SEC Filing | Abbott Laboratories

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UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

WASHINGTON, D.C. 20549

FORM 10-Q

(Mark One)

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

For the quarterly period ended March 31, 2021

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

For the transition period from to

Commission File No. 1-2189

ABBOTT LABORATORIES

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

100 Abbott Park Road

Abbott Park, Illinois 60064-6400

Telephone: (224) 667-6100

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

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

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

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

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

Large Accelerated Filer	☒	Accelerated Filer	☐
Non-Accelerated 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 March 31, 2021, Abbott Laboratories had 1,776,820,148 common shares without par value outstanding.

Table of Contents

Abbott Laboratories

Table of Contents

Part I - Financial Information
	Page
Item 1. Financial Statements and Supplementary Data

Condensed Consolidated Statement of Earnings	3
Condensed Consolidated Statement of Comprehensive Income	4
Condensed Consolidated Balance Sheet	5
Condensed Consolidated Statement of Shareholders’ Investment	6
Condensed Consolidated Statement of Cash Flows	7
Notes to the Condensed Consolidated Financial Statements	8

Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations	18

Item 4. Controls and Procedures	23

Part II - Other Information

Item 1. Legal Proceedings	23

Item 2. Unregistered Sales of Equity Securities and Use of Proceeds	23

Item 6. Exhibits	24

Signature	25

Table of Contents

Abbott Laboratories and Subsidiaries

Condensed Consolidated Statement of Earnings

(Unaudited)

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


	Three Months Ended March 31
	2021		2020
Net sales	$	10,456	$	7,726

Cost of products sold, excluding amortization of intangible assets		4,401		3,281
Amortization of intangible assets		509		561
Research and development		654		578
Selling, general and administrative		2,783		2,548
Total operating cost and expenses		8,347		6,968

Operating earnings		2,109		758

Interest expense		135		139
Interest (income)		(11)		(18)
Net foreign exchange (gain) loss		3		5
Other (income) expense, net		(61)		(1)
Earnings from continuing operations before tax		2,043		633
Tax expense on earnings from continuing operations		250		89
Earnings from continuing operations		1,793		544

Earnings from discontinued operations, net of tax		—		20

Net Earnings	$	1,793	$	564

Basic Earnings Per Common Share —
Continuing operations	$	1.00	$	0.31
Discontinued operations		—		0.01
Net earnings	$	1.00	$	0.32

Diluted Earnings Per Common Share —
Continuing operations	$	1.00	$	0.30
Discontinued operations		—		0.01
Net earnings	$	1.00	$	0.31

Average Number of Common Shares Outstanding Used for Basic Earnings Per Common Share		1,776,842		1,768,901
Dilutive Common Stock Options		14,661		11,677
Average Number of Common Shares Outstanding Plus Dilutive Common Stock Options		1,791,503		1,780,578

Outstanding Common Stock Options Having No Dilutive Effect		2,694		4,035

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

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Abbott Laboratories and Subsidiaries

Condensed Consolidated Statement of Comprehensive Income

(Unaudited)

(dollars in millions)


	Three Months Ended March 31
	2021		2020
Net Earnings	$	1,793	$	564

Foreign currency translation gain (loss) adjustments		(536)		(1,144)
Net actuarial gains (losses) and amortization of net actuarial (losses) and prior service (cost) and credits, net of taxes of $18 in 2021 and $15 in 2020		85		57
Net gains (losses) for derivative instruments designated as cash flow hedges, net of taxes of $46 in 2021 and $48 in 2020		112		166
Other comprehensive income (loss)		(339)		(921)
Comprehensive Income (Loss)	$	1,454	$	(357)


	March 31,		December 31,
	2021		2020
Supplemental Accumulated Other Comprehensive Income (Loss) Information, net of tax:
Cumulative foreign currency translation (loss) adjustments	$	(5,395)	$	(4,859)
Net actuarial (losses) and prior service (cost) and credits		(3,786)		(3,871)
Cumulative gains (losses) on derivative instruments designated as cash flow hedges		(104)		(216)
Accumulated Other Comprehensive Income (Loss)	$	(9,285)	$	(8,946)

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

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Abbott Laboratories and Subsidiaries

