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~~June 30, ~~2020~~2021


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

For the transition period from to

Commission File No. 1-2189

ABBOTT LABORATORIES

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

100 Abbott Park Road

Abbott Park, Illinois 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~~Accelerated Filer	☐	~~Smaller reporting company~~	☐

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~~June 30, ~~2020,~~2021, Abbott Laboratories had ~~1,772,361,581~~1,772,817,349 common shares without par value outstanding.

Table of Contents

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	1822

Item 4. Controls and Procedures	2328

Part II - Other Information

Item 1. Legal Proceedings	2328

Item 2. Unregistered Sales of Equity Securities and Use of Proceeds	2328

Item 6. Exhibits	2429

Signature	2530

Table of Contents

Abbott Laboratories and Subsidiaries

Condensed Consolidated Statement of Earnings

(Unaudited)

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


	Three Months Ended September 30				Nine Months Ended September 30				Three Months Ended June 30				Six Months Ended June 30
	2020		2019		2020		2019		2021		2020		2021		2020
Net sales	$	8,853	$	8,076	$	23,907	$	23,590	$	10,223	$	7,328	$	20,679	$	15,054

Cost of products sold, excluding amortization of intangible assets		3,966		3,358		10,510		9,797		4,947		3,263		9,348		6,544
Amortization of intangible assets		510		484		1,624		1,453		504		553		1,013		1,114
Research and development		580		596		1,722		1,845		654		564		1,308		1,142
Selling, general and administrative		2,302		2,440		7,126		7,352		2,726		2,276		5,509		4,824
Total operating cost and expenses		7,358		6,878		20,982		20,447		8,831		6,656		17,178		13,624

Operating earnings		1,495		1,198		2,925		3,143		1,392		672		3,501		1,430

Interest expense		137		167		410		506		134		134		269		273
Interest (income)		(10)		(24)		(37)		(69)		(11)		(9)		(22)		(27)
Net foreign exchange (gain) loss		(7)		7		(3)		9		—		(1)		3		4
Other (income) expense, net		(46)		(55)		(25)		(140)		(79)		22		(140)		21
Earnings from continuing operations before taxes		1,421		1,103		2,580		2,837		1,348		526		3,391		1,159
Tax expense on earnings from continuing operations		189		143		267		199
Tax expense (benefit) on earnings from continuing operations										159		(11)		409		78
Earnings from continuing operations		1,232		960		2,313		2,638		1,189		537		2,982		1,081

Earnings from discontinued operations, net of tax		—		—		20		—		—		—		—		20

Net Earnings	$	1,232	$	960	$	2,333	$	2,638	$	1,189	$	537	$	2,982	$	1,101

Basic Earnings Per Common Share —
Continuing operations	$	0.69	$	0.54	$	1.30	$	1.48	$	0.67	$	0.30	$	1.67	$	0.61
Discontinued operations		—		—		0.01		—		—		—		—		0.01
Net earnings	$	0.69	$	0.54	$	1.31	$	1.48	$	0.67	$	0.30	$	1.67	$	0.62

Diluted Earnings Per Common Share —
Continuing operations	$	0.69	$	0.53	$	1.29	$	1.47	$	0.66	$	0.30	$	1.66	$	0.60
Discontinued operations		—		—		0.01		—		—		—		—		0.01
Net earnings	$	0.69	$	0.53	$	1.30	$	1.47	$	0.66	$	0.30	$	1.66	$	0.61

Average Number of Common Shares Outstanding Used for Basic Earnings Per Common Share		1,774,475		1,771,521		1,772,166		1,767,985		1,779,203		1,772,953		1,778,049		1,770,970
Dilutive Common Stock Options		13,378		12,646		12,381		12,818		14,076		12,087		14,369		11,882
Average Number of Common Shares Outstanding Plus Dilutive Common Stock Options		1,787,853		1,784,167		1,784,547		1,780,803		1,793,279		1,785,040		1,792,418		1,782,852

Outstanding Common Stock Options Having No Dilutive Effect		—		61		—		61		2,720		50		2,694		50

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

Table of Contents

Abbott Laboratories and Subsidiaries

Condensed Consolidated Statement of Comprehensive Income

(Unaudited)

(dollars in millions)


	Three Months Ended September 30				Nine Months Ended September 30				Three Months Ended June 30				Six Months Ended June 30
	2020		2019		2020		2019		2021		2020		2021		2020
Net Earnings	$	1,232	$	960	$	2,333	$	2,638	$	1,189	$	537	$	2,982	$	1,101
Foreign currency translation gain (loss) adjustments		112		(478)		(677)		(265)		165		355		(371)		(789)
Net actuarial gains (losses) and amortization of net actuarial losses and prior service costs and credits, net of taxes of $14 and $42 in 2020 and $7 and $21 in 2019		28		31		122		80
Net gains (losses) for derivative instruments designated as cash flow hedges and other, net of taxes of $(43) and $(24) in 2020 and $23 and $8 in 2019		(104)		49		(24)		8
Net actuarial gains (losses) and amortization of net actuarial losses and prior service costs and credits, net of taxes of $18 and $36 in 2021 and $13 and $28 in 2020										48		37		133		94
Net gains (losses) for derivative instruments designated as cash flow hedges and other, net of taxes of $2 and $48 in 2021 and $(29) and $19 in 2020										6		(86)		118		80
Other comprehensive income (loss)		36		(398)		(579)		(177)		219		306		(120)		(615)
Comprehensive Income	$	1,268	$	562	$	1,754	$	2,461	$	1,408	$	843	$	2,862	$	486


	September 30,		December 31,		June 30,		December 31,
	2020		2019		2021		2020
Supplemental Accumulated Other Comprehensive Income (Loss) Information, net of tax:
Cumulative foreign currency translation (loss) adjustments	$	(5,601)	$	(4,924)	$	(5,230)	$	(4,859)
Net actuarial (losses) and prior service (costs) and credits		(3,418)		(3,540)		(3,738)		(3,871)
Cumulative gains (losses) on derivative instruments designated as cash flow hedges and other		(25)		(1)		(98)		(216)
Accumulated other comprehensive income (loss)	$	(9,044)	$	(8,465)	$	(9,066)	$	(8,946)

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

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Abbott Laboratories and Subsidiaries

Condensed Consolidated Balance Sheet

(Unaudited)

(dollars in millions)


		September 30,		December 31,	June 30,		December 31,
	2020		2019		2021		2020
Assets
Current Assets:
Cash and cash equivalents	$	4,480	$	3,860	$	8,658	$	6,838
Short-term investments		251		280		286		310
Trade receivables, less allowances of $446 in 2020 and $384 in 2019		5,649		5,425
Trade receivables, less allowances of $498 in 2021 and $460 in 2020						6,113		6,414
Inventories:
Finished products		3,173		2,784		3,118		3,030
Work in process		721		560		796		712
Materials		1,258		972		1,525		1,270
Total inventories		5,152		4,316		5,439		5,012
Prepaid expenses and other receivables		1,858		1,786		2,131		1,867
Total Current Assets		17,390		15,667		22,627		20,441
Investments		803		883		805		821
Property and equipment, at cost		17,972		16,799		19,074		18,793
Less: accumulated depreciation and amortization		9,352		8,761		10,258		9,764
Net property and equipment		8,620		8,038		8,816		9,029
Intangible assets, net of amortization		15,208		17,025		13,681		14,784
Goodwill		23,338		23,195		23,485		23,744
Deferred income taxes and other assets		3,684		3,079		3,855		3,729
	$	69,043	$	67,887	$	73,269	$	72,548



Liabilities and Shareholders’ Investment
Current Liabilities:
Short-term borrowings	$	208	$	201	$	199	$	213
Trade accounts payable		3,189		3,252		4,017		3,946
Salaries, wages and commissions		1,439		1,237		1,248		1,416
Other accrued liabilities		4,659		4,035		5,354		5,165
Dividends payable		639		635		799		798
Income taxes payable		117		226		242		362
Current portion of long-term debt		6		1,277		755		7
Total Current Liabilities		10,257		10,863		12,614		11,907
Long-term debt		18,349		16,661		17,547		18,527
Post-employment obligations, deferred income taxes and other long-term liabilities		8,842		9,062		9,079		9,111
Commitments and Contingencies
Shareholders’ Investment:
Preferred shares, 1 dollar par value Authorized — 1,000,000 shares, NaN issued		—		—		—		—
Common shares, without par value Authorized — 2,400,000,000 shares Issued at stated capital amount — Shares: 2020: 1,980,767,223; 2019: 1,976,855,085		24,037		23,853
Common shares held in treasury, at cost — Shares: 2020: 208,405,642; 2019: 214,351,838		(9,873)		(10,147)
Common shares, without par value Authorized — 2,400,000,000 shares Issued at stated capital amount — Shares: 2021: 1,982,553,488; 2020: 1,981,156,896						24,153		24,145
Common shares held in treasury, at cost — Shares: 2021: 209,736,139; 2020: 209,926,622						(10,340)		(10,042)
Earnings employed in the business		26,266		25,847		29,053		27,627
Accumulated other comprehensive income (loss)		(9,044)		(8,465)		(9,066)		(8,946)
Total Abbott Shareholders’ Investment		31,386		31,088		33,800		32,784
Noncontrolling Interests in Subsidiaries		209		213		229		219
Total Shareholders’ Investment		31,595		31,301		34,029		33,003
	$	69,043	$	67,887	$	73,269	$	72,548

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

Table of Contents

Abbott Laboratories and Subsidiaries

Condensed Consolidated Statement of Shareholders’ Investment

(Unaudited)

(in millions except shares and per share data)


	Three Months Ended September 30				Three Months Ended June 30
	2020		2019		2021		2020
Common Shares:
Balance at June 30
Shares: 2020: 1,979,594,379; 2019: 1,976,248,129	$	23,893	$	23,665
Balance at March 31
Shares: 2021: 1,982,205,491; 2020: 1,978,112,501					$	24,023	$	23,731
Issued under incentive stock programs
Shares: 2020: 1,172,844; 2019: 457,156		48		18
Shares: 2021: 347,997; 2020: 1,481,878						18		66
Share-based compensation		101		93		119		105
Issuance of restricted stock awards		(5)		(5)		(7)		(9)
Balance at September 30
Shares: 2020: 1,980,767,223; 2019: 1,976,705,285	$	24,037	$	23,771
Balance at June 30
Shares: 2021: 1,982,553,488; 2020: 1,979,594,379					$	24,153	$	23,893

Common Shares Held in Treasury:
Balance at March 31
Shares: 2021: 205,385,343; 2020: 209,267,175					$	(9,845)	$	(9,913)
Issued under incentive stock programs
Shares: 2021: 159,644; 2020: 212,973						8		10
Purchased
Shares: 2021: 4,510,440; 2020: 10,178						(503)		(1)
Balance at June 30
Shares: 2020: 209,064,380; 2019: 208,850,514	$	(9,904)	$	(9,659)
Issued under incentive stock programs
Shares: 2020: 664,727; 2019: 605,458		32		28
Purchased
Shares: 2020: 5,989; 2019: 4,524		(1)		—
Balance at September 30
Shares: 2020: 208,405,642; 2019: 208,249,580	$	(9,873)	$	(9,631)
Shares: 2021: 209,736,139; 2020: 209,064,380					$	(10,340)	$	(9,904)

Earnings Employed in the Business:
Balance at March 31					$	28,669	$	25,786
Net earnings						1,189		537
Cash dividends declared on common shares (per share — 2021: $0.45; 2020: $0.36)						(801)		(640)
Effect of common and treasury share transactions						(4)		(14)
Balance at June 30	$	25,669	$	25,045	$	29,053	$	25,669
Net earnings		1,232		960
Cash dividends declared on common shares (per share — 2020: $0.36; 2019: $0.32)		(641)		(570)
Effect of common and treasury share transactions		6		5
Balance at September 30	$	26,266	$	25,440

