What changed in this filing

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Item 8. Financial Statements and Supplementary Data

2023-02-17 compared with 2022-02-18 · 268 added, 201 removed, 938 unchanged (33% of the section changed)

13 unchanged sentences

Year Ended December 31

2022 2021 2020

Net Sales $ 43,653 $ 43,075 $ 34,608

Cost of products sold, excluding amortization of intangible assets 19,142 18,537 15,003

7 unchanged sentences

Net foreign exchange (gain) loss 2 1 ( 8 )

Debt extinguishment costs

Other (income) expense, net ( 321 ) ( 277 ) ( 103 )

3 unchanged sentences

Net Earnings from Discontinued Operations, net of taxes — — 24

Net Earnings $ 6,933 $ 7,071 $ 4,495

Basic Earnings Per Common Share --

1 unchanged sentence

Discontinued Operations — — 0.01

Net Earnings $ 3.94 $ 3.97 $ 2.52

Diluted Earnings Per Common Share --

1 unchanged sentence

Discontinued Operations — — 0.01

Net Earnings $ 3.91 $ 3.94 $ 2.50

Average Number of Common Shares Outstanding Used for Basic Earnings Per Common Share 1,753 1,775 1,773

7 unchanged sentences

Year Ended December 31

2022 2021 2020

Net Earnings $ 6,933 $ 7,071 $ 4,495

Foreign currency translation gain (loss) adjustments ( 894 ) ( 980 ) 65

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 $ 330 in 2022, $ 340 in 2021 and $( 79 ) in 2020

1,177 1,201 ( 331 )

Net gains (losses) on derivative instruments designated as cash flow hedges, net of taxes of $ 11 in 2022, $ 63 in 2021 and $( 87 ) in 2020

40 351 ( 215 )

Other Comprehensive Income (Loss) 323 572 ( 481 )

10 unchanged sentences

Year Ended December 31

2022 2021 2020

Cash Flow From (Used in) Operating Activities:

Net earnings $ 6,933 $ 7,071 $ 4,495

Adjustments to reconcile earnings to net cash from operating activities —

Depreciation 1,254 1,491 1,195

Amortization of intangible assets 2,013 2,047 2,132

1 unchanged sentence

Investing and financing losses, net 215 55 425

Loss on extinguishment of debt

Trade receivables ( 68 ) ( 383 ) ( 924 )

Inventories ( 1,413 ) ( 456 ) ( 493 )

Prepaid expenses and other assets ( 75 ) ( 312 ) ( 627 )

Trade accounts payable and other liabilities 420 1,288 1,766

Income taxes ( 383 ) ( 908 ) ( 614 )

Net Cash From Operating Activities 9,581 10,533 7,901

5 unchanged sentences

Proceeds from sales of investment securities 152 77 10

Other 22 26 19

Net Cash From (Used in) Investing Activities ( 1,740 ) ( 2,008 ) ( 2,215 )

6 unchanged sentences

Dividends paid ( 3,309 ) ( 3,202 ) ( 2,560 )

Other — — ( 11 )

Net Cash From (Used in) Financing Activities ( 7,636 ) ( 5,494 ) ( 2,779 )

17 unchanged sentences

Work in process 680 694

Materials 1,688 1,382

Total inventories 6,173 5,157

1 unchanged sentence

Total current assets 25,224 24,239

Investments 766 816

Property and equipment, at cost:

Buildings 4,053 4,007

Equipment 14,164 13,528

Construction in progress 1,484 1,304

20,212 19,364

accumulated depreciation and amortization 11,050 10,405

1 unchanged sentence

Intangible assets, net of amortization 10,454 12,739

Goodwill 22,799 23,231

Deferred income taxes and other assets 6,033 5,212

$ 74,438 $ 75,196

Abbott Laboratories and Subsidiaries

3 unchanged sentences

Current liabilities:

Short-term borrowings

Trade accounts payable $ 4,607 $ 4,408

14 unchanged sentences

1,985,273,421

24,709 24,470

Common shares held in treasury, at cost — Shares:

248,724,257 ;

( 15,229 ) ( 11,822 )

Earnings employed in the business 35,257 31,528

3 unchanged sentences

Total Shareholders’ Investment 36,905 36,024

$ 74,438 $ 75,196

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

3 unchanged sentences

Year Ended December 31

2022 2021 2020

Common Shares:

3 unchanged sentences

1,976,855,085

$ 24,470 $ 24,145 $ 23,853

Issued under incentive stock programs

4 unchanged sentences

1,981,156,896

$ 24,709 $ 24,470 $ 24,145

Common Shares Held in Treasury:

2 unchanged sentences

209,926,622 ;

$ ( 11,822 ) $ ( 10,042 ) $ ( 10,147 )

