UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM
(Mark One)
For the quarterly period ended
OR
For the transition period from to
Commission File No.
An |
| I.R.S. Employer Identification No. |
Telephone: (
Securities Registered Pursuant to Section 12(b) of the Act:
Title of Each Class |
| Trading Symbol(s) |
| Name of Each Exchange on Which Registered |
Indicate by check mark whether the registrant: (l) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of l934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days.
Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§ 229.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files).
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.
☒ | Accelerated Filer | ☐ | |
Non-Accelerated Filer | ☐ | Smaller reporting company | |
Emerging growth company |
If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ◻
Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes ☐ No
As of June 30, 2020, Abbott Laboratories had
Abbott Laboratories
Table of Contents
Page | |
Item 1. Financial Statements and Supplementary Data | |
3 | |
4 | |
5 | |
Condensed Consolidated Statement of Shareholders’ Investment | 6 |
8 | |
9 | |
Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations | 18 |
23 | |
23 | |
Item 2. Unregistered Sales of Equity Securities and Use of Proceeds | 24 |
25 | |
26 |
2
Abbott Laboratories and Subsidiaries
Condensed Consolidated Statement of Earnings
(Unaudited)
(dollars in millions except per share data; shares in thousands)
Three Months Ended June 30 | Six Months Ended June 30 | |||||||||||
| 2020 |
| 2019 |
| 2020 |
| 2019 | |||||
Net sales | $ | | $ | | $ | | $ | | ||||
Cost of products sold, excluding amortization of intangible assets |
| |
| |
| |
| | ||||
Amortization of intangible assets |
| |
| |
| |
| | ||||
Research and development |
| |
| |
| |
| | ||||
Selling, general and administrative |
| |
| |
| |
| | ||||
Total operating cost and expenses |
| |
| |
| |
| | ||||
Operating earnings |
| |
| |
| |
| | ||||
Interest expense |
| |
| |
| |
| | ||||
Interest (income) |
| ( |
| ( |
| ( |
| ( | ||||
Net foreign exchange (gain) loss |
| ( |
| ( |
| |
| | ||||
Other (income) expense, net |
| |
| ( |
| |
| ( | ||||
Earnings from continuing operations before taxes |
| |
| |
| |
| | ||||
Tax expense (benefit) on earnings from continuing operations |
| ( |
| |
| |
| | ||||
Earnings from continuing operations |
| |
| |
| |
| | ||||
Earnings from discontinued operations, net of tax | — | — | | — | ||||||||
Net Earnings |
| $ | |
| $ | | $ | |
| $ | | |
Basic Earnings Per Common Share — | ||||||||||||
Continuing operations |
| $ | |
| $ | | $ | |
| $ | | |
Discontinued operations | — |
| — |
| |
| — | |||||
Net earnings |
| $ | |
| $ | | $ | |
| $ | | |
Diluted Earnings Per Common Share — | ||||||||||||
Continuing operations |
| $ | |
| $ | | $ | |
| $ | | |
Discontinued operations |
| — |
| — |
| |
| — | ||||
Net earnings |
| $ | |
| $ | | $ | |
| $ | | |
Average Number of Common Shares Outstanding Used for Basic Earnings Per Common Share |
| |
| |
| |
| | ||||
Dilutive Common Stock Options |
| |
| |
| |
| | ||||
Average Number of Common Shares Outstanding Plus Dilutive Common Stock Options |
| |
| |
| |
| | ||||
Outstanding Common Stock Options Having No Dilutive Effect |
| |
| |
| |
| | ||||
The accompanying notes to the condensed consolidated financial statements are an integral part of this statement.
