ABBOTT LABORATORIES 10-K

ITEM 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA ​ Page Consolidated Statement of Earnings ​ 41 Consolidated Statement of Comprehensive Income ​ 42 Consolidated Statement of Cash Flows ​ 43 Consolidated Balance Sheet ​ 44 Consolidated Statement of Shareholders’ Investment ​ 46 Notes to Consolidated Financial Statements ​ 47 Management Report on Internal Control Over Financial Reporting ​ 75 Report of Independent Registered Public Accounting Firm (PCAOB ID: 42 ) ​ 76 Report of Independent Registered Public Accounting Firm ​ 78 ​ ​ ​ 40 Abbott Laboratories and Subsidiaries Consolidated Statement of Earnings (in millions except per share data) ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Year Ended December 31 ​ 2021 2020 2019 Net Sales ​ $ 43,075 ​ $ 34,608 ​ $ 31,904 Cost of products sold, excluding amortization of intangible assets ​ 18,537 ​ 15,003 ​ 13,231 Amortization of intangible assets ​ 2,047 ​ 2,132 ​ 1,936 Research and development ​ 2,742 ​ 2,420 ​ 2,440 Selling, general and administrative ​ 11,324 ​ 9,696 ​ 9,765 Total Operating Cost and Expenses ​ 34,650 ​ 29,251 ​ 27,372 Operating Earnings ​ 8,425 ​ 5,357 ​ 4,532 Interest expense ​ 533 ​ 546 ​ 670 Interest income ​ ( 43 ) ​ ( 46 ) ​ ( 94 ) Net foreign exchange (gain) loss ​ 1 ​ ( 8 ) ​ 7 Debt extinguishment costs ​ ​ — ​ ​ — ​ ​ 63 Other (income) expense, net ​ ( 277 ) ​ ( 103 ) ​ ( 191 ) Earnings from Continuing Operations Before Taxes ​ 8,211 ​ 4,968 ​ 4,077 Taxes on Earnings from Continuing Operations ​ 1,140 ​ 497 ​ 390 ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Earnings from Continuing Operations ​ 7,071 ​ 4,471 ​ 3,687 ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Net Earnings from Discontinued Operations, net of taxes ​ ​ — ​ ​ 24 ​ ​ — ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Net Earnings ​ $ 7,071 ​ $ 4,495 ​ $ 3,687 ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Basic Earnings Per Common Share -- ​ ​ ​ ​ ​ ​ ​ ​ ​ Continuing Operations ​ $ 3.97 ​ $ 2.51 ​ $ 2.07 Discontinued Operations ​ — ​ 0.01 ​ — Net Earnings ​ $ 3.97 ​ $ 2.52 ​ $ 2.07 ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Diluted Earnings Per Common Share -- ​ ​ ​ ​ ​ ​ ​ ​ ​ Continuing Operations ​ $ 3.94 ​ $ 2.49 ​ $ 2.06 Discontinued Operations ​ — ​ 0.01 ​ — Net Earnings ​ $ 3.94 ​ $ 2.50 ​ $ 2.06 ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Average Number of Common Shares Outstanding Used for Basic Earnings Per Common Share ​ 1,775 ​ 1,773 ​ 1,768 Dilutive Common Stock Options ​ 14 ​ 13 ​ 13 Average Number of Common Shares Outstanding Plus Dilutive Common Stock Options ​ 1,789 ​ 1,786 ​ 1,781 Outstanding Common Stock Options Having No Dilutive Effect ​ ​ — ​ 9 ​ 61 ​ The accompanying notes to consolidated financial statements are an integral part of this statement. ​ 41 Abbott Laboratories and Subsidiaries Consolidated Statement of Comprehensive Income (in millions) ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Year Ended December 31 ​ 2021 2020 2019 Net Earnings ​ $ 7,071 ​ $ 4,495 ​ $ 3,687 Foreign currency translation gain (loss) adjustments ​ ( 980 ) ​ 65 ​ ( 12 ) Net actuarial gains (losses) and prior service cost and credits and amortization of net actuarial losses and prior service cost and credits, net of taxes of $ 340 in 2021, $( 79 ) in 2020 and $( 238 ) in 2019 ​ 1,201 ​ ( 331 ) ​ ( 814 ) Net gains (losses) on derivative instruments designated as cash flow hedges, net of taxes of $ 63 in 2021, $( 87 ) in 2020 and $( 17 ) in 2019 ​ 351 ​ ( 215 ) ​ ( 53 ) Other Comprehensive Income (Loss) ​ 572 ​ ( 481 ) ​ ( 879 ) Comprehensive Income ​ $ 7,643 ​ $ 4,014 ​ $ 2,808 ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Supplemental Accumulated Other Comprehensive Income (Loss) Information, net of tax as of December 31: ​ ​ ​ ​ ​ ​ ​ ​ ​ Cumulative foreign currency translation (loss) adjustments ​ $ ( 5,839 ) ​ $ ( 4,859 ) ​ $ ( 4,924 ) Net actuarial (losses) and prior service (cost) and credits ​ ( 2,670 ) ​ ( 3,871 ) ​ ( 3,540 ) Cumulative gains (losses) on derivative instruments designated as cash flow hedges ​ 135 ​ ( 216 ) ​ ( 1 ) Accumulated other comprehensive income (loss) ​ $ ( 8,374 ) ​ $ ( 8,946 ) ​ $ ( 8,465 ) ​ The accompanying notes to consolidated financial statements are an integral part of this statement. ​ 42 Abbott Laboratories and Subsidiaries Consolidated Statement of Cash Flows (in millions) ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Year Ended December 31 ​ 2021 2020 2019 Cash Flow From (Used in) Operating Activities: ​ ​ ​ ​ ​ ​ ​ ​ ​ Net earnings ​ $ 7,071 ​ $ 4,495 ​ $ 3,687 Adjustments to reconcile earnings to net cash from operating activities — ​ ​ ​ ​ ​ ​ ​ ​ ​ Depreciation ​ 1,491 ​ 1,195 ​ 1,078 Amortization of intangible assets ​ 2,047 ​ 2,132 ​ 1,936 Share-based compensation ​ 640 ​ 546 ​ 519 Investing and financing losses, net ​ ​ 55 ​ ​ 425 ​ ​ 184 Loss on extinguishment of debt ​ ​ — ​ ​ — ​ ​ 63 Trade receivables ​ ( 383 ) ​ ( 924 ) ​ ( 275 ) Inventories ​ ( 456 ) ​ ( 493 ) ​ ( 593 ) Prepaid expenses and other assets ​ ​ ( 312 ) ​ ​ ( 627 ) ​ ​ ( 138 ) Trade accounts payable and other liabilities ​ ​ 1,288 ​ ​ 1,766 ​ ​ 220 Income taxes ​ ​ ( 908 ) ​ ​ ( 614 ) ​ ​ ( 545 ) Net Cash From Operating Activities ​ ​ 10,533 ​ ​ 7,901 ​ ​ 6,136 ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Cash Flow From (Used in) Investing Activities: ​ ​ ​ ​ ​ ​ ​ ​ ​ Acquisitions of property and equipment ​ ( 1,885 ) ​ ( 2,177 ) ​ ( 1,638 ) Acquisitions of businesses and technologies, net of cash acquired ​ ( 187 ) ​ ( 42 ) ​ ( 170 ) Proceeds from business dispositions ​ ​ 134 ​ ​ 58 ​ ​ 48 Purchases of investment securities ​ ​ ( 173 ) ​ ​ ( 83 ) ​ ​ ( 103 ) Proceeds from sales of investment securities ​ ​ 77 ​ ​ 10 ​ ​ 21 Other ​ 26 ​ 19 ​ 27 Net Cash From (Used in) Investing Activities ​ ( 2,008 ) ​ ( 2,215 ) ​ ( 1,815 ) ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Cash Flow From (Used in) Financing Activities: ​ ​ ​ ​ ​ ​ ​ ​ ​ Proceeds from issuance of (repayments of) short-term debt, net and other ​ ​ ( 204 ) ​ ​ 2 ​ ​ — Proceeds from issuance of long-term debt and debt with maturities over 3 months ​ ​ 4 ​ ​ 1,281 ​ ​ 1,842 Repayments of long-term debt and debt with maturities over 3 months ​ ( 48 ) ​ ( 1,333 ) ​ ( 3,441 ) Purchases of common shares ​ ( 2,299 ) ​ ( 403 ) ​ ( 718 ) Proceeds from stock options exercised ​ 255 ​ 245 ​ 298 Dividends paid ​ ( 3,202 ) ​ ( 2,560 ) ​ ( 2,270 ) Other ​ ​ — ​ ​ ( 11 ) ​ ​ — Net Cash From (Used in) Financing Activities ​ ( 5,494 ) ​ ( 2,779 ) ​ ( 4,289 ) ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Effect of exchange rate changes on cash and cash equivalents ​ ( 70 ) ​ 71 ​ ( 16 ) Net Increase (Decrease) in Cash and Cash Equivalents ​ 2,961 ​ 2,978 ​ 16 Cash and Cash Equivalents, Beginning of Year ​ 6,838 ​ 3,860 ​ 3,844 Cash and Cash Equivalents, End of Year ​ $ 9,799 ​ $ 6,838 ​ $ 3,860 ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Supplemental Cash Flow Information: ​ ​ ​ ​ ​ ​ ​ ​ ​ Income taxes paid ​ $ 1,941 ​ $ 970 ​ $ 930 Interest paid ​ 544 ​ 549 ​ 677 ​ The accompanying notes to consolidated financial statements are an integral part of this statement. ​ 43 Abbott Laboratories and Subsidiaries Consolidated Balance Sheet (dollars in millions) ​ ​ ​ ​ ​ ​ ​ ​ ​ December 31 ​ 2021 2020 Assets ​ ​ ​ ​ ​ ​ Current assets: ​ ​ ​ ​ ​ ​ Cash and cash equivalents ​ $ 9,799 ​ $ 6,838 Investments, primarily bank time deposits and U.S. treasury bills ​ 450 ​ 310 Trade receivables, less allowances of - 2021: $ 519 ; 2020: $ 460 ​ 6,487 ​ 6,414 Inventories: ​ ​ ​ ​ ​ ​ Finished products ​ 3,081 ​ 3,030 Work in process ​ 694 ​ 712 Materials ​ 1,382 ​ 1,270 Total inventories ​ 5,157 ​ 5,012 Other prepaid expenses and receivables ​ 2,346 ​ 1,867 Total current assets ​ 24,239 ​ 20,441 Investments ​ 816 ​ 821 Property and equipment, at cost: ​ ​ ​ ​ ​ ​ Land ​ 525 ​ 538 Buildings ​ 4,007 ​ 4,014 Equipment ​ 13,528 ​ 12,884 Construction in progress ​ 1,304 ​ 1,357 ​ ​ 19,364 ​ 18,793 Less: accumulated depreciation and amortization ​ 10,405 ​ 9,764 Net property and equipment ​ 8,959 ​ 9,029 Intangible assets, net of amortization ​ 12,739 ​ 14,784 Goodwill ​ 23,231 ​ 23,744 Deferred income taxes and other assets ​ 5,212 ​ 3,729 ​ ​ $ 75,196 ​ $ 72,548 ​ ​ 44 Abbott Laboratories and Subsidiaries Consolidated Balance Sheet (dollars in millions) ​ ​ ​ ​ ​ ​ ​ ​ ​ December 31 ​ 2021 2020 Liabilities and Shareholders’ Investment ​ ​ ​ ​ ​ ​ Current liabilities: ​ ​ ​ ​ Short-term borrowings ​ $ — ​ $ 213 Trade accounts payable ​ 4,408 ​ 3,946 Salaries, wages and commissions ​ 1,625 ​ 1,416 Other accrued liabilities ​ 5,181 ​ 5,165 Dividends payable ​ 831 ​ 798 Income taxes payable ​ 306 ​ 362 Current portion of long-term debt ​ 754 ​ 7 Total current liabilities ​ 13,105 ​ 11,907 Long-term debt ​ 17,296 ​ 18,527 Post-employment obligations and other long-term liabilities ​ 8,771 ​ 9,111 Commitments and contingencies ​ ​ ​ ​ ​ ​ Shareholders’ investment: ​ ​ ​ ​ ​ ​ Preferred shares, one dollar par value Authorized — 1,000,000 shares, none issued ​ — ​ — Common shares, without par value Authorized — 2,400,000,000 shares Issued at stated capital amount — Shares: 2021: 1,985,273,421 ; 2020: 1,981,156,896 ​ 24,470 ​ 24,145 Common shares held in treasury, at cost — Shares: 2021: 221,191,228 ; 2020: 209,926,622 ​ ( 11,822 ) ​ ( 10,042 ) Earnings employed in the business ​ 31,528 ​ 27,627 Accumulated other comprehensive income (loss) ​ ( 8,374 ) ​ ( 8,946 ) Total Abbott Shareholders’ Investment ​ 35,802 ​ 32,784 Noncontrolling interests in subsidiaries ​ 222 ​ 219 Total Shareholders’ Investment ​ 36,024 ​ 33,003 ​ ​ $ 75,196 ​ $ 72,548 ​ The accompanying notes to consolidated financial statements are an integral part of this statement. ​ 45 Abbott Laboratories and Subsidiaries Consolidated Statement of Shareholders’ Investment (in millions except shares and per share data) ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Year Ended December 31 ​ 2021 2020 2019 Common Shares: ​ ​ ​ ​ ​ ​ ​ ​ ​ Beginning of Year ​ ​ ​ ​ ​ ​ ​ ​ ​ Shares: 2021: 1,981,156,896 ; 2020: 1,976,855,085 ; 2019: 1,971,189,465 ​ $ 24,145 ​ $ 23,853 ​ $ 23,512 Issued under incentive stock programs ​ ​ ​ ​ ​ ​ ​ ​ ​ Shares: 2021: 4,116,525 ; 2020: 4,301,811 ; 2019: 5,665,620 ​ 173 ​ 181 ​ 209 Share-based compensation ​ ​ 642 ​ ​ 548 ​ ​ 521 Issuance of restricted stock awards ​ ​ ( 490 ) ​ ​ ( 437 ) ​ ​ ( 389 ) End of Year ​ ​ ​ ​ ​ ​ ​ ​ ​ Shares: 2021: 1,985,273,421 ; 2020: 1,981,156,896 ; 2019: 1,976,855,085 ​ $ 24,470 ​ $ 24,145 ​ $ 23,853 ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Common Shares Held in Treasury: ​ ​ ​ ​ ​ ​ ​ ​ ​ Beginning of Year ​ ​ ​ ​ ​ ​ ​ ​ ​ Shares: 2021: 209,926,622 ; 2020: 214,351,838 ; 2019: 215,570,043 ​ $ ( 10,042 ) ​ $ ( 10,147 ) ​ $ ( 9,962 ) Issued under incentive stock programs ​ ​ ​ ​ ​ ​ ​ ​ ​ Shares: 2021: 5,650,168 ; 2020: 6,290,757 ; 2019: 7,796,030 ​ 271 ​ 298 ​ 361 Purchased ​ ​ ​ ​ ​ ​ ​ ​ ​ Shares: 2021: 16,914,774 ; 2020: 1,865,541 ; 2019: 6,577,825 ​ ​ ( 2,051 ) ​ ​ ( 193 ) ​ ​ ( 546 ) End of Year ​ ​ ​ ​ ​ ​ ​ ​ ​ Shares: 2021: 221,191,228 ; 2020: 209,926,622 ; 2019: 214,351,838 ​ $ ( 11,822 ) ​ $ ( 10,042 ) ​ $ ( 10,147 ) ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Earnings Employed in the Business: ​ ​ ​ ​ ​ ​ ​ ​ ​ Beginning of Year ​ $ 27,627 ​ $ 25,847 ​ $ 24,560 Impact of adoption of new accounting standards ​ ​ — ​ ​ ( 5 ) ​ ​ — Net earnings ​ ​ 7,071 ​ ​ 4,495 ​ ​ 3,687 Cash dividends declared on common shares (per share — 2021: $ 1.82 ; 2020: $ 1.53 ; 2019: $ 1.32 ) ​ ( 3,235 ) ​ ( 2,722 ) ​ ( 2,343 ) Effect of common and treasury share transactions ​ 65 ​ 12 ​ ( 57 ) End of Year ​ $ 31,528 ​ $ 27,627 ​ $ 25,847 ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Accumulated Other Comprehensive Income (Loss): ​ ​ ​ ​ ​ ​ ​ ​ ​ Beginning of Year ​ $ ( 8,946 ) ​ $ ( 8,465 ) ​ $ ( 7,586 ) Other comprehensive income (loss) ​ 572 ​ ( 481 ) ​ ( 879 ) End of Year ​ $ ( 8,374 ) ​ $ ( 8,946 ) ​ $ ( 8,465 ) ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Noncontrolling Interests in Subsidiaries: ​ ​ ​ ​ ​ ​ ​ ​ ​ Beginning of Year ​ $ 219 ​ $ 213 ​ $ 198 Noncontrolling Interests’ share of income, business combinations, net of distributions and share repurchases ​ 3 ​ 6 ​ 15 End of Year ​ $ 222 ​ $ 219 ​ $ 213 ​ The accompanying notes to consolidated financial statements are an integral part of this statement. ​ ​ 46 Abbott Laboratories and Subsidiaries Notes to Consolidated Financial Statements Note 1 — Summary of Significant Accounting Policies NATURE OF BUSINESS — Abbott’s principal business is the discovery, development, manufacture and sale of a broad line of health care products. BASIS OF CONSOLIDATION — The consolidated financial statements include the accounts of the parent company and subsidiaries, after elimination of intercompany transactions. USE OF ESTIMATES — The consolidated financial statements have been prepared in accordance with generally accepted accounting principles in the United States and necessarily include amounts based on estimates and assumptions by management. Actual results could differ from those amounts. Significant estimates include amounts for sales rebates, income taxes, pension and other post-employment benefits, valuation of intangible assets, litigation, derivative financial instruments, and inventory and accounts receivable exposures. FOREIGN CURRENCY TRANSLATION — The statements of earnings of foreign subsidiaries whose functional currencies are other than the U.S. dollar are translated into U.S. dollars using average exchange rates for the period. The net assets of foreign subsidiaries whose functional currencies are other than the U.S. dollar are translated into U.S. dollars using exchange rates as of the balance sheet date. The U.S. dollar effects that arise from translating the net assets of these subsidiaries at changing rates are recorded in the foreign currency translation adjustment account, which is included in equity as a component of Accumulated other comprehensive income (loss). Transaction gains and losses are recorded on the Net foreign exchange (gain) loss line of the Consolidated Statement of Earnings. REVENUE RECOGNITION — Revenue from product sales is recognized upon the transfer of control, which is generally upon shipment or delivery, depending on the delivery terms set forth in the customer contract. Provisions for discounts, rebates and sales incentives to customers, and returns and other adjustments are provided for in the period the related sales are recorded. Sales incentives to customers are not material. Historical data is readily available and reliable, and is used for estimating the amount of the reduction in