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UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

WASHINGTON, D.C. 20549

FORM 10-Q

(Mark One)

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

For the quarterly period ended September 30, 2021

OR

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

For the transition period from                   to                  

Commission File No. 1-2189

ABBOTT LABORATORIES

An Illinois Corporation

    

I.R.S. Employer Identification No.

36-0698440

100 Abbott Park Road

Abbott ParkIllinois 60064-6400

Telephone:  (224) 667-6100

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

Title of Each Class

    

Trading Symbol(s)

    

Name of Each Exchange on Which Registered

Common Shares, Without Par Value

ABT

New York Stock Exchange
Chicago Stock Exchange, Inc.

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

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

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

Large Accelerated Filer

    

Accelerated Filer

Non-Accelerated Filer

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

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

Abbott Laboratories

Table of Contents

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

2

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.

3

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.

4

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.

5

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

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

6

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

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

7

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.

8

Table of Contents

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.

9

Table of Contents

Abbott Laboratories and Subsidiaries

Notes to the Condensed Consolidated Financial Statements

September 30, 2021

(Unaudited)

Note 3 — Revenue (Continued)

The following tables provide detail by sales category:

Three Months Ended September 30, 2021

Three Months Ended September 30, 2020

(in millions)

    

U.S.

    

Int’l

    

Total

    

U.S.

    

Int’l

    

Total

Established Pharmaceutical Products —

  

 

  

 

  

 

  

 

  

 

  

Key Emerging Markets

$

$

936

$

936

$

$

799

$

799

Other

 

 

329

 

329

 

 

300

300

Total

 

 

1,265

 

1,265

 

 

1,099

 

1,099

Nutritionals —

 

 

 

 

 

 

Pediatric Nutritionals

 

586

 

514

 

1,100

 

488

 

518

 

1,006

Adult Nutritionals

 

333

 

675

 

1,008

 

330

 

588

 

918

Total

 

919

 

1,189

 

2,108

 

818

 

1,106

 

1,924

Diagnostics —

 

 

 

 

 

 

Core Laboratory

 

291

 

1,001

 

1,292

 

284

 

892

 

1,176

Molecular

 

162

 

183

 

345

 

220

 

238

 

458

Point of Care

 

100

 

35

 

135

 

96

 

35

 

131

Rapid Diagnostics

 

1,394

 

746

 

2,140

 

533

 

342

 

875

Total

 

1,947

 

1,965

 

3,912

 

1,133

 

1,507

 

2,640

Medical Devices —

 

 

 

 

 

 

Rhythm Management

 

266

 

305

 

571

 

242

 

265

 

507

Electrophysiology

 

192

 

293

 

485

 

192

 

249

 

441

Heart Failure

 

170

 

59

 

229

 

144

 

46

 

190

Vascular

 

219

 

425

 

644

 

230

 

400

 

630

Structural Heart

 

177

 

215

 

392

 

159

 

194

 

353

Neuromodulation

 

149

 

41

 

190

 

170

 

36

 

206

Diabetes Care

323

798

1,121

226

617

843

Total

 

1,496

 

2,136

 

3,632

 

1,363

 

1,807

 

3,170

Other

 

6

 

5

 

11

 

15

 

5

 

20

Total

$

4,368

$

6,560

$

10,928

$

3,329

$

5,524

$

8,853

10

Table of Contents

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.

11

Table of Contents

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

12

Table of Contents

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.

13

Table of Contents

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.

14

Table of Contents

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.

15

Table of Contents

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.

16

Table of Contents

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.

17

Table of Contents

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

18

Table of Contents

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)

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.

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.

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.

19

Table of Contents

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:

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

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.

20

Table of Contents

Abbott Laboratories and Subsidiaries

Notes to the Condensed Consolidated Financial Statements

September 30, 2021

(Unaudited)

Note 11 — Litigation and Environmental Matters

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

Abbott is involved in various claims and legal proceedings, and Abbott estimates the range of possible loss for its legal proceedings and environmental exposures to be from approximately $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.

