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

For the quarterly period ended ~~September 30, 2019~~March 31, 2020


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

For the transition period from to

Commission File Number: 001-35565

AbbVie Inc.



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

1 North Waukegan Road

North Chicago, Illinois ~~60064~~60064-6400

Telephone: (847) 932-7900

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. 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 (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files). Yes ☒ No ☐

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



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

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

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

Securities registered pursuant to Section 12(b) of the Act:



Title of each class	Trading Symbol(s)	Name of each exchange on which registered
Common Stock, par value $0.01 per share	ABBV	New York Stock Exchange
		Chicago Stock Exchange
1.375% Senior Notes due 2024	ABBV24	New York Stock Exchange
0.750% Senior Notes due 2027	ABBV27	New York Stock Exchange
2.125% Senior Notes due 2028	ABBV28	New York Stock Exchange
1.250% Senior Notes due 2031	ABBV31	New York Stock Exchange

As of ~~October 29, 2019,~~April 30, 2020, AbbVie Inc. had ~~1,478,821,109~~1,476,742,215 shares of common stock at $0.01 par value outstanding.

AbbVie Inc. and Subsidiaries

Table of Contents



~~2019~~2020 Form 10-Q \|	1

PART I. FINANCIAL INFORMATION

ITEM 1. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA

AbbVie Inc. and Subsidiaries

Condensed Consolidated Statements of Earnings (unaudited)


	Three months ended September 30,				Nine months ended September 30,				Three months ended March 31,
(in millions, except per share data)	2019		2018		2019		2018		2020		2019
Net revenues	$	8,479	$	8,236	$	24,562	$	24,448	$	8,619	$	7,828

Cost of products sold	1,920		1,835		5,433		5,696		1,942		1,694
Selling, general and administrative	1,657		1,919		4,991		5,470		1,695		1,680
Research and development	2,285		1,268		4,865		3,834		1,379		1,289
Acquired in-process research and development	—		55		246		124		—		155
Other expense	—		—		—		500
Total operating costs and expenses	5,862		5,077		15,535		15,624		5,016		4,818
Operating earnings	2,617		3,159		9,027		8,824		3,603		3,010

Interest expense, net	420		302		1,054		825		428		325
Net foreign exchange loss	19		2		31		18		5		6
Other expense, net	177		94		2,590		411		72		135
Earnings before income tax expense	2,001		2,761		5,352		7,570		3,098		2,544
Income tax expense	117		14		271		57		88		88
Net earnings	$	1,884	$	2,747	$	5,081	$	7,513	$	3,010	$	2,456

Per share data
Basic earnings per share	$	1.27	$	1.81	$	3.41	$	4.81	$	2.02	$	1.65
Diluted earnings per share	$	1.26	$	1.81	$	3.41	$	4.79	$	2.02	$	1.65

Weighted-average basic shares outstanding	1,481		1,511		1,480		1,556		1,481		1,480
Weighted-average diluted shares outstanding	1,483		1,515		1,483		1,561		1,484		1,483

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



~~2019~~2020 Form 10-Q \|	2

AbbVie Inc. and Subsidiaries
Condensed Consolidated Statements of Comprehensive Income (unaudited)

Three months ended
September 30, Nine months ended
September 30,
(in millions) 2019 2018 2019 2018
Net earnings $ 1,884
$ 2,747
$ 5,081
$ 7,513

Foreign currency translation adjustments, net of tax expense (benefit) of $(16) for the three months and $(10) for the nine months ended September 30, 2019 and $3 for the three months and $(16) for the nine months ended September 30, 2018 (256 ) 30
(288 ) (250 )
Net investment hedging activities, net of tax expense (benefit) of $45 for the three months and $53 for the nine months ended September 30, 2019 and $(9) for the three months and $22 for the nine months ended September 30, 2018 156
(32 ) 184
73
Pension and post-employment benefits, net of tax expense (benefit) of $7 for the three months and $19 for the nine months ended September 30, 2019 and $8 for the three months and $24 for the nine months ended September 30, 2018 33
28
78
99
Marketable security activities, net of tax expense (benefit) of $— for the three months and $— for the nine months ended September 30, 2019 and $— for the three months and $— for the nine months ended September 30, 2018 (1 ) —
10
(2 )
Cash flow hedging activities, net of tax expense (benefit) of $18 for the three months and $9 for the nine months ended September 30, 2019 and $1 for the three months and $18 for the nine months ended September 30, 2018 31
54
(32 ) 248
Other comprehensive income (loss) (37 ) 80
(48 ) 168
Comprehensive income $ 1,847
$ 2,827
$ 5,033
$ 7,681



	Three months ended March 31,
(in millions)	2020			2019
Net earnings	$	3,010		$	2,456

Foreign currency translation adjustments, net of tax expense (benefit) of $(8) for the three months ended March 31, 2020 and $1 for the three months ended March 31, 2019	(227		)	(103		)
Net investment hedging activities, net of tax expense (benefit) of $20 for the three months ended March 31, 2020 and $19 for the three months ended March 31, 2019	72			65
Pension and post-employment benefits, net of tax expense (benefit) of $15 for the three months ended March 31, 2020 and $6 for the three months ended March 31, 2019	56			25
Marketable security activities, net of tax expense (benefit) of $— for the three months ended March 31, 2020 and $— for the three months ended March 31, 2019	—			7
Cash flow hedging activities, net of tax expense (benefit) of $(2) for the three months ended March 31, 2020 and $(7) for the three months ended March 31, 2019	(2		)	(30		)
Other comprehensive loss	(101		)	(36		)
Comprehensive income	$	2,909		$	2,420

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



~~2019~~2020 Form 10-Q \|	3

AbbVie Inc. and Subsidiaries
Condensed Consolidated Balance Sheets


(in millions, except share data)	September 30, 2019			December 31, 2018			March 31, 2020			December 31, 2019
	(unaudited)						(unaudited)
Assets
Current assets
Cash and equivalents	$	10,648		$	7,289		$	41,142		$	39,924
Short-term investments	—			772
Accounts receivable, net	5,529			5,384			6,362			5,428
Inventories	1,929			1,605			1,844			1,813
Prepaid expenses and other	2,060			1,895			2,410			2,354
Total current assets	20,166			16,945			51,758			49,519

Investments	131			1,420			78			93
Property and equipment, net	2,894			2,883			2,961			2,962
Intangible assets, net	19,036			21,233			18,203			18,649
Goodwill	15,537			15,663			15,561			15,604
Other assets	1,677			1,208			2,638			2,288
Total assets	$	59,441		$	59,352		$	91,199		$	89,115

Liabilities and Equity
Current liabilities
Short-term borrowings	$	—		$	3,699		$	6		$	—
Current portion of long-term debt and finance lease obligations	5,276			1,609			3,756			3,753
Accounts payable and accrued liabilities	12,217			11,931			12,709			11,832
Total current liabilities	17,493			17,239			16,471			15,585

Long-term debt and finance lease obligations	33,126			35,002			63,284			62,975
Deferred income taxes	1,058			1,067			959			1,130
Other long-term liabilities	15,990			14,490			17,900			17,597

Commitments and contingencies

Stockholders’ equity (deficit)
Common stock, $0.01 par value, 4,000,000,000 shares authorized, 1,781,429,626 shares issued as of September 30, 2019 and 1,776,510,871 as of December 31, 2018	18			18
Common stock held in treasury, at cost, 302,647,520 shares as of September 30, 2019 and 297,686,473 as of December 31, 2018	(24,501		)	(24,108		)
Common stock, $0.01 par value, 4,000,000,000 shares authorized, 1,786,240,964 shares issued as of March 31, 2020 and 1,781,582,608 as of December 31, 2019							18			18
Common stock held in treasury, at cost, 309,566,303 shares as of March 31, 2020 and 302,671,146 as of December 31, 2019							(25,110		)	(24,504		)
Additional paid-in capital	15,112			14,756			15,401			15,193
Retained earnings	3,673			3,368			5,973			4,717
Accumulated other comprehensive loss	(2,528		)	(2,480		)	(3,697		)	(3,596		)
Total stockholders’ equity (deficit)	(8,226		)	(8,446		)	(7,415		)	(8,172		)

Total liabilities and equity	$	59,441		$	59,352		$	91,199		$	89,115

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



~~2019~~2020 Form 10-Q \|	4

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


(in millions)	Common shares outstanding		Common stock		Treasury stock			Additional paid-in capital		Retained earnings			Accumulated other comprehensive loss			Total			Common shares outstanding		Common stock		Treasury stock			Additional paid-in capital		Retained earnings			Accumulated other comprehensive loss			Total
Balance at June 30, 2018	1,514		$	18	$	(20,845	)	$	14,596	$	5,495		$	(2,639	)	$	(3,375	)
Net earnings	—		—		—			—		2,747			—			2,747
Other comprehensive income, net of tax	—		—		—			—		—			80			80
Dividends declared	—		—		—			—		(1,453		)	—			(1,453		)
Purchases of treasury stock	(10	)	—		(1,009		)	—		—			—			(1,009		)
Stock-based compensation plans and other	—		—		5			84		—			—			89
Balance at September 30, 2018	1,504		$	18	$	(21,849	)	$	14,680	$	6,789		$	(2,559	)	$	(2,921	)

Balance at June 30, 2019	1,478		$	18	$	(24,505	)	$	15,028	$	3,384		$	(2,491	)	$	(8,566	)
Net earnings	—		—		—			—		1,884			—			1,884
Other comprehensive loss, net of tax	—		—		—			—		—			(37		)	(37		)
Dividends declared	—		—		—			—		(1,595		)	—			(1,595		)
Purchases of treasury stock	—		—		(3		)	—		—			—			(3		)
Stock-based compensation plans and other	1		—		7			84		—			—			91
Balance at September 30, 2019	1,479		$	18	$	(24,501	)	$	15,112	$	3,673		$	(2,528	)	$	(8,226	)

Balance at December 31, 2017	1,592		$	18	$	(11,923	)	$	14,270	$	5,459		$	(2,727	)	$	5,097
Adoption of new accounting standards	—		—		—			—		(1,733		)	—			(1,733		)
Net earnings	—		—		—			—		7,513			—			7,513
Other comprehensive income, net of tax	—		—		—			—		—			168			168
Dividends declared	—		—		—			—		(4,450		)	—			(4,450		)
Purchases of treasury stock	(95	)	—		(9,956		)	—		—			—			(9,956		)
Stock-based compensation plans and other	7		—		30			410		—			—			440
Balance at September 30, 2018	1,504		$	18	$	(21,849	)	$	14,680	$	6,789		$	(2,559	)	$	(2,921	)

Balance at December 31, 2018	1,479		$	18	$	(24,108	)	$	14,756	$	3,368		$	(2,480	)	$	(8,446	)	1,479		$	18	$	(24,108	)	$	14,756	$	3,368		$	(2,480	)	$	(8,446	)
Net earnings	—		—		—			—		5,081			—			5,081			—		—		—			—		2,456			—			2,456
Other comprehensive loss, net of tax	—		—		—			—		—			(48		)	(48		)	—		—		—			—		—			(36		)	(36		)
Dividends declared	—		—		—			—		(4,776		)	—			(4,776		)	—		—		—			—		(1,590		)	—			(1,590		)
Purchases of treasury stock	(5	)	—		(425		)	—		—			—			(425		)	(5	)	—		(419		)	—		—			—			(419		)
Stock-based compensation plans and other	5		—		32			356		—			—			388			4		—		25			184		—			—			209
Balance at September 30, 2019	1,479		$	18	$	(24,501	)	$	15,112	$	3,673		$	(2,528	)	$	(8,226	)
Balance at March 31, 2019																			1,478		$	18	$	(24,502	)	$	14,940	$	4,234		$	(2,516	)	$	(7,826	)

Balance at December 31, 2019																			1,479		$	18	$	(24,504	)	$	15,193	$	4,717		$	(3,596	)	$	(8,172	)
Net earnings																			—		—		—			—		3,010			—			3,010
Other comprehensive loss, net of tax																			—		—		—			—		—			(101		)	(101		)
Dividends declared																			—		—		—			—		(1,754		)	—			(1,754		)
Purchases of treasury stock																			(7	)	—		(643		)	—		—			—			(643		)
Stock-based compensation plans and other																			5		—		37			208		—			—			245
Balance at March 31, 2020																			1,477		$	18	$	(25,110	)	$	15,401	$	5,973		$	(3,697	)	$	(7,415	)

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



~~2019~~2020 Form 10-Q \|	5

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


	Nine months ended September 30,						Three months ended March 31,
(in millions) (brackets denote cash outflows)	2019			2018			2020			2019
Cash flows from operating activities
Net earnings	$	5,081		$	7,513		$	3,010		$	2,456
Adjustments to reconcile net earnings to net cash from operating activities:
Depreciation	346			349			115			118
Amortization of intangible assets	1,162			974			444			385
Change in fair value of contingent consideration liabilities	2,653			432			72			169
Stock-based compensation	351			351			219			189
Upfront costs and milestones related to collaborations	341			711			40			195
Intangible asset impairment	1,030			—
Other, net	92			423			1			(33		)
Changes in operating assets and liabilities:
Accounts receivable	(207		)	(806		)	(1,025		)	(316		)
Inventories	(401		)	(367		)	(107		)	(128		)
Prepaid expenses and other assets	183			(426		)	(19		)	(112		)
Accounts payable and other liabilities	(582		)	881			1,065			94
Cash flows from operating activities	10,049			10,035			3,815			3,017

Cash flows from investing activities
Acquisitions and investments	(476		)	(541		)	(12		)	(320		)
Acquisitions of property and equipment	(389		)	(515		)	(125		)	(107		)
Purchases of investment securities	(579		)	(1,581		)	(13		)	(194		)
Sales and maturities of investment securities	2,655			1,914			26			594
Other							(5		)	—
Cash flows from investing activities	1,211			(723		)	(129		)	(27		)

Cash flows from financing activities
Net change in commercial paper borrowings	(699		)	(400		)	—			(200		)
Proceeds from issuance of other short-term borrowings	—			3,002
Repayments of other short-term borrowings	(3,000		)	—			—			(3,000		)
Proceeds from issuance of long-term debt	1,534			5,963
Repayments of long-term debt and finance lease obligations	(5		)	(5,021		)
Debt issuance costs	(248		)	(34		)
Dividends paid	(4,771		)	(4,129		)	(1,763		)	(1,588		)
Purchases of treasury stock	(627		)	(9,956		)	(643		)	(620		)
Proceeds from the exercise of stock options	6			66			12			4
Payments of contingent consideration liabilities	(120		)	(78		)	(53		)	—
Other, net	36			16			25			21
Cash flows from financing activities	(7,894		)	(10,571		)	(2,422		)	(5,383		)
Effect of exchange rate changes on cash and equivalents	(7		)	(29		)	(46		)	1
Net change in cash and equivalents	3,359			(1,288		)	1,218			(2,392		)
Cash and equivalents, beginning of period	7,289			9,303			39,924			7,289

Cash and equivalents, end of period	$	10,648		$	8,015		$	41,142		$	4,897

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



~~2019~~2020 Form 10-Q \|	6

AbbVie Inc. and Subsidiaries

Notes to Condensed Consolidated Financial Statements (unaudited)

Note 1 Basis of Presentation

Basis of Historical Presentation

The unaudited interim condensed consolidated financial statements of AbbVie Inc. (AbbVie or the company) have been prepared pursuant to the rules and regulations of the U.S. Securities and Exchange Commission. Accordingly, certain information and footnote disclosures normally included in annual financial statements prepared in accordance with generally accepted accounting principles in the United States (U.S. GAAP) have been omitted. These unaudited interim condensed consolidated financial statements should be read in conjunction with the company’s audited consolidated financial statements and notes included in the company’s Annual Report on Form 10-K for the year ended December 31, ~~2018.~~2019.

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

Recent Accounting Pronouncements

Recently Adopted Accounting Pronouncements

ASU No. ~~2016-02~~2016-13

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

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

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

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

~~ASU No. 2018-02~~

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



~~2019 Form 10-Q~~ \|	7

~~Recent Accounting Pronouncements Not Yet Adopted~~

~~ASU No. 2016-13~~

~~In June 2016, the FASB issued ASU~~ No. 2016-13, Financial Instruments - Credit Losses (Topic 326). The standard changes how credit losses are measured for most financial assets and certain other instruments. For trade and other receivables, held-to-maturity debt securities, loans and other financial instruments, the standard requires the use of a new forward-looking "expected credit loss" model that generally will result in the earlier recognition of allowances for losses. For available-for-sale debt securities with unrealized losses, the standard now requires allowances to be recorded instead of reducing the amortized cost of the investment. ~~Additionally,~~AbbVie adopted the standard ~~requires new disclosures~~in the first quarter of 2020. The adoption did not have a material impact on the company's consolidated financial statements.