gross sales. Revenue from the launch of a new product, from an improved version of an existing product, or for shipments in excess of a customer’s normal requirements are recorded when the conditions noted above are met. In those situations, management records a returns reserve for such revenue, if necessary. In certain of Abbott’s businesses, primarily within diagnostics, Abbott participates in selling arrangements that include multiple performance obligations (e.g., instruments, reagents, procedures, and service agreements). The total transaction price of the contract is allocated to each performance obligation in an amount based on the estimated relative standalone selling prices of the promised goods or services underlying each performance obligation. Sales of product rights for marketable products are recorded as revenue upon disposition of the rights. INCOME TAXES — Deferred income taxes are provided for the tax effect of differences between the tax bases of assets and liabilities and their reported amounts in the financial statements at the enacted statutory rate to be in effect when the taxes are paid. No additional income taxes have been provided for any remaining undistributed foreign earnings not subject to the transition tax related to the U.S. Tax Cuts and Jobs Act (TCJA), or any additional outside basis differences that exist, as these amounts continue to be indefinitely reinvested in foreign operations. Effective for fiscal years beginning after December 31, 2017, the TCJA subjects taxpayers to tax on global intangible low-taxed income (GILTI) earned by certain foreign subsidiaries. Abbott treats the GILTI tax as a period expense and provides for the tax in the year that the tax is incurred. Interest and penalties on income tax obligations are included in taxes on earnings. EARNINGS PER SHARE — Unvested restricted stock units and awards that contain non-forfeitable rights to dividends are treated as participating securities and are included in the computation of earnings per share under the two-class method. Under the two-class method, net earnings are allocated between common shares and participating securities. Earnings from Continuing Operations allocated to common shares in 2021, 2020 and 2019 were $ 7.042 billion, $ 4.449 billion and $ 3.666 billion, respectively. Net earnings allocated to common shares in 2021, 2020 and 2019 were $ 7.042 billion, $ 4.473 billion and $ 3.666 billion, respectively. PENSION AND POST-EMPLOYMENT BENEFITS — Abbott accrues for the actuarially determined cost of pension and post-employment benefits over the service attribution periods of the employees. Abbott must develop long-term assumptions, the most significant of which are the health care cost trend rates, discount rates and the expected return on plan assets. Differences between the expected long-term return on plan assets and the actual return are amortized over a five-year period. Actuarial losses and gains are amortized over the remaining service attribution periods of the employees under the corridor method. ​ 47 Abbott Laboratories and Subsidiaries Notes to Consolidated Financial Statements (Continued) Note 1 — Summary of Significant Accounting Policies (Continued) FAIR VALUE MEASUREMENTS — For assets and liabilities that are measured using quoted prices in active markets, total fair value is the published market price per unit multiplied by the number of units held without consideration of transaction costs. Assets and liabilities that are measured using significant other observable inputs are valued by reference to similar assets or liabilities, adjusted for contract restrictions and other terms specific to that asset or liability. For these items, a significant portion of fair value is derived by reference to quoted prices of similar assets or liabilities in active markets. For all remaining assets and liabilities, fair value is derived using a fair value model, such as a discounted cash flow model or Black-Scholes model. Purchased intangible assets are recorded at fair value. The fair value of significant purchased intangible assets is based on independent appraisals. Abbott uses a discounted cash flow model to value intangible assets. The discounted cash flow model requires assumptions about the timing and amount of future net cash flows, risk, the cost of capital, terminal values and market participants. Intangible assets are reviewed for impairment on a quarterly basis. Goodwill and indefinite-lived intangible assets are tested for impairment at least annually. SHARE-BASED COMPENSATION — The fair value of stock options and restricted stock awards and units are amortized over their requisite service period, which could be shorter than the vesting period if an employee is retirement eligible, with a charge to compensation expense. LITIGATION — Abbott accounts for litigation losses in accordance with Financial Accounting Standards Board (FASB) Accounting Standards Codification (ASC) No. 450, “Contingencies.” Under ASC No. 450, loss contingency provisions are recorded for probable losses at management’s best estimate of a loss, or when a best estimate cannot be made, a minimum loss contingency amount is recorded. Legal fees are recorded as incurred. CASH, CASH EQUIVALENTS AND INVESTMENTS — Cash equivalents consist of bank time deposits, U.S. government securities, money market funds and U.S. treasury bills with original maturities of three months or less. Abbott holds certain investments with a carrying value of $ 256 million that are accounted for under the equity method of accounting. Investments held in a rabbi trust and investments in publicly traded equity securities are recorded at fair value and changes in fair value are recorded in earnings. Investments in equity securities that are not traded on public stock exchanges are recorded at cost minus impairment, if any, plus or minus changes resulting from observable price changes in orderly transactions for identical or similar investments of the same issuer. TRADE RECEIVABLE VALUATIONS — Accounts receivable are stated at the net amount expected to be collected. The allowance for doubtful accounts reflects the current estimate of credit losses expected to be incurred over the life of the accounts receivable. Abbott considers various factors in establishing, monitoring, and adjusting its allowance for doubtful accounts, including the aging of the accounts and aging trends, the historical level of charge-offs, and specific exposures related to particular customers. Abbott also monitors other risk factors and forward-looking information, such as country risk, when determining credit limits for customers and establishing adequate allowances. Accounts receivable are charged off after all reasonable means to collect the full amount (including litigation, where appropriate) have been exhausted. INVENTORIES — Inventories are stated at the lower of cost (first-in, first-out basis) or net realizable value. Cost includes material and conversion costs. PROPERTY AND EQUIPMENT — Depreciation and amortization are provided on a straight-line basis over the estimated useful lives of the assets. The following table shows estimated useful lives of property and equipment: ​ ​ ​ ​ Classification Estimated Useful Lives Buildings 10 to 50 years Equipment 2 to 20 years ​ PRODUCT LIABILITY — Abbott accrues for product liability claims when it is probable that a liability has been incurred and the amount of the liability can be reasonably estimated based on existing information. The liabilities are adjusted quarterly as additional information becomes available. Product liability losses are self-insured. ​ 48 Abbott Laboratories and Subsidiaries Notes to Consolidated Financial Statements (Continued) Note 1 — Summary of Significant Accounting Policies (Continued) RESEARCH AND DEVELOPMENT COSTS — Internal research and development costs are expensed as incurred. Clinical trial costs incurred by third parties are expensed as the contracted work is performed. Where contingent milestone payments are due to third parties under research and development arrangements, the milestone payment obligations are expensed when the milestone results are achieved. ACQUIRED IN-PROCESS AND COLLABORATIONS RESEARCH AND DEVELOPMENT (IPR&D) — The initial costs of rights to IPR&D projects obtained in an asset acquisition are expensed as IPR&D unless the project has an alternative future use. These costs include initial payments incurred prior to regulatory approval in connection with research and development collaboration agreements that provide rights to develop, manufacture, market and/or sell pharmaceutical or medical device products. The fair value of IPR&D projects acquired in a business combination are capitalized and accounted for as indefinite-lived intangible assets until completed and are then amortized over the remaining useful life. Collaborations are not significant. CONCENTRATION OF RISK AND GUARANTEES — Due to the nature of its operations, Abbott is not subject to significant concentration risks relating to customers, products or geographic locations. Product warranties are not significant. Abbott has no material exposures to off-balance sheet arrangements; no special purpose entities; nor activities that include non-exchange-traded contracts accounted for at fair value. Abbott periodically acquires a business or product rights in which Abbott agrees to pay contingent consideration based on attaining certain thresholds or based on the occurrence of certain events. ​ ​ ​ Note 2 — New Accounting Standards Recently Adopted Accounting Standards In June 2016, the FASB issued Accounting Standards Update (ASU) 2016-13, Financial Instruments – Credit Losses , which changes the methodology to be used to measure credit losses for certain financial instruments and financial assets, including trade receivables. The new methodology requires the recognition of an allowance that reflects the current estimate of credit losses expected to be incurred over the life of the financial asset. Abbott adopted the standard on January 1, 2020 and recorded a cumulative adjustment that was not significant to Earnings employed in the business in the Consolidated Balance Sheet. In December 2019, the FASB issued ASU 2019-12, Income Taxes (Topic 740): Simplifying the Accounting for Income Taxes , which among other things, eliminates certain exceptions in the current rules regarding the approach for intraperiod tax allocations and the methodology for calculating income taxes in an interim period, and clarifies the accounting for transactions that result in a step-up in the tax basis of goodwill. Abbott adopted the standard on January 1, 2021. The new standard did not have an impact on its consolidated financial statements. ​ ​ Note 3 — Revenue Abbott’s revenues are derived primarily from the sale of a broad line of health care products under short-term receivable arrangements. Patent protection and licenses, technological and performance features, and inclusion of Abbott’s products under a contract most impact which products are sold; price controls, competition and rebates most impact the net selling prices of products; and foreign currency translation impacts the measurement of net sales and costs. Abbott’s products are generally sold directly to retailers, wholesalers, distributors, hospitals, health care facilities, laboratories, physicians’ offices and government agencies throughout the world. Abbott has four reportable segments: Established Pharmaceutical Products, Diagnostic Products, Nutritional Products, and Medical Devices. 49 Abbott Laboratories and Subsidiaries Notes to Consolidated Financial Statements (Continued) Note 3 — Revenue (Continued) The following tables provide detail by sales category: ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ 2021 ​ 2020 ​ 2019 (in millions) U.S. Int’l Total U.S. Int’l Total U.S. Int’l Total Established Pharmaceutical Products — ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Key Emerging Markets ​ ​ $ — ​ $ 3,539 ​ $ 3,539 ​ $ — ​ $ 3,209 ​ $ 3,209 ​ $ — ​ $ 3,392 ​ $ 3,392 Other ​ ​ — ​ 1,179 ​ 1,179 ​ — ​ 1,094 ​ 1,094 ​ ​ — ​ 1,094 ​ 1,094 Total ​ ​ — ​ 4,718 ​ 4,718 ​ — ​ 4,303 ​ 4,303 ​ ​ — ​ 4,486 ​ 4,486 ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Nutritionals — ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Pediatric Nutritionals ​ ​ 2,192 ​ 2,106 ​ 4,298 ​ 1,987 ​ 2,140 ​ 4,127 ​ ​ 1,879 ​ 2,282 ​ 4,161 Adult Nutritionals ​ ​ 1,364 ​ 2,632 ​ 3,996 ​ 1,292 ​ 2,228 ​ 3,520 ​ ​ 1,231 ​ 2,017 ​ 3,248 Total ​ ​ 3,556 ​ 4,738 ​ 8,294 ​ 3,279 ​ 4,368 ​ 7,647 ​ ​ 3,110 ​ 4,299 ​ 7,409 ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Diagnostics — ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Core Laboratory ​ ​ 1,145 ​ 3,983 ​ 5,128 ​ 1,166 ​ 3,309 ​ 4,475 ​ ​ 1,086 ​ 3,570 ​ 4,656 Molecular ​ ​ 566 ​ 861 ​ 1,427 ​ 621 ​ 817 ​ 1,438 ​ ​ 149 ​ 293 ​ 442 Point of Care ​ ​ 384 ​ 152 ​ 536 ​ 369 ​ 147 ​ 516 ​ ​ 438 ​ 123 ​ 561 Rapid Diagnostics ​ ​ 5,034 ​ 3,519 ​ 8,553 ​ 2,618 ​ 1,758 ​ 4,376 ​ ​ 1,214 ​ 840 ​ 2,054 Total ​ ​ 7,129 ​ 8,515 ​ 15,644 ​ 4,774 ​ 6,031 ​ 10,805 ​ ​ 2,887 ​ 4,826 ​ 7,713 ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Medical Devices — ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Rhythm Management ​ ​ 1,018 ​ 1,180 ​ 2,198 ​ 903 ​ 1,011 ​ 1,914 ​ ​ 1,057 ​ 1,087 ​ 2,144 Electrophysiology ​ ​ 778 ​ 1,129 ​ 1,907 ​ 660 ​ 918 ​ 1,578 ​ ​ 742 ​ 979 ​ 1,721 Heart Failure ​ ​ 654 ​ 235 ​ 889 ​ 547 ​ 193 ​ 740 ​ ​ 574 ​ 195 ​ 769 Vascular ​ ​ 915 ​ 1,739 ​ 2,654 ​ 853 ​ 1,486 ​ 2,339 ​ ​ 1,047 ​ 1,803 ​ 2,850 Structural Heart ​ ​ 730 ​ 880 ​ 1,610 ​ 540 ​ 707 ​ 1,247 ​ ​ 616 ​ 784 ​ 1,400 Neuromodulation ​ ​ 616 ​ 165 ​ 781 ​ 564 ​ 138 ​ 702 ​ ​ 660 ​ 171 ​ 831 Diabetes Care ​ ​ ​ 1,212 ​ ​ 3,116 ​ ​ 4,328 ​ ​ 864 ​ ​ 2,403 ​ ​ 3,267 ​ ​ 678 ​ ​ 1,846 ​ ​ 2,524 Total ​ ​ 5,923 ​ 8,444 ​ 14,367 ​ 4,931 ​ 6,856 ​ 11,787 ​ ​ 5,374 ​ 6,865 ​ 12,239 ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Other ​ ​ 34 ​ 18 ​ 52 ​ 38 ​ 28 ​ 66 ​ ​ 27 ​ 30 ​ 57 ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Total ​ ​ $ 16,642 ​ $ 26,433 ​ $ 43,075 ​ $ 13,022 ​ $ 21,586 ​ $ 34,608 ​ $ 11,398 ​ $ 20,506 ​ $ 31,904 ​ Abbott recognizes revenue from product sales upon the transfer of control, which is generally upon shipment or delivery, depending on the delivery terms set forth in the customer contract. For maintenance agreements that provide service beyond Abbott’s standard warranty and other service agreements, revenue is recognized ratably over the contract term. A time-based measure of progress appropriately reflects the transfer of services to the customer. Payment terms between Abbott and its customers vary by the type of customer, country of sale, and the products or services offered. The term between invoicing and the payment due date is not significant. Management exercises judgment in estimating variable consideration. Provisions for discounts, rebates and sales incentives to customers, and returns and other adjustments are provided for in the period the related sales are recorded. Sales incentives to customers are not material. Historical data is readily available and reliable, and is used for estimating the amount of the reduction in gross sales. Abbott provides rebates to government agencies, wholesalers, group purchasing organizations and other private entities. 