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:

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.

21

Table of Contents

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.

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.

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.

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.

22

Table of Contents

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.

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.

23

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

Financial Review - Results of Operations

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

The following table details sales by reportable segment for the three and nine months ended September 30. Percent changes are versus the prior year and are based on unrounded numbers.

Net Sales to External Customers

 

    

Three Months

    

Three Months

    

    

    

 

Ended

Ended

Impact of

Total Change

 

Sept. 30,

Sept. 30,

Total

Foreign

Excl. Foreign

 

(in millions)

2021

2020

Change

Exchange

Exchange

 

Established Pharmaceutical Products

$

1,265

$

1,099

15.1

%

(0.2)

%

15.3

%

Nutritional Products

 

2,108

 

1,924

9.6

 

0.7

 

8.9

Diagnostic Products

 

3,912

 

2,640

48.2

 

1.4

 

46.8

Medical Devices

 

3,632

 

3,170

14.6

 

1.5

 

13.1

Total Reportable Segments

 

10,917

 

8,833

23.6

 

1.1

 

22.5

Other

 

11

 

20

(51.4)

 

0.9

 

(52.3)

Net Sales

$

10,928

$

8,853

23.4

 

1.0

 

22.4

Total U.S.

$

4,368

$

3,329

31.2

 

 

31.2

Total International

$

6,560

$

5,524

18.7

 

1.7

 

17.0

    

Net Sales to External Customers

Nine Months

Nine Months

 

Ended 

 

Ended

 

 

Impact of

 

Total Change

 

Sept. 30,

 

Sept. 30,

Total

Foreign

 

Excl. Foreign

(in millions)

    

2021

    

2020

    

Change

    

Exchange

    

Exchange

Established Pharmaceutical Products

$

3,515

$

3,156

 

11.4

%  

(0.6)

12.0

%

Nutritional Products

 

6,252

 

5,711

 

9.5

 

1.2

 

8.3

Diagnostic Products

 

11,173

 

6,460

 

73.0

 

3.8

 

69.2

Medical Devices

 

10,618

 

8,530

 

24.5

 

3.8

 

20.7

Total Reportable Segments

 

31,558

 

23,857

 

32.3

 

2.6

 

29.7

Other

 

49

 

50

 

(1.3)

 

2.8

 

(4.1)

Net Sales

$

31,607

$

23,907

 

32.2

 

2.6

 

29.6

Total U.S.

$

11,787

$

8,823

 

33.6

 

 

33.6

Total International

$

19,820

$

15,084

 

31.4

 

4.1

 

27.3

Note: In order to compute results excluding the impact of exchange rates, current year U.S. dollar sales are multiplied or divided, as appropriate, by the current year average foreign exchange rates and then those amounts are multiplied or divided, as appropriate, by the prior year average foreign exchange rates.

24

The 22.4 percent increase in total net sales during the third quarter of 2021, excluding the impact of foreign exchange, reflected demand for Abbott’s tests to detect COVID-19 as well as other growth across Abbott’s reportable segments. During the third quarter of 2021, Abbott’s COVID-19 testing-related sales totaled approximately $1.9 billion led by combined sales of approximately $1.6 billion related to Abbott’s BinaxNOW®, Panbio®, and ID NOW® rapid testing platforms. During the third quarter of 2020, COVID-19 testing-related sales totaled approximately $0.9 billion. Excluding the impact of COVID-19 testing-related sales, Abbott’s total net sales increased 13.2 percent. Excluding the impacts of COVID-19 testing-related sales and foreign exchange, Abbott’s total net sales increased 12.1 percent. Abbott’s net sales were favorably impacted by changes in foreign exchange rates in the third quarter as the relatively weaker U.S. dollar increased total international sales by 1.7 percent and total sales by 1.0 percent.