Upon adoption of the standard, accounts receivable are stated at amortized cost less allowance for credit losses. The allowance for credit losses reflects the best estimate of future losses over the contractual life of outstanding accounts receivable and is determined on the basis of historical experience, specific allowances for known troubled accounts, other currently available information including customer financial condition, and both current and forecasted economic conditions. The allowance for credit losses was $46 million at March 31, 2020. There were no significant changes in credit loss risk factors that impacted the company's recorded allowance during the three months ended March 31, 2020.

Recent Accounting Pronouncements Not Yet Adopted

ASU No. 2019-12

In December 2019, the FASB issued ASU No. 2019-12, Income Taxes (Topic 740). The standard includes simplifications related to accounting for income taxes including removing certain exceptions related to the approach for intraperiod tax allocation and the recognition of deferred tax liabilities for outside basis differences. The standard also clarifies the accounting for transactions that result in a step-up in the tax basis of goodwill. The standard will be effective for AbbVie starting with the first quarter of 2020. With certain exceptions, adjustments are to be applied using a modified-retrospective approach by reflecting adjustments through a cumulative-effect impact to retained earnings as of the beginning of the fiscal year of adoption.2021. AbbVie is currently assessing the impact of ~~adopting~~ this guidance ~~but does not expect a material impact~~ on its consolidated financial ~~statements based on the company’s current portfolio of financial assets.~~statements.



2020 Form 10-Q \|	7

Note 2 Supplemental Financial Information

Interest Expense, Net


	Three months ended September 30,						Nine months ended September 30,						Three months ended March 31,
(in millions)	2019			2018			2019			2018			2020			2019
Interest expense	$	480		$	339		$	1,225		$	968		$	563		$	387
Interest income	(60		)	(37		)	(171		)	(143		)	(135		)	(62		)
Interest expense, net	$	420		$	302		$	1,054		$	825		$	428		$	325

Inventories


(in millions)	September 30, 2019		December 31, 2018		March 31, 2020		December 31, 2019
Finished goods	$	449	$	473	$	546	$	485
Work-in-process	1,120		862		932		942
Raw materials	360		270		366		386
Inventories	$	1,929	$	1,605	$	1,844	$	1,813

Property and Equipment


(in millions)	September 30, 2019			December 31, 2018			March 31, 2020			December 31, 2019
Property and equipment, gross	$	8,492		$	8,396		$	8,250		$	8,188
Accumulated depreciation	(5,598		)	(5,513		)	(5,289		)	(5,226		)
Property and equipment, net	$	2,894		$	2,883		$	2,961		$	2,962

Depreciation expense was ~~$114 million for the three months and $346 million for the nine months ended September 30, 2019 and~~ $115 million for the three months ended March 31, 2020 and ~~$349~~$118 million for the ~~nine~~three months ended ~~September 30, 2018.~~March 31, 2019.



2020 Form 10-Q \|	8

Note 3 Earnings Per Share

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



~~2019 Form 10-Q~~ \|	8

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


	Three months ended September 30,				Nine months ended September 30,				Three months ended March 31,
(in millions, except per share data)	2019		2018		2019		2018		2020		2019
Basic EPS
Net earnings	$	1,884	$	2,747	$	5,081	$	7,513	$	3,010	$	2,456
Earnings allocated to participating securities	10		12		27		34		14		12
Earnings available to common shareholders	$	1,874	$	2,735	$	5,054	$	7,479	$	2,996	$	2,444
Weighted-average basic shares outstanding	1,481		1,511		1,480		1,556		1,481		1,480
Basic earnings per share	$	1.27	$	1.81	$	3.41	$	4.81	$	2.02	$	1.65

Diluted EPS
Net earnings	$	1,884	$	2,747	$	5,081	$	7,513	$	3,010	$	2,456
Earnings allocated to participating securities	10		12		27		34		14		12
Earnings available to common shareholders	$	1,874	$	2,735	$	5,054	$	7,479	$	2,996	$	2,444
Weighted-average shares of common stock outstanding	1,481		1,511		1,480		1,556		1,481		1,480
Effect of dilutive securities	2		4		3		5		3		3
Weighted-average diluted shares outstanding	1,483		1,515		1,483		1,561		1,484		1,483
Diluted earnings per share	$	1.26	$	1.81	$	3.41	$	4.79	$	2.02	$	1.65

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

Note 4 Licensing, Acquisitions and Other Arrangements

Proposed Acquisition of Allergan plc

On June 25, 2019, AbbVie announced that it entered into a definitive transaction agreement under which AbbVie will acquire Allergan plc (Allergan) in a cash and stock transaction for a transaction equity value of approximately $63 billion, based on the closing price of AbbVie’s common stock of $78.45 on June 24, 2019. Under the terms of the transaction agreement, Allergan shareholders will receive 0.8660 AbbVie shares and $120.30 in cash for each Allergan share. On October 14, 2019, Allergan shareholders approved the proposed transaction.

~~In connection with the proposed acquisition of Allergan, on June 25, 2019, AbbVie entered into a $38.0 billion~~ ~~364~~-day bridge credit agreement. On July 12, 2019, AbbVie entered into a term loan credit agreement with an aggregate principal amount of $6.0 billion consisting of a $1.5 billion 364-day term loan tranche, a $2.5 billion three-year term loan tranche and a $2.0 billion five-year term loan tranche, with the commitments under the bridge credit agreement to be reduced by such amount to $32.0 billion. NaN amounts have been drawn under the bridge credit agreement or term loan credit agreement.

On October 25, 2019, AbbVie commenced offers to exchange any and all outstanding notes of certain series issued by Allergan for up to $15.5 billion aggregate principal amount and €3.7 billion aggregate principal amount of new notes to be issued by AbbVie and cash, subject to conditions including the closing of the pending acquisition of Allergan. Concurrently with the offers to exchange the Allergan notes for AbbVie notes, the company solicited consents to adopt certain proposed amendments to each of the indentures governing the Allergan notes to, among other things, eliminate substantially all of the restrictive covenants in such indentures.

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

The transaction is subject to customary closing conditions and regulatory approvals. In March 2020, AbbVie and Allergan signed a consent decree agreement with the staff of the U.S. Federal Trade Commission (FTC) regarding the proposed acquisition. Under the terms of the consent decree, the companies have agreed to divest brazikumab, Allergan's IL-23 inhibitor pipeline product, to AstraZeneca and Zenpep, a treatment for exocrine pancreatic insufficiency, to Nestle. Nestle will also acquire Viokace, another pancreatic enzyme preparation, as part of the same transaction. In March 2020, AbbVie and Allergan received final approval from the European Commission to close the pending transaction which was conditional upon the divestiture of brazikumab. In May 2020, AbbVie and Allergan received final approval from the FTC and the Irish High Court to close the transaction. The transaction is expected to close in May 2020.



~~2019~~2020 Form 10-Q \|	9

~~The transaction is expected to close in early 2020, subject to customary closing conditions~~In anticipation of the proposed acquisition, AbbVie entered into several debt and ~~regulatory approvals. In September 2019, AbbVie and Allergan each received a Request~~financing arrangements. See Note 8 for ~~Additional Information (Second Request) from the Federal Trade Commission (FTC) in connection with the transaction. AbbVie and Allergan are cooperating fully with the FTC.~~additional information.

Other Licensing & Acquisitions Activity

Cash outflows related to other acquisitions and investments totaled ~~$476~~$12 million for the ~~nine~~three months ended ~~September 30, 2019~~March 31, 2020 and ~~$541~~$320 million for the ~~nine~~three months ended ~~September 30, 2018.~~March 31, 2019. AbbVie recorded 0 acquired in-process research and development (IPR&D) charges for the three months ended ~~September 30, 2019~~March 31, 2020 and recorded acquired IPR&D charges of ~~$246 million for the nine months ended September 30, 2019. AbbVie recorded IPR&D charges of $55~~$155 million for the three months ~~and $124 million for the nine months~~ ended ~~September 30, 2018.~~

~~Calico Life Sciences LLC~~

In June 2018, AbbVie and Calico Life Sciences LLC (Calico) entered into an extension of a collaboration to discover, develop and bring to market new therapies for patients with age-related diseases, including neurodegeneration and cancer. Under the terms of the agreement, AbbVie and Calico will each contribute an additional $500 million to the collaboration and the term was extended for an additional three years. Calico will be responsible for research and early development until 2022 and will advance collaboration projects through Phase 2a through 2027. Following completion of Phase 2a, AbbVie will have the option to exclusively license collaboration compounds. AbbVie will support Calico in its early research and development efforts and, upon exercise, would be responsible for late-stage development and commercial activities. Collaboration costs and profits will be shared equally by both parties post option exercise. AbbVie recorded $500 million in other expense in the condensed consolidated statement of earnings related to its commitments under the agreement during the nine months ended September 30, 2018.

~~Reata Pharmaceuticals, Inc.~~

In October 2019, AbbVie and Reata Pharmaceuticals, Inc. (Reata) entered into an amended and restated license agreement. Under the terms of the agreement, Reata reacquired exclusive development, manufacturing and commercialization rights concerning its proprietary Nrf2 activator product platform originally licensed to AbbVie for territories outside of the United States with respect to bardoxolone methyl and worldwide with respect to omaveloxolone and other next-generation Nrf2 activators. As consideration for the rights reacquired by Reata, AbbVie will receive a total of $330 million in cash payable in three installments through 2021 which will be recognized in other income in future periods. In addition, AbbVie will receive low single-digit, tiered royalties from worldwide sales of omaveloxolone and certain next-generation Nrf2 activators.March 31, 2019.

Note 5 Collaboration with Janssen Biotech, Inc.

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

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

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



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

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

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


	Three months ended September 30,				Nine months ended September 30,				Three months ended March 31,
(in millions)	2019		2018		2019		2018		2020		2019
United States - Janssen's share of profits (included in cost of products sold)	$	489	$	377	$	1,297	$	978	$	450	$	386
International - AbbVie's share of profits (included in net revenues)	215		160		621		455		266		193
Global - AbbVie's share of other costs (included in respective line items)	81		81		230		232		70		72

AbbVie’s receivable from Janssen, included in accounts receivable, net, was $298 million at March 31, 2020 and $235 million at ~~September 30, 2019 and $177 million at~~ December 31, ~~2018~~.2019. AbbVie’s payable to Janssen, included in accounts payable and accrued liabilities, was ~~$467~~$445 million at ~~September 30, 2019~~March 31, 2020 and ~~$376~~$455 million at December 31, ~~2018~~.2019.



2020 Form 10-Q \|	10

Note 6 Goodwill and Intangible Assets

Goodwill

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


(in millions)
Balance as of December 31, 2018	$	15,663
Balance as of December 31, 2019				$	15,604
Foreign currency translation adjustments	(126		)	(43		)
Balance as of September 30, 2019	$	15,537
Balance as of March 31, 2020				$	15,561

The company performs its annual goodwill impairment assessment in the third quarter, or earlier if impairment indicators exist. As of ~~September 30, 2019,~~March 31, 2020, there were 0 accumulated goodwill impairment losses.

Intangible Assets, Net

The following table summarizes intangible assets:


	September 30, 2019							December 31, 2018							March 31, 2020							December 31, 2019
(in millions)	Gross carrying amount		Accumulated amortization			Net carrying amount		Gross carrying amount		Accumulated amortization			Net carrying amount		Gross carrying amount		Accumulated amortization			Net carrying amount		Gross carrying amount		Accumulated amortization			Net carrying amount
Definite-lived intangible assets
Developed product rights	$	19,600	$	(6,208	)	$	13,392	$	15,872	$	(5,614	)	$	10,258	$	19,538	$	(6,687	)	$	12,851	$	19,547	$	(6,405	)	$	13,142
License agreements	7,798		(2,154		)	5,644		7,865		(1,810		)	6,055		7,798		(2,446		)	5,352		7,798		(2,291		)	5,507
Total definite-lived intangible assets	27,398		(8,362		)	19,036		23,737		(7,424		)	16,313
Indefinite-lived research and development	—		—			—		4,920		—			4,920
Total intangible assets, net	$	27,398	$	(8,362	)	$	19,036	$	28,657	$	(7,424	)	$	21,233	$	27,336	$	(9,133	)	$	18,203	$	27,345	$	(8,696	)	$	18,649

~~Indefinite-Lived Intangible Assets~~

Indefinite-lived intangible assets represent acquired IPR&D associated with products that have not yet received regulatory approval. The company performs its annual impairment assessment of indefinite-lived intangible assets in the third quarter, or earlier if impairment indicators exist.

In the third quarter of 2019, following the announcement of the decision to terminate the rovalpituzumab tesirine (Rova-T) research and development program, the company recorded an impairment charge of $1.0 billion which represented the remaining value of



~~2019 Form 10-Q~~ \|	11

~~the IPR&D acquired as part of the 2016 Stemcentrx acquisition. NaN indefinite-lived intangible asset impairment charges were recorded for the nine months ended September 30, 2018.~~

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

~~Definite-Lived Intangible Assets~~

Amortization expense was ~~$389~~$444 million for the three months ended March 31, 2020 and ~~$1.2 billion for the nine months ended September 30, 2019 and $320~~$385 million for the three months ~~and $974 million for the nine months~~ ended ~~September 30, 2018.~~March 31, 2019. Amortization expense was included in cost of products sold in the condensed consolidated statements of earnings. NaN ~~definite-lived~~ intangible asset impairment charges were recorded for the ~~nine~~three months ended ~~September 30, 2019~~March 31, 2020 and ~~2018.~~2019.

Note 7 Restructuring Plans

AbbVie recorded restructuring charges of ~~$22~~$17 million for the three months ended March 31, 2020 and ~~$208 million for the nine months ended September 30, 2019 and $22~~$167 million for the three months ~~and $45 million for the nine months~~ ended ~~September 30, 2018. Restructuring charges for the nine months ended September 30, 2019 primarily related to severance costs.~~

March 31, 2019.

The following table summarizes the cash activity in the restructuring reserve for the ~~nine~~three months ended ~~September 30, 2019:~~March 31, 2020:


(in millions)
Accrued balance as of December 31, 2018	$	99
Accrued balance as of December 31, 2019				$	140
Restructuring charges	194			17
Payments and other adjustments	(133		)	(38		)
Accrued balance as of September 30, 2019	$	160
Accrued balance as of March 31, 2020				$	119

~~Note 8 Leases~~

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

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

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



~~2019~~2020 Form 10-Q \|	1211

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

(in millions) Balance sheet caption September 30,
2019
Assets
Operating Other assets $ 357
Finance Property and equipment, net 24
Total lease assets $ 381
Liabilities
Operating
Current Accounts payable and accrued liabilities $ 107
Noncurrent Other long-term liabilities 268
Finance
Current Current portion of long-term debt and finance lease obligations 7
Noncurrent Long-term debt and finance lease obligations 21
Total lease liabilities $ 403

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

Three months ended
September 30, Nine months ended
September 30,
(in millions) 2019 2019
Operating lease cost $ 30
$ 94
Short-term lease cost 9
24
Variable lease cost 17
46
Total lease cost $ 56
$ 164

~~Sublease income and finance lease costs were insignificant for the three and nine months ended September 30, 2019.~~

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



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

~~The following table presents supplementary cash flow information regarding the company's leases:~~

Nine months ended
September 30,
(in millions) 2019
Cash paid for amounts included in the measurement of lease liabilities
Operating cash flows from operating leases $ 94
Right-of-use assets obtained in exchange for new operating lease liabilities 16

~~Finance lease cash flows were insignificant for the nine months ended September 30, 2019.~~



~~2019 Form 10-Q~~ \|	13

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

(in millions)
Operating
leases

Finance
leases

Total ^(a)(b)
2019 $ 32
$ 6
$ 38
2020 116
10
126
2021 99
9
108
2022 56
3
59
2023 35
1
36
Thereafter 80
—
80
Total lease payments 418
29
447
Less: Interest 43
1
44
Present value of lease liabilities $ 375
$ 28
$ 403

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

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

Note 98 Financial Instruments and Fair Value Measures

Risk Management Policy

See Note 1011 to the company's Annual Report on Form 10-K for the year ended December 31, ~~2018~~2019 for a summary of AbbVie's risk management policy and use of derivative instruments.

Financial Instruments

Various AbbVie foreign subsidiaries enter into foreign currency forward exchange contracts to manage exposures to changes in foreign exchange rates for anticipated intercompany transactions denominated in a currency other than the functional currency of the local entity. These contracts, with notional amounts totaling ~~$0.2 billion~~$842 million at ~~September 30, 2019~~March 31, 2020 and ~~$1.4 billion~~$957 million at December 31, ~~2018,~~2019, are designated as cash flow hedges and are recorded at fair value. The durations of these forward exchange contracts were generally less than 18 months. Accumulated gains and losses as of ~~September 30, 2019 will be~~March 31, 2020 are reclassified from ~~AOCI~~accumulated other comprehensive income (AOCI) and included in cost of products sold at the time the products are sold, generally not exceeding six months from the date of settlement.

