: | | | | | | |
Net earnings | | $ | 5,082 | | $ | 2,333 |
Adjustments to reconcile net earnings to net cash from operating activities — | | | | | | |
Depreciation | |
| 1,122 | |
| 837 |
Amortization of intangible assets | |
| 1,533 | |
| 1,624 |
Share-based compensation | |
| 534 | |
| 448 |
Trade receivables | |
| (194) | |
| (343) |
Inventories | |
| (471) | |
| (838) |
Other, net | | | (140) | | | 42 |
Net Cash From Operating Activities | | | 7,466 | | | 4,103 |
| | | | | | |
Cash Flow From (Used in) Investing Activities: | | | | | | |
Acquisitions of property and equipment | |
| (1,271) | |
| (1,498) |
Acquisitions of businesses and technologies, net of cash acquired | |
| (187) | |
| (32) |
Proceeds from business dispositions | | | 134 | | | 48 |
Sales (purchases) of other investment securities, net | | | (27) | | | (15) |
Other | |
| 14 | |
| 13 |
Net Cash (Used in) Investing Activities | |
| (1,337) | |
| (1,484) |
| | | | | | |
Cash Flow From (Used in) Financing Activities: | | | | | | |
Net borrowings (repayments) of short-term debt and other | | | (7) | | | 3 |
Proceeds from issuance of long-term debt | | | — | | | 1,280 |
Repayments of long-term debt | |
| (45) | |
| (1,332) |
Purchases of common shares | |
| (1,325) | |
| (242) |
Proceeds from stock options exercised | |
| 173 | |
| 229 |
Dividends paid | |
| (2,404) | |
| (1,919) |
Other | | | — | | | (11) |
Net Cash (Used in) Financing Activities | |
| (3,608) | |
| (1,992) |
| | | | | | |
Effect of exchange rate changes on cash and cash equivalents | |
| (57) | |
| (7) |
| | | | | | |
Net Increase in Cash and Cash Equivalents | |
| 2,464 | |
| 620 |
Cash and Cash Equivalents, Beginning of Year | |
| 6,838 | |
| 3,860 |
Cash and Cash Equivalents, End of Period | | $ | 9,302 | | $ | 4,480 |
Nine Months Ended September 30 | |||||||||||
2022 | 2021 | ||||||||||
Cash Flow From (Used in) Operating Activities: | |||||||||||
Net earnings | $ | 5,900 | $ | 5,082 | |||||||
Adjustments to reconcile net earnings to net cash from operating activities — | |||||||||||
Depreciation | 943 | 1,122 | |||||||||
Amortization of intangible assets | 1,517 | 1,533 | |||||||||
Share-based compensation | 570 | 534 | |||||||||
Trade receivables | (409) | (194) | |||||||||
Inventories | (1,224) | (471) | |||||||||
Other, net | (42) | (140) | |||||||||
Net Cash From Operating Activities | 7,255 | 7,466 | |||||||||
Cash Flow From (Used in) Investing Activities: | |||||||||||
Acquisitions of property and equipment | (1,167) | (1,271) | |||||||||
Acquisitions of businesses and technologies, net of cash acquired | — | (187) | |||||||||
Proceeds from business dispositions | 48 | 134 | |||||||||
Sales (purchases) of other investment securities, net | (3) | (27) | |||||||||
Other | 14 | 14 | |||||||||
Net Cash From (Used in) Investing Activities | (1,108) | (1,337) | |||||||||
Cash Flow From (Used in) Financing Activities: | |||||||||||
Net borrowings (repayments) of short-term debt and other | 37 | (7) | |||||||||
Proceeds from issuance of long-term debt | 7 | — | |||||||||
Repayments of long-term debt | (753) | (45) | |||||||||
Purchases of common shares | (3,110) | (1,325) | |||||||||
Proceeds from stock options exercised | 126 | 173 | |||||||||
Dividends paid | (2,486) | (2,404) | |||||||||
Net Cash From (Used in) Financing Activities | (6,179) | (3,608) | |||||||||
Effect of exchange rate changes on cash and cash equivalents | (173) | (57) | |||||||||
Net Increase (Decrease) in Cash and Cash Equivalents | (205) | 2,464 | |||||||||
Cash and Cash Equivalents, Beginning of Year | 9,799 | 6,838 | |||||||||
Cash and Cash Equivalents, End of Period | $ | 9,594 | $ | 9,302 |
(Unaudited)
Revenue
Recently Adopted Accounting Standards
In December 2019, the Financial Accounting Standards Board (FASB) issued Accounting Standards Update 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. Abbott adopted the standard on January 1, 2021. The new standard did not have an impact on its condensed consolidated financial statements.
Note 3 — Revenue
9
Abbott Laboratories and Subsidiaries
Notes to the Condensed Consolidated Financial Statements
September 30, 2021
(Unaudited)
Note 3 — Revenue (Continued)
The following tables provide detail by sales category:
| | | | | | | | | | | | | | | | | | |
| | Three Months Ended September 30, 2021 | | Three Months Ended September 30, 2020 | ||||||||||||||
(in millions) |
| U.S. |
| Int’l |
| Total |
| U.S. |
| Int’l |
| Total | ||||||
Established Pharmaceutical Products — | | |
|
| |
|
| |
|
| |
|
| |
|
| |
|
Key Emerging Markets | | $ | — | | $ | 936 | | $ | 936 | | $ | — | | $ | 799 | | $ | 799 |
Other | |
| — | |
| 329 | |
| 329 | |
| — | |
| 300 | | | 300 |
Total | |
| — | |
| 1,265 | |
| 1,265 | |
| — | |
| 1,099 |
| | 1,099 |
Nutritionals — | |
| | |
| | |
| | |
| | |
| | |
| |
Pediatric Nutritionals | |
| 586 | |
| 514 | |
| 1,100 | |
| 488 | |
| 518 | |
| 1,006 |
Adult Nutritionals | |
| 333 | |
| 675 | |
| 1,008 | |
| 330 | |
| 588 | |
| 918 |
Total | |
| 919 | |
| 1,189 | |
| 2,108 | |
| 818 | |
| 1,106 | |
| 1,924 |
Diagnostics — | |
| | |
| | |
| | |
| | |
| | |
| |
Core Laboratory | |
| 291 | |
| 1,001 | |
| 1,292 | |
| 284 | |
| 892 | |
| 1,176 |
Molecular | |
| 162 | |
| 183 | |
| 345 | |
| 220 | |
| 238 | |
| 458 |
Point of Care | |
| 100 | |
| 35 | |
| 135 | |
| 96 | |
| 35 | |
| 131 |
Rapid Diagnostics | |
| 1,394 | |
| 746 | |
| 2,140 | |
| 533 | |
| 342 | |
| 875 |
Total | |
| 1,947 | |
| 1,965 | |
| 3,912 | |
| 1,133 | |
| 1,507 | |
| 2,640 |
Medical Devices — | |
| | |
| | |
| | |
| | |
| | |
| |
Rhythm Management | |
| 266 | |
| 305 | |
| 571 | |
| 242 | |
| 265 | |
| 507 |
Electrophysiology | |
| 192 | |
| 293 | |
| 485 | |
| 192 | |
| 249 | |
| 441 |
Heart Failure | |
| 170 | |
| 59 | |
| 229 | |
| 144 | |
| 46 | |
| 190 |
Vascular | |
| 219 | |
| 425 | |
| 644 | |
| 230 | |
| 400 | |
| 630 |
Structural Heart | |
| 177 | |
| 215 | |
| 392 | |
| 159 | |
| 194 | |
| 353 |
Neuromodulation | |
| 149 | |
| 41 | |
| 190 | |
| 170 | |
| 36 | |
| 206 |
Diabetes Care | | | 323 | | | 798 | | | 1,121 | | | 226 | | | 617 | | | 843 |
Total | |
| 1,496 | |
| 2,136 | |
| 3,632 | |
| 1,363 | |
| 1,807 | |
| 3,170 |
| | | | | | | | | | | | | | | | | | |
Other | |
| 6 | |
| 5 | |
| 11 | |
| 15 | |
| 5 | |
| 20 |
| | | | | | | | | | | | | | | | | | |
Total | | $ | 4,368 | | $ | 6,560 | | $ | 10,928 | | $ | 3,329 | | $ | 5,524 | | $ | 8,853 |
10
Three Months Ended September 30, 2022 | Three Months Ended September 30, 2021 | |||||||||||||||||||||||||||||||||||||
(in millions) | U.S. | Int’l | Total | U.S. | Int’l | Total | ||||||||||||||||||||||||||||||||
Established Pharmaceutical Products — | ||||||||||||||||||||||||||||||||||||||
Key Emerging Markets | $ | — | $ | 993 | $ | 993 | $ | — | $ | 936 | $ | 936 | ||||||||||||||||||||||||||
Other | — | 333 | 333 | — | 329 | 329 | ||||||||||||||||||||||||||||||||
Total | — | 1,326 | 1,326 | — | 1,265 | 1,265 | ||||||||||||||||||||||||||||||||
Nutritionals — | ||||||||||||||||||||||||||||||||||||||
