What changed in this filing

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Item 1. Financial Statements

2023-11-06 compared with 2023-08-07 · 148 added, 125 removed, 725 unchanged (27% of the section changed)

3 unchanged sentences

Three months ended

June 30, Six months ended

September 30, Nine months ended

September 30,

(in millions, except per share data) 2023 2022 2023 2022

4 unchanged sentences

Acquired IPR&D and milestones 66 40 496 454

Other operating income ( 169 ) ( 172 ) ( 179 ) ( 172 )

Other operating expense (income), net — 229 ( 179 ) 57

Total operating costs and expenses 11,646 10,209 30,455 30,318

2 unchanged sentences

Net foreign exchange loss 25 36 97 108

Other expense, net 1,412 1,533 3,216 757

Other expense (income), net ( 95 ) ( 330 ) 3,121 427

Earnings before income tax expense 1,953 4,400 5,038 10,512

16 unchanged sentences

Three months ended

June 30, Six months ended

September 30, Nine months ended

September 30,

(in millions) 2023 2022 2023 2022

Net earnings $ 1,781 $ 3,952 $ 4,049 $ 9,373

Foreign currency translation adjustments, net of tax expense (benefit) of $( 6 ) for the three months and $ 6 for the six months ended June 30, 2023 and $( 12 ) for the three months and $( 19 ) for the six months ended June 30, 2022

( 16 ) ( 823 ) 178 ( 1,054 )

Net investment hedging activities, net of tax expense (benefit) of $ 2 for the three months and $( 58 ) for the six months ended June 30, 2023 and $ 146 for the three months and $ 183 for the six months ended June 30, 2022

Foreign currency translation adjustments, net of tax expense (benefit) of $( 17 ) for the three months and $( 11 ) for the nine months ended September 30, 2023 and $( 11 ) for the three months and $( 30 ) for the nine months ended September 30, 2022

( 457 ) ( 989 ) ( 279 ) ( 2,043 )

Pension and post-employment benefits, net of tax expense (benefit) of $( 4 ) for the three months and $ 10 for the six months ended June 30, 2023 and $ 11 for the three months and $ 21 for the six months ended June 30, 2022

Net investment hedging activities, net of tax expense (benefit) of $ 84 for the three months and $ 26 for the nine months ended September 30, 2023 and $ 165 for the three months and $ 348 for the nine months ended September 30, 2022

302 599 89 1,265

Cash flow hedging activities, net of tax expense (benefit) of $( 4 ) for the three months and $( 8 ) for the six months ended June 30, 2023 and $ 5 for the three months and $ 3 for the six months ended June 30, 2022

Pension and post-employment benefits, net of tax expense (benefit) of $ 1 for the three months and $ 11 for the nine months ended September 30, 2023 and $ 14 for the three months and $ 35 for the nine months ended September 30, 2022

Cash flow hedging activities, net of tax expense (benefit) of $ 7 for the three months and $( 1 ) for the nine months ended September 30, 2023 and $ 14 for the three months and $ 17 for the nine months ended September 30, 2022

52 83 ( 2 ) 98

8 unchanged sentences

Condensed Consolidated Balance Sheets

(in millions, except share data) June 30,

(in millions, except share data) September 30,

2023 December 31,

23 unchanged sentences

Stockholders' equity

Common stock, $ 0.01 par value, 4,000,000,000 shares authorized, 1,821,926,709 shares issued as of June 30, 2023 and 1,813,770,294 as of December 31, 2022

Common stock held in treasury, at cost, 57,127,750 shares as of June 30, 2023 and 44,589,000 as of December 31, 2022

Common stock, $ 0.01 par value, 4,000,000,000 shares authorized, 1,822,577,212 shares issued as of September 30, 2023 and 1,813,770,294 as of December 31, 2022

Common stock held in treasury, at cost, 57,091,177 shares as of September 30, 2023 and 44,589,000 as of December 31, 2022

( 6,525 ) ( 4,594 )

11 unchanged sentences

(in millions) Common shares outstanding Common stock Treasury stock Additional paid-in capital Retained earnings Accumulated other comprehensive loss Noncontrolling interest Total

Balance at March 31, 2022 1,767 $ 18 $ ( 4,585 ) $ 18,731 $ 5,103 $ ( 2,984 ) $ 31 $ 16,314

Balance at June 30, 2022 1,768 $ 18 $ ( 4,591 ) $ 18,906 $ 3,516 $ ( 3,196 ) $ 35 $ 14,688

Net earnings attributable to AbbVie Inc.