In the third quarter of 2019, the company entered into treasury rate lock agreements with notional amounts totaling $10.0 billion to hedge exposure to variability in future cash flows resulting from changes in interest rates related to the ~~anticipated~~ issuance of long-term debt in connection with the proposed acquisition of Allergan. The treasury rate lock agreements were designated as cash flow hedges and recorded at fair value. The agreements were net settled upon issuance of the senior notes in November 2019 and the resulting net gain was recognized in other comprehensive income (loss). This gain is reclassified to interest expense, net over the term of the related debt.

In the fourth quarter of 2019, the company entered into interest rate swap contracts with notional amounts totaling $2.3 billion at March 31, 2020 and December 31, 2019. The effect of the hedge contracts is to change a floating-rate interest obligation to a fixed rate for that portion of the floating-rate debt. The contracts were designated as cash flow hedges and are recorded at fair value. Realized and unrealized gains or losses are included in AOCI and are ~~expected to be~~ reclassified to interest expense, net over the lives of the ~~anticipated long-term debt issuances. These agreements had notional amounts totaling $10.0 billion at September 30, 2019.~~floating-rate debt.

The company also enters into foreign currency forward exchange contracts to manage its exposure to foreign currency denominated trade payables and receivables and intercompany loans. These contracts are not designated as hedges and are recorded at fair value. Resulting gains or losses are reflected in net foreign exchange gain or loss in the condensed consolidated statements of earnings and are generally offset by losses or gains on the foreign currency exposure being managed. These contracts had notional amounts totaling ~~$6.2~~$8.2 billion at ~~September 30, 2019~~March 31, 2020 and ~~$8.6~~$7.1 billion at December 31, ~~2018.~~2019.

The company also uses foreign currency forward exchange contracts or foreign currency denominated debt to hedge its net investments in certain foreign subsidiaries and affiliates. The company had €3.6 billion aggregate principal amount of senior Euro notes designated as net investment hedges at September 30, 2019 and December 31, 2018. In the third quarter of 2019, the company issued €1.4 billion aggregate principal amount of senior Euro notes and designated the principal amounts of this foreign denominated debt as net investment hedges. Concurrently, the company elected to de-designate hedge accounting for €1.4 billion aggregate principal amount of existing senior Euro notes. In addition, in the second quarter of 2019, the company entered into foreign currency forward exchange contracts with notional amounts totaling €971 million, £204 million and CHF62 million ~~and~~as well as €3.6 billion aggregate principal amount of senior Euro notes designated ~~the instruments~~ as net investment ~~hedges.~~hedges at March 31, 2020 and December 31, 2019. The company uses the spot method of assessing hedge effectiveness for



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

derivative instruments designated as net investment hedges. Realized and unrealized gains and losses from these hedges are included in AOCI and the initial fair value of hedge components excluded from the assessment of effectiveness is recognized in interest expense, net over the life of the hedging instrument.

AbbVie is a party to interest rate ~~hedge~~swap contracts designated as fair value hedges with notional amounts totaling $6.3 billion at March 31, 2020 and $10.8 billion at ~~September 30, 2019 and~~ December 31, ~~2018.~~2019. The effect of the hedge contracts is to change a fixed-rate interest obligation to a floating rate for that portion of the debt. AbbVie records the contracts at fair value and adjusts the carrying amount of the fixed-rate debt by an offsetting amount.

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



2020 Form 10-Q \|	12

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

Fair value –
Derivatives in asset position Fair value –
Derivatives in liability position
(in millions) Balance sheet caption September 30,
2019 December 31, 2018 Balance sheet caption September 30,
2019 December 31, 2018
Foreign currency forward exchange contracts
Designated as cash flow hedges
Prepaid expenses and
other
$ 4
$ 113
Accounts payable and accrued liabilities $ —
$ —
Designated as net investment hedges Prepaid expenses and
other 69
—
Accounts payable and accrued liabilities —
—
Not designated as hedges
Prepaid expenses and
other
13
19
Accounts payable and accrued liabilities 37
26
Treasury rate lock agreements designated as cash flow hedges Prepaid expenses and other 123
—
Accounts payable and accrued liabilities 35
—
Interest rate swaps designated as fair value hedges Prepaid expenses and other —
—
Accounts payable and accrued liabilities 8
—
Interest rate swaps designated as fair value hedges Other assets 44
—
Other long-term liabilities 59
466
Total derivatives $ 253
$ 132
$ 139
$ 492



	Fair value – Derivatives in asset position					Fair value – Derivatives in liability position
(in millions)	Balance sheet caption	March 31, 2020		December 31, 2019		Balance sheet caption	March 31, 2020		December 31, 2019
Foreign currency forward exchange contracts
Designated as cash flow hedges	Prepaid expenses and other	$	35	$	3	Accounts payable and accrued liabilities	$	—	$	14
Designated as cash flow hedges	Other assets	2		—		Other long-term liabilities	—		—
Designated as net investment hedges	Prepaid expenses and other	22		—		Accounts payable and accrued liabilities	1		24
Not designated as hedges	Prepaid expenses and other	43		19		Accounts payable and accrued liabilities	12		18
Interest rate swap contracts
Designated as cash flow hedges	Other assets	—		3		Other long-term liabilities	44		—
Designated as fair value hedges	Prepaid expenses and other	—		—		Accounts payable and accrued liabilities	—		2
Designated as fair value hedges	Other assets	133		28		Other long-term liabilities	—		74
Total derivatives		$	235	$	53		$	57	$	132

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

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


	Three months ended September 30,				Nine months ended September 30,				Three months ended March 31,
(in millions)	2019		2018		2019		2018		2020			2019
Foreign currency forward exchange contracts
Designated as cash flow hedges	$	3	$	1	$	8	$	122	$	49		$	3
Designated as net investment hedges	59		—		69		—		40			—
Treasury rate lock agreements designated as cash flow hedges	88		—		88		—
Interest rate swap contracts designated as cash flow hedges									(46		)	—

Assuming market rates remain constant through contract maturities, the company expects to ~~reclass~~reclassify pre-tax gains of ~~$50~~$34 million into cost of products sold for foreign currency cash flow hedges, pre-tax losses of $2 million into interest expense, net for interest rate swap cash flow hedges and pre-tax gains of $3$24 million into interest expense, net for treasury rate lock agreement cash flow hedges during the next 12 months.

Related to AbbVie’s non-derivative, foreign currency denominated debt designated as net investment hedges, the company recognized in other comprehensive income (loss) pre-tax gains of ~~$152~~$60 million for the three months ended March 31, 2020 and ~~$187 million for the nine months ended September 30, 2019 and recognized a pre-tax loss of $41~~$84 million for the three months ~~and a pre-tax gain of $95 million for the nine months~~ ended ~~September 30, 2018.~~March 31, 2019.



~~2019~~2020 Form 10-Q \|	1513

The following table summarizes the pre-tax amounts and location of derivative instrument net gains (losses) recognized in the condensed consolidated statements of earnings, including the net gains (losses) reclassified out of AOCI into net earnings. See Note 1110 for the amount of net gains (losses) reclassified out of AOCI.


		Three months ended September 30,						Nine months ended September 30,							Three months ended March 31,
(in millions)	Statement of earnings caption	2019			2018			2019			2018			Statement of earnings caption	2020			2019
Foreign currency forward exchange contracts
Designated as cash flow hedges	Cost of products sold	$	42		$	(54	)	$	119		$	(144	)	Cost of products sold	$	—		$	40
Designated as net investment hedges	Interest expense, net	10			—			19			—			Interest expense, net	8			—
Not designated as hedges	Net foreign exchange loss	(55		)	22			(95		)	91			Net foreign exchange loss	2			15
Interest rate swaps designated as fair value hedges	Interest expense, net	78			(63		)	443			(306		)
Treasury rate lock agreements designated as cash flow hedges														Interest expense, net	6			—
Interest rate swap contracts
Designated as cash flow hedges														Interest expense, net	1			—
Designated as fair value hedges														Interest expense, net	360			112
Debt designated as hedged item in fair value hedges	Interest expense, net	(78		)	63			(443		)	306			Interest expense, net	(360		)	(112		)

Fair Value Measures

The fair value hierarchy consists of the following three levels:

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

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

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

The following table summarizes the bases used to measure certain assets and liabilities carried at fair value on a recurring basis on the condensed consolidated balance sheet as of ~~September 30, 2019:~~March 31, 2020:


			Basis of fair value measurement								Basis of fair value measurement
(in millions)	Total		Quoted prices in active markets for identical assets (Level 1)		Significant other observable inputs (Level 2)		Significant unobservable inputs (Level 3)		Total		Quoted prices in active markets for identical assets (Level 1)		Significant other observable inputs (Level 2)		Significant unobservable inputs (Level 3)
Assets															��
Cash and equivalents	$	10,648	$	1,288	$	9,360	$	—	$	41,142	$	1,272	$	39,870	$	—
Debt securities	2		—		2		—		3		—		3		—
Equity securities	62		62		—		—
Interest rate hedges	44		—		44		—
Interest rate swap contracts									133		—		133		—
Foreign currency contracts	86		—		86		—		102		—		102		—
Treasury rate lock agreements	123		—		123		—
Total assets	$	10,965	$	1,350	$	9,615	$	—	$	41,380	$	1,272	$	40,108	$	—
Liabilities
Interest rate hedges	$	67	$	—	$	67	$	—
Interest rate swap contracts									$	44	$	—	$	44	$	—
Foreign currency contracts	37		—		37		—		13		—		13		—
Treasury rate lock agreements	35		—		35		—
Contingent consideration	6,957		—		—		6,957		7,359		—		—		7,359
Total liabilities	$	7,096	$	—	$	139	$	6,957	$	7,416	$	—	$	57	$	7,359



~~2019~~2020 Form 10-Q \|	1614


			Basis of fair value measurement								Basis of fair value measurement
(in millions)	Total		Quoted prices in active markets for identical assets (Level 1)		Significant other observable inputs (Level 2)		Significant unobservable inputs (Level 3)		Total		Quoted prices in active markets for identical assets (Level 1)		Significant other observable inputs (Level 2)		Significant unobservable inputs (Level 3)
Assets
Cash and equivalents	$	7,289	$	1,209	$	6,080	$	—	$	39,924	$	1,542	$	38,382	$	—
Time deposits	568		—		568		—
Debt securities	1,536		—		1,536		—		3		—		3		—
Equity securities	4		4		—		—		24		24		—		—
Interest rate swap contracts									31		—		31		—
Foreign currency contracts	132		—		132		—		22		—		22		—
Total assets	$	9,529	$	1,213	$	8,316	$	—	$	40,004	$	1,566	$	38,438	$	—
Liabilities
Interest rate hedges	$	466	$	—	$	466	$	—
Interest rate swap contracts									$	76	$	—	$	76	$	—
Foreign currency contracts	26		—		26		—		56		—		56		—
Contingent consideration	4,483		—		—		4,483		7,340		—		—		7,340
Total liabilities	$	4,975	$	—	$	492	$	4,483	$	7,472	$	—	$	132	$	7,340

The fair values of time deposits approximate their amortized cost due to the short maturities of these instruments. The fair values of available-for-sale debt securities were determined based on prices obtained from commercial pricing services. Equity securities consist of investments for which the fair values were determined by using the published market price per unit multiplied by the number of units held, without consideration of transaction costs. The derivatives entered into by the company were valued using observable market inputs including published interest rate curves and both forward and spot prices for foreign currencies.

The fair value measurements of the contingent consideration liabilities were determined based on significant unobservable inputs, including the discount rate, estimated probabilities and timing of achieving specified development, regulatory and commercial milestones and the estimated amount of future sales of the acquired products. The potential contingent consideration payments are estimated by applying a probability-weighted expected payment model for contingent milestone payments and a Monte Carlo simulation model for contingent royalty payments, which are then discounted to present value. Changes to the fair value of the contingent consideration liabilities can result from changes to one or a number of inputs, including discount rates, the probabilities of achieving the milestones, the time required to achieve the milestones and estimated future sales. Significant judgment is employed in determining the appropriateness of certain of these inputs. Changes to the inputs described above could have a material impact on the company's financial position and results of operations in any given period. ~~At September 30, 2019, a 50 basis point increase/decrease in~~

The fair value of the ~~assumed discount rate would have decreased/increased~~company's contingent consideration liabilities as of March 31, 2020 was calculated using the following significant unobservable inputs:



	Range	Weighted average^(a)
Discount rate	2.2% - 3.5%	2.8	%
Probability of payment for unachieved milestones	16% - 57%	54	%
Probability of payment for royalties by indication^(b)	16% - 100%	89	%
Projected year of payments	2020 - 2034	2027

(a) Unobservable inputs were weighted by the relative fair value of the contingent consideration ~~liabilities by approximately $270 million. Additionally, at September 30, 2019, a 5 percentage point increase/decrease in the assumed~~liabilities.

(b) Excludes early stage indications with 0% estimated probability of ~~success across all potential~~payment and includes approved indications ~~still in development would have increased/decreased~~with 100% probability of payment. Excluding approved indications, the ~~value~~estimated probability of ~~the contingent consideration liabilities by approximately $140 million.~~payment ranged from 16% to 56% at March 31, 2020.



2020 Form 10-Q \|	15

There have been 0 transfers of assets or liabilities ~~between~~into or out of Level 3 of the fair value ~~measurement levels.~~hierarchy. The following table presents the changes in fair value of contingent consideration liabilities which are measured using Level 3 inputs:


	Nine months ended September 30,						Three months ended March 31,
(in millions)	2019			2018			2020			2019
Beginning balance	$	4,483		$	4,534		$	7,340		$	4,483
Change in fair value recognized in net earnings	2,653			432			72			169
Payments	(179		)	(100		)	(53		)	—
Ending balance	$	6,957		$	4,866		$	7,359		$	4,652

The change in fair value recognized in net earnings is recorded in other expense, net in the condensed consolidated statements of earnings. During the second quarter of 2019, the company recorded a $2.3 billion increase in the SKYRIZI contingent consideration liability due to higher probabilities of success, higher estimated future sales and declining interest rates. The higher probabilities of success resulted from the April 2019 regulatory approvals of SKYRIZI for the treatment of moderate to severe plaque psoriasis. During the third quarter of 2019, the company recorded a $91 million decrease in the Stemcentrx contingent consideration liability due to the termination of the Rova-T research and development program.



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

Certain financial instruments are carried at historical cost or some basis other than fair value. The book values, approximate fair values and bases used to measure the approximate fair values of certain financial instruments as of ~~September 30, 2019~~March 31, 2020 are shown in the table below:


					Basis of fair value measurement										Basis of fair value measurement
(in millions)	Book value		Approximate fair value		Quoted prices in active markets for identical assets (Level 1)		Significant other observable inputs (Level 2)		Significant unobservable inputs (Level 3)		Book value		Approximate fair value		Quoted prices in active markets for identical assets (Level 1)		Significant other observable inputs (Level 2)		Significant unobservable inputs (Level 3)
Liabilities
Short-term borrowings											$	6	$	6	$	—	$	6	$	—
Current portion of long-term debt and finance lease obligations, excluding fair value hedges	$	5,284	$	5,293	$	5,286	$	7	$	—	3,756		3,757		3,750		7		—
Long-term debt and finance lease obligations, excluding fair value hedges	33,141		34,964		34,943		21		—		62,974		66,176		66,157		19		—
Total liabilities	$	38,425	$	40,257	$	40,229	$	28	$	—	$	66,736	$	69,939	$	69,907	$	32	$	—

The book values, approximate fair values and bases used to measure the approximate fair values of certain financial instruments as of December 31, ~~2018~~2019 are shown in the table below:


					Basis of fair value measurement										Basis of fair value measurement
(in millions)	Book value		Approximate fair value		Quoted prices in active markets for identical assets (Level 1)		Significant other observable inputs (Level 2)		Significant unobservable inputs (Level 3)		Book value		Approximate fair value		Quoted prices in active markets for identical assets (Level 1)		Significant other observable inputs (Level 2)		Significant unobservable inputs (Level 3)
Liabilities
Short-term borrowings	$	3,699	$	3,693	$	—	$	3,693	$	—
Current portion of long-term debt and finance lease obligations, excluding fair value hedges	1,609		1,617		1,609		8		—		$	3,755	$	3,760	$	3,753	$	7	$	—
Long-term debt and finance lease obligations, excluding fair value hedges	35,468		34,052		34,024		28		—		63,021		66,651		66,631		20		—
Total liabilities	$	40,776	$	39,362	$	35,633	$	3,729	$	—	$	66,776	$	70,411	$	70,384	$	27	$	—

AbbVie also holds investments in equity securities that do not have readily determinable fair values. The company records these investments at cost and remeasures them to fair value based on certain observable price changes or impairment events as they occur. The carrying amount of these investments was ~~$67~~$75 million as of ~~September 30, 2019~~March 31, 2020 and ~~$84~~$66 million as of December 31, ~~2018.~~2019. No significant cumulative upward or downward adjustments have been recorded for these investments as of ~~September 30, 2019.~~

~~Available-for-sale Securities~~

Substantially all of the company’s investments in debt securities were classified as available-for-sale with changes in fair value recognized in other comprehensive income. There were 0 debt securities classified as short-term as of September 30, 2019 and there were $204 million as of DecemberMarch 31, 2018. Estimated fair values of available-for-sale debt securities were generally determined based on prices obtained from commercial pricing services. In the third quarter of 2019, the company sold substantially all of its investments in debt securities.