Issued under incentive stock programs

1 unchanged sentence

248,724,257 ;

221,191,228 ;

$ ( 15,229 ) $ ( 11,822 ) $ ( 10,042 )

Earnings Employed in the Business:

1 unchanged sentence

Impact of adoption of new accounting standards — — ( 5 )

Net earnings 6,933 7,071 4,495

Cash dividends declared on common shares (per share — 2022:

( 3,365 ) ( 3,235 ) ( 2,722 )

Effect of common and treasury share transactions 161 65 12

End of Year $ 35,257 $ 31,528 $ 27,627

Accumulated Other Comprehensive Income (Loss):

1 unchanged sentence

Other comprehensive income (loss) 323 572 ( 481 )

End of Year $ ( 8,051 ) $ ( 8,374 ) $ ( 8,946 )

Noncontrolling Interests in Subsidiaries:

1 unchanged sentence

Noncontrolling Interests’ share of income, business combinations, net of distributions and share repurchases ( 3 ) 3 6

End of Year $ 219 $ 222 $ 219

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

71 unchanged sentences

The following table shows estimated useful lives of property and equipment:

Classification

Estimated Useful Lives

10 to 50 years

2 to 20 years

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.

1 unchanged sentence

Product liability losses are self-insured.

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.

1 unchanged sentence

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.

Abbott Laboratories and Subsidiaries

Notes to Consolidated Financial Statements (Continued)

Note 1 — Summary of Significant Accounting Policies (Continued)

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.

10 unchanged sentences

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 2020, the FASB issued ASU 2019-12, Income Taxes (Topic 740):

2 unchanged sentences

The new standard did not have an impact on its consolidated financial statements.

Recent Accounting Standards Not Yet Adopted

In September 2022, the FASB issued ASU 2022-04, Disclosure of Supplier Finance Program Obligations , which requires an entity to report information about its supplier finance program.

The standard becomes effective for Abbott in the first quarter of 2023.

Abbott does not expect adoption of this new standard to have a material impact on its consolidated financial statements.

Note 3 — Revenue

10 unchanged sentences

The following tables provide detail by sales category:

(in millions)

2022 2021 2020

(in millions) U.S.

Int’l Total U.S.

Established Pharmaceutical Products —

Key Emerging Markets $ — $ 3,728 $ 3,728 $ — $ 3,539 $ 3,539 $ — $ 3,209 $ 3,209

Other — 1,184 1,184 — 1,179 1,179 — 1,094 1,094

Total — 4,912 4,912 — 4,718 4,718 — 4,303 4,303

Nutritionals —

1 unchanged sentence

Adult Nutritionals 1,357 2,621 3,978 1,364 2,632 3,996 1,292 2,228 3,520

Total 2,919 4,540 7,459 3,556 4,738 8,294 3,279 4,368 7,647

Diagnostics —

Core Laboratory 1,137 3,751 4,888 1,145 3,983 5,128 1,166 3,309 4,475

Molecular 370 625 995 566 861 1,427 621 817 1,438

Point of Care 372 153 525 384 152 536 369 147 516

Rapid Diagnostics 6,767 3,409 10,176 5,034 3,519 8,553 2,618 1,758 4,376

Total 8,646 7,938 16,584 7,129 8,515 15,644 4,774 6,031 10,805

Medical Devices —

2 unchanged sentences

Heart Failure 694 226 920 654 235 889 547 193 740

Vascular 864 1,619 2,483 915 1,739 2,654 853 1,486 2,339

Structural Heart 818 894 1,712 730 880 1,610 540 707 1,247

1 unchanged sentence

Diabetes Care 1,633 3,123 4,756 1,212 3,116 4,328 864 2,403 3,267

Total 6,566 8,121 14,687 5,923 8,444 14,367 4,931 6,856 11,787

Other 11 — 11 34 18 52 38 28 66

Total $ 18,142 $ 25,511 $ 43,653 $ 16,642 $ 26,433 $ 43,075 $ 13,022 $ 21,586 $ 34,608

Products sold by the Diagnostics segment include various types of diagnostic tests to detect the COVID-19 coronavirus.

Abbott’s COVID-19 testing-related sales totaled approximately $ 8.4 billion in 2022, $ 7.7 billion in 2021, and $ 3.9 billion in 2020.

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.

3 unchanged sentences

The term between invoicing and the payment due date is not significant.

Abbott Laboratories and Subsidiaries

Notes to Consolidated Financial Statements (Continued)

Note 3 — Revenue (Continued)

Management exercises judgment in estimating variable consideration.

3 unchanged sentences

Abbott provides rebates to government agencies, wholesalers, group purchasing organizations and other private entities.

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.

25 unchanged sentences

The amounts as of December 31, 2022 and 2021 were not significant.