Accumulated Other Comprehensive Income (Loss):
Balance at March 31					$	(9,285)	$	(9,386)
Other comprehensive income (loss)						219		306
Balance at June 30	$	(9,080)	$	(7,365)	$	(9,066)	$	(9,080)
Other comprehensive income (loss)		36		(398)
Balance at September 30	$	(9,044)	$	(7,763)

Noncontrolling Interests in Subsidiaries:
Balance at March 31					$	226	$	209
Noncontrolling Interests’ share of income, business combinations, net of distributions and share repurchases						3		11
Balance at June 30	$	220	$	208	$	229	$	220
Noncontrolling Interests’ share of income, business combinations, net of distributions and share repurchases		(11)		(6)
Balance at September 30	$	209	$	202

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

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Abbott Laboratories and Subsidiaries

Condensed Consolidated Statement of Shareholders’ Investment

(Unaudited)

(in millions except shares and per share data)


	Nine Months Ended September 30					Six Months Ended June 30
	2020		2019		��	2021		2020
Common Shares:
Balance at January 1
Shares: 2020: 1,976,855,085; 2019: 1,971,189,465	$	23,853	$	23,512
Shares: 2021: 1,981,156,896; 2020: 1,976,855,085						$	24,145	$	23,853
Issued under incentive stock programs
Shares: 2020: 3,912,138; 2019: 5,515,820		167		205
Shares: 2021: 1,396,592; 2020: 2,739,294							65		119
Share-based compensation		451		436			423		350
Issuance of restricted stock awards		(434)		(382)			(480)		(429)
Balance at September 30
Shares: 2020: 1,980,767,223; 2019: 1,976,705,285	$	24,037	$	23,771
Balance at June 30
Shares: 2021: 1,982,553,488; 2020: 1,979,594,379						$	24,153	$	23,893

Common Shares Held in Treasury:
Balance at January 1
Shares: 2020: 214,351,838; 2019: 215,570,043	$	(10,147)	$	(9,962)
Shares: 2021: 209,926,622; 2020: 214,351,838						$	(10,042)	$	(10,147)
Issued under incentive stock programs
Shares: 2020: 6,211,326; 2019: 7,591,844		295		352
Shares: 2021: 4,978,431; 2020: 5,546,599							239		263
Purchased
Shares: 2020: 265,130; 2019: 271,381		(21)		(21)
Balance at September 30
Shares: 2020: 208,405,642; 2019: 208,249,580	$	(9,873)	$	(9,631)

Shares: 2021: 4,787,948; 2020: 259,141							(537)		(20)
Balance at June 30
Shares: 2021: 209,736,139; 2020: 209,064,380						$	(10,340)	$	(9,904)
Earnings Employed in the Business:
Balance at January 1	$	25,847	$	24,560		$	27,627	$	25,847
Impact of adoption of new accounting standard		(5)		—			—		(5)
Net earnings		2,333		2,638			2,982		1,101
Cash dividends declared on common shares (per share — 2020: $1.08; 2019: $0.96)		(1,922)		(1,706)
Cash dividends declared on common shares (per share — 2021: $0.90; 2020: $0.72)							(1,604)		(1,281)
Effect of common and treasury share transactions		13		(52)			48		7
Balance at September 30	$	26,266	$	25,440

Balance at June 30						$	29,053	$	25,669
Accumulated Other Comprehensive Income (Loss):
Balance at January 1	$	(8,465)	$	(7,586)		$	(8,946)	$	(8,465)
Other comprehensive income (loss)		(579)		(177)			(120)		(615)
Balance at September 30	$	(9,044)	$	(7,763)
Balance at June 30						$	(9,066)	$	(9,080)

Noncontrolling Interests in Subsidiaries:
Balance at January 1	$	213	$	198		$	219	$	213
Noncontrolling Interests’ share of income, business combinations, net of distributions and share repurchases		(4)		4			10		7
Balance at September 30	$	209	$	202
Balance at June 30						$	229	$	220

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

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Abbott Laboratories and Subsidiaries

Condensed Consolidated Statement of Cash Flows

(Unaudited)

(dollars in millions)


	Nine Months Ended September 30				Six Months Ended June 30
	2020		2019		2021		2020
Cash Flow From (Used in) Operating Activities:
Net earnings	$	2,333	$	2,638	$	2,982	$	1,101
Adjustments to reconcile net earnings to net cash from operating activities -
Adjustments to reconcile net earnings to net cash from operating activities —
Depreciation		837		805		795		539
Amortization of intangible assets		1,624		1,453		1,013		1,114
Share-based compensation		448		434		420		348
Trade receivables		(343)		(357)		200		127
Inventories		(838)		(730)		(542)		(987)
Other, net		42		(523)		(103)		(205)
Net Cash From Operating Activities		4,103		3,720		4,765		2,037

Cash Flow From (Used in) Investing Activities:
Acquisitions of property and equipment		(1,498)		(1,204)		(810)		(1,002)
Acquisitions of businesses and technologies, net of cash acquired		(32)		(171)		(15)		(32)
Proceeds from business dispositions		48		48		48		48
Sales (purchases) of other investment securities, net		(15)		(22)		81		(32)
Other		13		23		10		6
Net Cash (Used in) Investing Activities		(1,484)		(1,326)		(686)		(1,012)

Cash Flow From (Used in) Financing Activities:
Net borrowings (repayments) of short-term debt and other		3		52		20		31
Proceeds from issuance of long-term debt		1,280		—		—		1,279
Repayments of long-term debt		(1,332)		(523)		(5)		(2)
Purchases of common shares		(242)		(222)		(746)		(240)
Proceeds from stock options exercised		229		291		103		146
Dividends paid		(1,919)		(1,702)		(1,603)		(1,280)
Other		(11)		—		—		(11)
Net Cash (Used in) Financing Activities		(1,992)		(2,104)		(2,231)		(77)

Effect of exchange rate changes on cash and cash equivalents		(7)		(43)		(28)		(45)

Net Increase in Cash and Cash Equivalents		620		247		1,820		903
Cash and Cash Equivalents, Beginning of Year		3,860		3,844		6,838		3,860
Cash and Cash Equivalents, End of Period	$	4,480	$	4,091	$	8,658	$	4,763

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

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Abbott Laboratories and Subsidiaries

Notes to the Condensed Consolidated Financial Statements

~~September~~June 30, ~~2020~~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, ~~2019.~~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 ~~June 2016,~~December 2019, the Financial Accounting Standards Board (FASB) issued Accounting Standards Update ~~(ASU) 2016-13,~~ ~~Financial Instruments – Credit Losses~~, which changes the methodology to be used to measure credit losses for certain financial instruments and financial assets, including trade receivables. The new methodology requires the recognition of an allowance that reflects the current estimate of credit losses expected to be incurred over the life of the financial asset. Abbott adopted the standard on January 1, 2020 and recorded a cumulative adjustment that was not significant to Earnings employed in the business in the Condensed Consolidated Balance Sheet.

~~Recent Accounting Standards Not Yet Adopted~~

~~In December 2019, the FASB issued ASU~~ 2019-12, Income Taxes (Topic 740): Simplifying the Accounting for Income Taxes, which among other things, eliminates certain exceptions in the current rules regarding the approach for intraperiod tax allocations and the methodology for calculating income taxes in an interim period, and clarifies the accounting for transactions that result in a step-up in the tax basis of goodwill. ~~The~~Abbott adopted the standard ~~becomes effective for Abbott in the first quarter of 2021 and early adoption is permitted. Abbott does not expect adoption of this~~on January 1, 2021. The new standard todid not have ~~a material~~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 4 reportable segments: Established Pharmaceutical Products, Diagnostic Products, Nutritional Products, and Medical Devices.

Table of Contents

Abbott Laboratories and Subsidiaries

Notes to the Condensed Consolidated Financial Statements

June 30, 2021

(Unaudited)

Note 3 — Revenue

The following tables provide detail by sales category:


	Three Months Ended September 30, 2020						Three Months Ended September 30, 2019						Three Months Ended June 30, 2021						Three Months Ended June 30, 2020
(in millions)	U.S.		Int’l		Total		U.S.		Int’l		Total		U.S.		Int’l		Total		U.S.		Int’l		Total
Established Pharmaceutical Products —
Key Emerging Markets	$	—	$	799	$	799	$	—	$	891	$	891	$	—	$	915	$	915	$	—	$	764	$	764
Other		—		300		300		—		321		321		—		265		265		—		249		249
Total		—		1,099		1,099		—		1,212		1,212		—		1,180		1,180		—		1,013		1,013

Nutritionals —
Pediatric Nutritionals		488		518		1,006		478		566		1,044		528		565		1,093		484		540		1,024
Adult Nutritionals		330		588		918		310		520		830		345		670		1,015		324		535		859
Total		818		1,106		1,924		788		1,086		1,874		873		1,235		2,108		808		1,075		1,883

Diagnostics —
Core Laboratory		284		892		1,176		272		905		1,177		283		1,023		1,306		289		698		987
Molecular		220		238		458		35		76		111		94		196		290		144		215		359
Point of Care		96		35		131		112		32		144		97		40		137		79		39		118
Rapid Diagnostics		533		342		875		283		194		477		681		833		1,514		345		185		530
Total		1,133		1,507		2,640		702		1,207		1,909		1,155		2,092		3,247		857		1,137		1,994

Medical Devices —
Rhythm Management		242		265		507		265		273		538		269		298		567		185		216		401
Electrophysiology		192		249		441		185		242		427		209		278		487		120		179		299
Heart Failure		144		46		190		136		50		186		168		59		227		115		43		158
Vascular		230		400		630		251		446		697		246		451		697		168		313		481
Structural Heart		159		194		353		158		190		348		191		231		422		91		132		223
Neuromodulation		170		36		206		165		39		204		166		44		210		85		21		106
Diabetes Care		226		617		843		175		490		665		289		767		1,056		202		553		755
Total		1,363		1,807		3,170		1,335		1,730		3,065		1,538		2,128		3,666		966		1,457		2,423

Other		15		5		20		9		7		16		15		7		22		7		8		15

Total	$	3,329	$	5,524	$	8,853	$	2,834	$	5,242	$	8,076	$	3,581	$	6,642	$	10,223	$	2,638	$	4,690	$	7,328

910

Table of Contents

Abbott Laboratories and Subsidiaries

Notes to the Condensed Consolidated Financial Statements

~~September~~June 30, ~~2020~~2021

(Unaudited)

Nine Months Ended September 30, 2020

Nine Months Ended September 30, 2019
(in millions)

U.S.

Int’l

Total

U.S.

