What changed in this filing

/stocks — the workspaceLOADING

Item 8. Financial Statements and Supplementary Data

2023-02-17 compared with 2022-02-18 · 309 added, 395 removed, 1442 unchanged (33% of the section changed)

7 unchanged sentences

Notes to Consolidated Financial Statements

Report of Independent Registered Public Accounting Firm (PC AOB ID:

Summary of Significant Accounting Policies

Supplemental Financial Information

Earnings Per Share

Licensing, Acquisitions and Other Arrangements

Collaborations

Goodwill and Intangible Assets

Integration and Restructuring Plans

Debit, Credit Facilities and Commitments and Contingencies

Financial Instruments and Fair Value Measures

Post-Employment Benefits

Legal P roceedings and Contingencies

Segment and Geographic Area Information

Fourth Quarter Financial Results ( unaudited )

Report of Independent Registered Public Account ing Firm (PCA OB ID:

| 2022 Form 10-K

6 unchanged sentences

Research and development 6,510 6,922 6,379

Acquired in-process research and development 962 1,198 385

Other operating expense (income), net 432 — ( 890 )

Acquired IPR&D and milestones 697 1,124 1,376

Other operating expense, net 56 432 —

Total operating costs and expenses 39,937 38,273 34,441

28 unchanged sentences

1,088 521 ( 102 )

Marketable security activities, net of tax expense (benefit) of $ — in 2021, $ — in 2020 and $ — in 2019

Cash flow hedging activities, net of tax expense (benefit) of $ 5 in 2022, $ 20 in 2021 and $( 23 ) in 2020

— 151 ( 131 )

Other comprehensive income (loss) $ 218 $ 479 $ ( 1,116 )

Other comprehensive income $ 700 $ 218 $ 479

Comprehensive income 12,545 11,767 5,101

30 unchanged sentences

Commitments and contingencies

Stockholders' equity (deficit)

Stockholders' equity

Common stock, $ 0.01 par value, 4,000,000,000 shares authorized, 1,813,770,294 shares issued as of December 31, 2022 and 1,803,195,293 as of December 31, 2021

16 unchanged sentences

— — — — 4,616 — — 4,616

Other comprehensive loss, net of tax — — — — — ( 1,116 ) — ( 1,116 )

Other comprehensive income, net of tax — — — — — 479 — 479

Dividends declared — — — — ( 8,278 ) — — ( 8,278 )

Common shares and equity awards issued for acquisition of Allergan plc 286 — 23,166 1,243 — — — 24,409

Purchases of treasury stock ( 10 ) — ( 978 ) — — — — ( 978 )

Stock-based compensation plans and other 10 — 52 948 — — — 1,000

Change in noncontrolling interest — — — — — — 21 21

Balance at December 31, 2020 1,765 18 ( 2,264 ) 17,384 1,055 ( 3,117 ) 21 13,097

3 unchanged sentences

Dividends declared — — — — ( 9,470 ) — — ( 9,470 )

Common shares and equity awards issued for acquisition of Allergan plc 286 — 23,166 1,243 — — — 24,409

Purchases of treasury stock ( 8 ) — ( 934 ) — — — — ( 934 )

23 unchanged sentences

Stock-based compensation 671 692 753

Upfront costs and milestones related to collaborations 1,624 1,376 490

Acquired IPR&D and milestones 697 1,124 1,376

Other charges related to collaborations — 500 —

Gain on divestitures ( 172 ) ( 68 ) —

Stemcentrx impairment — — 1,030

Non-cash litigation reserve adjustments, net of cash payments 2,243 163 ( 31 )

Impairment of intangible assets 770 50 —

Other, net ( 150 ) ( 213 ) 863

15 unchanged sentences

Cash flows from financing activities

Net change in commercial paper borrowings — — ( 699 )

Repayments of other short-term borrowings — — ( 3,000 )

Proceeds from issuance of long-term debt 2,000 1,000 3,000

26 unchanged sentences

In the United States, AbbVie distributes pharmaceutical products principally through independent wholesale distributors, with some sales directly to retailers, pharmacies, patients or other customers.

Outside the United States, AbbVie sells products primarily to customers or through distributors, depending on the market served.

Outside the United States, AbbVie sells products primarily to wholesalers or through distributors, and depending on the market works through largely centralized national payers system to agree on reimbursement terms.

AbbVie was incorporated in Delaware on April 10, 2012.

13 unchanged sentences

Intercompany balances and transactions are eliminated.

Certain reclassifications have been made to conform the prior period consolidated financial statements to the current period presentation.

During 2022, AbbVie revised its classification of development milestone expense associated with licensing and collaboration arrangements in the consolidated statements of earnings.

Milestone payments incurred prior to regulatory approval, which were previously included in research and development (R&D) expense, are now presented as acquired IPR&D and milestones expense in the consolidated statements of earnings.

The reclassification decreased R&D expense and increased acquired IPR&D and milestones expense by $ 162 million in 2021 and $ 178 million in 2020.

The company believes this presentation assists users of the financial statements to better understand the total upfront and subsequent development milestone payments incurred to acquire in-process research and development projects.

Prior periods have been reclassified to conform to the current period presentation.

Certain other reclassifications have been made to conform the prior period consolidated financial statements to the current period presentation.

Revenue Recognition

3 unchanged sentences

For the majority of sales, the company transfers control, invoices the customer and recognizes revenue upon shipment to the customer.

The company recognizes shipping and handling costs as an expense in cost of products sold when the company transfers control to the customer.

The company recognizes shipping and handling costs as an

| 2022 Form 10-K

expense in cost of products sold when the company transfers control to the customer.

Payment terms vary depending on the type and location of the customer, are based on customary commercial terms and are generally less than one year.

AbbVie does not adjust revenue for the effects of a significant financing component for contracts where AbbVie expects the period between the transfer of the good or service and collection to be one year or less.

Discounts, rebates, sales incentives to customers, returns and certain other adjustments are accounted for as variable consideration.

Cash discounts, rebates and chargebacks, sales incentives, product returns and certain other adjustments are accounted for as variable consideration.

Provisions for variable consideration are based on current pricing, executed contracts, government pricing legislation and historical data and are provided for in the period the related revenues are recorded.

Rebate amounts are

| 2021 Form 10-K

typically based upon the volume of purchases using contractual or statutory prices, which may vary by product and by payer.

Rebate amounts are typically based upon the volume of purchases using contractual or statutory prices, which may vary by product and by payer.

For each type of rebate, factors used in the calculation of the accrual include the identification of the products subject to the rebate, the applicable price terms and the estimated lag time between sale and payment of the rebate, which can be significant.

Sales incentives to customers are insignificant.

In addition to revenue from contracts with customers, the company also recognizes certain collaboration revenues.

3 unchanged sentences

Research and Development Expenses

Internal research and development (R&D) costs are expensed as incurred.

Internal R&D costs are expensed as incurred.

Clinical trial costs incurred by third parties are expensed as the contracted work is performed.

Where contingent milestone payments are due to third parties under research and development collaborations, prior to regulatory approval, the payment obligations are expensed when the milestone results are achieved.

Payments made to third parties subsequent to regulatory approval are capitalized as intangible assets and amortized to cost of products sold over the remaining useful life of the related product.

Acquired IPR&D and Milestones Expenses

In an asset acquisition, payments incurred prior to regulatory approval to acquire rights to in-process R&D projects are expensed as acquired IPR&D and milestones expense in the consolidated statements of earnings unless the project has an alternative future use.

These costs include upfront and development milestone payments related to R&D collaborations, licensing arrangements, or other asset acquisitions that provide rights to develop, manufacture and/or sell pharmaceutical products.

Where contingent development milestone payments are due to third parties, prior to regulatory approval, the payment obligations are expensed when the milestone results are achieved.

Regulatory and commercial milestone payments made to third parties subsequent to regulatory approval are capitalized as intangible assets and amortized to cost of products sold over the remaining useful life of the related product.

Business Combinations

AbbVie utilizes the acquisition method of accounting for business combinations.

This method requires, among other things, that results of operations of acquired companies are included in AbbVie's results of operations beginning on the acquisition date and that assets acquired and liabilities assumed are recognized at fair value as of the acquisition date.

Any excess of the fair value of consideration transferred over the fair value of the net assets acquired is recognized as goodwill.

Contingent consideration liabilities are recognized at the estimated fair value on the acquisition date.

Subsequent changes to the fair value of contingent consideration liabilities are recognized in other expense, net in the consolidated statements of earnings.

The fair value of assets acquired and liabilities assumed in certain cases may be subject to revision based on the final determination of fair value during a period of time not to exceed 12 months from the acquisition date.

Legal costs, due diligence costs, business valuation costs and all other business acquisition costs are expensed when incurred.

In a business combination, the fair value of IPR&D projects acquired is capitalized and accounted for as indefinite-lived intangible assets until the underlying project receives regulatory approval, at which point the intangible asset will be accounted for as a definite-lived intangible asset, or discontinuation, at which point the intangible asset will be written off.

R&D costs incurred by the company after the acquisition are expensed to R&D as incurred.

Collaborations and Other Arrangements

3 unchanged sentences

These collaborations often require upfront payments and may include additional milestone, research and development cost sharing, royalty or profit share payments, contingent upon the occurrence of certain future events linked to the success of the asset in development and commercialization.

Upfront payments associated with collaborative arrangements during the development stage are expensed to acquired in-process research and development (IPR&D) expenses in the consolidated statements of earnings.

Subsequent payments made to the partner for the achievement of milestones during the development stage are expensed to R&D expense in the consolidated statements of earnings when the milestone is achieved.

Milestone payments made to the partner subsequent to regulatory approval are capitalized as intangible assets and amortized to cost of products sold over the estimated useful life of the related asset.

Upfront payments associated with collaborative arrangements and subsequent payments made to the partner for the achievement of development milestones prior to regulatory approval are expensed to acquired IPR&D and milestones expense in the consolidated statements of earnings.

Regulatory and commercial milestone payments made to the partner subsequent to regulatory approval are capitalized as intangible assets and amortized to cost of products sold over the estimated useful life of the related asset.

Royalties are expensed to cost of products sold in the consolidated statements of earnings when incurred.

2022 Form 10-K |

Costs associated with advertising are expensed as incurred and are included in selling, general and administrative (SG&A) expense in the consolidated statements of earnings.

6 unchanged sentences

Income taxes are accounted for under the asset and liability method.

Provisions for federal, state and foreign income taxes are calculated on reported pretax earnings based on current tax laws.

Provisions for federal, state and foreign income taxes are calculated on reported pre-tax earnings based on current tax laws.

Deferred taxes are provided using enacted tax rates on the future tax consequences of temporary differences, which are the differences between the financial statement carrying amounts of assets and liabilities and their respective tax bases and the tax benefits of carryforwards.

2 unchanged sentences

Cash and equivalents include money market funds and time deposits with original maturities of three months or less.

2021 Form 10-K |

Investments consist primarily of equity securities, held-to-maturity debt securities, marketable debt securities and time deposits.

