Cover and table of contents

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UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

WASHINGTON, D.C. 20549

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FORM 10-Q

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(Mark One)

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

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For the quarterly period ended September 30, 2021

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OR

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

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For the transition period from to

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Commission File No. 1-2189

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ABBOTT LABORATORIES

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

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100 Abbott Park Road

Abbott Park**,** Illinois 60064-6400

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Telephone: (224) 667-6100

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Securities Registered Pursuant to Section 12(b) of the Act:

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Title of Each Class		Trading Symbol(s)		Name of Each Exchange on Which Registered
Common Shares, Without Par Value	​	ABT	​	New York Stock Exchange Chicago Stock Exchange, Inc.

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Indicate by check mark whether the registrant: (l) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of l934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes ⌧ No ☐

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Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§ 229.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files). Yes ☒ No ☐

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

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	​
Large Accelerated Filer ☒		Accelerated Filer ☐
​	​	​
Non-Accelerated Filer ☐	​	Smaller reporting company ☐
​	​	​
​	​	Emerging growth company ☐

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If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐

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

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As of September 30, 2021, Abbott Laboratories had 1,768,286,969 common shares without par value outstanding.

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Abbott Laboratories

Table of Contents

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	​
Part I - Financial Information	​
​	Page
Item 1. Financial Statements and Supplementary Data	​
​	​
Condensed Consolidated Statement of Earnings	3
Condensed Consolidated Statement of Comprehensive Income	4
Condensed Consolidated Balance Sheet	5
Condensed Consolidated Statement of Shareholders’ Investment	6
Condensed Consolidated Statement of Cash Flows	8
Notes to the Condensed Consolidated Financial Statements	9
​	​
Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations	24
​	​
Item 4. Controls and Procedures	30
​	​
Part II - Other Information	​
​	​
Item 1. Legal Proceedings	30
​	​
Item 2. Unregistered Sales of Equity Securities and Use of Proceeds	30
​	​
Item 6. Exhibits	31
​	​
Signature	32

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Abbott Laboratories and Subsidiaries

Condensed Consolidated Statement of Earnings

(Unaudited)

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

​

​	​	​	​	​	​	​	​	​	​	​	​	​
​	​	Three Months Ended					​	Nine Months Ended
​	​	September 30					​	September 30
​		2021			2020			2021			2020
Net sales	​	$	10,928	​	$	8,853	​	$	31,607	​	$	23,907
​	​	​	​	​	​	​	​	​	​	​	​	​
Cost of products sold, excluding amortization of intangible assets	​		4,423	​		3,966	​		13,771	​		10,510
Amortization of intangible assets	​		520	​		510	​		1,533	​		1,624
Research and development	​		672	​		580	​		1,980	​		1,722
Selling, general and administrative	​		2,767	​		2,302	​		8,276	​		7,126
Total operating cost and expenses	​		8,382	​		7,358	​		25,560	​		20,982
​	​	​	​	​	​	​	​	​	​	​	​	​
Operating earnings	​		2,546	​		1,495	​		6,047	​		2,925
​	​	​	​	​	​	​	​	​	​	​	​	​
Interest expense	​		133	​		137	​		402	​		410
Interest (income)	​		(10)	​		(10)	​		(32)	​		(37)
Net foreign exchange (gain) loss	​		4	​		(7)	​		7	​		(3)
Other (income) expense, net	​		(74)	​		(46)	​		(214)	​		(25)
Earnings from continuing operations before taxes	​		2,493	​		1,421	​		5,884	​		2,580
Tax expense (benefit) on earnings from continuing operations	​		393	​		189	​		802	​		267
Earnings from continuing operations	​		2,100	​		1,232	​		5,082	​		2,313
​	​	​	​	​	​	​	​	​	​	​	​	​
Earnings from discontinued operations, net of tax	​	​	—	​	​	—	​	​	—	​	​	20
​	​	​	​	​	​	​	​	​	​	​	​	​
Net Earnings	​	$	2,100	​	$	1,232	​	$	5,082	​	$	2,333
​	​	​	​	​	​	​	​	​	​	​	​	​
Basic Earnings Per Common Share —	​	​	​	​	​	​	​	​	​	​	​	​
Continuing operations	​	$	1.18	​	$	0.69	​	$	2.85	​	$	1.30
Discontinued operations	​		—	​		—	​		—	​		0.01
Net earnings	​	$	1.18	​	$	0.69	​	$	2.85	​	$	1.31
​	​	​	​	​	​	​	​	​	​	​	​	​
Diluted Earnings Per Common Share —	​	​	​	​	​	​	​	​	​	​	​	​
Continuing operations	​	$	1.17	​	$	0.69	​	$	2.83	​	$	1.29
Discontinued operations	​		—	​		—	​		—	​		0.01
Net earnings	​	$	1.17	​	$	0.69	​	$	2.83	​	$	1.30
​	​	​	​	​	​	​	​	​	​	​	​	​
Average Number of Common Shares Outstanding Used for Basic Earnings Per Common Share	​		1,774,516	​		1,774,475	​		1,776,870	​		1,772,166
Dilutive Common Stock Options	​		14,483	​		13,378	​		14,407	​		12,381
Average Number of Common Shares Outstanding Plus Dilutive Common Stock Options	​		1,788,999	​		1,787,853	​		1,791,277	​		1,784,547
​	​	​	​	​	​	​	​	​	​	​	​	​
Outstanding Common Stock Options Having No Dilutive Effect	​	​	2,740	​		—	​	​	2,694	​		—

​

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

​

​

​

Abbott Laboratories and Subsidiaries

Condensed Consolidated Statement of Comprehensive Income

(Unaudited)

(dollars in millions)

​

​	​	​	​	​	​	​	​	​	​	​	​	​
​	​	Three Months Ended					​	Nine Months Ended
​	​	September 30					​	September 30
​		2021			2020			2021			2020
Net Earnings	​	$	2,100	​	$	1,232	​	$	5,082	​	$	2,333
Foreign currency translation gain (loss) adjustments	​		(391)	​		112	​		(762)	​		(677)
Net actuarial gains (losses) and amortization of net actuarial losses and prior service costs and credits, net of taxes of $18 and $54 in 2021 and $14 and $42 in 2020	​		78	​		28	​		211	​		122
Net gains (losses) for derivative instruments designated as cash flow hedges and other, net of taxes of $50 and $98 in 2021 and $(43) and $(24) in 2020	​		139	​		(104)	​		257	​		(24)
Other comprehensive income (loss)	​	​	(174)	​	​	36	​	​	(294)	​	​	(579)
Comprehensive Income	​	$	1,926	​	$	1,268	​	$	4,788	​	$	1,754
​	​	​	​	​	​	​	​	​	​	​	​	​
​	​	​	​	​	​	​	​	​	​	​	​	​
​	​	​	​	​	​	​	​	September 30,		​	December 31,
​	​	​	​	​	​	​	​	2021		​	2020
Supplemental Accumulated Other Comprehensive Income (Loss) Information, net of tax:	​	​	​	​	​	​	​	​	​	​	​	​
Cumulative foreign currency translation (loss) adjustments	​	​	​	​	​	​	​	$	(5,621)	​	$	(4,859)
Net actuarial (losses) and prior service (costs) and credits	​	​	​	​		​	​		(3,660)	​		(3,871)
Cumulative gains (losses) on derivative instruments designated as cash flow hedges and other	​	​	​	​		​	​		41	​		(216)
Accumulated other comprehensive income (loss)	​	​	​	​	​	​	​	$	(9,240)	​	$	(8,946)

