10-Q

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

WASHINGTON, D.C. 20549

FORM 10-Q

(Mark One)

☒    QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the quarterly period ended March 31, 2021

OR

☐    TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the transition period from                   to                  

Commission File No. 1-2189

ABBOTT LABORATORIES

An Illinois Corporation	I.R.S. Employer Identification No.
	36-0698440

100 Abbott Park Road

Abbott Park, Illinois 60064-6400

Telephone:  (224) 667-6100

Securities Registered Pursuant to Section 12(b) of the Act:

Title of Each Class	Trading Symbol(s)	Name of Each Exchange on Which Registered
Common Shares, Without Par Value ​	ABT	New York Stock Exchange Chicago Stock Exchange, Inc.

Indicate by check mark whether the registrant: (l) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of l934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes ⌧ No ☐

Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§ 229.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files).  Yes ⌧  No ☐

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company, or an emerging growth company.  See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company,” and “emerging growth company” in Rule 12b-2 of the Exchange Act.

Large Accelerated Filer	☒	Accelerated Filer	☐
Non-Accelerated Filer	☐	Smaller reporting company	☐
		Emerging growth company	☐

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act.  ☐

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes ☐ No ☒

As of March 31, 2021, Abbott Laboratories had 1,776,820,148 common shares without par value outstanding.

Abbott Laboratories

Table of Contents

Part I - Financial Information
	Page
Item 1. Financial Statements and Supplementary Data
Condensed Consolidated Statement of Earnings	3
Condensed Consolidated Statement of Comprehensive Income	4
Condensed Consolidated Balance Sheet	5
Condensed Consolidated Statement of Shareholders’ Investment	6
Condensed Consolidated Statement of Cash Flows	7
Notes to the Condensed Consolidated Financial Statements	8
Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations	18
Item 4. Controls and Procedures	23
Part II - Other Information
Item 1. Legal Proceedings	23
Item 2. Unregistered Sales of Equity Securities and Use of Proceeds	23
Item 6. Exhibits	24
Signature	25

2

Abbott Laboratories and Subsidiaries

Condensed Consolidated Statement of Earnings

(Unaudited)

(dollars in millions except per share data; shares in thousands)

	Three Months Ended March 31
	2021		2020
Net sales	$	10,456	$	7,726
Cost of products sold, excluding amortization of intangible assets		4,401		3,281
Amortization of intangible assets		509		561
Research and development		654		578
Selling, general and administrative		2,783		2,548
Total operating cost and expenses		8,347		6,968
Operating earnings		2,109		758
Interest expense		135		139
Interest (income)		(11)		(18)
Net foreign exchange (gain) loss		3		5
Other (income) expense, net		(61)		(1)
Earnings from continuing operations before tax		2,043		633
Tax expense on earnings from continuing operations		250		89
Earnings from continuing operations		1,793		544
Earnings from discontinued operations, net of tax		—		20
Net Earnings	$	1,793	$	564
Basic Earnings Per Common Share —
Continuing operations	$	1.00	$	0.31
Discontinued operations		—		0.01
Net earnings	$	1.00	$	0.32
Diluted Earnings Per Common Share —
Continuing operations	$	1.00	$	0.30
Discontinued operations		—		0.01
Net earnings	$	1.00	$	0.31
Average Number of Common Shares Outstanding Used for Basic Earnings Per Common Share		1,776,842		1,768,901
Dilutive Common Stock Options		14,661		11,677
Average Number of Common Shares Outstanding Plus Dilutive Common Stock Options		1,791,503		1,780,578
Outstanding Common Stock Options Having No Dilutive Effect		2,694		4,035

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

3

Abbott Laboratories and Subsidiaries

Condensed Consolidated Statement of Comprehensive Income

(Unaudited)

(dollars in millions)

	Three Months Ended March 31
	2021		2020
Net Earnings	$	1,793	$	564
Foreign currency translation gain (loss) adjustments		(536)		(1,144)
Net actuarial gains (losses) and amortization of net actuarial (losses) and prior service (cost) and credits, net of taxes of $18 in 2021 and $15 in 2020		85		57
Net gains (losses) for derivative instruments designated as cash flow hedges, net of taxes of $46 in 2021 and $48 in 2020		112		166
Other comprehensive income (loss)		(339)		(921)
Comprehensive Income (Loss)	$	1,454	$	(357)

	March 31,		December 31,
	2021		2020
Supplemental Accumulated Other Comprehensive Income (Loss) Information, net of tax:
Cumulative foreign currency translation (loss) adjustments	$	(5,395)	$	(4,859)
Net actuarial (losses) and prior service (cost) and credits		(3,786)		(3,871)
Cumulative gains (losses) on derivative instruments designated as cash flow hedges		(104)		(216)
Accumulated Other Comprehensive Income (Loss)	$	(9,285)	$	(8,946)

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

4

Abbott Laboratories and Subsidiaries

Condensed Consolidated Balance Sheet

(Unaudited)

(dollars in millions)

	March 31,		December 31,
	2021		2020
Assets
Current Assets:
Cash and cash equivalents	$	8,054	$	6,838
Short-term investments		318		310
Trade receivables, less allowances of $475 in 2021 and $460 in 2020		6,096		6,414
Inventories:
Finished products		3,219		3,030
Work in process		773		712
Materials		1,395		1,270
Total inventories		5,387		5,012
Prepaid expenses and other receivables		1,962		1,867
Total Current Assets		21,817		20,441
Investments		832		821
Property and equipment, at cost		18,697		18,793
Less: accumulated depreciation and amortization		9,865		9,764
Net property and equipment		8,832		9,029
Intangible assets, net of amortization		14,181		14,784
Goodwill		23,384		23,744
Deferred income taxes and other assets		3,739		3,729
	$	72,785	$	72,548

Liabilities and Shareholders’ Investment
Current Liabilities:
Short-term borrowings	$	199	$	213
Trade accounts payable		4,066		3,946
Salaries, wages and commissions		1,117		1,416
Other accrued liabilities		5,247		5,165
Dividends payable		801		798
Income taxes payable		276		362
Current portion of long-term debt		756		7
Total Current Liabilities		12,462		11,907
Long-term debt		17,489		18,527
Post-employment obligations, deferred income taxes and other long-term liabilities		9,046		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: 1,982,205,491; 2020: 1,981,156,896		24,023		24,145
Common shares held in treasury, at cost — Shares: 2021: 205,385,343; 2020: 209,926,622		(9,845)		(10,042)
Earnings employed in the business		28,669		27,627
Accumulated other comprehensive income (loss)		(9,285)		(8,946)
Total Abbott Shareholders’ Investment		33,562		32,784
Noncontrolling Interests in Subsidiaries		226		219
Total Shareholders’ Investment		33,788		33,003
	$	72,785	$	72,548

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

5

Abbott Laboratories and Subsidiaries

Condensed Consolidated Statement of Shareholders’ Investment

(Unaudited)

(in millions except shares and per share data)

	Three Months Ended March 31
	2021		2020
Common Shares:
Balance at January 1
Shares: 2021: 1,981,156,896; 2020: 1,976,855,085	$	24,145	$	23,853
Issued under incentive stock programs
Shares: 2021: 1,048,595; 2020: 1,257,416		47		53
Share-based compensation		304		245
Issuance of restricted stock awards		(473)		(420)
Balance at March 31
Shares: 2021: 1,982,205,491; 2020: 1,978,112,501	$	24,023	$	23,731
Common Shares Held in Treasury:
Balance at January 1
Shares: 2021: 209,926,622; 2020: 214,351,838	$	(10,042)	$	(10,147)
Issued under incentive stock programs
Shares: 2021: 4,818,787; 2020: 5,333,626		231		253
Purchased
Shares: 2021: 277,508; 2020: 248,963		(34)		(19)
Balance at March 31
Shares: 2021: 205,385,343; 2020: 209,267,175	$	(9,845)	$	(9,913)
Earnings Employed in the Business:
Balance at January 1	$	27,627	$	25,847
Impact of adoption of new accounting standard		—		(5)
Net earnings		1,793		564
Cash dividends declared on common shares (per share — 2021: $0.45; 2020: $0.36)		(803)		(641)
Effect of common and treasury share transactions		52		21
Balance at March 31	$	28,669	$	25,786
Accumulated Other Comprehensive Income (Loss):
Balance at January 1	$	(8,946)	$	(8,465)
Other comprehensive income (loss)		(339)		(921)
Balance at March 31	$	(9,285)	$	(9,386)
Noncontrolling Interests in Subsidiaries:
Balance at January 1	$	219	$	213
Noncontrolling Interests’ share of income, business combinations, net of distributions and share repurchases		7		(4)
Balance at March 31	$	226	$	209

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

6

Abbott Laboratories and Subsidiaries

Condensed Consolidated Statement of Cash Flows

(Unaudited)

(dollars in millions)