Abbott Laboratories and Subsidiaries

Notes to Consolidated Financial Statements (Continued)

Note 3 — Revenue (Continued)

Other Contract Assets and Liabilities

2 unchanged sentences

Contract assets at the beginning and end of the period, as well as the changes in the balance, were not significant.

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.

11 unchanged sentences

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.

Other (income) expense, net , for 2022, 2021 and 2020 include s approximately $ 406 million, $ 270 million and $ 205 million of income, respectively, related to the non-service cost components of the net periodic benefit costs ass ociated with the pension and post-retirement medical plans.

The following summarizes the activity related to the allowance for doubtful accounts:

2 unchanged sentences

Balance at December 31, 2020 $ 288

Impact of adopting ASU 2016-13

Provisions/charges to income 51

7 unchanged sentences

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:

(in millions)

Long-term Investments:

Equity securities

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.

Abbott Laboratories and Subsidiaries

1 unchanged sentence

Note 4 — Supplemental Financial Information (Continued)

The detail of various balance sheet components is as follows:

(in millions) December 31,

2022 December 31,

Long-term Investments:

Equity securities $ 558 $ 748

Total $ 766 $ 816

The decrease in Abbott’s long-term investments as of December 31, 2022 versus the balance as of December 31, 2021 primarily relates to a decrease in the fair value of investments held in a rabbi trust, the impact of asset impairments and a distribution from an investment held in a joint venture, partially offset by increased investment in long-term time deposits.

Abbott’s equity securities as of December 31, 2022 and December 31, 2021, include $ 298 million and $ 391 million, respectively, of investments in mutual funds that are held in a rabbi trust acquired as part of the St.

2 unchanged sentences

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.

Abbott also holds certain investments as of December 31, 2022 with a carrying value of $ 169 million that are accounted for under the equity method of accounting and other equity investments with a carrying value of $ 83 million that do not have a readily determinable fair va lue.

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.

Walk Vascular’s peripheral thrombectomy system has been 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.

(in millions)

(in millions) December 31,

2022 December 31,

Other Accrued Liabilities:

1 unchanged sentence

Accrued other rebates (a) 1,087 1,082

All other 4,120 3,735

Total $ 5,845 $ 5,181

________________________________________________________

(a) Accrued wholesaler chargeback rebates of $ 234 million and $ 211 million at December 31, 2022 and 2021, 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.

(in millions)

(in millions) December 31,

2022 December 31,

Post-employment Obligations and Other Long-term Liabilities:

3 unchanged sentences

All other (b) 3,804 3,685

Total $ 7,522 $ 8,771

________________________________________________________

(b) Includes approximately $ 850 million and $ 680 million of net unrecognized tax benefits in 2022 and 2021, respectively.

3 unchanged sentences

The components of the changes in accumulated other comprehensive income (loss) from continuing operations, net of income taxes, are as follows:

(in millions) Cumulative

Adjustments Net Actuarial Gains (Losses) and Prior Service

Credits Cumulative

Gains (Losses)

Net Actuarial

on Derivative

Prior Service

Designated as

(in millions)

Balance at December 31, 2020 $ ( 4,859 ) $ ( 3,871 ) $ ( 216 ) $ ( 8,946 )

7 unchanged sentences

Balance at December 31, 2022 $ ( 6,733 ) $ ( 1,493 ) $ 175 $ ( 8,051 )

________________________________________________________

(a) (Income) loss amounts reclassified from accumulated other comprehensive income related to cash flow hedges are recorded as Cost of products sold.

2 unchanged sentences

The total amount of goodwill reported was $ 22.8 billion at December 31, 2022 and $ 23.2 billion at December 31, 2021.

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.

Foreign currency translation adjustments decreased goodwill by $ 431 million in 2022 and b y $ 532 million in 2021.

The amount of goodwill related to reportable segments at December 31, 2022 was $ 2.7 billion for the Estab lished Pharmaceutical Products segment, $ 286 million for the Nutritional Products segment, $ 3.6 billion for the Diagnostic Products segment, and $ 16.2 billion for the Medical Devices segment.

There were no reductions of goodwill relating to impairments in 2022 and 2021.

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.

Indefinite-lived intangible assets, which relate to IPR&D acquired in a business combination, were approximately $ 807 million and $ 919 million at December 31, 2022 and 2021, respectively.

In 2022, $ 111 million of impairment charges were recorded on the Research and development line of the Consolidated Statement of Earnings related to certain IPR&D intangible assets associated with the Medical Devices business segment.

The gross amount of amortizable intangible assets, primarily product rights and technology, was $ 27.2 billion and $ 27.7 billion as of December 31, 2022 and 2021, respectively, an d accumulated amortization was $ 17.6 billion and $ 15.9 billion as of December 31, 2022 and 2021, respectively.