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

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

~~AbbVie had 0 other-than-temporary impairments as of September 30, 2019. Net realized gains and losses were insignificant for both the three and nine months ended September 30, 2019 and 2018.~~



~~2019 Form 10-Q~~ \|	18

2020.

Concentrations of Risk

Of total net accounts receivable, 3 U.S. wholesalers accounted for ~~68%~~70% as of ~~September 30, 2019~~March 31, 2020 and ~~63%~~68% as of December 31, ~~2018,~~2019, and substantially all of AbbVie’s net revenues in the United States were to these 3 wholesalers.



2020 Form 10-Q \|	16

HUMIRA (adalimumab) is AbbVie’s single largest product and accounted for approximately ~~58%~~55% of AbbVie’s total net revenues for the ~~nine~~three months ended ~~September 30, 2019~~March 31, 2020 and ~~61%~~57% for the ~~nine~~three months ended ~~September 30, 2018.~~March 31, 2019.

Debt and Credit Facilities

Allergan-Related Financing

In ~~September~~connection with the proposed acquisition of Allergan, in November 2019, the company issued ~~€1.4~~$30.0 billion aggregate principal amount of unsecured senior ~~Euro~~notes. Additional information on the terms of these notes consisting of €750 million aggregate principal amount of 0.75% senior notes due 2027 and €650 million aggregate principal amount of 1.25% senior notes due 2031. These senior notes rank equally with all other unsecured and unsubordinated indebtednessis included in the company’s Annual Report on Form 10-K for the year ended December 31, 2019. AbbVie expects to use the net proceeds to fund a portion of the ~~company. AbbVie may redeem~~aggregate cash consideration due to Allergan shareholders in connection with the ~~senior~~proposed acquisition described in Note 4 and to pay related fees and expenses. Pending the consummation of the proposed Allergan acquisition, the net proceeds from the offering are permitted to be invested temporarily in short-term investments. All of the notes ~~prior~~are subject to ~~maturity~~special mandatory redemption at a redemption price equal to 101% of the aggregate principal amount of the ~~senior~~ notes ~~redeemed~~ plus ~~a make-whole premium~~accrued and ~~may redeem~~unpaid interest if the ~~senior notes at par between one and three months prior to maturity. In connection with~~proposed acquisition of Allergan is not completed by January 30, 2021 or the ~~offering, debt issuance costs incurred totaled $9 million and debt discounts totaled $5 million and are being amortized over~~company notifies the ~~respective terms~~trustee in respect of the notes ~~to interest expense, net in~~that it will not pursue the ~~condensed consolidated statements~~consummation of ~~earnings.~~ the proposed Allergan acquisition.

In July 2019, AbbVie entered into a term loan credit agreement with an aggregate principal amount of $6.0 billion consisting of a $1.5 billion 364-day term loan tranche, a $2.5 billion three-year term loan tranche and a $2.0 billion five-year term loan tranche. NaN amounts were drawn under the term loan credit agreement at March 31, 2020.

In October 2019, ~~the company used the proceeds~~AbbVie commenced offers to ~~redeem €1.4~~exchange any and all outstanding notes of certain series issued by Allergan for up to $15.5 billion aggregate principal amount and €3.7 billion aggregate principal amount of ~~0.38% senior Euro~~new notes to be issued by AbbVie and cash, subject to conditions including the closing of the pending acquisition of Allergan. Concurrently with the offers to exchange the Allergan notes for AbbVie notes, the company solicited consents to adopt certain proposed amendments to each of the indentures governing the Allergan notes to, among other things, eliminate substantially all of the restrictive covenants in such indentures. In November 2019, the company announced that ~~were due~~the requisite number of consents had been received to ~~mature in November 2019.~~adopt the proposed amendments with respect to all Allergan notes and that Allergan executed a supplemental indenture with respect to each Allergan indenture implementing the amendments, which will become operative only upon settlement of the exchange offers. The expiration of the exchange offers is expected to occur on or about the closing date of AbbVie’s acquisition of Allergan.

Short-Term Borrowings

~~Short-term borrowings included commercial paper borrowings of $699 million as of December 31, 2018.~~ There were 0 commercial paper borrowings outstanding as of ~~September 30,~~March 31, 2020 and December 31, 2019. There were 0 commercial paper borrowings issued during the three months ended March 31, 2020. The weighted-average interest rate on commercial paper borrowings was ~~2.5%~~2.8% for the ~~nine~~three months ended ~~September 30, 2019 and 1.9% for the nine months ended September 30, 2018.~~March 31, 2019.

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

In August 2019, AbbVie entered into an amended and restated $4.0 billion five-year revolving credit facility that matures in August 2024. This amended facility enables the company to borrow funds on an unsecured basis at variable interest rates and contains various covenants, all of which the company was in compliance with as of September 30, 2019. NaN amounts were outstanding under the company's credit facilities as of September 30, 2019 and December 31, 2018.

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

Note 109 Post-Employment Benefits

The following table summarizes net periodic benefit cost relating to the company’s defined benefit and other post-employment plans:


	Defined benefit plans												Other post- employment plans								Defined benefit plans						Other post- employment plans
	Three months ended September 30,						Nine months ended September 30,						Three months ended September 30,				Nine months ended September 30,				Three months ended March 31,						Three months ended March 31,
(in millions)	2019			2018			2019			2018			2019		2018		2019		2018		2020			2019			2020		2019
Service cost	$	67		$	70		$	202		$	214		$	6	$	7	$	19	$	20	$	92		$	67		$	12	$	6
Interest cost	64			57			194			171			6		6		21		18		61			64			9		6
Expected return on plan assets	(118		)	(109		)	(356		)	(330		)	—		—		—		—		(135		)	(119		)	—		—
Amortization of actuarial losses and prior service cost	27			38			82			114			1		—		1		1
Amortization of actuarial losses and prior service cost (credit)																					55			26			6		(1		)
Net periodic benefit cost	$	40		$	56		$	122		$	169		$	13	$	13	$	41	$	39	$	73		$	38		$	27	$	11

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



~~2019~~2020 Form 10-Q \|	1917

Note 1110 Equity

Stock-Based Compensation

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


	Three months ended September 30,				Nine months ended September 30,				Three months ended March 31,
(in millions)	2019		2018		2019		2018		2020		2019
Cost of products sold	$	4	$	7	$	24	$	23	$	15	$	15
Research and development	31		32		136		139		92		72
Selling, general and administrative	40		36		191		189		112		102
Pre-tax compensation expense	75		75		351		351		219		189
Tax benefit	15		13		64		61		39		33
After-tax compensation expense	$	60	$	62	$	287	$	290	$	180	$	156

Stock Options

During the ~~nine~~three months ended ~~September 30, 2019,~~March 31, 2020, primarily in connection with the company's annual grant, AbbVie granted ~~1.0~~2.0 million stock options with a weighted-average grant-date fair value of ~~$12.54.~~$12.14. As of ~~September 30, 2019, $7~~March 31, 2020, $16 million of unrecognized compensation cost related to stock options is expected to be recognized as expense over approximately the next two years.

RSUs and Performance Shares

During the ~~nine~~three months ended ~~September 30, 2019,~~March 31, 2020, primarily in connection with the company's annual grant, AbbVie granted ~~5.5~~5.0 million RSUs and performance shares with a weighted-average grant-date fair value of ~~$78.55.~~$94.29. As of ~~September 30, 2019, $365~~March 31, 2020, $548 million of unrecognized compensation cost related to RSUs and performance shares is expected to be recognized as expense over approximately the next two years.

Cash Dividends

The following table summarizes quarterly cash dividends declared during ~~2019~~2020 and ~~2018:~~2019:

2019 2018
Date Declared Payment Date Dividend Per Share Date Declared Payment Date Dividend Per Share
11/01/19 02/14/20 $ 1.18
11/02/18 02/15/19 $ 1.07
09/06/19 11/15/19 $ 1.07
09/07/18 11/15/18 $ 0.96
06/20/19 08/15/19 $ 1.07
06/14/18 08/15/18 $ 0.96
02/21/19 05/15/19 $ 1.07
02/15/18 05/15/18 $ 0.96



2020				2019
Date Declared	Payment Date	Dividend Per Share		Date Declared	Payment Date	Dividend Per Share
02/20/20	05/15/20	$	1.18	11/01/19	02/14/20	$	1.18
				09/06/19	11/15/19	$	1.07
				06/20/19	08/15/19	$	1.07
				02/21/19	05/15/19	$	1.07



~~2019~~2020 Form 10-Q \|	2018

Stock Repurchase Program

The company's stock repurchase authorization permits purchases of AbbVie shares from time to time in open-market or private transactions at management's discretion. The program has no time limit and can be discontinued at any time. Shares repurchased under ~~these programs~~this program are recorded at acquisition cost, including related expenses, and are available for general corporate purposes.

Under this authorization, AbbVie repurchased 6 million shares for $500 million during the three months ended March 31, 2020 and 4 million shares for $300 million during the ~~nine~~three months ended ~~September 30, 2019 and 94 million shares for $9.8 billion during the nine months ended September 30, 2018.~~March 31, 2019. AbbVie's remaining stock repurchase authorization was approximately ~~$4.0~~$3.5 billion as of ~~September 30, 2019.~~March 31, 2020.

Accumulated Other Comprehensive Loss

The following table summarizes the changes in each component of accumulated other comprehensive loss, net of tax, for the ~~nine~~three months ended ~~September 30, 2019:~~March 31, 2020:


(in millions)	Foreign currency translation adjustments			Net investment hedging activities			Pension and post- employment benefits			Marketable security activities			Cash flow hedging activities			Total			Foreign currency translation adjustments			Net investment hedging activities			Pension and post-employment benefits			Cash flow hedging activities			Total
Balance as of December 31, 2018	$	(830	)	$	(65	)	$	(1,722	)	$	(10	)	$	147		$	(2,480	)
Balance as of December 31, 2019																			$	(928	)	$	9		$	(2,965	)	$	288		$	(3,596	)
Other comprehensive income (loss) before reclassifications	(288		)	199			12			12			77			12			(227		)	78			8			4			(137		)
Net losses (gains) reclassified from accumulated other comprehensive loss	—			(15		)	66			(2		)	(109		)	(60		)	—			(6		)	48			(6		)	36
Net current-period other comprehensive income (loss)	(288		)	184			78			10			(32		)	(48		)	(227		)	72			56			(2		)	(101		)
Balance as of September 30, 2019	$	(1,118	)	$	119		$	(1,644	)	$	—		$	115		$	(2,528	)
Balance as of March 31, 2020																			$	(1,155	)	$	81		$	(2,909	)	$	286		$	(3,697	)

Other comprehensive loss for the ~~nine~~three months ended ~~September 30, 2019~~March 31, 2020 included foreign currency translation adjustments totaling a loss of ~~$288~~$227 million, which was principally due to the impact of the weakening of the Euro ~~in the nine months ended September 30, 2019~~ on the translation of the company’s ~~assets denominated in the Euro.~~

Euro-denominated assets.

The following table summarizes the changes in each component of accumulated other comprehensive loss, net of tax, for the ~~nine~~three months ended ~~September 30, 2018:~~March 31, 2019:


(in millions)	Foreign currency translation adjustments			Net investment hedging activities			Pension and post- employment benefits			Marketable security activities			Cash flow hedging activities			Total			Foreign currency translation adjustments			Net investment hedging activities			Pension and post- employment benefits			Marketable security activities			Cash flow hedging activities			Total
Balance as of December 31, 2017	$	(439	)	$	(203	)	$	(1,919	)	$	—		$	(166	)	$	(2,727	)
Balance as of December 31, 2018																			$	(830	)	$	(65	)	$	(1,722	)	$	(10	)	$	147		$	(2,480	)
Other comprehensive income (loss) before reclassifications	(250		)	73			7			(6		)	110			(66		)	(103		)	65			5			7			5			(21		)
Net losses reclassified from accumulated other comprehensive loss	—			—			92			4			138			234
Net losses (gains) reclassified from accumulated other comprehensive loss																			—			—			20			—			(35		)	(15		)
Net current-period other comprehensive income (loss)	(250		)	73			99			(2		)	248			168			(103		)	65			25			7			(30		)	(36		)
Balance as of September 30, 2018	$	(689	)	$	(130	)	$	(1,820	)	$	(2	)	$	82		$	(2,559	)
Balance as of March 31, 2019																			$	(933	)	$	—		$	(1,697	)	$	(3	)	$	117		$	(2,516	)

Other comprehensive ~~income~~loss for the ~~nine~~three months ended ~~September 30, 2018~~March 31, 2019 included foreign currency translation adjustments totaling a loss of ~~$250~~$103 million, which was principally due to the impact of the weakening of the Euro ~~in the nine months ended September 30, 2018~~ on the translation of the company’s ~~assets denominated in the Euro.~~

Euro-denominated assets.



~~2019~~2020 Form 10-Q \|	2119

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

Three months ended
September 30, Nine months ended
September 30,
(in millions) (brackets denote gains) 2019 2018 2019 2018
Pension and post-employment benefits
Amortization of actuarial losses and other^(a)
$ 28
$ 38
$ 83
$ 115
Tax benefit (5 ) (8 ) (17 ) (23 )
Total reclassifications, net of tax $ 23
$ 30
$ 66
$ 92
Cash flow hedging activities
Losses (gains) on foreign currency forward exchange contracts^(b)
$ (42 ) $ 54
$ (119 ) $ 144
Tax expense (benefit) 3
—
10
(6 )
Total reclassifications, net of tax $ (39 ) $ 54
$ (109 ) $ 138
Net investment hedging activities
Gains on derivative amount excluded from effectiveness testing^(c)
$ (10 ) $ —
$ (19 ) $ —
Tax expense 2
—
4
—
Total reclassifications, net of tax $ (8 ) $ —
$ (15 ) $ —



	Three months ended March 31,
(in millions) (brackets denote gains)	2020			2019
Net investment hedging activities
Gains on derivative amount excluded from effectiveness testing^(a)	$	(8	)	$	—
Tax expense	2			—
Total reclassifications, net of tax	$	(6	)	$	—
Pension and post-employment benefits
Amortization of actuarial losses and other^(b)	$	61		$	25
Tax benefit	(13		)	(5		)
Total reclassifications, net of tax	$	48		$	20
Cash flow hedging activities
Gains on foreign currency forward exchange contracts^(c)	$	—		$	(40	)
Gains on treasury rate lock agreements and interest rate swap contracts^(a)	(7		)	—
Tax expense	1			5
Total reclassifications, net of tax	$	(6	)	$	(35	)

(a) Amounts are included in interest expense, net (see Note 8).

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

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

~~(c) Amounts are included in interest expense, net (see Note 9)~~8).

Note 1211 Income Taxes

The effective tax rate was 6%3% for the three months ended March 31, 2020 and ~~5% for the nine months ended September 30, 2019 and 1% for the three and nine months ended September 30, 2018.~~2019. The effective tax rate in each period differed from the U.S. statutory tax rate of 21% principally due to the benefit from foreign operations which reflects the impact of lower income tax rates in locations outside the United States, tax incentives in Puerto Rico and other foreign tax jurisdictions and business development activities. The ~~increase~~effective tax rate for the three months ended March 31, 2020 included the beneficial tax impact of a change in tax rate in a foreign jurisdiction, while the effective tax rate for the three ~~and nine~~ months ended ~~September 30,~~March 31, 2019 ~~over the prior year was principally due to the beneficial impact of the timing of provisions of the Act~~included a tax benefit related to earnings from certain foreign subsidiaries in prior year and changes in the jurisdictional mix of earnings, including a change in fair value of contingent consideration liabilities. These increases were partially offset by the favorable resolution of various tax ~~positions in the current year.~~

positions.

Due to the potential for resolution of federal, state and foreign examinations and the expiration of various statutes of limitations, it is reasonably possible that the company’s gross unrecognized tax benefits balance may change within the next ~~twelve~~12 months by up to ~~$193~~$50 million.