Int’l

Total
Established Pharmaceutical Products —












Key Emerging Markets

$
—

$
2,376

$
2,376

$
—

$
2,496

$
2,496
Other

—

780

780

—

816

816
Total

—

3,156

3,156

—

3,312

3,312

Nutritionals —

Pediatric Nutritionals

1,490

1,629

3,119

1,406

1,718

3,124
Adult Nutritionals

948

1,644

2,592

915

1,502

2,417
Total

2,438

3,273

5,711

2,321

3,220

5,541

Diagnostics —

Core Laboratory

840

2,312

3,152

793

2,614

3,407
Molecular

429

527

956

113

213

326
Point of Care

278

109

387

334

90

424
Rapid Diagnostics

1,246

719

1,965

881

617

1,498
Total

2,793

3,667

6,460

2,121

3,534

5,655

Medical Devices —

Rhythm Management

655

727

1,382

790

810

1,600
Electrophysiology

476

652

1,128

549

713

1,262
Heart Failure

411

140

551

428

143

571
Vascular

628

1,108

1,736

787

1,349

2,136
Structural Heart

386

508

894

446

578

1,024
Neuromodulation

392

97

489

485

124

609
Diabetes Care

614

1,736

2,350

485

1,348

1,833
Total

3,562

4,968

8,530

3,970

5,065

9,035

Other

30

20

50

26

21

47

Total

$
8,823

$
15,084

$
23,907

$
8,438

$
15,152

$
23,590

Note 3 — Revenue (Continued)


	Six Months Ended June 30, 2021						Six Months Ended June 30, 2020
(in millions)	U.S.		Int’l		Total		U.S.		Int’l		Total
Established Pharmaceutical Products —
Key Emerging Markets	$	—	$	1,736	$	1,736	$	—	$	1,577	$	1,577
Other		—		514		514		—		480		480
Total		—		2,250		2,250		—		2,057		2,057

Nutritionals —
Pediatric Nutritionals		1,036		1,123		2,159		1,002		1,111		2,113
Adult Nutritionals		673		1,312		1,985		618		1,056		1,674
Total		1,709		2,435		4,144		1,620		2,167		3,787

Diagnostics —
Core Laboratory		554		1,934		2,488		556		1,420		1,976
Molecular		269		468		737		209		289		498
Point of Care		189		77		266		182		74		256
Rapid Diagnostics		1,784		1,986		3,770		713		377		1,090
Total		2,796		4,465		7,261		1,660		2,160		3,820

Medical Devices —
Rhythm Management		510		576		1,086		413		462		875
Electrophysiology		388		530		918		284		403		687
Heart Failure		313		108		421		267		94		361
Vascular		465		867		1,332		398		708		1,106
Structural Heart		360		439		799		227		314		541
Neuromodulation		311		83		394		222		61		283
Diabetes Care		542		1,494		2,036		388		1,119		1,507
Total		2,889		4,097		6,986		2,199		3,161		5,360

Other		25		13		38		15		15		30

Total	$	7,419	$	13,260	$	20,679	$	5,494	$	9,560	$	15,054

Remaining Performance Obligations

As of ~~September~~June 30, ~~2020,~~2021, the estimated revenue expected to be recognized in the future related to performance obligations that are unsatisfied (or partially unsatisfied) was approximately ~~$3.6~~$3.9 billion in the Diagnostics segment and approximately ~~$430~~$414 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 1816 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.

Table of Contents

Abbott Laboratories and Subsidiaries

Notes to the Condensed Consolidated Financial Statements

June 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, 2019	$	294
Contract Liabilities:
Balance at December 31, 2020			$	405
Unearned revenue from cash received during the period		350		280
Revenue recognized related to contract liability balance		(293)		(279)
Balance at September 30, 2020	$	351
Balance at June 30, 2021			$	406

~~Table of Contents~~

~~Abbott Laboratories and Subsidiaries~~

~~Notes to the Condensed Consolidated Financial Statements~~

~~September 30, 2020~~

~~(Unaudited)~~

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~~June 30, 2021 and 2020 ~~and 2019~~ were ~~$1.226~~$1.184 billion and ~~$954~~$534 million, respectively, and for the ~~nine~~six months ended ~~September~~June 30, 2021 and 2020 ~~and 2019~~ were ~~$2.302~~$2.969 billion and ~~$2.622~~$1.075 billion, respectively. Net earnings allocated to common shares for the three months ended ~~September~~June 30, 2021 and 2020 ~~and 2019~~ were ~~$1.226~~$1.184 billion and ~~$954~~$534 million, respectively, and for the ~~nine~~six months ended ~~September~~June 30, 2021 and 2020 ~~and 2019~~ were ~~$2.322~~$2.969 billion and ~~$2.622~~$1.095 billion, respectively.

Earnings from discontinued operations, net of tax, in the first ~~nine~~six 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~~six months of ~~2020~~2021 includes ~~$350~~$80 million of pension contributions and the payment of cash taxes of approximately ~~$700~~$715 million. The first ~~nine~~six months of ~~2019~~2020 includes ~~$337~~$335 million of pension contributions and the payment of cash taxes of approximately ~~$775~~$285 million.

The following summarizes the activity for the first ~~nine~~six months of ~~2020~~2021 related to the allowance for doubtful accounts as of ~~September~~June 30, ~~2020:~~2021:


(in millions)
Allowance for Doubtful Accounts
Balance at December 31, 2019	$	228
Impact of adopting ASU 2016-13		7
Allowance for Doubtful Accounts:
Balance at December 31, 2020			$	288
Provisions/charges to income		63		31
Amounts charged off and other deductions		(14)		(9)
Balance at September 30, 2020	$	284
Balance at June 30, 2021			$	310

Table of Contents

Abbott Laboratories and Subsidiaries

Notes to the Condensed Consolidated Financial Statements

June 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~~June 30, ~~2020~~2021 and December 31, ~~2019~~2020 are as follows:


	September 30,		December 31,		June 30,		December 31,
(in millions)	2020		2019		2021		2020
Long-term Investments
Long-term Investments:
Equity securities	$	755	$	836	$	754	$	776
Other		48		47		51		45
Total	$	803	$	883	$	805	$	821

The decrease in Abbott’s long-term investments as of ~~September~~June 30, ~~2020 declined~~2021 versus the balance as of December 31, ~~2019 due~~2020 primarily relates to ~~investment impairments totaling approximately $110 million, recorded in Other (income) expense, net within~~ the ~~Condensed Consolidated Statement~~sale of ~~Earnings, which was partially offset by approximately $30 million of additional investments during the first nine months of 2020.~~an equity method investment.

~~Abbott's~~Abbott’s equity securities as of ~~September~~June 30, ~~2020~~2021, include ~~approximately $336~~$388 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~~June 30, ~~2020~~2021 with a carrying value of ~~approximately $292~~$260 million that are accounted for under the equity method of accounting and other equity investments with a carrying value of approximately ~~$112~~$91 million that do not have a readily determinable fair value. ~~The $112 million carrying value is net of an~~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 the first quarter of 2019, in conjunction with the acquisition of Cephea Valve Technologies, Inc., Abbott acquired a research & development (R&D) asset valued at $102 million, which was immediately expensed. The $102 million of expense was recorded in the R&D line of Abbott's Condensed Consolidated Statement of Earnings.

~~Table of Contents~~

~~Abbott Laboratories and Subsidiaries~~

~~Notes to the Condensed Consolidated Financial Statements~~

~~September 30, 2020~~

~~(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) on				Three Months Ended June 30
					Net Actuarial				Derivative												Cumulative Gains (Losses)
	Cumulative Foreign				(Losses) and Prior				Instruments				Cumulative Foreign				Net Actuarial (Losses) and				on Derivative Instruments
	Currency Translation				Service (Costs)				Designated as				Currency Translation				Prior Service (Costs) and				Designated as Cash Flow
	Adjustments				and Credits				Cash Flow Hedges				Adjustments				Credits				Hedges
(in millions)	2020		2019		2020		2019		2020		2019		2021		2020		2021		2020		2021		2020
Balance at June 30	$	(5,713)	$	(4,699)	$	(3,446)	$	(2,677)	$	79	$	11
Balance at March 31													$	(5,395)	$	(6,068)	$	(3,786)	$	(3,483)	$	(104)	$	165
Other comprehensive income (loss) before reclassifications		112		(478)		(21)		7		(74)		67		165		355		(12)		(9)		(28)		(67)
Amounts reclassified from accumulated other comprehensive income		—		—		49		24		(30)		(18)		—		—		60		46		34		(19)
Net current period comprehensive income (loss)		112		(478)		28		31		(104)		49		165		355		48		37		6		(86)
Balance at September 30	$	(5,601)	$	(5,177)	$	(3,418)	$	(2,646)	$	(25)	$	60
Balance at June 30													$	(5,230)	$	(5,713)	$	(3,738)	$	(3,446)	$	(98)	$	79

Nine Months Ended September 30

Cumulative Gains

(Losses) on

Net Actuarial

Derivative

Cumulative Foreign

(Losses) and Prior

Instruments

Currency Translation

Service (Costs)

Designated as

Adjustments

and Credits

Cash Flow Hedges
(in millions)

2020

2019

2020

2019

2020

2019
Balance at January 1

$
(4,924)

$
(4,912)

$
(3,540)

$
(2,726)

$
(1)

$
52
Other comprehensive income (loss) before reclassifications

(677)

(265)

(23)

9

35

48
Amounts reclassified from accumulated other comprehensive income

—

—

145

71

(59)

(40)
Net current period comprehensive income (loss)

(677)

(265)

122

80

(24)

8
Balance at September 30

$
(5,601)

$
(5,177)

$
(3,418)

$
(2,646)

$
(25)

$
60

Table of Contents

Abbott Laboratories and Subsidiaries

Notes to the Condensed Consolidated Financial Statements

June 30, 2021

(Unaudited)

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


	Six Months Ended June 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		(371)		(789)		10		(2)		68		109
Amounts reclassified from accumulated other comprehensive income		—		—		123		96		50		(29)
Net current period comprehensive income (loss)		(371)		(789)		133		94		118		80
Balance at June 30	$	(5,230)	$	(5,713)	$	(3,738)	$	(3,446)	$	(98)	$	79

Reclassified ~~amounts for foreign currency translation are recorded in the Condensed Consolidated Statement of Earnings as Net foreign exchange (gain) loss; and~~ amounts for cash flow hedges are recorded as Cost of products sold. Net actuarial losses and prior service cost are included as a component of net periodic benefit costs; see Note 12 for additional details.

Note 6 — Goodwill and Intangible Assets

The total amount of goodwill reported was ~~$23.3~~$23.5 billion at ~~September~~June 30, ~~2020~~2021 and ~~$23.2~~$23.7 billion at December 31, ~~2019.~~2020. Foreign currency translation adjustments ~~increased~~decreased goodwill by approximately ~~$144~~$259 million in the first ~~nine~~six months of ~~2020.~~2021. The amount of goodwill related to reportable segments at ~~September~~June 30, ~~2020~~2021 was $2.9 billion for the Established Pharmaceutical Products segment, $286 million for the Nutritional Products segment, ~~$3.7~~$3.8 billion for the Diagnostic Products segment, and $16.4 billion for the Medical Devices segment. There was 0 reduction of goodwill relating to impairments in the first ~~nine~~six months of 2021.

Indefinite-lived intangible assets, which relate to in-process R&D (IPR&D) acquired in a business combination, were approximately $947 million as of June 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 the second quarter of 2021.

The gross amount of amortizable intangible assets, primarily product rights and technology was ~~$27.5~~$27.8 billion as of ~~September~~June 30, 2021 and December 31, 2020, and ~~$27.6~~accumulated amortization was $15.1 billion as of June 30, 2021 and $14.2 billion as of December 31, ~~2019, and accumulated amortization was $13.5 billion as of September 30, 2020 and $11.9 billion as of December 31, 2019.~~2020. Foreign currency translation adjustments decreased intangible assets by ~~$69~~$83 million in the first ~~nine~~six months of ~~2020. An~~2021. In the second quarter of 2021, an asset impairment related to the ~~Medical Devices~~Established Pharmaceutical Products segment decreased intangible assets by ~~$148 million in the third quarter and first nine months of 2020.~~$11 million. The impairment was recorded in the Cost of products sold, excluding amortization of intangible assets line of ~~Abbott's~~Abbott’s Condensed Consolidated Statement of Earnings. Abbott’s estimated annual amortization expense for intangible assets is approximately ~~$2.1~~$2.0 billion in ~~2020, $2.0 billion per year in~~ 2021 and 2022,~~, and~~ ~~2023~~ and $1.9 billion in ~~2024.~~2023,

2024

~~Indefinite-lived intangible assets, which relate to in-process R&D acquired in a business combination, were approximately $1.2 billion~~, and ~~$1.3 billion as of September 30, 2020 and December 31, 2019, respectively~~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 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. Abbott estimates that the total pre-tax cost to implement this restructuring plan will be approximately $500 million to $625 million, including fixed asset write-downs of $80 million to $115 million, inventory-related charges of $250 million to $260 million, and other exit costs of $170 million to $250 million. Other exit costs include contract cancellation and employee-related costs. Actions associated with this plan are expected to be substantially complete by the end of 2021.

