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~~

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

For the quarterly period ended ~~September~~June 30, ~~2017~~2019

OR


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

☐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.~~ Number: 001-35565

AbbVie Inc.



(Exact name of registrant as specified in its charter)
Delaware		32-0375147
(State or other jurisdiction of incorporation or organization)		(I.R.S. employer identification number)

1 North Waukegan Road

North Chicago, Illinois60064

Telephone: (847) 932-7900

~~Telephone:~~ ~~(847) 932-7900~~

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yesx☒ No ¨☐

Indicate by check mark whether the registrant has submitted electronically ~~and posted on its corporate Web site, if any,~~ every Interactive Data File required to be submitted ~~and posted~~ pursuant to Rule 405 of Regulation S-T (§ ~~229.405~~232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit ~~and post~~ such files). Yesx☒ No ¨

☐

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



Large Accelerated Filerx	☒	Accelerated Filer¨	☐
Non-Accelerated Filer	☐	Smaller reporting company	☐

~~Non-Accelerated Filer~~ ¨		~~Smaller reporting company~~ ¨
~~(Do not check if a smaller reporting company)~~
		Emerging growth company¨	☐

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. ¨☐

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

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 Stock, par value $0.01 per share		ABBV		New York Stock Exchange
				Chicago Stock Exchange

As of ~~October 24, 2017,~~July 29, 2019, AbbVie Inc. had ~~1,596,429,740~~1,478,483,838 shares of common stock at $0.01 par value outstanding.

AbbVie Inc. and Subsidiaries

Table of Contents



~~2017~~2019 Form 10-Q \|	1

PART I. FINANCIAL INFORMATION

ITEM 1.FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA

AbbVie Inc. and Subsidiaries

Condensed Consolidated Statements of Earnings (unaudited)


		Three months ended September 30,								Nine months ended September 30,								Three months ended June 30,								Six months ended June 30,
(in millions, except per share data)		2017				2016				2017				2016				2019				2018				2019				2018
Net revenues		$	6,995			$	6,432			$	20,477			$	18,842			$	8,255			$	8,278			$	16,083			$	16,212

Cost of products sold		1,616				1,504				4,760				4,278				1,819				1,934				3,513				3,861
Selling, general and administrative		1,452				1,381				4,324				4,202				1,654				1,760				3,334				3,551
Research and development		1,222				1,106				3,580				3,176				1,291				1,322				2,580				2,566
Acquired in-process research and development		—				80				15				160				91				—				246				69
Other expense																		—				500				—				500
Total operating costs and expenses		4,290				4,071				12,679				11,816				4,855				5,516				9,673				10,547
Operating earnings		2,705				2,361				7,798				7,026				3,400				2,762				6,410				5,665

Interest expense, net		252				250				752				675				309				272				634				523
Net foreign exchange loss (gain)		9				(4		)		28				313
Net foreign exchange loss																		6				8				12				16
Other expense, net		349				101				484				152				2,278				470				2,413				317
Earnings before income tax expense		2,095				2,014				6,534				5,886				807				2,012				3,351				4,809
Income tax expense		464				416				1,277				1,324				66				29				154				43
Net earnings		$	1,631			$	1,598			$	5,257			$	4,562			$	741			$	1,983			$	3,197			$	4,766

Per share data
Basic earnings per share		$	1.02			$	0.97			$	3.28			$	2.79			$	0.49			$	1.26			$	2.15			$	3.00
Diluted earnings per share		$	1.01			$	0.97			$	3.27			$	2.78			$	0.49			$	1.26			$	2.14			$	2.99
Cash dividends declared per common share		$	0.64			$	0.57			$	1.92			$	1.71

Weighted-average basic shares outstanding		1,597				1,632				1,596				1,624				1,480				1,568				1,480				1,579
Weighted-average diluted shares outstanding		1,603				1,640				1,602				1,633				1,484				1,572				1,483				1,584

The accompanying notes are an integral part of these condensed consolidated financial statements.



~~2017~~2019 Form 10-Q \|	2

AbbVie Inc. and Subsidiaries

Condensed Consolidated Statements of Comprehensive Income (unaudited)

Three months ended
September 30, Nine months ended
September 30,
(in millions) 2017 2016 2017 2016
Net earnings $ 1,631
$ 1,598
$ 5,257
$ 4,562

Foreign currency translation adjustments, net of tax expense (benefit) of $7 for the three months and $40 for the nine months ended September 30, 2017 and $10 for the three months and $30 for the nine months ended September 30, 2016 183
31
602
164
Net investment hedging activities, net of tax expense (benefit) of $(52) for the three months and $(174) for the nine months ended September 30, 2017 and $— for the three months and $— for the nine months ended September 30, 2016 (90 ) —
(307 ) —
Pension and post-employment benefits, net of tax expense (benefit) of $8 for the three months and $23 for the nine months ended September 30, 2017 and $8 for the three months and $23 for the nine months ended September 30, 2016 8
15
21
48
Marketable security activities, net of tax expense (benefit) of $4 for the three months and $6 for the nine months ended September 30, 2017 and $1 for the three months and $(7) for the nine months ended September 30, 2016 (28 ) 12
(18 ) 19
Cash flow hedging activities, net of tax expense (benefit) of $(14) for the three months and $(29) for the nine months ended ended September 30, 2017 and $1 for the three months and $(3) for the nine months ended September 30, 2016 (138 ) (8 ) (325 ) (10 )
Other comprehensive income (loss) (65 ) 50
(27 ) 221
Comprehensive income $ 1,566
$ 1,648
$ 5,230
$ 4,783



	Three months ended June 30,								Six months ended June 30,
(in millions)	2019				2018				2019				2018
Net earnings	$	741			$	1,983			$	3,197			$	4,766

Foreign currency translation adjustments, net of tax expense (benefit) of $5 for the three months and $6 for the six months ended June 30, 2019 and $(16) for the three months and $(19) for the six months ended June 30, 2018	71				(469		)		(32		)		(280		)
Net investment hedging activities, net of tax expense (benefit) of $(11) for the three months and $8 for the six months ended June 30, 2019 and $61 for the three months and $31 for the six months ended June 30, 2018	(37		)		209				28				105
Pension and post-employment benefits, net of tax expense (benefit) of $6 for the three months and $12 for the six months ended June 30, 2019 and $7 for the three months and $16 for the six months ended June 30, 2018	20				49				45				71
Marketable security activities, net of tax expense (benefit) of $— for the three months and $— for the six months ended June 30, 2019 and $— for the three months and $— for the six months ended June 30, 2018	4				5				11				(2		)
Cash flow hedging activities, net of tax expense (benefit) of $(2) for the three months and $(9) for the six months ended June 30, 2019 and $18 for the three months and $17 for the six months ended June 30, 2018	(33		)		197				(63		)		194
Other comprehensive income (loss)	25				(9		)		(11		)		88
Comprehensive income	$	766			$	1,974			$	3,186			$	4,854

The accompanying notes are an integral part of these condensed consolidated financial statements.



~~2017~~2019 Form 10-Q \|	3

AbbVie Inc. and Subsidiaries

Condensed Consolidated Balance Sheets


(in millions, except share data)	September 30, 2017				December 31, 2016			June 30, 2019				December 31, 2018
	(unaudited)							(unaudited)
Assets
Current assets
Cash and equivalents	$	8,446			$	5,100		$	5,172			$	7,289
Short-term investments	1,108				1,323			244				772
Accounts receivable, net	4,891				4,758			5,482				5,384
Inventories	1,785				1,444			1,895				1,605
Prepaid expenses and other	2,700				3,562			2,307				1,895
Total current assets	18,930				16,187			15,100				16,945

Investments	1,971				1,783			1,473				1,420
Property and equipment, net	2,697				2,604			2,879				2,883
Intangible assets, net	28,167				28,897			20,459				21,233
Goodwill	15,748				15,416			15,642				15,663
Other assets	1,327				1,212			1,589				1,208
Total assets	$	68,840			$	66,099		$	57,142			$	59,352

Liabilities and Equity
Current liabilities
Short-term borrowings	$	800			$	377		$	306			$	3,699
Current portion of long-term debt and lease obligations	3,021				25
Current portion of long-term debt and finance lease obligations								5,335				1,609
Accounts payable and accrued liabilities	9,212				9,379			11,300				11,931
Total current liabilities	13,033				9,781			16,941				17,239

Long-term debt and lease obligations	33,974				36,440
Long-term debt and finance lease obligations								31,619				35,002
Deferred income taxes	6,147				6,890			1,148				1,067
Other long-term liabilities	8,999				8,352			16,000				14,490

Commitments and contingencies

Stockholders’ equity
Common stock, $0.01 par value, 4,000,000,000 shares authorized, 1,767,419,360 shares issued as of September 30, 2017 and 1,754,900,486 as of December 31, 2016	18				18
Common stock held in treasury, at cost, 171,296,169 shares as of September 30, 2017 and 162,387,762 as of December 31, 2016	(11,419		)		(10,852		)
Stockholders’ equity (deficit)
Common stock, $0.01 par value, 4,000,000,000 shares authorized, 1,781,055,877 shares issued as of June 30, 2019 and 1,776,510,871 as of December 31, 2018								18				18
Common stock held in treasury, at cost, 302,685,326 shares as of June 30, 2019 and 297,686,473 as of December 31, 2018								(24,505		)		(24,108		)
Additional paid-in capital	14,154				13,678			15,028				14,756
Retained earnings	6,547				4,378			3,384				3,368
Accumulated other comprehensive loss	(2,613		)		(2,586		)	(2,491		)		(2,480		)
Total stockholders’ equity	6,687				4,636
Total stockholders’ equity (deficit)								(8,566		)		(8,446		)

Total liabilities and equity	$	68,840			$	66,099		$	57,142			$	59,352

The accompanying notes are an integral part of these condensed consolidated financial statements.



~~2017~~2019 Form 10-Q \|	4

AbbVie Inc. and Subsidiaries

Condensed Consolidated Statements of ~~Cash Flows~~Equity (unaudited)

Nine months ended
September 30,
(in millions) (brackets denote cash outflows) 2017 2016
Cash flows from operating activities
Net earnings $ 5,257
$ 4,562
Adjustments to reconcile net earnings to net cash from operating activities:
Depreciation 324
307
Amortization of intangible assets 808
554
Change in fair value of contingent consideration liabilities 547
143
Stock-based compensation 288
278
Upfront costs and milestones related to collaborations 85
230
Devaluation loss related to Venezuela —
298
Other, net (73 ) 326
Changes in operating assets and liabilities, net of acquisitions:
Accounts receivable (163 ) (129 )
Inventories (119 ) 28
Prepaid expenses and other assets (22 ) (122 )
Accounts payable and other liabilities 444
(975 )
Cash flows from operating activities 7,376
5,500

Cash flows from investing activities
Acquisitions of businesses, net of cash acquired —
(2,477 )
Other acquisitions and investments (180 ) (172 )
Acquisitions of property and equipment (347 ) (365 )
Purchases of investment securities (1,838 ) (4,520 )
Sales and maturities of investment securities 1,890
1,579
Cash flows from investing activities (475 ) (5,955 )

Cash flows from financing activities
Net change in short-term borrowings 423
(406 )
Proceeds from issuance of long-term debt —
7,771
Repayments of long-term debt and lease obligations (18 ) (2,006 )
Debt issuance costs —
(52 )
Dividends paid (3,077 ) (2,784 )
Purchases of treasury stock (905 ) (4,223 )
Proceeds from the exercise of stock options 214
210
Payments of contingent consideration liabilities (268 ) —
Other, net 47
64
Cash flows from financing activities (3,584 ) (1,426 )
Effect of exchange rate changes on cash and equivalents 29
(300 )
Net change in cash and equivalents 3,346
(2,181 )
Cash and equivalents, beginning of period 5,100
8,399

Cash and equivalents, end of period $ 8,446
$ 6,218

Supplemental schedule of non-cash investing and financing activities
Issuance of common shares associated with acquisitions of businesses $ —
$ 3,923



(in millions)	Common shares outstanding			Common stock				Treasury stock				Additional paid-in capital				Retained earnings				Accumulated other comprehensive loss				Total
Balance at March 31, 2018	1,587			$	18			$	(13,331	)		$	14,519			$	4,977			$	(2,630	)		$	3,553
Net earnings	—			—				—				—				1,983				—				1,983
Other comprehensive loss, net of tax	—			—				—				—				—				(9		)		(9		)
Dividends declared	—			—				—				—				(1,465		)		—				(1,465		)
Purchases of treasury stock	(73	)		—				(7,516		)		—				—				—				(7,516		)
Stock-based compensation plans and other	—			—				2				77				—				—				79
Balance at June 30, 2018	1,514			$	18			$	(20,845	)		$	14,596			$	5,495			$	(2,639	)		$	(3,375	)

Balance at March 31, 2019	1,478			$	18			$	(24,502	)		$	14,940			$	4,234			$	(2,516	)		$	(7,826	)
Net earnings	—			—				—				—				741				—				741
Other comprehensive income, net of tax	—			—				—				—				—				25				25
Dividends declared	—			—				—				—				(1,591		)		—				(1,591		)
Purchases of treasury stock	—			—				(3		)		—				—				—				(3		)
Stock-based compensation plans and other	—			—				—				88				—				—				88
Balance at June 30, 2019	1,478			$	18			$	(24,505	)		$	15,028			$	3,384			$	(2,491	)		$	(8,566	)

Balance at December 31, 2017	1,592			$	18			$	(11,923	)		$	14,270			$	5,459			$	(2,727	)		$	5,097
Adoption of new accounting standards	—			—				—				—				(1,733		)		—				(1,733		)
Net earnings	—			—				—				—				4,766				—				4,766
Other comprehensive income, net of tax	—			—				—				—				—				88				88
Dividends declared	—			—				—				—				(2,997		)		—				(2,997		)
Purchases of treasury stock	(85	)		—				(8,947		)		—				—				—				(8,947		)
Stock-based compensation plans and other	7			—				25				326				—				—				351
Balance at June 30, 2018	1,514			$	18			$	(20,845	)		$	14,596			$	5,495			$	(2,639	)		$	(3,375	)

Balance at December 31, 2018	1,479			$	18			$	(24,108	)		$	14,756			$	3,368			$	(2,480	)		$	(8,446	)
Net earnings	—			—				—				—				3,197				—				3,197
Other comprehensive loss, net of tax	—			—				—				—				—				(11		)		(11		)
Dividends declared	—			—				—				—				(3,181		)		—				(3,181		)
Purchases of treasury stock	(5	)		—				(422		)		—				—				—				(422		)
Stock-based compensation plans and other	4			—				25				272				—				—				297
Balance at June 30, 2019	1,478			$	18			$	(24,505	)		$	15,028			$	3,384			$	(2,491	)		$	(8,566	)

The accompanying notes are an integral part of these condensed consolidated financial statements.



~~2017~~2019 Form 10-Q \|	5

AbbVie Inc. and Subsidiaries
Condensed Consolidated Statements of Cash Flows (unaudited)



	Six months ended June 30,
(in millions) (brackets denote cash outflows)	2019				2018
Cash flows from operating activities
Net earnings	$	3,197			$	4,766
Adjustments to reconcile net earnings to net cash from operating activities:
Depreciation	232				234
Amortization of intangible assets	773				654
Change in fair value of contingent consideration liabilities	2,473				337
Stock-based compensation	276				276
Upfront costs and milestones related to collaborations	321				656
Other, net	(10		)		118
Changes in operating assets and liabilities:
Accounts receivable	(96		)		(805		)
Inventories	(288		)		(191		)
Prepaid expenses and other assets	(97		)		(546		)
Accounts payable and other liabilities	(1,287		)		12
Cash flows from operating activities	5,494				5,511

Cash flows from investing activities
Acquisitions and investments	(440		)		(401		)
Acquisitions of property and equipment	(235		)		(233		)
Purchases of investment securities	(558		)		(637		)
Sales and maturities of investment securities	1,066				1,511
Cash flows from investing activities	(167		)		240

Cash flows from financing activities
Net change in commercial paper borrowings	(393		)		111
Proceeds from issuance of other short-term borrowings	—				3,000
Repayments of other short-term borrowings	(3,000		)		—
Repayments of long-term debt and finance lease obligations	(4		)		(3,013		)
Debt issuance costs	(171		)		—
Dividends paid	(3,180		)		(2,668		)
Purchases of treasury stock	(623		)		(8,947		)
Proceeds from the exercise of stock options	5				64
Payments of contingent consideration liabilities	(108		)		(39		)
Other, net	21				5
Cash flows from financing activities	(7,453		)		(11,487		)
Effect of exchange rate changes on cash and equivalents	9				(20		)
Net change in cash and equivalents	(2,117		)		(5,756		)
Cash and equivalents, beginning of period	7,289				9,303

Cash and equivalents, end of period	$	5,172			$	3,547

The accompanying notes are an integral part of these condensed consolidated financial statements.



2019 Form 10-Q \|	6

AbbVie Inc. and Subsidiaries

Notes to Condensed Consolidated Financial Statements (unaudited)

Note 1 Basis of Presentation

Basis of Historical Presentation

The unaudited interim condensed consolidated financial statements of AbbVie Inc. (AbbVie or the company) have been prepared pursuant to the rules and regulations of the U.S. Securities and Exchange Commission. Accordingly, certain information and footnote disclosures normally included in annual financial statements prepared in accordance with generally accepted accounting principles in the United States (U.S. GAAP) have been omitted. These unaudited interim condensed consolidated financial statements should be read in conjunction with the company’s audited consolidated financial statements and notes included in the company’s Annual Report on Form 10-K for the year ended December 31, ~~2016.~~

2018.

It is management’s opinion that these financial statements include all normal and recurring adjustments necessary for a fair presentation of the company’s financial position and operating results. Net revenues and net earnings for any interim period are not necessarily indicative of future or annual results. Certain reclassifications were made to conform the prior period interim condensed consolidated financial statements to the current period presentation.

Recent Accounting Pronouncements

Recently Adopted Accounting Pronouncements

ASU No. 2016-02

In ~~January 2017,~~February 2016, the Financial Accounting Standards Board (FASB) issued Accounting Standards Update (ASU) No. ~~2017-01,~~ ~~Business Combinations~~2016-02, Leases (Topic ~~805):Clarifying the Definition of a Business~~842). The standard provides clarifying guidance to assist in the evaluation of whether transactions are treated as business combinations or asset acquisitions. AbbVie elected to early adopt the changes prospectively in the first quarter of 2017.

~~In March 2016, the FASB issued ASU No. 2016-09,~~ ~~Compensation-Stock Compensation (Topic 718): Improvements to Employee Share-Based Payment Accounting~~. AbbVie adopted the standard in the first quarter of 2017. As a result, all excess tax benefits associated with stock-based awards are recognized in the statement of earnings when the awards vest or settle, rather than in stockholders' equity. In addition, excess tax benefits in the statement of cash flows are now classified as an operating activity rather than as a financing activity. AbbVie adopted these changes prospectively. Accordingly, the company recognized excess tax benefits in income tax expense of $14 million for the three months and $53 million for the nine months ended September 30, 2017 and classified them within cash flows from operating activities.

~~Recent Accounting Pronouncements Not Yet Adopted~~

~~In May 2014, the FASB issued ASU No. 2014-09,~~ ~~Summary and Amendments That Create Revenue from Contracts with Customers (Topic 606) and Other Assets and Deferred Costs-Contracts with Customers (Subtopic 340-40)~~. The amendments in this standard supersede most current revenue recognition requirements. The core principle of the new guidance is that an entity should recognize revenue to depict the transfer of promised goods or services to customers in an amount that reflects the consideration to which the entity expects to be entitled in exchange for those goods or services. AbbVie can apply the amendments using one of the following two methods: (i) retrospectively to each prior reporting period presented, or (ii) modified retrospectively with the cumulative effect of initially applying the amendments recognized at the date of initial application. AbbVie will adopt the standard effective the first quarter of 2018 and apply the amendments using the modified retrospective method. The company has made substantial progress in its review of the new standard and will complete its assessment by December 31, 2017. AbbVie does not expect significant changes to the amounts or timing of revenue recognition for product sales, which is its primary revenue stream. However, the company expects that the adoption of the new standard will require a cumulative-effect adjustment to retained earnings on January 1, 2018 of approximately $130 million, net of tax, primarily related to certain deferred license revenues that were originally expected to be recognized through early 2020.

~~In January 2016, the FASB issued ASU No. 2016-01,~~ ~~Financial Instruments-Overall (Subtopic 825-10): Recognition and Measurement of Financial Assets and Financial Liabilities~~. The standard requires several targeted changes including that equity investments (except those accounted for under the equity method of accounting, or those that result in consolidation of the investee) be measured at fair value with changes in fair value recognized in net earnings. These provisions will not impact the accounting for AbbVie's investments



~~2017 Form 10-Q~~ \|	6

in debt securities. The new guidance also changes certain disclosure requirements and other aspects of current U.S. GAAP. Amendments are to be applied as a cumulative-effect adjustment to the balance sheet as of the beginning of the fiscal year of adoption. This standard will be effective for AbbVie starting with the first quarter of 2018. The standard does not permit early adoption with the exception of certain targeted provisions. AbbVie is unable to estimate the impact of adopting this standard on its financial statements as it will be dependent upon the composition of its equity investment portfolio as of the adoption date and future changes in fair value subsequent to the adoption date. However, based on historical trends, AbbVie does not believe the adoption will have a material impact on its consolidated financial statements.

