What changed in this filing

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Item 8. Financial Statements and Supplementary Data

2024-02-20 compared with 2023-02-17 · 226 added, 327 removed, 1424 unchanged (28% of the section changed)

17 unchanged sentences

Post-Employment Benefits

Legal P roceedings and Contingencies

Legal Proceedings and Contingencies

Segment and Geographic Area Information

Fourth Quarter Financial Results (unaudited)

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

Report of Independent Registered Public Accounting Firm (PCAOB ID:

2023 Form 10-K |

7 unchanged sentences

Acquired IPR&D and milestones 778 697 1,124

Other operating expense, net 56 432 —

Other operating expense (income), net ( 179 ) 56 432

Total operating costs and expenses 41,561 39,937 38,273

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Earnings before income tax expense 6,250 13,477 12,989

Income tax expense (benefit) 1,632 1,440 ( 1,224 )

Income tax expense 1,377 1,632 1,440

Net earnings 4,873 11,845 11,549

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Cash flow hedging activities, net of tax expense (benefit) of $( 19 ) in 2023, $ 5 in 2022 and $ 20 in 2021

— 151 ( 131 )

Other comprehensive income $ 700 $ 218 $ 479

Other comprehensive income (loss) $ ( 106 ) $ 700 $ 218

Comprehensive income 4,767 12,545 11,767

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Additional paid-in capital 20,180 19,245

Retained earnings 4,784 3,127

Retained earnings (accumulated deficit)

( 1,000 ) 4,784

Accumulated other comprehensive loss ( 2,305 ) ( 2,199 )

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Consolidated Statements of Equity

years ended December 31 (in millions) Common shares outstanding Common stock Treasury stock Additional paid-in capital Retained earnings Accumulated other comprehensive loss Noncontrolling interest Total

years ended December 31 (in millions) Common shares outstanding Common stock Treasury stock Additional paid-in capital Retained earnings (accumulated deficit)

Accumulated other comprehensive loss Noncontrolling interest Total

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

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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 )

12 unchanged sentences

— — — — 4,863 — — 4,863

Other comprehensive income, net of tax — — — — — 700 — 700

Other comprehensive loss, net of tax — — — — — ( 106 ) — ( 106 )

Dividends declared — — — — ( 10,647 ) — — ( 10,647 )

15 unchanged sentences

Change in fair value of contingent consideration liabilities 5,128 2,761 2,679

Payments of contingent consideration liabilities ( 870 ) ( 164 ) ( 91 )

Stock-based compensation 747 671 692

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Income taxes paid 4,702 2,988 3,648

Supplemental schedule of non-cash investing and financing activities

Issuance of common shares associated with acquisitions of businesses — — 23,979

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

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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 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.

On January 1, 2013, AbbVie became an independent, publicly-traded company as a result of the distribution by Abbott Laboratories (Abbott) of 100 % of the outstanding common stock of AbbVie to Abbott's shareholders.

On May 8, 2020, AbbVie completed its acquisition of Allergan plc (Allergan).

Refer to Note 5 for additional information regarding this acquisition.

Note 2 Summary of Significant Accounting Policies

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Intercompany balances and transactions are eliminated .

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.

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

Revenue Recognition

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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

| 2022 Form 10-K

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

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.

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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.

For each type of rebate, factors used in the calculation of the accrual include the identification of the

2023 Form 10-K |

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.

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

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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.

Advertising expenses were $ 2.2 billion in 2023, $ 2.0 billion in 2022 and $ 2.1 billion in 2021.

| 2023 Form 10-K

Pension and Other Post-Employment Benefits

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AbbVie periodically assesses its marketable debt securities for impairment and credit losses.

When a decline in fair value of marketable debt security is due to credit related factors, an allowance for credit losses is recorded with a corresponding charge to other expense, net in the consolidated statements of earnings.

When a decline in the fair value of marketable debt security is due to credit related factors, an allowance for credit losses is recorded with a corresponding charge to other expense, net in the consolidated statements of earnings.