11 unchanged sentences

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.

| 2022 Form 10-K

Inventories are valued at the lower of cost (first-in, first-out basis) or market.

17 unchanged sentences

The estimated useful life for buildings ranges from 10 to 50 years.

Buildings include leasehold improvements which are amortized over the life of the related facility lease (including any renewal periods, if appropriate) or the asset, whichever is shorter.

Buildings include leasehold improvements which are amortized over the lesser of the remainder of the lease term or the useful life of the leasehold improvement.

The estimated useful life for equipment ranges from 2 to 25 years.

1 unchanged sentence

Depreciation expense was $ 778 million in 2022, $ 803 million in 2021 and $ 666 million in 2020.

| 2021 Form 10-K

Short-term leases with a term of 12 months or less are not recorded on the balance sheet.

13 unchanged sentences

Receivables for insurance recoveries for product liability claims, if any, are recorded as assets on an undiscounted basis when it is probable that a recovery will be realized.

Business Combinations

AbbVie utilizes the acquisition method of accounting for business combinations.

This method requires, among other things, that results of operations of acquired companies are included in AbbVie's results of operations beginning on the respective acquisition dates and that assets acquired and liabilities assumed are recognized at fair value as of the acquisition date.

Any excess of the fair value of consideration transferred over the fair values of the net assets acquired is recognized as goodwill.

Contingent consideration liabilities are recognized at the estimated fair value on the acquisition date.

Subsequent changes to the fair value of contingent consideration liabilities are recognized in other expense, net in the consolidated statements of earnings.

Legal costs, due diligence costs, business valuation costs and all other business acquisition costs are expensed when incurred.

Goodwill and Intangible Assets

4 unchanged sentences

AbbVie first compares the projected undiscounted cash flows to be generated by the asset to its carrying value.

If the undiscounted cash flows of an intangible asset are less than the carrying value, the intangible asset is written down to its fair value.

If the undiscounted cash

2022 Form 10-K |

flows of an intangible asset are less than the carrying value, the intangible asset is written down to its fair value.

Where cash flows cannot be identified for an individual asset, the review is applied at the lowest level for which cash flows are largely independent of the cash flows of other assets and liabilities.

8 unchanged sentences

The estimates and assumptions used are consistent with the company's business plans and a market participant's views.

The use of alternative estimates and assumptions could increase or decrease

2021 Form 10-K |

the estimated fair value of the assets and potentially result in different impacts to the company's results of operations.

The use of alternative estimates and assumptions could increase or decrease projected cash flows and the estimated fair value of the related intangible assets.

Future changes to these estimates and assumptions could have a material impact on the company's results of operations.

Actual results may differ from the company's estimates.

Acquired In-Process Research and Development

In an asset acquisition, the initial costs to acquire rights to IPR&D projects are expensed as IPR&D in the consolidated statements of earnings unless the project has an alternative future use.

These costs include initial payments incurred prior to regulatory approval in connection with research and development collaboration agreements that provide rights to develop, manufacture, market and/or sell pharmaceutical products.

In a business combination, the fair value of IPR&D projects acquired are capitalized and accounted for as indefinite-lived intangible assets until the underlying project receives regulatory approval, at which point the intangible asset will be accounted for as a definite-lived intangible asset, or discontinuation, at which point the intangible asset will be written off.

R&D costs incurred after the acquisition are expensed as incurred.

Foreign Currency Translation

3 unchanged sentences

dollars using period-end exchange rates.

dollar effects that arise from translating the net assets of these subsidiaries at changing rates are recognized in other comprehensive income (loss) in the consolidated statements of comprehensive income.

dollar affects that arise from translating the net assets of these subsidiaries at changing rates are recognized in other comprehensive income (loss) in the consolidated statements of comprehensive income.

The net assets of subsidiaries in highly inflationary economies are remeasured as if the functional currency were the reporting currency.

11 unchanged sentences

Cash flows related to net investment hedges are classified in the investing section of the consolidated statements of cash flows.

Recent Accounting Pronouncements

Recently Adopted Accounting Pronouncements

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.

AbbVie adopted the standard in the first quarter of 2021.

The adoption did not have a material impact on its consolidated financial statements.

| 2022 Form 10-K

10 unchanged sentences

Accounts payable 2,934 2,882

Current portion of contingent consideration liabilities 1,469 1,249

Salaries, wages and commissions 1,371 1,785

36 unchanged sentences

The number of common shares excluded was insignificant for all periods presented.

| 2022 Form 10-K

Note 5 Licensing, Acquisitions and Other Arrangements

Acquisition of DJS Antibodies Ltd

In October 2022, AbbVie entered into an agreement to acquire DJS Antibodies Ltd (DJS) including its lead program DJS-002 and proprietary HEPTAD platform.

DJS-002 is an LPAR1 antagonist antibody currently in preclinical studies for the treatment of Idiopathic Pulmonary Fibrosis and other fibrotic diseases.

HEPTAD platform is a potential novel approach to antibody discovery with specific capabilities targeting transmembrane protein targets.

The aggregate purchase price of $ 287 million was comprised of a $ 255 million upfront cash payment and $ 32 million for the acquisition date fair value of contingent consideration liabilities, for which AbbVie may owe up to $ 95 million in future payments upon achievement of certain development milestones.

The transaction was accounted for as a business combination using the acquisition method of accounting.

As of the acquisition date, AbbVie acquired $ 233 million of intangible assets for in-process research and development, $ 22 million of intangible assets for developed product rights and $ 60 million of deferred tax liabilities.

Other assets and liabilities assumed were insignificant.

The acquisition resulted in the recognition of $ 92 million of goodwill which is not deductible for tax purposes.

Acquisition of Soliton, Inc.

In December 2021, AbbVie completed its previously announced acquisition of Soliton, Inc.

Soliton's RESONIC (Rapid Acoustic Pulse device) has U.S.

Food and Drug Administration (FDA) 510(k) clearance for the long-term improvement in the appearance of cellulite up to one year.

The transaction was accounted for as a business combination using the acquisition method of accounting.

Total consideration transferred allocated to the purchase price consisted of cash consideration of $ 535 million paid to holders of Soliton common stock, equity-based awards and warrants.

As of the transaction date, AbbVie acquired $ 407 million of intangible assets for developed product rights and assumed deferred tax liabilities totaling $ 63 million.

Other assets and liabilities were insignificant.

The acquisition resulted in the recognition of $ 177 million of goodwill which is not deductible for tax purposes.

Acquisition of Luminera

In October 2020, AbbVie entered into an agreement with Luminera, a privately held aesthetics company based in Israel, to acquire Luminera's full dermal filler portfolio and R&D pipeline including HArmonyCa, a dermal filler intended for facial soft tissue augmentation.

The aggregate accounting purchase price of $ 186 million was comprised of a $ 122 million upfront cash payment and $ 64 million for the acquisition date fair value of contingent consideration liabilities, for which AbbVie may owe up to $ 90 million in future payments upon achievement of certain commercial milestones.

The agreement was accounted for as a business combination using the acquisition method of accounting.

As of the acquisition date, AbbVie acquired $ 127 million of intangible assets for in-process research and development and $ 33 million of intangible assets for developed product rights.

Other assets and liabilities assumed were insignificant.

The acquisition resulted in the recognition of $ 12 million of goodwill which is not deductible for tax purposes.

Acquisition of Allergan

1 unchanged sentence

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.

The combination created a diverse entity with leadership positions across immunology, hematologic oncology, aesthetics, neuroscience, eye care and women's health.

The combination created a diverse entity with leadership positions across immunology, hematologic oncology, aesthetics, neuroscience and eye care.

AbbVie's existing product portfolio and pipeline is enhanced with numerous Allergan assets and Allergan's product portfolio benefits from AbbVie's commercial strength, expertise and international infrastructure.

54 unchanged sentences

For the period from the acquisition date through December 31, 2020, net revenues attributable to Allergan were $ 10.3 billion and operating losses attributable to Allergan were $ 1.1 billion, inclusive of $ 4.0 billion of intangible asset amortization and $ 1.2 billion of inventory fair value step-up amortization.

Acquisition-related expenses, which were comprised primarily of regulatory, financial advisory and legal fees, totaled $ 781 million for the year ended December 31, 2020 and $ 103 million for the year ended December 31, 2019 which were included in SG&A expenses in the consolidated statements of earnings .

Acquisition-related expenses, which were comprised primarily of regulatory, financial advisory and legal fees, totaled $ 781 million for the year ended December 31, 2020 which were included in SG&A expenses in the consolidated statements of earnings .

In the fourth quarter of 2021, AbbVie recovered certain acquisition-related regulatory fees totaling $ 401 million which was recorded as a reduction to SG&A expenses in the consolidated statement of earnings for the year ended December 31, 2021.

Pro Forma Financial Information

The following table presents the unaudited pro forma combined results of AbbVie and Allergan for 2020 and 2019 as if the acquisition of Allergan had occurred on January 1, 2019:

The following table presents the unaudited pro forma combined results of AbbVie and Allergan for 2020 as if the acquisition of Allergan had occurred on January 1, 2019:

years ended December 31 (in millions) 2020

Net revenues $ 50,521

Net earnings (loss) 6,746 ( 38 )

Net earnings 6,746

The unaudited pro forma combined financial information was prepared using the acquisition method of accounting and was based on the historical financial information of AbbVie and Allergan.

5 unchanged sentences

In addition, the unaudited pro forma financial information is not a projection of future results of operations of the combined company nor does it reflect the expected realization of any synergies or cost savings associated with the acquisition.

Acquisition of Soliton, Inc.

In December 2021, AbbVie completed its previously announced acquisition of Soliton, Inc.

Soliton's RESONIC (Rapid Acoustic Pulse device) has U.S.

Food and Drug Administration (FDA) 510(k) clearance for the long-term improvement in the appearance of cellulite up to one year.

The transaction was accounted for as a business combination using the acquisition method of accounting.

Total consideration transferred allocated to the purchase price consisted of cash consideration of $ 535 million paid to holders of Soliton common stock, equity-based awards and warrants.

As of the transaction date, AbbVie acquired $ 407 million of intangible assets for developed product rights and assumed deferred tax liabilities totaling $ 63 million.

Other assets and liabilities were insignificant.

The acquisition resulted in the recognition of $ 177 million of goodwill which is not deductible for tax purposes.

Acquisition of Luminera

The agreement was accounted for as a business combination using the acquisition method of accounting.

As of the acquisition date, AbbVie acquired $ 127 million of intangible assets for in-process research and development and $ 33 million of intangible assets for developed

| 2021 Form 10-K

product rights.

Other assets and liabilities assumed were insignificant.

The acquisition resulted in the recognition of $ 12 million of goodwill which is not deductible for tax purposes.

Other Licensing & Acquisitions Activity

Cash outflows related to other acquisitions and investments totaled $ 1.4 billion in 2021, $ 1.4 billion in 2020 and $ 1.1 billion in 2019.

AbbVie recorded acquired IPR&D charges of $ 962 million in 2021, $ 1.2 billion in 2020 and $ 385 million in 2019.