Table of Contents

Abbott Laboratories and Subsidiaries

Notes to the Condensed Consolidated Financial Statements

June 30, 2021

(Unaudited)

Note 7 — Restructuring Plans (Continued)

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 includes fixed asset write-downs of $80 million, inventory-related charges of $248 million, and other exit costs, which include contract cancellations and employee-related costs of $171 million. Other exit costs will result in future cash outlays that are expected to be made primarily over the next 6 months. The following summarizes the activity for the first six months of 2021 related to this restructuring action and the status of the related accruals as of June 30, 2021:


	Inventory
	Related		Fixed Asset		Other Exit
(in millions)	Charges		Write-Downs		Costs		Total
Restructuring charges recorded in 2021	$	248	$	80	$	171	$	499
Payments		—		—		(19)		(19)
Other-non-cash		(248)		(80)		—		(328)
Accrued balance at June 30, 2021	$	—	$	—	$	152	$	152

From 2017 to ~~2020,~~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~~six months of ~~2020,~~2021, charges of ~~$13~~$4 million were recognized, of which $6$1 million is recorded in Cost of products sold ~~$1 million is recorded in Research~~ and ~~development and $6~~$3 million as Selling, general and administrative expense. ~~The following summarizes~~As of June 30, 2021, the ~~activity for~~accrued liabilities remaining in the ~~first nine months of 2020~~Condensed Consolidated Balance Sheet related to these actions total $15 million and ~~the status of the related accrual as of September 30, 2020:~~primarily represent severance obligations.

(in millions)

Accrued balance at December 31, 2019

$
46
Restructuring charges recorded in 2020

13
Payments and other adjustments

(24)
Accrued balance at September 30, 2020

$
35

~~Table of Contents~~

~~Abbott Laboratories and Subsidiaries~~

~~Notes to the Condensed Consolidated Financial Statements~~

~~September 30, 2020~~

~~(Unaudited)~~

From 2017 to 2020, Abbott management approved plans to streamline operations in order to reduce costs and improve efficiencies in various Abbott businesses including the nutritional, established pharmaceuticals and vascular businesses. In the first ~~nine~~six months of ~~2020,~~2021, charges of ~~$29~~$1 million were recognized ~~of which $1 million is recorded in~~as Cost of products ~~sold, $1 million is recorded in Research and development and $27 million as Selling, general and administrative expense.~~sold. The following summarizes the activity for the first ~~nine~~six months of ~~2020~~2021 related to these restructuring actions and the status of the related accrual as of ~~September~~June 30, ~~2020:~~2021:


(in millions)
Accrued balance at December 31, 2019	$	79
Restructuring charges recorded in 2020		29
Accrued balance at December 31, 2020			$	70
Restructuring charges recorded in 2021				1
Payments and other adjustments		(24)		(24)
Accrued balance at September 30, 2020	$	84
Accrued balance at June 30, 2021			$	47

Note 8 — Incentive Stock Programs

In the first ~~nine~~six months of ~~2020,~~2021, Abbott granted ~~4,006,336~~2,730,398 stock options, ~~568,471~~478,490 restricted stock awards and ~~5,183,375~~4,624,439 restricted stock units under its ~~current~~ incentive stock program. At ~~September~~June 30, ~~2020,~~2021, approximately ~~113~~101 million ~~common~~ shares were reserved for future grants. Information regarding the number of options outstanding and exercisable at ~~September~~June 30, ~~2020~~2021 is as follows:


	Outstanding		Exercisable		Outstanding		Exercisable
Number of shares		29,352,400		20,764,950		30,091,814		23,273,096
Weighted average remaining life (years)		6.2		5.2		6.0		5.2
Weighted average exercise price	$	55.34	$	45.92	$	62.45	$	51.56
Aggregate intrinsic value (in millions)	$	1,570	$	1,306	$	1,631	$	1,498

The total unrecognized share-based compensation cost at ~~September~~June 30, ~~2020~~2021 amounted to approximately ~~$499~~$645 million which is expected to be recognized over the next three years.

Table of Contents

Abbott Laboratories and Subsidiaries

Notes to the Condensed Consolidated Financial Statements

June 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.

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

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 ~~$7.9~~$8.8 billion at ~~September~~June 30, ~~2020~~2021 and ~~$6.8~~$8.1 billion at December 31, ~~2019,~~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~~June 30, ~~2020~~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~~June 30, ~~2020~~2021 and December 31, ~~2019,~~2020, Abbott held the gross notional ~~amount~~amounts of ~~$8.9~~$10.0 billion and ~~$9.1~~$11.0 billion, respectively, of such foreign currency forward exchange contracts.

Abbott has designated a yen-denominated, 5-year term loan of approximately ~~$566~~$540 million and ~~$546~~$577 million as of ~~September~~June 30, ~~2020~~2021 and December 31, ~~2019,~~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~~June 30, ~~2020~~2021 and December 31, ~~2019~~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.

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


	Fair Value - Assets					Fair Value - Liabilities
	June 30,		Dec. 31,			June 30,		Dec. 31,
(in millions)	2021		2020		Balance Sheet Caption	2021		2020		Balance Sheet Caption
Interest rate swaps designated as fair value hedges	$	143	$	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		98		30	Prepaid expenses and other receivables		151		433	Other accrued liabilities
Others not designated as hedges		43		60	Prepaid expenses and other receivables		67		65	Other accrued liabilities
Debt designated as a hedge of net investment in a foreign subsidiary		—		—	n/a		540		577	Long-term debt
	$	284	$	300		$	758	$	1,075

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Table of Contents

Abbott Laboratories and Subsidiaries

Notes to the Condensed Consolidated Financial Statements

~~September~~June 30, ~~2020~~2021

(Unaudited)

~~The following table summarizes the amounts~~Note 10 — Financial Instruments, Derivatives and ~~location of certain derivative financial instruments as of September 30, 2020 and December 31, 2019:~~Fair Value Measures (Continued)

Fair Value - Assets

Fair Value - Liabilities

Sept. 30,

Dec. 31,

Sept. 30,

Dec. 31,


(in millions)

2020

2019

Balance Sheet Caption

2020

2019

Balance Sheet Caption
Interest rate swaps designated as fair value hedges

$
232

$
48

Deferred income taxes and other assets

$
—

$
—

Post-employment obligations, deferred income taxes and other long-term liabilities
Foreign currency forward exchange contracts:

Hedging instruments

89

110

Prepaid expenses and other receivables

241

56

Other accrued liabilities
Others not designated as hedges

37

38

Prepaid expenses and other receivables

62

33

Other accrued liabilities
Debt designated as a hedge of net investment in a foreign subsidiary

—

—

n/a

566

546

Long-term debt

$
358

$
196

$
869

$
635

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~~six months ended ~~September~~June 30, ~~2020~~2021 and ~~2019.~~2020.


	Gain (loss) Recognized in Other								Income (expense) and Gain (loss)									Gain (loss) Recognized in Other								Income (expense) and Gain (loss)
	Comprehensive Income (loss)								Reclassified into Income									Comprehensive Income (loss)								Reclassified into Income
	Three Months				Nine Months				Three Months				Nine Months					Three Months				Six Months				Three Months				Six Months
	Ended Sept. 30				Ended Sept. 30				Ended Sept. 30				Ended Sept. 30					Ended June 30				Ended June 30				Ended June 30				Ended June 30
(in millions)	2020		2019		2020		2019		2020		2019		2020		2019		Income Statement Caption	2021		2020		2021		2020		2021		2020		2021		2020		Income Statement Caption
Foreign currency forward exchange contracts designated as cash flow hedges	$	103	$	99	$	(35)	$	78	$	48	$	26	$	90	$	58	Cost of products sold	$	(88)	$	(89)	$	46	$	138	$	(92)	$	31	$	(115)	$	42	Cost of products sold
Debt designated as a hedge of net investment in a foreign subsidiary		(10)		—		(20)		—		—		—		—		—	n/a		2		(2)		37		(10)		—		—		—		—	n/a
Interest rate swaps designated as fair value hedges		n/a		n/a		n/a		n/a		(11)		35		184		174	Interest expense		n/a		n/a		n/a		n/a		2		27		(67)		195	Interest expense

Losses of ~~$100~~$16 million and gains of ~~$49~~$67 million were recognized in the three months ended ~~September~~June 30, ~~2020~~2021 and ~~2019,~~2020, respectively, related to foreign currency forward exchange contracts not designated as a hedge. ~~Losses~~Gains of ~~$198~~$33 million and ~~gains~~losses of ~~$124~~$98 million were recognized in the ~~nine~~six months ended ~~September~~June 30, ~~2020~~2021 and ~~2019,~~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~~June 30, ~~2020~~2021 and December 31, ~~2019~~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, 2020				December 31, 2019				June 30, 2021				December 31, 2020
	Carrying		Fair		Carrying		Fair		Carrying		Fair		Carrying		Fair
(in millions)	Value		Value		Value		Value		Value		Value		Value		Value
Long-term Investment Securities:
Equity securities	$	755	$	755	$	836	$	836	$	754	$	754	$	776	$	776
Other		48		48		47		47		51		51		45		45
Total Long-term Debt		(18,355)		(22,224)		(17,938)		(20,772)		(18,302)		(21,592)		(18,534)		(22,809)
Foreign Currency Forward Exchange Contracts:
Receivable position		126		126		148		148		141		141		90		90
(Payable) position		(303)		(303)		(89)		(89)		(218)		(218)		(498)		(498)
Interest Rate Hedge Contracts:
Receivable position		232		232		48		48		143		143		210		210

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

1417

Table of Contents

Abbott Laboratories and Subsidiaries

Notes to the Condensed Consolidated Financial Statements

~~September~~June 30, ~~2020~~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								Basis of Fair Value Measurement
			Quoted		Significant						Quoted		Significant
			Prices in		Other		Significant				Prices in		Other		Significant
	Outstanding		Active		Observable		Unobservable		Outstanding		Active		Observable		Unobservable
(in millions)	Balances		Markets		Inputs		Inputs		Balances		Markets		Inputs		Inputs
September 30, 2020:
June 30, 2021:
Equity securities	$	351	$	351	$	—	$	—	$	403	$	403	$	—	$	—
Interest rate swap derivative financial instruments		232		—		232		—		143		—		143		—
Foreign currency forward exchange contracts		126		—		126		—		141		—		141		—
Total Assets	$	709	$	351	$	358	$	—	$	687	$	403	$	284	$	—

Fair value of hedged long-term debt	$	3,070	$	—	$	3,070	$	—	$	2,982	$	—	$	2,982	$	—
Foreign currency forward exchange contracts		303		—		303		—		218		—		218		—
Contingent consideration related to business combinations		68		—		—		68		67		—		—		67
Total Liabilities	$	3,441	$	—	$	3,373	$	68	$	3,267	$	—	$	3,200	$	67

December 31, 2019:
December 31, 2020:
Equity securities	$	357	$	357	$	—	$	—	$	386	$	386	$	—	$	—
Interest rate swap derivative financial instruments		48		—		48		—		210		—		210		—
Foreign currency forward exchange contracts		148		—		148		—		90		—		90		—
Total Assets	$	553	$	357	$	196	$	—	$	686	$	386	$	300	$	—

Fair value of hedged long-term debt	$	2,890	$	—	$	2,890	$	—	$	3,049	$	—	$	3,049	$	—
Foreign currency forward exchange contracts		89		—		89		—		498		—		498		—
Contingent consideration related to business combinations		68		—		—		68		68		—		—		68
Total Liabilities	$	3,047	$	—	$	2,979	$	68	$	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 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.