The 29.6 percent increase in total net sales during the first nine months of 2021, excluding the impact of foreign exchange, reflected demand for Abbott’s tests to detect COVID-19 as well as other growth across Abbott’s reportable segments. During the first nine months of 2021, Abbott’s COVID-19 testing-related sales totaled approximately $5.4 billion led by combined sales of approximately $4.5 billion related to Abbott’s BinaxNOW, Panbio, and ID NOW rapid testing platforms. During the first nine months of 2020, COVID-19 testing-related sales totaled approximately $1.5 billion. Excluding the impact of COVID-19 testing-related sales, Abbott’s total net sales increased 17.3 percent. Excluding the impacts of COVID-19 testing-related sales and foreign exchange, Abbott’s total net sales increased 14.9 percent. Abbott’s net sales were favorably impacted by changes in foreign exchange rates in the first nine months as the relatively weaker U.S. dollar increased total international sales by 4.1 percent and total sales by 2.6 percent.

Due to the unpredictability of the duration and impact of the current COVID-19 pandemic, the future extent to which the COVID-19 pandemic will have a material effect on Abbott’s business, financial condition or results of operations is uncertain.

The table below provides detail by sales category for the nine months ended September 30. Percent changes are versus the prior year and are based on unrounded numbers.

    

    

    

    

Impact of

    

Total Change

 

Sept. 30,

Sept. 30,

Total

Foreign

Excl. Foreign

 

(in millions)

2021

2020

Change

Exchange

Exchange

 

Established Pharmaceutical Products —

 

  

 

  

 

  

 

  

 

  

Key Emerging Markets

$

2,672

$

2,376

12.4

%

(1.8)

%

14.2

%

Other Emerging Markets

 

843

 

780

8.1

 

2.7

 

5.4

Nutritionals —

 

 

 

 

International Pediatric Nutritionals

 

1,637

 

1,629

0.5

 

2.2

 

(1.7)

U.S. Pediatric Nutritionals

 

1,622

 

1,490

8.9

 

 

8.9

International Adult Nutritionals

 

1,987

 

1,644

20.9

 

2.0

 

18.9

U.S. Adult Nutritionals

 

1,006

 

948

6.0

 

 

6.0

Diagnostics —

 

 

 

 

Core Laboratory

 

3,780

 

3,152

19.9

 

3.5

 

16.4

Molecular

 

1,082

 

956

13.2

 

3.3

 

9.9

Point of Care

 

401

 

387

3.6

 

1.0

 

2.6

Rapid Diagnostics

 

5,910

 

1,965

200.7

 

4.9

 

195.8

Medical Devices —

 

 

 

 

Rhythm Management

 

1,657

 

1,382

19.9

 

3.3

 

16.6

Electrophysiology

 

1,403

 

1,128

24.4

 

3.1

 

21.3

Heart Failure

 

650

 

551

17.8

 

1.6

 

16.2

Vascular

 

1,976

 

1,736

13.9

 

3.5

 

10.4

Structural Heart

 

1,191

 

894

33.2

 

3.7

 

29.5

Neuromodulation

 

584

 

489

19.6

 

1.5

 

18.1

Diabetes Care

3,157

2,350

34.3

5.6

28.7

25

Key Emerging Markets for the Established Pharmaceutical Products business include India, Russia, Brazil and China, along with several other markets that represent the most attractive long-term growth opportunities for Abbott’s branded generics product portfolio. Excluding the unfavorable effect of foreign exchange, sales in the Key Emerging Markets increased 14.2 percent compared to the first nine months of 2020 led by growth across several geographies, including India, China and Brazil. Other Emerging Markets, excluding the effect of foreign exchange, increased by 5.4 percent in the first nine months of 2021.