Cash outflows related to other acquisitions and investments totaled $ 539 million in 2022, $ 1.4 billion in 2021 and $ 1.4 billion in 2020.

AbbVie recorded acquired IPR&D and milestones expense of $ 697 million in 2022, $ 1.1 billion in 2021 and $ 1.4 billion in 2020.

Significant arrangements impacting 2022, 2021 and 2020, some of which require contingent milestone payments, are summarized below.

Syndesi Therapeutics SA

In February 2022, AbbVie acquired Syndesi Therapeutics SA and its portfolio of novel modulators of the synaptic vesicle protein 2A, including its lead molecule SDI-118 and accounted for the transaction as an asset acquisition.

SDI-118 is a small molecule currently in Phase 1b studies, which is being evaluated to target nerve terminals to enhance synaptic efficiency.

Under the terms of the agreement, AbbVie made an upfront payment of $ 130 million which was recorded to acquired IPR&D and milestones expense in the consolidated statement of earnings in the first quarter of 2022.

The agreement also includes

2022 Form 10-K |

additional future payments of up to $ 870 million upon the achievement of certain development, regulatory and commercial milestones.

Juvise Pharmaceuticals

In June 2022, AbbVie and Laboratories Juvise Pharmaceuticals (Juvise) entered into an asset purchase agreement where Juvise acquired worldwide commercial rights of a mature brand Pylera, which is used for the treatment of peptic ulcers with an infection by the bacterium Helicobacter pylori.

The transaction was accounted for as the sale of an asset.

Upon completion of the transaction, AbbVie received net cash proceeds of $ 215 million and recognized a pre-tax gain of $ 172 million which was recorded in other operating income in the consolidated statement of earnings in the second quarter of 2022.

Calico Life Sciences LLC

12 unchanged sentences

AbbVie exercised its exclusive right to acquire TeneoOne and TNB-383B based on an interim analysis of an ongoing Phase 1 study and accounted for the transaction as an asset acquisition.

Under the terms of the agreement, AbbVie made an exercise payment of $ 400 million which was recorded to IPR&D in the consolidated statement of earnings in the third quarter of 2021.

Under the terms of the agreement, AbbVie made an exercise payment of $ 400 million which was recorded to acquired IPR&D and milestones expense in the consolidated statement of earnings in the third quarter of 2021.

The agreement also included additional payments of up to $ 250 million upon the achievement of certain development, regulatory and commercial milestones.

6 unchanged sentences

and AbbVie will pay REGENXBIO tiered royalties on net revenues outside the U.S.

Upon closing in the fourth quarter of 2021, AbbVie made an upfront payment of $ 370 million to exclusively license RGX-314 which was recorded to IPR&D in the consolidated statement of earnings for the year ended December 31, 2021 .

Upon closing in the fourth quarter of 2021, AbbVie made an upfront payment of $ 370 million to exclusively license RGX-314 which was recorded to acquired IPR&D and milestones expense in the consolidated statement of earnings for the year ended December 31, 2022 .

The agreement also included additional payments of up to $ 1.4 billion upon the achievement of certain development, regulatory and commercial milestones.

5 unchanged sentences

The agreement also allows for potential collaboration on future CD47-related therapeutic agents, subject to further licenses to explore each other's related programs in their respective territories.

The terms of the arrangement include an initial upfront payment of $ 180 million to exclusively license lemzoparlimab along with a milestone payment of $ 20 million based on the Phase I results, for a total of $ 200 million, which was recorded to IPR&D in the consolidated statement of earnings in the fourth quarter of 2020 after regulatory approval of the transaction.

In addition, I-Mab will be eligible to receive up to $ 1.7 billion upon the achievement of certain clinical development, regulatory and

The terms of the arrangement include an initial upfront payment of $ 180 million to exclusively license lemzoparlimab along with a milestone payment of $ 20 million based on the Phase I results, for a total of $ 200 million, which was recorded to acquired IPR&D and milestones expense in the consolidated statement of earnings in the fourth quarter of 2020 after regulatory approval of the

| 2022 Form 10-K

commercial milestones, and AbbVie will pay tiered royalties from low-to-mid teen percentages on global net revenues outside of greater China.

In addition, I-Mab will be eligible to receive up to $ 1.7 billion upon the achievement of certain clinical development, regulatory and commercial milestones, and AbbVie will pay tiered royalties from low-to-mid teen percentages on global net revenues outside of greater China.

In June 2020, AbbVie and Genmab A/S (Genmab) entered into a collaboration agreement to jointly develop and commercialize three of Genmab's early-stage investigational bispecific antibody therapeutics and entered into a discovery research collaboration for future differentiated antibody therapeutics for the treatment of cancer.

Under the terms of the agreement, Genmab granted to AbbVie an exclusive license to its epcoritamab (DuoBody-CD3xCD20), DuoHexaBody-CD37 and DuoBody-CD3x5T4 programs.

Under the terms of the agreement, Genmab granted AbbVie an exclusive license to its epcoritamab (DuoBody-CD3xCD20), DuoHexaBody-CD37 and DuoBody-CD3x5T4 programs.

For epcoritamab, the companies will share commercial responsibilities in the U.S.

4 unchanged sentences

For the discovery research partnership, Genmab will conduct Phase 1 studies for these programs and AbbVie retains the right to opt-in to program development.

During 2020, AbbVie made an upfront payment of $ 750 million, which was recorded to IPR&D in the consolidated statement of earnings.

During 2020, AbbVie made an upfront payment of $ 750 million, which was recorded to acquired IPR&D and milestones expense in the consolidated statement of earnings.

AbbVie could make additional payments of up to $ 3.2 billion upon the achievement of certain development, regulatory and commercial milestones for all programs.

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 received a total of $ 250 million as of December 31, 2020 and $ 80 million in cash in 2021.

Total consideration of $ 330 million was recognized in other operating (income) expense in the consolidated statement of earnings in 2019.

In addition, AbbVie will receive low single-digit, tiered royalties from worldwide sales of omaveloxolone and certain next-generation Nrf2 activators.

Other Arrangements

In addition to the significant arrangements described above, AbbVie entered into several other arrangements resulting in charges to IPR&D of $ 192 million in 2021, $ 248 million in 2020 and $ 385 million in 2019 .

In addition to the significant arrangements described above, AbbVie entered into several other arrangements resulting in charges related to upfront payments of $ 315 million in 2022, $ 192 million in 2021 and $ 248 million in 2020.

In connection with the other individually insignificant early-stage arrangements entered into in 2022, AbbVie could make additional payments of up to $ 7.5 billion upon the achievement of certain development, regulatory and commercial milestones.

Acquired IPR&D and milestones expense also included development milestones of $ 252 million in 2022, $ 162 million in 2021 and $ 178 million in 2020.

Note 6 Collaborations

3 unchanged sentences

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.

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 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.

43 unchanged sentences

Additions (a)

Foreign currency translation adjustments 512

Measurement period adjustments (b)

Foreign currency translation adjustments and other ( 358 )

Balance as of December 31, 2021 32,379

Additions (b)

Measurement period adjustments (c)

Additions (c)

Foreign currency translation adjustments and other ( 315 )

Balance as of December 31, 2022 $ 32,156

(a) Goodwill additions related to the acquisition of Allergan in the second quarter of 2020 and the acquisition of Luminera in the fourth quarter of 2020 (see Note 5).

(b) Goodwill additions related to the acquisition of Soliton in the fourth quarter of 2021 (see Note 5).

(a) Goodwill additions related to the acquisition of Soliton in the fourth quarter of 2021 (see Note 5).

(b) Measurement period adjustments recorded in 2021 related to the acquisition of Allergan (see Note 5).

The company performs its annual goodwill impairment assessment in the third quarter, or earlier if impairment indicators exist.

As of December 31, 2021, there were no accumulated goodwill impairment losses.

As of December 31, 2022 and 2021, there were no accumulated goodwill impairment losses.

Intangible Assets, Net

9 unchanged sentences

Total definite-lived intangible assets 96,172 ( 29,645 ) 66,527 97,432 ( 22,151 ) 75,281

Indefinite-lived research and development 670 — 670 1,877 — 1,877

Indefinite-lived intangible assets 912 — 912 670 — 670

Total intangible assets, net $ 97,084 $ ( 29,645 ) $ 67,439 $ 98,102 $ ( 22,151 ) $ 75,951

Definite-Lived Intangible Assets

The increase in definite-lived intangible assets during 2021 was primarily due to the measurement period adjustments from the completion of the valuation of certain license agreements acquired in the Allergan acquisition as well as the acquisition of Soliton.

Refer to Note 5 for additional information regarding these acquisitions and related adjustments.

In 2021, AbbVie also reclassified $ 1.0 billion of indefinite-lived research and development intangible assets to developed product rights upon receiving certain regulatory approvals for Vuity, Qulipta, and HArmonyCa.

In September 2022, the company made a strategic decision to reduce ongoing sales and marketing investment related to Vuity, an on-market product to treat presbyopia.

This strategic decision contributed to a significant decrease in the estimated future cash flows for the product and represented a triggering event which required the company to evaluate the underlying definite lived-intangible asset for impairment.

The company utilized a discounted cash flow analysis to estimate the fair value of the intangible asset resulting in a full impairment of both the gross and net carrying amount.

Based on the revised cash flows, the company recorded a pre-tax impairment charge of $ 770 million to cost of products sold in the consolidated statement of earnings for the third quarter of 2022.

Definite-lived intangible assets are amortized over their estimated useful lives, which range between 1 to 16 years with an average of 12 years for developed product rights and 11 years for license agreements.

6 unchanged sentences

Indefinite-lived intangible assets represent acquired IPR&D associated with products that have not yet received regulatory approval.

Indefinite-lived intangible assets as of December 31, 2021 primarily relate to the acquisition of Allergan.

Indefinite-lived intangible assets as of December 31, 2022 primarily relate to the acquisitions of Allergan and DJS.

The company performs its annual impairment assessment of indefinite-lived intangible assets in the third quarter, or earlier if impairment indicators exist.

In 2019, following the announcement of the decision to terminate the rovalpituzumab tesirine (Rova-T) R&D program, the company recorded an impairment charge of $ 1.0 billion which represented the remaining value of the IPR&D acquired as part of the 2016 Stemcentrx acquisition.

The impairment charge was recorded to R&D expense in the consolidated statements of earnings in 2019.

Note 8 Integration and Restructuring Plans

Allergan Integration Plan

Following the closing of the Allergan acquisition, AbbVie implemented an integration plan designed to reduce costs, integrate and optimize the combined organization.

To achieve these integration objectives, AbbVie expects to incur total cumulative charges of approximately $ 2 billion of charges through 2022.

These costs will consist of severance and employee benefit costs (cash severance, non-cash severance, including accelerated equity award compensation expense, retention and other termination benefits) and other integration expenses.

The following table summarizes the charges associated with the Allergan acquisition integration plan:

Following the closing of the Allergan acquisition, AbbVie implemented an integration plan designed to reduce costs, integrate and optimize the combined organization and incurred total cumulative charges of $ 2.3 billion through 2022.