When AbbVie determines that a non-credit related impairment has occurred, the amortized cost basis of the investment, net of allowance for credit losses, is written down with a charge to other expense, net in the consolidated statements of earnings and an available-for-sale investment's unrealized loss is reclassified from AOCI to other expense, net in the consolidated statements of earnings.

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dollars using period-end exchange rates.

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.

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.

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

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2023 Form 10-K |

Recent Accounting Pronouncements

Recent Accounting Pronouncements Not Yet Adopted

In December 2023, the Financial Accounting Standards Board (FASB) issued Accounting Standards Update (ASU) No.

2023-09, Income Taxes (Topic 740) .

The standard requires disaggregation of the effective rate reconciliation into standard categories, enhances disclosure of income taxes paid, and modifies other income tax-related disclosures.

The standard will be effective for AbbVie starting in annual periods in 2025, with early adoption permitted.

AbbVie is currently assessing the impact of adopting this guidance on its consolidated financial statements.

In November 2023, the FASB issued ASU No.

2023-07 Segment Reporting - Improving Reportable Segment Disclosures (Topic 280) .

The standard requires disclosures to include significant segment expenses that are regularly provided to the chief operating decision maker (CODM), a description of other segment items by reportable segment, and any additional measures of a segment's profit or loss used by the CODM when deciding how to allocate resources.

The ASU also requires all annual disclosures currently required by Topic 280 to be included in interim periods.

The standard is effective for AbbVie starting in annual periods in 2024 and interim periods in 2025, with early adoption permitted and requires retrospective application to all prior periods presented in the financial statements.

AbbVie is currently assessing the impact of adopting this guidance on its consolidated financial statements.

Note 3 Supplemental Financial Information

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

| 2022 Form 10-K

Note 5 Licensing, Acquisitions and Other Arrangements

Proposed Acquisition of Cerevel Therapeutics Holdings, Inc.

On December 6, 2023, AbbVie announced that it entered into a definitive agreement under which AbbVie will acquire Cerevel Therapeutics Holdings, Inc.

(Cerevel Therapeutics).

Under the terms of the agreement, AbbVie will acquire all outstanding shares of Cerevel Therapeutics for $ 45.00 per share in cash for a total value of approximately $ 8.7 billion.

The transaction is expected to close in 2024 subject to regulatory approvals and other customary closing conditions.

Cerevel Therapeutics is a clinical-stage biotechnology company focused on the discovery and development of differentiated therapies for Neuroscience diseases.

Cerevel Therapeutics neuroscience pipeline includes multiple clinical-stage and preclinical candidates with the potential to treat several diseases including schizophrenia, Parkinson's disease and mood disorders.

2023 Form 10-K |

Acquisition of ImmunoGen, Inc.

Subsequent to 2023, on February 12, 2024, AbbVie completed its previously announced acquisition of ImmunoGen, Inc.

Under the terms of the agreement, AbbVie acquired all outstanding shares of ImmunoGen for $ 31.26 per share in cash for a total value of approximately $ 10.1 billion.

Due to the proximity of the closing date of the acquisition to the date of filing this Annual Report on Form 10-K, the initial accounting for the acquisition is not complete.

Significant, relevant information needed to complete the initial accounting, including the identification and measurement of the fair value of assets acquired and liabilities assumed, is pending.

As a result, it is not practicable to disclose the preliminary allocation of the purchase price to assets acquired and liabilities assumed or provide other related disclosures.

The accounting impact of this acquisition and the operating results of ImmunoGen will be included in the consolidated financial statements beginning in the first quarter of 2024.

ImmunoGen is a commercial-stage biotechnology company focused on the discovery, development and commercialization of antibody-drug conjugates (ADC) for cancer patients.

ImmunoGen's oncology portfolio includes its flagship cancer therapy Elahere, a first-in-class ADC approved for platinum-resistant ovarian cancer, and a pipeline of promising next-generation ADC's targeting hematologic malignancies and solid tumors.

In connection with these acquisitions, AbbVie entered into several debt and financing arrangements.

See Note 10 for additional information.