Condensed Consolidated Balance Sheet

(Unaudited)

(dollars in millions)


	March 31,		December 31,
	2021		2020
Assets
Current Assets:
Cash and cash equivalents	$	8,054	$	6,838
Short-term investments		318		310
Trade receivables, less allowances of $475 in 2021 and $460 in 2020		6,096		6,414
Inventories:
Finished products		3,219		3,030
Work in process		773		712
Materials		1,395		1,270
Total inventories		5,387		5,012
Prepaid expenses and other receivables		1,962		1,867
Total Current Assets		21,817		20,441
Investments		832		821
Property and equipment, at cost		18,697		18,793
Less: accumulated depreciation and amortization		9,865		9,764
Net property and equipment		8,832		9,029
Intangible assets, net of amortization		14,181		14,784
Goodwill		23,384		23,744
Deferred income taxes and other assets		3,739		3,729
	$	72,785	$	72,548


Liabilities and Shareholders’ Investment
Current Liabilities:
Short-term borrowings	$	199	$	213
Trade accounts payable		4,066		3,946
Salaries, wages and commissions		1,117		1,416
Other accrued liabilities		5,247		5,165
Dividends payable		801		798
Income taxes payable		276		362
Current portion of long-term debt		756		7
Total Current Liabilities		12,462		11,907
Long-term debt		17,489		18,527
Post-employment obligations, deferred income taxes and other long-term liabilities		9,046		9,111
Commitments and Contingencies
Shareholders’ Investment:
Preferred shares, one dollar par value Authorized — 1,000,000 shares, none issued		—		—
Common shares, without par value Authorized — 2,400,000,000 shares Issued at stated capital amount — Shares: 2021: 1,982,205,491; 2020: 1,981,156,896		24,023		24,145
Common shares held in treasury, at cost — Shares: 2021: 205,385,343; 2020: 209,926,622		(9,845)		(10,042)
Earnings employed in the business		28,669		27,627
Accumulated other comprehensive income (loss)		(9,285)		(8,946)
Total Abbott Shareholders’ Investment		33,562		32,784
Noncontrolling Interests in Subsidiaries		226		219
Total Shareholders’ Investment		33,788		33,003
	$	72,785	$	72,548

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

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Abbott Laboratories and Subsidiaries

Condensed Consolidated Statement of Shareholders’ Investment

(Unaudited)

(in millions except shares and per share data)


	Three Months Ended March 31
	2021		2020
Common Shares:
Balance at January 1
Shares: 2021: 1,981,156,896; 2020: 1,976,855,085	$	24,145	$	23,853
Issued under incentive stock programs
Shares: 2021: 1,048,595; 2020: 1,257,416		47		53
Share-based compensation		304		245
Issuance of restricted stock awards		(473)		(420)
Balance at March 31
Shares: 2021: 1,982,205,491; 2020: 1,978,112,501	$	24,023	$	23,731

Common Shares Held in Treasury:
Balance at January 1
Shares: 2021: 209,926,622; 2020: 214,351,838	$	(10,042)	$	(10,147)
Issued under incentive stock programs
Shares: 2021: 4,818,787; 2020: 5,333,626		231		253
Purchased
Shares: 2021: 277,508; 2020: 248,963		(34)		(19)
Balance at March 31
Shares: 2021: 205,385,343; 2020: 209,267,175	$	(9,845)	$	(9,913)

Earnings Employed in the Business:
Balance at January 1	$	27,627	$	25,847
Impact of adoption of new accounting standard		—		(5)
Net earnings		1,793		564
Cash dividends declared on common shares (per share — 2021: $0.45; 2020: $0.36)		(803)		(641)
Effect of common and treasury share transactions		52		21
Balance at March 31	$	28,669	$	25,786

Accumulated Other Comprehensive Income (Loss):
Balance at January 1	$	(8,946)	$	(8,465)
Other comprehensive income (loss)		(339)		(921)
Balance at March 31	$	(9,285)	$	(9,386)

Noncontrolling Interests in Subsidiaries:
Balance at January 1	$	219	$	213
Noncontrolling Interests’ share of income, business combinations, net of distributions and share repurchases		7		(4)
Balance at March 31	$	226	$	209