50 Abbott Laboratories and Subsidiaries Notes to Consolidated Financial Statements (Continued) Note 3 — Revenue (Continued) Rebate amounts are usually based upon the volume of purchases using contractual or statutory prices for a product. Factors used in the rebate calculations include the identification of which products have been sold subject to a rebate, which customer or government agency price terms apply, and the estimated lag time between sale and payment of a rebate. Using historical trends, adjusted for current changes, Abbott estimates the amount of the rebate that will be paid, and records the liability as a reduction of gross sales when Abbott records its sale of the product. Settlement of the rebate generally occurs from one to six months after sale. Abbott regularly analyzes the historical rebate trends and makes adjustments to reserves for changes in trends and terms of rebate programs. Historically, adjustments to prior years’ rebate accruals have not been material to net income. Other allowances charged against gross sales include cash discounts and returns, which are not significant. Cash discounts are known within 15 to 30 days of sale, and therefore can be reliably estimated. Returns can be reliably estimated because Abbott’s historical returns are low, and because sales return terms and other sales terms have remained relatively unchanged for several periods. Product warranties are also not significant. Abbott also applies judgment in determining the timing of revenue recognition related to contracts that include multiple performance obligations. The total transaction price of the contract is allocated to each performance obligation in an amount based on the estimated relative standalone selling prices of the promised goods or services underlying each performance obligation. For goods or services for which observable standalone selling prices are not available, Abbott uses an expected cost plus a margin approach to estimate the standalone selling price of each performance obligation. Remaining Performance Obligations As of December 31, 2021, the estimated revenue expected to be recognized in the future related to performance obligations that are unsatisfied (or partially unsatisfied) was approximately $ 4 billion in the Diagnostic Products segment and approximately $ 435 million in the Medical Devices segment. Abbott expects to recognize revenue on approximately 60 percent of these remaining performance obligations over the next 24 months , approximately 16 percent over the subsequent 12 months and the remainder thereafter. These performance obligations primarily reflect the future sale of reagents/consumables in contracts with minimum purchase obligations, extended warranty or service obligations related to previously sold equipment, and remote monitoring services related to previously implanted devices. Abbott has applied the practical expedient described in ASC 606-10-50 -14 and has not included remaining performance obligations related to contracts with original expected durations of one year or less in the amounts above. Assets Recognized for Costs to Obtain a Contract with a Customer Abbott has applied the practical expedient in ASC 340-40-25-4 and records as an expense the incremental costs of obtaining contracts with customers in the period of occurrence when the amortization period of the asset that Abbott otherwise would have recognized is one year or less. Upfront commission fees paid to sales personnel as a result of obtaining or renewing contracts with customers are incremental to obtaining the contract. Abbott capitalizes these amounts as contract costs. Capitalized commission fees are amortized based on the contract duration to which the assets relate which ranges from two to ten years . The amounts as of December 31, 2021 and 2020 were not significant. Additionally, the cost of transmitters provided to customers that use Abbott’s remote monitoring service with respect to certain medical devices are capitalized as contract costs. Capitalized transmitter costs are amortized based on the timing of the transfer of services to which the assets relate, which typically ranges from eight to ten years . The amounts as of December 31, 2021 and 2020 were not significant. Other Contract Assets and Liabilities Abbott discloses Trade receivables separately in the Consolidated Balance Sheet at the net amount expected to be collected. Contract assets primarily relate to Abbott’s conditional right to consideration for work completed but not billed at the reporting date. Contract assets at the beginning and end of the period, as well as the changes in the balance, were not significant. ​ 51 Abbott Laboratories and Subsidiaries Notes to Consolidated Financial Statements (Continued) Note 3 — Revenue (Continued) Contract liabilities primarily relate to payments received from customers in advance of performance under the contract. Abbott’s contract liabilities arise primarily in the Medical Devices reportable segment when payment is received upfront for various multi-period extended service arrangements. Changes in the contract liabilities during the period are as follows: ​ ​ ​ ​ ​ (in millions) ​ ​ Contract Liabilities: ​ ​ ​ Balance at December 31, 2019 ​ $ 294 Unearned revenue from cash received during the period ​ 505 Revenue recognized related to contract liability balance ​ ( 394 ) Balance at December 31, 2020 ​ ​ 405 Unearned revenue from cash received during the period ​ ​ 615 Revenue recognized related to contract liability balance ​ ​ ( 500 ) Balance at December 31, 2021 ​ $ 520 ​ ​ Note 4 — Supplemental Financial Information Other (income) expense, net, for 2021, 2020 and 2019 includes approximately $ 270 million, $ 205 million and $ 225 million of income, respectively, related to the non-service cost components of the net periodic benefit costs associated with the pension and post-retirement medical plans. The following summarizes the activity related to the allowance for doubtful accounts: ​ ​ ​ ​ ​ (in millions) ​ ​ Allowance for Doubtful Accounts: ​ ​ ​ Balance at December 31, 2019 ​ $ 228 Impact of adopting ASU 2016-13 ​ ​ 7 Provisions/charges to income ​ 88 Amounts charged off and other deductions ​ ( 35 ) Balance at December 31, 2020 ​ ​ 288 Provisions/charges to income ​ ​ 51 Amounts charged off and other deductions ​ ​ ( 26 ) Balance at December 31, 2021 ​ $ 313 ​ The allowance for doubtful accounts reflects the current estimate of credit losses expected to be incurred over the life of the accounts receivable. Abbott considers various factors in establishing, monitoring, and adjusting its allowance for doubtful accounts, including the aging of the accounts and aging trends, the historical level of charge-offs, and specific exposures related to particular customers. Abbott also monitors other risk factors and forward-looking information, such as country risk, when determining credit limits for customers and establishing adequate allowances. The detail of various balance sheet components is as follows: ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ December 31, ​ December 31, (in millions) 2021 2020 Long-term Investments: ​ ​ ​ ​ ​ ​ Equity securities ​ $ 748 ​ $ 776 Other ​ 68 ​ 45 Total ​ $ 816 ​ $ 821 ​ The decrease in Abbott’s long-term investments as of December 31, 2021 versus the balance as of December 31, 2020 primarily relates to the sale of an equity method investment partially offset by the acquisition of additional investments. ​ 52 Abbott Laboratories and Subsidiaries Notes to Consolidated Financial Statements (Continued) Note 4 — Supplemental Financial Information (Continued) Abbott’s equity securities as of December 31, 2021 and December 31, 2020, include $ 391 million and $ 366 million, respectively, of investments in mutual funds that are held in a rabbi trust acquired as part of the St. Jude Medical, Inc. (St. Jude Medical) business acquisition. These investments, which are specifically designated as available for the purpose of paying benefits under a deferred compensation plan, are not available for general corporate purposes and are subject to creditor claims in the event of insolvency. Abbott also holds certain investments as of December 31, 2021 with a carrying value of $ 256 million that are accounted for under the equity method of accounting and other equity investments with a carrying value of $ 90 million that do not have a readily determinable fair value. An approximately $ 60 million impairment of an investment was recorded in 2020 for which Abbott had previously recorded an unrealized gain of approximately $ 50 million in 2018. In September 2021, Abbott acquired 100 percent of Walk Vascular, LLC (Walk Vascular), a commercial-stage medical device company with a minimally invasive thrombectomy system designed to remove peripheral blood clots. Walk Vascular’s peripheral thrombectomy system will be incorporated into Abbott’s existing endovascular portfolio. The purchase price, the allocation of acquired assets and liabilities, and the revenue and net income contributed by Walk Vascular since the date of acquisition are not material to Abbott’s consolidated financial statements. In 2019, in conjunction with the acquisition of Cephea Valve Technologies, Inc., Abbott acquired a research & development (R&D) asset valued at $ 102 million, which was immediately expensed. The $ 102 million of expense was recorded in the Research and development line of Abbott’s Consolidated Statement of Earnings. ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ December 31, ​ December 31, (in millions) 2021 2020 Other Accrued Liabilities: ​ ​ ​ ​ ​ ​ Accrued rebates payable to government agencies ​ $ 364 ​ $ 316 Accrued other rebates (a) ​ 1,082 ​ 805 All other ​ 3,735 ​ 4,044 Total ​ $ 5,181 ​ $ 5,165 (a) Accrued wholesaler chargeback rebates of $ 211 million and $ 178 million at December 31, 2021 and 2020, respectively, are netted in trade receivables because Abbott’s customers are invoiced at a higher catalog price but only remit to Abbott their contract price for the products. ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ December 31, ​ December 31, (in millions) 2021 2020 Post-employment Obligations and Other Long-term Liabilities: ​ ​ ​ ​ ​ ​ Defined benefit pension plans and post-employment medical and dental plans for significant plans ​ $ 2,738 ​ $ 3,119 Deferred income taxes ​ 1,392 ​ 1,406 Operating lease liabilities ​ ​ 956 ​ ​ 902 All other (b) ​ 3,685 ​ 3,684 Total ​ $ 8,771 ​ $ 9,111 (b) Includes approximately $ 680 million and $ 740 million of net unrecognized tax benefits in 2021 and 2020, respectively. ​ 53 Abbott Laboratories and Subsidiaries Notes to Consolidated Financial Statements (Continued) Note 5 — Accumulated Other Comprehensive Income (Loss) The components of the changes in accumulated other comprehensive income (loss) from continuing operations, net of income taxes, are as follows: ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Cumulative ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Gains (Losses) ​ ​ ​ ​ ​ Cumulative ​ Net Actuarial ​ on Derivative ​ ​ ​ ​ ​ Foreign ​ (Losses) and ​ Instruments ​ ​ ​ ​ ​ Currency ​ Prior Service ​ Designated as ​ ​ ​ ​ ​ Translation ​ (Costs) and ​ Cash Flow ​ ​ ​ (in millions) Adjustments Credits Hedges Total Balance at December 31, 2019 ​ $ ( 4,924 ) ​ $ ( 3,540 ) ​ $ ( 1 ) ​ $ ( 8,465 ) Other comprehensive income (loss) before reclassifications ​ ​ 65 ​ ( 523 ) ​ ( 140 ) ​ ( 598 ) (Income) loss amounts reclassified from accumulated other comprehensive income (a) ​ ​ — ​ 192 ​ ( 75 ) ​ 117 Net current period other comprehensive income (loss) ​ ​ 65 ​ ( 331 ) ​ ( 215 ) ​ ( 481 ) Balance at December 31, 2020 ​ ​ ( 4,859 ) ​ ​ ( 3,871 ) ​ ​ ( 216 ) ​ ​ ( 8,946 ) Other comprehensive income (loss) before reclassifications ​ ​ ( 980 ) ​ 954 ​ 137 ​ 111 (Income) loss amounts reclassified from accumulated other comprehensive income (a) ​ ​ — ​ 247 ​ 214 ​ 461 Net current period other comprehensive income (loss) ​ ​ ( 980 ) ​ ​ 1,201 ​ ​ 351 ​ ​ 572 Balance at December 31, 2021 ​ $ ( 5,839 ) ​ $ ( 2,670 ) ​ $ 135 ​ $ ( 8,374 ) (a) (Income) loss amounts reclassified from accumulated other comprehensive income related to cash flow hedges are recorded as Cost of products sold. Net actuarial losses and prior service cost is included as a component of net periodic benefit cost – see Note 13 for additional information . Note 6 — Goodwill and Intangible Assets The total amount of goodwill reported was $ 23.2 billion at December 31, 2021 and $ 23.7 billion at December 31, 2020. Foreign currency translation adjustments decreased goodwill by $ 532 million in 2021 and increased goodwill by $ 550 million in 2020. The amount of goodwill related to reportable segments at December 31, 2021 was $ 2.8 billion for the Established Pharmaceutical Products segment, $ 286 million for the Nutritional Products segment, $ 3.7 billion for the Diagnostic Products segment, and $ 16.4 billion for the Medical Devices segment. There were no reductions of goodwill relating to impairments in 2021 and 2020. Indefinite-lived intangible assets, which relate to IPR&D acquired in a business combination, were approximately $ 919 million and $ 1.2 billion at December 31, 2021 and 2020, respectively. The decrease is due to IPR&D assets primarily related to the Medical Devices segment that became amortizable in 2021, partially offset by an increase of approximately $ 80 million related to a recent acquisition. In 2020, a $ 55 million impairment of an IPR&D intangible asset related to the Medical Devices segment was recorded in the Research and development line of Abbott’s Consolidated Statement of Earnings. The gross amount of amortizable intangible assets, primarily product rights and technology, was $ 27.7 billion and $ 27.8 billion as of December 31, 2021 and 2020, respectively, and accumulated amortization was $ 15.9 billion and $ 14.2 billion as of December 31, 2021 and 2020, respectively. Amortizable intangible assets increased by approximately $ 120 million as a result of a recent acquisition and the additional assets are being amortized over 9 years . Foreign currency translation adjustments decreased intangible assets by $ 197 million in 2021 and increased intangible assets by $ 67 million in 2020. In 2021, asset impairments related to the Established Pharmaceutical Products segment decreased intangible assets by $ 14 million. In 2020, asset impairments related to the Medical Devices segment decreased intangible assets by $ 148 million. The impairments were recorded in the Cost of products sold, excluding amortization of intangible assets line of Abbott’s Consolidated Statement of Earnings. The estimated annual amortization expense for intangible assets recorded at December 31, 2021 is approximately $ 2.1 billion in 2022, $ 2.0 billion in 2023, $ 1.9 billion in 2024, $ 1.7 billion in 2025 and $ 1.6 billion in 2026. Amortizable intangible assets are amortized over 2 to 20 years . 