Acquisition of DJS Antibodies Ltd

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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

On May 8, 2020, AbbVie completed its acquisition of all outstanding equity interests in Allergan in a cash and stock transaction.

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 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.

Under the terms of the acquisition, each ordinary share of Allergan common stock was converted into the right to receive (i) $ 120.30 in cash and (ii) 0.8660 of a share of AbbVie common stock.

Total consideration for the acquisition of Allergan is summarized as follows:

(in millions)

Cash consideration paid to Allergan shareholders (a)

Fair value of AbbVie common stock issued to Allergan shareholders (b)

Fair value of AbbVie equity awards issued to Allergan equity award holders (c)

Total consideration $ 64,084

(a) Represents cash consideration transferred of $ 120.30 per outstanding Allergan ordinary share based on 330 million Allergan ordinary shares outstanding at closing.

2022 Form 10-K |

(b) Represents the acquisition date fair value of 286 million shares of AbbVie common stock issued to Allergan shareholders based on the exchange ratio of 0.8660 AbbVie shares for each outstanding Allergan ordinary share at the May 8, 2020, closing price of $ 83.96 per share.

(c) Represents the pre-acquisition service portion of the fair value of 11 million AbbVie stock options and 8 million RSUs issued to Allergan equity award holders.

The acquisition of Allergan has been accounted for as a business combination using the acquisition method of accounting.

The acquisition method requires, among other things, that assets acquired and liabilities assumed in a business combination be recognized at their fair values as of the acquisition date.

The valuation of assets acquired and liabilities assumed was finalized during the second quarter of 2021.

Measurement period adjustments to the preliminary purchase price allocation during 2021 included (i) an increase to intangible assets of $ 710 million;

(ii) an increase to deferred income tax liabilities of $ 148 million;

(iii) other individually insignificant adjustments for a net increase to identifiable net assets of $ 2 million;

and (iv) a corresponding decrease to goodwill of $ 564 million.

The measurement period adjustments primarily resulted from the completion of the valuation of certain license agreement intangible assets based on facts and circumstances that existed as of the acquisition date and did not result from intervening events subsequent to such date.

These adjustments did not have a significant impact on AbbVie's results of operations in 2021 and would not have had a significant impact on prior period results if these adjustments had been made as of the acquisition date.

The following table summarizes t he final fair value of assets acquired and liabilities assumed as of the acquisition date:

(in millions)

Assets acquired and liabilities assumed

Cash and equivalents $ 1,537

Short-term investments 1,421

Accounts receivable 2,374

Inventories 2,340

Prepaid expenses and other current assets 1,982

Investments 137

Property and equipment 2,129

Intangible assets

Definite-lived intangible assets 68,190

In-process research and development 1,600

Other noncurrent assets 1,395

Short-term borrowings ( 60 )

Current portion of long-term debt and finance lease obligations ( 1,899 )

Accounts payable and accrued liabilities ( 5,852 )

Long-term debt and finance lease obligations ( 18,937 )

Deferred income taxes ( 3,940 )

Other long-term liabilities ( 4,765 )

Total identifiable net assets 47,652

Goodwill 16,432

Total assets acquired and liabilities assumed $ 64,084

The fair value step-up adjustment to inventories of $ 1.2 billion was amortized to cost of products sold when the inventory was sold to customers and was fully amortized as of December 31, 2021.

Intangible assets relate to $ 68.2 billion of definite-lived intangible assets and $ 1.6 billion of IPR&D.

The acquired definite-lived intangible assets consist of developed product rights and license agreements and are being amortized over a weighted-average estimated useful life of approximately twelve years using the estimated pattern of economic benefit.

The estimated fair values of identifiable intangible assets were determined using the "income approach" which is a valuation technique that provides an estimate of the fair value of an asset based on market participant expectations of the cash flows an asset would generate over its remaining useful life.

Some of the more significant assumptions inherent in the development of these asset valuations include the estimated net cash flows for each year for each asset or product, the appropriate discount rate necessary to measure the risk inherent in each future cash flow stream, the life cycle of each asset, the potential regulatory and commercial success risk, competitive trends impacting the asset and each cash flow stream, as well as other factors.

| 2022 Form 10-K

The fair value of long-term debt was determined by quoted market prices as of the acquisition date and the total purchase price adjustment of $ 1.3 billion is being amortized as a reduction to interest expense, net over the lives of the related debt.