International Pediatric Nutritional sales, excluding the effect of foreign exchange, decreased 1.7 percent in the first nine months of 2021 versus the comparable 2020 period and the decrease reflects lower sales in China, the Middle East and Canada partially offset by higher volumes sold in various countries in Latin America and Europe. U.S. Pediatric Nutritional sales increased 8.9 percent primarily due to increased demand for Pedialyte®, Abbott’s oral rehydration brand, and Similac®, Abbott’s infant brand. International Adult Nutritional sales, excluding the effect of foreign exchange, increased 18.9 percent, and U.S. Adult Nutritional sales increased 6.0 percent, reflecting continued growth of the Ensure® and Glucerna® brands in several countries including the U.S.

The 69.2 percent increase in Diagnostic Products sales, excluding the impact of foreign exchange, was driven by demand for Abbott’s portfolio of COVID-19 tests as described above as well as growth in the base Core Laboratory and Molecular businesses. In Core Laboratory, sales increased 16.4 percent, excluding the effect of foreign exchange, due to the increased volume of routine diagnostic testing performed in hospitals and other laboratories, partially offset by lower sales of Abbott’s laboratory-based tests for the detection of the IgG and IgM antibodies, which determine if someone was previously infected with the COVID-19 virus. In March 2021, Abbott received an Emergency Use Authorization (EUA) in the U.S. for its AdviseDX SARS-CoV-2 IgG II test for the semi-quantitative detection of IgG antibodies to COVID-19 on its ARCHITECT® and Alinity® i platforms. In the first nine months of 2021 and 2020, Core Laboratory IgG and IgM antibody testing-related sales on Abbott’s ARCHITECT and Alinity i platforms were $159 million and $212 million, respectively. In the first nine months of 2021, Core Laboratory sales increased 23.1 percent, excluding COVID-19 testing-related sales, and increased 19.3 percent, excluding the impact of foreign exchange and COVID-19 testing-related sales.

The 9.9 percent increase in Molecular Diagnostics sales, excluding the effect of foreign exchange, was driven by growth in the base business from the continued roll-out of the Alinity® m platform as well as higher demand in the first half of 2021 for Abbott’s laboratory-based molecular tests for COVID-19 on its m2000® and Alinity m platforms. In the first nine months of 2021 and 2020, Molecular Diagnostics COVID-19 testing-related sales were $699 million and $664 million, respectively. In March 2021, Abbott received an EUA in the U.S. for its multiplex molecular test on its Alinity m system to detect COVID-19, influenza A, influenza B, and respiratory syncytial virus (RSV) in one test. In the first nine months of 2021, Molecular Diagnostics sales increased 31.3 percent, excluding COVID-19 testing-related sales, and increased 28.1 percent, excluding the impact of foreign exchange and COVID-19 testing-related sales.

In Rapid Diagnostics, sales increased 195.8 percent, excluding the effect of foreign exchange, due to the demand for Abbott’s COVID-19 tests on its rapid testing platforms, including the Panbio system, the ID NOW platform, and the BinaxNOW COVID-19 Ag Card test. In the first nine months of 2021 and 2020, Rapid Diagnostics COVID-19 testing-related sales were $4.5 billion and $0.65 billion, respectively. In January 2021, Abbott received CE Mark for two new uses of its Panbio rapid antigen test: asymptomatic testing and self-swabbing under the supervision of a healthcare worker. On March 31, 2021, Abbott announced that it had received an EUA in the U.S. for its over-the-counter, non-prescription BinaxNOW COVID-19 Ag Self Test for individuals with or without symptoms. In the first quarter of 2021, Abbott also received EUAs that allow the non-prescription use of the BinaxNOW COVID-19 Ag Card Home Test and the BinaxNOW COVID-19 Ag Card test for professional use for individuals with or without symptoms. In June 2021, Abbott announced that it had received CE Mark in Europe for its over-the-counter Panbio COVID-19 Antigen Self-Test for individuals with or without symptoms.