Pediatric Nutritionals | 357 | 470 | 827 | 586 | 514 | 1,100 | ||||||||||||||||||||||||||||||||
Adult Nutritionals | 329 | 639 | 968 | 333 | 675 | 1,008 | ||||||||||||||||||||||||||||||||
Total | 686 | 1,109 | 1,795 | 919 | 1,189 | 2,108 | ||||||||||||||||||||||||||||||||
Diagnostics — | ||||||||||||||||||||||||||||||||||||||
Core Laboratory | 281 | 938 | 1,219 | 291 | 1,001 | 1,292 | ||||||||||||||||||||||||||||||||
Molecular | 65 | 118 | 183 | 162 | 183 | 345 | ||||||||||||||||||||||||||||||||
Point of Care | 92 | 35 | 127 | 100 | 35 | 135 | ||||||||||||||||||||||||||||||||
Rapid Diagnostics | 1,303 | 839 | 2,142 | 1,394 | 746 | 2,140 | ||||||||||||||||||||||||||||||||
Total | 1,741 | 1,930 | 3,671 | 1,947 | 1,965 | 3,912 | ||||||||||||||||||||||||||||||||
Medical Devices — | ||||||||||||||||||||||||||||||||||||||
Rhythm Management | 263 | 270 | 533 | 266 | 305 | 571 | ||||||||||||||||||||||||||||||||
Electrophysiology | 225 | 244 | 469 | 192 | 293 | 485 | ||||||||||||||||||||||||||||||||
Heart Failure | 177 | 51 | 228 | 170 | 59 | 229 | ||||||||||||||||||||||||||||||||
Vascular | 213 | 393 | 606 | 219 | 425 | 644 | ||||||||||||||||||||||||||||||||
Structural Heart | 207 | 213 | 420 | 177 | 215 | 392 | ||||||||||||||||||||||||||||||||
Neuromodulation | 156 | 36 | 192 | 149 | 41 | 190 | ||||||||||||||||||||||||||||||||
Diabetes Care | 423 | 744 | 1,167 | 323 | 798 | 1,121 | ||||||||||||||||||||||||||||||||
Total | 1,664 | 1,951 | 3,615 | 1,496 | 2,136 | 3,632 | ||||||||||||||||||||||||||||||||
Other | 3 | — | 3 | 6 | 5 | 11 | ||||||||||||||||||||||||||||||||
Total | $ | 4,094 | $ | 6,316 | $ | 10,410 | $ | 4,368 | $ | 6,560 | $ | 10,928 |
(Unaudited)
Nine Months Ended September 30, 2022 | Nine Months Ended September 30, 2021 | |||||||||||||||||||||||||||||||||||||
(in millions) | U.S. | Int’l | Total | U.S. | Int’l | Total | ||||||||||||||||||||||||||||||||
Established Pharmaceutical Products — | ||||||||||||||||||||||||||||||||||||||
Key Emerging Markets | $ | — | $ | 2,826 | $ | 2,826 | $ | — | $ | 2,672 | $ | 2,672 | ||||||||||||||||||||||||||
Other | — | 870 | 870 | — | 843 | 843 | ||||||||||||||||||||||||||||||||
Total | — | 3,696 | 3,696 | — | 3,515 | 3,515 | ||||||||||||||||||||||||||||||||
Nutritionals — | ||||||||||||||||||||||||||||||||||||||
Pediatric Nutritionals | 1,108 | 1,491 | 2,599 | 1,622 | 1,637 | 3,259 | ||||||||||||||||||||||||||||||||
Adult Nutritionals | 1,016 | 2,027 | 3,043 | 1,006 | 1,987 | 2,993 | ||||||||||||||||||||||||||||||||
Total | 2,124 | 3,518 | 5,642 | 2,628 | 3,624 | 6,252 | ||||||||||||||||||||||||||||||||
Diagnostics — | ||||||||||||||||||||||||||||||||||||||
Core Laboratory | 836 | 2,788 | 3,624 | 845 | 2,935 | 3,780 | ||||||||||||||||||||||||||||||||
Molecular | 308 | 507 | 815 | 431 | 651 | 1,082 | ||||||||||||||||||||||||||||||||
Point of Care | 284 | 110 | 394 | 289 | 112 | 401 | ||||||||||||||||||||||||||||||||
Rapid Diagnostics | 5,523 | 2,923 | 8,446 | 3,178 | 2,732 | 5,910 | ||||||||||||||||||||||||||||||||
Total | 6,951 | 6,328 | 13,279 | 4,743 | 6,430 | 11,173 | ||||||||||||||||||||||||||||||||
Medical Devices — | ||||||||||||||||||||||||||||||||||||||
Rhythm Management | 775 | 830 | 1,605 | 776 | 881 | 1,657 | ||||||||||||||||||||||||||||||||
Electrophysiology | 667 | 773 | 1,440 | 580 | 823 | 1,403 | ||||||||||||||||||||||||||||||||
Heart Failure | 523 | 167 | 690 | 483 | 167 | 650 | ||||||||||||||||||||||||||||||||
Vascular | 650 | 1,228 | 1,878 | 684 | 1,292 | 1,976 | ||||||||||||||||||||||||||||||||
Structural Heart | 604 | 667 | 1,271 | 537 | 654 | 1,191 | ||||||||||||||||||||||||||||||||
Neuromodulation | 456 | 112 | 568 | 460 | 124 | 584 | ||||||||||||||||||||||||||||||||
Diabetes Care | 1,165 | 2,320 | 3,485 | 865 | 2,292 | 3,157 | ||||||||||||||||||||||||||||||||
Total | 4,840 | 6,097 | 10,937 | 4,385 | 6,233 | 10,618 | ||||||||||||||||||||||||||||||||
Other | 8 | — | 8 | 31 | 18 | 49 | ||||||||||||||||||||||||||||||||
Total | $ | 13,923 | $ | 19,639 | $ | 33,562 | $ | 11,787 | $ | 19,820 | $ | 31,607 |
| | | | | | | | | | | | | | | | | | |
| | Nine Months Ended September 30, 2021 | | Nine Months Ended September 30, 2020 | ||||||||||||||
(in millions) |
| U.S. |
| Int’l |
| Total |
| U.S. |
| Int’l |
| Total | ||||||
Established Pharmaceutical Products — |
| |
|
| |
|
| |
|
| |
|
| |
| | |
|
Key Emerging Markets | | $ | — | | $ | 2,672 | | $ | 2,672 | | $ | — | | $ | 2,376 | | $ | 2,376 |
Other | |
| — | |
| 843 | |
| 843 | |
| — | |
| 780 | | | 780 |
Total | |
| — | |
| 3,515 | |
| 3,515 | |
| — | |
| 3,156 |
| | 3,156 |
Nutritionals — | |
| | |
| | |
| | |
| | |
| | |
| |
Pediatric Nutritionals | |
| 1,622 | |
| 1,637 | |
| 3,259 | |
| 1,490 | |
| 1,629 | |
| 3,119 |
Adult Nutritionals | |
| 1,006 | |
| 1,987 | |
| 2,993 | |
| 948 | |
| 1,644 | |
| 2,592 |
Total | |
| 2,628 | |
| 3,624 | |
| 6,252 | |
| 2,438 | |
| 3,273 | |
| 5,711 |
Diagnostics — | |
| | |
| | |
| | |
| | |
| | |
| |
Core Laboratory | |
| 845 | |
| 2,935 | |
| 3,780 | |
| 840 | |
| 2,312 | |
| 3,152 |
Molecular | |
| 431 | |
| 651 | |
| 1,082 | |
| 429 | |
| 527 | |
| 956 |
Point of Care | |
| 289 | |
| 112 | |
| 401 | |
| 278 | |
| 109 | |
| 387 |
Rapid Diagnostics | |
| 3,178 | |
| 2,732 | |
| 5,910 | |
| 1,246 | |
| 719 | |
| 1,965 |
Total | |
| 4,743 | |
| 6,430 | |
| 11,173 | |
| 2,793 | |
| 3,667 | |
| 6,460 |
Medical Devices — | |
| | |
| | |
| | |
| | |
| | |
| |
Rhythm Management | |
| 776 | |
| 881 | |
| 1,657 | |
| 655 | |
| 727 | |
| 1,382 |
Electrophysiology | |
| 580 | |
| 823 | |
| 1,403 | |
| 476 | |
| 652 | |
| 1,128 |
Heart Failure | |
| 483 | |
| 167 | |
| 650 | |
| 411 | |
| 140 | |
| 551 |
Vascular | |
| 684 | |
| 1,292 | |
| 1,976 | |
| 628 | |
| 1,108 | |
| 1,736 |
Structural Heart | |
| 537 | |
| 654 | |
| 1,191 | |
| 386 | |
| 508 | |
| 894 |
Neuromodulation | |
| 460 | |
| 124 | |
| 584 | |
| 392 | |
| 97 | |
| 489 |
Diabetes Care | | | 865 | | | 2,292 | | | 3,157 | | | 614 | | | 1,736 | | | 2,350 |
Total | |
| 4,385 | |
| 6,233 | |
| 10,618 | |
| 3,562 | |
| 4,968 | |
| 8,530 |
| | | | | | | | | | | | | | | | | | |
Other | |
| 31 | |
| 18 | |
| 49 | |
| 30 | |
| 20 | |
| 50 |
| | | | | | | | | | | | | | | | | | |
Total | | $ | 11,787 | | $ | 19,820 | | $ | 31,607 | | $ | 8,823 | | $ | 15,084 | | $ | 23,907 |
11
(Unaudited)
| | | |
(in millions) |
| | |
Contract Liabilities: | | | |
Balance at December 31, 2020 | | $ | 405 |
Unearned revenue from cash received during the period | | | 416 |
Revenue recognized related to contract liability balance | | | (409) |
Balance at September 30, 2021 | | $ | 412 |
(in millions) | ||||||||
Contract Liabilities: | ||||||||
Balance at December 31, 2021 | $ | 520 | ||||||
Unearned revenue from cash received during the period | 466 | |||||||
Revenue recognized related to contract liability balance | (508) | |||||||
Balance at September 30, 2022 | $ | 478 |
Earnings from discontinued operations, net of tax, in the first nine months 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.