3
Abbott Laboratories and Subsidiaries
Condensed Consolidated Statement of Comprehensive Income
(Unaudited)
(dollars in millions)
Three Months Ended June 30 | Six Months Ended June 30 | |||||||||||
| 2020 |
| 2019 |
| 2020 |
| 2019 | |||||
Net Earnings | $ | | $ | | $ | | $ | | ||||
Foreign currency translation gain (loss) adjustments |
| |
| |
| ( |
| | ||||
Net actuarial gains (losses) and amortization of net actuarial losses and prior service costs and credits, net of taxes of $ |
| |
| |
| |
| | ||||
Net gains (losses) for derivative instruments designated as cash flow hedges and other, net of taxes of $( |
| ( |
| ( |
| |
| ( | ||||
Other comprehensive income (loss) |
| |
| |
| ( |
| | ||||
Comprehensive Income |
| $ | |
| $ | | $ | |
| $ | | |
June 30, | December 31, | |||||
| 2020 |
| 2019 | |||
Supplemental Accumulated Other Comprehensive Income (Loss) Information, net of tax: | ||||||
Cumulative foreign currency translation (loss) adjustments | $ | ( | $ | ( | ||
Net actuarial (losses) and prior service (costs) and credits |
| ( |
| ( | ||
Cumulative gains (losses) on derivative instruments designated as cash flow hedges and other |
| |
| ( | ||
Accumulated other comprehensive income (loss) | $ | ( | $ | ( | ||
The accompanying notes to the condensed consolidated financial statements are an integral part of this statement.
4
Abbott Laboratories and Subsidiaries
Condensed Consolidated Balance Sheet
(Unaudited)
(dollars in millions)
June 30, | December 31, | |||||
| 2020 |
| 2019 | |||
Assets | ||||||
Current Assets: | ||||||
Cash and cash equivalents | $ | | $ | | ||
Short-term investments |
| |
| | ||
Trade receivables, less allowances of $ |
| |
| | ||
Inventories: | ||||||
Finished products |
| |
| | ||
Work in process |
| |
| | ||
Materials |
| |
| | ||
Total inventories |
| |
| | ||
Prepaid expenses and other receivables |
| |
| | ||
Total Current Assets |
| |
| | ||
Investments |
| |
| | ||
Property and equipment, at cost |
| |
| | ||
Less: accumulated depreciation and amortization |
| |
| | ||
Net property and equipment |
| |
| | ||
Intangible assets, net of amortization |
| |
| | ||
Goodwill |
| |
| | ||
Deferred income taxes and other assets |
| |
| | ||
| $ | |
| $ | | |
Liabilities and Shareholders’ Investment | ||||||
Current Liabilities: | ||||||
Short-term borrowings |
| $ | | $ | | |
Trade accounts payable |
| |
| | ||
Salaries, wages and commissions |
| |
| | ||
Other accrued liabilities |
| |
| | ||
Dividends payable |
| |
| | ||
Income taxes payable |
| |
| | ||
Current portion of long-term debt |
| |
| | ||
Total Current Liabilities |
| |
| | ||
Long-term debt |
| |
| | ||
Post-employment obligations, deferred income taxes and other long-term liabilities |
| |
| | ||
Commitments and Contingencies | ||||||
Shareholders’ Investment: | ||||||
Preferred shares, |
|
| ||||
Common shares, without par value Authorized — |
| |
| | ||
Common shares held in treasury, at cost — Shares: 2020: |
| ( |
| ( | ||
Earnings employed in the business |
| |
| | ||
Accumulated other comprehensive income (loss) |
| ( |
| ( | ||
Total Abbott Shareholders’ Investment |
| |
| | ||
Noncontrolling Interests in Subsidiaries |
| |
| | ||
Total Shareholders’ Investment |
| |
| | ||
| $ | | $ | | ||
The accompanying notes to the condensed consolidated financial statements are an integral part of this statement.