These costs consisted of severance and employee benefit costs (cash severance, non-cash severance, including accelerated equity award compensation expense, retention and other termination benefits) and other integration expenses.

The following table summarizes the charges (benefits) associated with the Allergan acquisition integration plan:

Severance and employee benefits Other integration

3 unchanged sentences

Selling, general and administrative ( 4 ) 64 388 403 289 237

Total charges $ 69 $ 696 $ 518 $ 435

Total charges (benefits) $ ( 8 ) $ 69 $ 696 $ 547 $ 518 $ 435

The following table summarizes the cash activity in the recorded liability associated with the integration plan:

6 unchanged sentences

Accrued balance as of December 31, 2021 222 33

Charges (benefits) ( 8 ) 385

Payments and other adjustments ( 116 ) ( 409 )

Accrued balance as of December 31, 2022 $ 98 $ 9

Other Restructuring

35 unchanged sentences

Total lease cost $ 339 $ 353 $ 311

In December 2022, the company entered into an agreement to sublease a portion of its Madison, New Jersey office space through the end of the original lease maturity in 2030.

As a result of this agreement, the company recognized an impairment loss on its right-of-use asset of $ 69 million and wrote-off the related leasehold improvements of $ 37 million.

These losses were recorded to SG&A expense in the consolidated statements of earnings for the year ended December 31, 2022.

The company used a discounted cash flows method to value the right-of-use asset to determine the impairment amount.

Sublease income and finance lease costs were insignificant in 2022, 2021 and 2020.

23 unchanged sentences

2026 113 6 119

2026 91 9 100

Thereafter 361 — 361

7 unchanged sentences

as of December 31 (dollars in millions) 2022 Effective

interest rate

interest rate (a)

2022 2021 Effective

interest rate

Senior notes issued in 2012

2.90 % notes due 2022

2.97 % $ 3,100 2.97 % $ 3,100

4.40 % notes due 2042

4.46 % 2,600 4.46 % 2,600

Senior notes issued in 2015

3.20 % notes due 2022

3.28 % 1,000 3.28 % 1,000

3.60 % notes due 2025

3.66 % 3,750 3.66 % 3,750

4.50 % notes due 2035

4.58 % 2,500 4.58 % 2,500

4.70 % notes due 2045

4.73 % 2,700 4.73 % 2,700

Senior notes issued in 2016

2.30 % notes due 2021

2.40 % — 2.40 % 1,800

2.85 % notes due 2023

2.91 % 1,000 2.91 % 1,000

3.20 % notes due 2026

interest rate (a)

2.30 - 3.45 % aggregate notes due 2022

1.92 - 3.28 %

4.30 % notes due 2036

$ — 0.99 - 3.45 %

4.45 % notes due 2046

3.75 % senior notes due 2023

3.84 % 1,250 3.84 % 1,250

Senior Euro notes issued in 2016

1.375 % notes due 2024 (€ 1,450 principal)

2.85 % senior notes due 2023

2.91 % 1,000 2.91 % 1,000

2.125 % notes due 2028 (€ 750 principal)

Floating rate term loans due 2023 2.45 % 1,000 0.81 % 1,000

1.50 % senior euro notes due 2023 (€ 500 principal)

0.49 % 532 0.49 % 567

Senior notes issued in 2018

3.375 % notes due 2021

2.80 % senior notes due 2023

2.13 % 350 2.13 % 350

3.75 % notes due 2023

2.60 % senior notes due 2024

2.69 % 3,750 2.69 % 3,750

4.25 % notes due 2028

1.375 % senior euro notes due 2024 (€ 1,450 principal)

1.46 % 1,543 1.46 % 1,643

4.875 % notes due 2048

3.85 % senior notes due 2024

2.07 % 1,032 2.07 % 1,032

Senior Euro notes issued in 2019

0.75 % notes due 2027 (€ 750 principal)

1.25 % senior euro notes due 2024 (€ 700 principal)

0.65 % 745 0.65 % 793

1.25 % notes due 2031 (€ 650 principal)

3.60 % senior notes due 2025

3.66 % 3,750 3.66 % 3,750

Senior notes issued in 2019

Floating rate notes due May 2021 0.74 % — 1.33 % 750

Floating rate notes due November 2021 0.78 % — 1.42 % 750

Floating rate notes due 2022 0.99 % 750 1.62 % 750

2.15 % notes due 2021

3.80 % senior notes due 2025

2.09 % 3,021 2.09 % 3,021

2.30 % notes due 2022

Floating rate term loans due 2025 1.39 % — 1.36 % 2,000

Floating rate term loans due 2025 2.82 % 2,000 — —

2.95 % senior notes due 2026

3.02 % 4,000 3.02 % 4,000

2.60 % notes due 2024

3.20 % senior notes due 2026

3.28 % 2,000 3.28 % 2,000

2.95 % notes due 2026

0.75 % senior euro notes due 2027 (€ 750 principal)

0.86 % 798 0.86 % 850

3.20 % notes due 2029

4.25 % senior notes due 2028

4.38 % 1,750 4.38 % 1,750

4.05 % notes due 2039

2.125 % senior euro notes due 2028 (€ 750 principal)

2.18 % 798 2.18 % 850

4.25 % notes due 2049

2.625 % senior euro notes due 2028 (€ 500 principal)

1.20 % 532 1.20 % 567

Term loan facilities

Floating rate notes due 2023 1.23 % — 1.29 % 1,000

Floating rate notes due 2023 0.81 % 1,000 — % —

Floating rate notes due 2025 1.36 % 2,000 1.42 % 2,000

| 2021 Form 10-K

as of December 31 (dollars in millions) Effective

interest rate

2021 Effective

interest rate

Senior notes acquired in 2020

5.000 % notes due 2021

3.20 % senior notes due 2029

3.25 % 5,500 3.25 % 5,500

3.450 % notes due 2022

2.125 % senior euro notes due 2029 (€ 550 principal)

1.19 % 585 1.19 % 623

3.250 % notes due 2022

1.25 % senior euro notes due 2031 (€ 650 principal)

1.30 % 691 1.30 % 737

2.800 % notes due 2023

4.55 % senior notes due 2035

3.52 % 1,789 3.52 % 1,789

3.850 % notes due 2024

4.50 % senior notes due 2035

4.58 % 2,500 4.58 % 2,500

3.800 % notes due 2025

4.30 % senior notes due 2036

4.37 % 1,000 4.37 % 1,000

4.550 % notes due 2035

4.05 % senior notes due 2039

4.11 % 4,000 4.11 % 4,000

4.625 % notes due 2042

4.40 % senior notes due 2042

4.46 % 2,600 4.46 % 2,600

4.850 % notes due 2044

4.625 % senior notes due 2042

4.00 % 457 4.00 % 457

4.750 % notes due 2045

4.85 % senior notes due 2044

4.11 % 1,074 4.11 % 1,074

Senior Euro notes acquired in 2020

0.500 % notes due 2021 (€ 750 principal)

4.70 % senior notes due 2045

4.73 % 2,700 4.73 % 2,700

1.500 % notes due 2023 (€ 500 principal)

4.75 % senior notes due 2045

4.20 % 881 4.20 % 881

1.250 % notes due 2024 (€ 700 principal)

4.45 % senior notes due 2046

4.50 % 2,000 4.50 % 2,000

2.625 % notes due 2028 (€ 500 principal)

4.875 % senior notes due 2048

4.94 % 1,750 4.94 % 1,750

2.125 % notes due 2029 (€ 550 principal)

4.25 % senior notes due 2049

4.29 % 5,750 4.29 % 5,750

8 unchanged sentences

(b) Represents unamortized purchase price adjustments of Allergan debt.

In April 2021, the company repaid $ 1.8 billion aggregate principal amount of 2.3 % senior notes that were scheduled to mature in May 2021.

In May 2021, the company repaid € 750 million aggregate principal amount of 0.5 % senior Euro notes that were scheduled to mature in June 2021.

These repayments were made by exercising, under the terms of the notes, 30-day early redemptions at 100% of the principal amounts.

The company also repaid $ 750 million aggregate principal amount of floating rate senior notes at maturity in May 2021.

In September 2021, the company refinanced its $ 1.0 billion floating rate three-year term loan.

As part of the refinancing, the company repaid the existing $ 1.0 billion term loan due May 2023 and borrowed $ 1.0 billion under a new term loan at a lower floating rate.

All other significant terms of the loan, including the maturity date, remained unchanged after the refinancing.

In September 2021, the company repaid $ 1.2 billion aggregate principal amount of 5.0 % senior notes that were scheduled to mature in December 2021.

This repayment was made by exercising, under the terms of the notes, 90-day early redemption at 100% of the principal amount.

In November 2021, the company repaid $ 1.3 billion aggregate principal amount of 3.375 % senior notes and $ 1.8 billion aggregate principal amount of 2.15 % senior notes at maturity.

The company also repaid $ 750 million aggregate principal amount of floating rate senior notes at maturity in November 2021.

2022 Form 10-K |

In January 2022, the company repaid $ 2.9 billion aggregate principal amount of 3.450 % senior notes that were scheduled to mature in March 2022.

This repayment was made by exercising, under the terms of the notes, 60-day early redemption at 100% of the principal amount.

In connection with the acquisition of Allergan, in May 2020, the company borrowed $ 3.0 billion under a $ 6.0 billion term loan credit agreement, of which $ 1.0 billion was outstanding under a floating rate three-year term loan tranche and $ 2.0 billion outstanding under a floating rate five-year term loan tranche as of December 31, 2021.

Subsequent to these borrowings, AbbVie terminated the unused commitments of the lenders under the term loan.

In May 2020, AbbVie completed its previously announced offers to exchange any and all outstanding notes of certain series issued by Allergan for new notes to be issued by AbbVie and cash.

Following the settlement of the exchange offers, AbbVie issued $ 14.0 billion and € 3.1 billion of new notes in exchange for the Allergan notes tendered in the exchange offers.

The aggregate principal amount of Allergan notes that remained outstanding following the settlement of the exchange offers was approximately $ 1.5 billion and € 635 million.

The exchange transaction was accounted for as a modification of the assumed debt instruments.

In May 2020, the company repaid $ 3.8 billion aggregate principal amount of 2.5 % senior notes at maturity.

In September 2020, the company repaid $ 650 million aggregate principal amount of 3.375 % senior notes at maturity.

In November 2020, the company repaid € 700 million aggregate principal amount of floating rate senior Euro notes at maturity and $ 450 million aggregate principal amount of 4.875 % senior notes due February 2021 three months prior to maturity.

In September 2019, the company issued € 1.4 billion aggregate principal amount of unsecured senior Euro notes.

These senior notes rank equally with all other unsecured and unsubordinated indebtedness of the company.

AbbVie may redeem the senior notes prior to maturity at a redemption price equal to the principal amount of the senior notes redeemed plus a make-whole premium and may redeem the senior notes at par between one and three months prior to maturity.

In connection with the offering, debt issuance costs incurred totaled $ 9 million and debt discounts totaled $ 5 million and are being amortized over the respective terms of the notes to interest expense, net in the consolidated statements of earnings.