| | | |
(in millions) |
| | |
Allowance for Doubtful Accounts: | | | |
Balance at December 31, 2020 | | $ | 288 |
Provisions/charges to income | | | 41 |
Amounts charged off and other deductions | |
| (18) |
Balance at September 30, 2021 | | $ | 311 |
12
(in millions) | ||||||||
Allowance for Doubtful Accounts: | ||||||||
Balance at December 31, 2021 | $ | 313 | ||||||
Provisions/charges to income | 10 | |||||||
Amounts charged off and other deductions | (49) | |||||||
Balance at September 30, 2022 | $ | 274 |
Abbott Laboratories and Subsidiaries
Notes to the Condensed Consolidated Financial Statements
September 30, 2021
(Unaudited)
Note 4 — Supplemental Financial Information (Continued)
The allowance for doubtful accounts reflects the current estimate of credit losses expected to be incurred over the life of the accounts receivable. 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.
| | | | | | |
| | September 30, | | December 31, | ||
(in millions) |
| 2021 |
| 2020 | ||
Long-term Investments: | | | | | | |
Equity securities | | $ | 758 | | $ | 776 |
Other | |
| 54 | |
| 45 |
Total | | $ | 812 | | $ | 821 |
(in millions) | September 30, 2022 | December 31, 2021 | ||||||||||||
Long-term Investments: | ||||||||||||||
Equity securities | $ | 604 | $ | 748 | ||||||||||
Other | 160 | 68 | ||||||||||||
Total | $ | 764 | $ | 816 |
investment losses partially offset by an investment in long-term time deposits.
13
Abbott Laboratories and Subsidiaries
Notes to the Condensed Consolidated Financial Statements
September 30, 2021
(Unaudited)
| | | | | | | | | | | | | | | | | | |
| | Three Months Ended September 30 | ||||||||||||||||
| | | | | | | | | | Cumulative Gains (Losses) | ||||||||
| | Cumulative Foreign | | Net Actuarial (Losses) and | | on Derivative Instruments | ||||||||||||
| | Currency Translation | | Prior Service (Costs) and | | Designated as Cash Flow | ||||||||||||
| | Adjustments | | Credits | | Hedges | ||||||||||||
(in millions) |
| 2021 |
| 2020 |
| 2021 |
| 2020 |
| 2021 |
| 2020 | ||||||
Balance at June 30 | | $ | (5,230) | | $ | (5,713) | | $ | (3,738) | | $ | (3,446) | | $ | (98) | | $ | 79 |
Other comprehensive income (loss) before reclassifications | |
| (391) | |
| 112 | | | 16 | |
| (21) | |
| 70 | |
| (74) |
Amounts reclassified from accumulated other comprehensive income | |
| 0 | |
| 0 | |
| 62 | |
| 49 | |
| 69 | |
| (30) |
Net current period comprehensive income (loss) | |
| (391) | |
| 112 | |
| 78 | |
| 28 | |
| 139 | |
| (104) |
Balance at September 30 | | $ | (5,621) | | $ | (5,601) | | $ | (3,660) | | $ | (3,418) | | $ | 41 | | $ | (25) |
Three Months Ended September 30 | ||||||||||||||||||||||||||||||||||||||
Cumulative Foreign Currency Translation (Loss) Adjustments | Net Actuarial (Losses) and Prior Service (Costs) and Credits | Cumulative Gains (Losses) on Derivative Instruments Designated as Cash Flow Hedges and Other | ||||||||||||||||||||||||||||||||||||
(in millions) | 2022 | 2021 | 2022 | 2021 | 2022 | 2021 | ||||||||||||||||||||||||||||||||
Balance at June 30 | $ | (6,260) | $ | (5,230) | $ | (2,554) | $ | (3,738) | $ | 108 | $ | (98) | ||||||||||||||||||||||||||
Other comprehensive income (loss) before reclassifications | (1,008) | (391) | 15 | 16 | 278 | 70 | ||||||||||||||||||||||||||||||||
Amounts reclassified from accumulated other comprehensive income | — | — | 41 | 62 | (65) | 69 | ||||||||||||||||||||||||||||||||
Net current period comprehensive income (loss) | (1,008) | (391) | 56 | 78 | 213 | 139 | ||||||||||||||||||||||||||||||||
Balance at September 30 | $ | (7,268) | $ | (5,621) | $ | (2,498) | $ | (3,660) | $ | 321 | $ | 41 |
| | | | | | | | | | | | | | | | | | |
| | Nine Months Ended September 30 | ||||||||||||||||
| | | | | | Cumulative Gains (Losses) | ||||||||||||
| | Cumulative Foreign | | Net Actuarial (Losses) and | | on Derivative Instruments | ||||||||||||
| | Currency Translation | | Prior Service (Costs) and | | Designated as Cash Flow | ||||||||||||
| | Adjustments |
| Credits |
| Hedges | ||||||||||||
(in millions) |
| 2021 |
| 2020 |
| 2021 |
| 2020 |
| 2021 |
| 2020 | ||||||
Balance at January 1 | | $ | (4,859) | | $ | (4,924) | | $ | (3,871) | | $ | (3,540) | | $ | (216) | | $ | (1) |
Other comprehensive income (loss) before reclassifications | |
| (762) | |
| (677) | | | 26 | |
| (23) | |
| 138 | |
| 35 |
Amounts reclassified from accumulated other comprehensive income | |
| — | | | — | |
| 185 | |
| 145 | |
| 119 | |
| (59) |
Net current period comprehensive income (loss) | |
| (762) | |
| (677) | |
| 211 | |
| 122 | |
| 257 | |
| (24) |
Balance at September 30 | | $ | (5,621) | | $ | (5,601) | | $ | (3,660) | | $ | (3,418) | | $ | 41 | | $ | (25) |
Nine Months Ended September 30 | ||||||||||||||||||||||||||||||||||||||
Cumulative Foreign Currency Translation (Loss) Adjustments | Net Actuarial (Losses) and Prior Service (Costs) and Credits | Cumulative Gains (Losses) on Derivative Instruments Designated as Cash Flow Hedges and Other | ||||||||||||||||||||||||||||||||||||
(in millions) | 2022 | 2021 | 2022 | 2021 | 2022 | 2021 | ||||||||||||||||||||||||||||||||
Balance at January 1 | $ | (5,839) | $ | (4,859) | $ | (2,670) | $ | (3,871) | $ | 135 | $ | (216) | ||||||||||||||||||||||||||
Other comprehensive income (loss) before reclassifications | (1,429) | (762) | 45 | 26 | 289 | 138 | ||||||||||||||||||||||||||||||||
Amounts reclassified from accumulated other comprehensive income | — | — | 127 | 185 | (103) | 119 | ||||||||||||||||||||||||||||||||
Net current period comprehensive income (loss) | (1,429) | (762) | 172 | 211 | 186 | 257 | ||||||||||||||||||||||||||||||||
Balance at September 30 | $ | (7,268) | $ | (5,621) | $ | (2,498) | $ | (3,660) | $ | 321 | $ | 41 |
14
Abbott Laboratories and Subsidiaries
Notes to the Condensed Consolidated Financial Statements
September 30, 2021
(Unaudited)
Note 65 — Goodwill and Intangible Assets
2022.