5
Abbott Laboratories and Subsidiaries
Condensed Consolidated Statement of Shareholders’ Investment
(Unaudited)
(in millions except shares and per share data)
Three Months Ended June 30 | ||||||
| 2020 |
| 2019 | |||
Common Shares: |
|
|
|
| ||
Balance at March 31 |
|
|
|
| ||
Shares: 2020: | $ | | $ | | ||
Issued under incentive stock programs |
|
|
|
| ||
Shares: 2020: |
| |
| | ||
Share-based compensation |
| |
| | ||
Issuance of restricted stock awards |
| ( |
| ( | ||
Balance at June 30 | ||||||
Shares: 2020: | $ | | $ | | ||
Common Shares Held in Treasury: |
|
|
|
| ||
Balance at March 31 | ||||||
Shares: 2020: | $ | ( | $ | ( | ||
Issued under incentive stock programs | ||||||
Shares: 2020: |
| |
| | ||
Purchased | ||||||
Shares: 2020: |
| ( |
| ( | ||
Balance at June 30 | ||||||
Shares: 2020: | $ | ( | $ | ( | ||
Earnings Employed in the Business: |
|
|
|
| ||
Balance at March 31 | $ | | $ | | ||
Net earnings |
| |
| | ||
Cash dividends declared on common shares (per share — 2020: $ |
| ( |
| ( | ||
Effect of common and treasury share transactions |
| ( |
| ( | ||
Balance at June 30 | $ | | $ | | ||
Accumulated Other Comprehensive Income (Loss): |
|
|
|
| ||
Balance at March 31 | $ | ( | $ | ( | ||
Other comprehensive income (loss) |
| |
| | ||
Balance at June 30 | $ | ( | $ | ( | ||
Noncontrolling Interests in Subsidiaries: |
|
|
|
| ||
Balance at March 31 | $ | | $ | | ||
Noncontrolling Interests’ share of income, business combinations, net of distributions |
| |
| | ||
Balance at June 30 | $ | | $ | | ||
The accompanying notes to condensed consolidated financial statements are an integral part of this statement.
6
Abbott Laboratories and Subsidiaries
Condensed Consolidated Statement of Shareholders’ Investment
(Unaudited)
(in millions except shares and per share data)
Six Months Ended June 30 | ||||||
| 2020 |
| 2019 | |||
Common Shares: | ||||||
Balance at January 1 | ||||||
Shares: 2020: | $ | | $ | | ||
Issued under incentive stock programs | ||||||
Shares: 2020: |
| |
| | ||
Share-based compensation |
| |
| | ||
Issuance of restricted stock awards |
| ( |
| ( | ||
Balance at June 30 | ||||||
Shares: 2020: | $ | | $ | | ||
Common Shares Held in Treasury: | ||||||
Balance at January 1 | ||||||
Shares: 2020: | $ | ( | $ | ( | ||
Issued under incentive stock programs | ||||||
Shares: 2020: | |
| | |||
Purchased |
| |||||
Shares: 2020: |
| ( |
| ( | ||
Balance at June 30 | ||||||
Shares: 2020: | $ | ( | $ | ( | ||
Earnings Employed in the Business: | ||||||
Balance at January 1 | $ | | $ | | ||
Impact of adoption of new accounting standards |
| ( |
| — | ||
Net earnings |
| |
| | ||
Cash dividends declared on common shares (per share — 2020: $ |
| ( |
| ( | ||
Effect of common and treasury share transactions |
| |
| ( | ||
Balance at June 30 | $ | | $ | | ||
Accumulated Other Comprehensive Income (Loss): | ||||||
Balance at January 1 | $ | ( | $ | ( | ||
Other comprehensive income (loss) |
| ( |
| | ||
Balance at June 30 | $ | ( | $ | ( | ||
Noncontrolling Interests in Subsidiaries: | ||||||
Balance at January 1 | $ | | $ | | ||
Noncontrolling Interests’ share of income, business combinations, net of distributions |
| |
| | ||
Balance at June 30 | $ | | $ | | ||
The accompanying notes to condensed consolidated financial statements are an integral part of this statement.