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

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Abbott Laboratories and Subsidiaries

Condensed Consolidated Statement of Cash Flows

(Unaudited)

(dollars in millions)


	Three Months Ended March 31
	2021		2020
Cash Flow From (Used in) Operating Activities:
Net earnings	$	1,793	$	564
Adjustments to reconcile net earnings to net cash from operating activities-
Depreciation		425		267
Amortization of intangible assets		509		561
Share-based compensation		288		233
Trade receivables		165		(104)
Inventories		(537)		(437)
Other, net		(6)		(369)
Net Cash From Operating Activities		2,637		715

Cash Flow From (Used in) Investing Activities:
Acquisitions of property and equipment		(397)		(360)
Acquisitions of businesses and technologies, net of cash acquired		(15)		—
Sales (purchases) of other investment securities, net		(14)		(36)
Other		4		3
Net Cash (Used in) Investing Activities		(422)		(393)

Cash Flow From (Used in) Financing Activities:
Net borrowings (repayments) of short-term debt and other		24		51
Repayments of long-term debt		(2)		(1)
Purchases of common shares		(275)		(236)
Proceeds from stock options exercised		86		89
Dividends paid		(800)		(638)
Net Cash (Used in) Financing Activities		(967)		(735)

Effect of exchange rate changes on cash and cash equivalents		(32)		(70)

Net Increase (Decrease) in Cash and Cash Equivalents		1,216		(483)
Cash and Cash Equivalents, Beginning of Year		6,838		3,860
Cash and Cash Equivalents, End of Period	$	8,054	$	3,377

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

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Abbott Laboratories and Subsidiaries

Notes to the Condensed Consolidated Financial Statements

March 31, 2021

(Unaudited)

Note 1 — Basis of Presentation

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

Note 2 — New Accounting Standards

Recently Adopted Accounting Standards

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

Note 3 — Revenue

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

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Abbott Laboratories and Subsidiaries

Notes to the Condensed Consolidated Financial Statements

March 31, 2021

(Unaudited)

The following table provides revenues by sales category:


	Three Months Ended March 31, 2021						Three Months Ended March 31, 2020
(in millions)	U.S.		Int’l		Total		U.S.		Int’l		Total
Established Pharmaceutical Products —
Key Emerging Markets	$	—	$	821	$	821	$	—	$	813	$	813
Other		—		249		249		—		231		231
Total		—		1,070		1,070		—		1,044		1,044

Nutritionals —
Pediatric Nutritionals		508		558		1,066		518		571		1,089
Adult Nutritionals		328		642		970		294		521		815
Total		836		1,200		2,036		812		1,092		1,904

Diagnostics —
Core Laboratory		271		911		1,182		267		722		989
Molecular		175		272		447		65		74		139
Point of Care		92		37		129		103		35		138
Rapid Diagnostics		1,103		1,153		2,256		368		192		560
Total		1,641		2,373		4,014		803		1,023		1,826

Medical Devices —
Rhythm Management		241		278		519		228		246		474
Electrophysiology		179		252		431		164		224		388
Heart Failure		145		49		194		152		51		203
Vascular		219		416		635		230		395		625
Structural Heart		169		208		377		136		182		318
Neuromodulation		145		39		184		137		40		177
Diabetes Care		253		727		980		186		566		752
Total		1,351		1,969		3,320		1,233		1,704		2,937

Other		10		6		16		8		7		15

Total	$	3,838	$	6,618	$	10,456	$	2,856	$	4,870	$	7,726

Remaining Performance Obligations

As of March 31, 2021, the estimated revenue expected to be recognized in the future related to performance obligations that are unsatisfied (or partially unsatisfied) was approximately $3.8 billion in the Diagnostics segment and approximately $400 million in the Medical Devices segment. Abbott expects to recognize revenue on approximately 60 percent of these remaining performance obligations over the next 24 months, approximately 17 percent over the subsequent 12 months and the remainder thereafter.