The gross amount of amortizable intangible assets, primarily product rights and technology was $27.8 billion as of September 30, 2021 and December 31, 2020, and accumulated amortization was $15.4 billion as of September 30, 2021 and $14.2 billion as of December 31, 2020. Amortizable intangible assets increased by approximately $130 million as a result of a recent acquisition and the additional assets are being amortized over 9 years. Foreign currency translation adjustments decreased intangible assets by $152 million in the first nine months of 2021. In the first nine monthsthird quarter of 2021, asset impairments related to the Established Pharmaceutical Products segment decreased intangible assets by $13 million. The impairments2022, $111 million of impairment charges were recorded inon the Cost of products sold, excluding amortization of intangible assetsResearch and development line of Abbott’sthe Condensed Consolidated Statement of Earnings. Abbott’s estimated annual amortization expense forEarnings related to certain IPR&D intangible assets is approximately $2.0 billion in 2021, $2.1 billion in 2022, $2.0 billion in 2023, $1.9 billion in 2024 and $1.8 billion in 2025.associated with the Medical Devices business segment.
15
Abbott Laboratories and Subsidiaries
Notes to the Condensed Consolidated Financial Statements
September 30, 2021
(Unaudited)
Note 7 — Restructuring Plans (Continued)
The following summarizes the activity for the first nine months of 2021 related to this restructuring action and the status of the related accruals as of September 30, 2021:
2022:
| | | | | | | | | | | | |
| | Inventory- | | | | | | | | | | |
| | Related | | Fixed Asset | | Other Exit | | | | |||
(in millions) |
| Charges |
| Write-Downs |
| Costs |
| Total | ||||
Restructuring charges recorded in 2021 | | $ | 248 | | $ | 80 | | $ | 152 | | $ | 480 |
Payments | |
| — | |
| — | |
| (54) | |
| (54) |
Other non-cash | |
| (248) | |
| (80) | |
| — | |
| (328) |
Accrued balance at September 30, 2021 | | $ | — | | $ | — | | $ | 98 | | $ | 98 |
(in millions) | Inventory- Related Charges | Fixed Asset Write-Downs | Other Exit Costs | Total | ||||||||||||||||||||||
Restructuring charges recorded in 2021 | $ | 248 | $ | 80 | $ | 113 | $ | 441 | ||||||||||||||||||
Payments | — | — | (90) | (90) | ||||||||||||||||||||||
Other non-cash | (248) | (80) | — | (328) | ||||||||||||||||||||||
Accrued balance at December 31, 2021 | — | — | 23 | 23 | ||||||||||||||||||||||
Payments and other adjustments | — | — | (10) | (10) | ||||||||||||||||||||||
Accrued balance at September 30, 2022 | $ | — | $ | — | $ | 13 | $ | 13 |
From 2017 to 2021, Abbott management approved restructuring plans as part of the integration of the acquisitions of St. Jude Medical into the Medical Devices segment, and Alere Inc. (Alere) into the Diagnostic Products segment, in order to leverage economies of scale and reduce costs. As of December 31, 2020, the accrued balance associated with these actions was $25 million.
From 2017 to 2021, Abbott management approved plans to streamline operations in order to reduce costs and improve efficiencies in variousAbbott’s diagnostic, established pharmaceutical, and nutritional businesses. In 2022 and 2021, Abbott businesses includingmanagement approved plans to streamline operations in its medical devices segment. Abbott recorded employees-related severance and other charges of approximately $12 million in the nutritional, established pharmaceuticalsfirst nine months of 2022 of which approximately $5 million was recorded in Cost of products sold, approximately $2 million was recorded in Research and vascular businesses. development, and approximately $5 million was recorded in Selling, general and administrative expense.
(in millions) | ||||||||
Restructuring charges recorded in 2021 | $ | 68 | ||||||
Payments and other adjustments | (7) | |||||||
Accrued balance at December 31, 2021 | 61 | |||||||
Restructuring charges recorded in 2022 | 12 | |||||||
Payments and other adjustments | (39) | |||||||
Accrued balance at September 30, 2022 | $ | 34 |
| | | |
(in millions) |
| | |
Accrued balance at December 31, 2020 | | $ | 70 |
Restructuring charges recorded in 2021 | | | 17 |
Payments and other adjustments | | | (30) |
Accrued balance at September 30, 2021 | | $ | 57 |
Note 8 — Incentive Stock Programs
In the first nine months of 2021,2022, Abbott granted 2,865,1152,634,647 stock options, 497,373514,205 restricted stock awards and 4,670,8455,427,697 restricted stock units under its incentive stock program. At September 30, 2021,2022, approximately 10187 million shares were reserved for future grants. Information regarding the number of options outstanding and exercisable at September 30, 20212022 is as follows:
| | | | | | |
|
| Outstanding |
| Exercisable | ||
Number of shares |
|
| 29,594,797 | |
| 22,674,416 |
Weighted average remaining life (years) |
|
| 5.8 | |
| 4.9 |
Weighted average exercise price |
| $ | 63.08 | | $ | 51.79 |
Aggregate intrinsic value (in millions) |
| $ | 1,645 | | $ | 1,504 |
Outstanding | Exercisable | |||||||||||||
Number of shares | 29,048,449 | 23,310,464 | ||||||||||||
Weighted average remaining life (years) | 5.4 | 4.6 | ||||||||||||
Weighted average exercise price | $ | 70.22 | $ | 59.69 | ||||||||||
Aggregate intrinsic value (in millions) | $ | 901 | $ | 890 |
16
Abbott Laboratories and Subsidiaries
Notes to the Condensed Consolidated Financial Statements
September 30, 2021
(Unaudited)
Note 98 — Debt and Lines of Credit
On June 24, 2020, Abbott completed the issuance of $1.3 billion aggregate principal amount of senior notes, consisting of $650 million of its 1.15% Notes due 2028 and $650 million of its 1.40% Notes due 2030.
17
(Unaudited)
2021:
| | | | | | | | | | | | | | | | |
| | Fair Value - Assets | | Fair Value - Liabilities | ||||||||||||
| | Sept. 30, | | Dec. 31, | | | | Sept. 30, | | Dec. 31, |
| | ||||
(in millions) |
| 2021 |
| 2020 |
| Balance Sheet Caption |
| 2021 |
| 2020 |
| Balance Sheet Caption | ||||
Interest rate swaps designated as fair value hedges | | $ | 129 |
| $ | 210 |
| Deferred income taxes and other assets |
| $ | — |
| $ | — |
| Post-employment obligations, deferred income taxes and other long-term liabilities |
Foreign currency forward exchange contracts: | | | | | | | | | | | | | | | | |
Hedging instruments | |
| 193 | |
| 30 |
| Prepaid expenses and other receivables | |
| 69 | |
| 433 |
| Other accrued liabilities |
Others not designated as hedges | |
| 45 | |
| 60 |
| Prepaid expenses and other receivables | |
| 68 | |
| 65 |
| Other accrued liabilities |
Debt designated as a hedge of net investment in a foreign subsidiary | | | — | | | — | | n/a | | | 536 | | | 577 | | Long-term debt |
| | $ | 367 |
| $ | 300 | | |
| $ | 673 |
| $ | 1,075 | | |
Fair Value - Assets | Fair Value - Liabilities | |||||||||||||||||||||||||||||||||||||
(in millions) | September 30, 2022 | Dec. 31, 2021 | Balance Sheet Caption | September 30, 2022 | Dec. 31, 2021 | Balance Sheet Caption | ||||||||||||||||||||||||||||||||
Interest rate swaps designated as fair value hedges | $ | — | $ | 87 | Deferred income taxes and other assets | $ | 166 | $ | — | Post-employment obligations, deferred income taxes and other long-term liabilities | ||||||||||||||||||||||||||||
Foreign currency forward exchange contracts: | ||||||||||||||||||||||||||||||||||||||
Hedging instruments | 760 | 222 | Prepaid expenses and other receivables | 66 | 65 | Other accrued liabilities | ||||||||||||||||||||||||||||||||