Note 1312 Legal Proceedings and Contingencies

AbbVie is subject to contingencies, such as various claims, legal proceedings and investigations regarding product liability, intellectual property, commercial, securities and other matters that arise in the normal course of business. Loss contingency provisions are recorded for probable losses at management’s best estimate of a loss, or when a best estimate cannot be made, a minimum loss contingency amount within a probable range is recorded. The recorded accrual balance for litigation was approximately ~~$325~~$300 million as of ~~September 30, 2019~~March 31, 2020 and ~~$350~~$290 million as of December 31, ~~2018.~~2019. Initiation of new legal proceedings or a change in the status of existing proceedings may result in a change in the estimated loss accrued by AbbVie. While it is not feasible to predict the outcome of all proceedings and exposures with certainty, management believes that their ultimate disposition should not have a material adverse effect on AbbVie’s consolidated financial position, results of operations or cash flows.



~~2019 Form 10-Q~~ \|	22

Subject to certain exceptions specified in the separation agreement by and between Abbott Laboratories (Abbott) and AbbVie, AbbVie assumed the liability for, and control of, all pending and threatened legal matters related to its business, including liabilities for any claims or legal proceedings related to products that had been part of its business, but were discontinued prior to the



2020 Form 10-Q \|	20

distribution, as well as assumed or retained liabilities, and will indemnify Abbott for any liability arising out of or resulting from such assumed legal matters.

~~Four lawsuits~~One lawsuit against Unimed Pharmaceuticals, LLC, Solvay Pharmaceuticals, Inc. (a company Abbott acquired in February 2010 and now known as AbbVie Products LLC) and others ~~are consolidated for pre-trial purposes~~remains pending in the United States District Court for the Northern District of Georgia for pre-trial purposes under the Multi-District Litigation (MDL) Rules as In re: AndroGel Antitrust Litigation, MDL No. 2084. ~~These cases,~~This case, brought by a direct AndroGel ~~purchasers,~~purchaser, generally ~~allege~~alleges Solvay's 2006 patent litigation settlement agreements and related agreements with 3 generic companies violate federal antitrust laws. ~~Plaintiffs seek~~The plaintiff seeks monetary damages and attorneys' fees.

In September 2014, the FTC filed a lawsuit, FTC v. AbbVie Inc., et al., against AbbVie and others in the United States District Court for the Eastern District of Pennsylvania, alleging that the 2011 patent litigation with 2 generic companies regarding AndroGel was sham litigation and the settlements of that litigation violated federal antitrust law. In May 2015, the court dismissed the FTC’s settlement-related claim. In June 2018, following a bench trial, the court found for the FTC on its sham litigation claim and ordered a disgorgement remedy of $448 million, plus prejudgment interest. The court denied the FTC’s request for injunctive relief. AbbVie is appealing the court’s liability and disgorgement rulings and, based on an assessment of the merits of that appeal, 0 liability has been accrued for this matter. The FTC is also appealing aspects of the court’s trial ruling and the dismissal of its settlement-related claim. In July 2018, a purported class action was filed in the United States District Court for the Eastern District of Pennsylvania on behalf of direct AndroGel purchasers based on the trial court’s ruling in the FTC’s case. In September 2019, 2 individual direct AndroGel purchasers substituted in as the plaintiffs in that lawsuit and withdrew the class allegations. That case, ~~now~~which was pending as Rochester Drug Co-Operative, Inc., et al. v. AbbVie Inc., et al., ~~is stayed pending the appeals~~was settled in ~~the FTC’s case.~~December 2019 and will be dismissed.

In August 2019, direct purchasers of AndroGel filed a lawsuit, King Drug Co. of Florence, Inc., et al. v. AbbVie Inc., et al., against AbbVie and others in the United States District Court for the Eastern District of Pennsylvania, making allegations similar to those in In re: AndroGel Antitrust Litigation (No. II), MDL No. 2084 (above) and FTC v. AbbVie Inc. (above).

Lawsuits are pending against AbbVie and others generally alleging that the 2005 patent litigation settlement involving Niaspan entered into between Kos Pharmaceuticals, Inc. (a company acquired by Abbott in 2006 and presently a subsidiary of AbbVie) and a generic company violates federal and state antitrust laws and state unfair and deceptive trade practices and unjust enrichment laws. Plaintiffs generally seek monetary damages and/or injunctive relief and attorneys' fees. The lawsuits consist of 4 individual plaintiff lawsuits and 2 consolidated purported class actions: 1 brought by Niaspan direct purchasers and 1 brought by Niaspan end-payers. The cases are pending in the United States District Court for the Eastern District of Pennsylvania for coordinated or consolidated pre-trial proceedings under the MDL Rules as In re: Niaspan Antitrust Litigation, MDL No. 2460. In August 2019, the court certified a class of direct purchasers of Niaspan. In October 2016, the Orange County, California District Attorney’s Office filed a lawsuit on behalf of the State of California regarding the Niaspan patent litigation settlement in Orange County Superior Court, asserting a claim under the unfair competition provision of the California Business and Professions Code seeking injunctive relief, restitution, civil penalties and attorneys’ fees. In May 2018, the California Court of Appeal ruled that the District Attorney’s Office may not bring monetary claims beyond the scope of Orange County, which the District Attorney’s Office is appealing.

~~In January and February 2019, two shareholder derivative lawsuits,~~ ~~Brown v. Gonzalez, et al.,~~ ~~and~~ ~~Elfers v. Gonzalez, et al.~~, were filed in the United States District Court for the Northern District of Illinois, alleging that certain AbbVie directors and officers breached their fiduciary duties in connection with HUMIRA patient and reimbursement support services and other services and items of value, as alleged in the ~~State of California~~ ~~case discussed below. The lawsuits were consolidated and, on August 19, 2019, the court granted the plaintiffs’ voluntary dismissal motion.~~

Between March and May 2019, 12 putative class action lawsuits were filed in the United States District Court for the Northern District of Illinois by indirect HUMIRA purchasers, alleging that AbbVie’s settlements with biosimilar manufacturers and AbbVie’s HUMIRA patent portfolio violate state and federal antitrust laws. The court consolidated these lawsuits as In re: Humira (Adalimumab) Antitrust Litigation.

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



~~2019 Form 10-Q~~ \|	23

~~class certification. In February 2019, the court granted the defendants’ summary judgment motion, which the plaintiff appealed to the United States Court of Appeals for the Seventh Circuit.~~

In July 2019, the New Mexico Attorney General filed a lawsuit, State of New Mexico ex rel. Balderas v. AbbVie Inc., et al., in New Mexico District Court for Santa Fe County against AbbVie and other companies alleging their marketing of AndroGel violated New Mexico’s Unfair Practices Act.

In September 2018, the Commissioner of the California Department of Insurance intervened in a qui tam lawsuit, State of California and Lazaro Suarez v. AbbVie Inc., et al., brought under the California Insurance Frauds Prevention Act, in California Superior Court for Alameda County. The Department of Insurance’s complaint alleges that, through patient and reimbursement support services and other services and items of value provided in connection with HUMIRA, AbbVie caused the submission of fraudulent commercial insurance claims for HUMIRA in violation of the California statute. The complaint seeks injunctive relief, an assessment of up to three times the amount of the claims at issue, and civil penalties. In addition, a federal securities lawsuit (Holwill v. AbbVie Inc., et al.) is pending in the United States District Court for the Northern District of Illinois) against AbbVie, its chief executive officer and former chief financial officer, alleging that reasons stated for HUMIRA sales growth in financial filings between 2013 and 2017 were misleading because they omitted the conduct alleged in the Department of Insurance’s complaint.



2020 Form 10-Q \|	21

In ~~November 2014, 5 individuals~~February 2020, a shareholder derivative lawsuit that had previously been filed ~~a putative class action lawsuit,~~ ~~Rubinstein, et al. v Gonzalez, et al.,~~ ~~on behalf of purchasers and sellers of certain Shire plc (Shire) securities between June 20 and October 14, 2014, against AbbVie and its chief executive officer~~ in the United States District Court for the Northern District of Illinois ~~alleging~~and then voluntarily dismissed was refiled in the United States District Court for the District of Delaware. The lawsuit, Elfers v. Gonzalez, et al., alleges that ~~the defendants made and/or are responsible for material misstatements in violation of federal securities laws~~certain AbbVie directors and officers breached their fiduciary duties in connection with ~~AbbVie's proposed transaction~~HUMIRA patient and reimbursement support services and other services and items of value, as alleged in the State of California case discussed above, and in connection with ~~Shire. In~~ ~~October 2019,~~ the ~~court granted final approval to the parties’ class settlement agreement.~~announcements of results of AbbVie’s 2018 Dutch auction tender offer.

In June 2016, a lawsuit, Elliott Associates, L.P., et al. v. AbbVie Inc., was filed by 5 investment funds against AbbVie in the Cook County, Illinois Circuit Court alleging that AbbVie made misrepresentations and omissions in connection with its proposed transaction with Shire. Similar lawsuits were filed between July 2017 and October 2019 against AbbVie and in some instances its chief executive officer in the same court by additional investment funds. Plaintiffs seek compensatory and punitive damages.

Product liability cases were filed in which plaintiffs generally allege that AbbVie and other manufacturers of TRTs did not adequately warn about risks of certain injuries, primarily heart attacks, strokes and blood clots. Approximately ~~3,900~~3,500 claims against AbbVie are consolidated for pre-trial purposes in the United States District Court for the Northern District of Illinois under the MDL Rules as In re: Testosterone Replacement Therapy Products Liability Litigation, MDL No. 2545. Approximately ~~200~~175 claims against AbbVie are pending in various state courts. Plaintiffs generally seek compensatory and punitive damages. In November 2018, AbbVie entered into a Master Settlement Agreement with the Plaintiffs’ Steering Committee in the MDL encompassing existing claims in all courts. All proceedings in pending cases are effectively stayed during the settlement administration process.

Product liability cases are pending in which plaintiffs generally allege that AbbVie did not adequately warn about risk of certain injuries, primarily various birth defects, arising from use of Depakote. Approximately ~~150~~100 cases are pending in the United States District Court for the Southern District of Illinois, and approximately ~~seven~~14 others are pending in various federal and state courts. Plaintiffs generally seek compensatory and punitive damages. Approximately 9080 percent of these pending cases, plus other unfiled claims, are subject to confidential settlement agreements and are expected to be dismissed with prejudice.

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

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

Pharmacyclics LLC, a wholly owned subsidiary of AbbVie, is seeking to enforce its patent rights relating to ibrutinib capsules (a drug Pharmacyclics sells under the trademark IMBRUVICA®). In February 2018 and March 2020, cases were filed in the United States District Court for the District of Delaware against the following defendants: ~~Fresenius Kabi USA, LLC, Fresenius Kabi USA, Inc., and Fresenius Kabi Oncology Limited;~~ Sun Pharma Global FZE and Sun Pharmaceutical Industries Ltd.; ~~Cipla Limited and Cipla USA Inc.; and~~ Zydus Worldwide DMCC and Cadila Healthcare ~~Limited,~~Limited; and Sandoz Inc., and Lek Pharmaceuticals D.D. In each case, Pharmacyclics alleges the defendant’s



~~2019 Form 10-Q~~ \|	24

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

Pharmacyclics LLC, a wholly owned subsidiary of AbbVie, is seeking to enforce its patent rights relating to ibrutinib tablets (a drug Pharmacyclics sells under the trademark IMBRUVICA®). ~~In a case~~Cases were filed in the United States District Court for the District of Delaware in March 2019 ~~Pharmacyclics alleges that~~and March 2020 against Alvogen Pine Brook ~~LLC’s~~LLC and Natco Pharma Ltd.’s, and in April 2020 against Zydus Worldwide DMCC and Cadila Healthcare Limited. In each case, Pharmacyclics alleges defendants’ proposed generic ibrutinib tablet product infringes certain Pharmacyclics patents. Pharmacyclics seeks declaratory and injunctive relief. Janssen Biotech, Inc. which is in a global collaboration with Pharmacyclics concerning the development and marketing of IMBRUVICA, is the co-plaintiff in this suit.



~~2019~~2020 Form 10-Q \|	2522

Note 1413 Segment Information

AbbVie operates in 1 business segment—pharmaceutical products. The following table details AbbVie’s worldwide net revenues:


		Three months ended September 30,				Nine months ended September 30,					Three months ended March 31,
						Nine months ended September 30,					Three months ended March 31,
(in millions)		Three months ended September 30,	2019		2018		2019		2018			2020		2019
Immunology	Immunology									Immunology
HUMIRA	United States	$	3,887	$	3,546	$	10,895	$	10,070	United States	$	3,656	$	3,215
	International	1,049		1,578		3,357		4,948		International	1,047		1,231
	Total	$	4,936	$	5,124	$	14,252	$	15,018	Total	$	4,703	$	4,446
SKYRIZI	United States	$	76	$	—	$	118	$	—	United States	$	266	$	—
	International	15		—		21		—		International	34		—
	Total	$	91	$	—	$	139	$	—	Total	$	300	$	—
RINVOQ	United States	$	14	$	—	$	14	$	—	United States	$	82	$	—
										International	4		—
										Total	$	86	$	—
Hematologic Oncology	Hematologic Oncology									Hematologic Oncology
IMBRUVICA	United States	$	1,042	$	812	$	2,757	$	2,129	United States	$	966	$	829
	Collaboration revenues	215		160		621		455		Collaboration revenues	266		193
	Total	$	1,257	$	972	$	3,378	$	2,584	Total	$	1,232	$	1,022
VENCLEXTA	United States	$	142	$	69	$	364	$	157	United States	$	201	$	105
	International	79		27		177		63		International	116		46
	Total	$	221	$	96	$	541	$	220	Total	$	317	$	151
HCV	HCV									HCV
MAVYRET	United States	$	368	$	444	$	1,167	$	1,206	United States	$	234	$	403
	International	327		395		1,098		1,413		International	325		387
	Total	$	695	$	839	$	2,265	$	2,619	Total	$	559	$	790
VIEKIRA	United States	$	—	$	—	$	—	$	3	International	$	5	$	25
	International	3		23		32		132
	Total	$	3	$	23	$	32	$	135
Other Key Products	Other Key Products									Other Key Products
Creon	United States	$	265	$	239	$	749	$	667	United States	$	276	$	227
Lupron	United States	$	187	$	173	$	546	$	530	United States	$	195	$	191
	International	43		41		122		126		International	38		38
	Total	$	230	$	214	$	668	$	656	Total	$	233	$	229
Synthroid	United States	$	197	$	192	$	582	$	567	United States	$	205	$	182
Synagis	International	$	132	$	97	$	457	$	462	International	$	270	$	287
Duodopa	United States	$	26	$	19	$	72	$	57	United States	$	25	$	22
	International	91		87		271		260		International	99		89
	Total	$	117	$	106	$	343	$	317	Total	$	124	$	111
Sevoflurane	United States	$	18	$	18	$	53	$	54	United States	$	16	$	17
	International	66		68		214		251		International	63		75
	Total	$	84	$	86	$	267	$	305	Total	$	79	$	92
Kaletra	United States	$	7	$	16	$	30	$	42	United States	$	14	$	13
	International	67		72		199		210		International	72		65
	Total	$	74	$	88	$	229	$	252	Total	$	86	$	78
AndroGel	United States	$	53	$	135	$	149	$	393
ORILISSA	United States	$	27	$	3	$	58	$	3	United States	$	30	$	13
	International	—		—		1		—		International	1		—
	Total	$	27	$	3	$	59	$	3	Total	$	31	$	13
AndroGel										United States	$	8	$	74
All other		$	83	$	22	$	438	$	250		$	105	$	101
Total net revenues	Total net revenues	$	8,479	$	8,236	$	24,562	$	24,448	Total net revenues	$	8,619	$	7,828



~~2019~~2020 Form 10-Q \|	2623

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

The following is a discussion and analysis of the financial condition of AbbVie Inc. (AbbVie or the company) as of ~~September 30, 2019~~March 31, 2020 and December 31, ~~2018~~2019 and the results of operations for the three ~~and nine~~ months ended ~~September 30, 2019~~March 31, 2020 and ~~2018.~~2019. This commentary should be read in conjunction with the ~~condensed consolidated financial statements~~Condensed Consolidated Financial Statements and accompanying notes appearing in Item 1, “Financial Statements and Supplementary Data.”

EXECUTIVE OVERVIEW

Company Overview

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

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

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

~~2019~~2020 Strategic Objectives

AbbVie's mission is to be an innovation-driven, patient-focused specialty biopharmaceutical company capable of achieving top-tier financial performance through outstanding execution and a consistent stream of innovative new medicines. AbbVie intends to continue to advance its mission in a number of ways, including: (i) growing revenues by diversifying revenue streams, ~~driving late-stage pipeline assets to the market and~~ ensuring strong commercial execution of new product ~~launches;~~launches and driving late-stage pipeline assets to the market; (ii) ~~continued investment~~continuing to invest and ~~expansion in~~expand its pipeline in support of opportunities in immunology, oncology and neuroscience, with additional targeted investment in cystic fibrosis and women's health as well as continued investment in key on-market products; (iii) expanding operating margins; and (iv) returning cash to shareholders via ~~dividends~~a strong and ~~share repurchases.~~growing dividend while also reducing incremental debt. In addition, AbbVie anticipates several regulatory submissions and key data readouts from key clinical trials in the next ~~twelve~~12 months.

