SEC Filing | Abbott Laboratories

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abt-20220930

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

WASHINGTON, D.C. 20549

FORM 10-Q

(Mark One)


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

For the quarterly period ended September 30, 2022


o			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 x No o

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 x No o

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 x			Accelerated Filer o

Non-Accelerated Filer o			Smaller reporting company o

			Emerging growth company o

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. o

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

As of September 30, 2022, Abbott Laboratories had 1,743,573,777 common shares without par value outstanding.

Table of Contents

Abbott Laboratories

Table of Contents


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

Condensed Consolidated Statement of Earnings			3
Condensed Consolidated Statement of Comprehensive Income			4
Condensed Consolidated Balance Sheet			5
Condensed Consolidated Statement of Shareholders’ Investment			6
Condensed Consolidated Statement of Cash Flows			8
Notes to the Condensed Consolidated Financial Statements			9

Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations			22

Item 4. Controls and Procedures			28

Part II - Other Information			28

Item 1. Legal Proceedings			28

Item 2. Unregistered Sales of Equity Securities and Use of Proceeds			28

Item 6. Exhibits			29

Signature			30

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				Nine Months Ended
	September 30				September 30
	2022		2021		2022		2021
Net sales	$	10,410	$	10,928	$	33,562	$	31,607

Cost of products sold, excluding amortization of intangible assets	4,629		4,423		14,549		13,771
Amortization of intangible assets	498		520		1,517		1,533
Research and development	782		672		2,163		1,980
Selling, general and administrative	2,731		2,767		8,275		8,276
Total operating cost and expenses	8,640		8,382		26,504		25,560

Operating earnings	1,770		2,546		7,058		6,047

Interest expense	141		133		404		402
Interest (income)	(55)		(10)		(95)		(32)
Net foreign exchange (gain) loss	19		4		16		7
Other (income) expense, net	(93)		(74)		(253)		(214)
Earnings before taxes	1,758		2,493		6,986		5,884
Taxes on earnings	323		393		1,086		802
Net Earnings	$	1,435	$	2,100	$	5,900	$	5,082

Basic Earnings Per Common Share	$	0.82	$	1.18	$	3.35	$	2.85

Diluted Earnings Per Common Share	$	0.81	$	1.17	$	3.32	$	2.83

Average Number of Common Shares Outstanding Used for Basic Earnings Per Common Share	1,752,968		1,774,516		1,756,209		1,776,870
Dilutive Common Stock Options	10,685		14,483		11,638		14,407
Average Number of Common Shares Outstanding Plus Dilutive Common Stock Options	1,763,653		1,788,999		1,767,847		1,791,277

Outstanding Common Stock Options Having No Dilutive Effect	5,445		2,740		2,655		2,694

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				Nine Months Ended
	September 30				September 30
	2022		2021		2022		2021
Net Earnings	$	1,435	$	2,100	$	5,900	$	5,082
Foreign currency translation gain (loss) adjustments	(1,008)		(391)		(1,429)		(762)
Net actuarial gains (losses) and amortization of net actuarial losses and prior service costs and credits, net of taxes of $11 and $36 in 2022 and $18 and $54 in 2021	56		78		172		211
Net gains (losses) for derivative instruments designated as cash flow hedges and other, net of taxes of $50 and $96 in 2022 and $50 and $98 in 2021	213		139		186		257
Other comprehensive income (loss)	(739)		(174)		(1,071)		(294)
Comprehensive Income	$	696	$	1,926	$	4,829	$	4,788


	September 30, 2022		December 31, 2021
Supplemental Accumulated Other Comprehensive Income (Loss) Information, net of tax:
Cumulative foreign currency translation (loss) adjustments	$	(7,268)	$	(5,839)
Net actuarial (losses) and prior service (costs) and credits	(2,498)		(2,670)
Cumulative gains (losses) on derivative instruments designated as cash flow hedges and other	321		135
Accumulated other comprehensive income (loss)	$	(9,445)	$	(8,374)

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

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Abbott Laboratories and Subsidiaries

Condensed Consolidated Balance Sheet

(Unaudited)

(dollars in millions)