F oreign currency translation adjustments decreased intangible assets by $ 150 million in 2022 and by $ 197 million in 2021.

The estimated annual amortization expense for intangible assets recorded at December 31, 2022 is approximately $ 2.0 billion in 2023, $ 1.9 billion in 2024, $ 1.7 billion in 2025, $ 1.5 billion in 2026 and $ 1.2 billion in 2027.

3 unchanged sentences

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.

In 2022, Abbott management approved plans to streamline operations in order to reduce costs and improve efficiencies in its medical devices, nutritional, diagnostic, and established pharmaceutical businesses.

Abbott recorded employee related severance and other charges of approximately $ 234 million of which approximately $ 59 million was recorded in Cost of products sold, approximately $ 36 million was recorded in Research and development and approximately $ 139 million was recorded in Selling, general and administrative expenses.

In addition, Abbott recognized inventory related charges of approximately $ 23 million and fixed assets impairment charges of approximately $ 4 million related to these restructuring plans.

The following summarizes the activity related to these restructuring actions and the status of the related accruals as of December 31, 2022:

(in millions)

Restructuring charges in 2022 $ 234

Payments and other adjustments ( 6 )

Accrued balance at December 31, 2022 $ 228

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 of 2021 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.

6 unchanged sentences

The following summarizes the activity related to this restructuring action and the status of the related accruals as of December 31, 2022:

(in millions)

(in millions) Inventory-

Charges Fixed Asset

Write-Downs Other Exit

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.

Payments and other adjustments — — ( 10 ) ( 10 )

Accrued balance at December 31, 2022 $ — $ — $ 13 $ 13

Abbott Laboratories and Subsidiaries

1 unchanged sentence

Note 7 — Restructuring Plans (Continued)

The following summarizes the activity for these restructurings:

In 2021, Abbott management approved plans to streamline operations in order to reduce costs and improve efficiencies in Abbott's diagnostic, established pharmaceutical, nutritional, and medical device businesses.

Abbott recorded employee related severance and other charges of approximately $ 68 million of which 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 expenses.

The following summarizes the activity for these restructuring actions and the status of the related accruals as of December 31, 2022:

(in millions)

Restructuring charges in 2021

Restructuring charges recorded in 2021 $ 68

Payments and other adjustments ( 7 )

Accrued balance at December 31, 2021 61

Payments and other adjustments ( 46 )

Accrued balance at December 31, 2022 $ 15

Note 8 — Incentive Stock Program

14 unchanged sentences

The following table summarizes stock option activity for the year ended December 31, 2022 and the outstanding stock options as of December 31, 2022.

(intrinsic values in millions)

Exercise Price

(intrinsic values in millions) Options Weighted

Exercise Price Weighted

Life (Years) Aggregate

Intrinsic Value

Outstanding at December 31, 2021 27,199,851 $ 65.16 5.7 $ 2,056

( 4,495,454 )

Granted 2,634,647 117.54

Exercised ( 1,520,074 ) 53.06

Lapsed ( 26,378 ) 110.72

Outstanding at December 31, 2022 28,288,046 $ 70.64 5.3 $ 1,167

4 unchanged sentences

The following table summarizes restricted stock awards and units activity for the year ended December 31, 2022.

Share Units Weighted

Outstanding at December 31, 2021 10,558,525 $ 102.40

( 6,507,761 )

Granted 6,001,920 117.34

Vested ( 5,456,368 ) 94.20

Forfeited ( 703,749 ) 113.18

Outstanding at December 31, 2022 10,400,328 $ 114.59

5 unchanged sentences

The table below summarizes the fair value of an option granted in 2022, 2021 and 2020 and the assumptions included in the Black-Scholes option-pricing model used to estimate the fair value:

2022 2021 2020

Fair value $ 25.26 $ 24.17 $ 14.39

Risk-free interest rate 1.9 % 0.8 % 1.3 %

Average life of options (years) 6.0 6.0 6.0

Volatility 23.8 % 23.8 % 19.4 %

Dividend yield 1.6 % 1.5 % 1.6 %

32 unchanged sentences

Total long-term portion $ 14,522 $ 17,296

On March 15, 2022, Abbott repaid the $ 750 million outstanding principal amount of its 2.55 % Notes upon maturity.

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.

3 unchanged sentences

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.

Any borrowings under the Revolving Credit Agreement will mature and be payable on November 12, 2025, and 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 September 2019, the board of directors approved a bond redemption authorization for the early redemption of up to $ 5 billion of outstanding long-term debt.

Of the $ 5 billion authorization, $ 2.15 billion remains available as of December 31, 2022.