The combination of AbbVie and Allergan will create a diverse entity with leadership positions across immunology, hematologic oncology, aesthetics, neuroscience, women's health, eye care and virology. AbbVie's existing product portfolio and pipeline will be enhanced with numerous Allergan assets and Allergan's product portfolio will benefit from AbbVie's commercial strength, expertise and international infrastructure.

Financial Results

The company's financial performance for the ~~nine~~three months ended ~~September 30, 2019~~March 31, 2020 included delivering worldwide net revenues of ~~$24.6~~$8.6 billion, operating earnings of ~~$9.0~~$3.6 billion, diluted earnings per share of ~~$3.41~~$2.02 and cash flows from operations of ~~$10.0~~$3.8 billion. Worldwide net revenues grew by 2%11% on a constant currency basis ~~primarily driven by revenue~~and reflected growth ~~related to IMBRUVICA~~in the immunology portfolio from SKYRIZI, RINVOQ and ~~VENCLEXTA as well as~~ the continued strength of HUMIRA in the U.S. as well as revenue growth from IMBRUVICA and ~~newly launched immunology assets SKYRIZI and RINVOQ, offset by international HUMIRA biosimilar competition.~~VENCLEXTA. Additionally, net revenues included an inventory stocking benefit related to the COVID-19 pandemic. This stocking benefit is expected to reverse in the second quarter of 2020.

Diluted earnings per share was ~~$3.41~~$2.02 for the ~~nine~~three months ended ~~September 30, 2019~~March 31, 2020 and included the following after-tax costs: (i) ~~$2.7 billion for the change in fair value of contingent consideration liabilities; (ii) $962~~$371 million related to the amortization of intangible assets; (iii) a Stemcentrx-related impairment charge of $823 million net of the related fair value adjustment to contingent consideration liabilities; (iv) $241 million for acquired in-process research and development (IPR&D); (v) $155(ii) $158 million of expenses related to the proposed Allergan ~~acquisition; (vi) $153 million of restructuring charges; and (vii) $95 million for milestone payments. These costs were partially offset by an after-tax benefit of~~ ~~$267 million~~ ~~due to the favorable resolution of various tax positions.~~



~~2019~~2020 Form 10-Q \|	2724

acquisition; (iii) $115 million for milestones and other research and development (R&D) expenses; and (iv) $72 million for the change in fair value of contingent consideration liabilities. Additionally, financial results reflected continued funding to support all stages of AbbVie’s ~~emerging~~ pipeline assets and continued investment in AbbVie’s on-market brands.

In November 2019, the company announced that its board of directors declared an increase in the company's quarterly cash dividend from $1.07 per share to $1.18 per share beginning with the dividend payable in February 2020. This reflects an increase of approximately 10.3% over the previous quarterly rate.

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

Impact of the Coronavirus Disease 2019 (COVID-19)

In March 2020, the World Health Organization declared the outbreak of a novel coronavirus (COVID-19) as a pandemic, which continues to spread throughout the United States and around the world. In response to the growing public health crisis, AbbVie has partnered with global authorities to support the experimental use of the HIV medicine Kaletra/Aluvia (lopinavir/ritonavir) to determine its efficacy in the treatment of COVID-19. Additionally, AbbVie announced a donation of $35 million to increase healthcare capacity, supply critical equipment and deliver food and essential supplies during the crisis. AbbVie continues to closely manage manufacturing and supply chain resources around the world to help ensure that patients continue to receive an uninterrupted supply of their medicines. Clinical trial sites are being monitored locally to protect the safety of study participants, staff and employees. While the impact of COVID-19 on AbbVie's operations to date has not been material, AbbVie expects this matter could negatively impact its results of operations throughout the duration of the outbreak. The extent to which COVID-19 may impact AbbVie's financial condition and results of operations is uncertain.

Research and Development

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

AbbVie’s pipeline currently includes approximately 5060 compounds or indications in clinical development individually or under collaboration or license agreements and is focused on such important medical specialties as immunology, oncology and neuroscience along with targeted investments in cystic fibrosis and women’s health. Of these programs, approximately 30 are in mid- and late-stage development.

The following sections summarize transitions of significant programs from Phase 2 development to Phase 3 development as well as developments in significant Phase 3 and registration programs. AbbVie expects multiple Phase 2 programs to transition into Phase 3 programs in the next ~~twelve~~12 months.

Significant Programs and Developments

Immunology

RINVOQ

In February 2019, the U.S. Food and Drug Administration (FDA) accepted for priority review AbbVie's New Drug Application (NDA) for upadacitinib, an investigational oral JAK1-selective inhibitor, for the treatment of adult patients with moderate to severe rheumatoid arthritis (RA).

~~In February 2019, AbbVie initiated a Phase 3 clinical trial to evaluate the efficacy and safety of upadacitinib in subjects with giant cell arteritis.~~

~~In August 2019, the FDA approved RINVOQ (upadacitinib) for the treatment of adults with moderately to severely active RA who have had an inadequate response or intolerance to methotrexate.~~

In October 2019, AbbVie announced that the Committee for Medicinal Products for Human Use (CHMP) of the European Medicines Agency (EMA) adopted a positive opinion for RINVOQ for the treatment of adults with moderate to severe active RA.

~~In October 2019,~~2020, AbbVie announced top-line results from its ~~first~~second Phase 3 clinical trial of RINVOQ in adult patients with active psoriatic ~~arthritis.~~arthritis (PsA). Results from the SELECT-PsA 21 study, which evaluated RINVOQ versus placebo in patients who did not adequately respond to treatment with one or more ~~biologic DMARDs,~~non-biologic disease-modifying anti-rheumatic drugs (DMARDs), showed that both doses of RINVOQ ~~(15 mg and 30 mg)~~ met the primary ~~endpoint of ACR20 response at week 12. Key~~and key secondary ~~endpoints were also achieved and included HAQ-DI, PASI75, minimal disease activity, ACR50 and ACR70.~~endpoints. The safety profile was consistent with that of previous studies across indications, with no new safety ~~signals~~risks detected.

~~SKYRIZI~~Oncology

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

In April ~~2019,~~2020, AbbVie received U.S. Food and Drug Administration (FDA) approval for the ~~FDA approved SKYRIZI (risankizumab)~~use of IMBRUVICA in combination with rituximab for the treatment of ~~moderate to severe plaque psoriasis in adults who are candidates for systemic therapy~~previously untreated patients with chronic lymphocytic leukemia (CLL) or ~~phototherapy.~~

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



~~2019~~2020 Form 10-Q \|	2825

~~Oncology~~

~~IMBRUVICA~~

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

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

VENCLEXTA

In ~~March 2019,~~February 2020, AbbVie announced that the FDA placed a partial clinical hold on all clinical trials evaluating VENCLEXTA for the investigational treatment of multiple myeloma (MM). The partial clinical hold followed a review of data from the ongoing Phase 3 ~~BELLINI~~VIALE-C trial ~~a study~~of VENCLEXTA in ~~relapsed/refractory MM,~~combination with low-dose cytarabine in which a higher proportion of deaths was observed in the VENCLEXTA arm compared to the control arm of the trial. In June 2019, AbbVie announced that the FDA lifted the partial clinical hold placed on the Phase 3 CANOVA trial, evaluating VENCLEXTA for the investigational treatment of relapsed/refractory MM positive for the translocation (11;14) abnormality, based upon agreement on revisions to the CANOVA study protocol, including new risk mitigation measures, protocol-specified guidelines and updated futility criteria. This action does not impact any of the approved indications for VENCLEXTA, such as CLL ornewly-diagnosed patients with acute myeloid leukemia (AML). did not meet its primary endpoint.

In May 2019, the FDA approved VENCLEXTA, in combination with obinutuzumab, for adult patients with previously untreated CLL/SLL. The approval was based on data from the Phase 3 CLL14 trial, evaluating the efficacy and safety of VENCLEXTA plus obinutuzumab versus obinutuzumab plus chlorambucil in previously untreated patients with CLL, which demonstrated that VENCLEXTA plus obinutuzumab prolonged progression-free survival and achieved higher rates of complete response and minimal residual disease-negativity compared to commonly used standard of care obinutuzumab plus chlorambucil.

~~Depatux-M~~

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

~~Veliparib~~

~~In July 2019,~~March 2020, AbbVie announced that top-line results from ~~the~~its Phase 3 ~~BROCADE3 study evaluating veliparib, an investigational, oral poly (adenosine diphosphate-ribose) polymerase (PARP) inhibitor,~~VIALE-A trial of VENCLEXTA in combination with ~~carboplatin and paclitaxel~~azacitidine in patients with AML met its primary ~~endpoint~~endpoints.

In March 2020, AbbVie received European Commission (EC) approval of ~~progression-free survival~~VENCLYXTO in combination with obinutuzumab for patients with ~~HER2 negative germline BRCA-mutated advanced breast cancer.~~

In July 2019, AbbVie announced that top-line results from the Phase 3 VELIA study, conducted in collaboration with the GOG Foundation, Inc., evaluating veliparib with carboplatin and paclitaxel followed by veliparib maintenance therapy met its primary endpoint of progression-free survival in patients with newly diagnosed ovarian cancer, regardless of biomarker status.

~~Rova-T~~

In August 2019, AbbVie announced the decision to terminate the MERU trial, a Phase 3 study evaluating rovalpituzumab tesirine (Rova-T) as a first-line maintenance therapy for advanced small-cell lung cancer (SCLC). An Independent Data Monitoring Committee recommended terminating the study after results demonstrated no survival benefit at a pre-planned interim analysis for patients receiving Rova-T as compared with placebo. With the closing of the MERU trial, AbbVie announced the termination of the Rova-T research and development program.



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

previously untreated CLL.

Virology/Liver Disease

MAVYRET

In ~~August 2019,~~March 2020, AbbVie announced that the ~~European Commission~~EC granted marketing authorization for MAVIRET ~~(glecaprevir/pibrentasvir)~~ to shorten the once-daily treatment duration from 12 to 8 weeks in treatment-naïve, compensated cirrhotic, chronic hepatitis C (HCV) patients with genotype (GT)1, 2, 4, 5 and 6 infection. An analysis from the same clinical trial evaluating MAVIRET as an 8-week, once-daily treatment option for treatment-naïve, compensated cirrhotic, GT3 HCV patients is ongoing.

~~In September 2019, the FDA approved MAVYRET (glecaprevir/pibrentasvir) to shorten the~~ once-daily treatment duration from 12 to 8 weeks in treatment-naïve, compensated cirrhotic, chronic HCV patients ~~across all genotypes (GT1-6).~~

~~Neuroscience~~

~~In May 2019, AbbVie initiated a Phase~~with genotype 3 ~~clinical trial to evaluate the safety and tolerability of ABBV-951, a subcutaneous levodopa/carbidopa delivery system, in subjects with Parkinson's disease.~~

In July 2019, AbbVie announced the decision to discontinue the Phase 2 ARISE study evaluating ABBV-8E12, an investigational anti-tau antibody, in patients with progressive supranuclear palsy, after an Independent Data Monitoring Committee recommended stopping the trial for futility after the trial showed that ABBV-8E12 did not provide efficacy.

~~Other~~

In July 2019, AbbVie submitted an NDA to the FDA for elagolix in combination with estradiol/norethindrone acetate (E2/NETA) daily add-back therapy for the management of heavy menstrual bleeding associated with uterine fibroids.infection.

For a more comprehensive discussion of AbbVie’s products and pipeline, see the company’s Annual Report on Form 10-K for the year ended December 31, ~~2018.~~2019.



~~2019 Form 10-Q~~ \|	30

RESULTS OF OPERATIONS

Net Revenues

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


	Three months ended September 30,					Percent change						Nine months ended September 30,							Percent change						Three months ended March 31,							Percent change
					At actual currency rates			At constant currency rates				Nine months ended September 30,						At actual currency rates			At constant currency rates				Three months ended March 31,						At actual currency rates			At constant currency rates
(dollars in millions)	Three months ended September 30,	2019		2018				At constant currency rates				2019			2018			At actual currency rates			At constant currency rates				2020			2019			At actual currency rates			At constant currency rates
United States	$	6,244	$	5,597	At actual currency rates		11.6	%		11.6	%		$	17,478		$	15,836			10.4	%		10.4	%		$	6,158		$	5,270			16.8	%		16.8	%
International	2,235		2,639			(15.3	)%		(13.7	)%		7,084			8,612				(17.7	)%		(14.1	)%		2,461			2,558				(3.8	)%		(2.0	)%
Net revenues	$	8,479	$	8,236		3.0	%		3.5	%		$	24,562		$	24,448			0.5	%		1.8	%		$	8,619		$	7,828			10.1	%		10.7	%



~~2019~~2020 Form 10-Q \|	3126

The following table details AbbVie’s worldwide net revenues:


		Three months ended September 30,				Percent change					Nine months ended September 30,						Percent change						Three months ended March 31,					Percent change
		Three months ended September 30,				At actual currency rates		At constant currency rates			Nine months ended September 30,						At actual currency rates		At constant currency rates				Three months ended March 31,					At actual currency rates		At constant currency rates
(dollars in millions)	(dollars in millions)	2019		2018				At constant currency rates		2019			2018			(dollars in millions)	At actual currency rates		At constant currency rates			2020			2019			At actual currency rates		At constant currency rates
Immunology	Immunology					At actual currency rates																Immunology
HUMIRA	United States	$	3,887	$	3,546	9.6	%	9.6	%		$	10,895		$	10,070		8.2	%	8.2	%	United States		$	3,656		$	3,215	13.7	%	13.7	%
	International	1,049		1,578		(33.5	)%	(31.8	)%		3,357			4,948			(32.1	)%	(28.5	)%	International		1,047			1,231		(14.9	)%	(12.8	)%
	Total	$	4,936	$	5,124	(3.7	)%	(3.2	)%		$	14,252		$	15,018		(5.1	)%	(3.9	)%	Total		$	4,703		$	4,446	5.8	%	6.4	%
SKYRIZI	United States	$	76	$	—	n/m		n/m			$	118		$	—		n/m		n/m		United States		$	266		$	—	n/m		n/m
	International	15		—		n/m		n/m			21			—			n/m		n/m		International		34			—		n/m		n/m
	Total	$	91	$	—	n/m		n/m			$	139		$	—		n/m		n/m		Total		$	300		$	—	n/m		n/m
RINVOQ	United States	$	14	$	—	n/m		n/m			$	14		$	—		n/m		n/m		United States		$	82		$	—	n/m		n/m
																					International		4			—		n/m		n/m
																					Total		$	86		$	—	n/m		n/m
Hematologic Oncology	Hematologic Oncology																				Hematologic Oncology
IMBRUVICA	United States	$	1,042	$	812	28.3	%	28.3	%		$	2,757		$	2,129		29.5	%	29.5	%	United States		$	966		$	829	16.6	%	16.6	%
	Collaboration revenues	215		160		34.5	%	34.5	%		621			455			36.5	%	36.5	%	Collaboration revenues		266			193		37.9	%	37.9	%
	Total	$	1,257	$	972	29.3	%	29.3	%		$	3,378		$	2,584		30.7	%	30.7	%	Total		$	1,232		$	1,022	20.6	%	20.6	%
VENCLEXTA	United States	$	142	$	69	>100.0%		>100.0%			$	364		$	157		>100.0%		>100.0%		United States		$	201		$	105	91.5	%	91.5	%
	International	79		27		>100.0%		>100.0%			177			63			>100.0%		>100.0%		International		116			46		>100.0		>100.0
	Total	$	221	$	96	>100.0%		>100.0%			$	541		$	220		>100.0%		>100.0%		Total		$	317		$	151	>100.0		>100.0
HCV	HCV																				HCV
MAVYRET	United States	$	368	$	444	(17.0	)%	(17.0	)%		$	1,167		$	1,206		(3.2	)%	(3.2	)%	United States		$	234		$	403	(42.0	)%	(42.0	)%
	International	327		395		(17.2	)%	(16.4	)%		1,098			1,413			(22.3	)%	(19.3	)%	International		325			387		(16.0	)%	(14.7	)%
	Total	$	695	$	839	(17.1	)%	(16.7	)%		$	2,265		$	2,619		(13.5	)%	(11.9	)%	Total		$	559		$	790	(29.2	)%	(28.6	)%
VIEKIRA	United States	$	—	$	—	n/m		n/m			$	—		$	3		(100.0	)%	(100.0	)%	International		$	5		$	25	(81.2	)%	(80.6	)%
	International	3		23		(88.1	)%	(88.6	)%		32			132			(75.4	)%	(72.5	)%
	Total	$	3	$	23	(88.0	)%	(88.5	)%		$	32		$	135		(76.6	)%	(73.7	)%
Other Key Products	Other Key Products																				Other Key Products
Creon	United States	$	265	$	239	11.2	%	11.2	%		$	749		$	667		12.4	%	12.4	%	United States		$	276		$	227	21.9	%	21.9	%
Lupron	United States	$	187	$	173	8.6	%	8.6	%		$	546		$	530		3.1	%	3.1	%	United States		$	195		$	191	2.1	%	2.1	%
	International	43		41		3.7	%	6.2	%		122			126			(3.3	)%	2.7	%	International		38			38		(0.3	)%	2.1	%
	Total	$	230	$	214	7.7	%	8.2	%		$	668		$	656		1.9	%	3.1	%	Total		$	233		$	229	1.7	%	2.1	%
Synthroid	United States	$	197	$	192	2.3	%	2.3	%		$	582		$	567		2.6	%	2.6	%	United States		$	205		$	182	12.3	%	12.3	%
Synagis	International	$	132	$	97	36.2	%	35.4	%		$	457		$	462		(1.0	)%	2.2	%	International		$	270		$	287	(5.6	)%	(4.1	)%
Duodopa	United States	$	26	$	19	36.4	%	36.4	%		$	72		$	57		25.5	%	25.5	%	United States		$	25		$	22	10.2	%	10.2	%
	International	91		87		5.8	%	9.6	%		271			260			4.5	%	10.7	%	International		99			89		12.0	%	14.9	%
	Total	$	117	$	106	11.3	%	14.4	%		$	343		$	317		8.3	%	13.4	%	Total		$	124		$	111	11.7	%	14.0	%
Sevoflurane	United States	$	18	$	18	(2.5	)%	(2.5	)%		$	53		$	54		(2.2	)%	(2.2	)%	United States		$	16		$	17	(6.1	)%	(6.1	)%
	International	66		68		(3.1	)%	(0.5	)%		214			251			(14.8	)%	(9.8	)%	International		63			75		(15.8	)%	(13.5	)%
	Total	$	84	$	86	(3.0	)%	(0.9	)%		$	267		$	305		(12.5	)%	(8.4	)%	Total		$	79		$	92	(14.0	)%	(12.2	)%
Kaletra	United States	$	7	$	16	(48.7	)%	(48.7	)%		$	30		$	42		(27.7	)%	(27.7	)%	United States		$	14		$	13	3.2	%	3.2	%
	International	67		72		(7.2	)%	(6.1	)%		199			210			(5.1	)%	(1.0	)%	International		72			65		10.8	%	13.1	%
	Total	$	74	$	88	(14.8	)%	(13.9	)%		$	229		$	252		(8.9	)%	(5.5	)%	Total		$	86		$	78	9.5	%	11.4	%
AndroGel	United States	$	53	$	135	(61.1	)%	(61.1	)%		$	149		$	393		(62.2	)%	(62.2	)%
ORILISSA	United States	$	27	$	3	>100.0%		>100.0%			$	58		$	3		>100.0%		>100.0%		United States		$	30		$	13	>100.0		>100.0
	International	—		—		n/m		n/m			1			—			n/m		n/m		International		1			—		>100.0		>100.0
	Total	$	27	$	3	>100.0%		>100.0%			$	59		$	3		>100%		>100%		Total		$	31		$	13	>100.0		>100.0
AndroGel																					United States		$	8		$	74	(89.1	)%	(89.1	)%
All other		$	83	$	22	>100.0%		>100.0%			$	438		$	250		74.5	%	81.3	%			$	105		$	101	2.8	%	4.4	%
Total net revenues	Total net revenues	$	8,479	$	8,236	3.0	%	3.5	%		$	24,562		$	24,448		0.5	%	1.8	%	Total net revenues		$	8,619		$	7,828	10.1	%	10.7	%