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.

Table of Contents

Abbott Laboratories and Subsidiaries

Notes to the Condensed Consolidated Financial Statements

June 30, 2021

(Unaudited)

Note 11 — Litigation and Environmental Matters (Continued)

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 ~~$85~~$255 million to ~~$120~~$280 million. The recorded accrual balance at ~~September~~June 30, ~~2020~~2021 for these proceedings and exposures was approximately ~~$105~~$265 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~~six months ended ~~September~~June 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				Defined Benefit Plans								Medical and Dental Plans
	Ended September 30				Ended September 30				Ended September 30				Ended September 30				Three Months				Six Months				Three Months				Six Months
(in millions)	2020		2019		2020		2019		2020		2019		2020		2019		Ended June 30				Ended June 30				Ended June 30				Ended June 30
																	2021		2020		2021		2020		2021		2020		2021		2020
Service cost — benefits earned during the period	$	85	$	63	$	251	$	188	$	12	$	5	$	35	$	17	$	96	$	81	$	196	$	166	$	14	$	11	$	28	$	23
Interest cost on projected benefit obligations		75		84		224		253		11		13		32		39		62		74		124		149		9		9		17		21
Expected return on plan assets		(193)		(177)		(576)		(533)		(7)		(6)		(21)		(20)		(211)		(191)		(422)		(383)		(7)		(7)		(14)		(14)
Net amortization of:
Actuarial loss, net		64		33		191		99		5		6		15		17		78		64		159		127		7		2		14		10
Prior service cost (credit)		—		—		1		1		(7)		(8)		(21)		(24)		1		1		1		1		(7)		(7)		(14)		(14)
Net cost - continuing operations	$	31	$	3	$	91	$	8	$	14	$	10	$	40	$	29
Net cost — continuing operations																	$	26	$	29	$	58	$	60	$	16	$	8	$	31	$	26

~~Table of Contents~~

~~Abbott Laboratories and Subsidiaries~~

~~Notes to the Condensed Consolidated Financial Statements~~

~~September 30, 2020~~

~~(Unaudited)~~

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~~six months of 2021 and 2020, ~~and 2019, $350~~$80 million and ~~$337~~$335 million, respectively, were contributed to defined benefit plans. Contributions made to post-employment medical and dental plans ~~and~~in the first six months of 2020 were $11 ~~million was contributed~~million. NaN contributions were made to the post-employment medical and dental plans in ~~each year.~~the first six months of 2021.

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~~six months of 2021 and 2020, taxes on earnings from continuing operations include approximately $90 million and $67 million, respectively, in excess tax benefits associated with share-based compensation. In the first six 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. ~~and $87 million in excess tax benefits associated with share-based compensation.~~ Earnings from discontinued operations, net of tax, in the first ~~nine~~six months of 2020 reflect the recognition of $20 million of net tax benefits primarily as a result of the resolution of various tax positions related to prior years. In the first nine months of 2019, taxes on earnings from continuing operations include a $78 million reduction to the transition tax related to the Tax Cut and Jobs Act (TCJA) and approximately $95 million in excess tax benefits associated with share-based compensation. The $78 million reduction to the transition tax liability was the result of the issuance of final transition tax regulations by the U.S. Department of Treasury in the first quarter of 2019.

Tax authorities in various jurisdictions regularly review Abbott’s income tax filings. Abbott believes that it is reasonably possible that the recorded amount of gross unrecognized tax benefits may decrease ~~between $70 million and $410~~approximately $80 million, including cash adjustments, within the next twelve months as a result of concluding various domestic and international tax matters. ~~In the U.S., Abbott’s federal income tax returns through 2016 are settled except for the federal income tax returns of the former Alere consolidated group which are settled through 2015.~~

Table of Contents

Abbott Laboratories and Subsidiaries

Notes to the Condensed Consolidated Financial Statements

June 30, 2021

(Unaudited)

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, ~~Neuromodulation,~~ 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.

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Table of Contents

Abbott Laboratories and Subsidiaries

Notes to the Condensed Consolidated Financial Statements

~~September~~June 30, ~~2020~~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								Net Sales to External Customers								Operating Earnings
	Three Months				Nine Months				Three Months				Nine Months				Three Months				Six Months				Three Months				Six Months
	Ended September 30				Ended September 30				Ended September 30				Ended September 30				Ended June 30				Ended June 30				Ended June 30				Ended June 30
(in millions)	2020		2019		2020		2019		2020		2019		2020		2019		2021		2020		2021		2020		2021		2020		2021		2020
Established Pharmaceutical Products	$	1,099	$	1,212	$	3,156	$	3,312	$	201	$	281	$	588	$	654	$	1,180	$	1,013	$	2,250	$	2,057	$	220	$	206	$	389	$	387
Nutritional Products		1,924		1,874		5,711		5,541		394		414		1,327		1,241		2,108		1,883		4,144		3,787		490		474		957		933
Diagnostic Products		2,640		1,909		6,460		5,655		875		456		1,802		1,356		3,247		1,994		7,261		3,820		1,076		522		2,777		927
Medical Devices		3,170		3,065		8,530		9,035		928		958		2,122		2,722		3,666		2,423		6,986		5,360		1,208		391		2,215		1,194
Total Reportable Segments		8,833		8,060		23,857		23,543		2,398		2,109		5,839		5,973		10,201		7,313		20,641		15,024		2,994		1,593		6,338		3,441
Other		20		16		50		47										22		15		38		30
Net sales	$	8,853	$	8,076	$	23,907	$	23,590									$	10,223	$	7,328	$	20,679	$	15,054
Corporate functions and benefit plan costs										(129)		(131)		(367)		(332)										(132)		(106)		(246)		(238)
Net interest expense										(127)		(143)		(373)		(437)										(123)		(125)		(247)		(246)
Share-based compensation (a)										(100)		(94)		(448)		(434)										(132)		(115)		(420)		(348)
Amortization of intangible assets										(510)		(484)		(1,624)		(1,453)										(504)		(553)		(1,013)		(1,114)
Other, net (b)										(111)		(154)		(447)		(480)										(755)		(168)		(1,021)		(336)
Earnings from continuing operations before taxes									$	1,421	$	1,103	$	2,580	$	2,837									$	1,348	$	526	$	3,391	$	1,159

(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~~six months ended ~~September~~June 30, ~~2020~~2021 and ~~2019~~2020 includes integration costs associated with the acquisition of St. Jude Medical and Alere, and restructuring charges. 2021 restructuring charges include $499 million related to Abbott’s restructuring plan for its COVID-19 test manufacturing network. Other, net for the three and ~~nine~~six months ended ~~September~~June 30, ~~2020~~2021 also includes costs related to ~~asset impairments, partially offset by income from the settlement of~~certain litigation. Other, net for the ~~nine~~three and six months ended ~~September~~June 30, ~~2019~~2020 also includes ~~charges associated with R&D assets acquired and immediately expensed.~~impairments of equity investments.

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Table of Contents

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

Financial Review - Results of Operations

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

During the first nine months of 2020, the coronavirus (COVID-19) pandemic affected Abbott’s diversified health care businesses in various ways. As is further described below, some businesses have performed at the levels required to successfully meet new demands, others have faced challenges, and still others have been relatively stable. Beginning in February, cardiovascular and neuromodulation procedures and routine core laboratory diagnostic testing volumes declined in China as that country implemented quarantine restrictions and postponed non-emergency health care activities. As March progressed, procedures and routine testing volumes in China steadily improved from the low levels seen in February.

As COVID-19 spread geographically, the impact initially expanded to certain countries in Asia and Europe beginning in late February, and more broadly across Europe and the U.S. during March and April. As the health care systems in these countries shifted their focus to fighting COVID-19, the impact on cardiovascular and neuromodulation device procedures and routine diagnostic testing volumes was similar to what was experienced in China in February. COVID-19 affected developed markets most significantly in the second quarter and expanded into key emerging markets in the third quarter. As a result, as is further described below, some businesses slowed and sales of cardiovascular and neuromodulation devices and routine diagnostic tests declined during the first nine months of 2020 from the prior year. Encouragingly, routine testing and procedure volume improved across Abbott’s hospital-based businesses as the second quarter progressed and the improvement continued in the third quarter as both demand for procedures and availability of health care resources return to more normal levels.

~~Abbott mobilized its teams across multiple fronts to develop and launch nine new diagnostic tests for COVID-19:~~

●

~~In March, Abbott launched a molecular test on its~~ m~~2000™ RealTi~~m~~e lab-based platform to detect COVID-19 pursuant to an Emergency Use Authorization (EUA) in the U.S. and CE Mark.~~

●

~~In March, Abbott also launched a molecular test to detect COVID-19 on its ID NOW™ rapid point-of-care platform in the U.S. pursuant to an EUA.~~

●

~~In April, Abbott launched an IgG (Immunoglobulin G) lab-based serology blood test on its ARCHITECT~~^® ~~i1000SR and i2000SR~~^® ~~laboratory instruments for the detection of an antibody to determine if someone was previously infected with the virus. The serology test was granted an EUA in the U.S. and CE Mark in April 2020.~~

●

~~In May, Abbott launched a lab-based serology blood test on its Alinity~~^® ~~i system pursuant to an EUA in the U.S. and CE Mark.~~

●

~~In May, Abbott also launched a molecular test on its Alinity m system to detect COVID-19 pursuant to an EUA in the U.S. Abbott received CE Mark for this test in June 2020.~~

●

In June, Abbott launched a lateral flow COVID-19 rapid antibody test on its Panbio™ system in select countries. This serology test detects an antibody to determine if someone was previously infected with the virus.

●

In August, Abbott launched its AdviseDx SARS-CoV-2 IgM (Immunoglobulin M) lab-based serology test for use on its ARCHITECT and Alinity platforms pursuant to a CE Mark. Abbott was granted an EUA in the U.S. for this test in October 2020.

●

~~In August, Abbott launched its BinaxNOW™ COVID-19 Ag Card test, a portable, lateral flow rapid test to detect COVID-19 pursuant to an EUA in the U.S.~~

●

In September, Abbott launched its Panbio rapid antigen test to detect COVID-19 pursuant to a CE Mark. In October, Abbott received approval by the World Health Organization for emergency use listing for the Panbio antigen test.

~~During the first nine months of 2020, Abbott’s COVID-19 testing related sales totaled $1.533 billion, of which $881 million was generated in the third quarter of 2020.~~

Abbott is continually implementing business continuity plans in the face of the pandemic. Due to the critical nature of its products and services, Abbott was generally exempt from governmental orders issued during the first quarter of 2020 in the U.S. and other countries requiring businesses to cease operations. The majority of its office-based work was conducted remotely during the period of such governmental orders and the company implemented strict travel restrictions. As some governmental orders were lifted in May and June 2020, Abbott entered a new phase in its operations whereby some office-based employees started working at Abbott’s offices on a rotational basis. Abbott has taken aggressive steps to limit exposure and enhance the safety of facilities for its employees.

With respect to Abbott’s financial position, at September 30, 2020, Abbott’s cash and cash equivalents and short-term investments totaled approximately $4.7 billion compared to $4.1 billion at December 31, 2019. Existing credit agreements are in place that would provide additional access to $5 billion, if needed.