Others not designated as hedges | 148 | 70 | Prepaid expenses and other receivables | 141 | 32 | Other accrued liabilities | ||||||||||||||||||||||||||||||||
Debt designated as a hedge of net investment in a foreign subsidiary | — | — | n/a | 413 | 521 | Long-term debt | ||||||||||||||||||||||||||||||||
$ | 908 | $ | 379 | $ | 786 | $ | 618 |
| | | | | | | | | | | | | | | | | | | | | | | | | | |
| | Gain (loss) Recognized in Other | | Income (expense) and Gain (loss) | | | ||||||||||||||||||||
| | Comprehensive Income (loss) | | Reclassified into Income | | | ||||||||||||||||||||
| | Three Months | | Nine Months | | Three Months | | Nine Months | | | ||||||||||||||||
| | Ended Sept. 30 | | Ended Sept. 30 | | Ended Sept. 30 | | Ended Sept. 30 | | | ||||||||||||||||
(in millions) |
| 2021 |
| 2020 |
| 2021 |
| 2020 |
| 2021 |
| 2020 |
| 2021 |
| 2020 |
| Income Statement Caption | ||||||||
Foreign currency forward exchange contracts designated as cash flow hedges | | $ | 96 | | $ | (103) | | $ | 142 | | $ | 35 | | $ | (92) | | $ | 48 | | $ | (207) | | $ | 90 | | Cost of products sold |
Debt designated as a hedge of net investment in a foreign subsidiary | |
| 4 | |
| (10) | |
| 41 | |
| (20) | |
| — | |
| — | |
| — | |
| — |
| n/a |
Interest rate swaps designated as fair value hedges | |
| n/a | |
| n/a | |
| n/a | |
| n/a | |
| (14) | |
| (11) | |
| (81) | |
| 184 |
| Interest expense |
18
Gain (loss) Recognized in Other Comprehensive Income (loss) | Income (expense) and Gain (loss) Reclassified into Income | |||||||||||||||||||||||||||||||||||||||||||||||||||||||
Three Months Ended September 30 | Nine Months Ended September 30 | Three Months Ended September 30 | Nine Months Ended September 30 | |||||||||||||||||||||||||||||||||||||||||||||||||||||
(in millions) | 2022 | 2021 | 2022 | 2021 | 2022 | 2021 | 2022 | 2021 | Income Statement Caption | |||||||||||||||||||||||||||||||||||||||||||||||
Foreign currency forward exchange contracts designated as cash flow hedges | $ | 350 | $ | 96 | $ | 442 | $ | 142 | $ | 79 | $ | (92) | $ | 149 | $ | (207) | Cost of products sold | |||||||||||||||||||||||||||||||||||||||
Debt designated as a hedge of net investment in a foreign subsidiary | 24 | 4 | 108 | 41 | — | — | — | — | n/a | |||||||||||||||||||||||||||||||||||||||||||||||
Interest rate swaps designated as fair value hedges | n/a | n/a | n/a | n/a | (85) | (14) | (253) | (81) | Interest expense |
(Unaudited)
| | | | | | | | | | | | |
| | September 30, 2021 | | December 31, 2020 | ||||||||
|
| Carrying |
| Fair |
| Carrying |
| Fair | ||||
(in millions) | | Value | | Value | | Value | | Value | ||||
Long-term Investment Securities: | | | |
| | | | | |
| | |
Equity securities | | $ | 758 | | $ | 758 | | $ | 776 | | $ | 776 |
Other | |
| 54 | |
| 54 | |
| 45 | |
| 45 |
Total Long-term Debt | | | (18,200) | | | (21,330) | | | (18,534) | | | (22,809) |
Foreign Currency Forward Exchange Contracts: | |
| | |
| | |
| | | | |
Receivable position | |
| 238 | |
| 238 | |
| 90 | |
| 90 |
(Payable) position | | | (137) | | | (137) | | | (498) | | | (498) |
Interest Rate Hedge Contracts: | |
| | |
| | |
| | |
| |
Receivable position | | | 129 | | | 129 | | | 210 | | | 210 |
September 30, 2022 | December 31, 2021 | |||||||||||||||||||||||||
(in millions) | Carrying Value | Fair Value | Carrying Value | Fair Value | ||||||||||||||||||||||
Long-term Investment Securities: | ||||||||||||||||||||||||||
Equity securities | $ | 604 | $ | 604 | $ | 748 | $ | 748 | ||||||||||||||||||
Other | 160 | 160 | 68 | 68 | ||||||||||||||||||||||
Total Long-term Debt | (16,414) | (15,821) | (18,050) | (21,152) | ||||||||||||||||||||||
Foreign Currency Forward Exchange Contracts: | ||||||||||||||||||||||||||
Receivable position | 908 | 908 | 292 | 292 | ||||||||||||||||||||||
(Payable) position | (207) | (207) | (97) | (97) | ||||||||||||||||||||||
Interest Rate Hedge Contracts: | ||||||||||||||||||||||||||
Receivable position | — | — | 87 | 87 | ||||||||||||||||||||||
(Payable) position | (166) | (166) | — | — |
19
(Unaudited)
| | | | | | | | | | | | |
| | | | | Basis of Fair Value Measurement | |||||||
| | | | | Quoted | | Significant | | | | ||
| | | | | Prices in | | Other | | Significant | |||
| | Outstanding | | Active | | Observable | | Unobservable | ||||
(in millions) |
| Balances |
| Markets |
| Inputs |
| Inputs | ||||
September 30, 2021: | | | | | | | | | | | | |
Equity securities | | $ | 398 | | $ | 398 |
| $ | — |
| $ | — |
Interest rate swap derivative financial instruments | |
| 129 | |
| — | |
| 129 | |
| — |
Foreign currency forward exchange contracts | |
| 238 | |
| — | |
| 238 | |
| — |
Total Assets | | $ | 765 |
| $ | 398 |
| $ | 367 |
| $ | — |
| | | | | | | | | | | | |
Fair value of hedged long-term debt | | $ | 2,967 | | $ | — |
| $ | 2,967 |
| $ | — |
Foreign currency forward exchange contracts | | | 137 | | | — | | | 137 | | | — |
Contingent consideration related to business combinations | |
| 129 | |
| — | |
| — | |
| 129 |
Total Liabilities | | $ | 3,233 |
| $ | — |
| $ | 3,104 | | $ | 129 |
| | | | | | | | | | | | |
December 31, 2020: | | | | | | | | | | | | |
Equity securities | | $ | 386 |
| $ | 386 |
| $ | — |
| $ | — |
Interest rate swap derivative financial instruments | |
| 210 | |
| — | |
| 210 | |
| — |
Foreign currency forward exchange contracts | |
| 90 | |
| — | |
| 90 | |
| — |
Total Assets | | $ | 686 |
| $ | 386 |
| $ | 300 |
| $ | — |
| | | | | | | | | | | | |
Fair value of hedged long-term debt | | $ | 3,049 |
| $ | — |
| $ | 3,049 |
| $ | — |
Foreign currency forward exchange contracts | |
| 498 | |
| — | |
| 498 | |
| — |
Contingent consideration related to business combinations | |
| 68 | |
| — | |
| — | |
| 68 |
Total Liabilities | | $ | 3,615 |
| $ | — |
| $ | 3,547 |
| $ | 68 |
Basis of Fair Value Measurement | ||||||||||||||||||||||||||
(in millions) | Outstanding Balances | Quoted Prices in Active Markets | Significant Other Observable Inputs | Significant Unobservable Inputs | ||||||||||||||||||||||
September 30, 2022: | ||||||||||||||||||||||||||
Equity securities | $ | 293 | $ | 293 | $ | — | $ | — | ||||||||||||||||||
Foreign currency forward exchange contracts | 908 | — | 908 | — | ||||||||||||||||||||||
Total Assets | $ | 1,201 | $ | 293 | $ | 908 | $ | — | ||||||||||||||||||
Fair value of hedged long-term debt | $ | 2,685 | $ | — | $ | 2,685 | $ | — | ||||||||||||||||||
Interest rate swap derivative financial instruments | 166 | — | 166 | — | ||||||||||||||||||||||
Foreign currency forward exchange contracts | 207 | — | 207 | — | ||||||||||||||||||||||
Contingent consideration related to business combinations | 138 | — | — | 138 | ||||||||||||||||||||||
Total Liabilities | $ | 3,196 | $ | — | $ | 3,058 | $ | 138 | ||||||||||||||||||
December 31, 2021: | ||||||||||||||||||||||||||
Equity securities | $ | 402 | $ | 402 | $ | — | $ | — | ||||||||||||||||||
Interest rate swap derivative financial instruments | 87 | — | 87 | — | ||||||||||||||||||||||
Foreign currency forward exchange contracts | 292 | — | 292 | — | ||||||||||||||||||||||
Total Assets | $ | 781 | $ | 402 | $ | 379 | $ | — | ||||||||||||||||||
Fair value of hedged long-term debt | $ | 2,926 | $ | — | $ | 2,926 | $ | — | ||||||||||||||||||
Foreign currency forward exchange contracts | 97 | — | 97 | — | ||||||||||||||||||||||
Contingent consideration related to business combinations | 130 | — | — | 130 | ||||||||||||||||||||||
Total Liabilities | $ | 3,153 | $ | — | $ | 3,023 | $ | 130 |
The increase in contingent consideration during the year was a result of a recent acquisition. 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.