	Three Months Ended March 31
	2021		2020
Cash Flow From (Used in) Operating Activities:
Net earnings	$	1,793	$	564
Adjustments to reconcile net earnings to net cash from operating activities-
Depreciation		425		267
Amortization of intangible assets		509		561
Share-based compensation		288		233
Trade receivables		165		(104)
Inventories		(537)		(437)
Other, net		(6)		(369)
Net Cash From Operating Activities		2,637		715
Cash Flow From (Used in) Investing Activities:
Acquisitions of property and equipment		(397)		(360)
Acquisitions of businesses and technologies, net of cash acquired		(15)		—
Sales (purchases) of other investment securities, net		(14)		(36)
Other		4		3
Net Cash (Used in) Investing Activities		(422)		(393)
Cash Flow From (Used in) Financing Activities:
Net borrowings (repayments) of short-term debt and other		24		51
Repayments of long-term debt		(2)		(1)
Purchases of common shares		(275)		(236)
Proceeds from stock options exercised		86		89
Dividends paid		(800)		(638)
Net Cash (Used in) Financing Activities		(967)		(735)
Effect of exchange rate changes on cash and cash equivalents		(32)		(70)
Net Increase (Decrease) in Cash and Cash Equivalents		1,216		(483)
Cash and Cash Equivalents, Beginning of Year		6,838		3,860
Cash and Cash Equivalents, End of Period	$	8,054	$	3,377

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

7

Abbott Laboratories and Subsidiaries

Notes to the Condensed Consolidated Financial Statements

March 31, 2021

(Unaudited)

Note 1 — Basis of Presentation

The accompanying unaudited, condensed consolidated financial statements have been prepared pursuant to rules and regulations of the Securities and Exchange Commission and, therefore, do not include all information and footnote disclosures normally included in audited financial statements. However, in the opinion of management, all adjustments (which include only normal adjustments) necessary to present fairly the results of operations, financial position and cash flows have been made.  It is suggested that these statements be read in conjunction with the financial statements included in Abbott’s Annual Report on Form 10-K for the year ended December 31, 2020.  The condensed consolidated financial statements include the accounts of the parent company and subsidiaries, after elimination of intercompany transactions.

Note 2 — New Accounting Standards

Recently Adopted Accounting Standards

In December 2019, the Financial Accounting Standards Board (FASB) issued Accounting Standards Update 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 condensed 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.  Abbott has four reportable segments: Established Pharmaceutical Products, Diagnostic Products, Nutritional Products, and Medical Devices.

8

Abbott Laboratories and Subsidiaries

Notes to the Condensed Consolidated Financial Statements

March 31, 2021

(Unaudited)

The following table provides revenues by sales category:

	Three Months Ended March 31, 2021						Three Months Ended March 31, 2020
(in millions)	U.S.		Int’l		Total		U.S.		Int’l		Total
Established Pharmaceutical Products —
Key Emerging Markets	$	—	$	821	$	821	$	—	$	813	$	813
Other		—		249		249		—		231		231
Total		—		1,070		1,070		—		1,044		1,044
Nutritionals —
Pediatric Nutritionals		508		558		1,066		518		571		1,089
Adult Nutritionals		328		642		970		294		521		815
Total		836		1,200		2,036		812		1,092		1,904
Diagnostics —
Core Laboratory		271		911		1,182		267		722		989
Molecular		175		272		447		65		74		139
Point of Care		92		37		129		103		35		138
Rapid Diagnostics		1,103		1,153		2,256		368		192		560
Total		1,641		2,373		4,014		803		1,023		1,826
Medical Devices —
Rhythm Management		241		278		519		228		246		474
Electrophysiology		179		252		431		164		224		388
Heart Failure		145		49		194		152		51		203
Vascular		219		416		635		230		395		625
Structural Heart		169		208		377		136		182		318
Neuromodulation		145		39		184		137		40		177
Diabetes Care		253		727		980		186		566		752
Total		1,351		1,969		3,320		1,233		1,704		2,937
Other		10		6		16		8		7		15
Total	$	3,838	$	6,618	$	10,456	$	2,856	$	4,870	$	7,726

Remaining Performance Obligations

As of March 31, 2021, the estimated revenue expected to be recognized in the future related to performance obligations that are unsatisfied (or partially unsatisfied) was approximately $3.8 billion in the Diagnostics segment and approximately $400 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 17 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 Accounting Standards Codification (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.

Other Contract Assets and Liabilities

Abbott discloses Trade receivables separately in the Condensed 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.

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.  

9

Abbott Laboratories and Subsidiaries

Notes to the Condensed Consolidated Financial Statements

March 31, 2021

(Unaudited)

Changes in the contract liabilities during the period are as follows:

(in millions)
Contract Liabilities:
Balance at December 31, 2020	$	405
Unearned revenue from cash received during the period		174
Revenue recognized related to contract liability balance		(163)
Balance at March 31, 2021	$	416

Note 4 — Supplemental Financial Information

Shares of unvested restricted stock 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 for the three months ended March 31, 2021 and 2020 were $1.785 billion and $541 million, respectively. Net earnings allocated to common shares for the three months ended March 31, 2021 and 2020 were $1.785 billion and $561 million, respectively.

Earnings from discontinued operations, net of tax, in the first quarter of 2020 include the recognition of $20 million of tax benefits as a result of the resolution of various tax positions related to the previous sale of a business that was reported as a discontinued operation.

Other, net in Net cash from operating activities in the Condensed Consolidated Statement of Cash Flows for the first three months of 2021 includes $16 million of pension contributions and the payment of cash taxes of approximately $270 million.  The first three months of 2020 includes $320 million of pension contributions and the payment of cash taxes of approximately $125 million.

The following summarizes the activity for the first three months of 2021 related to the allowance for doubtful accounts as of March 31, 2021:

(in millions)
Allowance for Doubtful Accounts:
Balance at December 31, 2020	$	288
Provisions/charges to income		15
Amounts charged off and other deductions		(8)
Balance at March 31, 2021	$	295

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 components of long-term investments as of March 31, 2021 and December 31, 2020 are as follows:

	March 31,		December 31,
(in millions)	2021		2020
Long-term Investments:
Equity securities	$	785	$	776
Other		47		45
Total	$	832	$	821

10

Abbott Laboratories and Subsidiaries

Notes to the Condensed Consolidated Financial Statements

March 31, 2021

(Unaudited)

Abbott’s equity securities as of March 31, 2021, include $375 million of investments in mutual funds that are held in a rabbi trust and were 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 March 31, 2021 with a carrying value of $289 million that are accounted for under the equity method of accounting and other equity investments with a carrying value of approximately $105 million that do not have a readily determinable fair value.

Note 5 — Changes in Accumulated Other Comprehensive Income (Loss)

The changes in accumulated other comprehensive income (loss), net of income taxes, are as follows:

	Three Months Ended March 31
									Cumulative Gains (Losses)
	Cumulative Foreign				Net Actuarial (Losses) and				on Derivative Instruments
	Currency Translation				Prior Service (Costs) and				Designated as Cash Flow
	Adjustments				Credits				Hedges
(in millions)	2021		2020		2021		2020		2021		2020
Balance at January 1	$	(4,859)	$	(4,924)	$	(3,871)	$	(3,540)	$	(216)	$	(1)
Other comprehensive income (loss) before reclassifications		(536)		(1,144)		22		7		96		176
Amounts reclassified from accumulated other comprehensive income		—		—		63		50		16		(10)
Net current period comprehensive income (loss)		(536)		(1,144)		85		57		112		166
Balance at March 31	$	(5,395)	$	(6,068)	$	(3,786)	$	(3,483)	$	(104)	$	165

Reclassified amounts for cash flow hedges are recorded as Cost of products sold.  Net actuarial losses and prior service cost are included as a component of net periodic benefit costs; see Note 11 for additional details.

Note 6 — Goodwill and Intangible Assets

The total amount of goodwill reported was $23.4 billion at March 31, 2021 and $23.7 billion at December 31, 2020. Foreign currency translation adjustments decreased goodwill by approximately $360 million in the first three months of 2021. The amount of goodwill related to reportable segments at March 31, 2021 was $2.9 billion for the Established Pharmaceutical Products segment, $286 million for the Nutritional Products segment, $3.8 billion for the Diagnostic Products segment, and $16.3 billion for the Medical Devices segment. There was no reduction of goodwill relating to impairments in the first three months of 2021.

The gross amount of amortizable intangible assets, primarily product rights and technology was $27.5 billion as of March 31, 2021 and $27.8 billion as of December 31, 2020, and accumulated amortization was $14.5 billion as of March 31, 2021 and $14.2 billion as of December 31, 2020. Foreign currency translation adjustments decreased intangible assets by $94 million in the first three months of 2021. Abbott’s estimated annual amortization expense for intangible assets is approximately $2.0 billion in 2021 and 2022, and $1.9 billion in 2023, 2024, and 2025.

Indefinite-lived intangible assets, which relate to in-process R&D acquired in a business combination, were approximately $1.2 billion as of March 31, 2021 and December 31, 2020.