n/m – Not meaningful

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

Global HUMIRA sales ~~decreased 3%~~increased 6% for the three months ended March 31, 2020 primarily driven by market growth across therapeutic categories and ~~4% for~~ the ~~nine months ended September 30, 2019 primarily as a result~~timing of COVID-19 inventory stocking impacts, offset by direct biosimilar competition in certain international ~~markets, partially offset by market growth across therapeutic categories.~~markets. In the United States, HUMIRA sales increased ~~10%~~14% for the three months ~~and 8% for~~ended March 31, 2020 driven by market growth across all indications. Additionally, U.S. HUMIRA sales in the ~~nine months ended September~~first quarter included approximately $65 million of



~~2019~~2020 Form 10-Q \|	3227

~~30, 2019 driven by market growth across all indications.~~COVID-19 inventory stocking. Internationally, HUMIRA ~~sales~~revenues decreased ~~32%~~13% for the three months ~~and 29% for the nine months~~ ended ~~September 30, 2019~~March 31, 2020 primarily driven by direct biosimilar competition in certain international markets, ~~following the expiration~~partially offset by approximately $35 million of the European Union composition of matter patent for adalimumab in October 2018. Biosimilar competition for HUMIRA is not expected in the United States until 2023. AbbVie continues to pursue strategies intended to further differentiate HUMIRA from competing products and add to the sustainability of HUMIRA.

COVID-19 inventory stocking.

Net revenues for SKYRIZI were ~~$91~~$300 million for the three months ~~and $139 million for the nine months~~ ended ~~September 30, 2019~~March 31, 2020 following the April 2019 regulatory approvals for the treatment of moderate to severe plaque psoriasis.

Net revenues for RINVOQ were ~~$14~~$86 million for the three ~~and nine~~ months ended ~~September 30, 2019~~March 31, 2020 following the August 2019 FDA approval and December 2019 EC approval for the treatment of moderate to severe rheumatoid arthritis.

Net revenues for IMBRUVICA represent product ~~sales~~revenues in the United States and collaboration revenues outside of the United States related to AbbVie’s 50% share of IMBRUVICA profit. AbbVie's global IMBRUVICA revenues increased ~~29%~~21% for the three months ~~and 31% for the nine months~~ ended ~~September 30, 2019~~March 31, 2020 as a result of continued penetration of IMBRUVICA for patients with CLL as well as ~~favorable pricing.~~

approximately $45 million of COVID-19 inventory stocking.

Net revenues for VENCLEXTA increased by more than 100% for the three ~~and nine~~ months ended ~~September 30, 2019~~March 31, 2020 primarily due to ~~market share gains following additional regulatory approvals~~continued expansion of VENCLEXTA for the treatment of patients with ~~relapsed/refractory~~first-line CLL and ~~first-line AML in 2018 and first-line CLL in 2019.~~

relapsed/refractory CLL.

Global MAVYRET sales decreased by ~~17%~~29% for the three months ~~and 12% for the nine months~~ ended ~~September 30, 2019~~March 31, 2020 primarily driven by competitive dynamics in the U.S. and lower patient volumes in certain international ~~markets and competitive dynamics in the U.S.~~

markets.

Net revenues for Creon increased ~~11%~~22% for the three months ~~and 12% for the nine months~~ ended ~~September 30, 2019~~March 31, 2020 primarily driven by continued market ~~growth.~~growth as well as approximately $11 million of COVID-19 inventory stocking. Creon maintains market leadership in the pancreatic enzyme market.

~~Net revenues for Duodopa increased 14% for the three months and 13% for the nine months ended September 30, 2019 primarily driven by increased market penetration.~~

Gross Margin


	Three months ended September 30,								Nine months ended September 30,								Three months ended March 31,
(dollars in millions)	2019			2018			% change		2019			2018			% change		2020			2019			% change
Gross margin	$	6,559		$	6,401		2	%	$	19,129		$	18,752		2	%	$	6,677		$	6,134		9	%
as a % of net revenues	77		%	78		%			78		%	77		%			77		%	78		%

Gross margin as a percentage of net revenues decreased for the three months ~~and increased for the nine months~~ ended ~~September 30, 2019~~March 31, 2020 compared to the prior year. Gross margin percentage for the three months ended ~~September 30, 2019~~March 31, 2020 was unfavorably impacted by collaboration profit sharing arrangements for IMBRUVICA and VENCLEXTA as well as higher intangible asset amortization and the IMBRUVICA profit sharing arrangement offset by the expiration of HUMIRA royalties. Gross margin percentage for the nine months ended September 30, 2019 was favorably impacted by the expiration of HUMIRA royalties offset by higher intangible asset amortization and the IMBRUVICA profit sharing arrangement.amortization.

Selling, General and Administrative


	Three months ended September 30,								Nine months ended September 30,								Three months ended March 31,
(dollars in millions)	2019			2018			% change		2019			2018			% change		2020			2019			% change
Selling, general and administrative	$	1,657		$	1,919		(14	)%	$	4,991		$	5,470		(9	)%	$	1,695		$	1,680		1	%
as a % of net revenues	20		%	23		%			20		%	22		%			20		%	21		%

Selling, general and administrative (SG&A) expenses as a percentage of net revenues decreased for the three ~~and nine~~ months ended ~~September 30, 2019~~March 31, 2020 compared to the prior year. SG&A expense percentage for the three ~~and nine~~ months ended ~~September 30, 2019~~March 31, 2020 was favorably impacted by ~~litigation reserve~~leverage from revenue growth and lower restructuring charges ~~that decreased~~compared to the prior year. These impacts were partially offset by ~~$221 million for~~higher product launch expenses, transaction costs associated with the ~~three months~~proposed Allergan acquisition and ~~$319 million for the nine months ended September 30, 2019, lower~~ charitable contributions to ~~certain U.S. not-for-profit organizations and international~~support COVID-19 global pandemic relief efforts.



~~2019~~2020 Form 10-Q \|	3328

HUMIRA expense reductions. This favorability was partially offset by new product launch expenses and transaction costs associated with the proposed Allergan acquisition of $26 million for the three months and $50 million for the nine months ended September 30, 2019. In addition, for the nine months ended September 30, 2019, SG&A expense was unfavorably impacted by restructuring charges.

Research and Development and Acquired In-Process Research and Development


	Three months ended September 30,								Nine months ended September 30,								Three months ended March 31,
(dollars in millions)	2019			2018			% change		2019			2018			% change		2020			2019			% change
Research and development	$	2,285		$	1,268		80	%	$	4,865		$	3,834		27	%	$	1,379		$	1,289		7	%
as a % of net revenues	27		%	15		%			20		%	16		%			16		%	16		%
Acquired in-process research and development	$	—		$	55		(100	)%	$	246		$	124		99	%	$	—		$	155		(100	)%

~~Research and development(R&D)~~R&D expenses as a percentage of net revenues ~~increased~~were flat for the three ~~and nine~~ months ended ~~September 30, 2019~~March 31, 2020 compared to the prior year principally due to a $1.0 billion intangible asset impairment charge which represented the remaining value of the IPR&D acquired as part of the 2016 Stemcentrx acquisition following the decision to terminate the Rova-T R&D program. See Note 6 to the Condensed Consolidated Financial Statements for additional information regarding the impairment charge. The remainingyear. R&D expenses included continued funding to support all stages of the company's emerging pipeline assets.

Acquired ~~IPR&D~~in-process research and development (IPR&D) expenses reflect upfront payments related to various collaborations. There were no individually significant transactions during ~~both~~ the three ~~and nine~~ months ended ~~September 30, 2019~~March 31, 2020 and ~~2018.~~2019.

~~Other Operating Expenses~~

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

Other Non-Operating Expenses


	Three months ended September 30,						Nine months ended September 30,						Three months ended March 31,
(in millions)	2019			2018			2019			2018			2020			2019
Interest expense	$	480		$	339		$	1,225		$	968		$	563		$	387
Interest income	(60		)	(37		)	(171		)	(143		)	(135		)	(62		)
Interest expense, net	$	420		$	302		$	1,054		$	825		$	428		$	325

Net foreign exchange loss	$	19		$	2		$	31		$	18		$	5		$	6
Other expense, net	177			94			2,590			411			72			135

Interest expense ~~net~~ increased for the three ~~and nine~~ months ended ~~September 30, 2019~~March 31, 2020 compared to the prior year primarily due to incremental interest and debt issuance costs associated with financing ~~related fees incurred in connection with~~ the proposed Allergan acquisition ~~which totaled $132 million~~partially offset by the favorable impact of lower interest rates on the company’s debt obligations.

Interest income increased for the three months ended March 31, 2020 compared to the prior year primarily due to a higher average cash and ~~$139 million for the nine months ended September 30, 2019, as well as~~cash equivalents balance partially offset by the unfavorable impact of ~~higher~~lower interest ~~rates on the company's debt obligations.~~

rates.

Other expense, net included charges related to changes in fair value of contingent consideration liabilities of ~~$180~~$72 million for the three months ended March 31, 2020 and ~~$2.7 billion for the nine months ended September 30, 2019 compared to charges of $95~~$169 million for the three months ~~and $432 million for the nine months~~ ended ~~September 30, 2018.~~March 31, 2019. The fair value of contingent consideration liabilities is impacted by the passage of time and multiple other inputs, including the probability of success of achieving regulatory/commercial milestones, discount rates, the estimated amount of future sales of the acquired products and other market-based factors. For the three ~~and nine~~ months ended September 30, 2019, the change in fair value represented higher probabilities of success, higher estimated future sales and declining interest rates. The higher probabilities of success resulted from the April 2019 regulatory



~~2019 Form 10-Q~~ \|	34

approvals of SKYRIZI for the treatment of moderate to severe plaque psoriasis. These changes were partially offset by a $91 million decrease in the Stemcentrx contingent consideration liability due to the termination of the Rova-T R&D program during the third quarter of 2019. For the three months ended September 30, 2018,March 31, 2020, the change in fair value represented the passage of ~~time.~~time partially offset by higher discount rates. For the ~~nine~~three months ended ~~September 30, 2018,~~March 31, 2019, the change in fair value represented ~~higher estimated future sales~~lower discount rates and the passage of ~~time partially offset by the effect of rising interest rates.~~time.

Income Tax Expense

The effective tax rate was 6%3% for the three months ended March 31, 2020 and ~~5% for the nine months ended September 30, 2019 and 1% for the three and nine months ended September 30, 2018.~~2019. The effective tax rate in each period differed from the U.S. statutory tax rate of 21% principally due to the benefit from foreign operations which reflects the impact of lower income tax rates in locations outside the United States, tax incentives in Puerto Rico and other foreign tax jurisdictions and business development activities. The ~~increase~~effective tax rate for the three months ended March 31, 2020 included the beneficial tax impact of a change in tax rate in a foreign jurisdiction, while the effective tax rate for the three ~~and nine~~ months ended ~~September 30,~~March 31, 2019 ~~over the prior year was principally due to the beneficial impact of the timing of provisions of the Tax Cuts and Jobs Act (the Act)~~included a tax benefit related to earnings from certain foreign subsidiaries in prior year and changes in the jurisdictional mix of earnings, including a change in fair value of contingent consideration liabilities. These increases were partially offset by the favorable resolution of various tax ~~positions in the current year.~~positions.



2020 Form 10-Q \|	29

FINANCIAL POSITION, LIQUIDITY AND CAPITAL RESOURCES


	Nine months ended September 30,						Three months ended March 31,
(in millions)	2019			2018			2020			2019
Cash flows provided by (used in):
Operating activities	$	10,049		$	10,035		$	3,815		$	3,017
Investing activities	1,211			(723		)	(129		)	(27		)
Financing activities	(7,894		)	(10,571		)	(2,422		)	(5,383		)

Operating cash flows for the ~~nine~~three months ended ~~September 30, 2019 were flat~~March 31, 2020 increased compared to the prior year due to ~~improved results~~earnings growth and the timing of operations resulting from an increase in operating earnings and lower defined benefit plan contributions, offset by higher payments for income taxes. AbbVie’s contributions to its defined benefit plans were $310 million for the nine months ended September 30, 2019 and $848 million for the nine months ended September 30, 2018.

working capital cash flows.

Investing cash flows for the ~~nine~~three months ended ~~September 30,~~March 31, 2020 included capital expenditures of $125 million, net sales and maturities of investment securities totaling $13 million and payments made for acquisitions and investments of $12 million. Investing cash flows for the three months ended March 31, 2019 included net sales and maturities of investment securities totaling ~~$2.1 billion resulting from the sale of substantially all of the company's investments in debt securities,~~$400 million, payments made for acquisitions and investments of ~~$476~~$320 million and capital expenditures of ~~$389~~$107 million. Investing cash flows for the nine months ended September 30, 2018 included payments made for acquisitions and investments of $541 million, capital expenditures of $515 million and net sales and maturities of investment securities totaling $333 million.

Financing cash flows ~~for the nine months ended September 30, 2019~~ included the repayment of AbbVie's $3.0 billion 364-day term loan credit agreement that was scheduled to mature in June 2019. In September 2019, the company issued €1.4 billion aggregate principal amount of unsecured senior Euro notes. In October 2019, the company used the proceeds to redeem €1.4 billion aggregate principal amount of 0.38% senior Euro notes that were due to mature in November 2019.