Excluding the effect of foreign exchange, total Medical Devices sales grew 20.7 percent driven by double-digit growth across all divisions, led by Diabetes Care, Structural Heart and Electrophysiology. Growth in Diabetes Care sales was driven by continued growth of FreeStyle Libre®, Abbott’s continuous glucose monitoring system, internationally and in the U.S. FreeStyle Libre and Libre Sense sales totaled $2.7 billion in the first nine months of 2021, which reflected a 37.2 percent increase, excluding the effect of foreign exchange, over the first nine months of 2020 when Libre sales totaled $1.9 billion. Libre Sense, which received CE Mark in Europe in the third quarter of 2020, is Abbott’s glucose sport biosensor specifically designed for athletes.

26

While procedure volumes across Abbott’s cardiovascular and neuromodulation businesses were negatively impacted early in 2021 by elevated COVID-19 case rates in certain countries, including the U.S., overall volumes improved over the course of the first nine months of 2021 across various businesses. The year-over-year increases in the various businesses reflect a recovery from the 2020 levels when the pandemic reduced procedure volumes as well as sales growth from pre-pandemic levels in Structural Heart, Electrophysiology, and Heart Failure, excluding the effect of foreign exchange. In January 2021, the U.S. Centers for Medicare & Medicaid Services expanded reimbursement coverage eligibility for MitraClip®, Abbott’s market-leading device for the minimally invasive treatment of mitral regurgitation (MR), a leaky heart valve. The growth in Structural Heart during the first nine months of 2021 was broad-based across several areas of the business, including MitraClip and TriClip®, the world’s first minimally invasive, clip-based device for repair of a leaky tricuspid heart valve which was launched in Europe in May 2020.

In the first nine months of 2021, various product approvals in the Medical Devices segment included:

In May 2021, CE Mark in Europe for Navitor™, Abbott’s latest-generation transcatheter aortic valve implantation (TAVI) system for patients with severe aortic stenosis who are at high or extreme surgical risk,
In August 2021, U.S. Food and Drug Administration (FDA) approval of the Amplatzer® Amulet® Left Atrial Appendage Occluder, which offers immediate closure of the left atrial appendage, an area in the heart where blood clots can form,
In September 2021, FDA approval of the Portico® with FlexNav® TAVI system to treat people with symptomatic, severe aortic stenosis who are at high or extreme risk for open heart surgery, and
In September 2021, FDA approval of the Amplatzer Talisman PFO Occlusion System to treat people with a patent foramen ovale – a small opening between the upper chambers of the heart – who are at risk of recurrent ischemic stroke.

The gross profit margin percentage was 54.8 percent for the third quarter of 2021 compared to 49.4 percent for the third quarter of 2020. The increase in the quarter reflects the effects of higher sales volume in various businesses, higher utilization at various manufacturing sites, a change in estimate to the restructuring actions recognized in the second quarter related to Abbott’s manufacturing network for COVID-19 diagnostic tests and the nonrecurrence of the 2020 impairment of an intangible asset. The gross profit margin percentage was 51.6 percent for the first nine months of 2021 compared to 49.2 percent for the first nine months of 2020. The increase primarily reflects the effects of higher sales volume, higher manufacturing utilization, and the nonrecurrence of the 2020 intangible asset impairment, partially offset by the impact of higher restructuring charges in the first nine months of 2021.

Research and development expenses increased $92 million, or 16.1 percent, in the third quarter of 2021 and increased $258 million, or 15.0 percent, in the first nine months of 2021 compared to the prior year. The increases in R&D expenses in the third quarter and first nine months of 2021 were primarily driven by higher spending on various projects to advance products in development.

Selling, general and administrative (SG&A) expenses for the third quarter of 2021 increased $465 million, or 20.2 percent, and increased $1.15 billion, or 16.1 percent, for the first nine months of 2021, due primarily to higher selling and marketing spending to drive growth across various businesses and the nonrecurrence of $100 million of income in 2020 from a litigation settlement. The increase in the first nine months of 2021 also includes charges related to certain litigation.