5 unchanged sentences

Change in noncontrolling interest — — — — — — ( 2 ) ( 2 )

Balance at September 30, 2022 1,768 $ 18 $ ( 4,590 ) $ 19,056 $ 4,953 $ ( 3,443 ) $ 33 $ 16,027

Balance at June 30, 2023 1,765 $ 18 $ ( 6,528 ) $ 19,839 $ 1,789 $ ( 2,252 ) $ 32 $ 12,898

Balance at March 31, 2023 1,764 $ 18 $ ( 6,524 ) $ 19,619 $ 2,393 $ ( 2,232 ) $ 29 $ 13,303

Net earnings attributable to AbbVie Inc.

5 unchanged sentences

Change in noncontrolling interest — — — — — — 3 3

Balance at June 30, 2023 1,765 $ 18 $ ( 6,528 ) $ 19,839 $ 1,789 $ ( 2,252 ) $ 32 $ 12,898

Balance at September 30, 2023 1,765 $ 18 $ ( 6,525 ) $ 20,021 $ 933 $ ( 2,353 ) $ 35 $ 12,129

Balance at December 31, 2021 1,768 $ 18 $ ( 3,143 ) $ 18,305 $ 3,127 $ ( 2,899 ) $ 28 $ 15,436

6 unchanged sentences

Change in noncontrolling interest — — — — — — 5 5

Balance at June 30, 2022 1,768 $ 18 $ ( 4,591 ) $ 18,906 $ 3,516 $ ( 3,196 ) $ 35 $ 14,688

Balance at September 30, 2022 1,768 $ 18 $ ( 4,590 ) $ 19,056 $ 4,953 $ ( 3,443 ) $ 33 $ 16,027

Balance at December 31, 2022 1,769 $ 18 $ ( 4,594 ) $ 19,245 $ 4,784 $ ( 2,199 ) $ 33 $ 17,287

6 unchanged sentences

Change in noncontrolling interest — — — — — — 2 2

Balance at June 30, 2023 1,765 $ 18 $ ( 6,528 ) $ 19,839 $ 1,789 $ ( 2,252 ) $ 32 $ 12,898

Balance at September 30, 2023 1,765 $ 18 $ ( 6,525 ) $ 20,021 $ 933 $ ( 2,353 ) $ 35 $ 12,129

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

2 unchanged sentences

Condensed Consolidated Statements of Cash Flows (unaudited)

Six months ended

Nine months ended

September 30,

(in millions) (brackets denote cash outflows) 2023 2022

6 unchanged sentences

Change in fair value of contingent consideration liabilities 3,432 647

Payments of contingent consideration liabilities ( 407 ) ( 161 )

Stock-based compensation 622 539

49 unchanged sentences

Three months ended

June 30, Six months ended

September 30, Nine months ended

September 30,

(in millions) 2023 2022 2023 2022

2 unchanged sentences

Interest expense, net $ 398 $ 497 $ 1,306 $ 1,568

(in millions) June 30,

(in millions) September 30,

2023 December 31,

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Property and Equipment, Net

(in millions) June 30,

(in millions) September 30,

2023 December 31,

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Property and equipment, net $ 4,934 $ 4,935

Depreciation expense was $ 190 million for the three months and $ 369 million for the six months ended June 30, 2023 and $ 203 million for the three months and $ 401 million for the six months ended June 30, 2022.

Depreciation expense was $ 196 million for the three months and $ 565 million for the nine months ended September 30, 2023 and $ 181 million for the three months and $ 582 million for the nine months ended September 30, 2022.

2023 Form 10-Q |

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Three months ended

June 30, Six months ended

September 30, Nine months ended

September 30,

(in millions, except per share data) 2023 2022 2023 2022

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Other Licensing & Acquisitions Activity

Cash outflows related to acquisitions and investments totaled $ 513 million for the six months ended June 30, 2023 and $ 394 million for the six months ended June 30, 2022.

AbbVie recorded acquired IPR&D and milestones expense of $ 280 million for the three months and $ 430 million for the six months ended June 30, 2023 and $ 269 million for the three months and $ 414 million for the six months ended June 30, 2022.

Cash outflows related to acquisitions and investments totaled $ 670 million for the nine months ended September 30, 2023 and $ 494 million for the nine months ended September 30, 2022.