Goodwill was calculated as the excess of the consideration transferred over the net assets recognized and represents the future economic benefits arising from the other assets acquired that could not be individually identified and separately recognized.

Specifically, the goodwill recognized from the acquisition of Allergan represents the value of additional growth platforms and an expanded revenue base as well as anticipated operational synergies and cost savings from the creation of a single combined global organization.

The goodwill is not deductible for tax purposes.

Following the acquisition date, the operating results of Allergan have been included in the consolidated financial statements.

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 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 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 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.

In order to reflect the occurrence of the acquisition on January 1, 2019 as required, the unaudited pro forma financial information includes adjustments to reflect incremental amortization expense to be incurred based on the final fair values of the identifiable intangible assets acquired;

the incremental cost of products sold related to the fair value adjustments associated with acquisition date inventory;

the additional interest expense associated with the issuance of debt to finance the acquisition;

and the reclassification of acquisition-related costs incurred during the year ended December 31, 2020 to the year ended December 31, 2019.

The unaudited pro forma financial information is not necessarily indicative of what the consolidated results of operations would have been had the acquisition been completed on January 1, 2019.

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.

Other Licensing & Acquisitions Activity

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.

Cash outflows related to other acquisitions and investments totaled $ 1.2 billion in 2023, $ 539 million in 2022 and $ 1.4 billion in 2021.

AbbVie recorded acquired IPR&D and milestones expense of $ 778 million in 2023, $ 697 million in 2022 and $ 1.1 billion in 2021.

Significant arrangements impacting 2023, 2022 and 2021, 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.

In February 2022, AbbVie acquired Syndesi Therapeutics SA and its portfolio of novel modulators of the synaptic vesicle protein 2A, including its lead molecule ABBV-552, previously named SDI-118, and accounted for the transaction as an asset acquisition.

ABBV-552 is a small molecule, 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.

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

I-Mab Biopharma

In September 2020, AbbVie and I-Mab Biopharma (I-Mab) entered into a collaboration agreement for the development and commercialization of lemzoparlimab, an anti-CD47 monoclonal antibody internally discovered and developed by I-Mab for the treatment of multiple cancers.

Both companies will collaborate to design and conduct further global clinical trials to evaluate lemzoparlimab.

The collaboration provides AbbVie an exclusive global license, excluding greater China, to develop and commercialize lemzoparlimab.

The companies will share manufacturing responsibilities with AbbVie being the primary manufacturer for global supply.

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 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

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 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.

and Japan, with AbbVie responsible for further global commercialization.

Genmab will record net revenues in the U.S.

and Japan, and the parties will share equally in pre-tax profits from these sales.

Genmab will receive tiered royalties on remaining global sales.

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 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.

Other Arrangements

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Acquired IPR&D and milestones expense also included development milestones of $ 196 million in 2023, $ 252 million in 2022 and $ 162 million in 2021.

2023 Form 10-K |

Note 6 Collaborations

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Except in certain cases, Janssen is responsible for approximately 60 % of collaboration development costs and AbbVie is responsible for the remaining 40 % of collaboration development costs.

2022 Form 10-K |

In the United States, both parties have co-exclusive rights to commercialize the products;

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Royalties paid for Venclexta revenues outside the United States are also included in AbbVie’s cost of products sold.

| 2023 Form 10-K

The following table shows the profit and cost sharing relationship between Genentech and AbbVie:

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AbbVie's share of development costs (included in R&D) 109 121 140

| 2022 Form 10-K

Note 7 Goodwill and Intangible Assets

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Additions (a)

Measurement period adjustments (b)

Foreign currency translation adjustments and other ( 315 )

Balance as of December 31, 2022 32,156

Additions (c)

Foreign currency translation adjustments and other 137

Balance as of December 31, 2023 $ 32,293

(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).