11

Abbott Laboratories and Subsidiaries

Notes to the Condensed Consolidated Financial Statements

March 31, 2021

(Unaudited)

Note 7 — Restructuring Plans

From 2017 to 2020, 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, 2020, the accrued balance associated with these actions was $25 million. No additional charges were recognized in the first three months of 2021. As of March 31, 2021, the accrued liabilities remaining in the Consolidated Balance Sheet related to these actions total $13 million and primarily represent severance obligations.

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.  In the first three months of 2021, charges of $1 million were recognized as Cost of products sold.  The following summarizes the activity for the first three months of 2021 related to these restructuring actions and the status of the related accrual as of March 31, 2021:

(in millions)
Accrued balance at December 31, 2020	$	70
Restructuring charges recorded in 2021		1
Payments and other adjustments		(13)
Accrued balance at March 31, 2021	$	58

Note 8 — Incentive Stock Program

In the first three months of 2021, Abbott granted 2,693,918 stock options, 478,490 restricted stock awards and 4,511,126 restricted stock units under its incentive stock program. At March 31, 2021, approximately 101 million shares were reserved for future grants. Information regarding the number of options outstanding and exercisable at March 31, 2021 is as follows:

	Outstanding		Exercisable
Number of shares		30,484,541		23,519,084
Weighted average remaining life (years)		6.2		5.4
Weighted average exercise price	$	62.17	$	51.23
Aggregate intrinsic value (in millions)	$	1,769	$	1,614

The total unrecognized share-based compensation cost at March 31, 2021 amounted to approximately $744 million which is expected to be recognized over the next three years.

Note 9 — 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 March 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 March 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 other European currencies. For intercompany and trade payables and receivables, the currency exposures are primarily the U.S. dollar and European currencies. At March 31, 2021 and December 31, 2020, Abbott held the gross notional amount of $10.2 billion and $11.0 billion, respectively, of such foreign currency forward exchange contracts.

12

Abbott Laboratories and Subsidiaries

Notes to the Condensed Consolidated Financial Statements

March 31, 2021

(Unaudited)

Abbott has designated a yen-denominated, 5-year term loan of approximately $542 million and $577 million as of March 31, 2021 and December 31, 2020, 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 March 31, 2021 and December 31, 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 March 31, 2021 and December 31, 2020:

	Fair Value - Assets					Fair Value - Liabilities
	March 31,		Dec. 31,			March 31,		Dec. 31,
(in millions)	2021		2020		Balance Sheet Caption	2021		2020		Balance Sheet Caption
Interest rate swaps designated as fair value hedges	$	141	$	210	Deferred income taxes and other assets	$	—	$	—	Post-employment obligations, deferred income taxes and other long-term liabilities
Foreign currency forward exchange contracts:
Hedging instruments		105		30	Prepaid expenses and other receivables		167		433	Other accrued liabilities
Others not designated as hedges		76		60	Prepaid expenses and other receivables		92		65	Other accrued liabilities
Debt designated as a hedge of net investment in a foreign subsidiary		—		—	n/a		542		577	Long-term debt
	$	322	$	300		$	801	$	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 for the three months ended March 31, 2021 and 2020.

	Gain (loss) Recognized in				Income (expense) and
	Other Comprehensive				Gain (loss) Reclassified
	Income (loss)				into Income
(in millions)	2021		2020		2021		2020		Income Statement Caption
Foreign currency forward exchange contracts designated as cash flow hedges	$	134	$	227	$	(23)	$	11	Cost of products sold
Debt designated as a hedge of net investment in a foreign subsidiary		35		(8)		—		—	n/a
Interest rate swaps designated as fair value hedges		n/a		n/a		(69)		168	Interest expense

Gains of $49 million and losses of $165 million were recognized in the three months ended March 31, 2021 and 2020, respectively, related to foreign currency forward exchange contracts not designated as a hedge. These amounts are reported in the Condensed Consolidated Statement of Earnings on the Net foreign exchange (gain) loss line.

13

Abbott Laboratories and Subsidiaries

Notes to the Condensed Consolidated Financial Statements

March 31, 2021

(Unaudited)

The carrying values and fair values of certain financial instruments as of March 31, 2021 and December 31, 2020 are shown in the following table. 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 non-performance by these counterparties.

	March 31, 2021				December 31, 2020
	Carrying		Fair		Carrying		Fair
(in millions)	Value		Value		Value		Value
Long-term Investment Securities:
Equity securities	$	785	$	785	$	776	$	776
Other		47		47		45		45
Total Long-term Debt		(18,245)		(21,046)		(18,534)		(22,809)
Foreign Currency Forward Exchange Contracts:
Receivable position		181		181		90		90
(Payable) position		(259)		(259)		(498)		(498)
Interest Rate Hedge Contracts:
Receivable position		141		141		210		210

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
March 31, 2021:
Equity securities	$	391	$	391	$	—	$	—
Interest rate swap derivative financial instruments		141		—		141		—
Foreign currency forward exchange contracts		181		—		181		—
Total Assets	$	713	$	391	$	322	$	—
Fair value of hedged long-term debt	$	2,980	$	—	$	2,980	$	—
Foreign currency forward exchange contracts		259		—		259		—
Contingent consideration related to business combinations		67		—		—		67
Total Liabilities	$	3,306	$	—	$	3,239	$	67
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

14

Abbott Laboratories and Subsidiaries

Notes to the Condensed Consolidated Financial Statements

March 31, 2021

(Unaudited)

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 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.  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.

Note 10 — 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 $215 million to $250 million. The recorded accrual balance at March 31, 2021 for these proceedings and exposures was approximately $230 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.

Note 11 — Post-Employment Benefits

Retirement plans consist of defined benefit, defined contribution, and medical and dental plans. Net periodic benefit costs, other than service costs, are recognized in the Other (income) expense, net line of the Condensed Consolidated Statement of Earnings. Net cost recognized in continuing operations for the three months ended March 31 for Abbott’s major defined benefit plans and post-employment medical and dental benefit plans is as follows:

	Defined Benefit Plans				Medical and Dental Plans
	March 31,		March 31,		March 31,		March 31,
(in millions)	2021		2020		2021		2020
Service cost — benefits earned during the period	$	100	$	85	$	14	$	12
Interest cost on projected benefit obligations		62		75		8		12
Expected return on plan assets		(211)		(192)		(7)		(7)
Net amortization of:
Actuarial loss, net		81		63		7		8
Prior service cost (credit)		—		—		(7)		(7)
Net cost — continuing operations	$	32	$	31	$	15	$	18

Abbott funds its domestic defined benefit plans according to IRS funding limitations.  International pension plans are funded according to similar regulations.  In the first three months of 2021 and 2020, $16 million and $320 million, respectively, were contributed to defined benefit plans.  Contributions made to post-employment medical and dental plans in the first three months of 2020 were $11 million. No contributions were made to the post-employment medical and dental plans in the first three months of 2021.

15

Abbott Laboratories and Subsidiaries

Notes to the Condensed Consolidated Financial Statements

March 31, 2021

(Unaudited)

Note 12 — Taxes on Earnings

Taxes on earnings from continuing operations reflect the estimated annual effective rates and include charges for interest and penalties.  In the first three months of 2021 and 2020, taxes on earnings from continuing operations include approximately $80 million and $47 million, respectively, in excess tax benefits associated with share-based compensation.  Earnings from discontinued operations, net of tax, in the first three months of 2020 reflect the recognition of $20 million of net tax benefits primarily as a result of the resolution of various tax positions related to prior years.

Tax authorities in various jurisdictions regularly review Abbott’s income tax filings.  Abbott believes that it is reasonably possible that the recorded amount of gross unrecognized tax benefits may decrease approximately $50 million, including cash adjustments, within the next twelve months as a result of concluding various domestic and international tax matters.

Note 13 — Segment 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.

16

Abbott Laboratories and Subsidiaries

Notes to the Condensed Consolidated Financial Statements

March 31, 2021

(Unaudited)

The following segment information has been prepared in accordance with the internal accounting policies of Abbott, as described above, and is not presented in accordance with generally accepted accounting principles applied to the consolidated financial statements.

	Three Months Ended March 31
	Net Sales to External Customers				Operating Earnings
(in millions)	2021		2020		2021		2020
Established Pharmaceutical Products	$	1,070	$	1,044	$	169	$	181
Nutritional Products		2,036		1,904		467		459
Diagnostic Products		4,014		1,826		1,701		405
Medical Devices		3,320		2,937		1,007		803
Total Reportable Segments		10,440		7,711		3,344		1,848
Other		16		15
Net sales	$	10,456	$	7,726
Corporate functions and benefit plans costs						(114)		(132)
Net interest expense						(124)		(121)
Share-based compensation (a)						(288)		(233)
Amortization of intangible assets						(509)		(561)
Other, net (b)						(266)		(168)
Earnings from continuing operations before taxes					$	2,043	$	633

(a) Approximately 50 percent of the annual net cost of share-based awards will typically be recognized in the first quarter due to the timing of the granting of share-based awards.