AbbVie recorded acquired IPR&D and milestones expense of $ 66 million for the three months and $ 496 million for the nine months ended September 30, 2023 and $ 40 million for the three months and $ 454 million for the nine months ended September 30, 2022.

Syndesi Therapeutics SA

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Other Arrangements

AbbVie entered into several other arrangements resulting in charges related to upfront payments of $ 220 million for the three months and $ 352 million for the six months ended June 30, 2023 and $ 222 million for the three and six months ended June 30, 2022.

Acquired IPR&D and milestones expense also included development milestones of $ 60 million for the three months and $ 78 million for the six months ended June 30, 2023 and $ 47 million for the three months and $ 62 million for the six months ended June 30, 2022 .

AbbVie entered into several other arrangements resulting in charges related to upfront payments of $ 44 million for the three months and $ 396 million for the nine months ended September 30, 2023 and $ 40 million for the three months and $ 262 million for the nine months ended September 30, 2022.

Acquired IPR&D and milestones expense also included development milestones of $ 22 million for the three months and $ 100 million for the nine months ended September 30, 2023 and $ 62 million for the nine months ended September 30, 2022.

There were no development milestones for the three months ended September 30, 2022.

Note 5 Collaborations

The company has ongoing transactions with other entities through collaboration agreements.

The following represent the significant collaboration agreements impacting the periods ended June 30, 2023 and 2022.

The following represent the significant collaboration agreements impacting the periods ended September 30, 2023 and 2022.

Collaboration with Janssen Biotech, Inc.

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Three months ended

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September 30, Nine months ended

September 30,

(in millions) 2023 2022 2023 2022

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Global - AbbVie's share of other costs (included in respective line items) 59 63 171 196

AbbVie’s receivable from Janssen, included in accounts receivable, net, was $ 268 million at June 30, 2023 and $ 295 million at December 31, 2022.

AbbVie’s payable to Janssen, included in accounts payable and accrued liabilities, was $ 295 million at June 30, 2023 and $ 379 million at December 31, 2022.

AbbVie’s receivable from Janssen, included in accounts receivable, net, was $ 253 million at September 30, 2023 and $ 295 million at December 31, 2022.

AbbVie’s payable to Janssen, included in accounts payable and accrued liabilities, was $ 308 million at September 30, 2023 and $ 379 million at December 31, 2022.

Collaboration with Genentech, Inc.

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Three months ended

June 30, Six months ended

September 30, Nine months ended

September 30,

(in millions) 2023 2022 2023 2022

8 unchanged sentences

Foreign currency translation adjustments ( 65 )

Balance as of June 30, 2023 $ 32,224

Balance as of September 30, 2023 $ 32,091

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

As of June 30, 2023, there were no accumulated goodwill impairment losses.

As of September 30, 2023, there were no accumulated goodwill impairment losses.

Intangible Assets, Net

The following table summarizes intangible assets:

June 30, 2023 December 31, 2022

September 30, 2023 December 31, 2022

(in millions) Gross

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Definite-Lived Intangible Assets

Amortization expense was $ 2.1 billion for the three months and $ 4.0 billion for the six months ended June 30, 2023 and $ 1.8 billion for the three months and $ 3.7 billion for the six months ended June 30, 2022.

Amortization expense was $ 2.0 billion for the three months and $ 6.1 billion for the nine months ended September 30, 2023 and $ 2.0 billion for the three months and $ 5.7 billion for the nine months ended September 30, 2022.

Amortization expense was included in cost of products sold in the condensed consolidated statements of earnings.

The company monitors intangible assets for impairment on a quarterly basis.

The definite-lived intangible asset related to Imbruvica in the United States has a carrying value of $ 4.3 billion as of June 30, 2023.

Estimated future cash flows are not significantly higher than the intangible asset’s carrying value, reflecting the company’s current expectations of the impact of the Inflation Reduction Act

In August 2023, as part of the Inflation Reduction Act (IRA) of 2022, the company’s oncology product Imbruvica sold in the United States (U.S.) was included on the list of products selected for negotiation by the Centers for Medicare & Medicaid Services.

The selection resulted in a significant decrease in the estimated future cash flows for the product and represented a triggering event

2023 Form 10-Q |

Future changes to the company’s estimates of the impact of the Inflation Reduction Act and the potential of government selection for price negotiations as well as regulatory, market and competitive developments could unfavorably impact the company’s ability to recover the carrying value of the related intangible asset.

It is reasonably possible that an intangible asset impairment may occur in future periods, which may have a material effect on AbbVie’s results of operations.

which required the company to evaluate the underlying definite lived-intangible asset for impairment.