20
Abbott Laboratories and Subsidiaries
Notes to the Condensed Consolidated Financial Statements
September 30, 2021
(Unaudited)
Note 1110 — Litigation and Environmental Matters
| | | | | | | | | | | | | | | | | | | | | | | | |
| | Defined Benefit Plans | | Medical and Dental Plans | ||||||||||||||||||||
| | Three Months | | Nine Months | | Three Months | | Nine Months | ||||||||||||||||
| | Ended Sept. 30 | | Ended Sept. 30 | | Ended Sept. 30 | | Ended Sept. 30 | ||||||||||||||||
(in millions) |
| 2021 |
| 2020 |
| 2021 |
| 2020 |
| 2021 |
| 2020 |
| 2021 |
| 2020 | ||||||||
Service cost - benefits earned during the period | | $ | 98 | | $ | 85 | | $ | 294 | | $ | 251 | | $ | 14 | | $ | 12 | | $ | 42 | | $ | 35 |
Interest cost on projected benefit obligations | |
| 62 | |
| 75 | |
| 186 | |
| 224 | |
| 8 | |
| 11 | |
| 25 | |
| 32 |
Expected return on plan assets | |
| (211) | |
| (193) | |
| (633) | |
| (576) | |
| (6) | |
| (7) | |
| (20) | |
| (21) |
Net amortization of: | | | | | | | | | | | | | | | | | | | | | | | | |
Actuarial loss, net | |
| 79 | |
| 64 | |
| 238 | |
| 191 | |
| 7 | |
| 5 | |
| 21 | |
| 15 |
Prior service cost (credit) | |
| — | |
| — | |
| 1 | |
| 1 | |
| (7) | |
| (7) | |
| (21) | |
| (21) |
Net cost - continuing operations | | $ | 28 | | $ | 31 | | $ | 86 | | $ | 91 | | $ | 16 | | $ | 14 | | $ | 47 | | $ | 40 |
Defined Benefit Plans | Medical and Dental Plans | |||||||||||||||||||||||||||||||||||||||||||||||||
Three Months Ended Sept. 30 | Nine Months Ended Sept. 30 | Three Months Ended Sept. 30 | Nine Months Ended Sept. 30 | |||||||||||||||||||||||||||||||||||||||||||||||
(in millions) | 2022 | 2021 | 2022 | 2021 | 2022 | 2021 | 2022 | 2021 | ||||||||||||||||||||||||||||||||||||||||||
Service cost - benefits earned during the period | $ | 92 | $ | 98 | $ | 282 | $ | 294 | $ | 13 | $ | 14 | $ | 38 | $ | 42 | ||||||||||||||||||||||||||||||||||
Interest cost on projected benefit obligations | 74 | 62 | 225 | 186 | 9 | 8 | 27 | 25 | ||||||||||||||||||||||||||||||||||||||||||
Expected return on plan assets | (231) | (211) | (701) | (633) | (8) | (6) | (23) | (20) | ||||||||||||||||||||||||||||||||||||||||||
Net amortization of: | ||||||||||||||||||||||||||||||||||||||||||||||||||
Actuarial loss, net | 58 | 79 | 174 | 238 | 2 | 7 | 8 | 21 | ||||||||||||||||||||||||||||||||||||||||||
Prior service cost (credit) | — | — | 1 | 1 | (6) | (7) | (18) | (21) | ||||||||||||||||||||||||||||||||||||||||||
Net cost (credit) | $ | (7) | $ | 28 | $ | (19) | $ | 86 | $ | 10 | $ | 16 | $ | 32 | $ | 47 |
21
Abbott Laboratories and Subsidiaries
Notes to the Condensed Consolidated Financial Statements
September 30, 2021
(Unaudited)
Note 1312 — Taxes on Earnings
22
(Unaudited)
Net Sales to External Customers | Operating Earnings | |||||||||||||||||||||||||||||||||||||||||||||||||
Three Months Ended Sept. 30 | Nine Months Ended Sept. 30 | Three Months Ended Sept. 30 | Nine Months Ended Sept. 30 | |||||||||||||||||||||||||||||||||||||||||||||||
(in millions) | 2022 | 2021 | 2022 | 2021 | 2022 | 2021 | 2022 | 2021 | ||||||||||||||||||||||||||||||||||||||||||
Established Pharmaceutical Products | $ | 1,326 | $ | 1,265 | $ | 3,696 | $ | 3,515 | $ | 331 | $ | 293 | $ | 831 | $ | 682 | ||||||||||||||||||||||||||||||||||
Nutritional Products | 1,795 | 2,108 | 5,642 | 6,252 | 69 | 431 | 550 | 1,388 | ||||||||||||||||||||||||||||||||||||||||||
Diagnostic Products | 3,671 | 3,912 | 13,279 | 11,173 | 1,352 | 1,652 | 5,631 | 4,429 | ||||||||||||||||||||||||||||||||||||||||||
Medical Devices | 3,615 | 3,632 | 10,937 | 10,618 | 1,039 | 1,160 | 3,272 | 3,375 | ||||||||||||||||||||||||||||||||||||||||||
Total Reportable Segments | 10,407 | 10,917 | 33,554 | 31,558 | 2,791 | 3,536 | 10,284 | 9,874 | ||||||||||||||||||||||||||||||||||||||||||
Other | 3 | 11 | 8 | 49 | ||||||||||||||||||||||||||||||||||||||||||||||
Net sales | $ | 10,410 | $ | 10,928 | $ | 33,562 | $ | 31,607 | ||||||||||||||||||||||||||||||||||||||||||
Corporate functions and benefit plan costs | (115) | (204) | (352) | (450) | ||||||||||||||||||||||||||||||||||||||||||||||
Net interest expense | (86) | (123) | (309) | (370) | ||||||||||||||||||||||||||||||||||||||||||||||
Share-based compensation (a) | (123) | (114) | (570) | (534) | ||||||||||||||||||||||||||||||||||||||||||||||
Amortization of intangible assets | (498) | (520) | (1,517) | (1,533) | ||||||||||||||||||||||||||||||||||||||||||||||
Other, net (b) | (211) | (82) | (550) | (1,103) | ||||||||||||||||||||||||||||||||||||||||||||||
Earnings before taxes | $ | 1,758 | $ | 2,493 | $ | 6,986 | $ | 5,884 |
| | | | | | | | | | | | | | | | | | | | | | | | |
| | Net Sales to External Customers | | Operating Earnings | ||||||||||||||||||||
| | Three Months | | Nine Months | | Three Months | | Nine Months | ||||||||||||||||
| | Ended Sept. 30 | | Ended Sept. 30 | | Ended Sept. 30 | | Ended Sept. 30 | ||||||||||||||||
(in millions) |
| 2021 |
| 2020 |
| 2021 |
| 2020 |
| 2021 |
| 2020 |
| 2021 |
| 2020 | ||||||||
Established Pharmaceutical Products | | $ | 1,265 | | $ | 1,099 | | $ | 3,515 | | $ | 3,156 | | $ | 293 | | $ | 201 | | $ | 682 | | $ | 588 |
Nutritional Products | |
| 2,108 | |
| 1,924 | |
| 6,252 | |
| 5,711 | |
| 431 | |
| 394 | |
| 1,388 | |
| 1,327 |
Diagnostic Products | |
| 3,912 | |
| 2,640 | |
| 11,173 | |
| 6,460 | |
| 1,652 | |
| 875 | |
| 4,429 | |
| 1,802 |
Medical Devices | |
| 3,632 | |
| 3,170 | |
| 10,618 | |
| 8,530 | |
| 1,160 | |
| 928 | |
| 3,375 | |
| 2,122 |
Total Reportable Segments | |
| 10,917 | |
| 8,833 | |
| 31,558 | |
| 23,857 | |
| 3,536 | |
| 2,398 | |
| 9,874 | | | 5,839 |
Other | |
| 11 | |
| 20 | |
| 49 | |
| 50 | | | | | | | | | | | | |
Net sales | | $ | 10,928 | | $ | 8,853 | | $ | 31,607 | | $ | 23,907 | | | | | | | | | | | | |
Corporate functions and benefit plan costs | | | | | | | | | | | | |
| | (204) | | | (129) | | | (450) | | | (367) |
Net interest expense | | | | | | | | | | | | |
| | (123) | | | (127) | | | (370) | | | (373) |
Share-based compensation (a) | | | | | | | | | | | | |
| | (114) | | | (100) | | | (534) | | | (448) |
Amortization of intangible assets | | | | | | | | | | | | |
| | (520) | | | (510) | | | (1,533) | | | (1,624) |
Other, net (b) | | | | | | | | | | | | |
| | (82) | | | (111) | | | (1,103) | | | (447) |
Earnings from continuing operations before taxes | | | | | | | | | | | | | | $ | 2,493 | | $ | 1,421 | | $ | 5,884 | | $ | 2,580 |
(a) | Approximately |
(b) | Other, net for the three and nine months ended September 30, 2022 includes $10 million and $172 million, respectively, of charges related to a voluntary recall within the Nutritional Products segment and $111 million of charges related to the impairment of IPR&D intangible assets. Other, net for the three and nine months ended September 30, 2022 and 2021 |
23