Principal payments required on long-term debt outstanding at December 31, 2022 are $ 2.3 billion in 2023, $ 1.1 billion in 2024, $ 1.5 billion in 2025, $ 2.9 billion in 2026, $ 0.6 billion in 2027 and $ 8.7 billion in 2028 and thereafter.

Abbott Laboratories and Subsidiaries

1 unchanged sentence

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.

At December 31, 2022, Abbott’s long-term debt rating was AA- by Standard & Poor’s Corporation and A1 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

10 unchanged sentences

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.

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:

5 unchanged sentences

Weighted average discount rate at December 31 2.9 % 2.7 % 3.2 %

________________________________________________________

(a) Includes short-term lease expense and variable lease costs, which were immaterial in the years ended December 31, 2022, 2021 and 2020.

1 unchanged sentence

(in millions)

Thereafter 422

Total future minimum lease payments – undiscounted 1,341

1 unchanged sentence

Present value of lease liabilities $ 1,173

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

Deferred income taxes and other assets

Operating Lease Liability:

Other accrued liabilities

Post-employment obligations and other long-term liabilities

Total Liability

Abbott Laboratories and Subsidiaries

1 unchanged sentence

Note 10 — Leases (Continued)

The following table summarizes the amounts and location of operating lease ROU assets and lease liabilities:

(in millions) December 31, 2022 December 31, 2021 Balance Sheet Caption

Operating Lease - ROU Asset $ 1,116 $ 1,153 Deferred income taxes and other assets

Operating Lease Liability:

Current $ 230 $ 245 Other accrued liabilities

Non-current 943 956 Post-employment obligations and other long-term liabilities

Total Liability $ 1,173 $ 1,201

Leases where Abbott is the Lessor

17 unchanged sentences

At December 31, 2022 and 2021, Abbott held gross notional amounts of $ 12.0 billion and $ 12.2 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.

Abbott Laboratories and Subsidiaries

Notes to Consolidated Financial Statements (Continued)

Note 11 — Financial Instruments, Derivatives and Fair Value Measures (Continued)

Abbott has designated a yen-denominated, 5 -year term loan of approximately $ 446 million and $ 521 million as of December 31, 2022 and December 31, 2021, respectively, as a hedge of the net investment in certain foreign subsidiaries.

The change in the value of the debt, which is due to changes in foreign exchange rates, is recorded in Accumulated other comprehensive income (loss), net of tax.

Abbott is a party to interest rate hedge contracts totaling approximately $ 2.9 billion at December 31, 2022 and 2021, to manage its exposure to changes in the fair value of fixed-rate debt.

2 unchanged sentences

Abbott records the contracts at fair value and adjusts the carrying amount of the fixed-rate debt by an offsetting amount.

Abbott Laboratories and Subsidiaries

Notes to Consolidated Financial Statements (Continued)

Note 11 — Financial Instruments, Derivatives and Fair Value Measures (Continued)

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)

Balance Sheet Caption

Fair Value — Assets Fair Value — Liabilities

(in millions) 2022 2021 Balance Sheet Caption 2022 2021 Balance Sheet Caption

Interest rate swaps designated as fair value hedges:

Deferred income taxes and other assets

Post-employment obligations and other long-term liabilities

Non-current $ — $ 87 Deferred income taxes and other assets $ 136 $ — Post-employment obligations and other long-term liabilities

Current — — 20 — Other accrued liabilities

Foreign currency forward exchange contracts:

Hedging instruments

Other prepaid expenses and receivables

Other accrued liabilities

Others not designated as hedges

Other prepaid expenses and receivables

Other accrued liabilities

Debt designated as a hedge of net investment in a foreign subsidiary

Long-term debt

Hedging instruments 304 222 Other prepaid expenses and receivables 96 65 Other accrued liabilities

Others not designated as hedges 108 70 Other prepaid expenses and receivables 130 32 Other accrued liabilities

Debt designated as a hedge of net investment in a foreign subsidiary — — n/a 446 521 Long-term debt

$ 412 $ 379 $ 828 $ 618

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)

(in millions)

Income Statement Caption

Foreign currency forward exchange contracts designated as cash flow hedges

Cost of products sold

Debt designated as a hedge of net investment in a foreign subsidiary

Interest rate swaps designated as fair value hedges

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.

Gain (loss) Recognized in Other Comprehensive Income (loss) Income (expense) and Gain (loss) Reclassified into Income

(in millions) 2022 2021 2020 2022 2021 2020 Income Statement Caption

Foreign currency forward exchange contracts designated as cash flow hedges $ 281 $ 164 $ ( 207 ) $ 234 $ ( 252 ) $ 102 Cost of products sold

Debt designated as a hedge of net investment in a foreign subsidiary 75 56 ( 31 ) n/a n/a n/a n/a

Interest rate swaps designated as fair value hedges n/a n/a n/a ( 243 ) ( 123 ) 162 Interest expense

A gain of $ 70 million, a gain of $ 19 million and a loss of $ 171 million were recognized in 2022, 2021 and 2020, 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.