The company utilized a discounted cash flow analysis to determine the fair value of $ 1.9 billion, which was lower than the carrying value of $ 4.0 billion and resulted in a partial impairment of both the gross and net carrying amount as of August 29, 2023.

Based on the revised cash flows, the company recorded a pre-tax impairment charge of $ 2.1 billion to cost of products sold in the condensed consolidated statement of earnings for the third quarter of 2023.

The fair value measurement was based on Level 3 inputs including estimated net revenues, cost of products sold, R&D costs, selling and marketing costs and discount rate.

The remaining intangible asset carrying value related to Imbruvica in the U.S.

totaled $ 1.8 billion as of September 30, 2023 .

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 condensed consolidated statement of earnings for the third quarter of 2022.

Indefinite-Lived Intangible Assets

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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 and incurred total cumulative charges of $ 2.4 billion through June 30, 2023 .

These costs 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.

1 unchanged sentence

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September 30, Nine months ended

September 30,

(in millions) 2023 2022 2023 2022

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Total charges $ 60 $ 116 $ 202 $ 329

The following table summarizes the cash activity in the recorded liability associated with the Allergan integration plan for the six months ended June 30, 2023:

The following table summarizes the cash activity in the recorded liability associated with the Allergan integration plan for the nine months ended September 30, 2023:

(in millions)

1 unchanged sentence

Payments and other adjustments ( 258 )

Accrued balance as of June 30, 2023 $ 47

Accrued balance as of September 30, 2023 $ 41

2023 Form 10-Q |

Other Restructuring

AbbVie recorded restructuring charges of $ 18 million for the three months and $ 45 million for the six months ended June 30, 2023 and $ 36 million for the three months and $ 93 million for the six months ended June 30, 2022.

The following table summarizes the cash activity in the restructuring reserve for the six months ended June 30, 2023:

AbbVie recorded restructuring charges of $ 10 million for the three months and $ 55 million for the nine months ended September 30, 2023 and $ 50 million for the three months and $ 143 million for the nine months ended September 30, 2022.

The following table summarizes the cash activity in the restructuring reserve for the nine months ended September 30, 2023:

(in millions)

2 unchanged sentences

Payments and other adjustments ( 64 )

Accrued balance as of June 30, 2023 $ 149

Accrued balance as of September 30, 2023 $ 143

Note 8 Financial Instruments and Fair Value Measures

3 unchanged sentences

Various AbbVie foreign subsidiaries enter into foreign currency forward exchange contracts to manage exposures to changes in foreign exchange rates for anticipated intercompany transactions denominated in a currency other than the functional currency of the local entity.

These contracts, with notional amounts totaling $ 2.2 billion at June 30, 2023 and $ 1.7 billion at December 31, 2022, are designated as cash flow hedges and are recorded at fair value.

These contracts, with notional amounts totaling $ 2.5 billion at September 30, 2023 and $ 1.7 billion at December 31, 2022, are designated as cash flow hedges and are recorded at fair value.

The durations of these forward exchange contracts were generally less than 18 months.

Accumulated gains and losses as of June 30, 2023 are reclassified from accumulated other comprehensive income (loss) (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.

Accumulated gains and losses as of September 30, 2023 are reclassified from accumulated other comprehensive income (loss) (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 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.

11 unchanged sentences

Resulting gains or losses are reflected in net foreign exchange gain or loss in the condensed consolidated statements of earnings and are generally offset by losses or gains on the foreign currency exposure being managed.

These contracts had notional amounts totaling $ 10.7 billion at June 30, 2023 and $ 6.5 billion at December 31, 2022.

These contracts had notional amounts totaling $ 6.8 billion at September 30, 2023 and $ 6.5 billion at December 31, 2022.

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 € 5.4 billion at June 30, 2023 and € 5.9 billion at December 31, 2022.

In addition, the company had foreign currency forward exchange contracts designated as net investment hedges with notional amounts totaling € 4.2 billion, SEK 1.4 billion, CAD 750 million and CHF 50 million at June 30, 2023 and € 4.3 billion, SEK 2.0 billion, CAD 750 million and CHF 90 million at December 31, 2022.

The company had an aggregate principal amount of senior Euro notes designated as net investment hedges of € 5.4 billion at September 30, 2023 and € 5.9 billion at December 31, 2022.