~~In February 2016, the FASB issued ASU No. 2016-02,~~ ~~Leases (Topic 842). The standard outlines~~outlined a comprehensive lease accounting model that ~~supersedes~~superseded the ~~current~~previous lease guidance and ~~requires~~required lessees to recognize lease liabilities and corresponding right-of-use assets for all leases with lease terms greater than 12 months. The guidance also ~~changes~~changed the definition of a lease and ~~expands~~expanded the disclosure requirements of lease arrangements. ~~The new standard must be~~AbbVie adopted ~~using the modified retrospective approach and will be effective for AbbVie starting with the first quarter of 2019, with early adoption permitted. AbbVie will adopt~~ the standard ~~effective~~ in the first quarter of 2019 using the modified retrospective method. Results for reporting periods beginning after December 31, 2018 have been presented in accordance with the standard, while results for prior periods have not been adjusted and ~~is currently assessing~~continue to be reported in accordance with AbbVie's historical accounting. The cumulative effect of initially applying the new leases standard was recognized as an adjustment to the opening condensed consolidated balance sheet as of January 1, 2019.

The company elected a package of practical expedients for leases that commenced prior to January 1, 2019 and did not reassess historical conclusions on: (i) whether any expired or existing contracts are or contain leases; (ii) lease classification for any expired or existing leases; and (iii) initial direct costs capitalization for any existing leases.

Under the new standard, on January 1, 2019, the company recognized a cumulative-effect adjustment to its condensed consolidated balance sheet primarily related to the recognition of liabilities and corresponding right-of-use assets for operating leases. The adjustment to the condensed consolidated balance sheet included: (i) a $405 million increase to other assets; (ii) a $115 million increase to accounts payable and accrued liabilities; and (iii) a $290 million increase to other long-term liabilities. Other cumulative-effect adjustments to the condensed consolidated balance sheet were insignificant.

Adoption of the standard did not have a significant impact on AbbVie's condensed consolidated statements of ~~adopting this guidance~~earnings for the three and six months ended June 30, 2019.

ASU No. 2018-02

In February 2018, the FASB issued ASU No. 2018-02, Income Statement - Reporting Comprehensive Income (Topic 220): Reclassification of Certain Tax Effects from Accumulated Other Comprehensive Income, which allowed a reclassification from accumulated other comprehensive income (AOCI) to retained earnings for stranded tax effects related to adjustments to deferred taxes resulting from the December 2017 enactment of the Tax Cuts and Jobs Act (the Act). AbbVie adopted the standard in the first quarter of 2019. Upon adoption, the company made an election to not reclassify the income tax effects of the Act from AOCI to retained earnings. Therefore, the adoption of the standard had no impact on ~~its~~AbbVie's consolidated financial statements.



2019 Form 10-Q \|	7

Recent Accounting Pronouncements Not Yet Adopted

ASU No. 2016-13

In June 2016, the FASB issued ASU No. 2016-13, Financial Instruments - Credit Losses (Topic 326). The standard changes how credit losses are measured for most financial assets and certain other instruments. For trade and other receivables, held-to-maturity debt securities, loans and other financial instruments, the standard requires the use of a new forward-looking "expected credit loss" model that generally will result in the earlier recognition of allowances for losses. For available-for-sale debt securities with unrealized losses, the standard now requires allowances to be recorded instead of reducing the amortized cost of the investment. Additionally, the standard requires new disclosures and will be effective for AbbVie starting with the first quarter of 2020. ~~Early adoption beginning in the first quarter of 2019 is permitted.~~ With certain exceptions, adjustments are to be applied using a modified-retrospective approach by reflecting adjustments through a cumulative-effect impact to retained earnings as of the beginning of the fiscal year of adoption. AbbVie is currently assessing the impact ~~and timing~~ of adopting this guidance on its consolidated financial statements.

~~In October 2016, the FASB issued ASU No. 2016-16,~~ ~~Income Taxes (Topic 740)~~. The new standard requires entities to recognize the income tax consequences of an intercompany transfer of an asset other than inventory when the transfer occurs. Under current U.S. GAAP, the income tax consequences of these intercompany asset transfers are deferred until the asset is sold to a third party or otherwise recovered through use. The standard will be effective for AbbVie starting with the first quarter of 2018. Adjustments for this update are to be applied on a modified retrospective basis through a cumulative-effect adjustment directly to retained earnings with any adjustments reflected as of the beginning of the fiscal year of adoption. AbbVie is currently assessing the impact of adopting this guidance on its consolidated financial statements. As of ~~September 30, 2017~~, AbbVie had approximately $1.8 billion of prepaid income tax assets that will be affected by this standard, of which $1.3 billion was included in prepaid expenses and other on the condensed consolidated balance sheet.

~~In March 2017, the FASB issued ASU No. 2017-07,~~ ~~Compensation - Retirement Benefits (Topic 715): Improving the Presentation of Net Periodic Pension Cost and Net Periodic Postretirement Benefit Cost~~. The standard requires that an employer continue to report the service cost component of net periodic benefit cost in the same income statement line item or items as other employee compensation costs arising from services rendered during the period. The other components of net periodic benefit cost are required to be presented separately outside of income from operations and are not eligible for capitalization. The standard will be effective for AbbVie starting with the first quarter of 2018. Upon adoption, the company will apply the income statement classification provisions of this standard retrospectively and preliminarily expects to reclassify income of approximately $50 million from operating earnings to non-operating income for the year ending December 31, 2017.

~~In August 2017, the FASB issued ASU No. 2017-12,~~ ~~Derivatives and Hedging (Topic 815): Targeted Improvements to Accounting for Hedging Activities.~~ The standard simplifies the application of hedge accounting and more closely aligns the accounting with an entity’s risk management activities. The standard will be effective for AbbVie starting with the first quarter of 2019, with early adoption permitted. AbbVie is currently assessing the impact and timing of adopting this guidance on its consolidated financial statements.



~~2017 Form 10-Q~~ \|	7

Note 2 Supplemental Financial Information

Interest Expense, Net



		Three months ended June 30,								Six months ended June 30,
(in millions)		2019				2018				2019				2018
Interest expense		$	358			$	320			$	745			$	629
Interest income		(49		)		(48		)		(111		)		(106		)
Interest expense, net		$	309			$	272			$	634			$	523

Three months ended
September 30, Nine months ended
September 30,
(in millions) 2017 2016 2017 2016
Interest expense $ 293
$ 271
$ 851
$ 731
Interest income (41 ) (21 ) (99 ) (56 )
Interest expense, net $ 252
$ 250
$ 752
$ 675
Inventories



(in millions)	June 30, 2019				December 31, 2018
Finished goods	$	638			$	473
Work-in-process	969				862
Raw materials	288				270
Inventories	$	1,895			$	1,605

~~Inventories~~

(in millions) September 30, 2017 December 31, 2016
Finished goods $ 353
$ 223
Work-in-process 1,271
1,080
Raw materials 161
141
Inventories $ 1,785
$ 1,444

Property and Equipment



(in millions)	June 30, 2019				December 31, 2018
Property and equipment, gross	$	8,443			$	8,396
Accumulated depreciation	(5,564		)		(5,513		)
Property and equipment, net	$	2,879			$	2,883

(in millions) September 30, 2017 December 31, 2016
Property and equipment, gross $ 7,894
$ 7,526
Accumulated depreciation (5,197 ) (4,922 )
Property and equipment, net $ 2,697
$ 2,604

Depreciation expense was ~~$111~~$114 million for the three months and ~~$324~~$232 million for the ~~nine~~six months ended ~~September~~June 30, ~~2017~~2019 and ~~$96~~$119 million for the three months and ~~$307~~$234 million for the ~~nine~~six months ended ~~September~~June 30, ~~2016.~~2018.



~~2017 Form 10-Q~~ \|	8

Note 3 Earnings Per Share

AbbVie grants certain ~~restricted stock awards (RSAs) and~~ restricted stock units (RSUs) that are considered to be participating securities. Due to the presence of participating securities, AbbVie calculates earnings per share (EPS) using the more dilutive of the treasury stock or the two-class method. For all periods presented, the two-class method was more dilutive.



2019 Form 10-Q \|	8

The following table summarizes the impact of the two-class method:



		Three months ended June 30,								Six months ended June 30,
(in millions, except per share data)		2019				2018				2019				2018
Basic EPS
Net earnings		$	741			$	1,983			$	3,197			$	4,766
Earnings allocated to participating securities		8				10				17				22
Earnings available to common shareholders		$	733			$	1,973			$	3,180			$	4,744
Weighted-average basic shares outstanding		1,480				1,568				1,480				1,579
Basic earnings per share		$	0.49			$	1.26			$	2.15			$	3.00

Diluted EPS
Net earnings		$	741			$	1,983			$	3,197			$	4,766
Earnings allocated to participating securities		8				10				17				22
Earnings available to common shareholders		$	733			$	1,973			$	3,180			$	4,744
Weighted-average shares of common stock outstanding		1,480				1,568				1,480				1,579
Effect of dilutive securities		4				4				3				5
Weighted-average diluted shares outstanding		1,484				1,572				1,483				1,584
Diluted earnings per share		$	0.49			$	1.26			$	2.14			$	2.99

Three months ended
September 30, Nine months ended
September 30,
(in millions, except per share information) 2017 2016 2017 2016
Basic EPS
Net earnings $ 1,631
$ 1,598
$ 5,257
$ 4,562
Earnings allocated to participating securities 8
8
26
23
Earnings available to common shareholders $ 1,623
$ 1,590
$ 5,231
$ 4,539
Weighted-average basic shares outstanding 1,597
1,632
1,596
1,624
Basic earnings per share $ 1.02
$ 0.97
$ 3.28
$ 2.79

Diluted EPS
Net earnings $ 1,631
$ 1,598
$ 5,257
$ 4,562
Earnings allocated to participating securities 8
8
26
23
Earnings available to common shareholders $ 1,623
$ 1,590
$ 5,231
$ 4,539
Weighted-average shares of common stock outstanding 1,597
1,632
1,596
1,624
Effect of dilutive securities 6
8
6
9
Weighted-average diluted shares outstanding 1,603
1,640
1,602
1,633
Diluted earnings per share $ 1.01
$ 0.97
$ 3.27
$ 2.78

Certain shares issuable under stock-based compensation plans were excluded from the computation of EPS because the effect would have been antidilutive. The number of common shares excluded ~~were~~was insignificant for all periods presented.

Note 4Licensing, Acquisitions and Other Arrangements

Proposed Acquisition of ~~Stemcentrx~~

Allergan plc

On June ~~1, 2016,~~25, 2019, AbbVie ~~acquired all~~announced that it entered into a definitive transaction agreement under which AbbVie will acquire Allergan plc (Allergan) in a cash and stock transaction for a transaction equity value of approximately $63 billion, based on the closing price of AbbVie’s common stock of $78.45 on June 24, 2019. Under the terms of the ~~outstanding equity interests~~transaction agreement, Allergan shareholders will receive 0.8660 AbbVie shares and $120.30 in ~~Stemcentrx,~~cash for each Allergan share.

In connection with the proposed acquisition of Allergan, on June 25, 2019, AbbVie entered into a ~~privately-held biotechnology company.~~ $38.0 billion 364-day bridge credit agreement. On July 12, 2019, AbbVie entered into a term loan credit agreement with an aggregate principal amount of $6.0 billion consisting of a $1.5 billion 364-day term loan tranche, a $2.5 billion three-year term loan tranche and a $2.0 billion five-year term loan tranche, with the commitments under the bridge credit agreement to be reduced by such amount to $32.0 billion. No amounts have been drawn under the bridge credit agreement or term loan credit agreement.

Allergan is a global pharmaceutical leader focused on developing, manufacturing and commercializing branded pharmaceutical, device, biologic, surgical and regenerative medicine products for patients around the world. Allergan markets a portfolio of brands and products primarily focused on key therapeutic areas including medical aesthetics, eye care, neuroscience, gastroenterology and women's health.

The transaction ~~expanded AbbVie’s oncology pipeline by adding the late-stage asset rovalpituzumab tesirine (Rova-T), four additional early-stage clinical compounds~~is expected to close in ~~solid tumor indications~~early 2020, subject to regulatory and ~~a significant portfolio of pre-clinical assets. Rova-T is currently in registrational trials for small cell lung cancer.~~Allergan shareholder approvals.

Other Licensing & Acquisitions Activity

~~The acquisition of Stemcentrx was accounted for as a business combination using the acquisition method of accounting. The aggregate upfront consideration~~Cash outflows related to other acquisitions and investments totaled $440 million for the ~~acquisition~~six months ended June 30, 2019 and $401 million for the six months ended June 30, 2018. AbbVie recorded acquired in-process research and development (IPR&D) charges of ~~Stemcentrx consisted~~$91 million for the three months and $246 million for the six months ended June 30, 2019. AbbVie recorded no acquired IPR&D charges for the three months ended June 30, 2018 and recorded acquired IPR&D charges of ~~approximately 62.4~~$69 million ~~shares of AbbVie common stock, issued from common stock held in treasury, and cash. AbbVie may make certain contingent payments upon~~for the achievement of defined development and regulatory milestones. As of the acquisition date, the maximum aggregate amount payable for development and regulatory milestones was $4.0 billion. The acquisition-date fair value of these milestones was $620 million and was estimated using a combination of probability-weighted discounted cash flow models and Monte Carlo simulation models. The estimate was determined based on significant inputs that are not observable in the market, referred to as Level 3 inputs, as described in more detail in Note 8.six months ended June 30, 2018.



~~2017~~2019 Form 10-Q \|	9

~~The following table summarizes total consideration:~~Calico Life Sciences LLC

(in millions)
Cash $ 1,883
Fair value of AbbVie common stock 3,923
Contingent consideration 620
Total consideration $ 6,426

~~The following table summarizes fair values of assets acquired~~In June 2018, AbbVie and ~~liabilities assumed as of the June 1, 2016 acquisition date:~~

(in millions)
Assets acquired and liabilities assumed
Accounts receivable $ 1
Prepaid expenses and other 7
Property and equipment 17
Intangible assets - Indefinite-lived research and development 6,100
Accounts payable and accrued liabilities (31 )
Deferred income taxes (1,933 )
Other long-term liabilities (7 )
Total identifiable net assets 4,154
Goodwill 2,272
Total assets acquired and liabilities assumed $ 6,426

Intangible assets were related to acquired in-process research and development (IPR&D) for Rova-T, four additional early-stage clinical compounds in solid tumor indications and several additional pre-clinical compounds. The estimated fair value of the acquired IPR&D was determined using the multi-period excess earnings model of the “income approach,” which is a valuation technique that providesCalico Life Sciences LLC (Calico) entered into an estimate of the fair value of an asset based on market participant expectations of the cash flows an asset would generate over its remaining useful life. Some of the more significant assumptions inherent in the development of those asset valuations include the estimated annual cash flows for each asset or product (including net revenues, cost of sales, research and development (R&D) costs, selling and marketing costs and working capital/contributory asset charges), the appropriate discount rate to select in order to measure the risk inherent in each future cash flow stream, the assessment of each asset’s life cycle, the regulatory approval probabilities, commercial success risks, competitive landscape as well as other factors.

The goodwill recognized represents expected synergies, including the ability to: (i) leverage the respective strengths of each business; (ii) expand the combined company’s product portfolio; (iii) accelerate AbbVie's clinical and commercial presence in oncology; and (iv) establish a strong leadership position in oncology. Goodwill was also impacted by the establishmentextension of a ~~deferred tax liability~~collaboration to discover, develop and bring to market new therapies for ~~the acquired identifiable intangible assets which have no tax basis. The goodwill is not deductible for tax purposes.~~

~~Pro Forma Financial Information~~

~~The following table presents the unaudited pro forma combined results of operations of AbbVie~~patients with age-related diseases, including neurodegeneration and ~~Stemcentrx for the three and nine months ended September 30, 2016 as if the acquisition of Stemcentrx had occurred on January 1, 2015:~~

Three months ended
September 30, Nine months ended
September 30,
(in millions, except per share information) 2016 2016
Net revenues $ 6,432
$ 18,845
Net earnings 1,579
4,515
Basic earnings per share $ 0.97
$ 2.72
Diluted earnings per share $ 0.96
$ 2.71

The unaudited pro forma financial information was prepared using the acquisition method of accounting and was based on the historical financial information of AbbVie and Stemcentrx. In order to reflect the occurrence of the acquisition on January 1, 2015 as



~~2017 Form 10-Q~~ \|	10

required, the unaudited pro forma financial information includes adjustments to reflect the additional interest expense associated with the issuance of debt to finance the acquisition and the reclassification of acquisition, integration and financing-related costs incurred during 2016 to the three and nine months ended September 30, 2015. The unaudited pro forma financial information is not necessarily indicative of what the consolidated results of operations would have been had the acquisition been completed on January 1, 2015. In addition, the unaudited pro forma financial information is not a projection of the future results of operations of the combined company nor does it reflect the expected realization of any cost savings or synergies associated with the acquisition.

~~Acquisition of BI 655066 and BI 655064 from Boehringer Ingelheim~~

On April 1, 2016, AbbVie acquired all rights to risankizumab (BI 655066), an anti-IL-23 monoclonal biologic antibody in Phase 3 development for psoriasis, from Boehringer Ingelheim (BI) pursuant to a global collaboration agreement. AbbVie is also evaluating the potential of this biologic therapy in Crohn’s disease, psoriatic arthritis and asthma. In addition to risankizumab, AbbVie also gained rights to an anti-CD40 antibody, BI 655064, currently in Phase 1 development. BI will retain responsibility for further development of BI 655064, and AbbVie may elect to advance the program after completion of certain clinical achievements. The acquired assets include all patents, data, know-how, third-party agreements, regulatory filings and manufacturing technology related to BI 655066 and BI 655064.

~~The company concluded that the acquired assets met the definition of a business and accounted for the transaction as a business combination using the acquisition method of accounting.~~cancer. Under the terms of the agreement, AbbVie ~~made~~and Calico will each contribute an ~~upfront payment of $595 million. Additionally, $18~~additional $500 million ~~of payments to BI, pursuant to a contractual obligation to reimburse BI for certain development costs it incurred prior~~ to the ~~acquisition date, were initially deferred.~~collaboration and the term was extended for an additional three years. Calico will be responsible for research and early development until 2022 and will advance collaboration projects through Phase 2a through 2027. Following completion of Phase 2a, AbbVie ~~may make certain contingent payments upon~~will have the achievement of defined development, regulatory and commercial milestones, as well as royalty payments based on net revenues of licensed products. As of the acquisition date, the maximum aggregate amount payable for development and regulatory milestones was approximately $1.6 billion. The acquisition-date fair value of these milestones was $606 million. The acquisition-date fair value of contingent royalty payments was $2.8 billion. The potential contingent consideration payments were estimated by applying a probability-weighted expected payment model for contingent milestone payments and a Monte Carlo simulation model for contingent royalty payments, which were then discounted to present value. The fair value measurements were based on Level 3 inputs.

~~The following table summarizes total consideration:~~

(in millions)
Cash $ 595
Deferred consideration payable 18
Contingent consideration 3,365
Total consideration $ 3,978

~~The following table summarizes fair values of assets acquired as of the April 1, 2016 acquisition date:~~

(in millions)
Assets acquired
Identifiable intangible assets - Indefinite-lived research and development $ 3,890
Goodwill 88
Total assets acquired $ 3,978

The estimated fair value of the acquired IPR&D was determined using the multi-period excess earnings model of the “income approach.” The goodwill recognized represents expected synergies, including an expansion of the company’s immunology product portfolio.

~~Pro forma results of operations for this acquisition have not been presented because this acquisition is insignificant to AbbVie’s consolidated results of operations.~~



~~2017 Form 10-Q~~ \|	11

~~Other Licensing & Acquisitions Activity~~

Excluding the acquisitions above, cash outflows related to other acquisitions and investments totaled $180 million for the nine months ended September 30, 2017 and $172 million for the nine months ended September 30, 2016. AbbVie recorded no IPR&D charges for the three months ended September 30, 2017 and recorded IPR&D charges of $15 million for the nine months ended September 30, 2017. AbbVie recorded IPR&D charges of $80 million for the three months and $160 million for the nine months ended September 30, 2016.

In October 2017, AbbVie entered into a global strategic collaboration with Alector, Inc. (Alector) to develop and commercialize medicines to treat Alzheimer’s disease and other neurodegenerative disorders. AbbVie and Alector have agreed to research a portfolio of antibody targets and AbbVie has an option to ~~global~~exclusively license collaboration compounds. AbbVie will support Calico in its early research and development efforts and, upon exercise, would be responsible for late-stage development and commercial ~~rights to two targets. AbbVie will make an initial upfront payment of $205 million, which~~activities. Collaboration costs and profits will be ~~expensed to IPR&D~~shared equally by both parties post option exercise. During the six months ended June 30, 2018, AbbVie recorded $500 million in other expense in the ~~fourth quarter~~condensed consolidated statement of ~~2017. Alector will conduct exploratory research, drug discovery and development for lead programs up~~earnings related to its commitments under the conclusion of the proof of concept studies. If the option is exercised, AbbVie will lead development and commercialization activities and could make additional payments to Alector of up to $986 million upon achievement of certain development and regulatory milestones. Alector and AbbVie will co-fund development and commercialization and will share global profits equally.agreement.

Note 5Collaboration with Janssen Biotech, Inc.

In December 2011, Pharmacyclics, a wholly-owned subsidiary of AbbVie, entered into a worldwide collaboration and license agreement with Janssen Biotech, Inc. and its affiliates (Janssen), one of the Janssen Pharmaceutical companies of Johnson & Johnson, for the joint development and commercialization of IMBRUVICA, a novel, orally active, selective covalent inhibitor of Bruton's tyrosine kinase (BTK) and certain compounds structurally related to IMBRUVICA, for oncology and other indications, excluding all immune and inflammatory mediated diseases or conditions and all psychiatric or psychological diseases or conditions, in the United States and outside the United States.

The collaboration provides Janssen with an exclusive license to commercialize IMBRUVICA outside of the United States and co-exclusively with AbbVie in the United States. Both parties are responsible for the development, manufacturing and marketing of any products generated as a result of the collaboration. The collaboration has no set duration or specific expiration date and provides for potential future development, regulatory and approval milestone payments of up to $200 million to AbbVie. The collaboration also includes a cost sharing arrangement for associated collaboration activities. Except in certain cases, Janssen is responsible for approximately 60% of collaboration development costs and AbbVie is responsible for the remaining 40% of collaboration development costs.