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

~~Table of Contents~~

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


	Net Sales to External Customers										Net Sales to External Customers
	Three Months		Three Months								Three Months		Three Months
	Ended		Ended				Impact of		Total Change		Ended		Ended				Impact of		Total Change
	September 30,		September 30,		Total		Foreign		Excl. Foreign		June 30,		June 30,		Total		Foreign		Excl. Foreign
(in millions)	2020		2019		Change		Exchange		Exchange		2021		2020		Change		Exchange		Exchange

Established Pharmaceutical Products	$	1,099	$	1,212	(9.3)	%	(6.0)	%	(3.3)	%	$	1,180	$	1,013	16.4	%	1.9	%	14.5	%
Nutritional Products		1,924		1,874	2.6		(1.5)		4.1			2,108		1,883	11.9		2.4		9.5
Diagnostic Products		2,640		1,909	38.2		(0.6)		38.8			3,247		1,994	62.8		5.6		57.2
Medical Devices		3,170		3,065	3.4		0.8		2.6			3,666		2,423	51.3		6.2		45.1
Total Reportable Segments		8,833		8,060	9.6		(1.0)		10.6			10,201		7,313	39.5		4.5		35.0
Other		20		16	23.1		1.1		22.0			22		15	62.5		4.6		57.9
Net Sales	$	8,853	$	8,076	9.6		(1.0)		10.6		$	10,223	$	7,328	39.5		4.5		35.0

Total U.S.	$	3,329	$	2,834	17.4		—		17.4		$	3,581	$	2,638	35.8		—		35.8

Total International	$	5,524	$	5,242	5.4		(1.6)		7.0		$	6,642	$	4,690	41.6		7.0		34.6


	Net Sales to External Customers										Net Sales to External Customers
	Nine Months		Nine Months								Six Months		Six Months
	Ended		Ended				Impact of		Total Change		Ended		Ended				Impact of		Total Change
	September 30,		September 30,		Total		Foreign		Excl. Foreign		June 30,		June 30,		Total		Foreign		Excl. Foreign
(in millions)	2020		2019		Change		Exchange		Exchange		2021		2020		Change		Exchange		Exchange

Established Pharmaceutical Products	$	3,156	$	3,312	(4.7)	%	(6.0)	%	1.3	%	$	2,250	$	2,057	9.4	%	(0.9)	%	10.3	%
Nutritional Products		5,711		5,541	3.1		(1.7)		4.8			4,144		3,787	9.4		1.4		8.0
Diagnostic Products		6,460		5,655	14.2		(1.5)		15.7			7,261		3,820	90.0		5.3		84.7
Medical Devices		8,530		9,035	(5.6)		(0.6)		(5.0)			6,986		5,360	30.3		5.1		25.2
Total Reportable Segments		23,857		23,543	1.3		(1.9)		3.2			20,641		15,024	37.4		3.5		33.9
Other		50		47	6.1		(0.2)		6.3			38		30	34.0		4.1		29.9
Net Sales	$	23,907	$	23,590	1.3		(1.9)		3.2		$	20,679	$	15,054	37.4		3.5		33.9

Total U.S.	$	8,823	$	8,438	4.6		—		4.6		$	7,419	$	5,494	35.0		—		35.0

Total International	$	15,084	$	15,152	(0.4)		(2.8)		2.4		$	13,260	$	9,560	38.7		5.4		33.3

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.

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The ~~10.6~~35.0 percent increase in total net sales induring the ~~third~~second quarter of ~~2020,~~2021, excluding the impact of foreign exchange, ~~was primarily driven by an increase in the Diagnostics segment as a result of~~reflected demand for Abbott’s ~~portfolio~~tests to detect COVID-19 as well as other growth across Abbott’s reportable segments. During the second quarter of 2021, Abbott’s COVID-19 testing-related sales totaled approximately $1.3 billion led by combined sales of approximately $1.0 billion related to Abbott’s BinaxNOW^®, Panbio^®, and ID NOW^® rapid-testing platforms. During the second quarter of 2020, COVID-19 testing related sales totaled approximately $0.6 billion. Excluding the impact of COVID-19 ~~diagnostics tests on its lab-based immunoassay~~testing-related sales, Abbott’s total net sales increased 33.2 percent. Excluding the impacts of COVID-19 testing-related sales and ~~molecular diagnostics systems and point-of-care rapid testing platforms.~~foreign exchange, Abbott’s total net sales increased 28.9 percent. Abbott’s net sales were ~~unfavorably~~favorably impacted by changes in foreign exchange rates ~~during~~in the ~~period compared to~~second quarter as the ~~third quarter of 2019. The~~ relatively ~~stronger~~weaker U.S. dollar ~~decreased~~increased total international sales by ~~1.6~~7.0 percent and total sales by ~~1.0 percent in the third quarter of 2020.~~4.5 percent.

The ~~3.2~~33.9 percent increase in total net sales during the first ~~nine~~six months of ~~2020,~~2021, excluding the impact of foreign exchange, ~~was driven~~reflected demand for Abbott’s tests to detect COVID-19 as well as other growth across Abbott’s reportable segments. During the first six months of 2021, Abbott’s COVID-19 testing-related sales totaled approximately $3.5 billion led by ~~increases in~~combined sales of approximately $2.8 billion related to Abbott’s BinaxNOW, Panbio, and ID NOW rapid-testing platforms. Excluding the ~~Diagnostics~~impact of COVID-19 testing-related sales, Abbott’s total net sales increased 19.5 percent. During the first six months of 2020, COVID-19 testing related sales totaled approximately $0.6 billion. Excluding the impacts of COVID-19 testing-related sales and ~~Nutritional Products segments, partially offset by a decrease in the Medical Devices segment due to reduced procedure volumes as a result of the pandemic.~~foreign exchange, Abbott’s total net sales increased 16.5 percent. Abbott’s net sales were ~~unfavorably~~favorably impacted by changes in foreign exchange rates in the first ~~nine~~six months ~~of 2020~~ as the relatively ~~stronger~~weaker U.S. dollar ~~decreased~~increased total international sales by ~~2.8~~5.4 percent and total sales by ~~1.9~~3.5 percent.

~~Table~~Due to the unpredictability of ~~Contents~~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~~six months ended ~~September~~June 30. Percent changes are versus the prior year and are based on unrounded numbers.


							Impact of		Total Change								Impact of		Total Change
	September 30,		September 30,		Total		Foreign		Excl. Foreign		June 30,		June 30,		Total		Foreign		Excl. Foreign
(in millions)	2020		2019		Change		Exchange		Exchange		2021		2020		Change		Exchange		Exchange
Established Pharmaceutical Products —
Key Emerging Markets	$	2,376	$	2,496	(4.8)	%	(8.0)	%	3.2	%	$	1,736	$	1,577	10.1	%	(2.3)	%	12.4	%
Other Emerging Markets		780		816	(4.4)		(0.1)		(4.3)			514		480	7.1		3.7		3.4

Nutritionals —
International Pediatric Nutritionals		1,629		1,718	(5.2)		(2.5)		(2.7)			1,123		1,111	1.1		2.5		(1.4)
U.S. Pediatric Nutritionals		1,490		1,406	5.9		—		5.9			1,036		1,002	3.4		—		3.4
International Adult Nutritionals		1,644		1,502	9.5		(3.5)		13.0			1,312		1,056	24.2		2.6		21.6
U.S. Adult Nutritionals		948		915	3.7		—		3.7			673		618	8.9		—		8.9

Diagnostics —
Core Laboratory		3,152		3,407	(7.5)		(1.8)		(5.7)			2,488		1,976	25.9		4.5		21.4
Molecular		956		326	193.0		(3.2)		196.2			737		498	48.0		5.3		42.7
Point of Care		387		424	(8.8)		(0.3)		(8.5)			266		256	3.7		1.3		2.4
Rapid Diagnostics		1,965		1,498	31.1		(0.8)		31.9			3,770		1,090	245.7		7.8		237.9

Medical Devices —
Rhythm Management		1,382		1,600	(13.6)		(0.6)		(13.0)			1,086		875	24.1		4.4		19.7
Electrophysiology		1,128		1,262	(10.6)		(0.3)		(10.3)			918		687	33.7		4.4		29.3
Heart Failure		551		571	(3.5)		(0.2)		(3.3)			421		361	16.6		2.1		14.5
Vascular ~~(a)~~		1,736		2,136	(18.7)		(0.6)		(18.1)			1,332		1,106	20.4		4.7		15.7
Structural Heart		894		1,024	(12.7)		(0.4)		(12.3)			799		541	47.7		5.5		42.2
Neuromodulation		489		609	(19.7)		(0.2)		(19.5)			394		283	39.5		2.2		37.3
Diabetes Care		2,350		1,833	28.2		(1.2)		29.4			2,036		1,507	35.1		7.5		27.6

(a) Vascular Product Lines:
Coronary and Endovascular		1,676		2,049	(18.2)		(0.7)		(17.5)

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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 ~~3.2~~12.4 percent compared to the first ~~nine~~six months of ~~2019~~2020 led ~~primarily~~ by growth inacross several geographies including India, China and various countries in Asia and Latin America. The nine-month growth rate was negatively impacted by lower demand in the second and third quarters of 2020 due to the spread of COVID-19 across emerging market countries.Brazil. Other Emerging Markets, excluding the effect of foreign exchange, ~~decreased~~increased by ~~4.3~~3.4 percent in the first ~~nine~~six months of ~~2020.~~2021.

International Pediatric Nutritional sales, excluding the effect of foreign exchange, decreased ~~2.7~~1.4 percent in the first ~~nine~~six months of ~~2020~~2021 versus the comparable ~~2019 period. Growth across Abbott’s pediatric products~~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 ~~Southeast Asia was more than offset by challenging market dynamics in the Greater China infant category.~~Latin America and Europe. U.S. Pediatric Nutritional sales increased ~~5.9~~3.4 percent primarily due to increased demand for Pedialyte^®, Abbott’s oral rehydration brand, and Pediasure^®. ~~The 13.0 percent increase in~~ International Adult Nutritional sales, excluding the effect of foreign exchange, ~~reflects~~increased 21.6 percent, and U.S. Adult Nutritional sales increased 8.9 percent, reflecting continued growth of the Ensure^® and Glucerna^® brands in several ~~countries.~~countries including the U.S. ~~Adult Nutritional sales increased 3.7 percent due to growth in Ensure.~~

InThe 84.7 percent increase in Diagnostic Products sales, excluding the ~~Diagnostics segment,~~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 ~~decreased 5.7~~increased 21.4 percent, excluding the effect of foreign exchange, asdue to the ~~lower~~increased volume of routine diagnostic testing performed in ~~hospital~~hospitals and other laboratories, ~~due to COVID-19 was~~ partially offset by lower sales of Abbott’s ~~COVID-19~~ 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 six months of 2021 and 2020, Core Laboratory IgG and IgM antibody testing-related sales on Abbott’s ARCHITECT and Alinity i platforms were ~~$212~~$112 million inand $148 million, respectively. In the first ~~nine~~six months of ~~2020.~~ 2021, Core Laboratory sales increased 30.0 percent, excluding COVID-19 testing-related sales, and increased 25.1 percent excluding the impact of foreign exchange and COVID-19 testing-related sales.

The ~~196.2~~42.7 percent increase in Molecular Diagnostics sales, excluding the effect of foreign exchange, ~~reflects higher volumes due to~~was driven by demand for Abbott’s laboratory-based molecular tests for COVID-19 on its m~~2000~~m2000™ and Alinity^® m ~~platforms.~~platforms as well as growth in the base business from the continued roll-out of the Alinity m platform. In the first six months of 2021 and 2020, Molecular Diagnostics COVID-19 testing-related sales were ~~$672~~$480 million and $312 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~~six months of ~~2020.~~2021, Molecular Diagnostics sales increased 37.8 percent, excluding COVID-19 testing-related sales, and increased 34.0 percent excluding the impact of foreign exchange and COVID-19 testing-related sales.