7
Abbott Laboratories and Subsidiaries
Condensed Consolidated Statement of Cash Flows
(Unaudited)
(dollars in millions)
Six Months Ended June 30 | ||||||
| 2020 |
| 2019 | |||
Cash Flow From (Used in) Operating Activities: | ||||||
Net earnings | $ | | $ | | ||
Adjustments to reconcile net earnings to net cash from operating activities - | ||||||
Depreciation |
| |
| | ||
Amortization of intangible assets |
| |
| | ||
Share-based compensation | | | ||||
Trade receivables |
| |
| ( | ||
Inventories |
| ( |
| ( | ||
Other, net |
| ( |
| ( | ||
Net Cash From Operating Activities |
| |
| | ||
Cash Flow From (Used in) Investing Activities: | ||||||
Acquisitions of property and equipment |
| ( |
| ( | ||
Acquisitions of businesses and technologies, net of cash acquired | ( | ( | ||||
Proceeds from business dispositions | | | ||||
Sales (purchases) of other investment securities, net |
| ( |
| | ||
Other |
| |
| | ||
Net Cash (Used in) Investing Activities |
| ( |
| ( | ||
Cash Flow From (Used in) Financing Activities: | ||||||
Net borrowings (repayments) of short-term debt and other |
| |
| | ||
Proceeds from issuance of long-term debt | | — | ||||
Repayments of long-term debt |
| ( |
| ( | ||
Purchases of common shares |
| ( |
| ( | ||
Proceeds from stock options exercised |
| |
| | ||
Dividends paid |
| ( |
| ( | ||
Other | ( | — | ||||
Net Cash (Used in) Financing Activities |
| ( |
| ( | ||
Effect of exchange rate changes on cash and cash equivalents |
| ( |
| | ||
Net Increase (Decrease) in Cash and Cash Equivalents |
| |
| ( | ||
Cash and Cash Equivalents, Beginning of Year |
| |
| | ||
Cash and Cash Equivalents, End of Period |
| $ | |
| $ | |
The accompanying notes to the condensed consolidated financial statements are an integral part of this statement.
8
Abbott Laboratories and Subsidiaries
Notes to the Condensed Consolidated Financial Statements
June 30, 2020
(Unaudited)
Note 1 — Basis of Presentation
The accompanying unaudited, condensed consolidated financial statements have been prepared pursuant to rules and regulations of the Securities and Exchange Commission and, therefore, do not include all information and footnote disclosures normally included in audited financial statements. However, in the opinion of management, all adjustments (which include only normal adjustments) necessary to present fairly the results of operations, financial position and cash flows have been made. It is suggested that these statements be read in conjunction with the financial statements included in Abbott’s Annual Report on Form 10-K for the year ended December 31, 2019. The condensed consolidated financial statements include the accounts of the parent company and subsidiaries, after elimination of intercompany transactions.
Note 2 — New Accounting Standards
Recently Adopted Accounting Standards
In June 2016, the Financial Accounting Standards Board (FASB) issued Accounting Standards Update (ASU) 2016-13, Financial Instruments – Credit Losses, which changes the methodology to be used to measure credit losses for certain financial instruments and financial assets, including trade receivables. The new methodology requires the recognition of an allowance that reflects the current estimate of credit losses expected to be incurred over the life of the financial asset. Abbott adopted the standard on January 1, 2020 and recorded a cumulative adjustment that was not significant to Earnings employed in the business in the Condensed Consolidated Balance Sheet.
Recent Accounting Standards Not Yet Adopted
In December 2019, the FASB issued ASU 2019-12, Income Taxes (Topic 740): Simplifying the Accounting for Income Taxes, which among other things, eliminates certain exceptions in the current rules regarding the approach for intraperiod tax allocations and the methodology for calculating income taxes in an interim period, and clarifies the accounting for transactions that result in a step-up in the tax basis of goodwill. The standard becomes effective for Abbott in the first quarter of 2021 and early adoption is permitted. Abbott does not expect adoption of this new standard to have a material impact on its condensed consolidated financial statements.
Note 3 — Revenue
Abbott’s revenues are derived primarily from the sale of a broad line of health care products under short-term receivable arrangements. Abbott has
The following tables provide detail by sales category:
Three Months Ended June 30, 2020 | Three Months Ended June 30, 2019 | |||||||||||||||||
(in millions) |
| U.S. |
| Int’l |
| Total |
| U.S. |
| Int’l |
| Total | ||||||
Established Pharmaceutical Products — |
|
|
|
|
|
|
|
|
|
|
|
| ||||||
Key Emerging Markets | $ | — | $ | | $ | | $ | — | $ | | $ | | ||||||
Other |
| — |
| |
| |
| — |
| | | |||||||
Total |
| — |
| |
| |
| — |
| |
| | ||||||
Nutritionals — |
|
|
|
|
|
|
|
|
|
|
|
| ||||||
Pediatric Nutritionals |
| |
| |
| |
| |
| |
| | ||||||
Adult Nutritionals |
| |
| |
| |
| |
| |
| | ||||||
Total |
| |
| | ||||||||||||||