In the United States, both parties have co-exclusive rights to commercialize the products; however, AbbVie is the principal in the ~~end customer~~end-customer product sales. AbbVie and Janssen share pre-tax profits and losses equally from the commercialization of products. Sales of IMBRUVICA are included in AbbVie's net revenues. Janssen's share of profits is included in AbbVie's cost of products sold. Other costs incurred under the collaboration are reported in their respective expense line items, net of Janssen's share.

Outside the United States, Janssen is responsible for and has exclusive rights to commercialize IMBRUVICA. AbbVie and Janssen share pre-tax profits and losses equally from the commercialization of products. AbbVie's share of profits is included in AbbVie's net revenues. Other costs incurred under the collaboration are reported in their respective expense line items, net of Janssen's share.

The following table shows the profit and cost sharing relationship between Janssen and AbbVie:



		Three months ended June 30,								Six months ended June 30,
(in millions)		2019				2018				2019				2018
United States - Janssen's share of profits (included in cost of products sold)		$	422			$	325			$	808			$	601
International - AbbVie's share of profits (included in net revenues)		213				157				406				295
Global - AbbVie's share of other costs (included in respective line items)		77				80				149				151

Three months ended
September 30, Nine months ended
September 30,
(in millions) 2017 2016 2017 2016
United States - Janssen's share of profits (included in cost of products sold) $ 268
$ 211
$ 727
$ 540
International - AbbVie's share of profits (included in net revenues) 114
64
306
175
Global - AbbVie's share of other costs (included in respective line items) 75
70
209
195

AbbVie’s receivable from Janssen, included in accounts receivable, net, was $230 million at June 30, 2019 and $177 million at December 31, 2018. AbbVie’s payable to Janssen, included in accounts payable and accrued liabilities, was $405 million at June 30, 2019 and $376 million at December 31, 2018.



~~2017~~2019 Form 10-Q \|	1210

Note 6 Goodwill and Intangible Assets

Goodwill

The following table summarizes the changes in the carrying amount of goodwill:



(in millions)
Balance as of December 31, 2018	$	15,663
Foreign currency translation adjustments	(21		)
Balance as of June 30, 2019	$	15,642

(in millions)
Balance as of December 31, 2016 $ 15,416
Foreign currency translation adjustments 332
Balance as of September 30, 2017 $ 15,748

The ~~latest~~company performs its annual goodwill impairment assessment ~~of goodwill was completed in the third quarter of 2017. As of September 30, 2017, there were no accumulated goodwill impairment losses. Future impairment tests for goodwill will be performed annually~~ in the third quarter, or earlier if impairment indicators exist.

As of June 30, 2019, there were no accumulated goodwill impairment losses.

Intangible Assets, Net

The following table summarizes intangible assets:



	June 30, 2019												December 31, 2018
(in millions)	Gross carrying amount				Accumulated amortization				Net carrying amount				Gross carrying amount				Accumulated amortization				Net carrying amount
Definite-lived intangible assets
Developed product rights	$	19,611			$	(5,963	)		$	13,648			$	15,872			$	(5,614	)		$	10,258
License agreements	7,798				(2,017		)		5,781				7,865				(1,810		)		6,055
Total definite-lived intangible assets	27,409				(7,980		)		19,429				23,737				(7,424		)		16,313
Indefinite-lived research and development	1,030				—				1,030				4,920				—				4,920
Total intangible assets, net	$	28,439			$	(7,980	)		$	20,459			$	28,657			$	(7,424	)		$	21,233

September 30, 2017 December 31, 2016
(in millions) Gross
carrying
amount Accumulated
amortization Net
carrying
amount Gross
carrying
amount Accumulated
amortization Net
carrying
amount
Definite-lived intangible assets
Developed product rights $ 16,456
$ (4,805 ) $ 11,651
$ 16,464
$ (4,256 ) $ 12,208
License agreements 7,869
(1,343 ) 6,526
7,809
(1,110 ) 6,699
Total definite-lived intangible assets 24,325
(6,148 ) 18,177
24,273
(5,366 ) 18,907
Indefinite-lived research and development 9,990
—
9,990
9,990
—
9,990
Total intangible assets, net $ 34,315
$ (6,148 ) $ 28,167
$ 34,263
$ (5,366 ) $ 28,897
Indefinite-Lived Intangible Assets

Amortization expense was $268 million for the three months and $808 million for the nine months ended September 30, 2017 and $208 million for the three months and $554 million for the nine months ended September 30, 2016. Amortization expense was included in cost of products sold in the condensed consolidated statements of earnings.

For the nine months ended September 30, 2017, no impairment charges were recorded to intangible assets. For the nine months ended September 30, 2016, an impairment charge of $39 million was recorded related to certain developed product rights in the United States due to a decline in the market for the product. The fair value was determined based on a discounted cash flow analysis and the charge was included in cost of products sold in the condensed consolidated statement of earnings.

~~The indefinite-lived~~Indefinite-lived intangible assets represent acquired IPR&D associated with products that have not yet received regulatory approval. The indefinite-lived intangible assets as of September 30, 2017 and December 31, 2016 primarily related to the acquisitions of Stemcentrx and BI compounds. See Note 4 for additional information. The latestcompany performs its annual impairment assessment of indefinite-lived intangible assets was completed in the third quarter of 2017. No impairment charges were recorded for the nine months ended September 30, 2017 and 2016. Future impairment tests for indefinite-lived intangible assets will be performed annually in the third quarter, or earlier if impairment indicators exist. No indefinite-lived intangible asset impairment charges were recorded for the six months ended June 30, 2019 and 2018.

In April 2019, the U.S. Food and Drug Administration (FDA) and the European Commission approved SKYRIZI (risankizumab) for the treatment of moderate to severe plaque psoriasis. As a result, AbbVie reclassified $3.9 billion of indefinite-lived intangible assets related to SKYRIZI to developed product rights definite-lived intangible assets. This amount will be amortized over its estimated useful life using the estimated pattern of economic benefit.

In the fourth quarter of 2018, the company recorded an impairment charge of $5.1 billion related to IPR&D acquired as part of the 2016 Stemcentrx acquisition following the decision to stop enrollment in the TAHOE trial. AbbVie continues to evaluate information as it becomes available with respect to the Stemcentrx-related clinical development programs and will monitor the remaining $1.0 billion of IPR&D assets for further impairment.

Definite-Lived Intangible Assets

Amortization expense was $388 million for the three months and $773 million for the six months ended June 30, 2019 and $324 million for the three months and $654 million for the six months ended June 30, 2018. Amortization expense was included in cost of products sold in the condensed consolidated statements of earnings. No definite-lived intangible asset impairment charges were recorded for the six months ended June 30, 2019 and 2018.



~~2017~~2019 Form 10-Q \|	1311

Note 7 Restructuring Plans

AbbVie recorded restructuring charges of $7$19 million for the three months and ~~$34~~$186 million for the ~~nine~~six months ended ~~September~~June 30, ~~2017~~2019 and $5$1 million for the three months and ~~$35~~$23 million for the ~~nine~~six months ended ~~September~~June 30, ~~2016.~~2018. Restructuring charges for the three and six months ended June 30, 2019 primarily related to severance costs.

The following table summarizes the cash activity in the restructuring reserve for the ~~nine~~six months ended ~~September~~June 30, ~~2017:~~2019:



(in millions)
Accrued balance as of December 31, 2018	$	99
Restructuring charges	172
Payments and other adjustments	(80		)
Accrued balance as of June 30, 2019	$	191

(in millions)
Accrued balance as of December 31, 2016 $ 87
Restructuring charges 34
Payments and other adjustments (65 )
Accrued balance as of September 30, 2017 $ 56

Note 8 ~~Financial Instruments and Fair Value Measures~~Leases

AbbVie's lease portfolio primarily consists of real estate properties, vehicles and equipment. Short-term leases with a term of 12 months or less are not recorded on the balance sheet. For leases commencing or modified in 2019 or later, AbbVie does not separate lease components from non-lease components.

The company records lease liabilities based on the present value of lease payments over the lease term. AbbVie generally uses an incremental borrowing rate to discount its lease liabilities, as the rate implicit in the lease is typically not readily determinable. Certain lease agreements include renewal options that are under the company's control. AbbVie includes optional renewal periods in the lease term only when it is reasonably certain that AbbVie will exercise its option.

Variable lease payments include payments to lessors for taxes, maintenance, insurance and other operating costs as well as payments that are adjusted based on an index or rate. The company's lease agreements do not contain any significant residual value guarantees or restrictive covenants.

The following table summarizes the amounts and location of operating and finance leases on the condensed consolidated balance sheet:



(in millions)	Balance sheet caption	June 30, 2019
Assets
Operating	Other assets	$	380
Finance	Property and equipment, net	27
Total lease assets		$	407
Liabilities
Operating
Current	Accounts payable and accrued liabilities	$	111
Noncurrent	Other long-term liabilities	290
Finance
Current	Current portion of long-term debt and finance lease obligations	9
Noncurrent	Long-term debt and finance lease obligations	22
Total lease liabilities		$	432



2019 Form 10-Q \|	12

The following table summarizes the lease costs recognized in the condensed consolidated statements of earnings:



		Three months ended June 30,				Six months ended June 30,
(in millions)		2019				2019
Operating lease cost		$	32			$	64
Finance lease cost
Amortization of right-of-use assets		2				4
Interest on lease liabilities		—				—
Short-term lease cost		9				15
Variable lease cost		14				29
Total lease cost		$	57			$	112

Sublease income was insignificant for the three and six months ended June 30, 2019.

The following table presents the weighted-average remaining lease term and weighted-average discount rate for operating and finance leases:



	June 30, 2019
Weighted-average remaining lease term (in years)
Operating	6
Finance	3
Weighted-average discount rate
Operating	4.0	%
Finance	4.4	%

The following table presents supplementary cash flow information regarding the company's operating and finance leases:



	Six months ended June 30,
(in millions)	2019
Cash paid for amounts included in the measurement of lease liabilities
Operating cash flows from operating leases	$	58
Operating cash flows from finance leases	—
Financing cash flows from finance leases	4
Right-of-use assets obtained in exchange for new finance lease liabilities	—
Right-of-use assets obtained in exchange for new operating lease liabilities	15



2019 Form 10-Q \|	13

The following table summarizes the future maturities of AbbVie's operating and finance lease liabilities as of June 30, 2019:



(in millions)	Operating leases				Finance leases				Total ^(a)(b)
2019	$	65			$	8			$	73
2020	121				11				132
2021	100				9				109
2022	55				3				58
2023	35				1				36
Thereafter	79				—				79
Total lease payments	455				32				487
Less: Interest	54				1				55
Present value of lease liabilities	$	401			$	31			$	432

(a) Total lease payments exclude approximately $350 million of contractual minimum lease payments for leases executed but not yet commenced. These leases will commence between years 2019 and 2020 with lease terms of approximately 11 years.

(b) Lease payments recognized as part of lease liabilities for optional renewal periods are insignificant.

Note 9 Financial Instruments and Fair Value Measures

Risk Management Policy

See Note 10 to the company's Annual Report on Form 10-K for the year ended December 31, ~~2016~~2018 for a summary of AbbVie's risk management policy and use of derivative instruments.

Financial Instruments

Various AbbVie foreign subsidiaries enter into foreign currency forward exchange contracts to manage exposures to changes in foreign exchange rates for anticipated intercompany transactions denominated in a currency other than the functional currency of the local entity. These contracts, with notional amounts totaling ~~$3.0 billion~~$503 million at ~~September~~June 30, ~~2017~~2019 and ~~$2.2~~$1.4 billion at December 31, ~~2016,~~2018, are designated as cash flow hedges and are recorded at fair value. The durations of these forward exchange contracts were generally less than ~~eighteen~~18 months. Accumulated gains and losses as of ~~September~~June 30, ~~2017~~2019 will be reclassified from ~~accumulated other comprehensive loss (AOCI)~~AOCI and included in cost of products sold at the time the products are sold, generally not exceeding six months from the date of settlement.

The company also enters into foreign currency forward exchange contracts to manage its exposure to foreign currency denominated trade payables and receivables and intercompany loans. These contracts are not designated as hedges and are recorded at fair value. Resulting gains or losses are reflected in net foreign exchange gain or loss in the consolidated statements of earnings and are generally offset by losses or gains on the foreign currency exposure being managed. These contracts had notional amounts totaling ~~$7.4~~$7.9 billion at ~~September~~June 30, ~~2017~~2019 and ~~$6.6~~$8.6 billion at December 31, ~~2016.~~

2018.

The company also uses foreign currency forward exchange contracts or foreign currency denominated debt to hedge its net investments in certain foreign subsidiaries and affiliates. ~~In the fourth quarter of 2016, the~~The company ~~issued~~continued to designate €3.6 billion aggregate principal amount of senior Euro notes as net investment hedges at June 30, 2019 and December 31, 2018. In addition, in the second quarter of 2019, the company entered into foreign currency forward exchange contracts with notional amounts totaling €971 million, £204 million and CHF62 million and designated the ~~principal amounts~~instruments as net investment hedges. The company uses the spot method of ~~this foreign denominated debt~~assessing hedge effectiveness for derivative instruments designated as net investment hedges. Realized and unrealized gains and losses from these hedges are included in ~~AOCI.~~AOCI and the initial fair value of hedge components excluded from the assessment of effectiveness is recognized in interest expense, net over the life of the hedging instrument.

AbbVie is a party to interest rate hedge contracts designated as fair value hedges with notional amounts totaling ~~$11.8~~$10.8 billion at ~~September~~June 30, ~~2017~~2019 and December 31, ~~2016.~~2018. The effect of the hedge contracts is to change a fixed-rate interest obligation to a floating rate for that portion of the debt. AbbVie records the contracts at fair value and adjusts the carrying amount of the fixed-rate debt by an offsetting amount.



~~2017~~2019 Form 10-Q \|	14

No amounts are excluded from the assessment of effectiveness for cash flow hedges or fair value hedges.

The following table summarizes the amounts and location of AbbVie’s derivative instruments on the condensed consolidated balance sheets:


	Fair value – Derivatives in asset position								Fair value – Derivatives in liability position							Fair value – Derivatives in asset position								Fair value – Derivatives in liability position
(in millions)	Balance sheet caption	September 30, 2017			December 31, 2016				Balance sheet caption	September 30, 2017			December 31, 2016			Balance sheet caption	June 30, 2019			December 31, 2018				Balance sheet caption	June 30, 2019			December 31, 2018
Foreign currency forward exchange contracts
Designated as cash flow hedges	Prepaid expenses and other	$	1		$	170			Accounts payable and accrued liabilities	$	150		$	5		Prepaid expenses and other	$	22		$	113			Accounts payable and accrued liabilities	$	—		$	—
Designated as cash flow hedges	Other assets	—			—				Other long-term liabilities	6			—
Designated as net investment hedges																Prepaid expenses and other	11			—				Accounts payable and accrued liabilities	1			—
Not designated as hedges	Prepaid expenses and other	52			55				Accounts payable and accrued liabilities	47			33			Prepaid expenses and other	40			19				Accounts payable and accrued liabilities	38			26
Interest rate swaps designated as fair value hedges	Other assets	—			—				Other long-term liabilities	295			338			Prepaid expenses and other	—			—				Accounts payable and accrued liabilities	8			—
Interest rate swaps designated as fair value hedges																Other assets	24			—				Other long-term liabilities	117			466
Total derivatives		$	53		$	225				$	498		$	376			$	97		$	132				$	164		$	492

While certain derivatives are subject to netting arrangements with the company’s counterparties, the company does not offset derivative assets and liabilities within the condensed consolidated balance sheets.

The following table presents the pre-tax amounts of gains (losses) from derivative instruments recognized in other comprehensive ~~income/~~income (loss):



		Three months ended June 30,								Six months ended June 30,
(in millions)		2019				2018				2019				2018
Foreign currency forward exchange contracts
Designated as cash flow hedges		$	2			$	169			$	5			$	121
Designated as net investment hedges		10				—				10				—

Three months ended
September 30, Nine months ended
September 30,
(in millions) 2017 2016 2017 2016
Foreign currency forward exchange contracts $ (114 ) $ (5 ) $ (253 ) $ 7

~~The amount of hedge ineffectiveness was insignificant for all periods presented.~~ Assuming market rates remain constant through contract maturities, the company expects to ~~transfer~~reclass pre-tax ~~unrealized losses~~gains of ~~$117~~$90 million into cost of products sold for foreign currency cash flow hedges during the next 12 months.

Related to AbbVie’s non-derivative, foreign currency denominated debt designated as net investment hedges, the company recognized ~~a pre-tax loss~~ in other comprehensive income (loss) a pre-tax loss of ~~$142~~$49 million for the three months and ~~$481~~a pre-tax gain of $35 million for the ~~nine~~six months ended ~~September~~June 30, ~~2017.~~

2019 and recognized pre-tax gains of $270 million for the three months and $136 million for the six months ended June 30, 2018.

The following table summarizes the pre-tax amounts and location of derivative instrument net gains (losses) recognized in the condensed consolidated statements of earnings, including the ~~effective portions of the~~ net gains (losses) reclassified out of AOCI into net earnings. See Note 1011 for the amount of net gains (losses) reclassified out of AOCI.


			Three months ended September 30,								Nine months ended September 30,									Three months ended June 30,								Six months ended June 30,
(in millions)	Statement of earnings caption		2017				2016				2017				2016			Statement of earnings caption		2019				2018				2019				2018
Foreign currency forward exchange contracts
Designated as cash flow hedges	Cost of products sold		$	38			$	4			$	101			$	23		Cost of products sold		$	37			$	(46	)		$	77			$	(90	)
Designated as net investment hedges																		Interest expense, net		9				—				9				—
Not designated as hedges	Net foreign exchange loss		(17		)		(15		)		(88		)		(122		)	Net foreign exchange loss		(25		)		128				(40		)		69
Non-designated treasury rate lock agreements	Other expense, net		—				—				—				(12		)
Interest rate swaps designated as fair value hedges	Interest expense, net		11				(49		)		43				321			Interest expense, net		253				(59		)		365				(243		)
Total			$	32			$	(60	)		$	56			$	210
Debt designated as hedged item in fair value hedges																		Interest expense, net		(253		)		59				(365		)		243

The gain (loss) related to outstanding interest rate swaps designated as fair value hedges is recognized in interest expense, net and directly offsets the (loss) gain on the underlying hedged item, the fixed-rate debt, resulting in no net impact to interest expense, net for all periods presented.



~~2017~~2019 Form 10-Q \|	15

Fair Value Measures

The fair value hierarchy consists of the following three levels:

Level 1 – Valuations based on unadjusted quoted prices in active markets for identical assets that the company has the ability to access;

Level 2 – Valuations based on quoted prices for similar instruments in active markets, quoted prices for identical or similar instruments in markets that are not active and model-based valuations in which all significant inputs are observable in the market; and

Level 3 – Valuations using significant inputs that are unobservable in the market and include the use of judgment by the company’s management about the assumptions market participants would use in pricing the asset or liability.

The following table summarizes the bases used to measure certain assets and liabilities carried at fair value on a recurring basis on the condensed consolidated balance sheet as of ~~September~~June 30, ~~2017:~~2019:


					Basis of fair value measurement															Basis of fair value measurement
(in millions)	Total				Quoted prices in active markets for identical assets (Level 1)				Significant other observable inputs (Level 2)				Significant unobservable inputs (Level 3)			Total				Quoted prices in active markets for identical assets (Level 1)				Significant other observable inputs (Level 2)				Significant unobservable inputs (Level 3)
Assets
Cash and equivalents	$	8,446			$	669			$	7,777			$	—		$	5,172			$	1,388			$	3,784			$	—
Time deposits	500				—				500				—
Debt securities	2,475				—				2,475				—			1,573				—				1,573				—
Equity securities	57				57				—				—			79				79				—				—
Interest rate hedges																24				—				24				—
Foreign currency contracts	53				—				53				—			73				—				73				—
Total assets	$	11,531			$	726			$	10,805			$	—		$	6,921			$	1,467			$	5,454			$	—
Liabilities
Interest rate hedges	$	295			$	—			$	295			$	—		$	125			$	—			$	125			$	—
Foreign currency contracts	203				—				203				—			39				—				39				—
Contingent consideration	4,455				—				—				4,455			6,789				—				—				6,789
Total liabilities	$	4,953			$	—			$	498			$	4,455		$	6,953			$	—			$	164			$	6,789



~~2017~~2019 Form 10-Q \|	16

The following table summarizes the bases used to measure certain assets and liabilities carried at fair value on a recurring basis on the condensed consolidated balance sheet as of December 31, ~~2016:~~2018:



					Basis of fair value measurement
(in millions)	Total				Quoted prices in active markets for identical assets (Level 1)				Significant other observable inputs (Level 2)				Significant unobservable inputs (Level 3)
Assets
Cash and equivalents	$	7,289			$	1,209			$	6,080			$	—
Time deposits	568				—				568				—
Debt securities	1,536				—				1,536				—
Equity securities	4				4				—				—
Foreign currency contracts	132				—				132				—
Total assets	$	9,529			$	1,213			$	8,316			$	—
Liabilities
Interest rate hedges	$	466			$	—			$	466			$	—
Foreign currency contracts	26				—				26				—
Contingent consideration	4,483				—				—				4,483
Total liabilities	$	4,975			$	—			$	492			$	4,483

Basis of fair value measurement
(in millions) Total Quoted prices in active markets for identical
assets
(Level 1) Significant
other observable
inputs
(Level 2) Significant
unobservable
inputs
(Level 3)
Assets
Cash and equivalents $ 5,100
$ 1,191
$ 3,909
$ —
Time deposits 1,014
—
1,014
—
Debt securities 1,974
—
1,974
—
Equity securities 76
76
—
—
Foreign currency contracts 225
—
225
—
Total assets $ 8,389
$ 1,267
$ 7,122
$ —
Liabilities
Interest rate hedges $ 338
$ —
$ 338
$ —
Foreign currency contracts 38
—
38
—
Contingent consideration 4,213
—
—
4,213
Total liabilities $ 4,589
$ —
$ 376
$ 4,213

The fair values of time deposits approximate their amortized cost due to the short maturities of these instruments. The fair values of available-for-sale debt securities were determined based on prices obtained from commercial pricing services. ~~Available-for-sale equity~~Equity securities ~~consists~~consist of investments for which the fair values were determined by using the published market price per unit multiplied by the number of units held, without consideration of transaction costs. The derivatives entered into by the company were valued using ~~publicized~~published spot curves for interest rate hedges and ~~publicized~~published forward curves for foreign currency contracts. The fair value measurements of the contingent consideration liabilities were determined based on significant unobservable inputs, including the discount rate, estimated probabilities and timing of achieving specified development, regulatory and commercial milestones and the estimated amount of future sales of the acquired ~~products still in development.~~products. Changes to the fair value of the contingent consideration liabilities can result from changes to one or a number of inputs, including discount rates, the probabilities of achieving the milestones, the time required to achieve the milestones and estimated future sales. Significant judgment is employed in determining the appropriateness of these inputs. Changes to the inputs described above could have a material impact on the company's financial position and results of operations in any given period. At ~~September~~June 30, ~~2017,~~2019, a 50 basis point increase/decrease in the assumed discount rate would have decreased/increased the value of the contingent consideration liabilities by approximately ~~$160~~$270 million. Additionally, at ~~September~~June 30, ~~2017,~~2019, a five percentage point increase/decrease in the assumed probability of success across all potential indications still in development would have increased/decreased the value of the contingent consideration liabilities by approximately ~~$340~~$210 million.