	September 30, 2022		December 31, 2021
Assets
Current Assets:
Cash and cash equivalents	$	9,594	$	9,799
Short-term investments	313		450
Trade receivables, less allowances of $520 in 2022 and $519 in 2021	6,408		6,487
Inventories:
Finished products	3,407		3,081
Work in process	726		694
Materials	1,601		1,382
Total inventories	5,734		5,157
Prepaid expenses and other receivables	2,796		2,346
Total Current Assets	24,845		24,239
Investments	764		816
Property and equipment, at cost	19,306		19,364
Less: accumulated depreciation and amortization	10,617		10,405
Net property and equipment	8,689		8,959
Intangible assets, net of amortization	10,850		12,739
Goodwill	22,284		23,231
Deferred income taxes and other assets	5,369		5,212
	$	72,801	$	75,196
Liabilities and Shareholders’ Investment
Current Liabilities:
Trade accounts payable	$	4,133	$	4,408
Salaries, wages and commissions	1,426		1,625
Other accrued liabilities	5,475		5,181
Dividends payable	820		831
Income taxes payable	394		306
Current portion of long-term debt	1,117		754
Total Current Liabilities	13,365		13,105
Long-term debt	15,297		17,296
Post-employment obligations, deferred income taxes and other long-term liabilities	8,255		8,771
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: 2022: 1,985,919,440; 2021: 1,985,273,421	24,560		24,470
Common shares held in treasury, at cost — Shares: 2022: 242,345,663; 2021: 221,191,228	(14,555)		(11,822)
Earnings employed in the business	35,115		31,528
Accumulated other comprehensive income (loss)	(9,445)		(8,374)
Total Abbott Shareholders’ Investment	35,675		35,802
Noncontrolling Interests in Subsidiaries	209		222
Total Shareholders’ Investment	35,884		36,024
	$	72,801	$	75,196

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 September 30
	2022		2021
Common Shares:
Balance at June 30
Shares: 2022: 1,985,676,735; 2021: 1,982,553,488	$	24,429	$	24,153
Issued under incentive stock programs
Shares: 2022: 242,705; 2021: 550,366	12		26
Share-based compensation	123		113
Issuance of restricted stock awards	(4)		(7)
Balance at September 30
Shares: 2022: 1,985,919,440; 2021: 1,983,103,854	$	24,560	$	24,285

Common Shares Held in Treasury:
Balance at June 30
Shares: 2022: 234,456,992; 2021: 209,736,139	$	(13,720)	$	(10,340)
Issued under incentive stock programs
Shares: 2022: 528,436; 2021: 545,860	31		26
Purchased
Shares: 2022: 8,417,107; 2021: 5,626,606	(866)		(685)
Balance at September 30
Shares: 2022: 242,345,663; 2021: 214,816,885	$	(14,555)	$	(10,999)

Earnings Employed in the Business:
Balance at June 30	$	34,487	$	29,053
Net earnings	1,435		2,100
Cash dividends declared on common shares (per share — 2022: $0.47; 2021: $0.45)	(822)		(799)
Effect of common and treasury share transactions	15		22
Balance at September 30	$	35,115	$	30,376

Accumulated Other Comprehensive Income (Loss):
Balance at June 30	$	(8,706)	$	(9,066)
Other comprehensive income (loss)	(739)		(174)
Balance at September 30	$	(9,445)	$	(9,240)

Noncontrolling Interests in Subsidiaries:
Balance at June 30	$	226	$	229
Noncontrolling Interests’ share of income, business combinations, net of distributions and share repurchases	(17)		(13)
Balance at September 30	$	209	$	216

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

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Abbott Laboratories and Subsidiaries

Condensed Consolidated Statement of Shareholders’ Investment

(Unaudited)

(in millions except shares and per share data)


	Nine Months Ended September 30
	2022		2021
Common Shares:
Balance at January 1
Shares: 2022: 1,985,273,421; 2021: 1,981,156,896	$	24,470	$	24,145
Issued under incentive stock programs
Shares: 2022: 646,019; 2021: 1,946,958	36		91
Share-based compensation	572		536
Issuance of restricted stock awards	(518)		(487)
Balance at September 30
Shares: 2022: 1,985,919,440; 2021: 1,983,103,854	$	24,560	$	24,285

Common Shares Held in Treasury:
Balance at January 1
Shares: 2022: 221,191,228; 2021: 209,926,622	$	(11,822)	$	(10,042)
Issued under incentive stock programs
Shares: 2022: 4,808,575; 2021: 5,524,291	261		265
Purchased
Shares: 2022: 25,963,010; 2021: 10,414,554	(2,994)		(1,222)
Balance at September 30
Shares: 2022: 242,345,663; 2021: 214,816,885	$	(14,555)	$	(10,999)

Earnings Employed in the Business:
Balance at January 1	$	31,528	$	27,627
Net earnings	5,900		5,082
Cash dividends declared on common shares (per share — 2022: $1.41; 2021: $1.35)	(2,475)		(2,403)
Effect of common and treasury share transactions	162		70
Balance at September 30	$	35,115	$	30,376

Accumulated Other Comprehensive Income (Loss):
Balance at January 1	$	(8,374)	$	(8,946)
Other comprehensive income (loss)	(1,071)		(294)
Balance at September 30	$	(9,445)	$	(9,240)