In Rapid Diagnostics, sales increased ~~31.9~~237.9 percent, excluding the effect of foreign exchange, due to ~~strong~~the demand for Abbott’s ~~point-of-care~~ COVID-19 ~~molecular test~~tests on its rapid testing platforms including the Panbio system, the ID NOW platform, and ~~its~~the BinaxNOW COVID-19 Ag Card ~~test in the U.S. as well as international demand for COVID-19 rapid tests on its Panbio system and increased testing in~~test. In the first ~~quarter for the flu in the U.S. These increases were partially offset by the unfavorable impact~~six months of ~~COVID-19 on routine diagnostic testing.~~2021 and 2020, Rapid Diagnostics COVID-19 testing-related sales were ~~$649~~$2.8 billion and $182 million, 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 ~~nine months~~quarter of ~~2020.~~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 ~~decreased 5.0 percent; the decrease was~~grew 25.2 percent driven ~~by the impact of COVID-19 on Abbott’s cardiovascular and neuromodulation businesses, partially offset~~ by double-digit growth inacross all divisions, led by Diabetes ~~Care.~~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 ~~$1.880~~$1.733 billion in the first ~~nine~~six months of ~~2020,~~2021, which reflected a ~~44.8~~36.3 percent increase, excluding the effect of foreign exchange, over the first ~~nine~~six months of ~~2019~~2020 when ~~FreeStyle~~ Libre sales totaled ~~$1.308~~$1.197 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.

In June, Abbott announced U.S. Food and Drug Administration (FDA) clearance of FreeStyle Libre 2 as an integrated continuous glucose monitoring (iCGM) system for adults and children ages 4 and older with diabetes. In September, Abbott obtained CE Mark for its FreeStyle Libre 3 system, which automatically delivers real time, up-to-the-minute glucose readings, 14-day accuracy and real-time glucose alarms. Abbott also obtained CE Mark for its Libre Sense™ Glucose Sport Biosensor in Europe. Libre Sense is a consumer over-the-counter product that provides continuous glucose monitoring for athletes to better understand the efficacy of their nutrition choices on training and athletic performance.

2024

Table of Contents

InWhile procedure volumes across Abbott’s cardiovascular and neuromodulation businesses ~~revenues during the first nine months of 2020~~ were negatively impacted early in 2021 by ~~reduced procedure~~elevated COVID-19 case rates in certain countries, including the U.S., volumes ~~due to COVID-19. Procedure volume trends~~ improved over the course of the ~~second~~first six months of 2021 across the 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 ~~third quarters as both demand~~Heart Failure, excluding the effect of foreign exchange. In January 2021, the U.S. Centers for ~~procedures~~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 six months of 2021 was broad-based across several areas of the business, including MitraClip, and ~~availability of healthcare resources return to more normal levels. In April, Abbott announced CE Mark approval for its~~ TriClip^® ~~heart valve repair system,~~, the world’s first minimally invasive, clip-based device for repair of a leaky tricuspid heart valve ~~repair device.~~which was launched in Europe in May 2020. In ~~July,~~May 2021, Abbott announced U.S. FDA approval of its next-generation Gallant™ implantable cardioverter defibrillator and cardiac resynchronization therapy defibrillator devices to help manage heart rhythm disorders. These devices offer Bluetooth technology and a new patient smartphone app for improved remote monitoring and enhanced patient-physician engagement. In September, Abbott obtainedthat it had received CE Mark in Europe for ~~MitraClip~~^® ~~G4,~~Navitor™, its ~~next-generation MitraClip mitral~~latest-generation transcatheter aortic valve ~~repair device.~~

In April 2017, Abbott received a warning letter from the U.S. FDA related to its manufacturing facility in Sylmar, CA which was acquired by Abbott on January 4, 2017 as part of the acquisition of St. Jude Medical. This facility manufactures implantable cardioverter defibrillators, cardiac resynchronization therapy defibrillators, and monitors. Abbott prepared and executed a comprehensive plan of corrective actions. On April 28, 2020, Abbott received a letter from the FDA indicating that, based on the FDA’s evaluation, it appeared that Abbott had addressed the items in the warning letter. As a result, the warning letter is considered closed.implantation (TAVI) system for patients with severe aortic stenosis who are at high or extreme surgical risk.

The gross profit margin percentage was ~~49.4~~46.7 percent for the ~~third~~second quarter of ~~2020~~2021 compared to ~~52.4~~47.9 percent for the ~~third~~second quarter of ~~2019.~~2020. The decline in the quarter reflects the impact of the $499 million charge recognized in Cost of products sold in 2021 related to the restructuring plan to align the manufacturing network for COVID-19 diagnostic tests with the change in demand for these tests. The impact of the $499 million charge on gross profit margin was partially offset by the effects of higher sales volume in various businesses, higher utilization at various manufacturing sites and a decrease in amortization expense in 2021. The gross profit margin percentage was ~~49.2~~49.9 percent for the first ~~nine~~six months of ~~2020~~2021 compared to ~~52.3~~49.1 percent for the first ~~nine~~six months of ~~2019.~~2020. The ~~decreases in~~increase primarily reflects the positive factors that also affected the gross profit margin ~~percentage primarily reflect~~for the ~~mix~~second quarter of ~~sales across Abbott’s various businesses and operational inefficiencies due to~~2021, partially offset by the impact of ~~COVID-19, as well as~~higher restructuring charges in the ~~increase in intangible asset amortization, the impairment~~first six months of ~~an intangible asset and the unfavorable effect of foreign exchange on gross margin in 2020.~~2021.

Research and development ~~(R&D)~~ expenses ~~decreased $16~~increased $90 million, or ~~2.8~~15.7 percent, in the ~~third~~second quarter of ~~2020~~2021 and ~~decreased $123~~increased $166 million, or ~~6.7~~14.5 percent in the first ~~nine~~six months of ~~2020~~2021 compared to the prior year. The ~~decrease~~increases in R&D expenses in the ~~third~~second quarter ~~of 2020 primarily reflects lower integration~~ and ~~restructuring costs in 2020 related to R&D. The decrease in R&D spending in the~~ first ~~nine~~six months of ~~2020~~2021 were primarily ~~reflects the immediate expensing~~driven by higher spending on various projects to advance products in the first quarter of 2019 of an R&D asset valued at $102 million in conjunction with the acquisition of Cephea Valve Technologies, Inc. The decrease in R&D expense during the first nine months of 2020 also reflects the favorable effect of foreign exchange in 2020. For the nine months ended September 30, 2020, research and development expenditures totaled $921 million for the Medical Devices segment, $419 million for the Diagnostic Products segment, $137 million for the Nutritional Products segment and $127 million for the Established Pharmaceutical Products segment.development.

Selling, general and administrative (SG&A) expenses ~~decreased 5.7~~for the second quarter of 2021 increased $450 million, or 19.8 percent, ~~in the third quarter~~ and ~~decreased 3.1~~increased $685 million, or 14.2 percent infor the first ~~nine~~six months of ~~2020. The decreases in the quarter~~2021, due primarily to higher selling and the first nine months of 2020 are due to income of $100 million from a litigation settlement in 2020, the favorable effect of foreign exchange, lower spending due to COVID-19 mobility restrictions, and the impact of various cost saving initiatives, partially offset by highermarketing spending to drive growth inacross various ~~businesses.~~businesses and charges related to certain litigation.

Restructuring Plans

~~The results~~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 projected testing demand driven by several factors, including significant reductions in cases in the ~~first nine months~~U.S. and other major developed countries, the accelerated rollout of ~~2020 reflect~~COVID-19 vaccines globally and the U.S. health authority’s updated guidance on testing for fully vaccinated individuals. Abbott estimates that the total pre-tax cost to implement this restructuring plan will be approximately $500 million to $625 million, including fixed asset write-downs of $80 million to $115 million, inventory-related charges ~~under approved restructuring plans as part~~ of $250 million to $260 million, and other exit costs of $170 million to $250 million. Other exit costs include contract cancellation and employee-related costs. Actions associated with this plan are expected to be substantially complete by the ~~integration~~end of 2021.

In the ~~acquisitions~~second quarter of ~~St. Jude Medical and Alere or as part of various cost reduction programs.~~2021, Abbott recorded ~~employee related severance and other~~ charges of ~~$42~~$499 million ~~in the first nine months of 2020 related to these initiatives, of which $7 million is recognized~~under this plan in Cost of products ~~sold, $2 million is~~sold. The charge recognized in ~~Research~~the second quarter includes fixed asset write-downs of $80 million, inventory-related charges of $248 million, and ~~development~~other exit costs, which include contract cancellations and ~~$33 million is recognized~~employee-related costs of $171 million. Other exit costs will result in ~~SG&A. See Note 7~~future cash outlays that are expected to be made primarily over the ~~financial statements, “Restructuring Plans,” for additional information regarding these charges.~~next six months.

Other (Income) Expense, net

Other ~~(income)~~income, net increased from $22 million of expense ~~net totaled $46~~in the second quarter of 2020 to $79 million of income in the ~~third~~second quarter of ~~2020 compared to $55~~2021 and from $21 million of ~~income~~expense in ~~2019 and $25~~the first six months of 2020 to $140 million of income in the first ~~nine~~six months of ~~2020 compared~~2021. The increases were primarily due to ~~$140 million~~the nonrecurrence of ~~income in 2019. The change in Other (income) expense, net for the first nine months of 2020 primarily reflects~~ equity investment impairments that totaled approximately $60 million in the second quarter of 2020 and $110 million in the first ~~nine~~six months of ~~2020.~~2020, a gain on the sale of an equity method investment in the second quarter of 2021 and higher income in the second quarter and first six months of 2021 related to the non-service cost components of net pension and post-retirement medical benefit costs.

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Interest Expense, net

Interest expense, net ~~decreased $16~~was virtually unchanged versus the prior year, decreasing $2 million in the ~~third~~second quarter of ~~2020~~2021 and ~~$64~~ increasing $1million in the first ~~nine~~six months of ~~2020 due to~~2021 as lower interest rates resulted in a decline in interest income that exceeded the reduction in interest ~~expense resulting from~~expense. The effect of higher cash and short-term investment balances on interest income more than offset the ~~favorable~~net impact of ~~the euro debt financing in November of 2019, the repayment of debt in December 2019 and a~~ lower interest ~~rate environment~~rates in ~~2020.~~the second quarter and mostly offset the impact of lower interest rates in the first six months of 2021.

Taxes on Earnings from Continuing Operations

Tax authorities in various jurisdictions regularly review Abbott’s income tax filings. Abbott believes that it is reasonably possible that the recorded amount of gross unrecognized tax benefits may decrease ~~between $70 million and $410~~approximately $80 million, including cash adjustments, within the next twelve months as a result of concluding various domestic and international tax matters. ~~In the U.S., Abbott's federal income tax returns through 2016 are settled except for the federal income tax returns of the former Alere consolidated group which are settled through 2015.~~

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Liquidity and Capital Resources ~~September~~June 30, ~~2020~~2021 Compared with December 31, ~~2019~~2020

~~On September 28, 2020, Abbott repaid the €1.140 billion outstanding principal amount of its 0.00% Notes due 2020 upon maturity.~~ The debt repayment, which equated to approximately $1.3 billion, was primarily funded by the net proceeds from the issuance on June 24, 2020 of $1.3 billion aggregate principal amount of senior notes. The June 2020 issuance consisted of $650 million of 1.15% Notes due 2028 and $650 million of 1.40% Notes due 2030.