In October 2019, the company used the proceeds to redeem € 1.4 billion aggregate principal amount of 0.375 % senior Euro notes that were due to mature in November 2019.

In November 2019, the company issued $ 30.0 billion aggregate principal amount of unsecured senior notes.

These senior notes rank equally with all other unsecured and unsubordinated indebtedness of the company.

AbbVie may redeem the fixed-rate senior notes prior to maturity at a redemption price equal to the greater of the principal amount or the sum of present values of the remaining scheduled payments of principal and interest on the fixed-rate senior notes to be redeemed plus a make-whole premium.

With exception of the fixed-rate notes due 2021 and 2022, AbbVie may also redeem the fixed-rate senior notes at par between one and six months prior to maturity.

In connection with the offering, debt issuance costs incurred totaled $ 173 million and debt discounts totaled $ 52 million, which are being amortized over the respective terms of the notes to interest expense, net in the consolidated statements of earnings.

AbbVie used the net proceeds to fund a portion of the aggregate cash consideration due to Allergan shareholders in connection with the acquisition described in Note 5 and to pay related fees and expenses.

AbbVie has outstanding $ 4.8 billion aggregate principal amount of unsecured senior notes which were issued in 2018.

AbbVie may redeem the senior notes prior to maturity at a redemption price equal to the principal amount of the senior notes redeemed plus a make-whole premium and AbbVie may redeem the senior notes at par between one month and six months prior to maturity.

AbbVie has outstanding € 2.2 billion aggregate principal amount of unsecured senior Euro notes which were issued in 2016.

AbbVie has outstanding $ 6.0 billion aggregate principal amount of unsecured senior notes which were issued in 2016 and $ 10.0 billion aggregate principal amount of unsecured senior notes which were issued in 2015.

AbbVie may redeem the senior notes, at any time, prior to maturity at a redemption price equal to the principal amount of the senior notes redeemed plus a make-whole premium and AbbVie may redeem the senior notes at par between one and six months prior to maturity.

AbbVie has outstanding $ 5.7 billion aggregate principal amount of unsecured senior notes which were issued in 2012.

AbbVie may redeem all of the senior notes of each series, at any time, or some of the senior notes of each series, from time to time, at a redemption price equal to the principal amount of the senior notes redeemed plus a make-whole premium.

| 2021 Form 10-K

Senior notes and floating rate term loans are redeemable prior to maturity at a redemption price equal to the principal amount plus a make-whole premium and AbbVie may redeem these debt securities at par generally between one and six months prior to maturity.

At December 31, 2022, the company was in compliance with its senior note covenants and term loan covenants.

Short-Term Borrowings

There were no commercial paper borrowings outstanding as of December 31, 2021 and December 31, 2020.

No commercial paper borrowings were issued during 2021.

The weighted-average interest rate on commercial paper borrowings was 1.8 % in 2020 and 2.5 % in 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 December 31, 2021.

Commitment fees under AbbVie's revolving credit facilities were insignificant in 2021, 2020 and 2019.

No amounts were outstanding under the company's credit facilities as of December 31, 2021 and December 31, 2020.

In March 2019, AbbVie repaid a $ 3.0 billion 364 -day term loan credit agreement that was drawn on in June 2018 and was scheduled to mature in June 2019.

Maturities of Long-Term Debt

The following table summarizes AbbVie's debt maturities as of December 31, 2021:

as of and for the years ending December 31 (in millions)

2022 $ 12,428

Thereafter 36,357

Total obligations and commitments 63,128

Fair value hedges, unamortized bond premiums and discounts, deferred financing costs and finance lease obligations 708

Fair value hedges, unamortized bond premiums/discounts, deferred financing costs and finance lease obligations 142

Total long-term debt and finance lease obligations $ 63,270

Repayment and Issuance of Long-Term Debt

In 2022, the company repaid $ 2.9 billion aggregate principal amount of 3.450 % senior notes, $ 1.7 billion aggregate principal amount of 3.25 % senior notes, $ 1.0 billion aggregate principal amount of 3.2 % senior notes.

These repayments were ma de by exercising, under the terms of the notes ranging between 60 and 90-day early redemptions at 100% of the principal amount.

During the quarter ended December 31, 2022, the company also paid $ 3.1 billion aggregate principal amount of 2.9 % senior notes, $ 3.0 billion aggregate principal amount of 2.3 % senior notes and $ 750 million aggregate principal amount of floating rate senior notes at maturity.

Additionally in 2022, the company refinanced its $ 2.0 billion floating rate five-year term loan.

As part of the refinancing, the company repaid the existing $ 2.0 billion term loan due May 2025 and borrowed $ 2.0 billion under a new term loan at a lower floating rate.

All other significant terms of the loan, including the maturity date, remained unchanged after the refinancing.

Subsequent to December 31, 2022, the company repaid a $ 1.0 billion floating rate three-year term loan that was scheduled to mature in May 2023.

In 2021, the company repaid $ 1.8 billion aggregate principal amount of 2.3 % senior notes, € 750 million aggregate principal amount of 0.5 % senior Euro notes and $ 1.2 billion aggregate principal amount of 5.0 % senior notes.

These repayments were made by exercising, under the terms of the notes, ranging between 30 and 90-day early redemptions at 100% of the principal amounts.

The company also repaid $ 1.3 billion aggregate principal amount of 3.375 % senior notes $ 1.8 billion aggregate principal amount of 2.15 % senior notes and $ 1.5 billion aggregate principal amount of floating rate senior notes at maturity.

Additionally in 2021, the company refinanced its $ 1.0 billion floating rate three-year term loan.

As part of the refinancing, the company repaid the existing $ 1.0 billion term loan due May 2023 and borrowed $ 1.0 billion under a new term loan at a lower floating rate.

All other significant terms of the loan, including the maturity date, remained unchanged after the refinancing.

Short-Term Borrowings

There were no commercial paper borrowings outstanding as of December 31, 2022 and December 31, 2021.

No commercial paper borrowings were issued during 2022 or 2021.

There were commercial paper borrowings issued during 2020 and the weighted-average interest rate was 1.8 %.

AbbVie currently has a $ 4.0 billion five-year revolving credit facility that matures in August 2024.

This credit 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 December 31, 2022.

Commitment fees under AbbVie's revolving credit facilities were insignificant in 2022, 2021 and 2020.

No amounts were outstanding under the company's credit facilities as of December 31, 2022 and December 31, 2021.

Contingencies and Guarantees

3 unchanged sentences

Based upon past experience, the likelihood of payments under these agreements is remote.

| 2022 Form 10-K

Note 11 Financial Instruments and Fair Value Measures

6 unchanged sentences

collateral is generally not required.

2021 Form 10-K |

Financial Instruments

3 unchanged sentences

Accumulated gains and losses as of December 31, 2022 will be reclassified from 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 issuance of long-term debt in connection with the acquisition of Allergan.

In 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 issuance of long-term debt in connection with the 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 resulting in a pre-tax gain of $ 383 million recognized in other comprehensive income (loss).

The agreements were net settled upon issuance of the senior notes in 2019 and the resulting net gain was recognized in other comprehensive income.

This gain is reclassified to interest expense, net over the term of the related debt.

The company is a party to interest rate swap contracts designed as cash flow hedges with notional amounts totaling $ 750 million at December 31, 2021 and $ 2.3 billion at December 31, 2020.

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.

Realized and unrealized gains or losses are included in AOCI and are reclassified to interest expense, net over the lives of the floating-rate debt.

The company was a party to interest rate swap contracts designated as cash flow hedges that matured in November 2022, for which the notional amount was $ 750 million at December 31, 2021.

The effect of the hedge contracts was to change a floating-rate interest obligation to a fixed rate for that portion of the floating-rate debt.

Realized and unrealized gains or losses were included in AOCI and were reclassified to interest expense, net over the lives of the 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.

3 unchanged sentences

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 an aggregate principal amount of senior Euro notes designated as net investment hedges of € 5.9 billion at December 31, 2021 and € 6.6 billion at December 31, 2020.

In addition, the company had foreign currency forward exchange contracts designated as net investment hedges with notional amounts totaling € 4.3 billion at December 31, 2021 and € 971 million at December 31, 2020.

The company had an aggregate principal amount of senior Euro notes designated as net investment hedges of € 5.9 billion at December 31, 2022 and December 31, 2021.

In addition, the company had foreign currency forward exchange contracts designated as net investment hedges with notional amounts totaling € 4.3 billion, SEK 2.0 billion, CAD 750 million and CHF 90 million at December 31, 2022 and € 4.3 billion at December 31, 2021.

The company uses the spot method of assessing hedge effectiveness for 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.

The company is a party to interest rate swap contracts designated as fair value hedges with notional amounts totaling $ 4.5 billion at December 31, 2021 and $ 4.8 billion at December 31, 2020.

The company is a party to interest rate swap contracts designated as fair value hedges with notional amounts totaling $ 4.5 billion at December 31, 2022 and December 31, 2021.

The effect of the hedge contracts is to change a fixed-rate interest obligation to a floating rate for that portion of the debt.

14 unchanged sentences

Designated as cash flow hedges Prepaid expenses and other — — Accounts payable and accrued liabilities — 7

Designated as cash flow hedges Other assets — — Other long-term liabilities — 20

Designated as fair value hedges Prepaid expenses and other — — Accounts payable and accrued liabilities 17 —

2 unchanged sentences

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

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

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

years ended in December 31 (in millions) 2022 2021 2020

3 unchanged sentences

Interest rate swap contracts designated as cash flow hedges 6 2 ( 53 )

Treasury rate lock agreements designated as cash flow hedges — — 383

Assuming market rates remain constant through contract maturities, the company expects to reclassify pre-tax gains of $ 65 million into cost of products sold for foreign currency cash flow hedges, pre-tax losses of $ 7 million into interest expense, net for interest rate swap cash flow hedges and pre-tax gains of $ 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 $ 577 million in 2021, pre-tax losses of $ 907 million in 2020 and pre-tax gains of $ 90 million in 2019.

Assuming market rates remain constant through contract maturities, the company expects to reclassify pre-tax gains of $ 86 million into cost of products sold for foreign currency cash flow hedges and pre-tax gains of $ 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 pre-tax gains of $ 406 million in 2022, pre-tax gains of $ 577 million in 2021 and pre-tax losses of $ 907 million in 2020.

| 2022 Form 10-K

27 unchanged sentences

Equity securities 91 59 32 —

Interest rate swap contracts 26 — 26 —

Foreign currency contracts 163 — 163 —

20 unchanged sentences

Total liabilities $ 14,924 $ — $ 37 $ 14,887

Money market funds and time deposits are valued using relevant observable market inputs including quoted prices for similar assets and interest rate curves.

Equity securities primarily consist of investments for which the fair values were determined by using the published market prices per unit multiplied by the number of units held, without consideration of transaction costs.

16 unchanged sentences

(a) Unobservable inputs were weighted by the relative fair value of the contingent consideration liabilities.