There have been no transfers of assets or liabilities between the fair value measurement levels. The following table presents the changes in fair value of contingent consideration liabilities which are measured using Level 3 inputs:



		Six months ended June 30,
(in millions)		2019				2018
Beginning balance		$	4,483			$	4,534
Change in fair value recognized in net earnings		2,473				337
Milestone payments		(167		)		(50		)
Ending balance		$	6,789			$	4,821

Nine months ended
September 30,
(in millions) 2017 2016
Beginning balance $ 4,213
$ —
Additions (see Note 4) —
3,985
Change in fair value recognized in net earnings 547
143
Milestone payments (305 ) —
Ending balance $ 4,455
$ 4,128

The change in fair value recognized in net earnings ~~was~~is recorded in other expense, net in the condensed consolidated statements of ~~earnings~~earnings. During the second quarter of 2019, the company recorded a $2.3 billion increase in the SKYRIZI contingent consideration liability due to higher probabilities of success, higher estimated future sales and declining interest rates. The higher probabilities of success resulted from the April 2019 regulatory approvals of SKYRIZI for ~~both~~ the ~~three and nine months ended September 30, 2017 and 2016.~~treatment of moderate to severe plaque psoriasis.



~~2017~~2019 Form 10-Q \|	17

~~In addition to the financial instruments that the company carries at fair value on the condensed consolidated balance sheets, certain~~Certain financial instruments are carried at historical cost or some basis other than fair value. The book values, approximate fair values and bases used to measure the approximate fair values of certain financial instruments as of ~~September~~June 30, ~~2017~~2019 are shown in the table below:



								Basis of fair value measurement
(in millions)	Book value			Approximate fair value				Quoted prices in active markets for identical assets (Level 1)				Significant other observable inputs (Level 2)				Significant unobservable inputs (Level 3)
Liabilities
Short-term borrowings	$	306		$	306			$	—			$	306			$	—
Current portion of long-term debt and finance lease obligations, excluding fair value hedges	5,343			5,357				5,348				9				—
Long-term debt and finance lease obligations, excluding fair value hedges	31,712			32,753				32,731				22				—
Total liabilities	$	37,361		$	38,416			$	38,079			$	337			$	—

Basis of fair value measurement
(in millions) Book Value Approximate fair value
Quoted prices in
active markets for identical assets
(Level 1)

Significant
other
observable
inputs
(Level 2)
Significant
unobservable
inputs
(Level 3)
Assets
Investments $ 47
$ 47
$ —
$ 2
$ 45
Total assets $ 47
$ 47
$ —
$ 2
$ 45
Liabilities
Short-term borrowings $ 800
$ 800
$ —
$ 800
$ —
Current portion of long-term debt and lease obligations 3,021
3,027
3,004
23
—
Long-term debt and lease obligations, excluding fair value hedges 34,269
35,647
33,575
2,072
—
Total liabilities $ 38,090
$ 39,474
$ 36,579
$ 2,895
$ —

The book values, approximate fair values and bases used to measure the approximate fair values of certain financial instruments as of December 31, ~~2016~~2018 are shown in the table below:



								Basis of fair value measurement
(in millions)	Book value			Approximate fair value				Quoted prices in active markets for identical assets (Level 1)				Significant other observable inputs (Level 2)				Significant unobservable inputs (Level 3)
Liabilities
Short-term borrowings	$	3,699		$	3,693			$	—			$	3,693			$	—
Current portion of long-term debt and finance lease obligations, excluding fair value hedges	1,609			1,617				1,609				8				—
Long-term debt and finance lease obligations, excluding fair value hedges	35,468			34,052				34,024				28				—
Total liabilities	$	40,776		$	39,362			$	35,633			$	3,729			$	—

Basis of fair value measurement
(in millions) Book Value Approximate fair value
Quoted prices in
active markets for identical assets
(Level 1)

Significant
other
observable
inputs
(Level 2)
Significant
unobservable
inputs
(Level 3)
Assets
Investments $ 42
$ 42
$ —
$ 5
$ 37
Total assets $ 42
$ 42
$ —
$ 5
$ 37
Liabilities
Short-term borrowings $ 377
$ 377
$ —
$ 377
$ —
Current portion of long-term debt and lease obligations 25
25
—
25
—
Long-term debt and lease obligations, excluding fair value hedges 36,778
36,664
34,589
2,075
—
Total liabilities $ 37,180
$ 37,066
$ 34,589
$ 2,477
$ —

~~Investments primarily consist of~~AbbVie also holds investments in equity securities that do not have readily determinable fair values. The company records these investments at cost ~~method investments, for which the company takes into consideration recent transactions~~ and ~~financial information of the investee, which represents a Level 3 basis of~~remeasures them to fair value ~~measurement.~~based on certain observable price changes or impairment events as they occur. The ~~fair values of short-term borrowings approximate the~~ carrying ~~values due to the short maturities~~amount of these ~~instruments.~~

~~The fair values~~investments was $65 million as of ~~long-term debt, excluding fair value hedges~~June 30, 2019 and ~~the term loans, were determined by using the published market price~~$84 million as of December 31, 2018. No significant cumulative upward or downward adjustments have been recorded for ~~the debt instruments, without consideration~~these investments as of transaction costs, which represents a Level 1 basis of fair value measurement. The fair values of the term loans were determined based on a discounted cash flow analysis using quoted market rates, which represents a Level 2 basis of fair value measurement. The counterparties to financial instruments consist of select major international financial institutions.



~~2017 Form 10-Q~~ \|	18

June 30, 2019.

Available-for-sale Securities

Substantially all of the company’s investments in debt ~~and equity~~ securities were classified as ~~available-for-sale.~~available-for-sale with changes in fair value recognized in other comprehensive income. Debt securities classified as short-term were ~~$549~~$244 million as of ~~September~~June 30, ~~2017~~2019 and ~~$309~~$204 million as of December 31, ~~2016.~~2018. Long-term debt securities mature primarily within five years. Estimated fair values of available-for-sale debt securities were generally determined based on prices obtained from commercial pricing services.

The following table ~~is a summary of~~summarizes available-for-sale securities by type as of ~~September~~June 30, ~~2017:~~2019:



	Amortized cost				Gross unrealized								Fair value
(in millions)	Amortized cost				Gains				Losses				Fair value
Asset backed securities	$	375			$	—			$	(1	)		$	374
Corporate debt securities	1,095				4				(2		)		1,097
Other debt securities	102				—				—				102
Total	$	1,572			$	4			$	(3	)		$	1,573

Amortized Cost Gross unrealized Fair Value
(in millions) Gains Losses
Asset backed securities $ 904
$ 1
$ (2 ) $ 903
Corporate debt securities 1,424
4
(1 ) 1,427
Other debt securities 145
—
—
145
Equity securities 18
41
(2 ) 57
Total $ 2,491
$ 46
$ (5 ) $ 2,532

~~The following table is a summary of available-for-sale securities by type as of December 31, 2016:~~

Amortized Cost Gross unrealized Fair Value
(in millions) Gains Losses
Asset backed securities $ 891
$ 1
$ (4 ) $ 888
Corporate debt securities 961
1
(2 ) 960
Other debt securities 127
—
(1 ) 126
Equity securities 18
60
(2 ) 76
Total $ 1,997
$ 62
$ (9 ) $ 2,050

AbbVie had no other-than-temporary impairments as of September 30, 2017. Net realized gains were $39 million for the three months and $49 million for the nine months ended September 30, 2017. Net realized gains for the three and nine months ended September 30, 2016 were insignificant.

~~Concentrations of Risk~~

The functional currency of the company’s Venezuela operations is the U.S. dollar due to the hyperinflationary status of the Venezuelan economy. During the first quarter of 2016, in consideration of declining economic conditions in Venezuela and a decline in transactions settled at the official rate, AbbVie determined that its net monetary assets denominated in the Venezuelan bolivar (VEF) were no longer expected to be settled at the official rate of 10 VEF per U.S. dollar, but rather at the Divisa Complementaria (DICOM) rate. Therefore, during the first quarter of 2016, AbbVie recorded a charge of $298 million to net foreign exchange loss to revalue its bolivar-denominated net monetary assets using the DICOM rate then in effect of approximately 270 VEF per U.S. dollar. As of September 30, 2017 and December 31, 2016, AbbVie’s net monetary assets in Venezuela were insignificant.

AbbVie continues to do business with foreign governments in certain countries, including Greece, Portugal, Italy and Spain, which have historically experienced challenges in credit and economic conditions. Substantially all of AbbVie’s trade receivables in Greece, Portugal, Italy and Spain are with government health systems. Outstanding governmental receivables in these countries, net of allowances for doubtful accounts, totaled $246 million as of September 30, 2017 and $244 million as of December 31, 2016. The company also continues to do business with foreign governments in certain oil-exporting countries that have recently experienced a deterioration in economic conditions, including Saudi Arabia and Russia, which may result in delays in the collection of receivables. Outstanding governmental receivables related to Saudi Arabia, net of allowances for doubtful accounts, were $141 million as of September 30, 2017 and $122 million as of December 31, 2016. Outstanding governmental receivables related to Russia, net of allowances for doubtful accounts, were $142 million as of September 30, 2017 and $110 million as of December 31, 2016. Global economic conditions and customer-specific factors may require the company to periodically re-evaluate the collectability of its receivables and the company could potentially incur credit losses.



~~2017~~2019 Form 10-Q \|	1918

The following table summarizes available-for-sale securities by type as of December 31, 2018:



	Amortized cost				Gross unrealized								Fair value
(in millions)	Amortized cost				Gains				Losses				Fair value
Asset backed securities	$	423			$	—			$	(2	)		$	421
Corporate debt securities	1,042				1				(9		)		1,034
Other debt securities	81				—				—				81
Total	$	1,546			$	1			$	(11	)		$	1,536

AbbVie had no other-than-temporary impairments as of June 30, 2019. Net realized gains and losses were insignificant for both the three and six months ended June 30, 2019 and 2018.

Concentrations of Risk

Of total net accounts receivable, three U.S. wholesalers accounted for ~~56%~~66% as of ~~September~~June 30, ~~2017~~2019 and ~~51%~~63% as of December 31, ~~2016,~~2018, and substantially all of AbbVie’s net revenues in the United States were to these three wholesalers.

HUMIRA (adalimumab) is AbbVie’s single largest product and accounted for approximately ~~66%~~58% of AbbVie’s total net revenues for the ~~nine~~six months ended ~~September~~June 30, ~~2017~~2019 and ~~63%~~61% for the ~~nine~~six months ended ~~September~~June 30, ~~2016.~~

2018.

Debt and Credit Facilities

Short-Term Borrowings

Short-term borrowings included commercial paper borrowings of ~~$800~~$306 million as of ~~September~~June 30, ~~2017~~2019 and ~~$377~~$699 million as of December 31, ~~2016.~~2018. The weighted-average interest rate on commercial paper borrowings was ~~1.2%~~2.7% for the ~~nine~~six months ended ~~September~~June 30, ~~2017~~2019 and ~~0.6%~~1.9% for the ~~nine~~six months ended ~~September~~June 30, ~~2016.~~2018.

In March 2019, AbbVie repaid its $3.0 billion 364-day term loan credit agreement that was scheduled to mature in June 2019.

In connection with the proposed acquisition of Allergan, on June 25, 2019, AbbVie entered into a 364-day bridge credit agreement and on July 12, 2019, AbbVie entered into a term loan credit agreement. See Note 4 for additional information.

Note 9 10Post-Employment Benefits

The following ~~is a summary of~~table summarizes net periodic benefit ~~costs~~cost relating to the company’s defined benefit and other post-employment plans:



	Defined benefit plans																Other post- employment plans
	Three months ended June 30,								Six months ended June 30,								Three months ended June 30,								Six months ended June 30,
(in millions)	2019				2018				2019				2018				2019				2018				2019				2018
Service cost	$	68			$	72			$	135			$	144			$	7			$	5			$	13			$	13
Interest cost	66				57				130				114				9				4				15				12
Expected return on plan assets	(119		)		(110		)		(238		)		(221		)		—				—				—				—
Amortization of actuarial losses and prior service cost (credit)	29				39				55				76				1				(3		)		—				1
Net periodic benefit cost	$	44			$	58			$	82			$	113			$	17			$	6			$	28			$	26

The components of net periodic benefit cost other than service cost are included in other expense, net in the condensed consolidated statements of earnings.



2019 Form 10-Q \|	19

Defined
benefit plans Other post-
employment plans
Three months ended
September 30, Nine months ended
September 30, Three months ended
September 30, Nine months ended
September 30,
(in millions) 2017 2016 2017 2016 2017 2016 2017 2016
Service cost $ 59
$ 52
$ 176
$ 158
$ 6
$ 6
$ 19
$ 19
Interest cost 52
50
153
151
6
6
18
18
Expected return on plan assets (96 ) (88 ) (286 ) (266 ) —
—
—
—
Amortization of actuarial losses and prior service costs 27
22
80
64
1
—
1
—
Net periodic benefit cost $ 42
$ 36
$ 123
$ 107
$ 13
$ 12
$ 38
$ 37

~~AbbVie's principal domestic defined benefit plan is the AbbVie Pension Plan. AbbVie made voluntary contributions to this plan of $150 million in both the nine months ended September 30, 2017 and 2016.~~

Note 1011 Equity

Stock-Based Compensation

Stock-based compensation expense is principally related to awards issued pursuant to the AbbVie 2013 Incentive Stock Program and is summarized as follows:



		Three months ended June 30,								Six months ended June 30,
(in millions)		2019				2018				2019				2018
Cost of products sold		$	5			$	12			$	20			$	16
Research and development		33				35				105				107
Selling, general and administrative		49				38				151				153
Pre-tax compensation expense		87				85				276				276
Tax benefit		16				19				49				48
After-tax compensation expense		$	71			$	66			$	227			$	228

Three months ended
September 30, Nine months ended
September 30,
(in millions) 2017 2016 2017 2016
Cost of products sold $ 7
$ 6
$ 20
$ 19
Research and development 30
6
127
161
Selling, general and administrative 34
35
141
141
Pre-tax compensation expense 71
47
288
321
Tax benefit 20
13
85
83
After-tax compensation expense $ 51
$ 34
$ 203
$ 238

Stock Options

During the ~~nine~~six months ended ~~September~~June 30, ~~2017,~~2019, primarily in connection with the company's annual grant, AbbVie granted ~~1.2~~1.0 million stock options with a weighted-average grant-date fair value of ~~$9.80.~~$12.54. As of ~~September~~June 30, ~~2017, $20~~2019, $8.5 million of unrecognized compensation cost related to stock options is expected to be recognized as expense over approximately the next two years.



~~2017 Form 10-Q~~ \|	20

~~RSAs,~~ RSUs and Performance Shares

During the ~~nine~~six months ended ~~September~~June 30, ~~2017,~~2019, primarily in connection with the company's annual grant, AbbVie granted ~~6.1~~5.4 million RSUs and performance shares with a weighted-average grant-date fair value of ~~$61.68.~~$78.68. As of ~~September~~June 30, ~~2017, $292~~2019, $434 million of unrecognized compensation cost related to ~~RSAs,~~ RSUs and performance shares is expected to be recognized as expense over approximately the next two years.

Cash Dividends

The following table summarizes quarterly cash dividends declared during ~~2017~~2019 and ~~2016:~~2018:



2019								2018
Date Declared		Payment Date		Dividend Per Share				Date Declared		Payment Date		Dividend Per Share
06/20/19		08/15/19		$	1.07			11/02/18		02/15/19		$	1.07
02/21/19		05/15/19		$	1.07			09/07/18		11/15/18		$	0.96
								06/14/18		08/15/18		$	0.96
								02/15/18		05/15/18		$	0.96



2019 Form 10-Q \|	20

2017 2016
Date Declared Payment Date Dividend Per Share Date Declared Payment Date Dividend Per Share
10/27/17 02/15/18 $ 0.71
10/28/16 02/15/17 $ 0.64
09/08/17 11/15/17 $ 0.64
09/09/16 11/15/16 $ 0.57
06/22/17 08/15/17 $ 0.64
06/16/16 08/15/16 $ 0.57
02/16/17 05/15/17 $ 0.64
02/18/16 05/16/16 $ 0.57

Stock Repurchase Program

~~On February 16, 2017, AbbVie's board of directors authorized a $5.0 billion increase to AbbVie's existing stock repurchase program.~~ The company's stock repurchase authorization permits purchases of AbbVie shares from time to time in open-market or private transactions at management's ~~direction depending on the company's cash flows, net debt level and market conditions.~~discretion. The program has no time limit and can be discontinued at any time. Shares repurchased under ~~this program~~these programs are recorded at acquisition cost, including related expenses, and are available for general corporate purposes.

AbbVie repurchased ~~approximately 7.8~~4 million shares ~~in the open market~~ for ~~$500~~$300 million during the ~~nine~~six months ended ~~September~~June 30, ~~2017. During~~2019 and 84 million shares for $8.8 billion during the ~~nine~~six months ended ~~September~~June 30, ~~2017, AbbVie cash-settled $285 million of its open market purchases made at the end of 2016.~~2018. AbbVie's remaining stock repurchase authorization was ~~$4.5~~approximately $4.0 billion as of ~~September~~June 30, ~~2017.~~

2019.

Accumulated Other Comprehensive Loss

The following table summarizes the changes in each component of accumulated other comprehensive loss, net of tax, for the ~~nine~~six months ended ~~September~~June 30, ~~2017:~~2019:



(in millions)	Foreign currency translation adjustments				Net investment hedging activities				Pension and post- employment benefits				Marketable security activities				Cash flow hedging activities				Total
Balance as of December 31, 2018	$	(830	)		$	(65	)		$	(1,722	)		$	(10	)		$	147			$	(2,480	)
Other comprehensive income (loss) before reclassifications	(32		)		35				2				10				7				22
Net losses (gains) reclassified from accumulated other comprehensive loss	—				(7		)		43				1				(70		)		(33		)
Net current-period other comprehensive income (loss)	(32		)		28				45				11				(63		)		(11		)
Balance as of June 30, 2019	$	(862	)		$	(37	)		$	(1,677	)		$	1			$	84			$	(2,491	)

(in millions) Foreign
currency
translation
adjustments Net investment hedging activities
Pension
and post-
employment
benefits

Marketable
security activities
Cash flow hedging
activities Total
Balance as of December 31, 2016 $ (1,435 ) $ 140
$ (1,513 ) $ 46
$ 176
$ (2,586 )
Other comprehensive income (loss) before reclassifications 602
(307 ) (37 ) 31
(229 ) 60
Net losses (gains) reclassified from accumulated other comprehensive loss —
—
58
(49 ) (96 ) (87 )
Net current-period other comprehensive income (loss) 602
(307 ) 21
(18 ) (325 ) (27 )
Balance as of September 30, 2017 $ (833 ) $ (167 ) $ (1,492 ) $ 28
$ (149 ) $ (2,613 )

Other comprehensive ~~income~~loss for the ~~nine~~six months ended ~~September~~June 30, ~~2017~~2019 included foreign currency translation adjustments totaling a ~~gain~~loss of ~~$602~~$32 million, which was principally due to the ~~impact~~weakening of ~~the improvement in~~ the Euro in the ~~nine~~six months ended ~~September~~June 30, ~~2017~~2019 on the translation of the company’s assets denominated in the Euro.



~~2017 Form 10-Q~~ \|	21

The following table summarizes the changes in each component of accumulated other comprehensive loss, net of tax, for the ~~nine~~six months ended ~~September~~June 30, ~~2016:~~2018:



(in millions)	Foreign currency translation adjustments				Net investment hedging activities				Pension and post- employment benefits				Marketable security activities				Cash flow hedging activities				Total
Balance as of December 31, 2017	$	(439	)		$	(203	)		$	(1,919	)		$	—			$	(166	)		$	(2,727	)
Other comprehensive income (loss) before reclassifications	(280		)		105				9				(6		)		110				(62		)
Net losses reclassified from accumulated other comprehensive loss	—				—				62				4				84				150
Net current-period other comprehensive income (loss)	(280		)		105				71				(2		)		194				88
Balance as of June 30, 2018	$	(719	)		$	(98	)		$	(1,848	)		$	(2	)		$	28			$	(2,639	)

(in millions) Foreign
currency
translation
adjustments
Pension
and post-
employment
benefits

Marketable
security activities
Cash flow hedging
activities Total
Balance as of December 31, 2015 $ (1,270 ) $ (1,378 ) $ 47
$ 40
$ (2,561 )
Other comprehensive income before reclassifications 164
7
23
13
207
Net losses (gains) reclassified from accumulated other comprehensive loss —
41
(4 ) (23 ) 14
Net current-period other comprehensive income (loss) 164
48
19
(10 ) 221
Balance as of September 30, 2016 $ (1,106 ) $ (1,330 ) $ 66
$ 30
$ (2,340 )

Other comprehensive income for the ~~nine~~six months ended ~~September~~June 30, ~~2016~~2018 included foreign currency translation adjustments totaling a ~~gain~~loss of ~~$164~~$280 million, which was principally due to the ~~impact~~weakening of the ~~improvement~~Euro in the ~~Euro and Japanese yen in the nine~~six months ended ~~September~~June 30, ~~2016~~2018 on the translation of the company’s assets denominated in the ~~Euro and Japanese yen.~~Euro.