​

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

​

​

​

Abbott Laboratories and Subsidiaries

Condensed Consolidated Balance Sheet

(Unaudited)

(dollars in millions)

​

​	​	​	​	​	​	​
​	​	September 30,		​	December 31,
​		2021			2020
Assets	​	​	​	​	​	​
Current Assets:	​	​	​	​	​	​
Cash and cash equivalents	​	$	9,302	​	$	6,838
Short-term investments	​		390	​		310
Trade receivables, less allowances of $507 in 2021 and $460 in 2020	​		6,405	​		6,414
Inventories:	​	​	​	​	​	​
Finished products	​		3,048	​		3,030
Work in process	​		710	​		712
Materials	​		1,503	​		1,270
Total inventories	​		5,261	​		5,012
Prepaid expenses and other receivables	​		2,134	​		1,867
Total Current Assets	​		23,492	​		20,441
Investments	​		812	​		821
Property and equipment, at cost	​	​	19,182	​	​	18,793
Less: accumulated depreciation and amortization	​		10,351	​		9,764
Net property and equipment	​		8,831	​		9,029
Intangible assets, net of amortization	​		13,312	​		14,784
Goodwill	​		23,299	​		23,744
Deferred income taxes and other assets	​		4,049	​		3,729
​	​	$	73,795	​	$	72,548

​

​	​	​	​	​	​	​
Liabilities and Shareholders’ Investment	​	​	​	​	​	​
Current Liabilities:		​	​		​	​
Short-term borrowings	​	$	197	​	$	213
Trade accounts payable	​		4,017	​		3,946
Salaries, wages and commissions	​		1,470	​		1,416
Other accrued liabilities	​		5,264	​		5,165
Dividends payable	​		797	​		798
Income taxes payable	​		368	​		362
Current portion of long-term debt	​		754	​		7
Total Current Liabilities	​		12,867	​		11,907
Long-term debt	​		17,446	​		18,527
Post-employment obligations, deferred income taxes and other long-term liabilities	​		8,844	​		9,111
Commitments and Contingencies	​	​	​	​	​	​
Shareholders’ Investment:	​	​	​	​	​	​
Preferred shares, one dollar par value Authorized — 1,000,000 shares, none issued	​		—	​		—
Common shares, without par value Authorized — 2,400,000,000 shares Issued at stated capital amount — Shares: 2021: 1,983,103,854; 2020: 1,981,156,896	​		24,285	​		24,145
Common shares held in treasury, at cost — Shares: 2021: 214,816,885; 2020: 209,926,622	​		(10,999)	​		(10,042)
Earnings employed in the business	​		30,376	​		27,627
Accumulated other comprehensive income (loss)	​		(9,240)	​		(8,946)
Total Abbott Shareholders’ Investment	​		34,422	​		32,784
Noncontrolling Interests in Subsidiaries	​		216	​		219
Total Shareholders’ Investment	​		34,638	​		33,003
​	​	$	73,795	​	$	72,548

​

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

​

​

Abbott Laboratories and Subsidiaries

Condensed Consolidated Statement of Shareholders’ Investment

(Unaudited)

(in millions except shares and per share data)

​

​	​	​	​	​	​	​
​	​	Three Months Ended September 30
​		2021			2020
Common Shares:	​	​	​	​	​	​
Balance at June 30	​	​	​	​	​	​
Shares: 2021: 1,982,553,488; 2020: 1,979,594,379	​	$	24,153	​	$	23,893
Issued under incentive stock programs	​	​		​	​
Shares: 2021: 550,366; 2020: 1,172,844	​		26	​		48
Share-based compensation	​		113	​		101
Issuance of restricted stock awards	​		(7)	​		(5)
Balance at September 30	​	​		​	​
Shares: 2021: 1,983,103,854; 2020: 1,980,767,223	​	$	24,285	​	$	24,037
​	​	​	​	​	​	​
Common Shares Held in Treasury:	​	​	​	​	​	​
Balance at June 30	​	​	​	​	​	​
Shares: 2021: 209,736,139; 2020: 209,064,380	​	$	(10,340)	​	$	(9,904)
Issued under incentive stock programs	​	​		​	​
Shares: 2021: 545,860; 2020: 664,727	​	​	26	​		32
Purchased	​		​	​	​
Shares: 2021: 5,626,606; 2020: 5,989	​		(685)	​		(1)
Balance at September 30	​	​		​	​
Shares: 2021: 214,816,885; 2020: 208,405,642	​	$	(10,999)	​	$	(9,873)
​	​	​	​	​	​	​
Earnings Employed in the Business:	​	​	​	​	​	​
Balance at June 30	​	$	29,053	​	$	25,669
Net earnings	​		2,100	​		1,232
Cash dividends declared on common shares (per share — 2021: $0.45; 2020: $0.36)	​		(799)	​		(641)
Effect of common and treasury share transactions	​		22	​		6
Balance at September 30	​	$	30,376	​	$	26,266
​	​	​	​	​	​	​
Accumulated Other Comprehensive Income (Loss):	​	​	​	​	​	​
Balance at June 30	​	$	(9,066)	​	$	(9,080)
Other comprehensive income (loss)	​		(174)	​		36
Balance at September 30	​	$	(9,240)	​	$	(9,044)
​	​	​	​	​	​	​
Noncontrolling Interests in Subsidiaries:	​	​	​	​	​	​
Balance at June 30	​	$	229	​	$	220
Noncontrolling Interests’ share of income, business combinations, net of distributions and share repurchases	​		(13)	​		(11)
Balance at September 30	​	$	216	​	$	209

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

​

Abbott Laboratories and Subsidiaries

Condensed Consolidated Statement of Shareholders’ Investment

(Unaudited)

(in millions except shares and per share data)