~~The company made~~ cash dividend payments of ~~$4.8~~$1.8 billion for the ~~nine~~three months ended ~~September 30, 2019~~March 31, 2020 and ~~$4.1~~$1.6 billion for the ~~nine~~three months ended ~~September 30, 2018.~~March 31, 2019. The increase in cash dividend payments was driven by an increase in the quarterly dividend rate. On ~~September 6, 2019,~~February 20, 2020, the board of directors declared a quarterly cash dividend of ~~$1.07~~$1.18 per share for stockholders of record at the close of business on ~~October~~April 15, ~~2019,~~2020, payable on ~~November~~May 15, 2019. In November 2019, the company announced that its board of directors declared an increase in the company's quarterly cash dividend from $1.07 per share to $1.18 per share beginning with the dividend payable in February 2020 to stockholders of record as of January 15, 2020. ~~This reflects an increase of approximately 10.3% over the previous quarterly rate.~~ The timing, declaration, amount of and payment of any dividends by AbbVie in the future is within the discretion of its board of directors and will depend upon many factors, including AbbVie’s financial condition, earnings, capital requirements of its operating subsidiaries, covenants associated with certain of AbbVie’s debt service obligations, legal requirements, regulatory constraints, industry practice, ability to access capital markets and other factors deemed relevant by its board of directors.



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

The company's stock repurchase authorization permits purchases of AbbVie shares from time to time in open-market or private transactions at management's discretion. The program has no time limit and can be discontinued at any time. Under this authorization, AbbVie repurchased 6 million shares for $500 million during the three months ended March 31, 2020 and 4 million shares for $300 million during the ~~nine~~three months ended ~~September 30, 2019 and 94 million shares for $9.8 billion during the nine months ended September 30, 2018.~~March 31, 2019. AbbVie cash-settled $201 million of its December 2018 ~~open-market~~open market purchases in January 2019.

During the nine months ended September 30, 2019, AbbVie made contingent consideration milestone and royalty payments totaling $179 million following the commercial launch of SKYRIZI in certain geographies. $120 million of these payments were included in financing cash flows and $59 million of the payments were included in operating cash flows.

~~During the nine months ended September 30, 2019 and 2018, the company issued and redeemed commercial paper. The balance of commercial paper outstanding was $699 million as of December 31, 2018.~~ There were no commercial paper borrowings outstanding as of ~~September 30,~~March 31, 2020 and December 31, 2019. AbbVie may issue additional commercial paper or retire commercial paper to meet liquidity requirements as needed.

~~During the nine months ended September 30, 2019, AbbVie paid debt issuance costs of $248 million, primarily related to financing fees associated with the proposed Allergan acquisition.~~

In connection with the proposed acquisition of Allergan, ~~on June 25,~~in July 2019, AbbVie entered into a ~~364-day bridge credit agreement and on July 12, 2019, AbbVie entered into a~~$6.0 billion term loan credit agreement. In October 2019, AbbVie commenced offers to exchange any and all outstanding notes of certain series issued by Allergan for up to $15.5 billion aggregate principal amount and €3.7 billion aggregate principal amount of new notes to be issued by AbbVie and cash, subject to conditions including the closing of the proposed acquisition. See Note 48 to the ~~condensed consolidated financial statements~~Condensed Consolidated Financial Statements for additional information.

Credit Risk

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

AbbVie continues to do business with foreign governments in certain countries significantly impacted by the COVID-19 pandemic. AbbVie has assessed credit risk in these countries and currently does not believe the economic conditions in these countries will have a significant impact on the company’s liquidity, cash flow or financial flexibility. However, if government funding were to become unavailable in these countries or if significant adverse changes in their reimbursement practices were to occur, AbbVie may not be able to collect the entire balance of receivables outstanding as of March 31, 2020. AbbVie will continue to monitor information as it becomes available with respect to COVID-19 and evaluate any expected impact on the company’s receivables.



2020 Form 10-Q \|	30

Credit Facility, Access to Capital and Credit Ratings

Credit Facility

~~In August 2019,~~ AbbVie ~~entered into an amended and restated~~currently has a $4.0 billion five-year revolving credit facility that matures in August 2024. This ~~amended~~credit facility enables the company to borrow funds on an unsecured basis at variable interest rates and contains various covenants. At ~~September 30, 2019,~~March 31, 2020, the company was in compliance with all ~~its credit facility covenants. Commitment~~covenants, and commitment fees under the credit facility were insignificant. No amounts were outstanding under the company's credit ~~facilities~~facility as of ~~September 30, 2019~~March 31, 2020 and December 31, ~~2018.~~2019.

Access to Capital

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

Credit Ratings

~~On June 25, 2019, following~~Following the announcement of the proposed acquisition of Allergan and the $30.0 billion senior notes issuance, Moody's Investor Service affirmed its Baa2 senior unsecured long-term rating and Prime-2 short-term rating with a stable outlook. S&P Global Ratings revised its ratings outlook to negative from stable and expects to lower the issuer credit rating by one notch to BBB+ from A- and the short-term rating to A-2 from A-1 when the acquisition is complete.



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

Unfavorable changes to the ratings may have an adverse impact on future financing arrangements; however, they would not affect the company’s ability to draw on its credit facility and would not result in an acceleration of scheduled maturities of any of the company’s outstanding debt.

CRITICAL ACCOUNTING POLICIES

A summary of the company’s significant accounting policies is included in Note 2, “Summary of Significant Accounting Policies” in AbbVie's Annual Report on Form 10-K for the year ended December 31, ~~2018. Significant~~2019. There have been no significant changes in the company’s application of its critical accounting policies ~~include~~during the ~~adoption of a new accounting standard that establishes a new lease accounting framework. See Notes 1 and 8 to the condensed consolidated financial statements for additional information.~~three months ended March 31, 2020.

FORWARD-LOOKING STATEMENTS

Some statements in this quarterly report on Form 10-Q may be forward-looking statements for purposes of the Private Securities Litigation Reform Act of 1995. The words “believe,” “expect,” “anticipate,” “project,” and similar expressions, among others, generally identify forward-looking statements. AbbVie cautions that these forward-looking statements are subject to risks and uncertainties that may cause actual results to differ materially from those indicated in the forward-looking statements. Such risks and uncertainties include, but are not limited to, challenges to intellectual property, competition from other products, difficulties inherent in the research and development process, adverse litigation or government action, and changes to laws and regulations applicable to our industry. Additional information about the economic, competitive, governmental, technological and other factors that may affect AbbVie’s operations is set forth in Item 1A, “Risk Factors,” in AbbVie’s Annual Report on Form 10-K for the year ended December 31, ~~2018,~~2019, which has been filed with the Securities and Exchange Commission. AbbVie notes these factors for investors as permitted by the Private Securities Litigation Reform Act of 1995. AbbVie undertakes no obligation to release publicly any revisions to forward-looking statements as a result of subsequent events or developments, except as required by law.

ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK

For a discussion of the company's market risk, see Item 7A, "Quantitative and Qualitative Disclosures About Market Risk" in AbbVie's Annual Report on Form 10-K for the year ended December 31, ~~2018.~~2019.



~~2019~~2020 Form 10-Q \|	3731

ITEM 4. CONTROLS AND PROCEDURES

DISCLOSURE CONTROLS AND PROCEDURES

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

INTERNAL CONTROL OVER FINANCIAL REPORTING

Changes in internal control over financial reporting. There were no changes in AbbVie’s internal control over financial reporting (as defined in Rule 13a-15(f) under the Exchange Act) that have materially affected, or are reasonably likely to materially affect, AbbVie’s internal control over financial reporting during the quarter ended ~~September 30, 2019.~~March 31, 2020.

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

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



~~2019~~2020 Form 10-Q \|	3832

PART II. OTHER INFORMATION

ITEM 1. LEGAL PROCEEDINGS

Information pertaining to legal proceedings is provided in Note 1312 to the ~~condensed consolidated financial statements~~Condensed Consolidated Financial Statements and is incorporated by reference herein.

ITEM 1A. RISK FACTORS

There have been no material changes to the risk factors disclosed in AbbVie’s Annual Report on Form 10-K for the fiscal year ended December 31, ~~2018,~~2019, except for the following:

~~The proposed acquisition of Allergan plc (“Allergan”) may not be completed on~~Public health outbreaks, epidemics or pandemics, such as the ~~currently contemplated timeline or terms, or at all, and may not achieve the intended benefits.~~

Consummation of the acquisition of Allergan by AbbVie is conditioned on, among other things, obtaining necessary governmental and regulatory approvals. If any of the conditions to the acquisition is not satisfied, it could delay or prevent the proposed acquisition from occurring, which could negatively impact AbbVie’s share price and future business and financial results. Further, as a condition to their approval of the acquisition, agencies may impose requirements, limitations or costs or require divestitures or place restrictions on the conduct of AbbVie’s business after the closing. These requirements, limitations, costs, divestitures or restrictions could jeopardize or delay the consummation of the acquisition or may reduce the anticipated benefits of the transaction. AbbVie will incur increased indebtedness to fund the cash consideration for the acquisition and such indebtedness could adversely affect AbbVie's business, financial condition, or results of operations. In addition, changes in laws and regulations, including Irish legislation implementing a tax increase payable upon completion of the proposed acquisition,coronavirus (COVID-19), could adversely impact AbbVie's ~~post-acquisition~~operations and financial ~~results. Following~~condition.

Public health outbreaks, epidemics or pandemics could adversely impact AbbVie's operations and financial condition. In March 2020, a novel strain of coronavirus (COVID-19) was designated a global pandemic and many countries, including the ~~proposed acquisition,~~United States, declared national emergencies and implemented preventive measures such as travel bans and shelter in place or total lock-down orders. The spread of COVID-19 has caused AbbVie to modify its business practices (including instituting remote work for many of AbbVie's employees), and AbbVie may take further actions as may be required by government authorities or as AbbVie determines are in the best interests of AbbVie's employees, patients, customers and business partners.

The impact of COVID-19 on AbbVie's operations, including, among others, its manufacturing and supply chain, sales and marketing, commercial and clinical trial operations, to-date has not ~~realize~~been material, but over the ~~proposed acquisition’s intended benefits within~~long-term is uncertain and cannot be predicted with confidence. The extent of the ~~expected timeframe or at all.~~adverse impact of COVID-19 on AbbVie's operations will depend on the extent and severity of the continued spread of COVID-19 globally, the timing and nature of actions taken to respond to COVID-19 and the resulting economic consequences. Ultimately, the outbreak could have a material adverse impact on AbbVie's operations and financial condition.

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

Period
(a) Total
Number of
Shares
(or Units)
Purchased
(b) Average
Price Paid
per Share
(or Unit) (c) Total Number
of Shares (or
Units) Purchased
as Part of Publicly
Announced Plans
or Programs

(d) Maximum
Number (or
Approximate
Dollar Value) of
Shares (or Units)
that May Yet Be
Purchased Under
the Plans or
Programs

July 1, 2019 – July 31, 2019 1,281
⁽¹⁾
$71.19
⁽¹⁾
—
$3,950,021,071
August 1, 2019 – August 31, 2019 1,290
⁽¹⁾
$65.06
⁽¹⁾
—
$3,950,021,071
September 1, 2019 – September 30, 2019 1,245
⁽¹⁾
$67.27
⁽¹⁾
—
$3,950,021,071
Total 3,816
⁽¹⁾
$67.84
⁽¹⁾
—
$3,950,021,071



Period	(a) Total Number of Shares (or Units) Purchased		(b) Average Price Paid per Share (or Unit)		(c) Total Number of Shares (or Units) Purchased as Part of Publicly Announced Plans or Programs	(d) Maximum Number (or Approximate Dollar Value) of Shares (or Units) that May Yet Be Purchased Under the Plans or Programs
January 1, 2020 – January 31, 2020	973	⁽¹⁾	$89.80	⁽¹⁾	—	$3,950,021,071
February 1, 2020 – February 29, 2020	2,453,899	⁽¹⁾	$83.66	⁽¹⁾	2,452,782	$3,744,836,046
March 1, 2020 – March 31, 2020	3,391,136	⁽¹⁾	$88.02	⁽¹⁾	3,341,886	$3,450,069,690
Total	5,846,008	⁽¹⁾	$86.19	⁽¹⁾	5,794,668	$3,450,069,690


1.	In addition to AbbVie shares repurchased on the open market under a publicly announced program, if any, these shares also included the shares purchased on the open market for the benefit of participants in the AbbVie Employee Stock Purchase Plan – ~~1,281~~973 in ~~July; 1,290~~January; 1,117 in ~~August;~~February; and ~~1,245~~49,250 in ~~September.~~March.

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



~~2019~~2020 Form 10-Q \|	3933

ITEM 6. EXHIBITS

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



Exhibit No.		Exhibit Description

~~1.1~~2.1		*UnderwritingAmendment to the Transaction Agreement, dated ~~September 17, 2019, among AbbVie Inc. and Morgan Stanley & Co. International plc, HSBC Bank plc and Merrill Lynch International (acting for themselves and~~ as ~~representatives~~ of ~~the several underwriters named therein) (incorporated by reference to Exhibit 1.1 of AbbVie’s Current Report on Form 8-K filed on September 23, 2019).~~

~~4.2~~		*Supplemental Indenture No. 6, dated September 26, 2019, amongMay 5, 2020, between AbbVie Inc., ~~U.S. Bank National Association, as trustee, transfer agent~~Allergan plc and ~~registrar, and Elavon Financial Services DAC, UK Branch, as paying agent (incorporated by reference to Exhibit 4.2 of AbbVie’s Current Report on Form 8-K filed on September 26, 2019).~~

~~4.3~~		*Agency Agreement, dated September 26, 2019, among AbbVie Inc., U.S. Bank National Association, as trustee, transfer agent and registrar, and Elavon Financial Services DAC, UK Branch, as paying agent (incorporated by reference to Exhibit 4.3 of AbbVie’s Current Report on Form 8-K filed on September 26, 2019).Venice Subsidiary, LLC.

10.1		Amended and Restated Revolving Credit Agreement, dated asForm of ~~August 27, 2019, among~~ AbbVie the lenders and other parties party thereto and JPMorgan Chase Bank, N.A., as administrative agent (incorporated by reference to Exhibit 10.1 of AbbVie’s Current Report on Form 8-K filed on August 30, 2019).Inc. Performance-Vested Restricted Stock Unit Agreement

10.2		Form of AbbVie Inc. Performance Share Award Agreement*

10.3		Form of AbbVie Inc. Non-Employee Director RSU Agreement (US)*

10.4		Form of AbbVie Inc. Non-Qualified Stock Option Agreement*

10.5		Form of AbbVie Inc. Retention RSU Agreement - Ratable Vesting*

10.6		AbbVie Non-Employee Directors' Fee Plan, as amended and restated.**

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

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

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

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

101		The following financial statements and notes from the AbbVie Inc. Quarterly Report on Form 10-Q for the quarter ended ~~September 30, 2019,~~March 31, 2020, filed on ~~November 6, 2019,~~May 8, 2020, formatted in iXBRL (Inline eXtensible Business Reporting Language): (i) Condensed Consolidated Statements of Earnings; (ii) Condensed Consolidated Statements of Comprehensive Income; (iii) Condensed Consolidated Balance Sheets; (iv) Condensed Consolidated Statements of Equity; (v) Condensed Consolidated Statements of Cash Flows; and (vi) the Notes to Condensed Consolidated Financial Statements.

104		Cover Page Interactive Data File (the cover page from the AbbVie Inc. Quarterly Report on Form 10-Q formatted as Inline XBRL and contained in Exhibit 101).

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

** Denotes management contract or compensatory plan or arrangement required to be filed as an exhibit hereto.



~~2019~~2020 Form 10-Q \|	4034

SIGNATURE

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



		ABBVIE INC.


	By:	/s/ Robert A. Michael
		Robert A. Michael
		Executive Vice President,
		Chief Financial Officer

Date: ~~November 6, 2019~~May 8, 2020



~~2019~~2020 Form 10-Q \|	4135



PART I.	FINANCIAL INFORMATION
		Page

Item 1.	FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA	2
Item 2.	MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS	2724
Item 3.	QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK	3731
Item 4.	CONTROLS AND PROCEDURES	3832

PART II.	OTHER INFORMATION

Item 1.	LEGAL PROCEEDINGS	3933
Item 1A.	RISK FACTORS	3933
Item 2.	UNREGISTERED SALES OF EQUITY SECURITIES AND USE OF PROCEEDS	3933
Item 6.	EXHIBITS	4034



(in millions)	Operating leases		Finance leases		Total ^(a)(b)
2019	$	32	$	6	$	38
2020	116		10		126
2021	99		9		108
2022	56		3		59
2023	35		1		36
Thereafter	80		—		80
Total lease payments	418		29		447
Less: Interest	43		1		44
Present value of lease liabilities	$	375	$	28	$	403



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