2019 Form 10-Q \|	21

The following table ~~below~~ presents the impact on AbbVie’s condensed consolidated statements of earnings for significant amounts reclassified out of each component of ~~AOCI:~~accumulated other comprehensive loss:


		Three months ended September 30,								Nine months ended September 30,							Three months ended June 30,								Six months ended June 30,
(in millions) (brackets denote gains)		2017				2016				2017				2016			2019				2018				2019				2018
Pension and post-employment benefits
Amortization of actuarial losses and other^(a)		$	28			$	22			$	81			$	64		$	30			$	36			$	55			$	77
Tax benefit		(8		)		(8		)		(23		)		(23		)	(7		)		(7		)		(12		)		(15		)
Total reclassifications, net of tax		$	20			$	14			$	58			$	41		$	23			$	29			$	43			$	62
Cash flow hedging activities
Gains on designated cash flow hedges^(b)		$	(38	)		$	(2	)		$	(101	)		$	(21	)
Losses (gains) on designated cash flow hedges^(b)																	$	(37	)		$	46			$	(77	)		$	90
Tax expense (benefit)		—				(2		)		5				(2		)	2				(4		)		7				(6		)
Total reclassifications, net of tax		$	(38	)		$	(4	)		$	(96	)		$	(23	)	$	(35	)		$	42			$	(70	)		$	84
Net investment hedging activities
Gains on derivative amount excluded from effectiveness testing^(c)																	$	(9	)		$	—			$	(9	)		$	—
Tax expense																	2				—				2				—
Total reclassifications, net of tax																	$	(7	)		$	—			$	(7	)		$	—

(a) Amounts are included in the computation of net periodic benefit cost (see Note 9)10).

(b) Amounts are included in cost of products sold (see Note 8)9).

(c) Amounts are included in interest expense, net (see Note 9).

Note 1112 Income Taxes

The effective tax rate was ~~22%~~8% for the three months and ~~20%~~5% for the ~~nine~~six months ended ~~September~~June 30, ~~2017~~2019 and ~~21%~~2% for the three months and ~~22%~~1% for the ~~nine~~six months ended ~~September~~June 30, ~~2016.~~2018. The effective tax rate in each period differed from the U.S. statutory tax rate of 21% principally due to the benefit from foreign operations which reflects the impact of lower income tax rates in locations outside the United States, tax ~~exemptions and~~ incentives in Puerto Rico and other foreign tax jurisdictions and business development ~~activities together with the cost of repatriation decisions.~~activities. The ~~change~~increase in the effective tax rate for the three and ~~nine~~six months ended ~~September~~June 30, ~~2017~~2019 over the prior year was principally due to the beneficial impact of the timing of provisions of the Act related to earnings from certain foreign subsidiaries in prior year and changes in the jurisdictional mix of earnings, ~~as well as certain discrete factors and events,~~ including ~~collaborations,~~a change in fair value of contingent consideration liabilities. These increases were partially offset by the ~~impact~~favorable resolution of various tax positions in the prior year non-deductible devaluation loss related to Venezuela and the impact of the adoption of ASU No. 2016-09, which changed the accounting treatment for excess tax benefits associated with stock-based awards. See Note 1 for additional information related to the adoption of this accounting pronouncement.current year.

Due to the potential for resolution of federal, state and foreign examinations and the expiration of various statutes of limitations, it is reasonably possible that the company’s gross unrecognized tax benefits balance may change within the next twelve months by up to ~~$246~~$41 million. At the time of separation, AbbVie and Abbott Laboratories (Abbott) entered into a tax sharing agreement which provides that Abbott is liable for and has indemnified AbbVie against all income tax liabilities for periods prior to the separation.



~~2017 Form 10-Q~~ \|	22

Accordingly, Abbott will indemnify and hold AbbVie harmless if the tax positions are settled for amounts in excess of recorded liabilities, and AbbVie will not benefit if prior tax positions are resolved more favorably than recorded amounts.

Note 1213 Legal Proceedings and Contingencies

AbbVie is subject to contingencies, such as various claims, legal proceedings and investigations regarding product liability, intellectual property, commercial, securities and other matters that arise in the normal course of business. Loss contingency provisions are recorded for probable losses at management’s best estimate of a loss, or when a best estimate cannot be made, a minimum loss contingency amount within a probable range is recorded. The recorded accrual balance for litigation was approximately ~~$215~~$330 million as of ~~September~~June 30, ~~2017~~2019 and ~~$225~~$350 million as of December 31, ~~2016.~~2018. Initiation of new legal proceedings or a change in the status of existing proceedings may result in a change in the estimated loss accrued by AbbVie. While it is not feasible to predict the outcome of all proceedings and exposures with certainty, management believes that their ultimate disposition should not have a material adverse effect on AbbVie’s consolidated financial position, results of operations or cash flows.



2019 Form 10-Q \|	22

Subject to certain exceptions specified in the separation agreement by and between Abbott and AbbVie, AbbVie assumed the liability for, and control of, all pending and threatened legal matters related to its business, including liabilities for any claims or legal proceedings related to products that had been part of its business, but were discontinued prior to the distribution, as well as assumed or retained liabilities, and will indemnify Abbott for any liability arising out of or resulting from such assumed legal matters.

~~Several pending~~Four lawsuits ~~filed~~ against Unimed Pharmaceuticals, Inc., Solvay Pharmaceuticals, Inc. (a company Abbott acquired in February 2010 and now known as AbbVie Products LLC) and others are consolidated for pre-trial purposes in the United States District Court for the Northern District of Georgia under the Multi-District Litigation (MDL) Rules as In re: AndroGel Antitrust Litigation, MDL No. 2084. These cases, brought by ~~private plaintiffs and the Federal Trade Commission (FTC),~~direct AndroGel purchasers, generally allege Solvay's ~~patent litigation involving AndroGel was sham litigation and the~~ 2006 patent litigation settlement agreements and related agreements with three generic companies violate federal antitrust laws. Plaintiffs ~~generally~~ seek monetary damages ~~and/or injunctive relief~~ and attorneys' fees. ~~These cases include: (a) four individual plaintiff lawsuits; (b) three purported class actions; and (c)~~ ~~Federal Trade Commission v. Actavis, Inc. et al.~~ Following the district court's dismissal of all plaintiffs' claims, appellate proceedings led to the reinstatement of the claims regarding the patent litigation settlements, which are proceeding in the district court.

Lawsuits are pending against AbbVie and others generally alleging that the 2005 patent litigation settlement involving Niaspan entered into between Kos Pharmaceuticals, Inc. (a company acquired by Abbott in 2006 and presently a subsidiary of AbbVie) and a generic company violates federal and state antitrust laws and state unfair and deceptive trade practices and unjust enrichment laws. Plaintiffs generally seek monetary damages and/or injunctive relief and attorneys' fees. The lawsuits consist of four individual plaintiff lawsuits and two consolidated purported class actions: one brought by ~~three named~~Niaspan direct purchasers ~~of Niaspan~~ and ~~the other~~one brought by ~~ten named end-payor purchasers of Niaspan.~~Niaspan end-payers. The cases are ~~consolidated for pre-trial proceedings~~pending in the United States District Court for the Eastern District of Pennsylvania for coordinated or consolidated pre-trial proceedings under the MDL Rules as In re: Niaspan Antitrust Litigation, MDL No. 2460. In October 2016, the Orange County, California District Attorney’s Office filed a lawsuit on behalf of the State of California ~~filed a lawsuit~~ regarding the Niaspan patent litigation settlement in Orange County Superior Court, asserting a claim under the unfair competition provision of the California Business and Professions Code seeking injunctive relief, restitution, civil penalties and attorneys’ fees. In May 2018, the California Court of Appeal ruled that the District Attorney’s Office may not bring monetary claims beyond the scope of Orange County, which the District Attorney’s Office is appealing.

In September 2014, the FTC filed ~~suit~~a lawsuit against AbbVie and others in the United States District Court for the Eastern District of Pennsylvania, ~~against AbbVie and others,~~ alleging that the 2011 patent litigation with two generic companies regarding AndroGel was sham litigation and the ~~patent~~settlements of that litigation ~~settlement with one of those generic companies violates~~violated federal antitrust ~~laws. The FTC's complaint seeks monetary damages and injunctive relief.~~law. In May 2015, the court dismissed the ~~FTC's~~FTC’s settlement-related claim. In June 2018, following a bench trial, the court found for the FTC on its sham litigation claim ~~regarding~~and ordered a disgorgement remedy of $448 million, plus prejudgment interest. The court denied the ~~patent litigation settlement.~~FTC’s request for injunctive relief. AbbVie is appealing the court’s liability and disgorgement rulings and, based on an assessment of the merits of that appeal, no liability has been accrued for this matter. The FTC is also appealing aspects of the court’s trial ruling and the dismissal of its settlement-related claim. One purported class action on behalf of direct AndroGel purchasers based on the trial court’s ruling in the FTC’s case is also pending in the United States District Court for the Eastern District of Pennsylvania and is stayed pending the appeals in the FTC’s case.

In ~~March 2015,~~January and February 2019, two shareholder derivative lawsuits, Brown v. Gonzalez, et al., and Elfers v. Gonzalez, et al., were filed in the United States District Court for the Northern District of Illinois, alleging that certain AbbVie directors and officers breached their fiduciary duties in connection with HUMIRA patient and reimbursement support services and other services and items of value, as alleged in the State of ~~Louisiana filed a lawsuit,~~ ~~State of Louisiana v. Fournier Industrie et Sante, et al., against AbbVie, Abbott~~California case discussed below.

Between March and affiliated Abbott entities in Louisiana state court. Plaintiff alleges that patent applications and patent litigation filed and other alleged conduct from the early 2000's and before related to the drug TriCor violated Louisiana State antitrust and unfair trade practices laws. The lawsuit seeks monetary damages and attorneys' fees. In August 2015, the court dismissed the case as time-barred. In December 2016, the appellate court for the state’s appeal remanded for the trial court to determine whether the state is a proper party in interest. On remand, the trial court denied AbbVie’s motion to dismiss.

~~In August 2013, a~~May 2019, 12 putative class action ~~lawsuit,~~ ~~Sidney Hillman Health Center of Rochester, et al. v. AbbVie Inc., et al., was~~lawsuits were filed ~~against AbbVie~~ in the United States District Court for the Northern District of Illinois by ~~three healthcare benefit providers~~indirect HUMIRA purchasers, alleging ~~violations~~that AbbVie’s settlements with biosimilar manufacturers and AbbVie’s HUMIRA patent portfolio violate state and federal antitrust laws.



~~2017 Form 10-Q~~ \|	23

of Federal Racketeer Influenced and Corrupt Organizations (RICO) statutes and state deceptive business practice and unjust enrichment laws in connection with reimbursements for certain uses of Depakote from 1998 to 2012. Plaintiffs seek monetary damages and/or equitable relief and attorneys' fees. In February 2017, the court dismissed this lawsuit with prejudice and in October 2017, the United States Court of Appeals for the Seventh Circuit affirmed the dismissal.

In November 2014, a putative class action lawsuit, Medical Mutual of Ohio v. AbbVie Inc., et al., was filed against several manufacturers of testosterone replacement therapies (TRTs), including AbbVie, in the United States District Court for the Northern District of Illinois on behalf of all insurance companies, health benefit providers, and other third party ~~payors~~payers who paid for TRTs, including AndroGel. The claims asserted include violations of the federal RICO Act and state consumer fraud and deceptive trade practices laws. The complaint seeks monetary damages and injunctive relief. ~~A similar~~In July 2018, the court denied the plaintiff’s motion for class certification. In February 2019, the court granted the defendants’ summary judgment motion.

In September 2018, the Commissioner of the California Department of Insurance intervened in a qui tam lawsuit, ~~Allied Services Division Welfare Fund~~State of California and Lazaro Suarez v. AbbVie Inc., et al., ~~filed~~brought under the California Insurance Frauds Prevention Act, in California Superior Court for Alameda County. The Department of Insurance’s complaint alleges that, through patient and reimbursement support services and other services and items of value provided in connection with HUMIRA, AbbVie caused the ~~same court~~submission of fraudulent commercial insurance claims for HUMIRA in ~~October 2015 on behalf~~violation of the ~~same putative class members~~California statute. The complaint seeks injunctive relief, an assessment of up to three times the amount of the claims at issue, and civil penalties. In addition, a ~~putative class of consumers, was voluntarily dismissed in September 2017.~~federal securities lawsuit (Holwill v. AbbVie Inc., et al.) is

~~Product liability cases are~~



2019 Form 10-Q \|	23

pending in which plaintiffs generally allege that AbbVie and other manufacturers of TRTs did not adequately warn about risks of certain injuries, primarily heart attacks, strokes and blood clots. Approximately 4,300 claims are consolidated for pre-trial purposes in the United States District Court for the Northern District of ~~Illinois under~~Illinois) against AbbVie, its chief executive officer and former chief financial officer, alleging that reasons stated for HUMIRA sales growth in financial filings between 2013 and 2017 were misleading because they omitted the ~~MDL Rules as~~ ~~In re: Testosterone Replacement Therapy Products Liability Litigation, MDL No. 2545. Approximately 210 claims are pending in various state courts. Plaintiffs generally seek compensatory and punitive damages. In July 2017, a jury~~conduct alleged in the ~~United States District Court for the Northern District~~Department of Illinois reached a verdict in the first case to be tried. The jury found for AbbVie on the plaintiff's strict liability and negligence claims and for the plaintiff on the plaintiff's fraud claim, but awarded no compensatory damages. The jury's award of $150 million in punitive damages without an underlying compensatory damage award will be subject to post-trial briefing. AbbVie expects the punitive damage award will not stand. In August 2017, a jury in the Circuit Court of Cook County, Illinois, reached a verdict for AbbVie on all claims. In October 2017, a jury in the United States District Court for the Northern District of Illinois reached a verdict for AbbVie on strict liability but for the plaintiff on remaining claims and awarded $140,000 in compensatory damages and $140 million in punitive damages, which will be the subject of post-trial proceedings.Insurance’s complaint.

Product liability cases are pending in which plaintiffs generally allege that AbbVie did not adequately warn about risk of certain injuries, primarily various birth defects, arising from use of Depakote. Over ninety percent of the approximately 625 claims are pending in the United States District Court for the Southern District of Illinois, and the rest are pending in various other federal and state courts. Plaintiffs generally seek compensatory and punitive damages.

In November 2014, five individuals filed a putative class action lawsuit, Rubinstein, et al. v Gonzalez, et al., on behalf of purchasers and sellers of certain Shire plc (Shire) securities between June 20 and October 14, 2014, against AbbVie and its chief executive officer in the United States District Court for the Northern District of Illinois alleging that the defendants made and/or are responsible for material misstatements in violation of federal securities laws in connection with AbbVie's proposed transaction with Shire. In July 2019, the court granted preliminary approval to the parties’ settlement agreement.

In June 2016, a lawsuit, Elliott Associates, L.P., et al. v. AbbVie Inc., was filed by five investment funds against AbbVie in the Cook County, Illinois Circuit Court alleging that AbbVie made misrepresentations and omissions in connection with its proposed transaction with Shire. Similar lawsuits were filed between July 2017 and ~~September 2017~~October 2018 against AbbVie and in some instances its chief executive officer in the same court by ~~twelve~~ additional investment funds. Plaintiffs seek compensatory and punitive damages.

~~In May 2017, a shareholder derivative lawsuit,~~ ~~Ellis v. Gonzalez, et al., was~~Product liability cases were filed in ~~Delaware Chancery~~which plaintiffs generally allege that AbbVie and other manufacturers of TRTs did not adequately warn about risks of certain injuries, primarily heart attacks, strokes and blood clots. Approximately 3,900 claims against AbbVie are consolidated for pre-trial purposes in the United States District Court ~~alleging~~for the Northern District of Illinois under the MDL Rules as In re: Testosterone Replacement Therapy Products Liability Litigation, MDL No. 2545. Approximately 200 claims against AbbVie are pending in various state courts. Plaintiffs generally seek compensatory and punitive damages. In November 2018, AbbVie entered into a Master Settlement Agreement with the Plaintiffs’ Steering Committee in the MDL encompassing existing claims in all courts. All proceedings in pending cases are effectively stayed during the settlement administration process.

Product liability cases are pending in which plaintiffs generally allege that ~~AbbVie's directors breached their fiduciary duties~~AbbVie did not adequately warn about risk of certain injuries, primarily various birth defects, arising from use of Depakote. Approximately 150 cases are pending in ~~connection~~the United States District Court for the Southern District of Illinois, and approximately six others are pending in various state courts. Plaintiffs generally seek compensatory and punitive damages. Approximately ninety percent of these pending cases, plus other unfiled claims, are subject to confidential settlement agreements and are expected to be dismissed with ~~statements made regarding the Shire transaction. The lawsuit seeks unspecified compensatory damages for AbbVie, among other relief.~~prejudice.

Beginning in May 2016, the Patent Trial & Appeal Board of the U.S. Patent & Trademark Office (PTO) instituted five inter partes review proceedings brought by Coherus Biosciences and Boehringer Ingelheim related to three AbbVie patents covering methods of treatment of rheumatoid arthritis using adalimumab. In these proceedings, the PTO reviewed the validity of the patents and issued decisions of invalidity in May, June and July of 2017. AbbVie’s appeal of the decisions is pending in the Court of Appeals for the Federal Circuit.

AbbVie is seeking to enforce certain patent rights related to adalimumab (a drug AbbVie sells under the trademark HUMIRA®). In a case filed in United States District Court for the District of Delaware in August 2016, AbbVie alleged that Amgen Inc.’s and Amgen Manufacturing, Limited’s proposed biosimilar adalimumab product infringed certain AbbVie patents. AbbVie sought declaratory and injunctive relief. In September 2017, the parties settled this case and it was dismissed without prejudice.



~~2017 Form 10-Q~~ \|	24

In March 2017, AbbVie filed a lawsuit, AbbVie Inc. v. Novartis Vaccines and Diagnostics, Inc. and Grifols Worldwide Operations Ltd., in the United States District Court for the Northern District of California against Novartis Vaccines and Grifols Worldwide seeking a declaratory judgment that ~~eleven~~11 HCV-related patents licensed to AbbVie in 2002 are invalid.

AbbVie is seeking to enforce certain patent rights related to adalimumab (a drug AbbVie sells under the trademark HUMIRA®). In a case filed in United States District Court for the District of Delaware in August 2017, AbbVie alleges that Boehringer Ingelheim International GmbH’s, Boehringer Ingelheim Pharmaceutical, Inc.’s, and Boehringer Ingelheim Fremont, Inc.’s proposed biosimilar adalimumab product infringes certain AbbVie patents. AbbVie seeks declaratory and injunctive relief. In May 2019, the parties settled this case and it was dismissed without prejudice.

Pharmacyclics LLC, a wholly owned subsidiary of AbbVie, is seeking to enforce its patent rights relating to ibrutinib capsules (a drug Pharmacyclics sells under the trademark IMBRUVICA®). In February 2018, cases were filed in the United States District Court for the District of Delaware against the following defendants: Fresenius Kabi USA, LLC, Fresenius Kabi USA, Inc., and Fresenius Kabi Oncology Limited; Sun Pharma Global FZE and Sun Pharmaceutical Industries Ltd.; Cipla Limited and Cipla USA Inc.; and Zydus Worldwide DMCC, Cadila Healthcare Limited, Sandoz Inc., and Lek Pharmaceuticals D.D. In each case, Pharmacyclics alleges the defendant’s proposed generic ibrutinib product infringes certain Pharmacyclics patents and seeks declaratory and injunctive relief. Janssen Biotech, Inc. which is in a global collaboration with Pharmacyclics concerning the development and marketing of IMBRUVICA, is the co-plaintiff in these suits.

Pharmacyclics LLC, a wholly owned subsidiary of AbbVie, is seeking to enforce its patent rights relating to ibrutinib tablets (a drug Pharmacyclics sells under the trademark IMBRUVICA®). In a case filed in the United States District Court for the District of Delaware in March 2019, Pharmacyclics alleges that Alvogen Pine Brook LLC’s and Natco Pharma Ltd.’s proposed generic ibrutinib tablet



2019 Form 10-Q \|	24

product infringes certain Pharmacyclics patents. Pharmacyclics seeks declaratory and injunctive relief. Janssen Biotech, Inc. which is in a global collaboration with Pharmacyclics concerning the development and marketing of IMBRUVICA, is the co-plaintiff in this suit.