(b) Other, net includes integration costs associated with the acquisition of St. Jude Medical and Alere, and restructuring charges. Other, net for the three months ended March 31, 2021 also includes costs related to certain litigation.

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Item 2.Management’s Discussion and Analysis of Financial Condition and Results of Operations

Financial Review - Results of Operations

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 primary products are medical devices, diagnostic testing products, nutritional products and branded generic pharmaceuticals.

The following table details sales by reportable segment for the three months ended March 31.  Percent changes are versus the prior year and are based on unrounded numbers.

	Net Sales to External Customers
	Three Months		Three Months
	Ended		Ended				Impact of		Total Change
	March 31,		March 31,		Total		Foreign		Excl. Foreign
(in millions)	2021		2020		Change		Exchange		Exchange
Established Pharmaceutical Products	$	1,070	$	1,044	2.5	%	(3.7)	%	6.2	%
Nutritional Products		2,036		1,904	6.9		0.5		6.4
Diagnostic Products		4,014		1,826	119.8		5.0		114.8
Medical Devices		3,320		2,937	13.1		4.3		8.8
Total Reportable Segments		10,440		7,711	35.3		2.4		32.9
Other		16		15	7.8		3.6		4.2
Net sales	$	10,456	$	7,726	35.3		2.4		32.9
Total U.S.	$	3,838	$	2,856	34.4		—		34.4
Total International	$	6,618	$	4,870	35.9		3.9		32.0

Note:  In order to compute results excluding the impact of  foreign exchange rates, current year U.S. dollar sales are multiplied or divided, as appropriate, by the current year average foreign exchange rates and then those amounts are multiplied or divided, as appropriate, by the prior year average foreign exchange rates.

The 32.9 percent increase in total net sales during the first three months of 2021, excluding the impact of foreign exchange, reflected strong demand for Abbott’s tests to detect COVID-19 as well as other growth across Abbott’s reportable segments.  During the first quarter of 2021, Abbott’s COVID-19 testing-related sales totaled approximately $2.2 billion led by combined sales of approximately $1.8 billion related to Abbott’s BinaxNOW, Panbio, and ID NOW rapid-testing platforms.  Excluding the impact of COVID-19 testing-related sales, Abbott’s total net sales increased 7.6 percent.  Excluding the impacts of COVID-19 testing-related sales and foreign exchange, Abbott’s total net sales increased 5.7 percent.  Abbott’s net sales were favorably impacted by changes in foreign exchange rates in the first quarter as the relatively weaker U.S. dollar increased total international sales by 3.9 percent and total sales by 2.4 percent.

Due to the unpredictability of the duration and impact of the current COVID-19 pandemic, the extent to which the COVID-19 pandemic will have a material effect on Abbott’s business, financial condition or results of operations is uncertain.

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The table below provides detail by sales category for the three months ended March 31. Percent changes are versus the prior year and are based on unrounded numbers.

							Impact of		Total Change
	March 31,		March 31,		Total		Foreign		Excl. Foreign
(in millions)	2021		2020		Change		Exchange		Exchange
Established Pharmaceutical Products —
Key Emerging Markets	$	821	$	813	1.0	%	(5.7)	%	6.7	%
Other Emerging Markets		249		231	7.8		3.6		4.2
Nutritionals —
International Pediatric Nutritionals		558		571	(2.3)		0.8		(3.1)
U.S. Pediatric Nutritionals		508		518	(1.8)		—		(1.8)
International Adult Nutritionals		642		521	23.1		1.0		22.1
U.S. Adult Nutritionals		328		294	11.4		—		11.4
Diagnostics —
Core Laboratory		1,182		989	19.6		3.5		16.1
Molecular		447		139	220.9		8.9		212.0
Point of Care		129		138	(6.6)		1.0		(7.6)
Rapid Diagnostics		2,256		560	302.8		7.8		295.0
Medical Devices —
Rhythm Management		519		474	9.6		3.8		5.8
Electrophysiology		431		388	11.0		3.9		7.1
Heart Failure		194		203	(4.6)		1.6		(6.2)
Vascular		635		625	1.7		3.7		(2.0)
Structural Heart		377		318	18.6		4.4		14.2
Neuromodulation		184		177	4.4		1.6		2.8
Diabetes Care		980		752	30.2		6.6		23.6

Key Emerging Markets for the Established Pharmaceutical Products business include India, Russia, Brazil and China, along with several other markets that represent the most attractive long-term growth opportunities for Abbott’s branded generics product portfolio.  Excluding the unfavorable effect of foreign exchange, sales in the Key Emerging Markets increased 6.7 percent compared to the first three months of 2020 led by growth across several geographies including China, India and Brazil.  Other Emerging Markets, excluding the effect of foreign exchange, increased by 4.2 percent in the first three months of 2021.

International Pediatric Nutritional sales, excluding the effect of foreign exchange, decreased 3.1 percent in the first three months of 2021 versus the comparable 2020 period.  U.S. Pediatric Nutritional sales decreased 1.8 percent.  The decrease in Abbott’s Pediatric Nutritional sales was primarily due to higher consumer purchases in 2020 in several countries, including the U.S., in advance of shelter-in-place restrictions related to the COVID-19 pandemic, partially offset by higher sales in the Greater China infant category in 2021.  International Adult Nutritional sales, excluding the effect of foreign exchange, increased 22.1 percent, and U.S. Adult Nutritional sales increased 11.4 percent, reflecting continued growth of the Ensure^® and Glucerna^® brands in several countries including the U.S.

The 114.8 percent increase in Diagnostic Products sales, excluding the impact of foreign exchange, was driven by strong demand for Abbott’s portfolio of COVID-19 tests as described above as well as improvements in the base Core Laboratory and Molecular businesses.  In Core Laboratory, sales increased 16.1 percent, excluding the effect of foreign exchange, due to the increased volume of routine diagnostic testing performed in hospitals and other laboratories as well as sales of Abbott’s laboratory-based tests for the detection of the IgG and IgM antibodies, which determine if someone was previously infected with the COVID-19 virus.  Core Laboratory IgG and IgM antibody testing-related sales on Abbott’s ARCHITECT and Alinity i platforms were approximately $50 million in the first three months of 2021.  In March 2021, Abbott received an Emergency Use Authorization (EUA) in the U.S. for its AdviseDX SARS-CoV-2 IgG II test for the semi-quantitative detection of IgG antibodies to COVID-19 on its ARCHITECT and Alinity i platforms.  In the first three months of 2021, Core Laboratory sales increased 14.1 percent, excluding COVID-19 testing-related sales, and increased 10.7 percent excluding the impact of foreign exchange and COVID-19 testing-related sales.

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The 212.0 percent increase in Molecular Diagnostics sales, excluding the effect of foreign exchange, was driven by demand for Abbott’s laboratory-based molecular tests for COVID-19 on its m2000 and Alinity m platforms as well as growth in the base business from the continued roll-out of the Alinity m platform.  Molecular Diagnostics COVID-19 testing-related sales were approximately $310 million in the first three months of 2021.  In March 2021, Abbott received an EUA in the U.S. for its multiplex molecular test on its Alinity m system to detect COVID-19, influenza A, influenza B, and respiratory syncytial virus (RSV) in one test.  In the first three months of 2021, Molecular Diagnostics sales increased 33.9 percent, excluding COVID-19 testing-related sales, and increased 31.5 percent excluding the impact of foreign exchange and COVID-19 testing-related sales.

In Rapid Diagnostics, sales increased 295.0 percent, excluding the effect of foreign exchange, due to strong demand for Abbott’s COVID-19 tests on its rapid testing platforms including the Panbio system, the ID NOW platform, and the BinaxNOW COVID-19 Ag Card test.  Rapid Diagnostics COVID-19 testing-related sales were approximately $1.8 billion in the first three months of 2021.  In January 2021, Abbott received CE Mark for two new uses of its Panbio rapid antigen test: asymptomatic testing and self-swabbing under the supervision of a healthcare worker.  On March 31, 2021, Abbott announced that it had received an EUA in the U.S. for its over-the-counter, non-prescription BinaxNOW COVID-19 Ag Self Test for individuals with or without symptoms.  In the first quarter of 2021, Abbott also received EUAs that allow the non-prescription use of the BinaxNOW COVID-19 Ag Card Home Test and the BinaxNOW COVID-19 Ag Card test for professional use for individuals with or without symptoms.

Excluding the effect of foreign exchange, total Medical Devices sales grew 8.8 percent driven by double-digit growth in Diabetes Care and Structural Heart as well as growth in Electrophysiology and Rhythm Management.  Growth in Diabetes Care sales was driven by continued growth of FreeStyle Libre^®, Abbott’s continuous glucose monitoring system, internationally and in the U.S.  FreeStyle Libre and Libre Sense™ sales totaled $829 million in the first quarter of 2021, which reflected a 29.8 percent increase, excluding the effect of foreign exchange, over the first three months of 2020 when Libre sales totaled $604 million.  Libre Sense, which received CE Mark in the third quarter of 2020, is Abbott’s glucose sport biosensor specifically designed for athletes.