(a) Goodwill additions related to the acquisition of DJS in the fourth quarter of 2022 (see Note 5).

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

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Definite-Lived Intangible Assets

In the fourth quarter of 2023, the company made a decision to reduce current sales and marketing investment related to both CoolSculpting, a body contouring technology for aesthetic nonsurgical fat reduction, and Liletta, an on-market women’s health product.

Each of these strategic decisions contributed to significant decreases in the estimated future cash flows for the respective products and represented triggering events that required an evaluation of the underlying definite-lived intangible assets for impairment.

The company used a discounted cash flow analysis for both products.

For CoolSculpting, the fair value of $ 290 million was lower than the carrying value of $ 1.3 billion resulting in a partial impairment of both the gross and net carrying amount.

For Liletta, the fair value of $ 241 million was lower than the carrying value of $ 561 million resulting in a partial impairment of both the gross and net carrying amount.

Based on the revised cash flows, the company recorded a pre-tax impairment charge of $ 1.4 billion to costs of products sold in the consolidated statement of earnings for the fourth quarter of 2023.

2023 Form 10-K |

In August 2023, as part of the Inflation Reduction Act 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 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 consolidated statement of earnings for the third quarter of 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.

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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.

Fair value measurements for the above evaluations were based on Level 3 inputs including estimated net revenues, cost of products sold, R&D costs, selling and marketing costs and discount rate.

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.

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Anticipated annual amortization expense $ 7.4 $ 7.0 $ 6.3 $ 5.6 $ 5.7

2022 Form 10-K |

Indefinite-Lived Intangible Assets

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, 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.

During the first quarter of 2023, the company made a decision to revise the research and development plan for AGN-151607, a novel investigational neurotoxin for the prevention of postoperative atrial fibrillation in cardiac surgery patients.

This decision contributed to a delay in the estimated timing of regulatory approval as well as a significant decrease in estimated future cash flows of the product and represented a triggering event which required the company to evaluate the underlying indefinite-lived intangible asset for impairment.

The company utilized a discounted cash flow analysis to estimate the fair value which was below the carrying value of the intangible asset.

Based on the revised cash flows, the company recorded a pre-tax impairment charge of $ 630 million to research and development expense in the consolidated statement of earnings for the first quarter of 2023.

Note 8 Integration and Restructuring Plans

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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

| 2023 Form 10-K

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

year ended December 31 (in millions) 2023 2022 2021

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Selling, general and administrative 192 399 353

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

Total charges $ 288 $ 539 $ 587

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

year ended December 31 (in millions) Severance and employee benefits Other integration

Charges $ 594 $ 435

year ended December 31 (in millions)

Accrued balance as of December 31, 2020 $ 387

Payments and other adjustments ( 658 )

Accrued balance as of December 31, 2021 255

Charges 65 461

Payments and other adjustments ( 525 )

Accrued balance as of December 31, 2022 107

Charges (benefits) ( 8 ) 385

Payments and other adjustments ( 338 )

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These charges were recorded in cost of products sold, R&D expense and SG&A expenses in the consolidated statements of earnings based on the classification of the affected employees or operations.

| 2022 Form 10-K

The following table summarizes the cash activity in the restructuring reserve for 2023, 2022 and 2021:

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Accrued balance as of December 31, 2020 $ 90

Restructuring charges 58

Payments and other adjustments ( 111 )

Accrued balance as of December 31, 2021 33

Restructuring charges 54

Payments and other adjustments ( 50 )

Accrued balance as of December 31, 2022 176

Restructuring charges 193

Payments and other adjustments ( 87 )

Accrued balance as of December 31, 2023 $ 196

2023 Form 10-K |

Note 9 Leases

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Finance lease cash flows were insignificant in 2023, 2022 and 2021.

Right-of-use assets obtained in exchange for new operating lease liabilities as of December 31, 2020 included $ 453 million of right-of-use assets acquired in the Allergan acquisition.