Note 1314 Segment Information

AbbVie operates in one business segment—pharmaceutical products. The following table details AbbVie’s worldwide net revenues:



			Three months ended June 30,								Six months ended June 30,
			Three months ended June 30,								Six months ended June 30,
(in millions)			2019				2018				2019				2018
Immunology
HUMIRA	United States		$	3,793			$	3,521			$	7,008			$	6,524
	International		1,077				1,664				2,308				3,370
	Total		$	4,870			$	5,185			$	9,316			$	9,894
SKYRIZI	United States		$	42			$	—			$	42			$	—
	International		6				—				6				—
	Total		$	48			$	—			$	48			$	—
Hematologic Oncology
IMBRUVICA	United States		$	886			$	693			$	1,715			$	1,317
	Collaboration revenues		213				157				406				295
	Total		$	1,099			$	850			$	2,121			$	1,612
VENCLEXTA	United States		$	117			$	47			$	222			$	88
	International		52				18				98				36
	Total		$	169			$	65			$	320			$	124
HCV
MAVYRET	United States		$	396			$	422			$	799			$	762
	International		384				510				771				1,018
	Total		$	780			$	932			$	1,570			$	1,780
VIEKIRA	United States		$	—			$	—			$	—			$	3
	International		4				41				29				109
	Total		$	4			$	41			$	29			$	112
Other Key Products
Creon	United States		$	257			$	219			$	484			$	428
Lupron	United States		$	168			$	180			$	359			$	357
	International		41				43				79				85
	Total		$	209			$	223			$	438			$	442
Synthroid	United States		$	203			$	193			$	385			$	375
Synagis	International		$	38			$	44			$	325			$	365
Duodopa	United States		$	24			$	20			$	46			$	38
	International		91				88				180				173
	Total		$	115			$	108			$	226			$	211
Sevoflurane	United States		$	18			$	19			$	35			$	36
	International		73				94				148				183
	Total		$	91			$	113			$	183			$	219
Kaletra	United States		$	10			$	13			$	23			$	26
	International		67				78				132				138
	Total		$	77			$	91			$	155			$	164
AndroGel	United States		$	22			$	128			$	96			$	258
ORILISSA	United States		$	18			$	—			$	31			$	—
	International		1				—				1				—
	Total		$	19			$	—			$	32			$	—
All other			$	254			$	86			$	355			$	228
Total net revenues			$	8,255			$	8,278			$	16,083			$	16,212

Three months ended
September 30, Nine months ended
September 30,
(in millions) 2017 2016 2017 2016
HUMIRA $ 4,701
$ 4,060
$ 13,535
$ 11,786
IMBRUVICA 688
501
1,865
1,321
HCV 276
378
764
1,211
Lupron 201
193
605
602
Creon 215
187
596
517
Synagis 116
96
456
460
Synthroid 191
188
576
558
AndroGel 147
174
437
501
Kaletra 85
137
310
416
Sevoflurane 100
102
311
327
Duodopa 94
74
255
215
All other 181
342
767
928
Total net revenues $ 6,995
$ 6,432
$ 20,477
$ 18,842



~~2017~~2019 Form 10-Q \|	25

ITEM 2. MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS

The following is a discussion and analysis of the financial condition of AbbVie Inc. (AbbVie or the company) as of ~~September~~June 30, ~~2017~~2019 and December 31, ~~2016~~2018 and the results of operations for the three and ~~nine~~six months ended ~~September~~June 30, ~~2017~~2019 and ~~2016.~~2018. This commentary should be read in conjunction with the condensed consolidated financial statements and accompanying notes appearing in Item 1, “Financial Statements and Supplementary Data.”

EXECUTIVE OVERVIEW

Company Overview

AbbVie is a global, research-based biopharmaceutical company formed in 2013 following separation from Abbott Laboratories (Abbott). ~~AbbVie’s mission is to use~~AbbVie uses its expertise, dedicated people and unique approach to innovation to develop and market advanced therapies that address some of the world’s most complex and serious diseases. AbbVie’s products are focused on treating conditions such as chronic autoimmune diseases in rheumatology, gastroenterology and dermatology; oncology, including blood cancers; virology, including hepatitis C virus (HCV) and human immunodeficiency virus (HIV); neurological disorders, such as Parkinson’s ~~disease and multiple sclerosis;~~disease; metabolic diseases, including thyroid disease and complications associated with cystic fibrosis; pain associated with endometriosis; as well as other serious health conditions. AbbVie also has a pipeline of promising new medicines in clinical development across such important medical specialties as immunology, ~~virology,~~ oncology and ~~neurology,~~neuroscience, with additional targeted investment in cystic fibrosis and women’s health.

AbbVie’s products are generally sold worldwide directly to wholesalers, distributors, government agencies, health care facilities, specialty pharmacies and independent retailers from AbbVie-owned distribution centers and public warehouses. In the United States, AbbVie distributes pharmaceutical products principally through independent wholesale distributors, with some sales directly to pharmacies and patients. Outside the United States, ~~sales are made either directly~~AbbVie sells products primarily to customers or through distributors, depending on the market served. Certain products are co-marketed or co-promoted with other companies. AbbVie has approximately ~~29,000~~30,000 employees. AbbVie operates in one business segment—pharmaceutical products.

On June 25, 2019, AbbVie announced that it entered into a definitive transaction agreement under which AbbVie will acquire Allergan plc (Allergan). See Note 4 to the condensed consolidated financial statements for additional information on the proposed acquisition.

~~2017~~2019 Strategic Objectives

~~AbbVie’s~~AbbVie's mission is to be an innovation-driven, patient-focused specialty biopharmaceutical company capable of achieving top-tier financial performance through outstanding execution and a consistent stream of innovative new medicines. AbbVie intends to continue to advance its mission in a number of ways, including: (i) growing revenues ~~through~~by diversifying revenue streams, driving late-stage pipeline assets to the market and ensuring strong commercial execution of new product launches; (ii) continued ~~strong performance from its existing portfolio of on-market products, including its flagship brands, HUMIRA~~investment and ~~IMBRUVICA as well as growth from pipeline products; (ii) expanding operating margins; (iii) continued investment~~expansion in its pipeline in support of opportunities in immunology, oncology ~~virology~~ and ~~neurology~~neuroscience, with additional targeted investment in cystic fibrosis and women's health as well as continued investment in key on-market products; ~~(iv) augmentation of its pipeline through concerted focus on strategic licensing, acquisition~~(iii) expanding operating margins; and ~~partnering activity with a focus on identifying compelling programs that fit AbbVie’s strategic criteria; and (v)~~(iv) returning cash to shareholders via dividends and share repurchases. In addition, AbbVie anticipates several regulatory submissions and key data readouts from key clinical trials in the next twelve months.

Financial Results

The company's financial performance for the ~~nine~~six months ended ~~September~~June 30, ~~2017~~2019 included delivering worldwide net revenues of ~~$20.5~~$16.1 billion, operating earnings of ~~$7.8~~$6.4 billion, ~~and~~ diluted earnings per share of ~~$3.27.~~$2.14 and cash flows from operations of $5.5 billion. Worldwide net revenues ~~grew~~decreased by 9%0.8% and increased 0.9% on a constant currency basis, primarily driven ~~primarily~~ by ~~the continued strength of HUMIRA,~~ revenue growth related to IMBRUVICA and ~~revenue growth from other key products including Creon and Duodopa. These increases were partially~~VENCLEXTA as well as the continued strength of U.S. HUMIRA revenues, offset by ~~a decline in net revenues of HCV product VIEKIRA.~~international HUMIRA biosimilar competition.

Diluted earnings per share was ~~$3.27~~$2.14 for the ~~nine~~six months ended ~~September~~June 30, ~~2017~~2019 and included the following after-tax costs: (i) ~~$606 million related to the amortization of intangible assets; (ii) $546 million~~$2.5 billion for the change in fair value of contingent consideration liabilities; (ii) $639 million related to the amortization of intangible assets; (iii) ~~milestone payments of $68 million; (iv) litigation reserve charges of $65 million; (v) acquisition related costs of $49 million; and (vi) $15~~$241 million for acquired in-process research and development (IPR&D).; (iv) $139 million of restructuring charges; (v) $75 million for milestone payments; and (vi) $27 million of expenses related to the proposed Allergan acquisition. These costs were partially offset by an after-tax benefit of $267 million due to the favorable resolution of various tax positions. Additionally, financial results for the nine months ended September 30, 2017 reflected continued added funding to support AbbVie’s emerging mid- and late-stage pipeline assets and continued investment in AbbVie’s growth brands.



~~2017~~2019 Form 10-Q \|	26

~~The company generated cash flows from operations~~financial results reflected continued funding to support all stages of ~~$7.4 billion for the nine months ended September 30, 2017, which AbbVie utilized to continue to enhance its~~AbbVie’s emerging pipeline ~~through licensing~~assets and ~~collaboration activities, pay cash dividends to stockholders of $3.1 billion and repurchase approximately 7.8 million shares for $500 million~~continued investment in ~~the open market. In September 2017,~~ AbbVie’s board of directors declared a quarterly cash dividend of $0.64 per share of common stock payable in November 2017. In October 2017, the company announced that its board of directors declared an increase in the company's quarterly cash dividend from $0.64 per share to $0.71 per share beginning with the dividend payable in February 2018. This reflects an increase of approximately 11% over the previous quarterly rate.

on-market brands.

In addition to these financial results, AbbVie continued to advance and augment its pipeline as further described below under the heading “Research and Development.”

Research and Development

Research and innovation are the cornerstones of AbbVie’s business as a global biopharmaceutical company. AbbVie’s long-term success depends to a great extent on its ability to continue to discover and develop innovative pharmaceutical products and acquire or collaborate on compounds currently in development by other biotechnology or pharmaceutical companies.

AbbVie’s pipeline currently includes more than 6050 compounds or indications in clinical development individually or under collaboration or license agreements and is focused on such important medical specialties as immunology, oncology ~~virology~~ and ~~neurology~~neuroscience along with targeted investments in cystic fibrosis and women’s health. Of these programs, ~~more than~~approximately 30 are in mid- and late-stage development.

The following sections summarize transitions of significant programs from Phase 2 development to Phase 3 development as well as developments in significant Phase 3 and registration programs. AbbVie expects multiple Phase 2 programs to transition into Phase 3 programs in the next twelve months.

Significant Programs and Developments

Immunology

Upadacitinib

In June 2017, AbbVie announced that top-line results from the Phase 3 SELECT-NEXT clinical trial evaluating upadacitinib (ABT-494), the company’s selective JAK1 inhibitor currently in late-stage development for rheumatoid arthritis (RA), met all primary and ranked secondary endpoints in patients with moderate to severe RA who did not adequately respond to treatment with conventional synthetic disease modifying anti-rheumatic drugs (DMARDs). The safety profile of upadacitinib was consistent with previously reported Phase 2 trials and no new safety signals were detected.

In September 2017, AbbVie announced that top-line results from the Phase 3 SELECT-BEYOND clinical trial evaluating upadacitinib met all primary and ranked secondary endpoints in patients with moderate to severe RA who did not adequately respond or were intolerant to treatment with biologic DMARDs. The safety profile of upadacitinib was consistent with previously reported Phase 2 trials and the Phase 3 SELECT-NEXT clinical trial, with no new safety signals detected.

~~Risankizumab~~

In October 2017, AbbVie announced that top-line results from three Phase 3 clinical trials evaluating risankizumab, an investigational interleukin-23 (IL-23) inhibitor, with 12-week dosing compared to ustekinumab and adalimumab met all co-primary and ranked secondary endpoints for the treatment of patients with moderate to severe chronic plaque psoriasis. The safety profile was consistent with all previously reported studies, and there were no new safety signals detected across the three studies.



~~2017 Form 10-Q~~ \|	27

~~Oncology~~

~~IMBRUVICA~~

~~In January 2017, AbbVie announced that~~February 2019, the U.S. Food and Drug Administration (FDA) ~~approved IMBRUVICA~~accepted for the treatment of patients with relapsed/refractory marginal zone lymphoma (MZL) who require systemic therapy and have received at least one prior anti-CD20-based therapy. This indication is approved under accelerated approval based on overall response rate (ORR) and continued approval may be contingent upon verification and description of clinical benefit in a confirmatory trial. MZL is a slow-growing form of non-Hodgkin's lymphoma.

~~In August 2017, AbbVie announced that the FDA approved IMBRUVICA~~priority review AbbVie's New Drug Application (NDA) for upadacitinib, an investigational oral JAK1-selective inhibitor, for the treatment of adult patients with ~~chronic graft-versus-host-disease (cGVHD) after failure of one or more lines of systemic therapy. IMBRUVICA is the first therapy specifically approved for adults with cGVHD, a~~moderate to severe and potentially life-threatening consequence of stem cell or bone marrow transplant. This marks the sixth U.S. disease indication for IMBRUVICA since the medication's initial approval in 2013 and the first approved indication outside of cancer.

~~Venetoclax~~

rheumatoid arthritis (RA).

In February 2017, AbbVie initiated a Phase 3 clinical trial to study the safety and efficacy of venetoclax in combination with azacitidine in untreated (treatment-naïve) elderly subjects with acute myeloid leukemia (AML) who are ineligible for standard induction therapy (high-dose chemotherapy).

In May 2017, AbbVie initiated a Phase 3 clinical trial to evaluate if venetoclax when co-administered with low dose cytarabine (LDAC) improves overall survival (OS) versus LDAC and placebo, in treatment naïve subjects with AML.

In September 2017, AbbVie announced that top-line results from the Phase 3 MURANO clinical trial evaluating venetoclax tablets in combination with Rituxan (rituximab) met the primary endpoint of prolonged progression-free survival compared with bendamustine in combination with Rituxan in patients with relapsed/refractory chronic lymphocytic leukemia.

~~Rova-T~~

~~In February 2017,~~2019, AbbVie initiated a Phase 3 clinical trial to evaluate the efficacy and safety of ~~Rova-T as maintenance therapy following first-line platinum based chemotherapy~~upadacitinib in ~~participants~~subjects with ~~extensive stage small~~giant cell ~~lung cancer (SCLC).~~arteritis.

SKYRIZI

In March 2019, AbbVie initiated two Phase 3 clinical trials to evaluate the efficacy and safety of risankizumab, an investigational interleukin-23 (IL-23) inhibitor, in subjects with psoriatic arthritis.

In April ~~2017, AbbVie initiated a Phase 3 clinical trial~~2019, the FDA approved SKYRIZI (risankizumab) for the treatment of moderate to ~~evaluate Rova-T compared with topotecan~~severe plaque psoriasis in adults who are candidates for ~~subjects with advanced~~systemic therapy or ~~metastatic SCLC with high levels of delta-like protein 3 who have first disease progression during or following front-line platinum-based chemotherapy.~~

~~Veliparib~~

phototherapy.

In April ~~2017,~~2019, the European Commission granted marketing authorization for SKYRIZI for the treatment of moderate to severe plaque psoriasis in adult patients who are candidates for systemic therapy.

Oncology

IMBRUVICA

In January 2019, the FDA approved IMBRUVICA, in combination with GAZYVA (obinutuzumab), for adult patients with previously untreated chronic lymphocytic leukemia (CLL)/small lymphocytic lymphoma (SLL).

In June 2019, AbbVie announced results from the Phase 3 CLL12 trial, evaluating IMBRUVICA in patients with previously untreated CLL, which demonstrated that IMBRUVICA significantly improved event- and progression-free survival.

VENCLEXTA

In March 2019, AbbVie announced that ~~two~~the FDA placed a partial clinical hold on all clinical trials evaluating VENCLEXTA for the investigational treatment of multiple myeloma (MM). The partial clinical hold followed a review of data from the ongoing Phase 3 ~~studies~~BELLINI trial, a study in relapsed/refractory MM, in which a higher proportion of deaths was observed in the VENCLEXTA arm compared to the control arm of the trial. In June 2019, AbbVie announced that the FDA lifted the partial clinical hold placed on the Phase 3 CANOVA trial, evaluating VENCLEXTA for the investigational treatment of relapsed/refractory MM positive for the translocation (11;14) abnormality, based upon agreement on revisions to the



2019 Form 10-Q \|	27

CANOVA study protocol, including new risk mitigation measures, protocol-specified guidelines and updated futility criteria. All other clinical trials evaluating VENCLEXTA in patients with MM remain on partial clinical hold while next steps continue to be evaluated with the FDA. This action does not impact any of the approved indications for VENCLEXTA, such as CLL or acute myeloid leukemia (AML).

In May 2019, the FDA approved VENCLEXTA, in combination with obinutuzumab, for adult patients with previously untreated CLL/SLL.

In June 2019, AbbVie announced results from the Phase 3 CLL14 trial, evaluating efficacy and safety of VENCLEXTA plus obinutuzumab versus obinutuzumab plus chlorambucil in previously untreated patients with CLL, which demonstrated that VENCLEXTA plus obinutuzumab prolonged progression-free survival and achieved higher rates of complete response and minimal residual disease-negativity compared to commonly used standard of care obinutuzumab plus chlorambucil.

Depatux-M

In May 2019, AbbVie announced the decision to discontinue the Phase 3 INTELLANCE-1 study of depatuxizumab mafodotin (Depatux-M, previously known as ABT-414) in patients with newly diagnosed glioblastoma, whose tumors have EGFR (epidermal growth factor receptor) amplification, at an interim analysis. An Independent Data Monitoring Committee recommended stopping enrollment in INTELLANCE-1 due to lack of survival benefit for patients receiving Depatux-M compared with placebo when added to the standard regimen of radiation and temozolomide. Enrollment has been halted in all ongoing Depatux-M studies.

Veliparib

In July 2019, AbbVie announced that top-line results from the Phase 3 BROCADE3 study evaluating veliparib, an investigational, oral poly (adenosine diphosphate-ribose) polymerase (PARP) inhibitor, in combination with ~~chemotherapy did not meet their~~carboplatin and paclitaxel met its primary ~~endpoints. The studies evaluated~~endpoint of progression-free survival in patients with HER2 negative germline BRCA-mutated advanced breast cancer.

In July 2019, AbbVie announced that top-line results from the Phase 3 VELIA study, conducted in collaboration with the GOG Foundation, Inc., evaluating veliparib ~~in combination~~ with carboplatin and paclitaxel followed by veliparib maintenance therapy met its primary endpoint of progression-free survival in patients with ~~squamous non-small cell lung~~newly diagnosed ovarian cancer, ~~(NSCLC) and triple negative breast cancer (TNBC). Ongoing~~regardless of biomarker status.

Neuroscience

In May 2019, AbbVie initiated a Phase 3 ~~studies include non-squamous non-small cell lung cancer, BRCA1/2 breast cancer~~clinical trial to evaluate the safety and ~~ovarian cancer.~~

~~Virology/Liver Disease~~

~~In February 2017, AbbVie announced that the European Committee for Medicinal Products for Human Use (CHMP) granted~~tolerability of ABBV-951, a ~~positive opinion for a shorter, eight-week treatment of VIEKIRAX (ombitasvir/paritaprevir/ritonavir tablets) + EXVIERA (dasabuvir tablets) as an option for previously untreated adult patients~~subcutaneous levodopa/carbidopa delivery system, in subjects with ~~genotype 1b chronic HCV and minimal to moderate fibrosis.~~

Parkinson's disease.

In July ~~2017,~~2019, AbbVie announced ~~that~~ the European Commission granted marketing authorization for MAVIRET (glecaprevir/pibrentasvir), a once-daily, ribavirin-free treatment for adults with HCV infection across all major genotypes (GT1-6). MAVIRET is also indicated fordecision to discontinue the Phase 2 ARISE study evaluating ABBV-8E12, an investigational anti-tau antibody, in patients with ~~specific treatment challenges, including those with compensated~~



~~2017 Form 10-Q~~ \|	28

~~cirrhosis across all major genotypes, and those who previously had limited treatment options, such as patients with severe chronic kidney disease (CKD) or those with genotype 3 chronic HCV infection.~~

~~In August 2017, AbbVie announced~~progressive supranuclear palsy, after an Independent Data Monitoring Committee recommended stopping the trial for futility after the trial showed that the FDA approved MAVYRET (glecaprevir/pibrentasvir) for the treatment of patients with chronic HCV genotype 1-6 infection without cirrhosis and with compensated cirrhosis (Child-Pugh A). MAVYRET is also indicated for the treatment of adult patients with HCV genotype 1 infection, who previously have been treated with a regimen containing an HCV NS5A inhibitor or an NS3/4A protease inhibitor, butABBV-8E12 did not ~~both. MAVYRET/MAVIRET is a new 8-week, pan-genotypic treatment for patients without cirrhosis and who are new to treatment.~~

provide efficacy.

Other

In ~~September 2017,~~July 2019, AbbVie ~~announced that it had~~ submitted ~~a New Drug Application~~an NDA to the FDA for elagolix ~~an investigational, orally administered gonadotropin-releasing hormone (GnRH) antagonist, being evaluated~~in combination with estradiol/norethindrone acetate (E2/NETA) daily add-back therapy for the management of ~~endometriosis~~heavy menstrual bleeding associated with ~~associated pain. In October, AbbVie was granted priority review for elagolix by the FDA.~~

uterine fibroids.

For a more comprehensive discussion of AbbVie’s products and pipeline, see the company’s Annual Report on Form 10-K for the year ended December 31, ~~2016.~~2018.



2019 Form 10-Q \|	28

RESULTS OF OPERATIONS

Net Revenues

The comparisons presented at constant currency rates reflect comparative local currency net revenues at the prior year’s foreign exchange rates. This measure provides information on the change in net revenues assuming that foreign currency exchange rates had not changed between the prior and ~~the~~ current periods. AbbVie believes that the non-GAAP measure of change in net revenues at constant currency rates, when used in conjunction with the GAAP measure of change in net revenues at actual currency rates, may provide a more complete understanding of the company’s operations and can facilitate analysis of the company’s results of operations, particularly in evaluating performance from one period to another.