In addition, the company had foreign currency forward exchange contracts designated as net investment hedges with notional amounts totaling € 4.9 billion, SEK 1.4 billion, CAD 750 million and CHF 50 million at September 30, 2023 and € 4.3 billion, SEK 2.0 billion, CAD 750 million and CHF 90 million at December 31, 2022.

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

Realized and unrealized gains and losses from these hedges are included in AOCI

2023 Form 10-Q |

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 $ 5.0 billion at June 30, 2023 and $ 4.5 billion at December 31, 2022.

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 $ 5.0 billion at September 30, 2023 and $ 4.5 billion at December 31, 2022.

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

1 unchanged sentence

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

2023 Form 10-Q |

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

1 unchanged sentence

Derivatives in liability position

(in millions) Balance sheet caption June 30,

2023 December 31, 2022 Balance sheet caption June 30,

2023 December 31, 2022

(in millions) Balance sheet caption September 30, 2023 December 31, 2022 Balance sheet caption September 30, 2023 December 31, 2022

Foreign currency forward exchange contracts

11 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 condensed consolidated balance sheets.

2023 Form 10-Q |

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

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September 30,

(in millions) 2023 2022 2023 2022

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Assuming market rates remain constant through contract maturities, the company expects to reclassify pre-tax gains of $ 74 million into cost of products sold for foreign currency cash flow hedges, pre-tax gains of $ 1 million into net foreign exchange loss for cross-currency 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 loss pre-tax gains of $ 36 million for the three months and pre-tax losses of $ 126 million for the six months ended June 30, 2023 and pre-tax gains of $ 402 million for the three months and pre-tax gains of $ 501 million for the six months ended June 30, 2022.

Related to AbbVie’s non-derivative, foreign currency denominated debt designated as net investment hedges, the company recognized in other comprehensive loss pre-tax gains of $ 173 million for the three months and pre-tax gains of $ 47 million for the nine months ended September 30, 2023 and pre-tax gains of $ 431 million for the three months and pre-tax gains of $ 932 million for the nine months ended September 30, 2022.

2023 Form 10-Q |

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

1 unchanged sentence

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September 30,

(in millions) Statement of earnings caption 2023 2022 2023 2022

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

2023 Form 10-Q |

The following table summarizes the bases used to measure certain assets and liabilities carried at fair value on a recurring basis on the condensed consolidated balance sheet as of June 30, 2023:

The following table summarizes the bases used to measure certain assets and liabilities carried at fair value on a recurring basis on the condensed consolidated balance sheet as of September 30, 2023:

Basis of fair value measurement

6 unchanged sentences

Equity securities 109 86 23 —

Cross-currency swap contracts 9 — 9 —

Foreign currency contracts 309 — 309 —

1 unchanged sentence

Interest rate swap contracts $ 436 $ — $ 436 $ —

Cross-currency swap contracts 5 — 5 —

Foreign currency contracts 90 — 90 —

1 unchanged sentence

Total liabilities $ 19,205 $ — $ 531 $ 18,674

2023 Form 10-Q |

The following table summarizes the bases used to measure certain assets and liabilities carried at fair value on a recurring basis on the condensed consolidated balance sheet as of December 31, 2022:

19 unchanged sentences

Changes to the fair value of the contingent consideration liabilities can result from changes to one or a number of inputs, including discount rates, the probabilities of achieving the milestones, the time required to achieve the milestones and estimated future sales.

Significant judgment is

2023 Form 10-Q |

employed in determining the appropriateness of certain of these inputs.

Significant judgment is employed in determining the appropriateness of certain of these inputs.

Changes to the inputs described above could have a material impact on the company's financial position and results of operations in any given period.

The fair value of the company's contingent consideration liabilities was calculated using the following significant unobservable inputs:

June 30, 2023 December 31, 2022

September 30, 2023 December 31, 2022

(in millions) Range Weighted average (a)

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

(b) Excluding approved indications, the estimated probability of payment was 89 % at June 30, 2023 and 56 % at December 31, 2022.

(b) Excluding approved indications, the estimated probability of payment was 89 % at September 30, 2023 and 56 % at December 31, 2022.

2023 Form 10-Q |

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

The following table presents the changes in fair value of total contingent consideration liabilities which are measured using Level 3 inputs:

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September 30,

(in millions) 2023 2022

3 unchanged sentences

Ending balance $ 18,674 $ 14,556

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

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

Contingent consideration payments of amounts up to the initial acquisition date fair value are classified as cash outflows from financing activities and payments of amounts in excess of the initial acquisition date fair value are classified as cash outflows from operating activities in the condensed consolidated statements of cash flows.