​

​	​	​	​	​	​	​
​	​	Nine Months Ended September 30
​		2021			2020
Common Shares:	​	​	​	​	​	​
Balance at January 1	​	​	​	​	​	​
Shares: 2021: 1,981,156,896; 2020: 1,976,855,085	​	$	24,145	​	$	23,853
Issued under incentive stock programs	​	​	​	​	​	​
Shares: 2021: 1,946,958; 2020: 3,912,138	​		91	​		167
Share-based compensation	​	​	536	​	​	451
Issuance of restricted stock awards	​	​	(487)	​	​	(434)
Balance at September 30	​	​	​	​	​	​
Shares: 2021: 1,983,103,854; 2020: 1,980,767,223	​	$	24,285	​	$	24,037
​	​	​	​	​	​	​
Common Shares Held in Treasury:	​	​	​	​	​	​
Balance at January 1	​	​	​	​	​	​
Shares: 2021: 209,926,622; 2020: 214,351,838	​	$	(10,042)	​	$	(10,147)
Issued under incentive stock programs	​	​	​	​	​	​
Shares: 2021: 5,524,291; 2020: 6,211,326	​		265	​		295
Purchased	​	​	​	​	​	​
Shares: 2021: 10,414,554; 2020: 265,130	​	​	(1,222)	​	​	(21)
Balance at September 30	​	​	​	​	​	​
Shares: 2021: 214,816,885; 2020: 208,405,642	​	$	(10,999)	​	$	(9,873)
​	​	​	​	​	​	​
Earnings Employed in the Business:	​	​	​	​	​	​
Balance at January 1	​	$	27,627	​	$	25,847
Impact of adoption of new accounting standard	​	​	—	​	​	(5)
Net earnings	​	​	5,082	​	​	2,333
Cash dividends declared on common shares (per share — 2021: $1.35; 2020: $1.08)	​		(2,403)	​		(1,922)
Effect of common and treasury share transactions	​		70	​		13
Balance at September 30	​	$	30,376	​	$	26,266
​	​	​	​	​	​	​
Accumulated Other Comprehensive Income (Loss):	​	​	​	​	​	​
Balance at January 1	​	$	(8,946)	​	$	(8,465)
Other comprehensive income (loss)	​		(294)	​		(579)
Balance at September 30	​	$	(9,240)	​	$	(9,044)
​	​	​	​	​	​	​
Noncontrolling Interests in Subsidiaries:	​	​	​	​	​	​
Balance at January 1	​	$	219	​	$	213
Noncontrolling Interests’ share of income, business combinations, net of distributions and share repurchases	​		(3)	​		(4)
Balance at September 30	​	$	216	​	$	209

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

​

​

Abbott Laboratories and Subsidiaries

Condensed Consolidated Statement of Cash Flows

(Unaudited)

(dollars in millions)

​

​	​	​	​	​	​	​
​	​	Nine Months Ended September 30
​		2021			2020
Cash Flow From (Used in) Operating Activities:	​	​	​	​	​	​
Net earnings	​	$	5,082	​	$	2,333
Adjustments to reconcile net earnings to net cash from operating activities —	​	​	​	​	​	​
Depreciation	​		1,122	​		837
Amortization of intangible assets	​		1,533	​		1,624
Share-based compensation	​		534	​		448
Trade receivables	​		(194)	​		(343)
Inventories	​		(471)	​		(838)
Other, net	​	​	(140)	​	​	42
Net Cash From Operating Activities	​	​	7,466	​	​	4,103
​	​	​	​	​	​	​
Cash Flow From (Used in) Investing Activities:	​	​	​	​	​	​
Acquisitions of property and equipment	​		(1,271)	​		(1,498)
Acquisitions of businesses and technologies, net of cash acquired	​		(187)	​		(32)
Proceeds from business dispositions	​	​	134	​	​	48
Sales (purchases) of other investment securities, net	​	​	(27)	​	​	(15)
Other	​		14	​		13
Net Cash (Used in) Investing Activities	​		(1,337)	​		(1,484)
​	​	​	​	​	​	​
Cash Flow From (Used in) Financing Activities:	​	​	​	​	​	​
Net borrowings (repayments) of short-term debt and other	​	​	(7)	​	​	3
Proceeds from issuance of long-term debt	​	​	—	​	​	1,280
Repayments of long-term debt	​		(45)	​		(1,332)
Purchases of common shares	​		(1,325)	​		(242)
Proceeds from stock options exercised	​		173	​		229
Dividends paid	​		(2,404)	​		(1,919)
Other	​	​	—	​	​	(11)
Net Cash (Used in) Financing Activities	​		(3,608)	​		(1,992)
​	​	​	​	​	​	​
Effect of exchange rate changes on cash and cash equivalents	​		(57)	​		(7)
​	​	​	​	​	​	​
Net Increase in Cash and Cash Equivalents	​		2,464	​		620
Cash and Cash Equivalents, Beginning of Year	​		6,838	​		3,860
Cash and Cash Equivalents, End of Period	​	$	9,302	​	$	4,480

​

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

​

​

​

Abbott Laboratories and Subsidiaries

Notes to the Condensed Consolidated Financial Statements

September 30, 2021

(Unaudited)

Note 1 — Basis of Presentation

​

The accompanying unaudited, condensed consolidated financial statements have been prepared pursuant to rules and regulations of the Securities and Exchange Commission and, therefore, do not include all information and footnote disclosures normally included in audited financial statements. However, in the opinion of management, all adjustments (which include only normal adjustments) necessary to present fairly the results of operations, financial position and cash flows have been made. It is suggested that these statements be read in conjunction with the financial statements included in Abbott’s Annual Report on Form 10-K for the year ended December 31, 2020. The condensed consolidated financial statements include the accounts of the parent company and subsidiaries, after elimination of intercompany transactions.

​

Note 2 — New Accounting Standards

​

Recently Adopted Accounting Standards

​

In December 2019, the Financial Accounting Standards Board (FASB) issued Accounting Standards Update 2019-12, Income Taxes (Topic 740): Simplifying the Accounting for Income Taxes, which among other things, eliminates certain exceptions in the current rules regarding the approach for intraperiod tax allocations and the methodology for calculating income taxes in an interim period, and clarifies the accounting for transactions that result in a step-up in the tax basis of goodwill. Abbott adopted the standard on January 1, 2021. The new standard did not have an impact on its condensed consolidated financial statements.

​

Note 3 — Revenue

​

Abbott’s revenues are derived primarily from the sale of a broad line of health care products under short-term receivable arrangements. Abbott has four reportable segments: Established Pharmaceutical Products, Diagnostic Products, Nutritional Products, and Medical Devices.