Net Sales to External Customers Three Months Three Months Ended Ended Impact of Total Change Sept. 30, Sept. 30, Total Foreign Excl. Foreign (in millions) 2021 2020 Change Exchange Exchange Established Pharmaceutical Products $ 1,265 $ 1,099 15.1 % (0.2) % 15.3 % Nutritional Products 2,108 1,924 9.6 0.7 8.9 Diagnostic Products 3,912 2,640 48.2 1.4 46.8 Medical Devices 3,632 3,170 14.6 1.5 13.1 Total Reportable Segments 10,917 8,833 23.6 1.1 22.5 Other 11 20 (51.4) 0.9 (52.3) Net Sales $ 10,928 $ 8,853 23.4 1.0 22.4 Total U.S. $ 4,368 $ 3,329 31.2 — 31.2 Total International $ 6,560 $ 5,524 18.7 1.7 17.0 Net Sales to External Customers Nine Months Nine Months Ended Ended Impact of Total Change Sept. 30, Sept. 30, Total Foreign Excl. Foreign (in millions) 2021 2020 Change Exchange Exchange Established Pharmaceutical Products $ 3,515 $ 3,156 11.4 % (0.6) % 12.0 % Nutritional Products 6,252 5,711 9.5 1.2 8.3 Diagnostic Products 11,173 6,460 73.0 3.8 69.2 Medical Devices 10,618 8,530 24.5 3.8 20.7 Total Reportable Segments 31,558 23,857 32.3 2.6 29.7 Other 49 50 (1.3) 2.8 (4.1) Net Sales $ 31,607 $ 23,907 32.2 2.6 29.6 Total U.S. $ 11,787 $ 8,823 33.6 — 33.6 Total International $ 19,820 $ 15,084 31.4 4.1 27.3 -— Results of Operationstable detailstables detail sales by reportable segment for the three and nine months ended September 30. Percent changes are versus the prior year and are based on unrounded numbers.Net Sales to External Customers (in millions) Three Months Ended
September 30, 2022Three Months Ended
September 30, 2021Total
ChangeImpact of
Foreign
ExchangeTotal Change
Excl. Foreign
ExchangeEstablished Pharmaceutical Products $ 1,326 $ 1,265 4.9 % (7.3) % 12.2 % Nutritional Products 1,795 2,108 (14.9) (4.6) (10.3) Diagnostic Products 3,671 3,912 (6.2) (5.6) (0.6) Medical Devices 3,615 3,632 (0.5) (6.9) 6.4 Total Reportable Segments 10,407 10,917 (4.7) (6.0) 1.3 Other 3 11 n/m n/m n/m Net Sales $ 10,410 $ 10,928 (4.7) (6.0) 1.3 Total U.S. $ 4,094 $ 4,368 (6.3) — (6.3) Total International $ 6,316 $ 6,560 (3.7) (10.0) 6.3 Net Sales to External Customers (in millions) Nine Months Ended
September 30, 2022Nine Months Ended
September 30, 2021Total
ChangeImpact of
Foreign
ExchangeTotal Change
Excl. Foreign
ExchangeEstablished Pharmaceutical Products $ 3,696 $ 3,515 5.2 % (6.4) % 11.6 % Nutritional Products 5,642 6,252 (9.8) (3.4) (6.4) Diagnostic Products 13,279 11,173 18.9 (4.2) 23.1 Medical Devices 10,937 10,618 3.0 (5.4) 8.4 Total Reportable Segments 33,554 31,558 6.3 (4.7) 11.0 Other 8 49 n/m n/m n/m Net Sales $ 33,562 $ 31,607 6.2 (4.7) 10.9 Total U.S. $ 13,923 $ 11,787 18.1 — 18.1 Total International $ 19,639 $ 19,820 (0.9) (7.4) 6.5 Note: 24
The 22.41.3 percent increase in total net sales during the third quarter of 2021,2022, excluding the impact of foreign exchange, reflected demand for Abbott’s tests to detect COVID-19growth in the Medical Devices and Established Pharmaceutical Products segments partially offset by lower Nutritional Products sales as well as other growth across Abbott’s reportable segments. During the third quarter of 2021,a year-over-year decline in COVID-19 testing-related revenues. Abbott’s COVID-19 testing-related sales totaled approximately $1.9$1.7 billion led by combined sales of approximately $1.6 billion related to Abbott’s BinaxNOW®, Panbio®, and ID NOW® rapid testing platforms. Duringduring the third quarter of 2020, COVID-19 testing-related sales totaled2022 and approximately $0.9 billion.$1.9 billion during the third quarter of 2021. Excluding the impact of COVID-19 testing-related sales, Abbott’s total net sales increased 13.2decreased 3.1 percent. Excluding the impacts of COVID-19 testing-related sales and foreign exchange, Abbott’s total net sales increased 12.13.2 percent. Abbott’s net sales were favorablyunfavorably impacted by changes in foreign exchange rates in the third quarter as the relatively weakerstronger U.S. dollar increaseddecreased total international sales by 1.710.0 percent and total sales by 1.06.0 percent.
| | | | | | | | | | | | | |
|
| | |
| | |
| |
| Impact of |
| Total Change |
|
| | Sept. 30, | | Sept. 30, | | Total | | Foreign | | Excl. Foreign |
| ||
(in millions) | | 2021 | | 2020 | | Change | | Exchange | | Exchange |
| ||
Established Pharmaceutical Products — |
| |
|
| |
|
|
|
|
|
|
| |
Key Emerging Markets | | $ | 2,672 | | $ | 2,376 | | 12.4 | % | (1.8) | % | 14.2 | % |
Other Emerging Markets | |
| 843 | |
| 780 | | 8.1 |
| 2.7 |
| 5.4 | |
| | | | | | | | | | | | | |
Nutritionals — | |
| | |
| | | |
| |
| | |
International Pediatric Nutritionals | |
| 1,637 | |
| 1,629 | | 0.5 |
| 2.2 |
| (1.7) | |
U.S. Pediatric Nutritionals | |
| 1,622 | |
| 1,490 | | 8.9 |
| — |
| 8.9 | |
International Adult Nutritionals | |
| 1,987 | |
| 1,644 | | 20.9 |
| 2.0 |
| 18.9 | |
U.S. Adult Nutritionals | |
| 1,006 | |
| 948 | | 6.0 |
| — |
| 6.0 | |
| | | | | | | | | | | | | |
Diagnostics — | |
| | |
| | | |
| |
| | |
Core Laboratory | |
| 3,780 | |
| 3,152 | | 19.9 |
| 3.5 |
| 16.4 | |
Molecular | |
| 1,082 | |
| 956 | | 13.2 |
| 3.3 |
| 9.9 | |
Point of Care | |
| 401 | |
| 387 | | 3.6 |
| 1.0 |
| 2.6 | |
Rapid Diagnostics | |
| 5,910 | |
| 1,965 | | 200.7 |
| 4.9 |
| 195.8 | |
| | | | | | | | | | | | | |
Medical Devices — | |
| | |
| | | |
| |
| | |
Rhythm Management | �� |
| 1,657 | |
| 1,382 | | 19.9 |
| 3.3 |
| 16.6 | |
Electrophysiology | |
| 1,403 | |
| 1,128 | | 24.4 |
| 3.1 |
| 21.3 | |
Heart Failure | |
| 650 | |
| 551 | | 17.8 |
| 1.6 |
| 16.2 | |
Vascular | |
| 1,976 | |
| 1,736 | | 13.9 |
| 3.5 |
| 10.4 | |
Structural Heart | |
| 1,191 | |
| 894 | | 33.2 |
| 3.7 |
| 29.5 | |
Neuromodulation | |
| 584 | |
| 489 | | 19.6 |
| 1.5 |
| 18.1 | |
Diabetes Care | | | 3,157 | | | 2,350 | | 34.3 | | 5.6 | | 28.7 | |
25
(in millions) | Sept. 30, 2022 | Sept. 30, 2021 | Total Change | Impact of Foreign Exchange | Total Change Excl. Foreign Exchange | |||||||||||||||||||||||||||
Established Pharmaceutical Products — | ||||||||||||||||||||||||||||||||
Key Emerging Markets | $ | 2,826 | $ | 2,672 | 5.8 | % | (6.4) | % | 12.2 | % | ||||||||||||||||||||||
Other Emerging Markets | 870 | 843 | 3.2 | (6.3) | 9.5 | |||||||||||||||||||||||||||
Nutritionals — | ||||||||||||||||||||||||||||||||
International Pediatric Nutritionals | 1,491 | 1,637 | (8.9) | (4.3) | (4.6) | |||||||||||||||||||||||||||
U.S. Pediatric Nutritionals | 1,108 | 1,622 | (31.7) | — | (31.7) | |||||||||||||||||||||||||||
International Adult Nutritionals | 2,027 | 1,987 | 2.0 | (7.0) | 9.0 | |||||||||||||||||||||||||||
U.S. Adult Nutritionals | 1,016 | 1,006 | 1.0 | — | 1.0 | |||||||||||||||||||||||||||
Diagnostics — | ||||||||||||||||||||||||||||||||
Core Laboratory | 3,624 | 3,780 | (4.1) | (5.7) | 1.6 | |||||||||||||||||||||||||||
Molecular | 815 | 1,082 | (24.7) | (2.8) | (21.9) | |||||||||||||||||||||||||||
Point of Care | 394 | 401 | (1.6) | (1.2) | (0.4) | |||||||||||||||||||||||||||
Rapid Diagnostics | 8,446 | 5,910 | 42.9 | (3.8) | 46.7 | |||||||||||||||||||||||||||
Medical Devices — | ||||||||||||||||||||||||||||||||
Rhythm Management | 1,605 | 1,657 | (3.2) | (4.5) | 1.3 | |||||||||||||||||||||||||||
Electrophysiology | 1,440 | 1,403 | 2.6 | (5.6) | 8.2 | |||||||||||||||||||||||||||
Heart Failure | 690 | 650 | 6.2 | (2.4) | 8.6 | |||||||||||||||||||||||||||
Vascular | 1,878 | 1,976 | (5.0) | (4.9) | (0.1) | |||||||||||||||||||||||||||
Structural Heart | 1,271 | 1,191 | 6.7 | (6.1) | 12.8 | |||||||||||||||||||||||||||
Neuromodulation | 568 | 584 | (2.7) | (2.1) | (0.6) | |||||||||||||||||||||||||||
Diabetes Care | 3,485 | 3,157 | 10.4 | (7.0) | 17.4 |
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 for Established Pharmaceutical Products increased 14.212.2 percent compared toin the first nine months of 20202022, led by double-digit growth acrossin several geographies,countries, including India and China, and Brazil.therapeutic areas, including gastroenterology, central nervous system/pain management, and respiratory products. Other Emerging Markets, excluding the effect of foreign exchange, increased by 5.49.5 percent in the first nine months of 2021.