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.

27

Other (Income) Expense, net

Other income, net increased from $46 million of income in the third quarter of 2020 to $74 million of income in the third quarter of 2021 and from $25 million of income in the first nine months of 2020 to $214 million of income in the first nine months of 2021. The increase in the third quarter was primarily due to higher income in 2021 related to the non-service cost components of net pension and post-retirement medical benefit costs. The increase in the first nine months of 2021 was primarily due to a $100 million change related to the nonrecurrence of 2020 equity investment impairments, a gain on the sale of an equity method investment in 2021 and higher income in 2021 related to the non-service cost components of net pension and post-retirement medical benefit costs.

Interest Expense, net

Interest expense, net was virtually unchanged versus the prior year, decreasing $4 million in the third quarter of 2021 and decreasing $3 million in the first nine months of 2021 due to the reduction in interest expense driven by lower interest rates in 2021. The effect of higher cash and short-term investment balances mostly offset the impact of lower interest rates on interest income in the first nine months of 2021.

Taxes on Earnings from Continuing Operations

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.

Liquidity and Capital Resources September 30, 2021 Compared with December 31, 2020

The increase in cash and cash equivalents from $6.8 billion at December 31, 2020 to $9.3 billion at September 30, 2021 primarily reflects the cash generated from operations in the first nine months of 2021, partially offset by the payment of dividends, capital expenditures and share repurchases. Working capital was $10.6 billion at September 30, 2021 and $8.5 billion at December 31, 2020. The increase in working capital in 2021 primarily reflects the increase in cash and cash equivalents partially offset by an increase in the current portion of long-term debt.

In the Condensed Consolidated Statement of Cash Flows, Net cash from operating activities for the first nine months of 2021 totaled $7.5 billion, an increase of $3.4 billion over the prior year primarily due to higher operating earnings and improved working capital management, partially offset by higher cash taxes paid. Cash taxes paid in 2021 totaled approximately $990 million versus $700 million in 2020. Other, net in Net cash from operating activities was a use of $140 million for the first nine months of 2021 and a source of $42 million for the first nine months of 2020. The year-over-year change in Other, net in Net cash from operating activities reflects the nonrecurrence of 2020 non-cash impairment charges related to intangible assets and equity investments.

In September 2019, the board of directors authorized the early redemption of up to $5 billion of outstanding long-term notes. As of September 30, 2021, $2.15 billion of the $5 billion authorization remains available.

At September 30, 2021, Abbott’s long-term debt rating was A+ by Standard & Poor’s Corporation and A2 by Moody’s Investors Service. Abbott expects to maintain an investment grade rating. Abbott has readily available financial resources, including lines of credit of $5.0 billion which expire in 2025.

28

In October 2019, the board of directors authorized the repurchase of up to $3 billion of Abbott’s common shares from time to time. The 2019 authorization was in addition to the approximately $100 million of the share repurchase program authorized in 2014 that remained unused as of December 31, 2020. In the first nine months of 2021, Abbott repurchased 10.1 million of its common shares for $1.187 billion which fully utilized the authorization remaining under the 2014 share repurchase program and a portion of the 2019 authorization. As of September 30, 2021, $1.910 billion remains available for repurchase under the 2019 share repurchase program.

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

In each of the first three quarters of 2021, Abbott declared a quarterly dividend of $0.45 per share on its common shares, which represents an increase of 25 percent over the $0.36 per share dividend declared in each of the first three quarters of 2020.

Recently Adopted Accounting Standards

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

Legislative Issues

Abbott’s primary markets are highly competitive and subject to substantial government regulations throughout the world. Abbott expects debate to continue over the availability, method of delivery, and payment for health care products and services. It is not possible to predict the extent to which Abbott or the health care industry in general might be adversely affected by these factors in the future. A more complete discussion of these factors is contained in Item 1, Business, and Item 1A, Risk Factors, in the 2020 Annual Report on Form 10-K.