1 unchanged sentence

The hedged debt is marked to market, offsetting the effect of marking the interest rate swaps to market.

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.

2 unchanged sentences

Abbott does not expect any losses from nonperformance by these counterparties.

(in millions)

Abbott Laboratories and Subsidiaries

Notes to Consolidated Financial Statements (Continued)

Note 11 — Financial Instruments, Derivatives and Fair Value Measures (Continued)

(in millions) Carrying Value Fair Value Carrying Value Fair Value

Long-term Investment Securities:

Equity securities $ 558 $ 558 $ 748 $ 748

Other 208 208 68 68

Total long-term debt ( 16,773 ) ( 16,313 ) ( 18,050 ) ( 21,152 )

8 unchanged sentences

Basis of Fair Value Measurement

(in millions)

(in millions) Outstanding Balances Quoted Prices in Active Markets Significant Other Observable Inputs Significant Unobservable Inputs

December 31, 2022:

Equity securities $ 307 $ 307 $ — $ —

Interest rate swap derivative financial instruments

Foreign currency forward exchange contracts 412 — 412 —

Total Assets $ 719 $ 307 $ 412 $ —

Fair value of hedged long-term debt $ 2,691 $ — $ 2,691 $ —

Interest rate swap derivative financial instruments 156 — 156 —

Foreign currency forward exchange contracts 226 — 226 —

5 unchanged sentences

Foreign currency forward exchange contracts 292 — 292 —

Total Assets $ 781 $ 402 $ 379 $ —

Fair value of hedged long-term debt $ 2,926 $ — $ 2,926 $ —

8 unchanged sentences

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 fair value of the contingent consideration was determined based on independent appraisals at the time of acquisition, adjusted for the time value of money and other changes in fair value.

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.

Excluding such contingent consideration, the maximum amount that may be due under the other contingent consideration arrangements was estimated at December 31, 2022 to be approxima tely $ 235 million, w hich is dependent upon attaining certain sales thresholds or upon the occurrence of certain events, such as regulatory approvals.

Note 12 — Litigation and Environmental Matters

12 unchanged sentences

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

Defined Benefit Plans Medical and Dental

(in millions) 2022 2021 2022 2021

20 unchanged sentences

Prior service cost (credits) ( 6 ) ( 5 ) ( 33 ) ( 39 )

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.

Total $ 1,954 $ 3,057 $ ( 6 ) $ 373

The $ 3.6 billion and $ 463 million of defined benefit plan gains in 2022 and 2021, respectively, that decreased the projected benefit obligations primarily reflect the year-over-year increases in the discount rates used to measure the obligations.

The $ 437 million of medical and dental plan gains in 2022 that decreased the projected benefit obligations primarily reflect the year-over-year increase in the discount rates used to measure the obligations.

The projected benefit obligations for non-U.S.

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The components of the net periodic benefit cost were as follows:

Defined Benefit Plans

Defined Benefit Plans Medical and

(in millions) 2022 2021 2020 2022 2021 2020

7 unchanged sentences

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.

net actuarial gains of $ 858 million for defined benefit plans and a gain of $ 374 million for medical and dental plans in 2022;

net actuarial gains of $ 1.141 billion for defined benefit plans and a gain o f $ 45 million for medical and dental plans in 2021 , and net actuarial losses of $ 611 million for defined benefit plans and a gain of $ 23 million for medical and dental plans in 2020.

The net actuarial gains in 2022 are primarily due to the year-over-year increase in discount rates partially offset by the impact of 2022 actual asset returns being less than expected returns.

The net actuarial gains in 2021 are primarily due to the favorable impact of actual 2021 asset returns in excess of expected returns and the year-over-year increase in discount rates.

1 unchanged sentence

The weighted average assumptions used to determine benefit obligations for defined benefit plans and medical and dental plans are as follows:

2022 2021 2020

Discount rate 5.0 % 2.7 % 2.3 %

1 unchanged sentence

The weighted average assumptions used to determine the net cost for defined benefit plans and medical and dental plans are as follows:

2022 2021 2020

Discount rate 2.7 % 2.3 % 3.0 %

2 unchanged sentences

The assumed health care cost trend rates for medical and dental plans at December 31 were as follows:

2022 2021 2020

Health care cost trend rate assumed for the next year 7 % 7 % 8 %

8 unchanged sentences

Basis of Fair Value Measurement

(in millions)

(in millions) Outstanding

December 31, 2022

6 unchanged sentences

government securities (f) 419 16 — — 403

Other (g) 775 297 75 — 403

Absolute return funds (h) 1,678 304 — — 1,374

Cash and Cash Equivalents 154 20 — — 134

Other (i) 1,009 7 — — 1,002

$ 11,675 $ 3,750 $ 1,306 $ 1 $ 6,618

December 31, 2021

6 unchanged sentences

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

________________________________________________________

(a) A mix of index funds and actively managed equity accounts that are benchmarked to various large cap indices.