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

Other Contract Assets and Liabilities

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

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

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Abbott Laboratories and Subsidiaries

Notes to the Condensed Consolidated Financial Statements

March 31, 2021

(Unaudited)

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


(in millions)
Contract Liabilities:
Balance at December 31, 2020	$	405
Unearned revenue from cash received during the period		174
Revenue recognized related to contract liability balance		(163)
Balance at March 31, 2021	$	416

Note 4 — Supplemental Financial Information

Shares of unvested restricted stock that contain non-forfeitable rights to dividends are treated as participating securities and are included in the computation of earnings per share under the two-class method. Under the two-class method, net earnings are allocated between common shares and participating securities. Earnings from Continuing Operations allocated to common shares for the three months ended March 31, 2021 and 2020 were $1.785 billion and $541 million, respectively. Net earnings allocated to common shares for the three months ended March 31, 2021 and 2020 were $1.785 billion and $561 million, respectively.

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

Other, net in Net cash from operating activities in the Condensed Consolidated Statement of Cash Flows for the first three months of 2021 includes $16 million of pension contributions and the payment of cash taxes of approximately $270 million. The first three months of 2020 includes $320 million of pension contributions and the payment of cash taxes of approximately $125 million.

The following summarizes the activity for the first three months of 2021 related to the allowance for doubtful accounts as of March 31, 2021:


(in millions)
Allowance for Doubtful Accounts:
Balance at December 31, 2020	$	288
Provisions/charges to income		15
Amounts charged off and other deductions		(8)
Balance at March 31, 2021	$	295

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

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


	March 31,		December 31,
(in millions)	2021		2020
Long-term Investments:
Equity securities	$	785	$	776
Other		47		45
Total	$	832	$	821

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Abbott Laboratories and Subsidiaries

Notes to the Condensed Consolidated Financial Statements

March 31, 2021

(Unaudited)

Abbott’s equity securities as of March 31, 2021, include $375 million of investments in mutual funds that are held in a rabbi trust and were acquired as part of the St. Jude Medical, Inc. (St. Jude Medical) business acquisition. These investments, which are specifically designated as available for the purpose of paying benefits under a deferred compensation plan, are not available for general corporate purposes and are subject to creditor claims in the event of insolvency.

Abbott also holds certain investments as of March 31, 2021 with a carrying value of $289 million that are accounted for under the equity method of accounting and other equity investments with a carrying value of approximately $105 million that do not have a readily determinable fair value.

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

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


	Three Months Ended March 31
									Cumulative Gains (Losses)
	Cumulative Foreign				Net Actuarial (Losses) and				on Derivative Instruments
	Currency Translation				Prior Service (Costs) and				Designated as Cash Flow
	Adjustments				Credits				Hedges
(in millions)	2021		2020		2021		2020		2021		2020
Balance at January 1	$	(4,859)	$	(4,924)	$	(3,871)	$	(3,540)	$	(216)	$	(1)
Other comprehensive income (loss) before reclassifications		(536)		(1,144)		22		7		96		176
Amounts reclassified from accumulated other comprehensive income		—		—		63		50		16		(10)
Net current period comprehensive income (loss)		(536)		(1,144)		85		57		112		166
Balance at March 31	$	(5,395)	$	(6,068)	$	(3,786)	$	(3,483)	$	(104)	$	165

Reclassified amounts for cash flow hedges are recorded as Cost of products sold. Net actuarial losses and prior service cost are included as a component of net periodic benefit costs; see Note 11 for additional details.

Note 6 — Goodwill and Intangible Assets

The total amount of goodwill reported was $23.4 billion at March 31, 2021 and $23.7 billion at December 31, 2020. Foreign currency translation adjustments decreased goodwill by approximately $360 million in the first three months of 2021. The amount of goodwill related to reportable segments at March 31, 2021 was $2.9 billion for the Established Pharmaceutical Products segment, $286 million for the Nutritional Products segment, $3.8 billion for the Diagnostic Products segment, and $16.3 billion for the Medical Devices segment. There was no reduction of goodwill relating to impairments in the first three months of 2021.

The gross amount of amortizable intangible assets, primarily product rights and technology was $27.5 billion as of March 31, 2021 and $27.8 billion as of December 31, 2020, and accumulated amortization was $14.5 billion as of March 31, 2021 and $14.2 billion as of December 31, 2020. Foreign currency translation adjustments decreased intangible assets by $94 million in the first three months of 2021. Abbott’s estimated annual amortization expense for intangible assets is approximately $2.0 billion in 2021 and 2022, and $1.9 billion in 2023, 2024, and 2025.