		Three months ended September 30,								Percent change						Nine months ended September 30,								Percent change						Three months ended June 30,								Percent change						Six months ended June 30,								Percent change
									At actual currency rates			At constant currency rates				Nine months ended September 30,							At actual currency rates			At constant currency rates				Three months ended June 30,							At actual currency rates			At constant currency rates				Six months ended June 30,							At actual currency rates			At constant currency rates
(dollars in millions)		Three months ended September 30,	2017				2016					At constant currency rates				2017				2016			At actual currency rates			At constant currency rates				2019				2018			At actual currency rates			At constant currency rates				2019				2018			At actual currency rates			At constant currency rates
United States		$	4,586			$	4,081		At actual currency rates		12.4	%		12.4	%		$	13,284			$	11,695			13.6	%		13.6	%		$	5,964			$	5,449			9.5	%		9.5	%		$	11,234			$	10,239			9.7	%		9.7	%
International		2,409				2,351				2.4	%		0.3	%		7,193				7,147				0.6	%		1.0	%		2,291				2,829				(19.0	)%		(14.4	)%		4,849				5,973				(18.8	)%		(14.3	)%
Net revenues		$	6,995			$	6,432			8.8	%		8.1	%		$	20,477			$	18,842			8.7	%		8.8	%		$	8,255			$	8,278			(0.3	)%		1.3	%		$	16,083			$	16,212			(0.8	)%		0.9	%



~~2017~~2019 Form 10-Q \|	29

The following table details AbbVie’s worldwide net revenues:

Three months ended
September 30, Percent change Nine months ended
September 30, Percent change
At actual
currency rates At constant
currency rates At actual
currency rates At constant
currency rates
(dollars in millions) 2017 2016 2017 2016
HUMIRA
United States $ 3,151
$ 2,647
19.1 % 19.1 % $ 9,048
$ 7,554
19.8 % 19.8 %
International 1,550
1,413
9.7 % 6.8 % 4,487
4,232
6.0 % 6.8 %
Total $ 4,701
$ 4,060
15.8 % 14.8 % $ 13,535
$ 11,786
14.8 % 15.1 %
IMBRUVICA
United States $ 574
$ 437
31.0 % 31.0 % $ 1,559
$ 1,146
36.0 % 36.0 %
Collaboration revenues 114
64
80.7 % 80.7 % 306
175
75.4 % 75.4 %
Total $ 688
$ 501
37.3 % 37.3 % $ 1,865
$ 1,321
41.2 % 41.2 %
HCV
United States $ 60
$ 76
(19.5 )% (19.5 )% $ 124
$ 288
(56.6 )% (56.6 )%
International 216
302
(28.7 )% (29.8 )% 640
923
(30.7 )% (30.5 )%
Total $ 276
$ 378
(26.8 )% (27.7 )% $ 764
$ 1,211
(36.9 )% (36.7 )%
Lupron
United States $ 161
$ 155
4.1 % 4.1 % $ 488
$ 485
0.6 % 0.6 %
International 40
38
3.5 % 1.6 % 117
117
(0.1 )% (0.5 )%
Total $ 201
$ 193
4.0 % 3.6 % $ 605
$ 602
0.5 % 0.4 %
Creon
United States $ 215
$ 187
14.8 % 14.8 % $ 596
$ 517
15.3 % 15.3 %
Synagis
International $ 116
$ 96
21.0 % 23.5 % $ 456
$ 460
(0.8 )% (1.7 )%
Synthroid
United States $ 191
$ 188
1.5 % 1.5 % $ 576
$ 558
3.1 % 3.1 %
AndroGel
United States $ 147
$ 174
(14.9 )% (14.9 )% $ 437
$ 501
(12.7 )% (12.7 )%
Kaletra
United States $ 16
$ 27
(39.2 )% (39.2 )% $ 54
$ 90
(39.9 )% (39.9 )%
International 69
110
(38.2 )% (40.4 )% 256
326
(21.7 )% (24.3 )%
Total $ 85
$ 137
(38.4 )% (40.2 )% $ 310
$ 416
(25.7 )% (27.7 )%
Sevoflurane
United States $ 19
$ 19
0.5 % 0.5 % $ 56
$ 58
(2.4 )% (2.4 )%
International 81
83
(3.4 )% (3.3 )% 255
269
(5.5 )% (3.8 )%
Total $ 100
$ 102
(2.7 )% (2.6 )% $ 311
$ 327
(4.9 )% (3.5 )%
Duodopa
United States $ 16
$ 10
56.4 % 56.4 % $ 44
$ 26
70.8 % 70.8 %
International 78
64
21.5 % 16.6 % 211
189
11.7 % 12.3 %
Total $ 94
$ 74
26.3 % 22.0 % $ 255
$ 215
18.7 % 19.2 %
All other $ 181
$ 342
(46.9 )% (47.4 )% $ 767
$ 928
(17.4 )% (17.1 )%
Total net revenues $ 6,995
$ 6,432
8.8 % 8.1 % $ 20,477
$ 18,842
8.7 % 8.8 %



			Three months ended June 30,								Percent change						Six months ended June 30,								Percent change
			Three months ended June 30,								At actual currency rates			At constant currency rates			Six months ended June 30,								At actual currency rates			At constant currency rates
(dollars in millions)			2019				2018				At actual currency rates			At constant currency rates			2019				2018				At actual currency rates			At constant currency rates
Immunology
HUMIRA	United States		$	3,793			$	3,521			7.7	%		7.7	%		$	7,008			$	6,524			7.4	%		7.4	%
	International		1,077				1,664				(35.2	)%		(31.0	)%		2,308				3,370				(31.5	)%		(27.0	)%
	Total		$	4,870			$	5,185			(6.1	)%		(4.8	)%		$	9,316			$	9,894			(5.8	)%		(4.3	)%
SKYRIZI	United States		$	42			$	—			n/m			n/m			$	42			$	—			n/m			n/m
	International		6				—				n/m			n/m			6				—				n/m			n/m
	Total		$	48			$	—			n/m			n/m			$	48			$	—			n/m			n/m
Hematologic Oncology
IMBRUVICA	United States		$	886			$	693			27.9	%		27.9	%		$	1,715			$	1,317			30.2	%		30.2	%
	Collaboration revenues		213				157				35.9	%		35.9	%		406				295				37.6	%		37.6	%
	Total		$	1,099			$	850			29.3	%		29.3	%		$	2,121			$	1,612			31.6	%		31.6	%
VENCLEXTA	United States		$	117			$	47			>100.0%			>100.0%			$	222			$	88			>100.0%			>100.0%
	International		52				18				>100.0%			>100.0%			98				36				>100.0%			>100.0%
	Total		$	169			$	65			>100.0%			>100.0%			$	320			$	124			>100.0%			>100.0%
HCV
MAVYRET	United States		$	396			$	422			(6.0	)%		(6.0	)%		$	799			$	762			4.8	%		4.8	%
	International		384				510				(24.7	)%		(20.4	)%		771				1,018				(24.3	)%		(20.5	)%
	Total		$	780			$	932			(16.3	)%		(14.0	)%		$	1,570			$	1,780			(11.8	)%		(9.6	)%
VIEKIRA	United States		$	—			$	—			n/m			n/m			$	—			$	3			(100.0	)%		(100.0	)%
	International		4				41				(88.8	)%		(86.4	)%		29				109				(72.7	)%		(69.1	)%
	Total		$	4			$	41			(90.3	)%		(87.9	)%		$	29			$	112			(74.2	)%		(70.6	)%
Other Key Products
Creon	United States		$	257			$	219			17.5	%		17.5	%		$	484			$	428			13.1	%		13.1	%
Lupron	United States		$	168			$	180			(6.4	)%		(6.4	)%		$	359			$	357			0.5	%		0.5	%
	International		41				43				(4.5	)%		3.2	%		79				85				(6.7	)%		1.0	%
	Total		$	209			$	223			(6.0	)%		(4.5	)%		$	438			$	442			(0.9	)%		0.6	%
Synthroid	United States		$	203			$	193			4.9	%		4.9	%		$	385			$	375			2.7	%		2.7	%
Synagis	International		$	38			$	44			(11.9	)%		(3.9	)%		$	325			$	365			(10.9	)%		(6.6	)%
Duodopa	United States		$	24			$	20			12.8	%		12.8	%		$	46			$	38			20.1	%		20.1	%
	International		91				88				3.6	%		11.0	%		180				173				3.9	%		11.3	%
	Total		$	115			$	108			5.3	%		11.3	%		$	226			$	211			6.8	%		12.8	%
Sevoflurane	United States		$	18			$	19			(3.3	)%		(3.3	)%		$	35			$	36			(2.0	)%		(2.0	)%
	International		73				94				(21.9	)%		(16.3	)%		148				183				(19.1	)%		(13.2	)%
	Total		$	91			$	113			(18.8	)%		(14.1	)%		$	183			$	219			(16.3	)%		(11.4	)%
Kaletra	United States		$	10			$	13			(33.9	)%		(33.9	)%		$	23			$	26			(15.0	)%		(15.0	)%
	International		67				78				(12.9	)%		(6.8	)%		132				138				(3.9	)%		1.7	%
	Total		$	77			$	91			(16.0	)%		(10.8	)%		$	155			$	164			(5.7	)%		(1.0	)%
AndroGel	United States		$	22			$	128			(83.0	)%		(83.0	)%		$	96			$	258			(62.8	)%		(62.8	)%
ORILISSA	United States		$	18			$	—			n/m			n/m			$	31			$	—			n/m			n/m
	International		1				—				n/m			n/m			1				—				n/m			n/m
	Total		$	19			$	—			n/m			n/m			$	32			$	—			n/m			n/m
All other			$	254			$	86			>100.0%			>100.0%			$	355			$	228			55.2	%		61.3	%
Total net revenues			$	8,255			$	8,278			(0.3	)%		1.3	%		$	16,083			$	16,212			(0.8	)%		0.9	%

n/m – Not meaningful

The following discussion and analysis of AbbVie’s net revenues by product is presented on a constant currency basis.

Global HUMIRA sales ~~increased 15%~~decreased 5% for ~~both~~ the three months and ~~nine~~4% for the six months ended ~~September~~June 30, ~~2017~~2019 primarily as a result of direct biosimilar competition in certain international markets, partially offset by market growth across therapeutic ~~categories and geographies as well as favorable pricing in certain geographies.~~categories. In the United States, HUMIRA sales increased ~~19%~~8% for the three months and ~~20%~~7% for the ~~nine~~six months ended ~~September~~June 30, ~~2017~~2019 driven by market growth across all ~~indications and favorable pricing.~~indications. Internationally, HUMIRA sales ~~increased 7%~~decreased 31% for ~~both~~ the three months and ~~nine~~27% for the six months ended ~~September~~



2019 Form 10-Q \|	30

June 30, ~~2017~~2019 primarily driven ~~primarily~~ by ~~market growth.~~direct biosimilar competition in certain international markets following the expiration of the European Union composition of matter patent for adalimumab in October 2018. Biosimilar competition for HUMIRA is not expected in the United States until 2023. AbbVie continues to pursue strategies intended to further differentiate HUMIRA from competing products and add to the sustainability ~~and future growth~~ of HUMIRA.

Net revenues for SKYRIZI were $48 million for the three and six months ended June 30, 2019 following the April 2019 regulatory approvals for the treatment of moderate to severe plaque psoriasis.



~~2017 Form 10-Q~~ \|	30

Net revenues for IMBRUVICA represent product ~~revenues~~sales in the United States and collaboration revenues outside of the United States related to AbbVie’s 50% share of IMBRUVICA profit. ~~Global~~AbbVie's global IMBRUVICA ~~sales~~revenues increased ~~37%~~29% for the three months and ~~41%~~32% for the ~~nine~~six months ended ~~September~~June 30, ~~2017~~2019 as a result of continued penetration of IMBRUVICA ~~as a first-line treatment~~ for patients with ~~chronic lymphocytic leukemia (CLL)~~CLL as well as favorable pricing.

Net revenues for VENCLEXTA increased by more than 100% for the three and six months ended June 30, 2019 primarily due to market share gains following additional regulatory approvals of VENCLEXTA for the treatment of patients with relapsed/refractory CLL and AML in 2018.

Global ~~HCV~~MAVYRET sales decreased ~~28%~~by 14% for the three months and ~~37%~~10% for the ~~nine~~six months ended ~~September~~June 30, ~~2017 as a result of market contraction,~~2019 primarily driven by lower ~~market share and price erosion of VIEKIRA. These factors were partially offset by the launch of MAVYRET~~patient volumes in certain ~~geographies during the third quarter of 2017.~~international markets.

Net revenues for Creon increased ~~15%~~18% for ~~both~~ the three months and ~~nine~~13% for the six months ended ~~September~~June 30, ~~2017~~2019 primarily driven ~~primarily~~ by continued market growth and ~~higher market share.~~favorable pricing. Creon maintains market leadership in the pancreatic enzyme market.

Synagis is a seasonal product with the majority of sales occurring in the first and fourth quarters. Synagis revenues increased 23% for the three months ended September 30, 2017 primarily due to seasonal acceleration in certain geographies and tender timing. Synagis revenues for the nine months ended September 30, 2017 decreased 2%.

Net revenues for Duodopa increased ~~22%~~11% for the three months and ~~19%~~13% for the ~~nine~~six months ended ~~September~~June 30, ~~2017~~2019 primarily ~~as a result of~~driven by increased market ~~penetration and geographic expansion.~~penetration.

Gross Margin


		Three months ended September 30,											Nine months ended September 30,											Three months ended June 30,											Six months ended June 30,
(dollars in millions)		2017				2016				% change			2017				2016				% change			2019				2018				% change			2019				2018				% change
Gross margin		$	5,379			$	4,928			9	%		$	15,717			$	14,564			8	%		$	6,436			$	6,344			1	%		$	12,570			$	12,351			2	%
as a % of net revenues		77		%		77		%					77		%		77		%					78		%		77		%					78		%		76		%

Gross margin as a percentage of net revenues ~~was flat~~increased for ~~both~~ the three and ~~nine~~six months ended ~~September~~June 30, ~~2017~~2019 compared to the prior year. Gross margin percentage for ~~both~~ the three and ~~nine~~six months ended ~~September~~June 30, ~~2017~~2019 was favorably impacted primarily by ~~product mix and operational efficiencies,~~the expiration of HUMIRA royalties, partially offset by ~~the unfavorable impact of~~ higher intangible asset amortization and the IMBRUVICA profit sharing arrangement.

Selling, General and Administrative


		Three months ended September 30,											Nine months ended September 30,											Three months ended June 30,											Six months ended June 30,
(dollars in millions)		2017				2016				% change			2017				2016				% change			2019				2018				% change			2019				2018				% change
Selling, general and administrative		$	1,452			$	1,381			5	%		$	4,324			$	4,202			3	%		$	1,654			$	1,760			(6	)%		$	3,334			$	3,551			(6	)%
as a % of net revenues		21		%		21		%					21		%		22		%					20		%		21		%					21		%		22		%

~~SG&A~~Selling, general and administrative (SG&A) expenses as a percentage of net revenues ~~was flat~~decreased for the three ~~months~~ and ~~decreased for the nine~~six months ended ~~September~~June 30, ~~2017~~2019 compared to the prior year. SG&A expense percentage for ~~both~~ the three and ~~nine~~six months ended ~~September~~June 30, ~~2017~~2019 was favorably impacted by ~~continued leverage from revenue growth,~~lower charitable contributions, as $120 million of prior year contributions to certain U.S. not-for-profit organizations did not recur, and by international HUMIRA expense reductions, partially offset by new product launch ~~expenses.~~expenses and $24 million of transaction costs associated with the proposed Allergan acquisition. In addition, for the six months ended June 30, 2019, SG&A expense percentage ~~for the nine months ended September 30, 2017~~ was ~~also~~ unfavorably impacted by restructuring charges, offset by a $98 million decrease in litigation reserve ~~charges of $97 million.~~charges.



~~2017~~2019 Form 10-Q \|	31

Research and Development and Acquired In-Process Research and Development


		Three months ended September 30,											Nine months ended September 30,											Three months ended June 30,											Six months ended June 30,
(dollars in millions)		2017				2016				% change			2017				2016				% change			2019				2018				% change			2019				2018				% change
Research and development		$	1,222			$	1,106			11	%		$	3,580			$	3,176			13	%		$	1,291			$	1,322			(2	)%		$	2,580			$	2,566			1	%
as a % of net revenues		17		%		17		%					17		%		17		%					16		%		16		%					16		%		16		%
Acquired in-process research and development		$	—			$	80			(100	)%		$	15			$	160			(91	)%		$	91			$	—			n/m			$	246			$	69			>100	%

Research and ~~Development~~development(R&D) expenses as a percentage of net revenues were flat for ~~both~~ the three and ~~nine~~six months ended ~~September~~June 30, ~~2017 increased~~2019 compared to the prior ~~year principally due to increased~~year. R&D expenses included continued funding to support ~~the company’s emerging mid- and late-stage pipeline assets and the impact~~all stages of the post-acquisition R&D expenses of Stemcentrx and Boehringer Ingelheim (BI) compounds. These increases were partially offset by lower acquisition related costs, which decreased by $54 million for the three months and $130 million for the nine months ended September 30, 2017 compared to the prior year.company's emerging pipeline assets.

Acquired ~~in-process research and development (IPR&D)~~IPR&D expenses reflect upfront payments related to various collaborations. There were no individually significant transactions ~~or cash flows~~ during both the three and ~~nine~~six months ended ~~September~~June 30, ~~2017~~2019 and ~~2016.~~2018.

Other Operating Expenses

There were no other operating expenses for the three and six months ended June 30, 2019. Other operating expenses for the six months ended June 30, 2018 included a $500 million charge related to the extension of the previously announced collaboration with Calico Life Sciences LLC (Calico) to discover, develop and bring to market new therapies for patients with age-related diseases, including neurodegeneration and cancer.

Other Non-Operating Expenses


		Three months ended September 30,								Nine months ended September 30,								Three months ended June 30,								Six months ended June 30,
(in millions)		2017				2016				2017				2016				2019				2018				2019				2018
Interest expense		$	293			$	271			$	851			$	731			$	358			$	320			$	745			$	629
Interest income		(41		)		(21		)		(99		)		(56		)		(49		)		(48		)		(111		)		(106		)
Interest expense, net		$	252			$	250			$	752			$	675			$	309			$	272			$	634			$	523

Net foreign exchange loss (gain)		$	9			$	(4	)		$	28			$	313
Net foreign exchange loss																		$	6			$	8			$	12			$	16
Other expense, net		349				101				484				152				2,278				470				2,413				317

Interest expense, net ~~was flat~~increased for the three and six months ended ~~September~~June 30, ~~2017 compared to the prior year. The increase for the nine months ended September 30, 2017~~2019 compared to the prior year ~~was~~ primarily due to the ~~May 2016 issuance~~unfavorable impact of ~~$7.8 billion aggregate principal amount of senior notes, which were issued to finance~~higher interest rates on the ~~acquisition of Stemcentrx~~company's debt obligations and ~~to repay an~~higher average outstanding ~~term loan.~~debt balances.

Net foreign exchange loss for the nine months ended September 30, 2016 included losses totaling $298 million related to the devaluation of AbbVie’s net monetary assets denominated in the Venezuelan bolivar. See Note 8 to the Condensed Consolidated Financial Statements for additional information regarding the Venezuelan devaluation.

Other expense, net included charges related to changes in fair value of ~~the BI and Stemcentrx~~ contingent consideration liabilities ~~which totaled $401~~of $2.3 billion for the three months and $2.5 billion for the six months ended June 30, 2019 compared to charges of $485 million for the three months and ~~$547~~$337 million for the ~~nine~~six months ended ~~September~~June 30, ~~2017 compared to $104 million for the three months and $145 million for the nine months ended September 30, 2016 following the initial recognition of these liabilities in the second quarter of 2016.~~2018. The fair value of contingent consideration liabilities is impacted by the passage of time and multiple other inputs, including the probability of success of achieving regulatory/commercial milestones, discount rates, the estimated amount of future sales of the acquired products and other market-based factors. For the three and ~~nine~~six months ended ~~September~~June 30, ~~2017,~~2019, the change in fair value represented ~~mainly~~ higher probabilities of success, higher estimated future sales and declining interest rates. The higher probabilities of success resulted from the April 2019 regulatory approvals of SKYRIZI for the treatment of moderate to severe plaque psoriasis. For the three and six months ended June 30, 2018, the change in fair value represented higher estimated future sales and the passage of ~~time. See Note 4 to~~time partially offset by the ~~Condensed Consolidated Financial Statements for additional information regarding the acquisitions~~effect of Stemcentrx and BI compounds. Other expense, net also included realized gains on available-for-sale investment securities of $39 million for the three months and $49 million for the nine months ended September 30, 2017.rising interest rates.



~~2017~~2019 Form 10-Q \|	32

Income Tax Expense

The effective tax rate was ~~22%~~8% for the three months and ~~20%~~5% for the ~~nine~~six months ended ~~September~~June 30, ~~2017~~2019 and ~~21%~~2% for the three months and ~~22%~~1% for the ~~nine~~six months ended ~~September~~June 30, ~~2016.~~2018. The effective tax rate in each period differed from the U.S. statutory tax rate of 21% principally due to the benefit from foreign operations which reflects the impact of lower income tax rates in locations outside the United States, tax ~~exemptions and~~ incentives in Puerto Rico and other foreign tax jurisdictions and business development ~~activities together with the cost of repatriation decisions.~~activities. The ~~change~~increase in the effective tax rate for ~~both~~ the three and ~~nine~~six months ended ~~September~~June 30, ~~2017~~2019 over the prior year was principally due to the beneficial impact of the timing of provisions of the Tax Cuts and Jobs Act (the Act) related to earnings from certain foreign subsidiaries in prior year and changes in the jurisdictional mix of earnings, ~~as well as certain discrete factors and events,~~ including ~~collaborations,~~a change in fair value of contingent consideration liabilities. These increases were partially offset by the ~~impact~~favorable resolution of various tax positions in the prior year non-deductible devaluation loss related to Venezuela and the impact of the adoption of ASU No. 2016-09, which changed the accounting treatment for excess tax benefits associated with stock-based awards. See Note 1 to the Condensed Consolidated Financial Statements for additional information related to the adoption of this accounting pronouncement.current year.