2 unchanged sentences

equity indices in both developed and emerging markets.

Abbott Laboratories and Subsidiaries

Notes to Consolidated Financial Statements (Continued)

Note 13 — Post-Employment Benefits (Continued)

(d) A mix of index funds and actively managed accounts that are benchmarked to various U.S.

2 unchanged sentences

(f) Primarily United Kingdom, Canada, Japan and Eurozone government bonds.

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.

(g) Primarily asset backed securities, bank loans, interest rate swap positions and diversified fixed income vehicles benchmarked to LIBOR, SOFR or EURIBOR.

(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.

8 unchanged sentences

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.

Abbott did no t have any unfunded commitments related to fixed income funds at December 31, 2022 and 2021.

Fixed income securities in a common collective trust or a registered investment company are valued at the NAV provided by the fund administrator.

3 unchanged sentences

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.

Abbott did no t have any unfunded commitments related to absolute return funds at December 31, 2022 and 2021.

Investments in these funds may be generally redeemed monthly or quarterly with required notice periods ranging from 45 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.

For approximately $ 270 million and $ 290 million of the absolute return funds, redemptions are subject to a 33 percent gate and a 25 percent gate, respectively, and $ 70 million is subject to a lock u ntil 2025.

Investments in the private funds cannot be redeemed but the funds will make distributions through liquidation.

17 unchanged sentences

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:

(in millions)

Benefit Plans

(in millions) Defined

Benefit Plans Medical and

2023 $ 368 $ 67

2028 to 2032 2,593 409

The Abbott Stock Retirement Plan is the principal defined contribution plan.

3 unchanged sentences

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 2022, taxes on earnings from continuing operations include approximately $ 43 million in excess tax benefits associated with share-based compensation and approximately $ 20 million of net tax expense as a result of the resolution of various tax positions related to prior years.

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.

6 unchanged sentences

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.

As of December 31, 2022, the remaining balance of Abbott’s transition tax obligation is approximately $ 739 million, which will be paid over the next 4 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.

9 unchanged sentences

Earnings From Continuing Operations Before Taxes:

Domestic $ 3,732 $ 3,264 $ 1,588

Foreign 4,574 4,947 3,380

Total $ 8,306 $ 8,211 $ 4,968

(in millions) 2022 2021 2020

Taxes on Earnings From Continuing Operations:

Domestic $ 1,309 $ 859 $ 39

Foreign 723 790 566

Total current 2,032 1,649 605

Domestic ( 610 ) ( 355 ) ( 18 )

Foreign ( 49 ) ( 154 ) ( 90 )

Total deferred ( 659 ) ( 509 ) ( 108 )

Total $ 1,373 $ 1,140 $ 497

Differences between the effective income tax rate and the U.S.

statutory tax rate were as follows:

2022 2021 2020

Statutory tax rate on earnings from continuing operations 21.0 % 21.0 % 21.0 %

20 unchanged sentences

Trade receivable reserves 227 206

Research and development costs 319 —

Inventory reserves 187 169

5 unchanged sentences

Deferred tax liabilities:

Depreciation ( 376 ) ( 330 )

Right of Use lease assets ( 252 ) ( 264 )

5 unchanged sentences

(in millions) 2022 2021

January 1 $ 1,908 $ 1,210

Increase due to current year tax positions 154 143

1 unchanged sentence

Decrease due to prior year tax positions ( 115 ) ( 119 )

Settlements 3 ( 35 )

Lapse of statute ( 22 ) ( 39 )

December 31 $ 2,036 $ 1,908

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 $ 1.28 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.

Abbott believes that it is reasonably possible that the recorded amount of gross unrecognized tax benefits may decrease by approximately $ 315 million, including cash adjustments, within the next twelve months as a result of concluding various domestic and international tax matters.

Abbott Laboratories and Subsidiaries

7 unchanged sentences

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.

For segment reporting purposes, the Core Laboratories Diagnostics, Rapid Diagnostics, Molecular Diagnostics and Point of Care Diagnostics 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.

For segment reporting purposes, the Cardiac Rhythm Management, Electrophysiology, Heart Failure, Vascular, Structural Heart, Neuromodulation 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.