54 Abbott Laboratories and Subsidiaries Notes to Consolidated Financial Statements (Continued) Note 7 — Restructuring Plans On May 27, 2021, Abbott management approved a restructuring plan related to its Diagnostic Products segment to align its manufacturing network for COVID-19 diagnostic tests with changes in the second quarter in projected testing demand driven by several factors, including significant reductions in cases in the U.S. and other major developed countries, the accelerated rollout of COVID-19 vaccines globally and the U.S. health authority’s updated guidance on testing for fully vaccinated individuals. In the second quarter of 2021, Abbott recorded charges of $ 499 million under this plan in Cost of products sold. The charge recognized in the second quarter included fixed asset write-downs of $ 80 million, inventory-related charges of $ 248 million, and other exit costs, which included contract cancellations and employee-related costs of $ 171 million. In the second half of 2021, as the Delta and Omicron variants of COVID-19 spread and the number of new COVID-19 cases increased significantly, particularly in the U.S., demand for rapid COVID-19 tests increased significantly. As a result, in the second half of 2021, Abbott sold approximately $ 181 million of inventory that was previously estimated to have no net realizable value under the second quarter restructuring action. In addition, the estimate of other exit costs was reduced by a net $ 58 million as Abbott fulfilled its purchase obligations under certain contracts for which a liability was recorded in the second quarter or Abbott settled with the counterparty in the second half of 2021. The following summarizes the activity related to this restructuring action and the status of the related accruals as of December 31, 2021: ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Inventory- ​ ​ ​ ​ ​ ​ ​ ​ Related ​ Fixed Asset ​ Other Exit ​ ​ ​ (in millions) Charges Write-Downs Costs Total Restructuring charges recorded in 2021 ​ $ 248 ​ $ 80 ​ $ 113 ​ $ 441 Payments ​ — ​ — ​ ( 90 ) ​ ( 90 ) Other non-cash ​ ( 248 ) ​ ( 80 ) ​ — ​ ( 328 ) Accrued balance at December 31, 2021 ​ $ — ​ $ — ​ $ 23 ​ $ 23 ​ From 2017 to 2021, Abbott management approved restructuring plans as part of the integration of the acquisitions of St. Jude Medical into the Medical Devices segment, and Alere Inc. (Alere) into the Diagnostic Products segment, in order to leverage economies of scale and reduce costs. As of December 31, 2018, the accrued balance associated with these actions was $ 41 million. From 2019 to 2021, Abbott recorded employee-related severance and other charges totaling approximately $ 95 million, comprised of $ 10 million in 2021, $ 13 million in 2020, and $ 72 million in 2019. Approximately $ 31 million was recorded in Cost of products sold, approximately $ 5 million was recorded in Research and development, and approximately $ 59 million was recorded in Selling, general and administrative expense over the last three years. As of December 31, 2021, the accrued liabilities remaining in the Consolidated Balance Sheet related to these actions total $ 9 million. From 2017 to 2020, Abbott management approved plans to streamline operations in order to reduce costs and improve efficiencies in various Abbott businesses including the nutritional, established pharmaceuticals and vascular businesses. As of December 31, 2018, the accrued balance associated with these actions was $ 70 million. From 2019 to 2020, Abbott recorded employee-related severance and other charges totaling approximately $ 102 million, comprised of $ 36 million in 2020 and $ 66 million in 2019. Approximately $ 22 million was recorded in Cost of products sold, approximately $ 30 million was recorded in Research and development, and approximately $ 50 million was recorded in Selling, general and administrative expense over the two years. As of December 31, 2021, the accrued liabilities remaining in the Consolidated Balance Sheet related to these actions total $ 24 million. In 2021, Abbott management approved plans to streamline operations in order to reduce costs and improve efficiencies in various Abbott businesses including the diagnostics, established pharmaceuticals, nutritional, and medical devices businesses. Abbott recorded employee-related severance and other charges of approximately $ 68 million. Approximately $ 16 million was recorded in Cost of products sold, approximately $ 4 million was recorded in Research and development, and approximately $ 48 million was recorded in Selling, general and administrative expense. 55 Abbott Laboratories and Subsidiaries Notes to Consolidated Financial Statements (Continued) Note 7 — Restructuring Plans (Continued) The following summarizes the activity for these restructurings: ​ ​ ​ ​ ​ (in millions) ​ ​ Restructuring charges in 2021 ​ $ 68 Payments and other adjustments ​ ​ ( 7 ) Accrued balance at December 31, 2021 ​ $ 61 ​ ​ Note 8 — Incentive Stock Program The 2017 Incentive Stock Program authorizes the granting of nonqualified stock options, restricted stock awards, restricted stock units, performance awards, foreign benefits and other share-based awards. Stock options and restricted stock awards and units comprise the majority of benefits that have been granted and are currently outstanding under this program and a prior program. In 2021, Abbott granted 2,865,115 stock options, 497,373 restricted stock awards and 4,721,696 restricted stock units under this program. Under Abbott’s stock incentive programs, the purchase price of shares under option must be at least equal to the fair market value of the common stock on the date of grant, and the maximum term of an option is 10 years . Options generally vest equally over three years . Restricted stock awards generally vest over three years , with no more than one-third of the award vesting in any one year upon Abbott reaching a minimum return on equity target. Restricted stock units vest over three years and upon vesting, the recipient receives one share of Abbott stock for each vested restricted stock unit. The aggregate fair market value of options and restricted stock awards and units is recognized as expense over the requisite service period, which may be shorter than the vesting period if an employee is retirement eligible. Forfeitures are estimated at the time of grant. Restricted stock awards and settlement of vested restricted stock units are issued out of treasury shares. Abbott generally issues new shares for exercises of stock options. As a policy, Abbott does not purchase its shares relating to its share-based programs. In April 2017, Abbott’s shareholders authorized the 2017 Incentive Stock Program under which a maximum of 170 million shares were available for issuance. At December 31, 2021, approximately 102 million shares remained available for future issuance. The following table summarizes stock option activity for the year ended December 31, 2021 and the outstanding stock options as of December 31, 2021. ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Weighted ​ ​ ​ ​ ​ ​ Weighted ​ Average ​ ​ ​ ​ ​ ​ Average ​ Remaining ​ Aggregate (intrinsic values in millions) Options Exercise Price Life (Years) Intrinsic Value Outstanding at December 31, 2020 ​ 28,919,886 ​ $ 55.65 6.0 $ 1,557 Granted 2,865,115 ​ 123.70 ​ ​ ​ ​ ​ Exercised ( 4,495,454 ) ​ 40.48 ​ ​ ​ ​ ​ Lapsed ( 89,696 ) ​ 106.80 ​ ​ ​ ​ ​ Outstanding at December 31, 2021 27,199,851 ​ $ 65.16 5.7 $ 2,056 Exercisable at December 31, 2021 ​ 20,387,490 ​ $ 53.49 ​ 4.9 ​ $ 1,779 ​ 56 Abbott Laboratories and Subsidiaries Notes to Consolidated Financial Statements (Continued) Note 8 — Incentive Stock Program (Continued) The following table summarizes restricted stock awards and units activity for the year ended December 31, 2021. ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Weighted ​ ​ ​ ​ Average ​ ​ ​ Grant-Date ​ ​ Share Units ​ Fair Value Outstanding at December 31, 2020 12,492,868 ​ $ 78.19 Granted 5,219,069 ​ 123.85 Vested ( 6,507,761 ) ​ 73.54 Forfeited ( 645,651 ) ​ 98.13 Outstanding at December 31, 2021 10,558,525 ​ $ 102.40 ​ The fair market value of restricted stock awards and units vested in 2021, 2020 and 2019 was $ 809 million, $ 631 million and $ 588 million, respectively. The total intrinsic value of options exercised in 2021, 2020 and 2019 was $ 393 million, $ 279 million and $ 315 million, respectively. The total unrecognized compensation cost related to all share-based compensation plans at December 31, 2021 amounted to approximately $ 450 million, which is expected to be recognized over the next three years . Total non-cash stock compensation expense charged against income from continuing operations in 2021, 2020 and 2019 for share-based plans totaled approximately $ 640 million, $ 546 million and $ 519 million, respectively, and the tax benefit recognized was approximately $ 267 million, $ 200 million and $ 197 million, respectively. Stock compensation cost capitalized as part of inventory is not significant. The table below summarizes the fair value of an option granted in 2021, 2020 and 2019 and the assumptions included in the Black-Scholes option-pricing model used to estimate the fair value: ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ 2021 2020 2019 ​ Fair value ​ $ 24.17 ​ $ 14.39 ​ $ 14.50 ​ Risk-free interest rate ​ 0.8 % ​ 1.3 % ​ 2.5 % Average life of options (years) ​ 6.0 ​ ​ 6.0 ​ ​ 6.0 ​ Volatility ​ 23.8 % ​ 19.4 % ​ 19.8 % Dividend yield ​ 1.5 % ​ 1.6 % ​ 1.7 % ​ The risk-free interest rate is based on the rates available at the time of the grant for zero-coupon U.S. government issues with a remaining term equal to the option’s expected life. The average life of an option is based on both historical and projected exercise and lapsing data. Expected volatility is based on implied volatilities from traded options on Abbott’s stock and historical volatility of Abbott’s stock over the expected life of the option. Dividend yield is based on the option’s exercise price and annual dividend rate at the time of grant. 57 Abbott Laboratories and Subsidiaries Notes to Consolidated Financial Statements (Continued) Note 9 — Debt and Lines of Credit The following is a summary of long-term debt at December 31: ​ ​ ​ ​ ​ ​ ​ ​ (in millions) 2021 2020 2.55 % Notes, due 2022 ​ $ 750 ​ $ 750 0.875 % Notes, due 2023 ​ ​ 1,294 ​ ​ 1,398 3.40 % Notes, due 2023 ​ ​ 1,050 ​ ​ 1,050 5-year term loan due 2024 ​ ​ 521 ​ ​ 577 0.10 % Notes, due 2024 ​ ​ 670 ​ ​ 724 3.875 % Notes, due 2025 ​ ​ 500 ​ ​ 500 2.95 % Notes, due 2025 ​ ​ 1,000 ​ ​ 1,000 1.50 % Notes, due 2026 ​ ​ 1,294 ​ ​ 1,398 3.75 % Notes, due 2026 ​ ​ 1,700 ​ ​ 1,700 0.375 % Notes, due 2027 ​ ​ 670 ​ ​ 724 1.15 % Notes, due 2028 ​ ​ 650 ​ ​ 650 1.40 % Notes, due 2030 ​ ​ 650 ​ ​ 650 4.75 % Notes, due 2036 ​ ​ 1,650 ​ ​ 1,650 6.15 % Notes, due 2037 ​ 547 ​ 547 6.00 % Notes, due 2039 ​ 515 ​ 515 5.30 % Notes, due 2040 ​ 694 ​ 694 4.75 % Notes, due 2043 ​ 700 ​ 700 4.90 % Notes, due 2046 ​ ​ 3,250 ​ ​ 3,250 Unamortized debt issuance costs ​ ​ ( 78 ) ​ ​ ( 87 ) Other, including fair value adjustments relating to interest rate hedge contracts designated as fair value hedges ​ 23 ​ 144 Total carrying amount of long-term debt ​ 18,050 ​ 18,534 Less: Current portion ​ 754 ​ 7 Total long-term portion ​ $ 17,296 ​ $ 18,527 ​ On June 24, 2020, Abbott completed the issuance of $ 1.3 billion aggregate principal amount of senior notes, consisting of $ 650 million of its 1.15 % Notes due 2028 and $ 650 million of its 1.40 % Notes due 2030. On September 28, 2020, Abbott repaid the € 1.140 billion outstanding principal amount of its 0.00 % Notes due 2020 upon maturity. The repayment equated to approximately $ 1.3 billion. Abbott has readily available financial resources, including unused lines of credit that support commercial paper borrowing arrangements and provide Abbott with the ability to borrow up to $ 5 billion on an unsecured basis. The lines of credit are part of a Five Year Credit Agreement (Revolving Credit Agreement) that Abbott entered into on November 12, 2020. At that time, Abbott also terminated its 2018 revolving credit agreement. There were no outstanding borrowings under the 2018 revolving credit agreement at the time of its termination. Any borrowings under the Revolving Credit Agreement will mature and be payable on November 12, 2025. Any borrowings under the Revolving Credit Agreement will bear interest, at Abbott’s option, based on either a base rate or Eurodollar rate, plus an applicable margin based on Abbott’s credit ratings. In 2019, Abbott’s long-term borrowings and debt issuance included the following: ● On November 19, 2019, Abbott’s wholly owned subsidiary, Abbott Ireland Financing DAC, completed an offering of € 1.180 billion of long-term debt consisting of € 590 million of 0.10 % Notes due 2024 and € 590 million of 0.375 % Notes due 2027. The proceeds equated to approximately $ 1.3 billion. The Notes are guaranteed by Abbott. ● On November 21, 2019, Abbott borrowed ¥ 59.8 billion under a 5-year term loan and designated the yen-denominated loan as a hedge of its net investment in certain foreign subsidiaries. The term loan bears interest at TIBOR plus a fixed spread, and the interest rate is reset quarterly. The proceeds equated to approximately $ 550 million. 