(b) Excluding approved indications, the estimated probability of payment ranged from 56 % to 89 % at December 31, 2021 and 56 % to 89 % at December 31, 2020.

(b) Excluding approved indications, the estimated probability of payment was 56 % at December 31, 2022 and ranged from 56 % to 89 % at December 31, 2021.

There have been no transfers of assets or liabilities into or out of Level 3 of the fair value hierarchy.

6 unchanged sentences

Ending balance $ 16,384 $ 14,887 $ 12,997

(a) Additions during the year ended December 31, 2020 represent contingent consideration liabilities assumed in the Allergan acquisition as well as contingent consideration resulting from the Luminera acquisition (see Note 5).

The change in fair value recognized in net earnings is recorded in other expense, net in the consolidated statements of earnings.

During the year-ended December 31, 2021, the company recorded a $ 2.7 billion increase in the Skyrizi contingent consideration liability due to higher estimated sales driven by stronger market share uptake, favorable clinical trial results and the passage of time, partially offset by higher discount rates.

During the year-ended December 31, 2020, the company recorded a $ 5.7 billion increase in the Skyrizi contingent consideration liability due to higher estimated future sales driven by stronger market share uptake, lower discount rates, the passage of time and favorable clinical trial results.

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 lower discount 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 R&D program.

(a) Additions during the year ended December 31, 2022, represent contingent consideration liabilities assumed in the DJS acquisition.

Additions during the year ended December 31, 2020, represent contingent consideration liabilities assumed in the Allergan and Luminera acquisitions (see Note 5).

The change in fair value recognized in net earnings is recorded in other expense, net in the consolidated statements of earnings and included charges of $ 2.8 billion in 2022, $ 2.7 billion in 2021 and $ 5.8 billion in 2020.

In 2022, the change in fair value reflected higher estimated Skyrizi sales driven by stronger market share uptake and the passage of time, partially offset by higher discount rates.

In 2021, the change in fair value reflected higher estimated Skyrizi sales driven by stronger market share uptake, favorable clinical trial results and the passage of time, partially offset by higher discount rates.

In 2020, the change in fair value reflected higher estimated Skyrizi sales driven by stronger market share uptake, lower discount rates, the passage of time and favorable clinical trial results.

2022 Form 10-K |

42 unchanged sentences

Benefits paid ( 294 ) ( 281 ) ( 25 ) ( 22 )

Acquisition — 1,409 — 43

Other, primarily foreign currency translation adjustments ( 208 ) ( 176 ) ( 1 ) —

6 unchanged sentences

Benefits paid ( 294 ) ( 281 ) ( 25 ) ( 22 )

Acquisition — 1,296 — —

Other, primarily foreign currency translation adjustments ( 216 ) ( 144 ) — —

9 unchanged sentences

Accumulated other comprehensive loss $ 2,368 $ 3,509 $ ( 128 ) $ 91

The projected benefit obligations in the table above included $ 3.2 billion at December 31, 2021 and $ 3.5 billion at December 31, 2020, related to international defined benefit plans.

For plans reflected in the table above, the accumulated benefit obligations were $ 10.5 billion at December 31, 2021 and December 31, 2020.

Related to international defined benefit plans the projected benefit obligations in the table above included $ 2.1 billion at December 31, 2022 and $ 3.2 billion at December 31, 2021.

For plans reflected in the table above, the accumulated benefit obligations were $ 7.7 billion at December 31, 2022 and $ 10.5 billion at December 31, 2021.

The 2022 actuarial gain of $ 3.7 billion for qualified pension plans and actuarial gain of $ 229 million for other post-employment plans were primarily driven by an increase in the discount rate.

The 2021 actuarial gain of $ 8 million for qualified pension plans and actuarial loss of $ 10 million for other post-employment plans were primarily driven by an increase in the assumed discount rate offset by change in demographic assumptions from 2020.

2022 Form 10-K |

7 unchanged sentences

Fair value of plan assets 4,580 5,447

The 2020 actuarial losses of $ 1.1 billion for qualified pension plans and $ 40 million for other post-employment plans were primarily driven by a decrease in the assumed discount rate from 2019.

AbbVie's U.S.

2 unchanged sentences

retiree health benefit plan was approved in 2020 and communicated to employees and retirees in October 2020.

Beginning in 2022, Medicare-eligible retirees and Medicare-eligible dependents will choose health care coverage from insurance providers through a private Medicare exchange.

Beginning in 2022, Medicare-eligible retirees and Medicare-eligible dependents choose health care coverage from insurance providers through a private Medicare exchange.

AbbVie will continue to provide financial support to Medicare-eligible retirees.

1 unchanged sentence

retiree health benefit plan decreased AbbVie's post-employment benefit obligation and increased AbbVie's unrecognized prior service credit as of December 31, 2020 by $ 397 million.

In connection with the Allergan acquisition, AbbVie assumed certain post-employment benefit obligations which were recorded at fair value.

Upon acquisition in the second quarter of 2020, the excess of projected benefit obligations over the plan assets was recognized as a liability totaling $ 156 million.

| 2022 Form 10-K

Amounts Recognized in Other Comprehensive Income (Loss)

The following table summarizes the pre-tax losses (gains) included in other comprehensive income (loss):

Amounts Recognized in Other Comprehensive Income

The following table summarizes the pre-tax losses (gains) included in other comprehensive income:

years ended December 31 (in millions) 2022 2021 2020

6 unchanged sentences

Other post-employment plans

Actuarial loss $ 10 $ 40 $ 451

Actuarial loss (gain) $ ( 229 ) $ 10 $ 40

Prior service credit ( 2 ) — ( 397 )

115 unchanged sentences

Under the Amended Plan, a total of 144 million shares of AbbVie common stock have been reserved for issuance as awards to AbbVie employees.

The 2013 ISP also facilitated the assumption of certain awards granted under Abbott’s incentive stock program, which were adjusted and converted into Abbott and AbbVie stock-based awards as a result of AbbVie's separation from Abbott.

| 2022 Form 10-K

38 unchanged sentences

Equity awards granted to senior executives and other key employees consist of a combination of performance-vested RSUs and performance shares as well as non-qualified stock options described above.

The performance-vested RSUs have the potential to vest in one-third increments during a three-year performance period.

For awards granted in 2021 and 2020, performance is based on AbbVie's return on invested capital relative to a defined peer group of pharmaceutical, biotech and life science companies.

For awards granted in 2019, the tranches tied to 2021 performance are based on AbbVie’s return on

| 2021 Form 10-K

equity relative to a defined peer group of pharmaceutical, biotech and life sciences companies.

The performance-vested RSUs have the potential to vest in one-third increments during a three-year performance period and may be earned based on AbbVie’s return on invested capital (ROIC) performance relative to a defined peer group of pharmaceutical, biotech and life science companies.

The recipient may receive one share of AbbVie common stock for each vested award.

The performance shares have the potential to vest over a three-year performance period and may be earned based on AbbVie’s EPS achievement and AbbVie’s total stockholder return (TSR) (a market condition) relative to a defined peer group of pharmaceutical, biotech and life sciences companies.

The performance shares

2022 Form 10-K |

have the potential to vest over a three-year performance period and may be earned based on AbbVie’s EPS achievement and AbbVie’s total stockholder return (TSR) (a market condition) relative to a defined peer group of pharmaceutical, biotech and life sciences companies.

Dividend equivalents on performance-vested RSUs and performance shares accrue during the performance period and are payable at vesting only to the extent that shares are earned.

8 unchanged sentences

Outstanding at December 31, 2022 13,031 $ 116.84

The fair market value of RSUs and performance shares (as applicable) vested was $ 718 million in 2021, $ 618 million in 2020 and $ 371 million in 2019.

The fair market value of RSUs and performance shares (as applicable) vested was $ 1.0 billion in 2022, $ 718 million in 2021 and $ 618 million in 2020.

In connection with the Allergan acquisition, during the second quarter of 2020, AbbVie issued 8.2 million RSUs to holders of Allergan equity awards based on a conversion factor described in the transaction agreement.

14 unchanged sentences

Shares repurchased under these programs are recorded at acquisition cost, including related expenses and are available for general corporate purposes.

AbbVie repurchased 6 million shares for $ 670 million in 2021, 8 million shares for $ 757 million in 2020 and 4 million shares for $ 300 million in 2019.

AbbVie repurchased 8 million shares for $ 1.1 billion in 2022, 6 million shares for $ 670 million in 2021 and 8 million shares for $ 757 million in 2020.

AbbVie's remaining stock repurchase authorization was $ 1.4 billion as of December 31, 2022.

On February 16, 2023, AbbVie's board of directors authorized a $ 5.0 billion increase to the existing stock repurchase authorization.

| 2022 Form 10-K

2 unchanged sentences

(in millions) (brackets denote losses) Foreign currency translation adjustments Net investment hedging activities Pension

and post-employment benefits Marketable security activities Cash flow hedging activities Total

and post-employment benefits Cash flow hedging activities Total

Balance as of December 31, 2019 $ ( 928 ) $ 9 $ ( 2,965 ) $ 288 $ ( 3,596 )

11 unchanged sentences

Balance as of December 31, 2022 $ ( 1,513 ) $ 464 $ ( 1,458 ) $ 308 $ ( 2,199 )

Other comprehensive income (loss) for 2021 included foreign currency translation adjustments totaling losses of $ 1.2 billion and the offsetting impact of net investment hedging activities totaling gains of $ 699 million, which were principally due to the impact of the weakening of the Euro on the translation of the company’s Euro-denominated assets.

Other comprehensive income (loss) for 2020 included foreign currency translation adjustments totaling gains of $ 1.5 billion and the offsetting impact of net investment hedging activities totaling losses of $ 799 million, which were principally due to the impact of the strengthening of the Euro on the translation of the company's Euro-denominated assets.

Other comprehensive income (loss) for 2019 included pension and post-employment benefit plan losses of $ 1.2 billion primarily due to an actuarial loss driven by lower discount rates.

See Note 12 for additional information.

Other comprehensive income for 2022 included pension and post-employment benefit plan gains of $ 1.1 billion primarily due actuarial gains driven by higher discount rates partially offset by losses on plan assets.

Other comprehensive income for 2022 also included foreign currency translation adjustments totaling losses of $ 943 million principally due to the impact of the weakening of the Euro on the translation of the company’s Euro-denominated assets and the offsetting impact of net investment hedging activities totaling gains of $ 555 million.

Other comprehensive income for 2021 included foreign currency translation adjustments totaling losses of $ 1.2 billion principally due to the impact of the weakening of the Euro on the translation of the company's Euro-denominated assets and the offsetting impact of net investment hedging activities totaling gains of $ 699 million.

Other comprehensive income for 2020 included foreign currency translation adjustments totaling gains of $ 1.5 billion principally due to the impact of the strengthening of the Euro on the translation of the company's Euro-denominated assets and the offsetting impact of net investment hedging activities totaling losses of $ 799 million.