​

Abbott Laboratories and Subsidiaries

Notes to the Condensed Consolidated Financial Statements

September 30, 2021

(Unaudited)

​

Note 3 — Revenue (Continued)

​

The following tables provide detail by sales category:

​

​	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​
​	​	Three Months Ended September 30, 2021								​	Three Months Ended September 30, 2020
(in millions)		U.S.			Int’l			Total			U.S.			Int’l			Total
Established Pharmaceutical Products —	​	​			​			​			​			​			​
Key Emerging Markets	​	$	—	​	$	936	​	$	936	​	$	—	​	$	799	​	$	799
Other	​		—	​		329	​		329	​		—	​		300	​	​	300
Total	​		—	​		1,265	​		1,265	​		—	​		1,099		​	1,099
Nutritionals —	​		​	​		​	​		​	​		​	​		​	​		​
Pediatric Nutritionals	​		586	​		514	​		1,100	​		488	​		518	​		1,006
Adult Nutritionals	​		333	​		675	​		1,008	​		330	​		588	​		918
Total	​		919	​		1,189	​		2,108	​		818	​		1,106	​		1,924
Diagnostics —	​		​	​		​	​		​	​		​	​		​	​		​
Core Laboratory	​		291	​		1,001	​		1,292	​		284	​		892	​		1,176
Molecular	​		162	​		183	​		345	​		220	​		238	​		458
Point of Care	​		100	​		35	​		135	​		96	​		35	​		131
Rapid Diagnostics	​		1,394	​		746	​		2,140	​		533	​		342	​		875
Total	​		1,947	​		1,965	​		3,912	​		1,133	​		1,507	​		2,640
Medical Devices —	​		​	​		​	​		​	​		​	​		​	​		​
Rhythm Management	​		266	​		305	​		571	​		242	​		265	​		507
Electrophysiology	​		192	​		293	​		485	​		192	​		249	​		441
Heart Failure	​		170	​		59	​		229	​		144	​		46	​		190
Vascular	​		219	​		425	​		644	​		230	​		400	​		630
Structural Heart	​		177	​		215	​		392	​		159	​		194	​		353
Neuromodulation	​		149	​		41	​		190	​		170	​		36	​		206
Diabetes Care	​	​	323	​	​	798	​	​	1,121	​	​	226	​	​	617	​	​	843
Total	​		1,496	​		2,136	​		3,632	​		1,363	​		1,807	​		3,170
​	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​
Other	​		6	​		5	​		11	​		15	​		5	​		20
​	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​
Total	​	$	4,368	​	$	6,560	​	$	10,928	​	$	3,329	​	$	5,524	​	$	8,853

​

​

Abbott Laboratories and Subsidiaries

Notes to the Condensed Consolidated Financial Statements

September 30, 2021

(Unaudited)

​

Note 3 — Revenue (Continued)

​

​	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​
​	​	Nine Months Ended September 30, 2021								​	Nine Months Ended September 30, 2020
(in millions)		U.S.			Int’l			Total			U.S.			Int’l			Total
Established Pharmaceutical Products —		​			​			​			​			​		​	​
Key Emerging Markets	​	$	—	​	$	2,672	​	$	2,672	​	$	—	​	$	2,376	​	$	2,376
Other	​		—	​		843	​		843	​		—	​		780	​	​	780
Total	​		—	​		3,515	​		3,515	​		—	​		3,156		​	3,156
Nutritionals —	​		​	​		​	​		​	​		​	​		​	​		​
Pediatric Nutritionals	​		1,622	​		1,637	​		3,259	​		1,490	​		1,629	​		3,119
Adult Nutritionals	​		1,006	​		1,987	​		2,993	​		948	​		1,644	​		2,592
Total	​		2,628	​		3,624	​		6,252	​		2,438	​		3,273	​		5,711
Diagnostics —	​		​	​		​	​		​	​		​	​		​	​		​
Core Laboratory	​		845	​		2,935	​		3,780	​		840	​		2,312	​		3,152
Molecular	​		431	​		651	​		1,082	​		429	​		527	​		956
Point of Care	​		289	​		112	​		401	​		278	​		109	​		387
Rapid Diagnostics	​		3,178	​		2,732	​		5,910	​		1,246	​		719	​		1,965
Total	​		4,743	​		6,430	​		11,173	​		2,793	​		3,667	​		6,460
Medical Devices —	​		​	​		​	​		​	​		​	​		​	​		​
Rhythm Management	​		776	​		881	​		1,657	​		655	​		727	​		1,382
Electrophysiology	​		580	​		823	​		1,403	​		476	​		652	​		1,128
Heart Failure	​		483	​		167	​		650	​		411	​		140	​		551
Vascular	​		684	​		1,292	​		1,976	​		628	​		1,108	​		1,736
Structural Heart	​		537	​		654	​		1,191	​		386	​		508	​		894
Neuromodulation	​		460	​		124	​		584	​		392	​		97	​		489
Diabetes Care	​	​	865	​	​	2,292	​	​	3,157	​	​	614	​	​	1,736	​	​	2,350
Total	​		4,385	​		6,233	​		10,618	​		3,562	​		4,968	​		8,530
​	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​
Other	​		31	​		18	​		49	​		30	​		20	​		50
​	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​
Total	​	$	11,787	​	$	19,820	​	$	31,607	​	$	8,823	​	$	15,084	​	$	23,907

​

Remaining Performance Obligations

​

As of September 30, 2021, the estimated revenue expected to be recognized in the future related to performance obligations that are unsatisfied (or partially unsatisfied) was approximately $3.9 billion in the Diagnostics segment and approximately $445 million in the Medical Devices segment. Abbott expects to recognize revenue on approximately 60 percent of these remaining performance obligations over the next 24 months, approximately 16 percent over the subsequent 12 months and the remainder thereafter.

​

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

​

Abbott Laboratories and Subsidiaries

Notes to the Condensed Consolidated Financial Statements

September 30, 2021

(Unaudited)

​

Note 3 — Revenue (Continued)

​

Other Contract Assets and Liabilities

​

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

​

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

​

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

​

​	​	​	​
(in millions)		​	​
Contract Liabilities:	​	​	​
Balance at December 31, 2020	​	$	405
Unearned revenue from cash received during the period	​	​	416
Revenue recognized related to contract liability balance	​	​	(409)
Balance at September 30, 2021	​	$	412

​

​

Note 4 — Supplemental Financial Information

​

Shares of unvested restricted stock that contain non-forfeitable rights to dividends are treated as participating securities and are included in the computation of earnings per share under the two-class method. Under the two-class method, net earnings are allocated between common shares and participating securities. Earnings from Continuing Operations allocated to common shares for the three months ended September 30, 2021 and 2020 were $2.092 billion and $1.226 billion, respectively, and for the nine months ended September 30, 2021 and 2020 were $5.061 billion and $2.302 billion, respectively. Net earnings allocated to common shares for the three months ended September 30, 2021 and 2020 were $2.092 billion and $1.226 billion, respectively, and for the nine months ended September 30, 2021 and 2020 were $5.061 billion and $2.322 billion, respectively.

​

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

​

Other, net in Net cash from operating activities in the Condensed Consolidated Statement of Cash Flows for the first nine months of 2021 includes $366 million of pension contributions and the payment of cash taxes of approximately $990 million. The first nine months of 2020 includes $350 million of pension contributions and the payment of cash taxes of approximately $700 million.