58 Abbott Laboratories and Subsidiaries Notes to Consolidated Financial Statements (Continued) Note 9 — Debt and Lines of Credit (Continued) In 2019, Abbott’s repayment of long-term debt included the following: ● $ 0.500 billion outstanding principal amount of its 2.80 % Notes due 2020 – redeemed on February 24, 2019 ● $ 2.850 billion principal amount of its 2.9 % Notes due 2021 – redeemed on December 19, 2019. Abbott incurred a charge of $ 63 million related to the early repayment of this debt. The 2.80 % Notes were redeemed under a bond redemption authorization approved by the board of directors in 2018. The 2.9 % Notes were redeemed under a bond redemption authorization approved by the board of directors in September 2019 for the early redemption of up to $ 5 billion of outstanding long-term notes. The 2019 bond redemption authorization superseded the board’s 2018 authorization. Of the $ 5 billion authorization, $ 2.15 billion remains available as of December 31, 2021. Principal payments required on long-term debt outstanding at December 31, 2021 are $ 754 million in 2022, $ 2.3 billion in 2023, $ 1.2 billion in 2024, $ 1.5 billion in 2025, $ 3.0 billion in 2026 and $ 9.3 billion in 2027 and thereafter. At December 31, 2021, Abbott’s long-term debt rating was A+ by Standard & Poor’s Corporation and A2 by Moody’s. In December 2021, Abbott repaid a short-term facility for approximately $ 195 million. After the repayment, Abbott has no short-term borrowings. Abbott’s weighted-average interest rate on short-term borrowings was 0.4 % at December 31, 2020 and 2019. ​ Note 10 — Leases Leases where Abbott is the Lessee Abbott has entered into operating leases as the lessee for office space, manufacturing facilities, R&D laboratories, warehouses, vehicles and equipment. Finance leases are not significant. Abbott’s operating leases generally have remaining lease terms of 1 to 10 years . Some leases include options to extend beyond the original lease term , generally up to 10 years and some include options to terminate early . These options have been included in the determination of the lease liability when it is reasonably certain that the option will be exercised. For all of its asset classes, Abbott elected the practical expedient allowed under FASB ASC No. 842, “Leases” to account for each lease component (e.g., the right to use office space) and the associated non-lease components (e.g., maintenance services) as a single lease component. Abbott also elected the short-term lease accounting policy for all asset classes; therefore, Abbott is not recognizing a lease liability or right of use (ROU) asset for any lease that, at the commencement date, has a lease term of 12 months or less and does not include an option to purchase the underlying asset that Abbott is reasonably certain to exercise. As Abbott’s leases typically do not provide an implicit rate, the interest rate used to determine the present value of the payments under each lease typically reflects Abbott’s incremental borrowing rate based on information available at the lease commencement date. Abbott’s incremental borrowing rates at January 1, 2019 were used for operating leases that commenced prior to January 1, 2019 when ASC No. 842 was adopted. 59 Abbott Laboratories and Subsidiaries Notes to Consolidated Financial Statements (Continued) Note 10 — Leases (Continued) The following table provides information related to Abbott’s operating leases: ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ (in millions, except weighted averages) 2021 2020 ​ 2019 ​ Operating lease cost (a) ​ $ 359 ​ $ 329 ​ $ 314 ​ Cash paid for amounts included in the measurement of operating lease liabilities ​ ​ 287 ​ ​ 264 ​ ​ 253 ​ ROU assets arising from entering into new operating lease obligations ​ ​ 343 ​ ​ 396 ​ ​ 310 ​ Weighted average remaining lease term at December 31 (in years) ​ ​ 8 ​ ​ 8 ​ ​ 8 ​ Weighted average discount rate at December 31 ​ ​ 2.7 % ​ 3.2 % ​ 3.9 % (a) Includes short-term lease expense and variable lease costs, which were immaterial in the years ended December 31, 2021, 2020 and 2019 . Future minimum lease payments under non-cancellable operating leases as of December 31, 2021 were as follows: ​ ​ ​ ​ ​ (in millions) ​ ​ 2022 ​ $ 272 2023 ​ 234 2024 ​ 178 2025 ​ 142 2026 ​ 118 Thereafter ​ 407 Total future minimum lease payments – undiscounted ​ 1,351 Less: imputed interest ​ ( 150 ) Present value of lease liabilities ​ $ 1,201 ​ The following table summarizes the amounts and location of operating lease ROU assets and lease liabilities: ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ (in millions) December 31, 2021 December 31, 2020 Balance Sheet Caption ​ ​ ​ ​ ​ ​ ​ ​ ​ Operating Lease - ROU Asset ​ $ 1,153 ​ $ 1,101 ​ Deferred income taxes and other assets ​ ​ ​ ​ ​ ​ ​ ​ ​ Operating Lease Liability: ​ ​ ​ ​ ​ ​ Current ​ $ 245 ​ $ 241 ​ Other accrued liabilities Non-current ​ 956 ​ ​ 902 ​ Post-employment obligations and other long-term liabilities Total Liability ​ $ 1,201 ​ $ 1,143 ​ ​ ​ 60 Abbott Laboratories and Subsidiaries Notes to Consolidated Financial Statements (Continued) Note 10 — Leases (Continued) Leases where Abbott is the Lessor Certain assets, primarily diagnostics instruments, are leased to customers under contractual arrangements that typically include an operating or sales-type lease as well as performance obligations for reagents and other consumables. Sales-type leases are not significant. Contract terms vary by customer and may include options to terminate the contract or options to extend the contract. Where instruments are provided under operating lease arrangements, some portion or the entire lease revenue may be variable and subject to subsequent non-lease component (e.g., reagent) sales. The allocation of revenue between the lease and non-lease components is based on standalone selling prices. Operating lease revenue represented less than 3 percent of Abbott’s total net sales in the years ended December 31, 2021, 2020 and 2019. Assets related to operating leases are reported within Net property and equipment on the Consolidated Balance Sheet. The original cost and the net book value of such assets were $ 3.5 billion and $ 1.6 billion, respectively, as of December 31, 2021 and $ 3.3 billion and $ 1.4 billion, respectively, as of December 31, 2020. ​ Note 11 — Financial Instruments, Derivatives and Fair Value Measures Certain Abbott foreign subsidiaries enter into foreign currency forward exchange contracts to manage exposures to changes in foreign exchange rates primarily for anticipated intercompany purchases by those subsidiaries whose functional currencies are not the U.S. dollar. These contracts, with gross notional amounts totaling $ 8.6 billion at December 31, 2021, and $ 8.1 billion at December 31, 2020, are designated as cash flow hedges of the variability of the cash flows due to changes in foreign exchange rates and are recorded at fair value. Accumulated gains and losses as of December 31, 2021 will be included in Cost of products sold at the time the products are sold, generally through the next twelve to eighteen months . Abbott enters into foreign currency forward exchange contracts to manage currency exposures for foreign currency denominated third-party trade payables and receivables, and for intercompany loans and trade accounts payable where the receivable or payable is denominated in a currency other than the functional currency of the entity. For intercompany loans, the contracts require Abbott to sell or buy foreign currencies, primarily European currencies, in exchange for primarily U.S. dollars and European currencies. For intercompany and trade payables and receivables, the currency exposures are primarily the U.S. dollar and European currencies. At December 31, 2021 and 2020, Abbott held gross notional amounts of $ 12.2 billion and $ 11.0 billion, respectively, of such foreign currency forward exchange contracts. In November 2019, Abbott borrowed ¥ 59.8 billion under a 5-year term loan and designated the yen-denominated loan as a hedge of the net investment in certain foreign subsidiaries. The proceeds equated to approximately $ 550 million. The value of this long-term debt was approximately $ 521 million and $ 577 million as of December 31, 2021 and December 31, 2020, respectively. The change in the value of the debt, which is due to changes in foreign exchange rates, was recorded in Accumulated other comprehensive income (loss), net of tax. 61 Abbott Laboratories and Subsidiaries Notes to Consolidated Financial Statements (Continued) Note 11 — Financial Instruments, Derivatives and Fair Value Measures (Continued) Abbott is a party to interest rate hedge contracts totaling approximately $ 2.9 billion at December 31, 2021 and 2020, to manage its exposure to changes in the fair value of fixed-rate debt. These contracts are designated as fair value hedges of the variability of the fair value of fixed-rate debt due to changes in the long-term benchmark interest rates. The effect of the hedge is to change a fixed-rate interest obligation to a variable rate for that portion of the debt. Abbott records the contracts at fair value and adjusts the carrying amount of the fixed-rate debt by an offsetting amount. The following table summarizes the amounts and location of certain derivative financial instruments as of December 31: ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Fair Value — Assets ​ Fair Value — Liabilities (in millions) 2021 2020 Balance Sheet Caption 2021 2020 Balance Sheet Caption Interest rate swaps designated as fair value hedges ​ $ 87 ​ $ 210 Deferred income taxes and other assets ​ $ — ​ $ — Post-employment obligations and other long-term liabilities Foreign currency forward exchange contracts: ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Hedging instruments ​ 222 ​ 30 Other prepaid expenses and receivables ​ 65 ​ 433 Other accrued liabilities Others not designated as hedges ​ 70 ​ 60 ​ Other prepaid expenses and receivables ​ 32 ​ 65 ​ Other accrued liabilities Debt designated as a hedge of net investment in a foreign subsidiary ​ ​ — ​ ​ — ​ n/a ​ ​ 521 ​ ​ 577 ​ Long-term debt ​ ​ $ 379 ​ $ 300 ​ ​ ​ $ 618 ​ $ 1,075 ​ ​ ​ The following table summarizes the activity for foreign currency forward exchange contracts designated as cash flow hedges, debt designated as a hedge of net investment in a foreign subsidiary and certain other derivative financial instruments, as well as the amounts and location of income (expense) and gain (loss) reclassified into income. ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Gain (loss) Recognized in ​ Income (expense) and ​ ​ ​ ​ Other Comprehensive ​ Gain (loss) Reclassified ​ ​ ​ ​ Income (loss) ​ into Income ​ ​ (in millions) 2021 2020 2019 2021 2020 2019 Income Statement Caption Foreign currency forward exchange contracts designated as cash flow hedges ​ $ 164 ​ $ ( 207 ) ​ $ 9 ​ $ ( 252 ) ​ $ 102 ​ $ 79 ​ Cost of products sold Debt designated as a hedge of net investment in a foreign subsidiary ​ 56 ​ ( 31 ) ​ 4 ​ n/a ​ n/a ​ n/a n/a Interest rate swaps designated as fair value hedges ​ n/a ​ n/a ​ n/a ​ ( 123 ) ​ 162 ​ 148 Interest expense ​ A gain of $ 19 million, a loss of $ 171 million and a gain of $ 75 million were recognized in 2021, 2020 and 2019, respectively, related to foreign currency forward exchange contracts not designated as hedges. These amounts are reported in the Consolidated Statement of Earnings on the Net foreign exchange (gain) loss line. The interest rate swaps are designated as fair value hedges of the variability of the fair value of fixed-rate debt due to changes in the long-term benchmark interest rates. The hedged debt is marked to market, offsetting the effect of marking the interest rate swaps to market. 62 Abbott Laboratories and Subsidiaries Notes to Consolidated Financial Statements (Continued) Note 11 — Financial Instruments, Derivatives and Fair Value Measures (Continued) The carrying values and fair values of certain financial instruments as of December 31 are shown in the table below. The carrying values of all other financial instruments approximate their estimated fair values. The counterparties to financial instruments consist of select major international financial institutions. Abbott does not expect any losses from nonperformance by these counterparties. ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ 2021 ​ 2020 ​ ​ Carrying ​ Fair ​ Carrying ​ Fair (in millions) Value Value Value Value Long-term Investment Securities: ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Equity securities ​ $ 748 ​ $ 748 ​ $ 776 ​ $ 776 Other ​ 68 ​ 68 ​ 45 ​ 45 Total long-term debt ​ ( 18,050 ) ​ ( 21,152 ) ​ ( 18,534 ) ​ ( 22,809 ) Foreign Currency Forward Exchange Contracts: ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Receivable position ​ 292 ​ 292 ​ 90 ​ 90 (Payable) position ​ ( 97 ) ​ ( 97 ) ​ ( 498 ) ​ ( 498 ) Interest Rate Hedge Contracts: ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Receivable position ​ 87 ​ 87 ​ 210 ​ 210 (Payable) position ​ ​ — ​ ​ — ​ ​ — ​ ​ — ​ The fair value of the debt was determined based on significant other observable inputs, including current interest rates. The following table summarizes the bases used to measure certain assets and liabilities at fair value on a recurring basis in the balance sheet: ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Basis of Fair Value Measurement ​ ​ ​ ​ ​ Quoted ​ Significant ​ ​ ​ ​ ​ ​ ​ Prices in ​ Other ​ Significant ​ ​ Outstanding ​ Active ​ Observable ​ Unobservable (in millions) Balances Markets Inputs Inputs December 31, 2021: ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Equity securities ​ $ 402 ​ $ 402 ​ $ — ​ $ — Interest rate swap derivative financial instruments ​ 87 ​ — ​ 87 ​ — Foreign currency forward exchange contracts ​ 292 ​ — ​ 292 ​ — Total Assets ​ $ 781 ​ $ 402 ​ $ 379 ​ $ — ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Fair value of hedged long-term debt ​ $ 2,926 ​ $ — ​ $ 2,926 ​ $ — Foreign currency forward exchange contracts ​ 97 ​ — ​ 97 ​ — Contingent consideration related to business combinations ​ 130 ​ — ​ — ​ 130 Total Liabilities ​ $ 3,153 ​ $ — ​ $ 3,023 ​ $ 130 ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ December 31, 2020: ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Equity securities ​ $ 386 ​ $ 386 ​ $ — ​ $ — Interest rate swap derivative financial instruments ​ ​ 210 ​ ​ — ​ ​ 210 ​ ​ — Foreign currency forward exchange contracts ​ 90 ​ — ​ 90 ​ — Total Assets ​ $ 686 ​ $ 386 ​ $ 300 ​ $ — ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Fair value of hedged long-term debt ​ $ 3,049 ​ $ — ​ $ 3,049 ​ $ — Foreign currency forward exchange contracts ​ 498 ​ — ​ 498 ​ — Contingent consideration related to business combinations ​ 68 ​ — ​ — ​ 68 Total Liabilities ​ $ 3,615 ​ $ — ​ $ 3,547 ​ $ 68 ​ 63 Abbott Laboratories and Subsidiaries Notes to Consolidated Financial Statements (Continued) Note 11 — Financial Instruments, Derivatives and Fair Value Measures (Continued) The fair value of foreign currency forward exchange contracts is determined using a market approach, which utilizes values for comparable derivative instruments. The fair value of the debt was