2022 Form 10-K |

16 unchanged sentences

( 23 ) ( 24 ) ( 24 )

Losses (gains) on interest rate swap contracts (a)

Losses on interest rate swap contracts (a)

Tax expense (benefit) 13 ( 12 ) 7

30 unchanged sentences

Tax law changes and related restructuring ( 2.4 ) ( 2.0 ) ( 48.5 )

Tax audit settlements ( 0.4 ) ( 5.1 ) ( 4.7 )

Tax audits and settlements 0.9 ( 0.4 ) ( 5.1 )

All other, net ( 0.8 ) 0.4 ( 1.3 )

1 unchanged sentence

The effective income tax rate fluctuates year to year due to the allocation of the company's taxable earnings among jurisdictions, as well as certain discrete factors and events in each year, including changes in tax law, acquisitions and collaborations.

The effective income tax rates in 2021, 2020 and 2019 differed from the statutory tax rate principally due to the impact of 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, business development activities, changes in enacted tax rates and laws and related restructuring, tax audit settlements and accretion on contingent consideration.

The 2020 effective income tax rate included the recognition of a net tax benefit of $ 1.7 billion related to changes in tax laws and related restructuring, including certain intra-group transfers of intellectual property and deferred tax remeasurement.

The effective income tax rates in 2022, 2021 and 2020 differed from the statutory tax rate principally due to the impact of 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, business development activities, changes in enacted tax rates and laws and related restructuring, tax audits and settlements and changes in fair value of contingent consideration.

The effective tax rates for these periods also reflected the benefit from U.S.

tax credits principally related to research and development credits, the orphan drug tax credit and Puerto Rico excise tax credits.

The Puerto Rico excise tax credits relate to legislation enacted by Puerto Rico that assesses an excise tax on certain products manufactured in Puerto Rico.

The Puerto Rico tax credits relate to excise tax on certain products manufactured in Puerto Rico.

The tax is levied on gross inventory purchases from entities in Puerto Rico and is included in cost of products sold in the consolidated statements of earnings.

1 unchanged sentence

income tax purposes.

The effective income tax rate in 2020 and 2019 included impacts related to U.S.

In 2022, Puerto Rico enacted Act 52-2002 (the Puerto Rico Act) allowing for a transition from a Puerto Rico excise tax levied on gross inventory purchases to an income-based tax beginning in 2023.

The company completed the transition requirements of the Puerto Rico Act in 2022, resulting in the remeasurement of certain deferred tax assets and liabilities based on income tax rates at which they are expected to reverse in the future.

The net tax benefit from the remeasurement of deferred taxes related to the Puerto Rico Act was $ 323 million.

2022 Form 10-K |

The Tax Cuts and Jobs Act (the Act) was signed into law in December 2017, resulting in significant changes to the U.S.

2 unchanged sentences

The company’s accounting policy for the minimum tax on foreign sourced earnings is to report the tax effects on the basis that the minimum tax will be recognized in tax expense in the year it is incurred as a period expense.

The effective income tax rates for 2019 also included the effects of Stemcentrx impairment related expenses.

| 2021 Form 10-K

Deferred Tax Assets and Liabilities

5 unchanged sentences

Advance payments 547 809

Net operating losses and other credit carryforwards 10,095 2,765

Net operating losses and other carryforwards 10,391 10,095

Other 1,710 1,234

7 unchanged sentences

Total deferred tax liabilities ( 4,702 ) ( 5,923 )

Net deferred tax liabilities $ ( 735 ) $ ( 1,232 )

The decrease in net deferred tax assets is primarily related to the utilization of net operating losses and other carryforwards offset by an increase in advance payments.

Net deferred tax assets (liabilities) $ 830 $ ( 735 )

The increase in net deferred tax assets is primarily related to capitalization of R&D expense and increases in accruals and reserves, offset by a decrease in advance payments.

The decrease in deferred tax liabilities is primarily related to amortization of intangible assets.

4 unchanged sentences

As of December 31, 2022, the company had U.S.

federal and state credit carryforwards of $ 214 million as well as U.S.

federal, state and foreign credit carryforwards of $ 355 million as well as U.S.

federal, state and foreign net operating loss carryforwards of $ 33.2 billion, which will expire at various times through 2042.

20 unchanged sentences

If recognized, the net amount of potential tax benefits that would impact the company's effective tax rate is $ 5.5 billion in 2022 and $ 5.2 billion in 2021.

Of the unrecognized tax benefits recorded in the table above as of December 31, 2021, AbbVie would be indemnified for approximately $ 79 million.

The "Increase due to current year tax positions" and "Increase due to prior year tax positions" in the table above include amounts related to federal, state and international tax items.

2 unchanged sentences

AbbVie recognized gross income tax expense of $ 339 million in 2022, $ 161 million in 2021 and $ 142 million in 2020, for interest and penalties related to income tax matters.

AbbVie had an accrual for the payment of gross interest and penalties of $ 803 million at December 31, 2021, $ 642 million at December 31, 2020 and $ 191 million at December 31, 2019.

AbbVie had an accrual for the payment of gross interest and penalties of $ 1.1 billion at December 31, 2022, $ 803 million at December 31, 2021 and $ 642 million at December 31, 2020.

The company is routinely audited by the tax authorities in significant jurisdictions and a number of audits are currently underway.

10 unchanged sentences

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.

Subject to certain exceptions specified in the separation agreement by and between 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 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.

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 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.

Antitrust Litigation

2 unchanged sentences

Plaintiffs generally seek monetary damages and/or injunctive relief and attorneys' fees.

The lawsuits pending in federal court consist of four individual plaintiff lawsuits and two consolidated purported class actions:

2022 Form 10-K |

pending in federal court consist of four individual plaintiff lawsuits and two consolidated purported class actions:

one brought by Niaspan direct purchasers and one brought by Niaspan end-payors.

by Niaspan direct purchasers and one brought by Niaspan end-payors.

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:

5 unchanged sentences

of Florence, Inc., et al.

AbbVie Inc., et al.

, against AbbVie and others in the United States District Court for the Eastern District of Pennsylvania, alleging that 2006 patent litigation settlements and related agreements by Solvay Pharmaceuticals, Inc.

AbbVie Inc., et al., against AbbVie and others in the United States District Court for the Eastern District of Pennsylvania, alleging that 2006 patent litigation settlements and related agreements by Solvay Pharmaceuticals, Inc.

(a company Abbott acquired in February 2010 and now known as AbbVie Products LLC) with three generic companies violated federal antitrust law, and also alleging that 2011 patent litigation by Abbott with two generic companies regarding AndroGel was sham litigation and the settlements of those litigations violated federal antitrust law.

In May 2020, Perrigo Company and related entities filed a lawsuit against AbbVie and others in the United States District Court for the Eastern District of Pennsylvania, alleging that Abbott's 2011 AndroGel patent lawsuit filed against Perrigo was sham litigation.

In October 2020, the Perrigo lawsuit was transferred to the United States District Court for New Jersey.

In September 2021, the New Jersey court granted AbbVie's motion for judgment on the pleadings in the Perrigo lawsuit, dismissing it with prejudice.

Perrigo has appealed the dismissal.

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 violated state and federal antitrust laws.

The court consolidated these lawsuits as In re:

Humira (Adalimumab) Antitrust Litigation .

In June 2020, the court dismissed the consolidated litigation with prejudice.

The plaintiffs have appealed the dismissal.

Lawsuits are pending against Forest Laboratories, LLC and others generally alleging that 2009 and 2010 patent litigation settlements involving Namenda entered into between Forest and generic companies and other conduct by Forest involving Namenda, violated state antitrust, unfair and deceptive trade practices, and unjust enrichment laws.

Plaintiffs generally seek monetary damages, injunctive relief and attorneys’ fees.

Plaintiffs generally seek monetary damages and/or injunctive relief and attorneys’ fees.

In November 2022, the State of Oregon filed a lawsuit in the Multnomah County, Oregon Circuit Court making similar allegations regarding the 2011 patent litigation with one of the generic companies.

Lawsuits are pending against Forest Laboratories, LLC, an AbbVie subsidiary, and others generally alleging that 2009 and 2010 patent litigation settlements involving Namenda entered into between Forest and generic companies and other conduct by Forest involving Namenda, violated state antitrust, unfair and deceptive trade practices and unjust enrichment laws.

Plaintiffs generally seek monetary damages and/or injunctive relief and attorneys’ fees.

The lawsuits, purported class actions filed by indirect purchasers of Namenda, are consolidated as In re:

Namenda Indirect Purchaser Antitrust Litigation in the United States District Court for the Southern District of New York.

Lawsuits are pending against Allergan Inc.

generally alleging that Allergan’s petitioning to the U.S.

Patent Office and Food and Drug Administration and other conduct by Allergan involving Restasis violated federal and state antitrust laws and state unfair and deceptive trade practices and unjust enrichment laws.

Plaintiffs generally seek monetary damages, injunctive relief and attorneys’ fees.

The lawsuits, certified as a class action filed on behalf of indirect purchasers of Restasis, are consolidated for pre-trial purposes in the United States District Court for the Eastern District of New York under the MDL Rules as In re:

Restasis (Cyclosporine Ophthalmic Emulsion) Antitrust Litigation , MDL No.

In May 2021, the parties reached an agreement to settle this matter that is subject to final court approval.

In November 2022, the parties reached an agreement to settle this matter that has received preliminary court approval.

Lawsuits are pending against Forest Laboratories, LLC and others generally alleging that 2012 and 2013 patent litigation settlements involving Bystolic with six generic manufacturers violated federal and state antitrust laws and state unfair and deceptive trade practices and unjust enrichment laws.

Plaintiffs generally seek monetary damages, injunctive relief, and attorneys’ fees.

Plaintiffs generally seek monetary damages and/or injunctive relief and attorneys’ fees.

The lawsuits, purported class actions filed on behalf of direct and indirect purchasers of Bystolic, are consolidated as In re:

3 unchanged sentences

Approximately 3,000 matters are pending against Allergan.

The federal court cases are consolidated for pre-trial purposes in the United States District Court for the Northern District of Ohio under the MDL rules as In re:

Most of the federal court cases are consolidated for pre-trial purposes in the United States District Court for the Northern District of Ohio under the MDL rules as In re:

National Prescription Opiate Litigation, MDL No.

Approximately 251 of the claims are pending in various state courts.

Approximately 270 matters are pending in various state courts.

The plaintiffs in these cases, which include states, counties, cities, other municipal entities, Native American tribes, union trust funds and other third-party payors, private hospitals and personal injury claimants, generally seek compensatory and punitive damages.

In December 2021, a California state court reached a judgment for Allergan and other defendants in the trial of an opioid lawsuit by Orange, Los Angeles, and Santa Clara Counties and the City of Oakland.

In December 2021, Allergan reached an agreement to settle a lawsuit brought by the State of New York and two New York counties, which also provides all other New York counties and political subdivisions the opportunity to participate in the settlement.

2021 Form 10-K |

In July 2019, the New Mexico Attorney General filed a lawsuit, State of New Mexico ex rel.

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 October 2020, the state added a claim under the New Mexico False Advertising Act.

In November 2022, Allergan finalized the terms of a settlement with state and local government entities and Native American tribes.