Certain financial instruments are carried at historical cost or some basis other than fair value.

The book values, approximate fair values and bases used to measure the approximate fair values of certain financial instruments as of June 30, 2023 are shown in the table below:

The book values, approximate fair values and bases used to measure the approximate fair values of certain financial instruments as of September 30, 2023 are shown in the table below:

Basis of fair value measurement

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(Level 2) Significant unobservable inputs

Short-term borrowings $ 2 $ 2 $ — $ 2 $ —

Current portion of long-term debt and finance lease obligations, excluding fair value hedges 5,113 5,041 4,763 278 —

1 unchanged sentence

Total liabilities $ 61,150 $ 54,676 $ 53,887 $ 789 $ —

2023 Form 10-Q |

The book values, approximate fair values and bases used to measure the approximate fair values of certain financial instruments as of December 31, 2022 are shown in the table below:

10 unchanged sentences

The company records these investments at cost and remeasures them to fair value based on certain observable price changes or impairment events as they occur.

The carrying amount of these investments was $ 124 million as of June 30, 2023 and $ 129 million as of December 31, 2022.

No significant cumulative upward or downward adjustments have been recorded for these investments as of June 30, 2023.

The carrying amount of these investments was $ 131 million as of September 30, 2023 and $ 129 million as of December 31, 2022.

No significant cumulative upward or downward adjustments have been recorded for these investments as of September 30, 2023.

2023 Form 10-Q |

Concentrations of Risk

Of total net accounts receivable, three U.S.

wholesalers accounted for 75 % as of June 30, 2023 and 82 % as of December 31, 2022, and substantially all of AbbVie’s pharmaceutical product net revenues in the United States were to these three wholesalers.

Humira (adalimumab) is AbbVie’s single largest product and accounted for approximately 29 % of AbbVie’s total net revenues for the six months ended June 30, 2023 and 36 % for the six months ended June 30, 2022.

wholesalers accounted for 81 % as of September 30, 2023 and 82 % as of December 31, 2022, and substantially all of AbbVie’s pharmaceutical product net revenues in the United States were to these three wholesalers.

Humira (adalimumab) is AbbVie’s single largest product and accounted for approximately 28 % of AbbVie’s total net revenues for the nine months ended September 30, 2023 and 36 % for the nine months ended September 30, 2022.

Debt and Credit Facilities

8 unchanged sentences

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

In July 2022, the company repaid $ 1.7 billion aggregate principal amount of 3.25 % senior notes that were scheduled to mature in October 2022.

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

In September 2022, the company repaid $ 1.0 billion aggregate principal amount of 3.2 % senior notes that were scheduled to mature in November 2022.

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

Short-Term Borrowings

2 unchanged sentences

This amended facility enables the company to borrow funds on an unsecured basis at variable interest rates and contains various covenants.

At June 30, 2023, the company was in compliance with all covenants, and commitment fees under the credit facility were insignificant.

No amounts were outstanding under the company's credit facilities as of June 30, 2023 and December 31, 2022.

2023 Form 10-Q |

At September 30, 2023, the company was in compliance with all covenants, and commitment fees under the credit facility were insignificant.

No amounts were outstanding under the company's credit facilities as of September 30, 2023 and December 31, 2022.

Note 9 Post-Employment Benefits

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(in millions) 2023 2022 2023 2022 2023 2022 2023 2022

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Net periodic benefit cost (credit) $ ( 1 ) $ 68 $ ( 3 ) $ 204 $ 12 $ 16 $ 37 $ 47

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

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

2023 Form 10-Q |

Note 10 Equity

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(in millions) 2023 2022 2023 2022

6 unchanged sentences

Stock Options

During the six months ended June 30, 2023, primarily in connection with the company's annual grant, AbbVie granted 0.6 million stock options with a weighted-average grant-date fair value of $ 29.89 .

As of June 30, 2023, $ 9 million of unrecognized compensation cost related to stock options is expected to be recognized as expense over approximately the next two years .

During the nine months ended September 30, 2023, primarily in connection with the company's annual grant, AbbVie granted 0.6 million stock options with a weighted-average grant-date fair value of $ 29.89 .

As of September 30, 2023, $ 7 million of unrecognized compensation cost related to stock options is expected to be recognized as expense over approximately the next two years .

RSUs and Performance Shares

During the six months ended June 30, 2023, primarily in connection with the company's annual grant, AbbVie granted 5.8 million RSUs and performance shares with a weighted-average grant-date fair value of $ 149.86 .