determined based on the face value of the debt adjusted for the fair value of the interest rate swaps, which is based on a discounted cash flow analysis using significant other observable inputs. Contingent consideration relates to businesses acquired by Abbott. The increase in contingent consideration during the year primarily reflects the fair value of the contingent consideration that resulted from a recent acquisition; the fair value of such contingent consideration was determined based on an independent appraisal. The maximum amount for certain contingent consideration is not determinable as it is based on a percent of certain sales. Excluding such contingent consideration, the maximum amount that may be due under the other contingent consideration arrangements was estimated at December 31, 2021 to be approximately $ 230 million, which is dependent upon attaining certain sales thresholds or upon the occurrence of certain events, such as regulatory approvals. The increase from the estimate at December 31, 2020 of approximately $ 200 million reflects the additional contingent consideration that resulted from a recent acquisition, partially offset by the expiration of certain contingent consideration arrangements. Note 12 — Litigation and Environmental Matters Abbott has been identified as a potentially responsible party for investigation and cleanup costs at a number of locations in the United States and Puerto Rico under federal and state remediation laws and is investigating potential contamination at a number of company-owned locations. Abbott has recorded an estimated cleanup cost for each site for which management believes Abbott has a probable loss exposure. No individual site cleanup exposure is expected to exceed $ 4 million, and the aggregate cleanup exposure is not expected to exceed $ 10 million. Abbott is involved in various claims and legal proceedings, and Abbott estimates the range of possible loss for its legal proceedings and environmental exposures to be from approximately $ 30 million to $ 45 million. The recorded accrual balance at December 31, 2021 for these proceedings and exposures was approximately $ 40 million. This accrual represents management’s best estimate of probable loss, as defined by FASB ASC No. 450, “Contingencies.” Within the next year, legal proceedings may occur that may result in a change in the estimated loss accrued by Abbott. While it is not feasible to predict the outcome of all such proceedings and exposures with certainty, management believes that their ultimate disposition should not have a material adverse effect on Abbott’s financial position, cash flows, or results of operations. ​ 64 Abbott Laboratories and Subsidiaries Notes to Consolidated Financial Statements (Continued) Note 13 — Post-Employment Benefits Retirement plans consist of defined benefit, defined contribution and medical and dental plans. Information for Abbott’s major defined benefit plans and post-employment medical and dental benefit plans is as follows: ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Medical and Dental ​ ​ Defined Benefit Plans ​ Plans (in millions) 2021 2020 2021 2020 Projected benefit obligations, January 1 ​ $ 13,129 ​ $ 11,238 ​ $ 1,567 ​ $ 1,556 Service cost — benefits earned during the year ​ 391 ​ 336 ​ 56 ​ 46 Interest cost on projected benefit obligations ​ 248 ​ 300 ​ 33 ​ 42 (Gains) losses, primarily changes in discount rates, plan design changes, law changes and differences between actual and estimated health care costs ​ ( 463 ) ​ 1,305 ​ ( 16 ) ​ ( 5 ) Benefits paid ​ ( 340 ) ​ ( 327 ) ​ ( 74 ) ​ ( 73 ) Other, including foreign currency translation ​ ( 192 ) ​ 277 ​ — ​ 1 Projected benefit obligations, December 31 ​ $ 12,773 ​ $ 13,129 ​ $ 1,566 ​ $ 1,567 Plan assets at fair value, January 1 ​ $ 12,018 ​ $ 10,277 ​ $ 353 ​ $ 360 Actual return (loss) on plan assets ​ 1,521 ​ 1,463 ​ 56 ​ 46 Company contributions ​ 418 ​ 400 ​ 35 ​ 20 Benefits paid ​ ( 340 ) ​ ( 327 ) ​ ( 74 ) ​ ( 73 ) Other, including foreign currency translation ​ ( 149 ) ​ 205 ​ — ​ — Plan assets at fair value, December 31 ​ $ 13,468 ​ $ 12,018 ​ $ 370 ​ $ 353 Projected benefit obligations less (greater) than plan assets, December 31 ​ $ 695 ​ $ ( 1,111 ) ​ $ ( 1,196 ) ​ $ ( 1,214 ) Long-term assets ​ $ 2,270 ​ $ 824 ​ $ — ​ $ — Short-term liabilities ​ ( 31 ) ​ ( 29 ) ​ ( 2 ) ​ ( 1 ) Long-term liabilities ​ ( 1,544 ) ​ ( 1,906 ) ​ ( 1,194 ) ​ ( 1,213 ) Net asset (liability) ​ $ 695 ​ $ ( 1,111 ) ​ $ ( 1,196 ) ​ $ ( 1,214 ) Amounts Recognized in Accumulated Other Comprehensive Income (loss): ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Actuarial losses, net ​ $ 3,062 ​ $ 4,559 ​ $ 412 ​ $ 486 Prior service cost (credits) ​ ( 5 ) ​ ( 5 ) ​ ( 39 ) ​ ( 67 ) Total ​ $ 3,057 ​ $ 4,554 ​ $ 373 ​ $ 419 ​ The $ 463 million of defined benefit plan gains in 2021 that decreased the projected benefit obligations primarily reflect the year-over-year increase in the discount rates used to measure the obligations. The $ 1.3 billion of defined benefit plan losses in 2020 that increased the projected benefit obligations primarily reflect the year-over-year decline in the discount rates used to measure the obligations. The projected benefit obligations for non-U.S. defined benefit plans were $ 3.7 billion and $ 4.1 billion at December 31, 2021 and 2020, respectively. The accumulated benefit obligations for all defined benefit plans were $ 11.5 billion and $ 11.9 billion at December 31, 2021 and 2020, respectively. For plans where the projected benefit obligations exceeded plan assets at December 31, 2021 and 2020, the projected benefit obligations and the aggregate plan assets were as follows: ​ ​ ​ ​ ​ ​ ​ ​ (in millions) 2021 2020 Projected benefit obligation ​ $ 2,632 ​ $ 8,946 Fair value of plan assets ​ 1,057 ​ 7,010 ​ 65 Abbott Laboratories and Subsidiaries Notes to Consolidated Financial Statements (Continued) Note 13 — Post-Employment Benefits (Continued) For plans where the accumulated benefit obligations exceeded plan assets at December 31, 2021 and 2020, the aggregate accumulated benefit obligations, the projected benefit obligations and the aggregate plan assets were as follows: ​ ​ ​ ​ ​ ​ ​ ​ (in millions) 2021 2020 Accumulated benefit obligation ​ $ 1,406 ​ $ 2,459 Projected benefit obligation ​ 1,554 ​ 2,773 Fair value of plan assets ​ 136 ​ 965 ​ The components of the net periodic benefit cost were as follows: ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Medical and ​ ​ Defined Benefit Plans ​ Dental Plans (in millions) 2021 2020 2019 ​ 2021 2020 2019 Service cost — benefits earned during the year ​ $ 391 ​ $ 336 ​ $ 250 ​ $ 56 ​ $ 46 ​ $ 23 Interest cost on projected benefit obligations ​ 248 ​ 300 ​ 337 ​ 33 ​ 42 ​ 52 Expected return on plans’ assets ​ ( 843 ) ​ ( 770 ) ​ ( 710 ) ​ ( 27 ) ​ ( 28 ) ​ ( 27 ) Amortization of actuarial losses ​ 317 ​ 255 ​ ​ 132 ​ ​ 29 ​ ​ 21 ​ ​ 22 Amortization of prior service cost (credits) ​ ​ 1 ​ ​ 1 ​ ​ 1 ​ ​ ( 28 ) ​ ​ ( 28 ) ​ ​ ( 32 ) Total net cost ​ $ 114 ​ $ 122 ​ $ 10 ​ $ 63 ​ $ 53 ​ $ 38 ​ Other comprehensive income (loss) for each respective year includes the amortization of actuarial losses and prior service costs (credits) as noted in the previous table. Other comprehensive income (loss) for each respective year also includes: net actuarial gains of $ 1.141 billion for defined benefit plans and a gain of $ 45 million for medical and dental plans in 2021; net actuarial losses of $ 611 million for defined benefit plans and a gain of $ 23 million for medical and dental plans in 2020, and net actuarial losses of $ 944 million for defined benefit plans and a loss of $ 190 million for medical and dental plans in 2019. The net actuarial gains in 2021 are primarily due to the favorable impact of actual asset returns in excess of expected returns and the year-over-year increase in discount rates. The net actuarial losses in 2020 are primarily due to the year-over-year decline in discount rates partially offset by the impact of actual asset returns in excess of expected returns. The weighted average assumptions used to determine benefit obligations for defined benefit plans and medical and dental plans are as follows: ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ 2021 2020 2019 Discount rate 2.7 % 2.3 % 3.0 % Expected aggregate average long-term change in compensation 4.3 % 4.3 % 4.3 % ​ The weighted average assumptions used to determine the net cost for defined benefit plans and medical and dental plans are as follows: ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ 2021 2020 2019 Discount rate 2.3 % 3.0 % 4.0 % Expected return on plan assets 7.5 % 7.5 % 7.5 % Expected aggregate average long-term change in compensation 4.3 % 4.3 % 4.3 % ​ The assumed health care cost trend rates for medical and dental plans at December 31 were as follows: ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ 2021 2020 2019 Health care cost trend rate assumed for the next year 7 % 8 % 9 % Rate that the cost trend rate gradually declines to 5 % 5 % 5 % Year that rate reaches the assumed ultimate rate 2026 ​ 2025 ​ 2025 ​ ​ 66 Abbott Laboratories and Subsidiaries Notes to Consolidated Financial Statements (Continued) Note 13 — Post-Employment Benefits (Continued) The discount rates used to measure liabilities were determined based on high-quality fixed income securities that match the duration of the expected retiree benefits. The health care cost trend rates represent Abbott’s expected annual rates of change in the cost of health care benefits and are forward projections of health care costs as of the measurement date. The following table summarizes the bases used to measure the defined benefit and medical and dental plan assets at fair value: ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Basis of Fair Value Measurement ​ ​ ​ ​ ​ Quoted ​ Significant ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Prices in ​ Other ​ Significant ​ ​ ​ ​ ​ Outstanding ​ Active ​ Observable ​ Unobservable ​ Measured at (in millions) Balances Markets Inputs Inputs NAV (j) December 31, 2021: ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Equities: ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ U.S. large cap (a) ​ $ 3,664 ​ $ 2,403 ​ $ — ​ $ — ​ $ 1,261 U.S. mid and small cap (b) ​ ​ 936 ​ ​ 876 ​ ​ — ​ ​ 4 ​ ​ 56 International (c) ​ ​ 2,902 ​ ​ 591 ​ ​ — ​ ​ — ​ ​ 2,311 Fixed income securities: ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ U.S. government securities (d) ​ ​ 366 ​ ​ 21 ​ ​ 325 ​ ​ — ​ ​ 20 Corporate debt instruments (e) ​ ​ 1,709 ​ ​ 434 ​ ​ 1,260 ​ ​ — ​ ​ 15 Non-U.S. government securities (f) ​ ​ 626 ​ ​ 33 ​ ​ 1 ​ ​ — ​ ​ 592 Other (g) ​ ​ 510 ​ ​ 87 ​ ​ 111 ​ ​ — ​ ​ 312 Absolute return funds (h) ​ ​ 1,934 ​ ​ 476 ​ ​ — ​ ​ — ​ ​ 1,458 Cash and Cash Equivalents ​ ​ 266 ​ ​ 35 ​ ​ — ​ ​ — ​ ​ 231 Other (i) ​ ​ 925 ​ ​ 2 ​ ​ — ​ ​ — ​ ​ 923 ​ ​ $ 13,838 ​ $ 4,958 ​ $ 1,697 ​ $ 4 ​ $ 7,179 December 31, 2020: ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Equities: ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ U.S. large cap (a) ​ $ 3,410 ​ $ 2,202 ​ $ — ​ $ — ​ $ 1,208 U.S. mid and small cap (b) ​ 775 ​ ​ 721 ​ ​ — ​ ​ 3 ​ ​ 51 International (c) ​ 2,654 ​ ​ 542 ​ ​ — ​ ​ — ​ ​ 2,112 Fixed income securities: ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ U.S. government securities (d) ​ 475 ​ ​ 23 ​ ​ 289 ​ ​ — ​ ​ 163 Corporate debt instruments (e) ​ 1,408 ​ ​ 425 ​ ​ 908 ​ ​ — ​ ​ 75 Non-U.S. government securities (f) ​ 523 ​ ​ 16 ​ ​ — ​ ​ — ​ ​ 507 Other (g) ​ 503 ​ ​ 159 ​ ​ 72 ​ ​ — ​ ​ 272 Absolute return funds (h) ​ 1,618 ​ ​ 462 ​ ​ — ​ ​ — ​ ​ 1,156 Cash and Cash Equivalents ​ ​ 281 ​ ​ 19 ​ ​ — ​ ​ — ​ ​ 262 Other (i) ​ 724 ​ ​ 9 ​ ​ — ​ ​ — ​ ​ 715 ​ ​ $ 12,371 ​ $ 4,578 ​ $ 1,269 ​ $ 3 ​ $ 6,521 (a) A mix of index funds and actively managed equity accounts that are benchmarked to various large cap indices. (b) A mix of index funds and actively managed equity accounts that are benchmarked to various mid and small cap indices. (c) A mix of index funds and actively managed pooled investment funds that are benchmarked to various non-U.S. equity indices in both developed and emerging markets. (d) A mix of index funds and actively managed accounts that are benchmarked to various U.S. government bond indices. (e) A mix of index funds and actively managed accounts that are benchmarked to various corporate bond indices. (f) Primarily United Kingdom, Canada, Japan and Eurozone government bonds. 67 Abbott Laboratories and Subsidiaries Notes to Consolidated Financial Statements (Continued) Note 13 — Post-Employment Benefits (Continued) (g) Primarily asset backed securities, bank loans and actively managed, diversified fixed income vehicles benchmarked to Libor. (h) Primarily hedge funds and funds invested by managers that have a global mandate with the flexibility to allocate capital broadly across a wide range of asset classes and strategies including, but not limited to equities, fixed income, commodities, interest rate futures, currencies and other securities to outperform an agreed upon benchmark with specific return and volatility targets. (i) Primarily investments in private funds, such as private equity, private credit, private real estate and private energy funds. (j) Investments measured at fair value using the net asset value (NAV) practical expedient have not been classified in the fair value hierarchy. The fair value amounts presented in this table are intended to permit reconciliation of the fair value hierarchy to the amounts presented in the consolidated balance sheet. Equities that are valued using quoted prices are valued at the published market prices. Equities in a common collective trust or a registered investment company are valued at the NAV provided by the fund administrator. The NAV is based on the value of the underlying assets owned by the fund minus its liabilities. For approximately half of these funds, investments may be redeemed once per week or month, with a required 2 to 30 day notice period. For the remaining funds, daily redemption of an investment is allowed. Fixed income securities that are valued using significant other observable inputs are valued at prices obtained from independent financial service industry recognized vendors. Abbott did not have any unfunded commitments related to fixed income funds at December 31, 2021 and 2020. Fixed income securities in a common collective trust or a registered investment company are valued at the NAV provided by the fund administrator. For the majority of these funds, investments may be redeemed either weekly or monthly, with a required 2 to 14 day notice period. For the remaining funds, investments may be generally redeemed daily. Absolute return