2022.
first nine months of 2022 and 2021, respectively.
various other Rapid Diagnostics products.
readings and 14-day accuracy in a wearable sensor.
26
While2022, procedure volumes across Abbott’s cardiovascular and neuromodulation businesses were negatively impacted earlyby new surges of COVID-19 in 2021 by elevatedvarious geographies as well as intermittent COVID-19 case rateslockdown restrictions in certain countries, includingChina and healthcare staffing challenges throughout the U.S.,nine months. Despite such challenges, overall volumesvolume trends improved over the course ofin several businesses versus the first nine months of 2021 across various businesses. The year-over-year increases in2021. In Electrophysiology, the various businesses reflect a recovery from the 2020 levels when the pandemic reduced procedure volumes as well as sales8.2 percent growth, from pre-pandemic levels in Structural Heart, Electrophysiology, and Heart Failure, excluding the effect of foreign exchange.exchange, reflects the increase in procedure volumes and the continued roll‑out of Abbott’s EnSite® X EP System with Ensite Omnipolar Technology (OT), a new cardiac mapping platform available in the U.S., Japan and across Europe. In January 2021,2022, Abbott announced FDA clearance for the U.S. Centers for Medicare & Medicaid Services expanded reimbursement coverage eligibility forEnSite® X EP System with EnSite OT. The system leverages the Advisor® HD Grid Catheter to provide a 360‑degree view of the heart without regard to the orientation of the catheter in the heart.
percutaneous coronary intervention case rates compared to many other cardiovascular procedures.
U.S. with slow heart rhythms.
Nutritional business as well as higher manufacturing and supply chain costs across Abbott's businesses, including inflation and higher commodity and distribution expenses. The future extent to which inflation, supply chain disruptions, and unfavorable foreign exchange rates will have a material effect on Abbott's operating results is uncertain.
development partially offset by the favorable impact of foreign exchange.
Restructuring Plans
On May 27, 2021, Abbott management approved a restructuring plan related to its Diagnostic Products segment to align its manufacturing network for COVID-19 diagnostic tests with changes in the second quarter in projected testing demand driven by several factors, including significant reductions in cases in the U.S. and other major developed countries, the accelerated rollout of COVID-19 vaccines globallylitigation costs and the U.S. health authority’s updated guidance on testing for fully vaccinated individuals. In the second quarterfavorable impact of 2021, Abbott recorded charges of $499 million under this plan in Cost of products sold. The charge recognized in the second quarter included fixed asset write-downs of $80 million, inventory-related charges of $248 million, and other exit costs, which included contract cancellations and employee-related costs of $171 million.
In the third quarter of 2021, as the Delta variant of COVID-19 spread and the number of new COVID-19 cases increased significantly particularly in the U.S., demand for rapid COVID-19 tests increased significantly. As a result, in the third quarter Abbott sold approximately $120 million of inventory that was previously estimated to have no net realizable value under the second quarter restructuring action. In addition, the estimate of other exit costs was reduced by a net $19 million as Abbott fulfilled its purchase obligations under certain contracts for which a liability was recorded in the second quarter or Abbott settled with the counterparty in the third quarter.
27
Other (Income) Expense, net
2021.
rate hedge contracts related to certain fixed-rate debt.
debt and a decrease in cash and cash equivalents.
cash taxes of approximately $990 million in 2021.
28
In October 2019,December 2021, the board of directors authorized the repurchase of up to $3$5 billion of Abbott’s common shares from time to time. The 2019new authorization was in addition to the approximately $100 million$1.081 billion portion of the share repurchase program authorized in 20142019 that remainedwas unused as of December 31, 2020. 2021.In the first nine months of 2021,2022, Abbott repurchased 10.125.7 million of its common shares for $1.187$2.965 billion which fully utilized the authorization remaining under the 20142019 share repurchase program and a portion of the 20192021 authorization.As of September 30, 2021, $1.9102022, $3.116 billion remains available for repurchase under the 2019 share2021 repurchase program.
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.
2021.
Recently Adopted Accounting Standards
In December 2019, the Financial Accounting Standards Board issued Accounting Standards Update 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. Abbott adopted the standard on January 1, 2021. The new standard did not have an impact on its condensed consolidated financial statements.
29
Evaluation of disclosure controls and procedures.
The 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.
2021 and our Quarterly Report on Form 10-Q for the quarterly period ended March 31, 2022.
Period | (a) Total Number of Shares (or Units) Purchased(1) | (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(2) | |||||||||||||||||||||||||
July 1, 2022 - July 31, 2022 | — | $ | — | — | $ | 3,981,169,070 | |||||||||||||||||||||||
August 1, 2022 - August 31, 2022 | 1,050,000 | 102.567 | 1,050,000 | 3,873,473,475 | |||||||||||||||||||||||||
September 1, 2022 - September 30, 2022 | 7,363,597 | 102.895 | 7,363,597 | 3,115,796,433 | |||||||||||||||||||||||||
Total | 8,413,597 | $ | 102.854 | 8,413,597 | $ | 3,115,796,433 |
| | | | | | | | | | | |
|
| |
| | |
| |
| (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 |
| ||
July 1, 2021 – July 31, 2021 | | 450,000 | (1) | $ | 120.849 |
| 450,000 | | $ | 2,540,924,508 | (2) |
August 1, 2021 – August 31, 2021 | | 2,175,000 | (1) | | 123.265 |
| 2,175,000 | | | 2,272,822,841 | (2) |
September 1, 2021 – September 30, 2021 | | 3,002,035 | (1) | | 120.814 |
| 3,000,000 | | | 1,910,394,012 | (2) |
Total | | 5,627,035 | (1) | $ | 121.764 |
| 5,625,000 | | $ | 1,910,394,012 | (2) |
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.
30
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Exhibit No. | Exhibit | |||||||
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3.1 |
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31.1 |
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31.2 |
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Exhibits 32.1 and 32.2 are furnished herewith and should not be deemed to be “filed” under the Securities Exchange Act of 1934. | ||||||||
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32.1 |
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32.2 |
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101 |
| The following financial statements and notes from the Abbott Laboratories Quarterly Report on Form 10-Q for the quarter and nine months ended September 30, | ||||||
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| ||||||
104 |
| Cover Page Interactive Data File (the cover page XBRL tags are embedded in the Inline XBRL document and included in Exhibit 101). |
31
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By: | /s/ Robert E. Funck, Jr. |
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| Robert E. Funck, Jr. |
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| Executive Vice President, Finance |
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| Date: November |
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32