Indefinite-lived intangible assets, which relate to in-process R&D acquired in a business combination, were approximately $1.2 billion as of March 31, 2021 and December 31, 2020.

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Abbott Laboratories and Subsidiaries

Notes to the Condensed Consolidated Financial Statements

March 31, 2021

(Unaudited)

Note 7 — Restructuring Plans

From 2017 to 2020, Abbott management approved restructuring plans as part of the integration of the acquisitions of St. Jude Medical into the Medical Devices segment, and Alere Inc. (Alere) into the Diagnostic Products segment, in order to leverage economies of scale and reduce costs. As of December 31, 2020, the accrued balance associated with these actions was $25 million. No additional charges were recognized in the first three months of 2021. As of March 31, 2021, the accrued liabilities remaining in the Consolidated Balance Sheet related to these actions total $13 million and primarily represent severance obligations.

From 2017 to 2020, Abbott management approved plans to streamline operations in order to reduce costs and improve efficiencies in various Abbott businesses including the nutritional, established pharmaceuticals and vascular businesses. In the first three months of 2021, charges of $1 million were recognized as Cost of products sold. The following summarizes the activity for the first three months of 2021 related to these restructuring actions and the status of the related accrual as of March 31, 2021:


(in millions)
Accrued balance at December 31, 2020	$	70
Restructuring charges recorded in 2021		1
Payments and other adjustments		(13)
Accrued balance at March 31, 2021	$	58

Note 8 — Incentive Stock Program

In the first three months of 2021, Abbott granted 2,693,918 stock options, 478,490 restricted stock awards and 4,511,126 restricted stock units under its incentive stock program. At March 31, 2021, approximately 101 million shares were reserved for future grants. Information regarding the number of options outstanding and exercisable at March 31, 2021 is as follows:


	Outstanding		Exercisable
Number of shares		30,484,541		23,519,084
Weighted average remaining life (years)		6.2		5.4
Weighted average exercise price	$	62.17	$	51.23
Aggregate intrinsic value (in millions)	$	1,769	$	1,614

The total unrecognized share-based compensation cost at March 31, 2021 amounted to approximately $744 million which is expected to be recognized over the next three years.

Note 9 — Financial Instruments, Derivatives and Fair Value Measures

Certain Abbott foreign subsidiaries enter into foreign currency forward exchange contracts to manage exposures to changes in foreign exchange rates primarily for anticipated intercompany purchases by those subsidiaries whose functional currencies are not the U.S. dollar. These contracts, with gross notional amounts totaling $8.6 billion at March 31, 2021 and $8.1 billion at December 31, 2020 are designated as cash flow hedges of the variability of the cash flows due to changes in foreign exchange rates and are recorded at fair value. Accumulated gains and losses as of March 31, 2021 will be included in Cost of products sold at the time the products are sold, generally through the next twelve to eighteen months.

Abbott enters into foreign currency forward exchange contracts to manage currency exposures for foreign currency denominated third-party trade payables and receivables, and for intercompany loans and trade accounts payable where the receivable or payable is denominated in a currency other than the functional currency of the entity. For intercompany loans, the contracts require Abbott to sell or buy foreign currencies, primarily European currencies, in exchange for primarily U.S. dollars and other European currencies. For intercompany and trade payables and receivables, the currency exposures are primarily the U.S. dollar and European currencies. At March 31, 2021 and December 31, 2020, Abbott held the gross notional amount of $10.2 billion and $11.0 billion, respectively, of such foreign currency forward exchange contracts.

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Abbott Laboratories and Subsidiaries

Notes to the Condensed Consolidated Financial Statements

March 31, 2021

(Unaudited)

Abbott has designated a yen-denominated, 5-year term loan of approximately $542 million and $577 million as of March 31, 2021 and December 31, 2020, respectively, as a hedge of the net investment in certain foreign subsidiaries. The change in the value of the debt, which is due to changes in foreign exchange rates, is recorded in Accumulated other comprehensive income (loss), net of tax.

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

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