That settlement is subject to certain conditions, including Allergan's determination that a sufficient number of government entities elect to participate in the settlement.

AbbVie recorded a charge of $ 2.1 billion to selling, general and administrative expense in the consolidated statement of earnings in the second quarter of 2022 related to this potential settlement.

Shareholder and Securities Litigation

In June 2016, a lawsuit, Elliott Associates, L.P., et al.

, was filed by five 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.

AbbVie Inc., was filed by five 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.

The court granted motions dismissing the claims of three investment-fund plaintiffs, which they appealed.

In March 2021, in the first of those appeals, the dismissal was affirmed.

One of these plaintiffs refiled its lawsuit in New York state court in June 2020 while the appeal of its dismissal in Illinois is pending.

In November 2020, the New York Supreme Court for the County of New York dismissed that lawsuit, which is being appealed.

In September 2021, the Illinois court granted AbbVie's motion for summary judgment against all remaining plaintiffs on all the remaining claims, dismissing them with prejudice.

The plaintiffs have appealed the dismissals.

In September 2021, the Illinois court granted AbbVie's motion for summary judgment on all pending claims in all pending cases, dismissing them with prejudice.

In November 2022, the Illinois appellate court affirmed summary judgment in AbbVie's favor and, in December 2022, that court denied plaintiffs' petition for rehearing.

In October 2018, a federal securities lawsuit, Holwill v.

1 unchanged sentence

In September 2021, the court granted plaintiffs' motion to certify a class.

In May 2022, a shareholder derivative lawsuit, Ranney v.

Gonzalez, et al., was filed in Delaware Chancery Court, alleging that

| 2022 Form 10-K

certain AbbVie directors and officers breached their fiduciary duties based on related allegations.

In December 2022, after AbbVie and the director/officer defendants filed a motion to dismiss, the plaintiff voluntarily dismissed the lawsuit with prejudice.

Lawsuits are pending against Allergan and certain of its current and former officers alleging they made misrepresentations and omissions regarding Allergan's textured breast implants.

4 unchanged sentences

In September 2021, the court granted plaintiffs' motion to certify a class.

Lawsuits are pending against Allergan and certain of its current and former officers alleging they made misrepresentations and omissions regarding Allergan’s former Actavis generics unit and its alleged anticompetitive conduct with other generic drug companies.

The lawsuits were filed by Allergan shareholders and consist of three purported class actions and one individual action that have been consolidated in the U.S.

District Court for the District of New Jersey as In re:

Allergan Generic Drug Pricing Securities Litigation .

In July 2021, the parties reached an agreement to settle the class action lawsuits, which received court approval in November 2021.

In December 2022, the court granted Allergan's motion for summary judgment on the remaining claims, dismissing them with prejudice.

Plaintiffs are appealing the court's motion to dismiss and summary judgment rulings.

In April 2022, a federal securities lawsuit, Nakata v.

AbbVie Inc., was filed in the United States District Court for the Northern District of Illinois against AbbVie and certain officers alleging misstatements regarding the potential effect that safety information about another company’s product would have on the Food and Drug Administration’s approval and labeling for AbbVie’s Rinvoq.

In May and July 2022, two shareholder derivative lawsuits, Treppel Family Trust v.

Gonzalez et al., and Katcher v.

Gonzalez, et al., were filed in the same court, alleging that certain AbbVie directors and officers breached fiduciary and other legal duties based on related allegations.

Product Liability and General Litigation

1 unchanged sentence

Silbersher v.

Allergan Inc., et al.

, was filed in the United States District Court for the Northern District of California against several Allergan entities and others, alleging that their conduct before the U.S.

Allergan Inc., et al., was filed in the United States District Court for the Northern District of California against several Allergan entities and others, alleging that their conduct before the U.S.

Patent Office resulted in false claims for payment being made to federal and state healthcare payors for Namenda XR and Namzaric.

1 unchanged sentence

The federal government and state governments declined to intervene in the lawsuit.

In August 2022, the United States Court of Appeals reversed the district court’s denial of Allergan’s motion to dismiss.

The case has been remanded to the district court for further proceedings consistent with that ruling.

Intellectual Property Litigation

and AbbVie Biotechnology Ltd are seeking to enforce their patent rights relating to adalimumab (a drug AbbVie sells under the trademark Humira).

In April 2021 and May 2021, cases were filed in the United States District Court for the Northern District of Illinois against Alvotech hf.

AbbVie alleges defendant’s proposed biosimilar adalimumab product infringes certain AbbVie patents and seeks declaratory and injunctive relief.

In August 2021, the court denied Defendant’s motion to dismiss on jurisdictional grounds in the first case;

a motion in the second case remains pending.

The court has set a trial on a subset of patents for August 2022.

The court order provides that Alvotech will stay off the market until that decision.

Litigation on the remaining patents is stayed.

In October 2021, the May 2021 declaratory judgment action filed by Alvotech hf.

subsidiary Alvotech USA, Inc.

in the United States Eastern District of Virginia was transferred to the Northern District of Illinois and subsequently dismissed.

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).

2 unchanged sentences

The judgment precludes Defendants from obtaining regulatory approval and launching until the last patent expires in 2036.

On August 30, 2021, Defendants appealed.

On November 15, 2022, the Court of Appeals for the Federal Circuit affirmed the judgment.

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.

| 2021 Form 10-K

Allergan USA, Inc., Allergan Sales, LLC, and Forest Laboratories Holdings Limited, wholly owned subsidiaries of AbbVie, are seeking to enforce patent rights relating to cariprazine (a drug sold under the trademark Vraylar).

Litigation was filed in the United States District Court for the District of Delaware in December 2019 against Sun Pharmaceutical Industries Limited and Sun Pharma Global FZE;

Aurobindo Pharma Limited and Aurobindo Pharma USA, Inc.;

and Zydus Pharmaceuticals (USA), Inc.

and Cadila Healthcare Limited.

Allergan alleges defendants' proposed generic cariprazine products infringe certain patents and seeks declaratory and injunctive relief.

Gedeon Richter Plc, Inc.

which is in a global collaboration with Allergan concerning the development and marketing of Vraylar, is the co-plaintiff in this suit.

2021 Form 10-K |

is seeking to enforce patent rights relating to venetoclax (a drug sold under the trademark Venclexta).

Litigation was filed in the United States District Court for the District of Delaware in July 2020 against Dr.

Reddy’s Laboratories, Ltd.

Reddy’s Laboratories, Inc.:

and Alembic Pharmaceuticals Ltd., Alembic Pharmaceuticals, Inc., and Alembic Global Holdings SA.

AbbVie alleges defendants’ proposed generic venetoclax products infringe certain patents and seeks declaratory and injunctive relief.

Genentech, Inc., which is in a global collaboration with AbbVie concerning the development and marketing of Venclexta, is the co-plaintiff in this suit.

Note 16 Segment and Geographic Area Information

5 unchanged sentences

The determination of a single business segment is consistent with the consolidated financial information regularly reviewed by the CODM for purposes of assessing performance, allocating resources and planning and forecasting future periods.

2022 Form 10-K |

Substantially all of AbbVie's net revenues in the United States are to three wholesalers.

35 unchanged sentences

United States $ 2,037 $ 1,728 $ 951

International 1 — —

Total $ 2,038 $ 1,728 $ 951

Duodopa United States $ 95 $ 102 $ 103

2 unchanged sentences

United States $ 680 $ 552 $ 125

Qulipta United States $ 158 $ — $ —

Other Neuroscience (a)

19 unchanged sentences

Total $ 1,175 $ 1,169 $ 693

Women's Health

Lo Loestrin (a)

United States $ 423 $ 346 $ —

International 14 10 —

Total $ 437 $ 356 $ —

Orilissa/Oriahnn United States $ 139 $ 121 $ 91

International 6 4 2

Total $ 145 $ 125 $ 93

Other Women's Health (a)

United States $ 209 $ 181 $ —

International 5 11 —

Total $ 214 $ 192 $ —

Other Key Products

3 unchanged sentences

Creon United States $ 1,278 $ 1,191 $ 1,114

Lupron United States $ 604 $ 600 $ 720

International 179 152 167

Total $ 783 $ 752 $ 887

Linzess/Constella (a)

2 unchanged sentences

Total $ 1,035 $ 1,038 $ 667

Synthroid United States $ 767 $ 771 $ 786

All other $ 4,137 $ 5,019 $ 5,119

1 unchanged sentence

(a) Net revenues include Allergan product revenues after the acquisition closing date of May 8, 2020.

2021 Form 10-K |

Net revenues to external customers by geographic area, based on product shipment destination, were as follows:

1 unchanged sentence

United States $ 45,713 $ 43,510 $ 34,879

Canada 1,397 1,159 813

Germany 1,340 1,223 1,049

Canada 1,159 1,397 1,159

Japan 956 1,090 1,198

France 936 797 695

China 912 857 471

France 787 936 797

Australia 508 533 527

Spain 506 519 453

Italy 506 379 372

United Kingdom 462 497 509

Italy 444 506 379

Brazil 430 368 406

7 unchanged sentences

Total long-lived assets $ 4,935 $ 5,110

2022 Form 10-K |

Note 17 Fourth Quarter Financial Results (unaudited)

11 unchanged sentences

We have audited the accompanying consolidated balance sheets of AbbVie Inc.

and subsidiaries (the Company) as of December 31, 2021 and 2020, and the related consolidated statements of earnings, comprehensive income, equity and cash flows for each of the three years in the period ended December 31, 2021, and the related notes (collectively referred to as the “financial statements”).

and subsidiaries (the Company) as of December 31, 2022 and 2021, the related consolidated statements of earnings, comprehensive income, equity and cash flows for each of the three years in the period ended December 31, 2022, and the related notes (collectively referred to as the “financial statements”).

In our opinion, the financial statements present fairly, in all material respects, the financial position of the Company at December 31, 2022 and 2021, and the results of its operations and its cash flows for each of the three years in the period ended December 31, 2022, in conformity with U.S.

35 unchanged sentences

Valuation of contingent consideration

Description of the Matter As discussed in Note 2 to the consolidated financial statements under the caption “Business Combinations” and in Note 11 under the caption “Financial Instruments and Fair Value Measures,” the Company recognized contingent consideration liabilities at the estimated fair value on the acquisition date in connection with applying the acquisition method of accounting for business combinations.

Description of the Matter As discussed in Note 2 to the consolidated financial statements under the caption “Business Combinations” and in Note 11 under the caption “Fair Value Measures,” the Company recognized contingent consideration liabilities at the estimated fair value on the acquisition date in connection with applying the acquisition method of accounting for business combinations.

Subsequent changes to the fair value of the contingent consideration liabilities were recorded within the consolidated statement of earnings in the period of change.

18 unchanged sentences

Compared sentence by sentence after normalising whitespace, quotation marks, case and digits, so re-formatting and restated figures do not read as changed language. Wording changes appear as one removal and one addition. The current filing and the prior one are authoritative.

What changed 10-K

Item 8. Financial Statements and Supplementary Data