While procedure volumes across Abbott’s cardiovascular and neuromodulation businesses were negatively impacted early in 2021 by elevated COVID-19 case rates in certain countries, including the U.S., volumes improved over the course of the quarter for many products.  Growth in Structural Heart was broad-based across several areas of the business, including TriClip^®, the world’s first minimally invasive, clip-based device for repair of a leaky tricuspid heart valve which was launched in Europe in May 2020, and MitraClip^®, Abbott’s market-leading device for the minimally invasive treatment of mitral regurgitation (MR), a leaky heart valve.  In January 2021, the U.S. Centers for Medicare & Medicaid Services expanded reimbursement coverage eligibility for MitraClip.

Excluding the effect of foreign exchange, the 6.2 percent decline in Heart Failure sales reflects fewer left ventricular assist device (LVAD) procedures as such procedures, which require a stay in the hospital’s intensive care unit, continued to be negatively impacted by the COVID-19 pandemic during the first quarter of 2021.  The sales decline also reflects the initial spread of the pandemic driving higher demand in the first quarter of 2020 for Abbott’s CentriMag™ circulatory support systems which are used in acute hospital care.  Excluding the effect of foreign exchange, the 2.0 percent decline in Vascular sales reflects price reductions on drug-eluting stents across various geographies and lower sales in China due to a new national tender program instituted in the fourth quarter of 2020, partially offset by the improvement in procedure volume trends in various countries.

The gross profit margin percentage was 53.0 percent for the first quarter of 2021 compared to 50.3 percent for the first quarter of 2020.  The increase primarily reflects higher sales volume in various businesses, higher utilization at various manufacturing sites, and a decrease in intangible amortization expense in 2021.

Research and development expenses increased $76 million, or 13.3 percent, in the first quarter of 2021.  The 2021 increase in R&D expense was primarily driven by higher spending on various projects to advance products in development.  For the three months ended March 31, 2021, research and development expenditures totaled $317 million for the Medical Devices segment, $168 million for the Diagnostic Products segment, $45 million for the Nutritional Products segment and $50 million for the Established Pharmaceutical Products segment.

Selling, general and administrative (SG&A) expenses for the first quarter of 2021 increased $235 million, or 9.2 percent, due primarily to charges related to certain litigation and higher selling and marketing spending to drive growth across various businesses.

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Other (Income) Expense, net

Other income, net increased from $1 million in the first quarter of 2020 to $61 million in the first quarter of 2021. The increase was primarily due to an impairment of an equity investment of approximately $50 million in 2020 as well as higher income in the first quarter of 2021 related to the non-service cost components of net pension and post-retirement medical benefit costs.

Interest Expense, net

Interest expense, net increased $3 million in the first quarter of 2021 as lower interest rates resulted in a decline in interest income that exceeded the reduction in interest expense.  The net impact of lower interest rates was partially offset by the effect of higher cash and short-term investment balances on interest income.

Taxes on Earnings

Taxes on earnings from continuing operations reflect the estimated annual effective rates and include charges for interest and penalties.  In the first three months of 2021 and 2020, taxes on earnings from continuing operations include approximately $80 million and $47 million, respectively, in excess tax benefits associated with share-based compensation.  Earnings from discontinued operations, net of tax, in the first three months of 2020 reflect the recognition of $20 million of net tax benefits primarily as a result of the resolution of various tax positions related to prior years.

Tax authorities in various jurisdictions regularly review Abbott’s income tax filings.  Abbott believes that it is reasonably possible that the recorded amount of gross unrecognized tax benefits may decrease approximately $50 million, including cash adjustments, within the next twelve months as a result of concluding various domestic and international tax matters.

Liquidity and Capital Resources March 31, 2021 Compared with December 31, 2020

The increase in cash and cash equivalents from $6.8 billion at December 31, 2020 to $8.1 billion at March 31, 2021 primarily reflects the cash generated from operations in the first three months of 2021, partially offset by the payment of dividends and capital expenditures.  Working capital was $9.4 billion at March 31, 2021 and $8.5 billion at December 31, 2020.  The increase in working capital in 2021 primarily reflects the increase in cash and cash equivalents partially offset by an increase in the current portion of long-term debt.

In the Condensed Consolidated Statement of Cash Flows, Net cash from operating activities for the first three months of 2021 totaled $2.6 billion, an increase of $1.9 billion over the prior year primarily due to higher operating earnings, higher collections of accounts receivable and the timing of pension contributions partially offset by higher cash taxes paid.  Other, net in Net cash from operating activities was a use of $6 million for the first three months of 2021 and a use of $369 million for the first three months of 2020. The year-over-year change in Other, net in Net cash from operating activities is primarily due to the timing of pension contributions as pension contributions were $16 million in 2021 and $320 million in 2020. Cash taxes paid were approximately $270 million in 2021 and $125 million in 2020.

In September 2019, the board of directors authorized the early redemption of up to $5 billion of outstanding long-term notes.  As of March 31, 2021, $2.15 billion of the $5 billion authorization remains available.

At March 31, 2021, Abbott’s long-term debt rating was A by Standard & Poor’s Corporation and A3 by Moody’s Investors Service.  Abbott expects to maintain an investment grade rating.  Abbott has readily available financial resources, including lines of credit of $5.0 billion which expire in 2025.

In October 2019, the board of directors authorized the repurchase of up to $3 billion of Abbott’s common shares from time to time.  The 2019 authorization is in addition to the approximately $100 million unused portion of the share repurchase program authorized in 2014.

On April 27, 2016, the board of directors authorized the issuance and sale for general corporate purposes of up to 75 million common shares that would result in proceeds of up to $3 billion.  No shares have been issued under this authorization.

In the first quarter of 2021, Abbott declared a quarterly dividend of $0.45 per share on its common shares, which represents an increase of 25 percent over the $0.36 per share dividend declared in the first quarter of 2020.

21

Recently Adopted Accounting Standards

In December 2019, the Financial Accounting Standards Board issued Accounting Standards Update 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 condensed consolidated financial statements.

Legislative Issues

Abbott’s primary markets are highly competitive and subject to substantial government regulations throughout the world.  Abbott expects debate to continue over the availability, method of delivery, and payment for health care products and services.  It is not possible to predict the extent to which Abbott or the health care industry in general might be adversely affected by these factors in the future.  A more complete discussion of these factors is contained in Item 1, Business, and Item 1A, Risk Factors, in the 2020 Annual Report on Form 10-K.

Private Securities Litigation Reform Act of 1995 — A Caution Concerning Forward-Looking Statements

Under the safe harbor provisions of the Private Securities Litigation Reform Act of 1995, Abbott cautions that any forward-looking statements made by Abbott are subject to risks and uncertainties that may cause actual results to differ materially from those indicated in the forward-looking statements. Economic, competitive, governmental, technological and other factors that may affect Abbott’s operations are discussed in Item 1A, "Risk Factors" in our Annual Report on Form 10-K for the year ended December 31, 2020, and are incorporated herein by reference. Abbott undertakes no obligation to release publicly any revisions to forward-looking statements as a result of subsequent events or developments, except as required by law.

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PART I.    FINANCIAL INFORMATION

Item 4.      Controls and Procedures

(a) Evaluation of disclosure controls and procedures.  The President and Chief Executive Officer, Robert B. Ford, and Chief Financial Officer, Robert E. Funck, Jr., evaluated the effectiveness of Abbott Laboratories’ disclosure controls and procedures as of the end of the period covered by this report, and concluded that Abbott Laboratories’ disclosure controls and procedures were effective to ensure that information Abbott is required to disclose in the reports that it files or submits with the Securities and Exchange Commission (the “Commission”) under the Securities Exchange Act of 1934 (the “Exchange Act”) is recorded, processed, summarized and reported, within the time periods specified in the Commission’s rules and forms, and to ensure that information required to be disclosed by Abbott in the reports that it files or submits under the Exchange Act is accumulated and communicated to Abbott’s management, including its principal executive officer and principal financial officer, as appropriate to allow timely decisions regarding required disclosure.

(b) Changes in internal control over financial reporting. During the quarter ended March 31, 2021, there were no changes in Abbott’s internal control over financial reporting (as defined in Rule 13a-15(f) under the Exchange Act) that have materially affected, or are reasonably likely to materially affect, Abbott’s internal control over financial reporting.

PART II.   OTHER INFORMATION

Item 1.       Legal Proceedings

Abbott is involved in various claims, legal proceedings and investigations, including those described in our Annual Report on Form 10-K for the year ended December 31, 2020.