As of June 30, 2023, $ 802 million of unrecognized compensation cost related to RSUs and performance shares is expected to be recognized as expense over approximately the next two years .

2023 Form 10-Q |

During the nine months ended September 30, 2023, primarily in connection with the company's annual grant, AbbVie granted 5.8 million RSUs and performance shares with a weighted-average grant-date fair value of $ 149.59 .

As of September 30, 2023, $ 692 million of unrecognized compensation cost related to RSUs and performance shares is expected to be recognized as expense over approximately the next two years .

Cash Dividends

12 unchanged sentences

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

AbbVie repurchased 10 million shares for $ 1.6 billion during the six months ended June 30, 2023 and 8 million shares for $ 1.1 billion during the six months ended June 30, 2022.

AbbVie's remaining stock repurchase authorization was approximately $ 4.8 billion as of June 30, 2023.

AbbVie repurchased 10 million shares for $ 1.6 billion during the nine months ended September 30, 2023 and 8 million shares for $ 1.1 billion during the nine months ended September 30, 2022.

AbbVie's remaining stock repurchase authorization was approximately $ 4.8 billion as of September 30, 2023.

2023 Form 10-Q |

Accumulated Other Comprehensive Loss

The following table summarizes the changes in each component of accumulated other comprehensive loss, net of tax, for the six months ended June 30, 2023:

The following table summarizes the changes in each component of accumulated other comprehensive loss, net of tax, for the nine months ended September 30, 2023:

(in millions) Foreign currency

8 unchanged sentences

Net current-period other comprehensive income (loss) ( 279 ) 89 38 ( 2 ) ( 154 )

Balance as of June 30, 2023 $ ( 1,335 ) $ 251 $ ( 1,422 ) $ 254 $ ( 2,252 )

Other comprehensive loss for the six months ended June 30, 2023 included foreign currency translation adjustments totaling a gain of $ 178 million 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 a loss of $ 213 million.

The following table summarizes the changes in each component of accumulated other comprehensive loss, net of tax, for the six months ended June 30, 2022:

Balance as of September 30, 2023 $ ( 1,792 ) $ 553 $ ( 1,420 ) $ 306 $ ( 2,353 )

Other comprehensive loss for the nine months ended September 30, 2023 included foreign currency translation adjustments totaling a loss of $ 279 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 a gain of $ 89 million.

The following table summarizes the changes in each component of accumulated other comprehensive loss, net of tax, for the nine months ended September 30, 2022:

(in millions) Foreign currency

8 unchanged sentences

Net current-period other comprehensive income (loss) ( 2,043 ) 1,265 136 98 ( 544 )

Balance as of June 30, 2022 $ ( 1,624 ) $ 575 $ ( 2,470 ) $ 323 $ ( 3,196 )

Other comprehensive loss for the six months ended June 30, 2022 included foreign currency translation adjustments totaling a loss of $ 1.1 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 a gain of $ 666 million.

Balance as of September 30, 2022 $ ( 2,613 ) $ 1,174 $ ( 2,410 ) $ 406 $ ( 3,443 )

Other comprehensive loss for the nine months ended September 30, 2022 included foreign currency translation adjustments totaling a loss of $ 2.0 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 a gain of $ 1.3 billion.

2023 Form 10-Q |

1 unchanged sentence

Three months ended

June 30, Six months ended

September 30, Nine months ended

September 30,

(in millions) (brackets denote gains) 2023 2022 2023 2022

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( 6 ) ( 6 ) ( 18 ) ( 18 )

Gains on cross-currency swap contracts (d)

( 8 ) — ( 8 ) —

Losses on cross-currency swap contracts (d)

Losses on interest rate swap contracts (a)

6 unchanged sentences

Note 11 Income Taxes

The effective tax rate was 22 % for the three months and 26 % for the six months ended June 30, 2023 compared to 22 % for the three months and 11 % for the six months ended June 30, 2022.

The effective tax rate was 9 % for the three months and 20 % for the nine months ended September 30, 2023 compared to 10 % for the three months and 11 % for the nine months ended September 30, 2022.

The effective tax rate in each period differed from the U.S.

statutory tax rate of 21 % principally due to the impact of foreign operations which reflects the impact of lower income tax rates in locations outside the United States, changes in fair value of contingent consideration and business development activities.