Noncontrolling Interests in Subsidiaries:
Balance at January 1	$	222	$	219
Noncontrolling Interests’ share of income, business combinations, net of distributions and share repurchases	(13)		(3)
Balance at September 30	$	209	$	216

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

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Abbott Laboratories and Subsidiaries

Condensed Consolidated Statement of Cash Flows

(Unaudited)

(dollars in millions)


	Nine Months Ended September 30
	2022		2021
Cash Flow From (Used in) Operating Activities:
Net earnings	$	5,900	$	5,082
Adjustments to reconcile net earnings to net cash from operating activities —
Depreciation	943		1,122
Amortization of intangible assets	1,517		1,533
Share-based compensation	570		534
Trade receivables	(409)		(194)
Inventories	(1,224)		(471)
Other, net	(42)		(140)
Net Cash From Operating Activities	7,255		7,466

Cash Flow From (Used in) Investing Activities:
Acquisitions of property and equipment	(1,167)		(1,271)
Acquisitions of businesses and technologies, net of cash acquired	—		(187)
Proceeds from business dispositions	48		134
Sales (purchases) of other investment securities, net	(3)		(27)
Other	14		14
Net Cash From (Used in) Investing Activities	(1,108)		(1,337)

Cash Flow From (Used in) Financing Activities:
Net borrowings (repayments) of short-term debt and other	37		(7)
Proceeds from issuance of long-term debt	7		—
Repayments of long-term debt	(753)		(45)
Purchases of common shares	(3,110)		(1,325)
Proceeds from stock options exercised	126		173
Dividends paid	(2,486)		(2,404)
Net Cash From (Used in) Financing Activities	(6,179)		(3,608)

Effect of exchange rate changes on cash and cash equivalents	(173)		(57)

Net Increase (Decrease) in Cash and Cash Equivalents	(205)		2,464
Cash and Cash Equivalents, Beginning of Year	9,799		6,838
Cash and Cash Equivalents, End of Period	$	9,594	$	9,302

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

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Abbott Laboratories and Subsidiaries

Notes to the Condensed Consolidated Financial Statements

September 30, 2022

(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, 2021. The condensed consolidated financial statements include the accounts of the parent company and subsidiaries, after elimination of intercompany transactions.

Note 2 — 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.

The following tables provide detail by sales category:


	Three Months Ended September 30, 2022						Three Months Ended September 30, 2021
(in millions)	U.S.		Int’l		Total		U.S.		Int’l		Total
Established Pharmaceutical Products —
Key Emerging Markets	$	—	$	993	$	993	$	—	$	936	$	936
Other	—		333		333		—		329		329
Total	—		1,326		1,326		—		1,265		1,265
Nutritionals —
Pediatric Nutritionals	357		470		827		586		514		1,100
Adult Nutritionals	329		639		968		333		675		1,008
Total	686		1,109		1,795		919		1,189		2,108
Diagnostics —
Core Laboratory	281		938		1,219		291		1,001		1,292
Molecular	65		118		183		162		183		345
Point of Care	92		35		127		100		35		135
Rapid Diagnostics	1,303		839		2,142		1,394		746		2,140
Total	1,741		1,930		3,671		1,947		1,965		3,912
Medical Devices —
Rhythm Management	263		270		533		266		305		571
Electrophysiology	225		244		469		192		293		485
Heart Failure	177		51		228		170		59		229
Vascular	213		393		606		219		425		644
Structural Heart	207		213		420		177		215		392
Neuromodulation	156		36		192		149		41		190
Diabetes Care	423		744		1,167		323		798		1,121
Total	1,664		1,951		3,615		1,496		2,136		3,632

Other	3		—		3		6		5		11

Total	$	4,094	$	6,316	$	10,410	$	4,368	$	6,560	$	10,928

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Abbott Laboratories and Subsidiaries

Notes to the Condensed Consolidated Financial Statements

September 30, 2022

(Unaudited)

Note 2 — Revenue (Continued)


	Nine Months Ended September 30, 2022						Nine Months Ended September 30, 2021
(in millions)	U.S.		Int’l		Total		U.S.		Int’l		Total
Established Pharmaceutical Products —
Key Emerging Markets	$	—	$	2,826	$	2,826	$	—	$	2,672	$	2,672
Other	—		870		870		—		843		843
Total	—		3,696		3,696		—		3,515		3,515
Nutritionals —
Pediatric Nutritionals	1,108		1,491		2,599		1,622		1,637		3,259
Adult Nutritionals	1,016		2,027		3,043		1,006		1,987		2,993
Total	2,124		3,518		5,642		2,628		3,624		6,252
Diagnostics —
Core Laboratory	836		2,788		3,624		845		2,935		3,780
Molecular	308		507		815		431		651		1,082
Point of Care	284		110		394		289		112		401
Rapid Diagnostics	5,523		2,923		8,446		3,178		2,732		5,910
Total