​

The following summarizes the activity for the first nine months of 2021 related to the allowance for doubtful accounts as of September 30, 2021:

​

​	​	​	​
(in millions)		​	​
Allowance for Doubtful Accounts:	​	​	​
Balance at December 31, 2020	​	$	288
Provisions/charges to income	​	​	41
Amounts charged off and other deductions	​		(18)
Balance at September 30, 2021	​	$	311

​

Abbott Laboratories and Subsidiaries

Notes to the Condensed Consolidated Financial Statements

September 30, 2021

(Unaudited)

​

Note 4 — Supplemental Financial Information (Continued)

​

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

​

The components of long-term investments as of September 30, 2021 and December 31, 2020 are as follows:

​

​	​	​	​	​	​	​
​	​	September 30,		​	December 31,
(in millions)		2021			2020
Long-term Investments:	​	​	​	​	​	​
Equity securities	​	$	758	​	$	776
Other	​		54	​		45
Total	​	$	812	​	$	821

​

The decrease in Abbott’s long-term investments as of September 30, 2021 versus the balance as of December 31, 2020 primarily relates to the sale of an equity method investment.

​

Abbott’s equity securities as of September 30, 2021, include $382 million of investments in mutual funds that are held in a rabbi trust and were acquired as part of the St. Jude Medical, Inc. (St. Jude Medical) business acquisition. These investments, which are specifically designated as available for the purpose of paying benefits under a deferred compensation plan, are not available for general corporate purposes and are subject to creditor claims in the event of insolvency.

​

Abbott also holds certain investments as of September 30, 2021 with a carrying value of $269 million that are accounted for under the equity method of accounting and other equity investments with a carrying value of approximately $91 million that do not have a readily determinable fair value. An approximately $60 million impairment of an investment was recorded in the second quarter of 2020 for which Abbott had previously recorded an unrealized gain of approximately $50 million in 2018.

​

In September 2021, Abbott acquired 100 percent of Walk Vascular, LLC (Walk Vascular), a commercial-stage medical device company with a minimally invasive thrombectomy system designed to remove peripheral blood clots. Walk Vascular’s peripheral thrombectomy system will be incorporated into Abbott’s existing endovascular portfolio. The purchase price, the allocation of acquired assets and liabilities, and the revenue and net income contributed by Walk Vascular since the date of acquisition are not material to Abbott’s condensed consolidated financial statements.

​

Abbott Laboratories and Subsidiaries

Notes to the Condensed Consolidated Financial Statements

September 30, 2021

(Unaudited)

​

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

​

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

​

​	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​
​	​	Three Months Ended September 30
​	​	​	​	​	​	​	​	​					​	Cumulative Gains (Losses)
​	​	Cumulative Foreign					​	Net Actuarial (Losses) and					​	on Derivative Instruments
​	​	Currency Translation					​	Prior Service (Costs) and					​	Designated as Cash Flow
​	​	Adjustments					​	Credits					​	Hedges
(in millions)		2021			2020			2021			2020			2021			2020
Balance at June 30	​	$	(5,230)	​	$	(5,713)	​	$	(3,738)	​	$	(3,446)	​	$	(98)	​	$	79
Other comprehensive income (loss) before reclassifications	​		(391)	​		112	​	​	16	​		(21)	​		70	​		(74)
Amounts reclassified from accumulated other comprehensive income	​		—	​		—	​		62	​		49	​		69	​		(30)
Net current period comprehensive income (loss)	​		(391)	​		112	​		78	​		28	​		139	​		(104)
Balance at September 30	​	$	(5,621)	​	$	(5,601)	​	$	(3,660)	​	$	(3,418)	​	$	41	​	$	(25)

​

​	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​
​	​	Nine Months Ended September 30
​	​	​					​	​					​	Cumulative Gains (Losses)
​	​	Cumulative Foreign					​	Net Actuarial (Losses) and					​	on Derivative Instruments
​	​	Currency Translation					​	Prior Service (Costs) and					​	Designated as Cash Flow
​	​	Adjustments						Credits						Hedges
(in millions)		2021			2020			2021			2020			2021			2020
Balance at January 1	​	$	(4,859)	​	$	(4,924)	​	$	(3,871)	​	$	(3,540)	​	$	(216)	​	$	(1)
Other comprehensive income (loss) before reclassifications	​		(762)	​		(677)	​	​	26	​		(23)	​		138	​		35
Amounts reclassified from accumulated other comprehensive income	​		—	​	​	—	​		185	​		145	​		119	​		(59)
Net current period comprehensive income (loss)	​		(762)	​		(677)	​		211	​		122	​		257	​		(24)
Balance at September 30	​	$	(5,621)	​	$	(5,601)	​	$	(3,660)	​	$	(3,418)	​	$	41	​	$	(25)

​

Reclassified amounts for cash flow hedges are recorded as Cost of products sold. Net actuarial losses and prior service cost are included as a component of net periodic benefit costs; see Note 12 for additional details.

​

Abbott Laboratories and Subsidiaries

Notes to the Condensed Consolidated Financial Statements

September 30, 2021

(Unaudited)

​

Note 6 — Goodwill and Intangible Assets

​

The total amount of goodwill reported was $23.3 billion at September 30, 2021 and $23.7 billion at December 31, 2020. Foreign currency translation adjustments decreased goodwill by approximately $444 million in the first nine months of 2021. The amount of goodwill related to reportable segments at September 30, 2021 was $2.9 billion for the Established Pharmaceutical Products segment, $286 million for the Nutritional Products segment, $3.8 billion for the Diagnostic Products segment, and $16.4 billion for the Medical Devices segment. There was no reduction of goodwill relating to impairments in the first nine months of 2021.

​

Indefinite-lived intangible assets, which relate to in-process R&D (IPR&D) acquired in a business combination, were approximately $929 million as of September 30, 2021 and $1.2 billion at December 31, 2020. The decrease is due to IPR&D assets primarily related to the Medical Devices segment that became amortizable in 2021, partially offset by an increase of approximately $90 million related to a recent acquisition.

​

The gross amount of amortizable intangible assets, primarily product rights and technology was $27.8 billion as of September 30, 2021 and December 31, 2020, and accumulated amortization was $15.4 billion as of September 30, 2021 and $14.2 billion as of December 31, 2020. Amortizable intangible assets increased by approximately $130 million as a result of a recent acquisition and the additional assets are being amortized over 9 years. Foreign currency translation adjustments decreased intangible assets by $152 million in the first nine months of 2021. In the first nine months of 2021, asset impairments related to the Established Pharmaceutical Products segment decreased intangible assets by $13 million. The impairments were recorded in the Cost of products sold, excluding amortization of intangible assets line of Abbott’s Condensed Consolidated Statement of Earnings. Abbott’s estimated annual amortization expense for intangible assets is approximately $2.0 billion in 2021, $2.1 billion in 2022, $2.0 billion in 2023, $1.9 billion in 2024 and $1.8 billion in 2025.

​

Note 7 — Restructuring Plans

​

On May 27, 2021, Abbott management approved a restructuring plan related to its Diagnostic Products segment to align its manufacturing network for COVID-19 diagnostic tests with changes in the second quarter in projected testing demand driven by several factors, including significant reductions in cases in the U.S. and other major developed countries, the accelerated rollout of COVID-19 vaccines globally and the U.S. health authority’s updated guidance on testing for fully vaccinated individuals. In the second quarter of 2021, Abbott recorded charges of $499 million under this plan in Cost of products sold. The charge recognized in the second quarter included fixed asset write-downs of $80 million, inventory-related charges of $248 million, and other exit costs, which included contract cancellations and employee-related costs of $171 million.