funds are valued at the NAV provided by the fund administrator. All private funds are valued at the NAV provided by the fund on a one-quarter lag adjusted for known cash flows and significant events through the reporting date. Abbott did not have any unfunded commitments related to absolute return funds at December 31, 2021 and 2020. Investments in these funds may be generally redeemed monthly or quarterly with required notice periods ranging from 5 to 90 days . For approximately $ 290 million and $ 150 million of the absolute return funds, redemptions are subject to a 33 percent gate and a 25 percent gate, respectively, and $ 50 million is subject to a lock until 2022. Investments in the private funds cannot be redeemed but the funds will make distributions through liquidation. The estimate of the liquidation period for each fund ranges from 2022 to 2031. Abbott’s unfunded commitment in these funds was $ 585 million and $ 523 million as of December 31, 2021 and 2020, respectively. The investment mix of equity securities, fixed income and other asset allocation strategies is based upon achieving a desired return, as well as balancing higher return, more volatile equity securities with lower return, less volatile fixed income securities. Investment allocations are made across a range of markets, industry sectors, capitalization sizes, and in the case of fixed income securities, maturities and credit quality. The plans do not directly hold any securities of Abbott. There are no known significant concentrations of risk in the plans’ assets. Abbott’s medical and dental plans’ assets are invested in a similar mix as the pension plan assets. The actual asset allocation percentages at year end are consistent with the company’s targeted asset allocation percentages. The plans’ expected return on assets, as shown above is based on management’s expectations of long-term average rates of return to be achieved by the underlying investment portfolios. In establishing this assumption, management considers historical and expected returns for the asset classes in which the plans are invested, as well as current economic and capital market conditions. Abbott funds its domestic pension plans according to IRS funding limitations. International pension plans are funded according to similar regulations. Abbott funded $ 418 million in 2021 and $ 400 million in 2020 to defined pension plans. Abbott expects to contribute approximately $ 415 million to its pension plans in 2022. 68 Abbott Laboratories and Subsidiaries Notes to Consolidated Financial Statements (Continued) Note 13 — Post-Employment Benefits (Continued) Total benefit payments expected to be paid to participants, which includes payments funded from company assets, as well as paid from the plans, are as follows: ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Defined ​ Medical and (in millions) Benefit Plans Dental Plans 2022 ​ $ 350 ​ $ 75 2023 ​ ​ 365 ​ ​ 75 2024 ​ ​ 387 ​ ​ 77 2025 ​ ​ 408 ​ ​ 78 2026 ​ ​ 429 ​ ​ 79 2027 to 2031 ​ ​ 2,485 ​ ​ 410 ​ The Abbott Stock Retirement Plan is the principal defined contribution plan. Abbott’s contributions to this plan were $ 181 million in 2021, $ 164 million in 2020 and $ 158 million in 2019. ​ Note 14 — Taxes on Earnings from Continuing Operations Taxes on earnings from continuing operations reflect the annual effective rates, including charges for interest and penalties. Deferred income taxes reflect the tax consequences on future years of differences between the tax bases of assets and liabilities and their financial reporting amounts. In 2021, taxes on earnings from continuing operations include approximately $ 145 million in excess tax benefits associated with share-based compensation and approximately $ 55 million of net tax benefits as a result of the resolution of various tax positions related to prior years. In 2020, taxes on earnings from continuing operations include the recognition of approximately $ 170 million of tax benefits associated with the impairment of certain assets, approximately $ 140 million of net tax benefits as a result of the resolution of various tax positions related to prior years, and approximately $ 100 million in excess tax benefits associated with share-based compensation. In 2020, taxes on earnings from continuing operations also include a $ 26 million increase to the transition tax liability associated with the 2017 TCJA. The $ 26 million increase to the transition tax liability was the result of the resolution of various tax positions related to prior years. This adjustment increased the cumulative net tax expense related to the TCJA to $ 1.53 billion. The one-time transition tax is based on Abbott’s total post-1986 earnings and profits (E&P) that were previously deferred from U.S. income taxes. The tax computation also requires the determination of the amount of post-1986 E&P considered held in cash and other specified assets. As of December 31, 2021, the remaining balance of Abbott’s transition tax obligation is approximately $ 794 million, which will be paid over the next five years as allowed by the TCJA. Earnings from discontinued operations, net of tax, in 2020 reflect the recognition of $ 24 million of net tax benefits primarily as a result of the resolution of various tax positions related to prior years. In 2019, taxes on earnings from continuing operations included approximately $ 100 million in excess tax benefits associated with share-based compensation, an $ 86 million reduction of the transition tax and $ 68 million of tax expense resulting from tax legislation enacted in the fourth quarter of 2019 in India. The $ 86 million reduction to the transition tax liability was the result of the issuance of final transition tax regulations by the U.S. Department of Treasury in 2019. Undistributed foreign earnings remain indefinitely reinvested in foreign operations. Determining the amount of unrecognized deferred tax liability related to any remaining undistributed foreign earnings not subject to the transition tax and additional outside basis difference in its foreign entities is not practicable. In the U.S., Abbott’s federal income tax returns through 2016 are settled. There are numerous other income tax jurisdictions for which tax returns are not yet settled, none of which are individually significant. Reserves for interest and penalties are not significant. 69 Abbott Laboratories and Subsidiaries Notes to Consolidated Financial Statements (Continued) Note 14 — Taxes on Earnings from Continuing Operations (Continued) Earnings from continuing operations before taxes, and the related provisions for taxes on earnings from continuing operations, were as follows: ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ (in millions) 2021 2020 2019 Earnings From Continuing Operations Before Taxes: ​ ​ ​ ​ ​ ​ ​ ​ ​ Domestic ​ $ 3,264 ​ $ 1,588 ​ $ 889 Foreign ​ 4,947 ​ 3,380 ​ ​ 3,188 Total ​ $ 8,211 ​ $ 4,968 ​ $ 4,077 ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ (in millions) 2021 2020 2019 Taxes on Earnings From Continuing Operations: ​ ​ ​ ​ ​ ​ ​ Current: ​ ​ ​ ​ ​ ​ ​ ​ ​ Domestic ​ $ 859 ​ $ 39 ​ $ 291 Foreign ​ 790 ​ 566 ​ ​ 590 Total current ​ 1,649 ​ 605 ​ ​ 881 Deferred: ​ ​ ​ ​ ​ ​ ​ ​ ​ Domestic ​ ( 355 ) ​ ( 18 ) ​ ​ ( 305 ) Foreign ​ ( 154 ) ​ ( 90 ) ​ ​ ( 186 ) Total deferred ​ ( 509 ) ​ ( 108 ) ​ ​ ( 491 ) Total ​ $ 1,140 ​ $ 497 ​ $ 390 ​ Differences between the effective income tax rate and the U.S. statutory tax rate were as follows: ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ 2021 2020 2019 Statutory tax rate on earnings from continuing operations 21.0 % 21.0 % 21.0 % Impact of foreign operations ( 3.9 ) ​ ( 3.3 ) ​ ( 5.0 ) ​ Impact of TCJA and other related items ​ — ​ 0.5 ​ ( 2.1 ) ​ Foreign-derived intangible income benefit ​ ( 1.1 ) ​ ( 1.0 ) ​ ( 2.0 ) ​ Domestic impairment loss ​ ( 0.1 ) ​ ( 2.7 ) ​ — ​ Excess tax benefits related to stock compensation ​ ( 1.7 ) ​ ( 1.9 ) ​ ( 2.5 ) ​ Research tax credit ​ ( 0.6 ) ​ ( 1.0 ) ​ ( 1.2 ) ​ Resolution of certain tax positions pertaining to prior years ( 0.7 ) ​ ( 2.8 ) ​ — ​ Intercompany restructurings and integration ​ 0.1 ​ 0.5 ​ — ​ State taxes, net of federal benefit 0.4 ​ 0.5 ​ 0.8 ​ All other, net 0.5 ​ 0.2 ​ 0.6 ​ Effective tax rate on earnings from continuing operations 13.9 % 10.0 % 9.6 % ​ Impact of foreign operations is primarily derived from operations in Puerto Rico, Switzerland, Ireland, the Netherlands, Costa Rica, Singapore, and Malta. 70 Abbott Laboratories and Subsidiaries Notes to Consolidated Financial Statements (Continued) Note 14 — Taxes on Earnings from Continuing Operations (Continued) The tax effect of the differences that give rise to deferred tax assets and liabilities were as follows: ​ ​ ​ ​ ​ ​ ​ ​ (in millions) 2021 2020 Deferred tax assets: ​ ​ ​ ​ ​ ​ Compensation and employee benefits $ 618 ​ $ 1,003 Other, primarily reserves not currently deductible, and NOL’s and credit carryforwards ​ ​ 2,425 ​ ​ 2,483 Trade receivable reserves ​ ​ 206 ​ ​ 196 Inventory reserves ​ ​ 169 ​ ​ 146 Lease liabilities ​ ​ 273 ​ ​ 259 Deferred intercompany profit ​ ​ 261 ​ ​ 254 Total deferred tax assets before valuation allowance ​ ​ 3,952 ​ ​ 4,341 Valuation allowance ​ ​ ( 1,180 ) ​ ​ ( 1,160 ) Total deferred tax assets ​ ​ 2,772 ​ ​ 3,181 Deferred tax liabilities: ​ ​ ​ ​ ​ ​ Depreciation ​ ​ ( 330 ) ​ ​ ( 297 ) Right of Use lease assets ​ ​ ( 264 ) ​ ​ ( 251 ) Other, primarily the excess of book basis over tax basis of intangible assets ​ ​ ( 2,364 ) ​ ​ ( 2,876 ) Total deferred tax liabilities ​ ​ ( 2,958 ) ​ ​ ( 3,424 ) Total net deferred tax assets (liabilities) $ ( 186 ) ​ $ ( 243 ) ​ Abbott has incurred losses in a foreign jurisdiction where realization of the future economic benefit is so remote that the benefit is not reflected as a deferred tax asset. The following table summarizes the gross amounts of unrecognized tax benefits without regard to reduction in tax liabilities or additions to deferred tax assets and liabilities if such unrecognized tax benefits were settled: ​ ​ ​ ​ ​ ​ ​ ​ (in millions) 2021 2020 January 1 ​ $ 1,210 ​ $ 1,175 Increase due to current year tax positions ​ 143 ​ ​ 190 Increase due to prior year tax positions ​ 748 ​ ​ 97 Decrease due to prior year tax positions ​ ( 119 ) ​ ​ ( 144 ) Settlements ​ ( 35 ) ​ ​ ( 27 ) Lapse of statute ​ ​ ( 39 ) ​ ​ ( 81 ) December 31 ​ $ 1,908 ​ $ 1,210 ​ The 2021 increase due to prior year tax positions includes approximately $ 714 million of international tax positions for which a deferred tax asset has not been recorded because recognition of the future benefit is not expected. The total amount of unrecognized tax benefits that, if recognized, would impact the effective tax rate is approximately $ 1.12 billion. Abbott believes that it is reasonably possible that the recorded amount of gross unrecognized tax benefits may decrease within a range of $ 50 million to $ 60 million, including cash adjustments, within the next twelve months as a result of concluding various domestic and international tax matters. ​ 71 Abbott Laboratories and Subsidiaries Notes to Consolidated Financial Statements (Continued) Note 15 — Segment and Geographic Area Information Abbott’s principal business is the discovery, development, manufacture and sale of a broad line of health care products. Abbott’s products are generally sold directly to retailers, wholesalers, hospitals, health care facilities, laboratories, physicians’ offices and government agencies throughout the world. Abbott’s reportable segments are as follows: Established Pharmaceutical Products —International sales of a broad line of branded generic pharmaceutical products. Nutritional Products —Worldwide sales of a broad line of adult and pediatric nutritional products. Diagnostic Products —Worldwide sales of diagnostic systems and tests for blood banks, hospitals, commercial laboratories and alternate-care testing sites. For segment reporting purposes, the Core Laboratories Diagnostics, Rapid Diagnostics, Molecular Diagnostics and Point of Care divisions are aggregated and reported as the Diagnostic Products segment. Medical Devices — Worldwide sales of rhythm management, electrophysiology, heart failure, vascular, structural heart, neuromodulation and diabetes care products. For segment reporting purposes, the Cardiac Rhythm Management, Electrophysiology and Heart Failure, Vascular, Neuromodulation, Structural Heart and Diabetes Care divisions are aggregated and reported as the Medical Devices segment. Abbott’s underlying accounting records are maintained on a legal entity basis for government and public reporting requirements. Segment disclosures are on a performance basis consistent with internal management reporting. The cost of some corporate functions and the cost of certain employee benefits are charged to segments at predetermined rates that approximate cost. Remaining costs, if any, are not allocated to segments. In addition, intangible asset amortization is not allocated to operating segments, and intangible assets and goodwill are not included in the measure of each segment’s assets. The following segment information has been prepared in accordance with the internal accounting policies of Abbott, as described above, and are not presented in accordance with generally accepted accounting principles applied to the consolidated financial statements. ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Net Sales to External Customers (a) ​ Operating Earnings (a) (in millions) 2021 2020 2019 2021 2020 2019 Established Pharmaceutical Products ​ $ 4,718 ​ $ 4,303 ​ $ 4,486 ​ $ 889 ​ $ 794 ​ $ 904 Nutritional Products ​ 8,294 ​ 7,647 ​ 7,409 ​ 1,763 ​ 1,751 ​ 1,705 Diagnostic Products ​ 15,644 ​ 10,805 ​ 7,713 ​ 6,256 ​ 3,725 ​ 1,912 Medical Devices ​ 14,367 ​ 11,787 ​ 12,239 ​ 4,514 ​ 3,038 ​ 3,769 Total Reportable Segments ​ 43,023 ​ 34,542 ​ 31,487 ​ $ 13,422 ​ $ 9,308 ​ $ 8,290 Other ​ 52 ​ 66 ​ 57 ​ ​ ​ ​ ​ ​ ​ ​ ​ Total ​ $ 43,075 ​ $ 34,608 ​ $ 31,904 ​ ​ ​ ​ ​ ​ ​ ​ ​ (a) In 2021, the impact of foreign exchange favorably impacted net sales and unfavorably impacted operating earnings. In 2020 and 2019, the impact of foreign exchange unfavorably impacted net sales and operating earnings. ​ 72 Abbott Laboratories and Subsidiaries Notes to Consolidated Financial Statements (Continued) Note 15 — Segment and Geographic Area Information (Continued) ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ (in millions) 2021 2020 2019 Total Reportable Segment Operating Earnings ​ $ 13,422 ​ $ 9,308 ​ $ 8,290 Corporate functions and benefit plan costs ​ ​ ( 801 ) ​ ( 518 ) ​ ( 468 ) Net interest expense ​ ​ ( 490 ) ​ ( 500 ) ​ ( 576 ) Loss on extinguishment of debt ​ ​ — ​ ​ — ​ ​ ( 63 ) Share-based compensation ​ ​ ( 640 ) ​ ( 546 ) ​ ( 519 ) Amortization of intangible assets ​ ​ ( 2,047 ) ​ ( 2,132 ) ​ ( 1,936 ) Other, net (b) ​ ​ ( 1,233 ) ​ ( 644 ) ​ ( 651 ) Earnings from Continuing Operations Before Taxes ​ $ 8,211 ​ $ 4,968 ​ $ 4,077 (b) Other, net includes integration costs associated with the acquisition of St. Jude Medical and Alere and restructuring charges in 2021, 2020 and 2019. 