Item 2.        Unregistered Sales of Equity Securities and Use of Proceeds

(c)   Issuer Purchases of Equity Securities

						(d) Maximum
						Number (or
					(c) Total Number	Approximate
					of Shares (or	Dollar Value) of
	(a) Total				Units) Purchased	Shares (or Units)
	Number of		(b) Average		as Part of	that May Yet Be
	Shares (or		Price Paid per		Publicly	Purchased Under
	Units)		Share (or		Announced Plans	the Plans or
Period	Purchased		Unit)		or Programs	Programs
January 1, 2021 – January 31, 2021	1,785	(1)  ​	$	109.110	0	$	3,097,391,913	(2)​
February 1, 2021 – February 28, 2021	10,000	(1)​		122.543	0		3,097,391,913	(2)​
March 1, 2021 – March 31, 2021	0	(1)​		0	0		3,097,391,913	(2)​
Total	11,785	(1)​	$	120.509	0	$	3,097,391,913	(2)​

1. These shares include the shares deemed surrendered to Abbott to pay the exercise price in connection with the exercise of employee stock options – 1,785 in January, 10,000 in February, and 0 in March; and

These shares do not include the shares surrendered to Abbott to satisfy tax withholding obligations in connection with the vesting of restricted stock or restricted stock units.

2. On September 11, 2014, the board of directors authorized the repurchase of up to $3 billion of Abbott common shares, from time to time (the “2014 Plan”).  On October 11, 2019, the board of directors authorized the repurchase of up to $3 billion of Abbott common shares, from time to time (the “2019 Plan”).  The 2019 Plan is in addition to the unused portion of the 2014 Plan.

23

Item 6.    Exhibits

Exhibit No.	Exhibit
3.1	Amended and Restated Articles of Incorporation of Abbott Laboratories, filed as Exhibit 3.1 to the Abbott Laboratories Current Report on Form 8-K filed on April 26, 2021.
3.2	By-Laws of Abbott Laboratories, as amended and restated effective April 23, 2021, filed as Exhibit 3.1 to the Abbott Laboratories Current Report on Form 8-K filed on February 19, 2021.
31.1	Certification of Chief Executive Officer Required by Rule 13a-14(a) (17 CFR 240.13a-14(a)).
31.2	Certification of Chief Financial Officer Required by Rule 13a-14(a) (17 CFR 240.13a-14(a)).
Exhibits 32.1 and 32.2 are furnished herewith and should not be deemed to be “filed” under the Securities Exchange Act of 1934.
32.1	Certification of Chief Executive Officer Pursuant to 18 U.S.C. Section 1350, as Adopted Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.
32.2	Certification of Chief Financial Officer Pursuant to 18 U.S.C. Section 1350, as Adopted Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.
101	The following financial statements and notes from the Abbott Laboratories Quarterly Report on Form 10-Q for the quarter ended March 31, 2021, formatted in Inline XBRL: (i) Condensed Consolidated Statement of Earnings; (ii) Condensed Consolidated Statement of Comprehensive Income; (iii) Condensed Consolidated Balance Sheet; (iv) Condensed Consolidated Statement of Shareholders’ Investment; (v) Condensed Consolidated Statement of Cash Flows; and (vi) Notes to the Condensed Consolidated Financial Statements.
104	Cover Page Interactive Data File (the cover page XBRL tags are embedded in the Inline XBRL document and included in Exhibit 101).

24

SIGNATURE

Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized.

ABBOTT LABORATORIES
By:	/s/ Robert E. Funck, Jr.
	Robert E. Funck, Jr.
	Executive Vice President, Finance and Chief Financial Officer
	Date: May 5, 2021

25

EX-31.1

Exhibit 31.1

Certification of Chief Executive Officer

Required by Rule 13a-14(a) (17 CFR 240.13a-14(a))

I, Robert B. Ford, certify that:

1. I have reviewed this quarterly report on Form 10-Q of Abbott Laboratories;

2. Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;

3. Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of Abbott as of, and for, the periods presented in this report;

4. Abbott’s other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for Abbott and have:

a) Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to Abbott, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;

b) Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, 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;

c) Evaluated the effectiveness of Abbott’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and

d) Disclosed in this report any change in Abbott’s internal control over financial reporting that occurred during Abbott’s most recent fiscal quarter that has materially affected, or is reasonably likely to materially affect, Abbott’s internal control over financial reporting; and

5. Abbott’s other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to Abbott’s auditors and the audit committee of Abbott’s board of directors:

a) All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect Abbott’s ability to record, process, summarize and report financial information; and

b) Any fraud, whether or not material, that involves management or other employees who have a significant role in Abbott’s internal control over financial reporting.

Date: May 5, 2021	/s/ Robert B. Ford
	Robert B. Ford
	President and Chief Executive Officer

EX-31.2

Exhibit 31.2

Certification of Chief Financial Officer

Required by Rule 13a-14(a) (17 CFR 240.13a-14(a))

I, Robert E. Funck, Jr., certify that:

1. I have reviewed this quarterly report on Form 10-Q of Abbott Laboratories;

2. Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;

3. Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of Abbott as of, and for, the periods presented in this report;

4. Abbott’s other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for Abbott and have:

a) Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to Abbott, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;

b) Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, 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;

c) Evaluated the effectiveness of Abbott’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and

d) Disclosed in this report any change in Abbott’s internal control over financial reporting that occurred during Abbott’s most recent fiscal quarter that has materially affected, or is reasonably likely to materially affect, Abbott’s internal control over financial reporting; and

5. Abbott’s other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to Abbott’s auditors and the audit committee of Abbott’s board of directors:

a) All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect Abbott’s ability to record, process, summarize and report financial information; and

b) Any fraud, whether or not material, that involves management or other employees who have a significant role in Abbott’s internal control over financial reporting.

5
Date: May 5, 2021	/s/ Robert E. Funck, Jr.
	Robert E. Funck, Jr.
	Executive Vice President, Finance and Chief Financial Officer

EX-32.1

Exhibit 32.1

Certification Pursuant To

18 U.S.C. Section 1350

As Adopted Pursuant To

Section 906 of the Sarbanes-Oxley Act of 2002

In connection with the Quarterly Report of Abbott Laboratories (the “Company”) on Form 10-Q for the period ended March 31, 2021 as filed with the Securities and Exchange Commission (the “Report”), I, Robert B. Ford, President and Chief Executive Officer of the Company, certify, pursuant to 18 U.S.C. § 1350, as adopted pursuant to § 906 of the Sarbanes-Oxley Act of 2002, that:

(1) The Report fully complies with the requirements of section 13(a) or 15(d) of the Securities Exchange Act of 1934; and

(2) The information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Company.

/s/ Robert B. Ford

Robert B. Ford

President and Chief Executive Officer

May 5, 2021

A signed original of this written statement required by Section 906 has been provided to Abbott Laboratories and will be retained by Abbott Laboratories and furnished to the Securities and Exchange Commission or its staff upon request.

EX-32.2

Exhibit 32.2

Certification Pursuant To

18 U.S.C. Section 1350

As Adopted Pursuant To

Section 906 of the Sarbanes-Oxley Act of 2002

In connection with the Quarterly Report of Abbott Laboratories (the “Company”) on Form 10-Q for the period ended March 31, 2021 as filed with the Securities and Exchange Commission (the “Report”), I, Robert E. Funck, Jr., Executive Vice President, Finance and Chief Financial Officer of the Company, certify, pursuant to 18 U.S.C. § 1350, as adopted pursuant to § 906 of the Sarbanes-Oxley Act of 2002, that:

(1) The Report fully complies with the requirements of section 13(a) or 15(d) of the Securities Exchange Act of 1934; and

(2) The information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Company.

/s/ Robert E. Funck, Jr.

Robert E. Funck, Jr.

Executive Vice President, Finance
and Chief Financial Officer

May 5, 2021

A signed original of this written statement required by Section 906 has been provided to Abbott Laboratories and will be retained by Abbott Laboratories and furnished to the Securities and Exchange Commission or its staff upon request.