​

In the third quarter of 2021, as the Delta variant of COVID-19 spread and the number of new COVID-19 cases increased significantly particularly in the U.S., demand for rapid COVID-19 tests increased significantly. As a result, in the third quarter Abbott sold approximately $120 million of inventory that was previously estimated to have no net realizable value under the second quarter restructuring action. In addition, the estimate of other exit costs was reduced by a net $19 million as Abbott fulfilled its purchase obligations under certain contracts for which a liability was recorded in the second quarter or Abbott settled with the counterparty in the third quarter.

Abbott Laboratories and Subsidiaries

Notes to the Condensed Consolidated Financial Statements

September 30, 2021

(Unaudited)

​

Note 7 — Restructuring Plans (Continued)

​

The following summarizes the activity for the first nine months of 2021 related to this restructuring action and the status of the related accruals as of September 30, 2021:

​

​	​	​	​	​	​	​	​	​	​	​	​	​
​	​	Inventory-		​	​	​	​	​	​	​	​	​
​	​	Related		​	Fixed Asset		​	Other Exit		​	​	​
(in millions)		Charges			Write-Downs			Costs			Total
Restructuring charges recorded in 2021	​	$	248	​	$	80	​	$	152	​	$	480
Payments	​		—	​		—	​		(54)	​		(54)
Other non-cash	​		(248)	​		(80)	​		—	​		(328)
Accrued balance at September 30, 2021	​	$	—	​	$	—	​	$	98	​	$	98

​

From 2017 to 2021, Abbott management approved restructuring plans as part of the integration of the acquisitions of St. Jude Medical into the Medical Devices segment, and Alere Inc. (Alere) into the Diagnostic Products segment, in order to leverage economies of scale and reduce costs. As of December 31, 2020, the accrued balance associated with these actions was $25 million. In the first nine months of 2021, charges of $5 million were recognized, of which $1 million is recorded in Cost of products sold and $4 million as Selling, general and administrative expense. As of September 30, 2021, the accrued liabilities remaining in the Condensed Consolidated Balance Sheet related to these actions total $10 million and primarily represent severance obligations.

​

From 2017 to 2021, Abbott management approved plans to streamline operations in order to reduce costs and improve efficiencies in various Abbott businesses including the nutritional, established pharmaceuticals and vascular businesses. In the first nine months of 2021, charges of $17 million were recognized, of which $1 million is recorded in Cost of products sold and $16 million as Selling, general and administrative expense. The following summarizes the activity for the first nine months of 2021 related to these restructuring actions and the status of the related accrual as of September 30, 2021:

​

​	​	​	​
(in millions)		​	​
Accrued balance at December 31, 2020	​	$	70
Restructuring charges recorded in 2021	​	​	17
Payments and other adjustments	​	​	(30)
Accrued balance at September 30, 2021	​	$	57

​

​

Note 8 — Incentive Stock Programs

​

In the first nine months of 2021, Abbott granted 2,865,115 stock options, 497,373 restricted stock awards and 4,670,845 restricted stock units under its incentive stock program. At September 30, 2021, approximately 101 million shares were reserved for future grants. Information regarding the number of options outstanding and exercisable at September 30, 2021 is as follows:

​

​	​	​	​	​	​	​
​		Outstanding			Exercisable
Number of shares			29,594,797	​		22,674,416
Weighted average remaining life (years)			5.8	​		4.9
Weighted average exercise price		$	63.08	​	$	51.79
Aggregate intrinsic value (in millions)		$	1,645	​	$	1,504

​

The total unrecognized share-based compensation cost at September 30, 2021 amounted to approximately $552 million which is expected to be recognized over the next three years.

​

Abbott Laboratories and Subsidiaries

Notes to the Condensed Consolidated Financial Statements

September 30, 2021

(Unaudited)

​

Note 9 — Debt and Lines of Credit

​

On September 28, 2020, Abbott repaid the €1.140 billion outstanding principal amount of its 0.00% Notes due 2020 upon maturity. The repayment equated to approximately $1.3 billion.

​

On June 24, 2020, Abbott completed the issuance of $1.3 billion aggregate principal amount of senior notes, consisting of $650 million of its 1.15% Notes due 2028 and $650 million of its 1.40% Notes due 2030.

​

Note 10 — Financial Instruments, Derivatives and Fair Value Measures

​

Certain Abbott foreign subsidiaries enter into foreign currency forward exchange contracts to manage exposures to changes in foreign exchange rates primarily for anticipated intercompany purchases by those subsidiaries whose functional currencies are not the U.S. dollar. These contracts, with gross notional amounts totaling $8.7 billion at September 30, 2021 and $8.1 billion at December 31, 2020 are designated as cash flow hedges of the variability of the cash flows due to changes in foreign exchange rates and are recorded at fair value. Accumulated gains and losses as of September 30, 2021 will be included in Cost of products sold at the time the products are sold, generally through the next twelve to eighteen months.

​

Abbott enters into foreign currency forward exchange contracts to manage currency exposures for foreign currency denominated third-party trade payables and receivables, and for intercompany loans and trade accounts payable where the receivable or payable is denominated in a currency other than the functional currency of the entity. For intercompany loans, the contracts require Abbott to sell or buy foreign currencies, primarily European currencies, in exchange for primarily U.S. dollars and other European currencies. For intercompany and trade payables and receivables, the currency exposures are primarily the U.S. dollar and European currencies. At September 30, 2021 and December 31, 2020, Abbott held the gross notional amounts of $11.4 billion and $11.0 billion, respectively, of such foreign currency forward exchange contracts.

​

Abbott has designated a yen-denominated, 5-year term loan of approximately $536 million and $577 million as of September 30, 2021 and December 31, 2020, respectively, as a hedge of the net investment in certain foreign subsidiaries. The change in the value of the debt, which is due to changes in foreign exchange rates, is recorded in Accumulated other comprehensive income (loss), net of tax.

​

Abbott is a party to interest rate hedge contracts totaling approximately $2.9 billion at September 30, 2021 and December 31, 2020 to manage its exposure to changes in the fair value of fixed-rate debt. These contracts are designated as fair value hedges of the variability of the fair value of fixed-rate debt due to changes in the long-term benchmark interest rates. The effect of the hedge is to change a fixed-rate interest obligation to a variable rate for that portion of the debt. Abbott records the contracts at fair value and adjusts the carrying amount of the fixed-rate debt by an offsetting amount.