The following table summarizes the future maturities of AbbVie's operating and finance lease liabilities as of December 31, 2023:

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$ — 0.49 - 3.84 %

3.75 % senior notes due 2023

3.84 % 1,250 3.84 % 1,250

2.85 % senior notes due 2023

2.91 % 1,000 2.91 % 1,000

Floating rate term loans due 2023 5.07 % — 2.45 % 1,000

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

0.49 % 532 0.49 % 567

2.60 % senior notes due 2024

2.69 % 3,750 2.69 % 3,750

2.60 % senior notes due 2024

2.69 % 3,750 2.69 % 3,750

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

9 unchanged sentences

Floating rate term loans due 2025 5.95 % 2,000 2.82 % 2,000

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

2.95 % senior notes due 2026

59 unchanged sentences

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.

In 2023, the company repaid a $ 1.0 billion floating rate three-year term loan, $ 350 million aggregate principal amount of 2.80 % senior notes and $ 1.0 billion aggregate principal amount of 2.85 % senior notes at maturity.

During the quarter ended December 31, 2023, the company also repaid € 500 million aggregate principal amount of 1.50 % senior euro notes and $ 1.3 billion aggregate principal amount of 3.75 % senior notes at maturity.

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 and $ 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.

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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.

Financing Related to ImmunoGen and Cerevel Therapeutics Acquisitions

In connection with the acquisition of ImmunoGen and proposed acquisition of Cerevel Therapeutics, on December 6, 2023, AbbVie entered into a $ 9.0 billion 364-day bridge credit agreement and on December 21, 2023, AbbVie entered into a 364-day term loan credit agreement with an aggregate principal amount of $ 5.0 billion.

No amounts were drawn under the bridge credit agreement or term loan credit agreement as of December 31, 2023 .

Subsequent to 2023, on February 12, 2024, AbbVie borrowed $ 5.0 billion under the term loan credit agreement.

See Note 5 for additional information.

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 commercial paper borrowings were issued during 2023 or 2022 and there were no commercial paper borrowings outstanding as of December 31, 2023 and December 31, 2022.

Subsequent to 2023, AbbVie issued commercial paper borrowings of which $ 1.7 billion were outstanding as of the date of filing this Annual Report on Form 10-K.

In March 2023, AbbVie entered into an amended and restated five-year revolving credit facility.

The amendment increased the unsecured revolving credit facility commitments from $ 4.0 billion to $ 5.0 billion and extended the maturity date of the facility from August 2023 to March 2028.

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

At December 31, 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 December 31, 2023 and December 31, 2022.

2023 Form 10-K |

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

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

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.

Accumulated gains and losses as of December 31, 2023 are 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 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 2019 and the resulting net gain was recognized in other comprehensive income.

The agreements were net settled upon issuance of the senior notes in 2019 and the resulting net gain was included in AOCI .

This gain is reclassified to interest expense, net over the term of the related 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 company was a party to interest rate swap contracts designated as cash flow hedges that matured in November 2022.

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.

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

In June 2023, the company entered into a cross-currency swap contract that matured in November 2023 with a notional amount totaling € 433 million to hedge the company’s exposure to changes in future cash flows of foreign currency denominated debt related to changes in foreign exchange rates.

The cross-currency swap contract was designated as a cash flow hedge and effectively converted the interest and principal payments of the related foreign currency denominated debt to U.S.

The unrealized gains and losses on the contract were included in AOCI and reclassified to net foreign exchange loss over the term of the related 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.

These contracts are not designated as hedges and are recorded at fair value.

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

Resulting gains or losses are reflected in net foreign exchange gains or loss in the 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 $ 7.9 billion at December 31, 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 € 5.9 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 had an aggregate principal amount of senior Euro notes designated as net investment hedges of € 5.4 billion at December 31, 2023 and € 5.9 billion 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 December 31, 2023 and € 4.3 billion,

| 2023 Form 10-K

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 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, 2022 and December 31, 2021.

The company is a party to interest rate swap contracts designated as fair value hedges with notional amounts totaling $ 5.0 billion at December 31, 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.