2021 restructuring charges include Abbott’s restructuring plan for its COVID-19 test manufacturing network. Other, net for 2021 also includes costs related to certain litigation. Other, net in 2020 also includes costs related to asset impairments, partially offset by income from the settlement of litigation. Charges for restructuring actions and other cost reduction initiatives were approximately $ 375 million in 2021, $ 125 million in 2020 and $ 215 million in 2019 . ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Additions to ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Depreciation ​ Property and Equipment ​ Total Assets (in millions) 2021 2020 2019 2021 2020 2019 2021 2020 2019 Established Pharmaceuticals ​ $ 94 ​ $ 88 ​ $ 98 ​ $ 169 ​ $ 109 ​ $ 109 ​ $ 2,789 ​ $ 2,888 ​ $ 2,858 Nutritionals ​ ​ 151 ​ 143 ​ 139 ​ 174 ​ 201 ​ 141 ​ 3,425 ​ 3,478 ​ 3,274 Diagnostics ​ ​ 760 ​ 488 ​ 403 ​ 980 ​ 1,263 ​ 726 ​ 7,699 ​ 7,696 ​ 5,235 Medical Devices ​ ​ 285 ​ 281 ​ 266 ​ 348 ​ 402 ​ 532 ​ 7,261 ​ 6,893 ​ 6,640 Total Reportable Segments ​ ​ 1,290 ​ 1,000 ​ 906 ​ 1,671 ​ 1,975 ​ 1,508 ​ $ 21,174 ​ $ 20,955 ​ $ 18,007 Other ​ ​ 201 ​ 195 ​ 172 ​ 201 ​ 218 ​ 160 ​ ​ ​ ​ ​ ​ ​ ​ ​ Total ​ $ 1,491 ​ $ 1,195 ​ $ 1,078 ​ $ 1,872 ​ $ 2,193 ​ $ 1,668 ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ (in millions) 2021 2020 Total Reportable Segment Assets ​ $ 21,174 ​ $ 20,955 Cash and investments ​ 11,065 ​ 7,969 Goodwill and intangible assets ​ 35,970 ​ 38,528 All other (c) ​ 6,987 ​ 5,096 Total Assets ​ $ 75,196 ​ $ 72,548 (c) All other includes the long-term assets associated with the defined benefit plans of $ 2.27 billion in 2021 and $ 824 million in 2020. ​ ​ 73 Abbott Laboratories and Subsidiaries Notes to Consolidated Financial Statements (Continued) Note 15 — Segment and Geographic Area Information (Continued) ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Net Sales to External ​ ​ Customers (d) (in millions) 2021 2020 2019 United States ​ $ 16,642 ​ $ 13,022 ​ $ 11,398 Germany ​ ​ 2,572 ​ ​ 2,108 ​ ​ 1,751 China ​ 2,392 ​ 1,965 ​ 2,346 Japan ​ 1,695 ​ 1,386 ​ 1,435 India ​ ​ 1,561 ​ ​ 1,323 ​ ​ 1,397 Canada ​ ​ 1,385 ​ ​ 841 ​ ​ 573 Switzerland ​ ​ 1,313 ​ ​ 1,140 ​ ​ 1,068 All Other Countries ​ 15,515 ​ 12,823 ​ 11,936 Consolidated ​ $ 43,075 ​ $ 34,608 ​ $ 31,904 (d) Sales by country are based on the country that sold the product. Long-lived assets on a geographic basis primarily include property and equipment. It excludes goodwill, intangible assets, deferred tax assets, and financial instruments. At December 31, 2021 and 2020, long-lived assets totaled $ 13.1 billion and $ 11.7 billion, respectively, and in the United States such assets totaled $ 6.8 billion and $ 6.1 billion, respectively. Long-lived asset balances associated with other countries were not material on an individual country basis in either of the two years. ​ ​ ​ 74 ​ Management Report on Internal Control Over Financial Reporting The management of Abbott Laboratories is responsible for establishing and maintaining adequate internal control over financial reporting. Abbott’s internal control system was designed to provide reasonable assurance to the company’s management and board of directors regarding the preparation and fair presentation of published financial statements. All internal control systems, no matter how well designed, have inherent limitations. Therefore, even those systems determined to be effective can provide only reasonable assurance with respect to financial statement preparation and presentation. Abbott’s management assessed the effectiveness of the company’s internal control over financial reporting as of December 31, 2021. In making this assessment, it used the criteria set forth in Internal Control — Integrated Framework (2013) issued by the Committee of Sponsoring Organizations of the Treadway Commission. Based on our assessment, we believe that, as of December 31, 2021, the company’s internal control over financial reporting was effective based on those criteria. Abbott’s independent registered public accounting firm has issued an audit report on their assessment of the effectiveness of the company’s internal control over financial reporting. This report appears on page 78. Robert B. Ford Chairman of the Board and Chief Executive Officer Robert E. Funck, Jr. Executive Vice President, Finance and Chief Financial Officer Philip P. Boudreau Vice President, Finance and Controller February 18, 2022 ​ 75 ​ Report of Independent Registered Public Accounting Firm To the Shareholders and Board of Directors of Abbott Laboratories Opinion on the Financial Statements We have audited the accompanying consolidated balance sheets of Abbott Laboratories and subsidiaries (the Company) as of December 31, 2021 and 2020, the related consolidated statements of earnings, comprehensive income, shareholders’ investment and cash flows for each of the three years in the period ended December 31, 2021, and the related notes (collectively referred to as the “consolidated financial statements”). In our opinion, the consolidated financial statements present fairly, in all material respects, the financial position of the Company as of December 31, 2021 and 2020, and the results of its operations and its cash flows for each of the three years in the period ended December 31, 2021, in conformity with U.S. generally accepted accounting principles. We also have audited, in accordance with the standards of the Public Company Accounting Oversight Board (United States) (PCAOB), the Company’s internal control over financial reporting as of December 31, 2021, based on criteria established in Internal Control — Integrated Framework issued by the Committee of Sponsoring Organizations of the Treadway Commission (2013 framework), and our report dated February 18, 2022 expressed an unqualified opinion thereon. Basis for Opinion These financial statements are the responsibility of the Company’s management. Our responsibility is to express an opinion on the Company’s financial statements based on our audits. We are a public accounting firm registered with the PCAOB and are required to be independent with respect to the Company in accordance with the U.S. federal securities laws and the applicable rules and regulations of the Securities and Exchange Commission and the PCAOB. We conducted our audits in accordance with the standards of the PCAOB. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement, whether due to error or fraud. Our audits included performing procedures to assess the risks of material misstatement of the financial statements, whether due to error or fraud, and performing procedures that respond to those risks. Such procedures included examining, on a test basis, evidence regarding the amounts and disclosures in the financial statements. Our audits also included evaluating the accounting principles used and significant estimates made by management, as well as evaluating the overall presentation of the financial statements. We believe that our audits provide a reasonable basis for our opinion. 76 ​ Critical Audit Matter The critical audit matter communicated below is a matter arising from the current period audit of the financial statements that was communicated or required to be communicated to the audit committee and that: (1) relates to accounts or disclosures that are material to the financial statements and (2) involved our especially challenging, subjective, or complex judgments. The communication of the critical audit matter does not alter in any way our opinion on the consolidated financial statements, taken as a whole, and we are not, by communicating the critical audit matter below, providing a separate opinion on the critical audit matter or on the accounts or disclosures to which it relates. ​ ​ Income taxes – Unrecognized tax benefits Description of the Matter ​ As described in Note 14 to the consolidated financial statements, unrecognized tax benefits were approximately $1.9 billion at December 31, 2021. Unrecognized tax benefits are assessed by management quarterly for identification and measurement, or more frequently if there are any indicators suggesting change in unrecognized tax benefits. Assessing tax positions involves judgement including interpreting tax laws of multiple jurisdictions and assumptions relevant to the measurement of an unrecognized tax benefit, including the estimated amount of tax liability that may be incurred should the tax position not be sustained upon inspection by a tax authority. These judgements and assumptions can significantly affect unrecognized tax benefits. How We Addressed the Matter in our Audit ​ We obtained an understanding, evaluated the design and tested the operating effectiveness of controls over the Company’s identification and measurement of unrecognized tax benefits, as well as its process for the assessment of events that may indicate a change in unrecognized tax benefits is warranted. For example, we tested controls over management’s review of the completeness of identified unrecognized tax benefits, as well as controls over management’s review of significant assumptions used within the measurement of unrecognized tax benefits. With the support of our tax professionals, among other audit procedures performed, we evaluated the reasonableness of management’s judgement with respect to the interpretation of tax laws of multiple jurisdictions by reading and evaluating management’s documentation, including relevant accounting policies, and by considering how tax law, including statutes, regulations and case law, affected management’s judgments. We tested the completeness of management’s assessment of the identification of unrecognized tax benefits and possible outcomes related to it including evaluation of technical merits of the unrecognized tax benefits. We also tested, with the support of our valuation specialists, appropriateness and consistency of management’s methods and significant assumptions associated with the measurement of unrecognized tax benefits, including assessing the estimated amount of tax liability that may be incurred should the tax position not be sustained upon inspection by a tax authority. ​ /s/ Ernst & Young LLP We have served as the Company’s auditor since 2013. Chicago , Illinois February 18, 2022 ​ 77 ​ Report of Independent Registered Public Accounting Firm To the Shareholders and Board of Directors of Abbott Laboratories Opinion on Internal Control over Financial Reporting We have audited Abbott Laboratories and subsidiaries’ internal control over financial reporting as of December 31, 2021, based on criteria established in Internal Control-Integrated Framework issued by the Committee of Sponsoring Organizations of the Treadway Commission (2013 framework) (the COSO criteria). In our opinion, Abbott Laboratories and subsidiaries (the Company) maintained, in all material respects, effective internal control over financial reporting as of December 31, 2021, based on the COSO criteria. We also have audited, in accordance with the standards of the Public Company Accounting Oversight Board (United States) (PCAOB), the consolidated balance sheets of the Company as of December 31, 2021 and 2020, the related consolidated statements of earnings, comprehensive income, shareholders' investment and cash flows for each of the three years in the period ended December 31, 2021, and the related notes and our report dated February 18, 2022 expressed an unqualified opinion thereon. Basis for Opinion The Company’s management is responsible for maintaining effective internal control over financial reporting and for its assessment of the effectiveness of internal control over financial reporting included in the accompanying Management Report on Internal Control Over Financial Reporting. Our responsibility is to express an opinion on the Company’s internal control over financial reporting based on our audit. We are a public accounting firm registered with the PCAOB and are required to be independent with respect to the Company in accordance with the U.S. federal securities laws and the applicable rules and regulations of the Securities and Exchange Commission and the PCAOB. We conducted our audit in accordance with the standards of the PCAOB. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether effective internal control over financial reporting was maintained in all material respects. Our audit included obtaining an understanding of internal control over financial reporting, assessing the risk that a material weakness exists, testing and evaluating the design and operating effectiveness of internal control based on the assessed risk, and performing such other procedures as we considered necessary in the circumstances. We believe that our audit provides a reasonable basis for our opinion. Definition and Limitations of Internal Control Over Financial Reporting A company’s internal control over financial reporting is a process designed to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles. A company’s internal control over financial reporting includes those policies and procedures that (1) pertain to the maintenance of records that, in reasonable detail, accurately and fairly reflect the transactions and dispositions of the assets of the company; (2) provide reasonable assurance that transactions are recorded as necessary to permit preparation of financial statements in accordance with generally accepted accounting principles, and that receipts and expenditures of the company are being made only in accordance with authorizations of management and directors of the company; and (3) provide reasonable assurance regarding prevention or timely detection of unauthorized acquisition, use, or disposition of the company’s assets that could have a material effect on the financial statements. Because of its inherent limitations, internal control over financial reporting may not prevent or detect misstatements. Also, projections of any evaluation of effectiveness to future periods are subject to the risk that controls may become inadequate because of changes in conditions, or that the degree of compliance with the policies or procedures may deteriorate. /s/ Ernst & Young LLP Chicago, Illinois February 18, 2022 ​ 78 ​ ITEM 9. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND FINANCIAL DISCLOSURE None. ​