4 unchanged sentences

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)

Net Sales to External Customers (a) Operating Earnings (a)

(in millions) 2022 2021 2020 2022 2021 2020

4 unchanged sentences

Total Reportable Segments 43,642 43,023 34,542 $ 12,831 $ 13,422 $ 9,308

(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.

Other 11 52 66

Total $ 43,653 $ 43,075 $ 34,608

________________________________________________________

(a) In 2022 and 2020, the impact of foreign exchange unfavorably impacted net sales and operating earnings.

In 2021, the impact of foreign exchange favorably impacted net sales and unfavorably impacted operating earnings.

Abbott Laboratories and Subsidiaries

5 unchanged sentences

Net interest expense ( 375 ) ( 490 ) ( 500 )

Loss on extinguishment of debt

Share-based compensation ( 685 ) ( 640 ) ( 546 )

2 unchanged sentences

Earnings from Continuing Operations Before Taxes $ 8,306 $ 8,211 $ 4,968

(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.

________________________________________________________

(b) Other, net in 2022 includes $ 176 million of charges related to a voluntary recall within the Nutritional Products segment and $ 111 million of charges related to the impairment of IPR&D intangible assets.

Other, net also includes integration costs associated with the acquisitions of Alere Inc.

Jude Medical and restructuring charges in 2022, 2021 and 2020.

Charges for restructuring actions and other cost reduction initiatives were approximately $ 265 million in 2022, $ 375 million in 2021 and $ 125 million in 2020.

Property and Equipment

Other, net in 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.

Depreciation Additions to

Property and Equipment Total Assets

(in millions) 2022 2021 2020 2022 2021 2020 2022 2021 2020

Established Pharmaceuticals $ 97 $ 94 $ 88 $ 175 $ 169 $ 109 $ 2,883 $ 2,789 $ 2,888

Nutritionals 155 151 143 251 174 201 3,625 3,425 3,478

Diagnostics 494 760 488 832 980 1,263 7,985 7,699 7,696

Medical Devices 311 285 281 335 348 402 7,844 7,261 6,893

Total Reportable Segments 1,057 1,290 1,000 1,593 1,671 1,975 $ 22,337 $ 21,174 $ 20,955

Other 197 201 195 182 201 218

Total $ 1,254 $ 1,491 $ 1,195 $ 1,775 $ 1,872 $ 2,193

(in millions) 2022 2021

3 unchanged sentences

All other (c) 7,912 6,987

(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.

Total Assets $ 74,438 $ 75,196

________________________________________________________

(c) All other includes the long-term assets associated with the defined benefit plans of $ 3.20 billion in 2022 and $ 2.27 billion in 2021.

Abbott Laboratories and Subsidiaries

5 unchanged sentences

United States $ 18,142 $ 16,642 $ 13,022

Germany 2,340 2,572 2,108

China 2,133 2,392 1,965

Japan 1,932 1,695 1,386

India 1,649 1,561 1,323

Switzerland 1,336 1,313 1,140

Canada 1,280 1,385 841

All Other Countries 14,841 15,515 12,823

Consolidated $ 43,653 $ 43,075 $ 34,608

________________________________________________________

(d) Sales by country are based on the country that sold the product.

3 unchanged sentences

Long-lived asset balances associated with other countries were not material on an individual country basis in either of the two years.

Note 16 — Subsequent Event

On February 8, 2023, Abbott entered into a definitive agreement to acquire Cardiovascular Systems, Inc.

CSI sells an atherectomy system used in treating peripheral and coronary artery disease.

The acquisition, which is expected to add complementary technologies to Abbott’s portfolio of vascular device offerings, is subject to the approval of CSI shareholders and the satisfaction of customary closing conditions, including applicable regulatory approvals.

Under the terms of the agreement, Abbott will pay $ 20 per common share at a total expected equity value of approximately $ 890 million.

The acquisition is expected to be funded with cash on hand.

Management Report on Internal Control Over Financial Reporting

16 unchanged sentences

We have audited the accompanying consolidated balance sheets of Abbott Laboratories and subsidiaries (the Company) as of December 31, 2022 and 2021, 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, 2022, 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.

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

generally accepted accounting principles.

16 unchanged sentences

Income taxes – Unrecognized tax benefits

Description of the

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

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.

Description of the Matter As described in Note 14 to the consolidated financial statements, unrecognized tax benefits were approximately $2.0 billion at December 31, 2022.

Unrecognized tax benefits are assessed by management quarterly for identification and measurement, or more frequently if there are any indicators suggesting a change in unrecognized tax benefits.

Assessing tax positions involves judgment 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 judgments 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.

With the support of our tax professionals, among other audit procedures performed, we evaluated the reasonableness of management’s judgment 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.

We also tested the 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

29 unchanged sentences

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

What changed 10-K

Item 8. Financial Statements and Supplementary Data