2022 Form 10-K |

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

9 unchanged sentences

Interest rate swap contracts

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

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

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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:

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

years ended in December 31 (in millions) 2023 2022 2021

2 unchanged sentences

Designated as net investment hedges ( 144 ) 395 341

Cross-currency swap contracts designated as cash flow hedges ( 6 ) — —

Interest rate swap contracts designated as cash flow hedges — 6 2

Assuming market rates remain constant through contract maturities, the company expects to reclassify pre-tax gains of $ 7 million into cost of products sold for foreign currency cash flow hedges and pre-tax gains of $ 23 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.

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 losses of $ 252 million in 2023, pre-tax gains of $ 406 million in 2022 and pre-tax gains of $ 577 million in 2021.

2023 Form 10-K |

7 unchanged sentences

Treasury rate lock agreements designated as cash flow hedges Interest expense, net 24 23 24

Cross-currency swap contracts designated as cash flow hedges Net foreign exchange loss ( 6 ) — —

Interest rate swap contracts

33 unchanged sentences

Equity securities 91 59 32 —

Interest rate swap contracts 26 — 26 —

Foreign currency contracts 163 — 163 —

9 unchanged sentences

The potential contingent consideration payments are estimated by applying a probability-weighted expected payment model for contingent milestone payments and a Monte Carlo simulation model for contingent royalty payments, which are then discounted to present value.

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

| 2022 Form 10-K

and estimated future sales.

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

2023 Form 10-K |

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.

4 unchanged sentences

4.7 % - 5.1 %

Probability of payment for unachieved milestones 100 % - 100 %

Probability of payment for royalties by indication (b)

Probability of payment for unachieved milestones (b)

100 % - 100 %

Probability of payment for royalties by indication (C)

Projected year of payments 2024 - 2034

(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 56 % at December 31, 2022 and ranged from 56 % to 89 % at December 31, 2021.

(b) All significant milestones were achieved and paid as of December 31, 2023.

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

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

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(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 $ 5.1 billion in 2023, $ 2.8 billion in 2022 and $ 2.7 billion in 2021.

In 2023, the change in fair value reflected higher estimated Skyrizi sales driven by stronger market share uptake, the passage of time and lower discount rates.

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.

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 consolidated statements of cash flows.

| 2023 Form 10-K

5 unchanged sentences

(Level 2) Significant unobservable inputs

Short-term borrowings $ 1 $ 1 $ — $ 1 $ —

Current portion of long-term debt and finance lease obligations, excluding fair value hedges $ 7,191 $ 7,069 $ 6,862 $ 207 $ —

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Prior service cost (credit) 1 3 ( 297 ) ( 333 )

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

Accumulated other comprehensive loss (income) $ 2,291 $ 2,368 $ ( 15 ) $ ( 128 )

Related to international defined benefit plans the projected benefit obligations in the table above included $ 2.4 billion at December 31, 2023 and $ 2.1 billion at December 31, 2022.

For plans reflected in the table above, the accumulated benefit obligations were $ 8.6 billion at December 31, 2023 and $ 7.7 billion at December 31, 2022.

The 2023 actuarial loss of $ 491 million for qualified pension plans and actuarial loss of $ 89 million for other post-employment plans were primarily driven by a decrease in the discount rate and changes to experience impact and medical trends assumptions.

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.

| 2023 Form 10-K

13 unchanged sentences

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

This change to the U.S.

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.

| 2022 Form 10-K

Amounts Recognized in Other Comprehensive Income

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

Amounts Recognized in Other Comprehensive Income (Loss)

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

years ended December 31 (in millions) 2023 2022 2021

Defined benefit plans

Actuarial loss (gain) $ ( 925 ) $ ( 345 ) $ 701

Actuarial gain $ ( 16 ) $ ( 925 ) $ ( 345 )

Amortization of prior service cost ( 1 ) ( 2 ) ( 2 )

1 unchanged sentence

Foreign exchange loss (gain) and other ( 44 ) 17 ( 27 )

Total loss (gain) $ ( 1,141 ) $ ( 662 ) $ 528

Total gain $ ( 77 ) $ ( 1,141 ) $ ( 662 )

What changed 10-K

Item 8. Financial Statements and Supplementary Data