​

Abbott Laboratories and Subsidiaries

Notes to the Condensed Consolidated Financial Statements

September 30, 2021

(Unaudited)

​

Note 10 — Financial Instruments, Derivatives and Fair Value Measures (Continued)

​

The following table summarizes the amounts and location of certain derivative financial instruments as of September 30, 2021 and December 31, 2020:

​

​	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​
​	​	Fair Value - Assets							​	Fair Value - Liabilities
​	​	Sept. 30,		​	Dec. 31,		​	​	​	Sept. 30,		​	Dec. 31,			​
(in millions)		2021			2020			Balance Sheet Caption		2021			2020			Balance Sheet Caption
Interest rate swaps designated as fair value hedges	​	$	129		$	210		Deferred income taxes and other assets		$	—		$	—		Post-employment obligations, deferred income taxes and other long-term liabilities
Foreign currency forward exchange contracts:	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​
Hedging instruments	​		193	​		30		Prepaid expenses and other receivables	​		69	​		433		Other accrued liabilities
Others not designated as hedges	​		45	​		60		Prepaid expenses and other receivables	​		68	​		65		Other accrued liabilities
Debt designated as a hedge of net investment in a foreign subsidiary	​	​	—	​	​	—	​	n/a	​	​	536	​	​	577	​	Long-term debt
​	​	$	367		$	300	​	​		$	673		$	1,075	​	​

​

The following table summarizes the activity for foreign currency forward exchange contracts designated as cash flow hedges and certain other derivative financial instruments, as well as the amounts and location of income (expense) and gain (loss) reclassified into income for the three and nine months ended September 30, 2021 and 2020.

​

​	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​
​	​	Gain (loss) Recognized in Other											​	Income (expense) and Gain (loss)											​	​
​	​	Comprehensive Income (loss)											​	Reclassified into Income											​	​
​	​	Three Months					​	Nine Months					​	Three Months					​	Nine Months					​	​
​	​	Ended Sept. 30					​	Ended Sept. 30					​	Ended Sept. 30					​	Ended Sept. 30					​	​
(in millions)		2021			2020			2021			2020			2021			2020			2021			2020			Income Statement Caption
Foreign currency forward exchange contracts designated as cash flow hedges	​	$	96	​	$	(103)	​	$	142	​	$	35	​	$	(92)	​	$	48	​	$	(207)	​	$	90	​	Cost of products sold
Debt designated as a hedge of net investment in a foreign subsidiary	​		4	​		(10)	​		41	​		(20)	​		—	​		—	​		—	​		—		n/a
Interest rate swaps designated as fair value hedges	​		n/a	​		n/a	​		n/a	​		n/a	​		(14)	​		(11)	​		(81)	​		184		Interest expense

​

​

Abbott Laboratories and Subsidiaries

Notes to the Condensed Consolidated Financial Statements

September 30, 2021

(Unaudited)

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Note 10 — Financial Instruments, Derivatives and Fair Value Measures (Continued)

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Losses of $18 million and $100 million were recognized in the three months ended September 30, 2021 and 2020, respectively, related to foreign currency forward exchange contracts not designated as a hedge. Gains of $15 million and losses of $198 million were recognized in the nine months ended September 30, 2021 and 2020, respectively, related to foreign currency forward exchange contracts not designated as a hedge. These amounts are reported in the Condensed Consolidated Statement of Earnings on the Net foreign exchange (gain) loss line.

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The carrying values and fair values of certain financial instruments as of September 30, 2021 and December 31, 2020 are shown in the following table. The carrying values of all other financial instruments approximate their estimated fair values. The counterparties to financial instruments consist of select major international financial institutions. Abbott does not expect any losses from non-performance by these counterparties.

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​	​	​	​	​	​	​	​	​	​	​	​	​
​	​	September 30, 2021					​	December 31, 2020
​		Carrying			Fair			Carrying			Fair
(in millions)	​	Value		​	Value		​	Value		​	Value
Long-term Investment Securities:	​	​	​		​	​	​	​	​		​	​
Equity securities	​	$	758	​	$	758	​	$	776	​	$	776
Other	​		54	​		54	​		45	​		45
Total Long-term Debt	​	​	(18,200)	​	​	(21,330)	​	​	(18,534)	​	​	(22,809)
Foreign Currency Forward Exchange Contracts:	​		​	​		​	​		​	​	​	​
Receivable position	​		238	​		238	​		90	​		90
(Payable) position	​	​	(137)	​	​	(137)	​	​	(498)	​	​	(498)
Interest Rate Hedge Contracts:	​		​	​		​	​		​	​		​
Receivable position	​	​	129	​	​	129	​	​	210	​	​	210

​

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

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Abbott Laboratories and Subsidiaries

Notes to the Condensed Consolidated Financial Statements

September 30, 2021

(Unaudited)

​

Note 10 — Financial Instruments, Derivatives and Fair Value Measures (Continued)

​

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

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​	​	​	​	​	​	​	​	​	​	​	​	​
​	​	​	​	​	Basis of Fair Value Measurement
​	​	​	​	​	Quoted		​	Significant		​	​	​
​	​	​	​	​	Prices in		​	Other		​	Significant
​	​	Outstanding		​	Active		​	Observable		​	Unobservable
(in millions)		Balances			Markets			Inputs			Inputs
September 30, 2021:	​	​	​	​	​	​	​	​	​	​	​	​
Equity securities	​	$	398	​	$	398		$	—		$	—
Interest rate swap derivative financial instruments	​		129	​		—	​		129	​		—
Foreign currency forward exchange contracts	​		238	​		—	​		238	​		—
Total Assets	​	$	765		$	398		$	367		$	—
​	​	​	​	​	​	​	​	​	​	​	​	​
Fair value of hedged long-term debt	​	$	2,967	​	$	—		$	2,967		$	—
Foreign currency forward exchange contracts	​	​	137	​	​	—	​	​	137	​	​	—
Contingent consideration related to business combinations	​		129	​		—	​		—	​		129
Total Liabilities	​	$	3,233		$	—		$	3,104	​	$	129
​	​	​	​	​	​	​	​	​	​	​	​	​
December 31, 2020:	​	​	​	​	​	​	​	​	​	​	​	​
Equity securities	​	$	386		$	386		$	—		$	—
Interest rate swap derivative financial instruments	​		210	​		—	​		210	​		—
Foreign currency forward exchange contracts	​		90	​		—	​		90	​		—
Total Assets	​	$	686		$	386		$	300		$	—
​	​	​	​	​	​	​	​	​	​	​	​	​
Fair value of hedged long-term debt	​	$	3,049		$	—		$	3,049		$	—
Foreign currency forward exchange contracts	​		498	​		—	​		498	​		—
Contingent consideration related to business combinations	​		68	​		—	​		—	​		68
Total Liabilities	​	$	3,615		$	—		$	3,547		$	68

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The fair value of foreign currency forward exchange contracts is determined using a market approach, which utilizes values for comparable derivative instruments. The fair value of debt was determined based on the face value of the debt adjusted for the fair value of the interest rate swaps, which is based on a discounted cash flow analysis using significant other observable inputs.

​

The increase in contingent consideration during the year was a result of a recent acquisition. The fair value of the contingent consideration was determined based on independent appraisals at the time of acquisition, adjusted for the time value of money and other changes in fair value.