~~The $620 million~~ increase in cash and cash equivalents from ~~$3.9~~$6.8 billion at December 31, ~~2019~~2020 to ~~$4.5~~$8.7 billion at ~~September~~June 30, ~~2020~~2021 primarily reflects the ~~favorable impact of~~ cash generated ~~by operating activities,~~from operations in the first six months of 2021, partially offset by the payment of dividends, capital expenditures and ~~capital expenditures.~~share repurchases. Working capital was ~~$7.1~~$10.0 billion at ~~September~~June 30, ~~2020~~2021 and ~~$4.8~~$8.5 billion at December 31, ~~2019.~~2020. The ~~$2.3 billion~~ increase ~~was due~~ in ~~large part to~~working capital in 2021 primarily reflects the ~~higher level of~~increase in cash and cash equivalents ~~noted above, as well as~~partially offset by an increase in ~~inventory related to shifting demand dynamics and higher accounts receivable balances due to higher levels~~the current portion of ~~sales.~~long-term debt.

In the Condensed Consolidated Statement of Cash Flows, Net cash from operating activities for the first ~~nine~~six months of ~~2020~~2021 totaled ~~$4.1~~$4.8 billion, an increase of ~~$383 million~~$2.7 billion over the prior year primarily due ~~primarily~~ to ~~lower payments related to integration expenses, restructuring actions~~higher operating earnings, improved working capital management and ~~interest,~~ the ~~proceeds from a litigation settlement payment and~~ timing ~~for various accrued expenses,~~of pension contributions partially offset by ~~an increased investment in working capital.~~higher cash taxes paid. Other, net in Net cash from operating activities was a use of $103 million for the first ~~nine~~six months of ~~2020 was~~2021 and a ~~source~~use of ~~$42~~$205 million ~~and includes~~for the ~~impact~~first six months of non-cash impairment charges related to intangible assets and equity investments and the payment timing for various accrued expenses partially offset by the impact of the payment of cash taxes of approximately $700 million and $350 million of pension contributions.2020. The year-over-year change in Other, net in Net cash from operating activities ~~for~~is primarily due to the ~~first nine months of 2019 was a use of $523 million and includes the payment of cash taxes of approximately $775 million and $337 million~~timing of pension contributions ~~partially offset by~~as pension contributions were $80 million in 2021 and $335 million in 2020, the payment timing for various accrued ~~expenses. Abbott expects~~expenses associated with litigation and restructuring actions in 2021, and the $80 million non-cash restructuring charge in 2021 to ~~fund~~recognize the write-down of COVID-19 manufacturing-related fixed assets, which was partially offset by the higher cash ~~dividends, capital expenditures and its other investments~~taxes paid in ~~its businesses with cash flow from operating activities, cash on hand, short-term investments and borrowings.~~2021 of approximately $715 million versus the $285 million paid in 2020.

In September 2019, the board of directors authorized the early redemption of up to $5 billion of outstanding long-term notes. ~~This bond redemption authorization superseded the board’s previous authorization under which $700 million had not yet been redeemed. In December 2019, Abbott redeemed $2.850 billion~~As of ~~debt. After this redemption,~~June 30, 2021, $2.15 billion of the $5 billion ~~debt redemption~~ authorization remains available.

At ~~September~~June 30, ~~2020,~~2021, Abbott’s long-term debt rating was A-A+ by Standard & Poor’s Corporation and A3A2 by Moody’s Investors Service. Abbott expects to maintain an investment grade rating. Abbott has readily available financial resources, including lines of credit of $5.0 billion which expire in ~~2023.~~2025.

In October 2019, the board of directors authorized the repurchase of up to $3 billion of Abbott’s common shares from time to time. ~~This~~The 2019 authorization iswas in addition to the ~~$270~~approximately $100 million ~~unused portion~~ of the share repurchase program authorized in ~~2014.~~2014 that remained unused as of December 31, 2020. In June 2021, Abbott repurchased 4.5 million of its common shares for $502 million which fully utilized the authorization remaining under the 2014 share repurchase program and a portion of the 2019 authorization. As of June 30, 2021, $2.595 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.

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In each of the first ~~three~~two quarters of ~~2020,~~2021, Abbott declared a quarterly dividend of ~~$0.36~~$0.45 per share on its common shares, which represents an increase of ~~approximately 12.5~~25 percent over the ~~$0.32~~$0.36 per share ~~quarterly~~ dividend declared in each of the first ~~three~~two quarters of ~~2019.~~2020.

Recently Adopted Accounting Standards

In ~~June 2016,~~December 2019, the Financial Accounting Standards Board ~~(FASB)~~ issued Accounting Standards Update ~~(ASU) 2016-13,~~ ~~Financial Instruments – Credit Losses~~, which changes the methodology to be used to measure credit losses for certain financial instruments and financial assets, including trade receivables. The new methodology requires the recognition of an allowance that reflects the current estimate of credit losses expected to be incurred over the life of the financial asset. Abbott adopted the standard on January 1, 2020 and recorded a cumulative adjustment that was not significant to Earnings employed in the business in the Condensed Consolidated Balance Sheet.

~~Recently Issued Accounting Standards Not Yet Adopted~~

~~In December 2019, the FASB issued~~ ASU 2019-12, Income Taxes (Topic 740): Simplifying the Accounting for Income Taxes, which among other things, eliminates certain exceptions in the current rules regarding the approach for intraperiod tax allocations and the methodology for calculating income taxes in an interim period, and clarifies the accounting for transactions that result in a step-up in the tax basis of goodwill. ~~The~~Abbott adopted the standard ~~becomes effective for Abbott in the first quarter of 2021 and early adoption is permitted. Abbott does not expect adoption of this~~on January 1, 2021. The new standard todid not have ~~a material~~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 ~~2019~~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 ~~including the impact of the COVID-19 pandemic on Abbott's operations and financial results,~~ that may cause actual results to differ materially from those indicated in the forward-looking statements. Economic, competitive, governmental, technological and other factors that may affect ~~Abbott's~~Abbott’s operations are discussed in Item 1A, ~~"Risk Factors'',~~“Risk Factors” in ~~the 2019~~our Annual Report on Form 10-K ~~and in Item 1A, “Risk Factors”, in the Quarterly Report on Form 10-Q~~ for the ~~quarter~~year ended ~~March~~December 31, ~~2020.~~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.

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PART I. FINANCIAL INFORMATION

Item 4.Controls and Procedures

(a)

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

(b)

Changes in internal control over financial reporting.During the quarter ended ~~September~~June 30, ~~2020,~~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 ~~including those~~as described in our Annual Report on Form 10-K for the year ended December 31, ~~2019.~~2020.

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

~~(c)~~ ~~Issuer Purchases of Equity Securities~~

(c)

Issuer Purchases of Equity Securities

(d) Maximum

Number (or

(c) Total Number

Approximate

(c) Total Number

Approximate

of Shares (or

Dollar Value) of

of Shares (or

Dollar Value) of

(a) Total

Units) Purchased

Shares (or Units)

(a) Total

Units) Purchased

Shares (or Units)

Number of

(b) Average

as Part of

that May Yet Be

Number of

(b) Average

as Part of

that May Yet Be

Shares (or

Price Paid per

Publicly

Purchased Under

Shares (or

Price Paid per

Publicly

Purchased Under

Units)

Share (or

Announced Plans

the Plans or

Units)

Share (or

Announced Plans

the Plans or

Period

Purchased

Unit)

or Programs

Programs

Purchased

Unit)

or Programs

Programs

July 1, 2020 - July 31, 2020

⁽¹⁾

3,270,234,923

⁽²⁾

August 1, 2020 - August 31, 2020

⁽¹⁾

3,270,234,923

⁽²⁾

September 1, 2020 - September 30, 2020

28,423

⁽¹⁾

109.47

3,270,234,923

⁽²⁾

April 1, 2021 – April 30, 2021

18,202

⁽¹⁾

120.900

3,097,391,913

⁽²⁾

May 1, 2021 – May 31, 2021

⁽¹⁾

3,097,391,913

⁽²⁾

June 1, 2021 – June 30, 2021

4,500,000

⁽¹⁾

111.575

4,500,000

2,595,306,483

⁽²⁾

Total

28,423

⁽¹⁾

109.47

3,270,234,923

⁽²⁾

4,518,202

⁽¹⁾

111.612

4,500,000

2,595,306,483

⁽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, and 28,423 in September.

These shares include the shares deemed surrendered to Abbott to pay the exercise price in connection with the exercise of employee stock options – 18,202 in April, 0 in May, and 0 in June; 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.
2. On September 11, 2014, the board of directors authorized the repurchase of up to $3 billion of Abbott common shares, from time to time (the “2014 Plan”). On October 11, 2019, the board of directors authorized the repurchase of up to $3 billion of Abbott common shares, from time to time (the “2019 Plan”). The 2019 Plan is in addition to the unused portion of the 2014 Plan. The amount available for repurchase under the remaining portion of the 2014 Plan has been fully utilized as part of the share repurchases in the second quarter of 2021.

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Item 6. Exhibits


Exhibit No.		Exhibit

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~~six months ended ~~September~~June 30, ~~2020,~~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).

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SIGNATURE

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


ABBOTT LABORATORIES


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

	Date:~~November~~ August 4, ~~2020~~2021

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	Nine Months Ended September 30, 2020						Nine Months Ended September 30, 2019
(in millions)	U.S.		Int’l		Total		U.S.		Int’l		Total
Established Pharmaceutical Products —
Key Emerging Markets	$	—	$	2,376	$	2,376	$	—	$	2,496	$	2,496
Other		—		780		780		—		816		816
Total		—		3,156		3,156		—		3,312		3,312

Nutritionals —
Pediatric Nutritionals		1,490		1,629		3,119		1,406		1,718		3,124
Adult Nutritionals		948		1,644		2,592		915		1,502		2,417
Total		2,438		3,273		5,711		2,321		3,220		5,541

Diagnostics —
Core Laboratory		840		2,312		3,152		793		2,614		3,407
Molecular		429		527		956		113		213		326
Point of Care		278		109		387		334		90		424
Rapid Diagnostics		1,246		719		1,965		881		617		1,498
Total		2,793		3,667		6,460		2,121		3,534		5,655

Medical Devices —
Rhythm Management		655		727		1,382		790		810		1,600
Electrophysiology		476		652		1,128		549		713		1,262
Heart Failure		411		140		551		428		143		571
Vascular		628		1,108		1,736		787		1,349		2,136
Structural Heart		386		508		894		446		578		1,024
Neuromodulation		392		97		489		485		124		609
Diabetes Care		614		1,736		2,350		485		1,348		1,833
Total		3,562		4,968		8,530		3,970		5,065		9,035

Other		30		20		50		26		21		47

Total	$	8,823	$	15,084	$	23,907	$	8,438	$	15,152	$	23,590


	Fair Value - Assets					Fair Value - Liabilities
	Sept. 30,		Dec. 31,			Sept. 30,		Dec. 31,
(in millions)	2020		2019		Balance Sheet Caption	2020		2019		Balance Sheet Caption
Interest rate swaps designated as fair value hedges	$	232	$	48	Deferred income taxes and other assets	$	—	$	—	Post-employment obligations, deferred income taxes and other long-term liabilities
Foreign currency forward exchange contracts:
Hedging instruments		89		110	Prepaid expenses and other receivables		241		56	Other accrued liabilities
Others not designated as hedges		37		38	Prepaid expenses and other receivables		62		33	Other accrued liabilities
Debt designated as a hedge of net investment in a foreign subsidiary		—		—	n/a		566		546	Long-term debt
	$	358	$	196		$	869	$	635