XML

Document and Entity Information	3 Months Ended
	Mar. 31, 2021 shares
Document and Entity Information
Document Type	10-Q
Document Transition Report	false
Document Quarterly Report	true
Document Period End Date	Mar. 31, 2021
Entity File Number	1-2189
Entity Registrant Name	ABBOTT LABORATORIES
Entity Tax Identification Number	36-0698440
Entity Incorporation, State or Country Code	IL
Entity Address, State or Province	IL
Entity Address, Address Line One	100 Abbott Park Road
Entity Address, City or Town	Abbott Park
Entity Address, Postal Zip Code	60064-6400
City Area Code	224
Local Phone Number	667-6100
Title of 12(b) Security	Common Shares, Without Par Value
Entity Current Reporting Status	Yes
Entity Interactive Data Current	Yes
Entity Filer Category	Large Accelerated Filer
Entity Small Business	false
Entity Emerging Growth Company	false
Entity Shell Company	false
Entity Common Stock, Shares Outstanding	1,776,820,148
Entity Central Index Key	0000001800
Current Fiscal Year End Date	--12-31
Document Fiscal Year Focus	2021
Document Fiscal Period Focus	Q1
Amendment Flag	false
New York Stock Exchange
Document and Entity Information
Security Exchange Name	NYSE
Trading Symbol	ABT
Chicago Stock Exchange
Document and Entity Information
Security Exchange Name	CHX

XML

Condensed Consolidated Statement of Earnings - USD ($) shares in Thousands, $ in Millions	3 Months Ended
	Mar. 31, 2021	Mar. 31, 2020
Condensed Consolidated Statement of Earnings
Net sales	$ 10,456	$ 7,726
Cost of products sold, excluding amortization of intangible assets	4,401	3,281
Amortization of intangible assets	509	561
Research and development	654	578
Selling, general and administrative	2,783	2,548
Total operating cost and expenses	8,347	6,968
Operating earnings	2,109	758
Interest expense	135	139
Interest (income)	(11)	(18)
Net foreign exchange (gain) loss	3	5
Other (income) expense, net	(61)	(1)
Earnings from continuing operations before tax	2,043	633
Tax expense on earnings from continuing operations	250	89
Earnings from continuing operations	1,793	544
Earnings from discontinued operations, net of tax		20
Net Earnings	$ 1,793	$ 564
Basic Earnings Per Common Share --
Continuing operations	$ 1.00	$ 0.31
Discontinued operations		0.01
Net earnings	1.00	0.32
Diluted Earnings Per Common Share --
Continuing operations	1.00	0.30
Discontinued operations		0.01
Net earnings	$ 1.00	$ 0.31
Average Number of Common Shares Outstanding Used for Basic Earnings Per Common Share	1,776,842	1,768,901
Dilutive Common Stock Options	14,661	11,677
Average Number of Common Shares Outstanding Plus Dilutive Common Stock Options	1,791,503	1,780,578
Outstanding Common Stock Options Having No Dilutive Effect	2,694	4,035

XML

Condensed Consolidated Statement of Comprehensive Income - USD ($) $ in Millions	3 Months Ended
	Mar. 31, 2021	Mar. 31, 2020	Dec. 31, 2020
Condensed Consolidated Statement of Comprehensive Income
Net Earnings	$ 1,793	$ 564
Foreign currency translation gain (loss) adjustments	(536)	(1,144)
Net actuarial gains (losses) and amortization of net actuarial (losses) and prior service (cost) and credits, net of taxes of $18 in 2021 and $15 in 2020	85	57
Net gains (losses) for derivative instruments designated as cash flow hedges, net of taxes of $46 in 2021 and $48 in 2020	112	166
Other comprehensive income (loss)	(339)	(921)
Comprehensive Income (Loss)	1,454	$ (357)
Supplemental Accumulated Other Comprehensive Income (Loss) Information, net of tax:
Cumulative foreign currency translation (loss) adjustments	(5,395)		$ (4,859)
Net actuarial (losses) and prior service (cost) and credits	(3,786)		(3,871)
Cumulative gains (losses) on derivative instruments designated as cash flow hedges	(104)		(216)
Accumulated Other Comprehensive Income (Loss)	$ (9,285)		$ (8,946)

XML

Condensed Consolidated Statement of Comprehensive Income (Parenthetical) - USD ($) $ in Millions	3 Months Ended
	Mar. 31, 2021	Mar. 31, 2020
Condensed Consolidated Statement of Comprehensive Income
Net actuarial gains (losses) and amortization of net actuarial (losses) and prior service (cost) and credits taxes	$ 18	$ 15
Net gains (losses) for derivative instruments designated as cash flow hedges taxes	$ 46	$ 48

XML

Condensed Consolidated Balance Sheet - USD ($) $ in Millions	Mar. 31, 2021	Dec. 31, 2020
Current Assets:
Cash and cash equivalents	$ 8,054	$ 6,838
Short-term investments	318	310
Trade receivables, less allowances of $475 in 2021 and $460 in 2020	6,096	6,414
Inventories:
Finished products	3,219	3,030
Work in process	773	712
Materials	1,395	1,270
Total inventories	5,387	5,012
Prepaid expenses and other receivables	1,962	1,867
Total Current Assets	21,817	20,441
Investments	832	821
Property and equipment, at cost	18,697	18,793
Less: accumulated depreciation and amortization	9,865	9,764
Net property and equipment	8,832	9,029
Intangible assets, net of amortization	14,181	14,784
Goodwill	23,384	23,744
Deferred income taxes and other assets	3,739	3,729
Total Assets	72,785	72,548
Current Liabilities:
Short-term borrowings	199	213
Trade accounts payable	4,066	3,946
Salaries, wages and commissions	1,117	1,416
Other accrued liabilities	5,247	5,165
Dividends payable	801	798
Income taxes payable	276	362
Current portion of long-term debt	756	7
Total Current Liabilities	12,462	11,907
Long-term debt	17,489	18,527
Post-employment obligations, deferred income taxes and other long-term liabilities	9,046	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: 1,982,205,491; 2020: 1,981,156,896	24,023	24,145
Common shares held in treasury, at cost - Shares: 2021: 205,385,343; 2020: 209,926,622	(9,845)	(10,042)
Earnings employed in the business	28,669	27,627
Accumulated other comprehensive income (loss)	(9,285)	(8,946)
Total Abbott Shareholders' Investment	33,562	32,784
Noncontrolling Interests in Subsidiaries	226	219
Total Shareholders' Investment	33,788	33,003
Total Liabilities and Shareholders' Investment	$ 72,785	$ 72,548

XML

Condensed Consolidated Balance Sheet (Parenthetical) - USD ($) $ in Millions	Mar. 31, 2021	Dec. 31, 2020
Condensed Consolidated Balance Sheet
Trade receivables, allowances (in dollars)	$ 475	$ 460
Preferred shares, par value (in dollars per share)	$ 1	$ 1
Preferred shares, authorized shares	1,000,000	1,000,000
Preferred shares, issued shares	0	0
Common shares, authorized shares	2,400,000,000	2,400,000,000
Common shares, issued shares	1,982,205,491	1,981,156,896
Common shares held in treasury, shares	205,385,343	209,926,622

XML

Condensed Consolidated Statement of Shareholders' Investment - USD ($) $ in Millions	3 Months Ended
	Mar. 31, 2021	Mar. 31, 2020
Increase (Decrease) in Shareholders' Investment
Beginning of Year	$ 33,003
Net Earnings	1,793	$ 564
Other comprehensive income (loss)	(339)	(921)
End of Year	33,788
Common Shares:
Increase (Decrease) in Shareholders' Investment
Beginning of Year	24,145	23,853
Issued under incentive stock programs	47	53
Share-based compensation	304	245
Issuance of restricted stock awards	(473)	(420)
End of Year	24,023	23,731
Common Shares Held in Treasury:
Increase (Decrease) in Shareholders' Investment
Beginning of Year	(10,042)	(10,147)
Issued under incentive stock programs	231	253
Purchased	(34)	(19)
End of Year	(9,845)	(9,913)
Earnings Employed in the Business:
Increase (Decrease) in Shareholders' Investment
Beginning of Year	27,627	25,847
Net Earnings	1,793	564
Cash dividends declared on common shares	(803)	(641)
Effect of common and treasury share transactions	52	21
End of Year	28,669	25,786
Earnings Employed in the Business: | Impact of adoption of new accounting standards
Increase (Decrease) in Shareholders' Investment
End of Year		(5)
Accumulated Other Comprehensive Income (Loss):
Increase (Decrease) in Shareholders' Investment
Beginning of Year	(8,946)	(8,465)
Other comprehensive income (loss)	(339)	(921)
End of Year	(9,285)	(9,386)
Noncontrolling Interests in Subsidiaries:
Increase (Decrease) in Shareholders' Investment
Beginning of Year	219	213
Noncontrolling Interests' share of income, business combinations, net of distributions and share repurchases	7	(4)
End of Year	$ 226	$ 209

XML

Condensed Consolidated Statement of Shareholders' Investment (Parenthetical) - $ / shares	3 Months Ended
	Mar. 31, 2021	Mar. 31, 2020
Common Shares:
Increase (Decrease) in Shareholders' Investment
Balance at beginning of period (in shares)	1,981,156,896	1,976,855,085
Issued under incentive stock programs (in shares)	1,048,595	1,257,416
Balance at end of period (in shares)	1,982,205,491	1,978,112,501
Common Shares Held in Treasury:
Increase (Decrease) in Shareholders' Investment
Balance at beginning of period (in shares)	209,926,622	214,351,838
Issued under incentive stock programs (in shares)	4,818,787	5,333,626
Purchased (in shares)	277,508	248,963
Balance at end of period (in shares)	205,385,343	209,267,175
Earnings Employed in the Business:
Increase (Decrease) in Shareholders' Investment
Cash dividends declared per common share	$ 0.45	$ 0.36