The increase in the effective tax rate for the six months ended June 30, 2023 over the prior year was primarily due to changes in fair value of contingent consideration, tax law changes in Puerto Rico and impairment of certain intangible assets.

Due to the potential for resolution of federal, state and foreign examinations and the expiration of various statutes of limitations, it is reasonably possible that the company’s gross unrecognized tax benefits balance may change within the next 12 months by up to $ 603 million.

statutory tax rate of 21 % principally due to the impact of foreign operations which reflects the impact of lower income tax rates in locations outside the United States and business development activities.

The effective tax rate for the nine months ended September 30, 2023 and September 30, 2022 and the three months ended September 30, 2022 were also impacted by changes in fair value of contingent consideration.

The increase in the effective tax rate for the nine months ended September 30, 2023 over the prior year was primarily due to changes in fair value of contingent consideration.

Due to the potential for resolution of federal, state and foreign examinations and the expiration of various statutes of limitations, it is reasonably possible the company’s gross unrecognized tax benefits balance may change within the next 12 months by up to $ 620 million.

2023 Form 10-Q |

11 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:

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

The lawsuits pending in federal court consist of six individual plaintiff lawsuits and a certified class action by Niaspan direct purchasers.

The cases are pending in the United States District Court for the Eastern District of Pennsylvania for coordinated or consolidated pre-trial proceedings under the MDL Rules as In re:

Niaspan Antitrust Litigation , MDL No.

In August 2019, the court certified a class of direct purchasers of Niaspan.

In June 2020 and August 2021, the court denied the end-payors' motion to certify a class, which was affirmed on appeal by the United States Court of Appeals for the Third Circuit in April 2023.

In October 2016, the Orange County, California District Attorney’s Office filed a lawsuit on behalf of the State of California regarding the Niaspan patent litigation settlement in Orange County Superior Court, asserting a claim under the unfair competition provision of the California Business and Professions Code seeking injunctive relief, restitution, civil penalties and attorneys’ fees.

13 unchanged sentences

Lawsuits are pending against Allergan and several other manufacturers generally alleging that they improperly promoted and sold prescription opioid products.

Approximately 2,860 matters are pending against Allergan in federal and state courts.

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:

Approximately 610 lawsuits are pending against Allergan in federal and state courts.

Most of the federal court lawsuits 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 250 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.

Approximately 160 of the lawsuits are pending in various state courts.

The plaintiffs in these lawsuits, 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.

Of these approximately 610 lawsuits, approximately 195 of them are brought by states, counties, cities, and other municipal entities.

Over 98% of these state, city, and other municipal entity plaintiffs have reached settlement agreements with Allergan and their lawsuits are in the process of being dismissed with prejudice.

Approximately 20 other lawsuits are brought by approximately 180 Native American Tribes.

Over 98% of these Native American Tribes have reached settlement agreements with

Three other lawsuits are brought by 3 Native American Tribes.

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 its settlement of over 2,500 lawsuits by states, counties, cities, other municipal entities, and Native American

2023 Form 10-Q |

Allergan and their lawsuits are in the process of being dismissed with prejudice.

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 these settlements.

Approximately 160 of the remaining 198 such lawsuits are in the process of being dismissed with prejudice pursuant to that settlemen t .

In March 2023, AbbVie Inc.

28 unchanged sentences

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

In March 2023, the court granted Allergan’s motion to dismiss, dismissing plaintiff-realtor’s federal law claims with prejudice and state law claims without prejudice.

The plaintiff-realtor is appealing the court’s motion to dismiss ruling.

In March 2023, the court granted Allergan’s motion to dismiss, dismissing plaintiff-relator’s federal law claims with prejudice and state law claims without prejudice.

The plaintiff-relator is appealing the court’s motion to dismiss ruling.

Intellectual Property Litigation

16 unchanged sentences

Three months ended

June 30, Six months ended

September 30, Nine months ended

September 30,

(in millions)

9 unchanged sentences

Total $ 1,110 $ 695 $ 2,714 $ 1,752

Hematologic Oncology

Imbruvica United States $ 678 $ 849 $ 1,982 $ 2,585

4 unchanged sentences

Total $ 590 $ 515 $ 1,699 $ 1,493

Epkinly Collaboration revenues $ 14 $ — $ 14 $ —

Botox Cosmetic United States $ 388 $ 370 $ 1,217 $ 1,232

21 unchanged sentences

Three months ended

June 30, Six months ended

September 30, Nine months ended

September 30,

(in millions)

33 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-Q

Item 1. Financial Statements