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Abbott Laboratories and Subsidiaries

Notes to the Condensed Consolidated Financial Statements

September 30, 2021

(Unaudited)

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Note 11 — Litigation and Environmental Matters

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

​

Abbott is involved in various claims and legal proceedings, and Abbott estimates the range of possible loss for its legal proceedings and environmental exposures to be from approximately $25 million to $45 million. The recorded accrual balance at September 30, 2021 for these proceedings and exposures was approximately $35 million. This accrual represents management’s best estimate of probable loss, as defined by FASB ASC No. 450, “Contingencies.” Within the next year, legal proceedings may occur that may result in a change in the estimated loss accrued by Abbott. While it is not feasible to predict the outcome of all such proceedings and exposures with certainty, management believes that their ultimate disposition should not have a material adverse effect on Abbott’s financial position, cash flows, or results of operations.

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Note 12 — Post-Employment Benefits

​

Retirement plans consist of defined benefit, defined contribution, and medical and dental plans. Net periodic benefit costs, other than service costs, are recognized in the Other (income) expense, net line of the Condensed Consolidated Statement of Earnings. Net cost recognized in continuing operations for the three and nine months ended September 30 for Abbott’s major defined benefit plans and post-employment medical and dental benefit plans is as follows:

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​	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​
​	​	Defined Benefit Plans											​	Medical and Dental Plans
​	​	Three Months					​	Nine Months					​	Three Months					​	Nine Months
​	​	Ended Sept. 30					​	Ended Sept. 30					​	Ended Sept. 30					​	Ended Sept. 30
(in millions)		2021			2020			2021			2020			2021			2020			2021			2020
Service cost - benefits earned during the period	​	$	98	​	$	85	​	$	294	​	$	251	​	$	14	​	$	12	​	$	42	​	$	35
Interest cost on projected benefit obligations	​		62	​		75	​		186	​		224	​		8	​		11	​		25	​		32
Expected return on plan assets	​		(211)	​		(193)	​		(633)	​		(576)	​		(6)	​		(7)	​		(20)	​		(21)
Net amortization of:	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​
Actuarial loss, net	​		79	​		64	​		238	​		191	​		7	​		5	​		21	​		15
Prior service cost (credit)	​		—	​		—	​		1	​		1	​		(7)	​		(7)	​		(21)	​		(21)
Net cost - continuing operations	​	$	28	​	$	31	​	$	86	​	$	91	​	$	16	​	$	14	​	$	47	​	$	40

​

Abbott funds its domestic defined benefit plans according to Internal Revenue Service funding limitations. International pension plans are funded according to similar regulations. In the first nine months of 2021 and 2020, $366 million and $350 million, respectively, were contributed to defined benefit plans and $26 million and $11 million, respectively, were contributed to the post-employment medical and dental plans.

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Abbott Laboratories and Subsidiaries

Notes to the Condensed Consolidated Financial Statements

September 30, 2021

(Unaudited)

​

Note 13 — Taxes on Earnings

​

Taxes on earnings from continuing operations reflect the estimated annual effective rates and include charges for interest and penalties. In the first nine months of 2021 and 2020, taxes on earnings from continuing operations include approximately $97 million and $87 million, respectively, in excess tax benefits associated with share-based compensation. In the first nine months of 2020, taxes on earnings from continuing operations also include approximately $81 million in tax benefits related to the settlement of the former St. Jude Medical consolidated group’s 2014 through 2016 federal income tax returns in the U.S. Earnings from discontinued operations, net of tax, in the first nine months of 2020 reflect the recognition of $20 million of net tax benefits primarily as a result of the resolution of various tax positions related to prior years.

​

Tax authorities in various jurisdictions regularly review Abbott’s income tax filings. Abbott believes that it is reasonably possible that the recorded amount of gross unrecognized tax benefits may decrease approximately $80 million, including cash adjustments, within the next twelve months as a result of concluding various domestic and international tax matters.

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Note 14 — Segment Information

​

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

​

Abbott’s reportable segments are as follows:

​

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

​

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

​

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

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

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

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Abbott Laboratories and Subsidiaries

Notes to the Condensed Consolidated Financial Statements

September 30, 2021

(Unaudited)

​

Note 14 — Segment Information (Continued)

​

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

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​	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​
​	​	Net Sales to External Customers											​	Operating Earnings
​	​	Three Months					​	Nine Months					​	Three Months					​	Nine Months
​	​	Ended Sept. 30					​	Ended Sept. 30					​	Ended Sept. 30					​	Ended Sept. 30
(in millions)		2021			2020			2021			2020			2021			2020			2021			2020
Established Pharmaceutical Products	​	$	1,265	​	$	1,099	​	$	3,515	​	$	3,156	​	$	293	​	$	201	​	$	682	​	$	588
Nutritional Products	​		2,108	​		1,924	​		6,252	​		5,711	​		431	​		394	​		1,388	​		1,327
Diagnostic Products	​		3,912	​		2,640	​		11,173	​		6,460	​		1,652	​		875	​		4,429	​		1,802
Medical Devices	​		3,632	​		3,170	​		10,618	​		8,530	​		1,160	​		928	​		3,375	​		2,122
Total Reportable Segments	​		10,917	​		8,833	​		31,558	​		23,857	​		3,536	​		2,398	​		9,874	​	​	5,839
Other	​		11	​		20	​		49	​		50	​	​	​	​	​	​	​	​	​	​	​	​
Net sales	​	$	10,928	​	$	8,853	​	$	31,607	​	$	23,907	​	​	​	​	​	​	​	​	​	​	​	​
Corporate functions and benefit plan costs	​	​	​	​	​	​	​	​	​	​	​	​		​	(204)	​	​	(129)	​	​	(450)	​	​	(367)
Net interest expense	​	​	​	​	​	​	​	​	​	​	​	​		​	(123)	​	​	(127)	​	​	(370)	​	​	(373)
Share-based compensation (a)	​	​	​	​	​	​	​	​	​	​	​	​		​	(114)	​	​	(100)	​	​	(534)	​	​	(448)
Amortization of intangible assets	​	​	​	​	​	​	​	​	​	​	​	​		​	(520)	​	​	(510)	​	​	(1,533)	​	​	(1,624)
Other, net (b)	​	​	​	​	​	​	​	​	​	​	​	​		​	(82)	​	​	(111)	​	​	(1,103)	​	​	(447)
Earnings from continuing operations before taxes	​	​	​	​	​	​	​	​	​	​	​	​	​	$	2,493	​	$	1,421	​	$	5,884	​	$	2,580

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

(b)

Other, net for the three and nine months ended September 30, 2021 and 2020 includes integration costs associated with the acquisition of St. Jude Medical and Alere, and restructuring charges. 2021 restructuring charges include Abbott’s restructuring plan for its COVID-19 test manufacturing network. Other, net for the nine months ended September 30, 2021 also includes costs related to certain litigation. Other, net for the three and nine months ended September 30, 2020 also includes costs related to asset impairments, partially offset by income from the settlement of litigation.

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