FINANCIAL POSITION, LIQUIDITY AND CAPITAL RESOURCES


	Nine months ended September 30,							Six months ended June 30,
(in millions)	2017				2016			2019				2018
Cash flows provided by (used in):
Operating activities	$	7,376			$	5,500		$	5,494			$	5,511
Investing activities	(475		)		(5,955		)	(167		)		240
Financing activities	(3,584		)		(1,426		)	(7,453		)		(11,487		)

Operating cash flows for the ~~nine~~six months ended ~~September~~June 30, ~~2017 reflected~~2019 were flat compared to the prior year due to improved results of operations resulting from ~~revenue growth and~~ an ~~improvement~~increase in operating earnings ~~as well as favorability from the timing of~~and lower defined benefit plan contributions, offset by higher payments for income ~~tax payments compared to the prior year. Cash provided by operating activities reflected~~taxes and interest. AbbVie’s ~~voluntary~~ contributions to its ~~principal domestic~~ defined benefit ~~plan of $150 million for both the nine months ended September 30, 2017 and 2016. Realized excess tax benefits associated with stock-based compensation totaled $53~~plans were $203 million for the ~~nine~~six months ended ~~September~~June 30, ~~2017~~2019 and ~~were presented within cash flows from operating activities as a result of~~$822 million for the ~~adoption of a new accounting pronouncement. In the nine~~six months ended ~~September~~June 30, 2016, prior to the adoption of the new accounting pronouncement, realized excess tax benefits of $47 million were presented within cash flows from financing activities. See Note 1 to the Condensed Consolidated Financial Statements for additional information regarding the adoption of this new accounting pronouncement.2018.

Investing cash flows for the ~~nine~~six months ended ~~September~~June 30, ~~2017~~2019 included net sales and maturities of investment securities totaling ~~$52~~$508 million, payments made for acquisitions and investments of $440 million and capital expenditures of $235 million. ~~For~~Investing cash flows for the ~~nine~~six months ended ~~September~~June 30, ~~2016, investing activities primarily~~2018 included ~~$1.9 billion of cash consideration paid to acquire Stemcentrx in June 2016, a $595 million upfront payment to acquire certain BI compounds in April 2016~~net sales and ~~net purchases~~maturities of investment securities totaling ~~$2.9 billion. Cash flows from investing activities~~$874 million, payments made for ~~the nine months ended September 30, 2017~~acquisitions and ~~2016 also reflected~~investments of $401 million and capital expenditures ~~and other acquisitions and investments.~~of $233 million.

Financing cash flows for the six months ended June 30, 2019 included the repayment of AbbVie's $3.0 billion 364-day term loan credit agreement that was scheduled to mature in June 2019.

The company made cash dividend payments of ~~$3.1~~$3.2 billion for the ~~nine~~six months ended ~~September~~June 30, ~~2017~~2019 and ~~$2.8~~$2.7 billion for the ~~nine~~six months ended ~~September~~June 30, ~~2016.~~2018. The increase in cash dividend payments was driven by an increase in the quarterly dividend ~~rate from $0.57 per share to $0.64 per share beginning with the dividend that was paid in February 2017.~~rate. On ~~September 8, 2017,~~June 20, 2019, the board of directors declared a quarterly cash dividend of ~~$0.64~~$1.07 per share for stockholders of record at the close of business on ~~October 13, 2017,~~July 15, 2019, payable on ~~November~~August 15, 2017. On October 27, 2017, the company announced that its board of directors declared an increase in the company's quarterly cash dividend from $0.64 per share to $0.71 per share beginning with the dividend payable on February 15, 2018 to stockholders of record as of January 12, 2018. This reflects an increase of approximately 11% over the previous quarterly rate.2019. The timing, declaration, amount of and payment of any dividends by AbbVie in the future is within the discretion of its board of directors and will depend upon many factors, including AbbVie’s financial condition, earnings, capital requirements of its operating subsidiaries, covenants associated with certain of AbbVie’s debt service obligations, legal requirements, regulatory constraints, industry practice, ability to access capital markets and other factors deemed relevant by its board of directors.

On February 16, 2017, AbbVie's board of directors authorized a $5.0 billion increase to AbbVie's existing stock repurchase program. Under this program, the company repurchased approximately 7.8 million shares for $500 million in the open market in the nine months ended September 30, 2017. Additionally, during the nine months ended September 30, 2017, AbbVie cash-settled $285 million of its open market purchases made at the end of 2016. The company's stock repurchase authorization permits purchases of AbbVie



~~2017 Form 10-Q~~ \|	33

shares from time to time in open-market or private transactions at management's ~~direction depending on the company's cash flows, net debt level and market conditions.~~discretion. The program has no time limit and can be discontinued at any time.

AbbVie repurchased 4 million shares for $300 million during the six months ended June 30, 2019 and 84 million shares for $8.8 billion during the six months ended June 30, 2018. AbbVie cash-settled $201 million of its December 2018 open-market purchases in January 2019.

During the ~~nine~~six months ended ~~September~~June 30, ~~2017~~2019, AbbVie made $167 million of contingent consideration payments related to the commercial launch of SKYRIZI in certain geographies. $108 million of these payments were included in financing cash flows and ~~2016,~~$59 million of the payments were included in operating cash flows.

During the six months ended June 30, 2019 and 2018, the company issued and redeemed commercial paper. The balance of commercial paper outstanding was ~~$800~~$306 million as of ~~September~~June 30, ~~2017~~2019 and ~~$377~~$699 million as of December 31, ~~2016.~~2018. AbbVie may issue additional commercial paper or retire commercial paper to meet liquidity requirements as needed.



2019 Form 10-Q \|	33

In ~~May 2016,~~connection with the ~~company issued $7.8 billion aggregate principal amount~~proposed acquisition of ~~senior notes. Approximately $2.0 billion of the net proceeds were used to repay an outstanding~~Allergan, on June 25, 2019, AbbVie entered into a 364-day bridge credit agreement and on July 12, 2019, AbbVie entered into a term loan ~~that was due~~credit agreement. See Note 4 to ~~mature in November 2016, approximately $1.9 billion of~~ the ~~net proceeds were used to finance~~condensed consolidated financial statements for additional information. During the ~~acquisition of Stemcentrx and approximately $3.8 billion of the net proceeds were used to finance an accelerated share repurchase agreement.~~

~~In the third quarter of 2017,~~six months ended June 30, 2019, AbbVie paid ~~$305~~debt issuance costs of $171 million ~~of contingent consideration to BI~~ related to ~~a Phase 3 enrollment milestone. $268 million of this milestone was included in financing cash flows and $37 million was included in operating cash flows for~~ the ~~nine months ended September 30, 2017.~~

Cash and equivalents were impacted by net favorable exchange rate changes totaling $29 million for the nine months ended September 30, 2017 and net unfavorable exchange rate changes totaling $300 million for the nine months ended September 30, 2016. The unfavorable exchange rate changes in 2016 were primarily due to the devaluation of AbbVie’s net monetary assets denominated in the Venezuelan bolivar. While a significant portion of cash and equivalents as of September 30, 2017 were considered reinvested indefinitely in foreign subsidiaries, AbbVie does not expect such reinvestment to affect its liquidity and capital resources. If these funds were needed for operations in the United States, AbbVie would be required to accrue and pay U.S. income taxes to repatriate these funds. AbbVie believes that it has sufficient sources of liquidity to support its assumption that the amount of undistributed earnings as of September 30, 2017 has been reinvested indefinitely.

bridge credit agreement.

Credit Risk

AbbVie monitors economic conditions, the creditworthiness of customers and government regulations and funding, both domestically and abroad. AbbVie regularly communicates with its customers regarding the status of receivable balances, including their payment plans and obtains positive confirmation of the validity of the receivables. AbbVie establishes an allowance against accounts receivable when it is probable they will not be collected. AbbVie may also utilize factoring arrangements to mitigate credit risk, although the receivables included in such arrangements have historically not been a significant amount of total outstanding receivables.

AbbVie continues to do business with foreign governments in certain countries, including Greece, Portugal, Italy and Spain, which have historically experienced challenges in credit and economic conditions. Substantially all of AbbVie’s trade receivables in Greece, Portugal, Italy and Spain are with government health systems. Outstanding governmental receivables in these countries, net of allowances for doubtful accounts, totaled $246 million as of September 30, 2017 and $244 million as of December 31, 2016. The company also continues to do business with foreign governments in certain oil-exporting countries that have recently experienced a deterioration in economic conditions, including Saudi Arabia and Russia, which may result in delays in the collection of receivables. Outstanding governmental receivables related to Saudi Arabia, net of allowances for doubtful accounts, were $141 million as of September 30, 2017 and $122 million as of December 31, 2016. Outstanding governmental receivables related to Russia, net of allowances for doubtful accounts, were $142 million as of September 30, 2017 and $110 million as of December 31, 2016. Global economic conditions and customer-specific factors may require the company to periodically re-evaluate the collectability of its receivables and the company could potentially incur credit losses.

Currently, AbbVie does not believe the economic conditions in oil-exporting countries will have a significant impact on the company’s liquidity, cash flow or financial flexibility. However, if government funding were to become unavailable in these countries or if significant adverse changes in their reimbursement practices were to occur, AbbVie may not be able to collect the entire balance outstanding as of September 30, 2017.



~~2017 Form 10-Q~~ \|	34

Credit Facility, Access to Capital and Credit Ratings

Credit Facility

AbbVie currently has a $3.0 billion five-year revolving credit facility which matures in ~~October 2019.~~August 2023. The revolving credit facility enables the company to borrow funds on an unsecured basis at variable interest rates and contains various covenants. At ~~September~~June 30, ~~2017,~~2019, the company was in compliance with all its credit facility covenants. Commitment fees under the credit facility were insignificant. ~~There~~No amounts were ~~no amounts~~ outstanding under the credit facility as of ~~September~~June 30, ~~2017~~2019 and December 31, ~~2016.~~

2018.

Access to Capital

The company intends to fund short-term and long-term financial obligations as they mature through cash on hand, future cash flows from operations or by issuing additional debt. The company’s ability to generate cash flows from operations, issue debt or enter into financing arrangements on acceptable terms could be adversely affected if there is a material decline in the demand for the company’s products or in the solvency of its customers or suppliers, deterioration in the company’s key financial ratios or credit ratings or other material unfavorable changes in business conditions. At the current time, the company believes it has sufficient financial flexibility to issue debt, enter into other financing arrangements and attract long-term capital on acceptable terms to support the company’s growth objectives.

Credit Ratings

On June 25, 2019, following the announcement of the proposed acquisition of Allergan, Moody's Investor Service affirmed its Baa2 senior unsecured long-term rating and Prime-2 short-term rating with a stable outlook. S&P Global Ratings revised its ratings outlook to negative from stable and expects to lower the issuer credit rating by one notch to BBB+ from A- and the short-term rating to A-2 from A-1 when the acquisition is complete.

~~There were no changes in the company’s credit ratings during the nine months ended September 30, 2017.~~ Unfavorable changes to the ratings may have an adverse impact on future financing arrangements; however, they would not affect the company’s ability to draw on its credit facility and would not result in an acceleration of scheduled maturities of any of the company’s outstanding debt.

CRITICAL ACCOUNTING POLICIES

A summary of the company’s significant accounting policies is included in Note 2, ~~entitled~~ “Summary of Significant Accounting Policies” ~~to the company’s~~in AbbVie's Annual Report on Form 10-K for the year ended December 31, ~~2016. There have been no significant~~2018. Significant changes in the company’s application of its critical accounting policies ~~during~~include the ~~nine months ended September 30, 2017.~~adoption of a new accounting standard that establishes a new lease accounting framework. See Notes 1 and 8 to the condensed consolidated financial statements for additional information.



2019 Form 10-Q \|	34

FORWARD-LOOKING STATEMENTS

Some statements in this quarterly report on Form 10-Q may be forward-looking statements for purposes of the Private Securities Litigation Reform Act of 1995. The words “believe,” “expect,” “anticipate,” “project,” and similar expressions, among others, generally identify forward-looking statements. AbbVie cautions that these forward-looking statements are subject to risks and uncertainties that may cause actual results to differ materially from those indicated in the forward-looking statements. Such risks and uncertainties include, but are not limited to, challenges to intellectual property, competition from other products, difficulties inherent in the research and development process, adverse litigation or government action, and changes to laws and regulations applicable to our industry. Additional information about the economic, competitive, governmental, technological and other factors that may affect AbbVie’s operations is set forth in Item 1A, “Risk Factors,” in AbbVie’s Annual Report on Form 10-K for the year ended December 31, ~~2016,~~2018, which has been filed with the Securities and Exchange Commission. AbbVie notes these factors for investors as permitted by the Private Securities Litigation Reform Act of 1995. AbbVie 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.

ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK

For a discussion of the company's market risk, see Item 7A, "Quantitative and Qualitative Disclosures About Market Risk" in AbbVie's Annual Report on Form 10-K for the year ended December 31, ~~2016.~~2018.



~~2017~~2019 Form 10-Q \|	35

ITEM 4. CONTROLS AND PROCEDURES

DISCLOSURE CONTROLS AND PROCEDURES

Evaluation of disclosure controls and procedures. The Chief Executive Officer, Richard A. Gonzalez, and the Chief Financial Officer, ~~William J. Chase,~~Robert A. Michael, evaluated the effectiveness of AbbVie’s disclosure controls and procedures as of the end of the period covered by this report, and concluded that AbbVie’s disclosure controls and procedures were effective to ensure that information AbbVie is required to disclose in the reports that it files or submits with the Securities and Exchange Commission under the Securities Exchange Act of 1934 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 AbbVie in the reports that it files or submits under the Exchange Act is accumulated and communicated to AbbVie’s management, including its principal executive officer and principal financial officer, as appropriate to allow timely decisions regarding required disclosure.

INTERNAL CONTROL OVER FINANCIAL REPORTING

Changes in internal control over financial reporting. There were no changes in AbbVie’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, AbbVie’s internal control over financial reporting during the quarter ended ~~September~~June 30, ~~2017.~~2019.

Inherent Limitations on Effectiveness of Controls. AbbVie’s management, including its Chief Executive Officer and its Chief Financial Officer, do not expect that AbbVie’s disclosure controls or internal control over financial reporting will prevent or detect all ~~error~~errors and all fraud. A control system, no matter how well designed and operated, can provide only reasonable, not absolute, assurance that the control system’s objectives will be met. The design of a control system must reflect the fact that there are resource constraints, and the benefits of controls must be considered relative to their costs. Further, because of the inherent limitations in all control systems, no evaluation of controls can provide absolute assurance that misstatements due to error or fraud will not occur or that all control issues and instances of fraud, if any, have been detected. These inherent limitations include the realities that judgments in decision-making can be faulty and that breakdowns can occur because of simple error or mistake. Controls can also be circumvented by the individual acts of some persons, by collusion of two or more people, or by management override of the controls.

The design of any system of controls is based in part on certain assumptions about the likelihood of future events, and there can be no assurance that any design will succeed in achieving its stated goals under all potential future conditions. Projections of any evaluation of controls effectiveness to future periods are subject to risks. Over time, controls may become inadequate because of changes in conditions or deterioration in the degree of compliance with policies or procedures.



~~2017~~2019 Form 10-Q \|	36

PART II. OTHER INFORMATION

ITEM 1. LEGAL PROCEEDINGS

Information pertaining to legal proceedings is provided in Note 1213 to the ~~Condensed Consolidated Financial Statements~~condensed consolidated financial statements and is incorporated by reference herein.

ITEM 1A. RISK FACTORS

There have been no material changes to the risk factors disclosed in AbbVie’s Annual Report on Form 10-K for the fiscal year ended December 31, 2018, except for the following:

The proposed acquisition of Allergan plc (“Allergan”) may not be completed on the currently contemplated timeline or terms, or at all, and may not achieve the intended benefits.

Consummation of the acquisition of Allergan by AbbVie is conditioned on, among other things, obtaining necessary governmental, regulatory and Allergan shareholder approvals. If any of the conditions to the acquisition is not satisfied, it could delay or prevent the proposed acquisition from occurring, which could negatively impact AbbVie’s share price and future business and financial results. Further, as a condition to their approval of the acquisition, agencies may impose requirements, limitations or costs or require divestitures or place restrictions on the conduct of AbbVie’s business after the closing. These requirements, limitations, costs, divestitures or restrictions could jeopardize or delay the consummation of the acquisition or may reduce the anticipated benefits of the transaction. AbbVie will incur increased indebtedness to fund the cash consideration for the acquisition and such indebtedness could adversely affect AbbVie's business, financial condition, or results of operations. Following the proposed acquisition, AbbVie may not realize the proposed acquisition’s intended benefits within the expected timeframe or at all.

ITEM 2. UNREGISTERED SALES OF EQUITY SECURITIES AND USE OF PROCEEDS

(c) Issuer Purchases of Equity Securities

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
July 1, 2017 – July 31, 2017 24,680
⁽¹⁾
$72.78
⁽¹⁾
—
$4,536,288,945
August 1, 2017 – August 31, 2017 2,731
⁽¹⁾
$70.45
⁽¹⁾
—
$4,536,288,945
September 1, 2017 – September 30, 2017 4,266
⁽¹⁾
$83.29
⁽¹⁾
—
$4,536,288,945
Total 31,677
⁽¹⁾
$74.00
⁽¹⁾
—
$4,536,288,945



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
April 1, 2019 – April 30, 2019	1,204		⁽¹⁾	$83.93	⁽¹⁾	—			$3,950,021,071
May 1, 2019 – May 31, 2019	1,371		⁽¹⁾	$77.84	⁽¹⁾	—			$3,950,021,071
June 1, 2019 – June 30, 2019	1,138		⁽¹⁾	$77.58	⁽¹⁾	—			$3,950,021,071
Total	3,713		⁽¹⁾	$79.74	⁽¹⁾	—			$3,950,021,071

1.

In addition to AbbVie shares repurchased on the open market under a publicly announced program, if any, these shares also included the shares ~~deemed surrendered to~~purchased on the open market for the benefit of participants in the AbbVie ~~to pay the exercise price~~Employee Stock Purchase Plan – 1,204 in ~~connection with the exercise of employee stock options – 3,738~~April; 1,371 in ~~July; 1,293~~May; and 1,138 in ~~August; and 2,974 in September, with average exercise prices of $72.84 in July; $69.87 in August; and $86.51 in September.~~June.

~~These shares also included the shares purchased on the open market for the benefit of participants in the AbbVie Employee Stock Purchase Plan - 20,942 in July; 1,438 in August; and 1,292 in September.~~

These shares do not include the shares surrendered to AbbVie to satisfy minimum tax withholding obligations in connection with the vesting or exercise of stock-based awards.



2019 Form 10-Q \|	37

ITEM 6. EXHIBITS

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



Exhibit No.		Exhibit Description

2.1		*Transaction Agreement, dated as of June 25, 2019, between AbbVie, Allergan and Acquirer Sub (incorporated by reference to Exhibit 2.1 of AbbVie’s Current Report on Form 8-K filed on June 25, 2019).

2.2		*Appendix III to the Rule 2.5 Announcement, dated as of June 25, 2019 (Conditions Appendix) (incorporated by reference to Exhibit 2.2 of AbbVie’s Current Report on Form 8-K filed on June 25, 2019).

2.3		*Expenses Reimbursement Agreement, dated as of June 25, 2019, between AbbVie and Allergan (incorporated by reference to Exhibit 2.3 of AbbVie’s Current Report on Form 8-K filed on June 25, 2019).

10.1		*364-Day Bridge Credit Agreement, dated as of June 25, 2019, among AbbVie, Morgan Stanley Senior Funding, Inc. and the lenders party thereto (incorporated by reference to Exhibit 10.1 of AbbVie’s Current Report on Form 8-K filed on June 25, 2019).

10.2		AbbVie Supplemental Pension Plan, as amended and restated.**

10.3		*Term Loan Credit Agreement, dated as of July 12, 2019, among AbbVie, certain lenders party thereto and Morgan Stanley Senior Funding, Inc., as administrative agent (incorporated by reference to Exhibit 10.1 of AbbVie’s Current Report on Form 8-K filed on July 16, 2019).

10.4		*First Amendment to Revolving Credit Agreement, dated as of July 12, 2019, among AbbVie, the lenders and other parties party thereto and JPMorgan Chase Bank, N.A., as administrative agent (incorporated by reference to Exhibit 10.2 of AbbVie’s Current Report on Form 8-K filed on July 16, 2019).

10.5		AbbVie 2013 Incentive Stock Program Second Amendment.**

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)).

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 AbbVie Inc. Quarterly Report on Form 10-Q for the quarter ended June 30, 2019, filed on August 5, 2019, formatted in iXBRL (Inline eXtensible Business Reporting Language): (i) Condensed Consolidated Statements of Earnings; (ii) Condensed Consolidated Statements of Comprehensive Income; (iii) Condensed Consolidated Balance Sheets; (iv) Condensed Consolidated Statements of Equity; (v) Condensed Consolidated Statements of Cash Flows; and (vi) the Notes to Condensed Consolidated Financial Statements.

* Incorporated herein by ~~reference~~reference. Commission file number 001-35565.

** Denotes management contract or compensatory plan or arrangement required to ~~the Exhibit Index included herewith.~~be filed as an exhibit hereto.



~~2017~~2019 Form 10-Q \|	3738

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.



		ABBVIE INC.


	By:	/s/ ~~William J. Chase~~Robert A. Michael
		~~William J. Chase~~Robert A. Michael
		Executive Vice President,
		Chief Financial Officer

Date: ~~November 7, 2017~~August 5, 2019



~~2017~~2019 Form 10-Q \|	3839

~~EXHIBIT INDEX~~

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



~~Exhibit No.~~		~~Exhibit Description~~

~~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)).~~
��
~~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 AbbVie Inc. Quarterly Report on Form 10-Q for the quarter ended September 30, 2017, filed on November 7, 2017, formatted in XBRL: (i) Condensed Consolidated Statements of Earnings; (ii) Condensed Consolidated Statements of Comprehensive Income; (iii) Condensed Consolidated Balance Sheets; (iv) Condensed Consolidated Statements of Cash Flows; and (v) the Notes to Condensed Consolidated Financial Statements.