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

Under the safe harbor provisions of the Private Securities Litigation Reform Act of 1995, Abbott cautions that any forward-looking statements made by Abbott are subject to risks and uncertainties that may cause actual results to differ materially from those indicated in the forward-looking statements. Economic, competitive, governmental, technological and other factors that may affect Abbott’s operations are discussed in Item 1A, “Risk Factors” in our Annual Report on Form 10-K for the year ended December 31, 2020, and are incorporated herein by reference. Abbott undertakes no obligation to release publicly any revisions to forward-looking statements as a result of subsequent events or developments, except as required by law.

29

PART I.     FINANCIAL INFORMATION

Item 4.      Controls and Procedures

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

(b) Changes in internal control over financial reporting. During the quarter ended September 30, 2021, there were no changes in Abbott’s internal control over financial reporting (as defined in Rule 13a-15(f) under the Exchange Act) that have materially affected, or are reasonably likely to materially affect, Abbott’s internal control over financial reporting.

PART II.   OTHER INFORMATION

Item 1.       Legal Proceedings

Abbott is involved in various claims, legal proceedings and investigations as described in our Annual Report on Form 10-K for the year ended December 31, 2020.

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

(c) Issuer Purchases of Equity Securities

    

    

    

    

(d) Maximum

 

Number (or

 

(c) Total Number

Approximate

 

of Shares (or

Dollar Value) of

 

(a) Total

Units) Purchased

Shares (or Units)

 

Number of

(b) Average

as Part of

that May Yet Be

 

Shares (or

Price Paid per

Publicly

Purchased Under

 

Units)

Share (or

Announced Plans

the Plans or

 

Period

Purchased

Unit)

or Programs

Programs

 

July 1, 2021 – July 31, 2021

450,000

(1)  

$

120.849

 

450,000

$

2,540,924,508

(2)

August 1, 2021 – August 31, 2021

2,175,000

(1)

123.265

 

2,175,000

2,272,822,841

(2)

September 1, 2021 – September 30, 2021

3,002,035

(1)

120.814

 

3,000,000

1,910,394,012

(2)

Total

5,627,035

(1)

$

121.764

 

5,625,000

$

1,910,394,012

(2)

1. These shares include the shares deemed surrendered to Abbott to pay the exercise price in connection with the exercise of employee stock options – 0 in July, 0 in August, 2,035 in September; and

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

2. On October 11, 2019, the board of directors authorized the repurchase of up to $3 billion of Abbott common shares, from time to time.

30

Item 6.    Exhibits

Exhibit No.

    

Exhibit

3.1

By-Laws of Abbott Laboratories, as amended and restated effective August 30, 2021, filed as Exhibit 3.1 to the Abbott Laboratories Current Report on Form 8-K filed on September 1, 2021.

31.1

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

31.2

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

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

32.1

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

32.2

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

101

The following financial statements and notes from the Abbott Laboratories Quarterly Report on Form 10-Q for the quarter and nine months ended September 30, 2021, formatted in Inline XBRL: (i) Condensed Consolidated Statement of Earnings; (ii) Condensed Consolidated Statement of Comprehensive Income; (iii) Condensed Consolidated Balance Sheet; (iv) Condensed Consolidated Statement of Shareholders’ Investment; (v) Condensed Consolidated Statement of Cash Flows; and (vi) Notes to the Condensed Consolidated Financial Statements.

104

Cover Page Interactive Data File (the cover page XBRL tags are embedded in the Inline XBRL document and included in Exhibit 101).

31

SIGNATURE

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

ABBOTT LABORATORIES

By:

/s/ Robert E. Funck, Jr.

Robert E. Funck, Jr.

Executive Vice President, Finance
and Chief Financial Officer

Date: November 3, 2021

32

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