XML

Condensed Consolidated Statement of Cash Flows - USD ($) $ in Millions	3 Months Ended
	Mar. 31, 2021	Mar. 31, 2020
Cash Flow From (Used in) Operating Activities:
Net earnings	$ 1,793	$ 564
Adjustments to reconcile net earnings to net cash from operating activities -
Depreciation	425	267
Amortization of intangible assets	509	561
Share-based compensation	288	233
Trade receivables	165	(104)
Inventories	(537)	(437)
Other, net	(6)	(369)
Net Cash From Operating Activities	2,637	715
Cash Flow From (Used in) Investing Activities:
Acquisitions of property and equipment	(397)	(360)
Acquisitions of businesses and technologies, net of cash acquired	(15)
Sales (purchases) of other investment securities, net	(14)	(36)
Other	4	3
Net Cash (Used in) Investing Activities	(422)	(393)
Cash Flow From (Used in) Financing Activities:
Net borrowings (repayments) of short-term debt and other	24	51
Repayments of long-term debt	(2)	(1)
Purchases of common shares	(275)	(236)
Proceeds from stock options exercised	86	89
Dividends paid	(800)	(638)
Net Cash (Used in) Financing Activities	(967)	(735)
Effect of exchange rate changes on cash and cash equivalents	(32)	(70)
Net Increase (Decrease) in Cash and Cash Equivalents	1,216	(483)
Cash and Cash Equivalents, Beginning of Year	6,838	3,860
Cash and Cash Equivalents, End of Period	$ 8,054	$ 3,377

XML

Basis of Presentation

3 Months Ended

Mar. 31, 2021

Basis of Presentation

Basis of Presentation

Note 1 — Basis of Presentation

The accompanying unaudited, condensed consolidated financial statements have been prepared pursuant to rules and regulations of the Securities and Exchange Commission and, therefore, do not include all information and footnote disclosures normally included in audited financial statements. However, in the opinion of management, all adjustments (which include only normal adjustments) necessary to present fairly the results of operations, financial position and cash flows have been made.  It is suggested that these statements be read in conjunction with the financial statements included in Abbott’s Annual Report on Form 10-K for the year ended December 31, 2020.  The condensed consolidated financial statements include the accounts of the parent company and subsidiaries, after elimination of intercompany transactions.

XML

New Accounting Standards

3 Months Ended

Mar. 31, 2021

New Accounting Standards

New Accounting Standards

Note 2 — New Accounting Standards

Recently Adopted Accounting Standards

In December 2019, the Financial Accounting Standards Board (FASB) issued Accounting Standards Update 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 condensed consolidated financial statements.

XML

Revenue

3 Months Ended

Mar. 31, 2021

Revenue

Revenue

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.  Abbott has four reportable segments: Established Pharmaceutical Products, Diagnostic Products, Nutritional Products, and Medical Devices.

The following table provides revenues by sales category:

	Three Months Ended March 31, 2021						Three Months Ended March 31, 2020
(in millions)	U.S.		Int’l		Total		U.S.		Int’l		Total
Established Pharmaceutical Products —
Key Emerging Markets	$	—	$	821	$	821	$	—	$	813	$	813
Other		—		249		249		—		231		231
Total		—		1,070		1,070		—		1,044		1,044
Nutritionals —
Pediatric Nutritionals		508		558		1,066		518		571		1,089
Adult Nutritionals		328		642		970		294		521		815
Total		836		1,200		2,036		812		1,092		1,904
Diagnostics —
Core Laboratory		271		911		1,182		267		722		989
Molecular		175		272		447		65		74		139
Point of Care		92		37		129		103		35		138
Rapid Diagnostics		1,103		1,153		2,256		368		192		560
Total		1,641		2,373		4,014		803		1,023		1,826
Medical Devices —
Rhythm Management		241		278		519		228		246		474
Electrophysiology		179		252		431		164		224		388
Heart Failure		145		49		194		152		51		203
Vascular		219		416		635		230		395		625
Structural Heart		169		208		377		136		182		318
Neuromodulation		145		39		184		137		40		177
Diabetes Care		253		727		980		186		566		752
Total		1,351		1,969		3,320		1,233		1,704		2,937
Other		10		6		16		8		7		15
Total	$	3,838	$	6,618	$	10,456	$	2,856	$	4,870	$	7,726

Remaining Performance Obligations

As of March 31, 2021, the estimated revenue expected to be recognized in the future related to performance obligations that are unsatisfied (or partially unsatisfied) was approximately $3.8 billion in the Diagnostics segment and approximately $400 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 17 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 Accounting Standards Codification (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.

Other Contract Assets and Liabilities

Abbott discloses Trade receivables separately in the Condensed 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.

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, 2020	$	405
Unearned revenue from cash received during the period		174
Revenue recognized related to contract liability balance		(163)
Balance at March 31, 2021	$	416

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Supplemental Financial Information

3 Months Ended

Mar. 31, 2021

Supplemental Financial Information

Supplemental Financial Information

Note 4 — Supplemental Financial Information

Shares of unvested restricted stock 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 for the three months ended March 31, 2021 and 2020 were $1.785 billion and $541 million, respectively. Net earnings allocated to common shares for the three months ended March 31, 2021 and 2020 were $1.785 billion and $561 million, respectively.

Earnings from discontinued operations, net of tax, in the first quarter of 2020 include the recognition of $20 million of tax benefits as a result of the resolution of various tax positions related to the previous sale of a business that was reported as a discontinued operation.

Other, net in Net cash from operating activities in the Condensed Consolidated Statement of Cash Flows for the first three months of 2021 includes $16 million of pension contributions and the payment of cash taxes of approximately $270 million.  The first three months of 2020 includes $320 million of pension contributions and the payment of cash taxes of approximately $125 million.

The following summarizes the activity for the first three months of 2021 related to the allowance for doubtful accounts as of March 31, 2021:

(in millions)
Allowance for Doubtful Accounts:
Balance at December 31, 2020	$	288
Provisions/charges to income		15
Amounts charged off and other deductions		(8)
Balance at March 31, 2021	$	295

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 components of long-term investments as of March 31, 2021 and December 31, 2020 are as follows:

	March 31,		December 31,
(in millions)	2021		2020
Long-term Investments:
Equity securities	$	785	$	776
Other		47		45
Total	$	832	$	821

Abbott’s equity securities as of March 31, 2021, include $375 million of investments in mutual funds that are held in a rabbi trust and were 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 March 31, 2021 with a carrying value of $289 million that are accounted for under the equity method of accounting and other equity investments with a carrying value of approximately $105 million that do not have a readily determinable fair value.

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Changes in Accumulated Other Comprehensive Income (Loss)

3 Months Ended

Mar. 31, 2021

Changes in Accumulated Other Comprehensive Income (Loss)

Changes in Accumulated Other Comprehensive Income (Loss)

Note 5 — Changes in Accumulated Other Comprehensive Income (Loss)

The changes in accumulated other comprehensive income (loss), net of income taxes, are as follows:

	Three Months Ended March 31
									Cumulative Gains (Losses)
	Cumulative Foreign				Net Actuarial (Losses) and				on Derivative Instruments
	Currency Translation				Prior Service (Costs) and				Designated as Cash Flow
	Adjustments				Credits				Hedges
(in millions)	2021		2020		2021		2020		2021		2020
Balance at January 1	$	(4,859)	$	(4,924)	$	(3,871)	$	(3,540)	$	(216)	$	(1)
Other comprehensive income (loss) before reclassifications		(536)		(1,144)		22		7		96		176
Amounts reclassified from accumulated other comprehensive income		—		—		63		50		16		(10)
Net current period comprehensive income (loss)		(536)		(1,144)		85		57		112		166
Balance at March 31	$	(5,395)	$	(6,068)	$	(3,786)	$	(3,483)	$	(104)	$	165

Reclassified amounts for cash flow hedges are recorded as Cost of products sold.  Net actuarial losses and prior service cost are included as a component of net periodic benefit costs; see Note 11 for additional details.

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Goodwill and Intangible Assets

3 Months Ended

Mar. 31, 2021

Goodwill and Intangible Assets

Goodwill and Intangible Assets

Note 6 — Goodwill and Intangible Assets

The total amount of goodwill reported was $23.4 billion at March 31, 2021 and $23.7 billion at December 31, 2020. Foreign currency translation adjustments decreased goodwill by approximately $360 million in the first three months of 2021. The amount of goodwill related to reportable segments at March 31, 2021 was $2.9 billion for the Established Pharmaceutical Products segment, $286 million for the Nutritional Products segment, $3.8 billion for the Diagnostic Products segment, and $16.3 billion for the Medical Devices segment. There was no reduction of goodwill relating to impairments in the first three months of 2021.

The gross amount of amortizable intangible assets, primarily product rights and technology was $27.5 billion as of March 31, 2021 and $27.8 billion as of December 31, 2020, and accumulated amortization was $14.5 billion as of March 31, 2021 and $14.2 billion as of December 31, 2020. Foreign currency translation adjustments decreased intangible assets by $94 million in the first three months of 2021. Abbott’s estimated annual amortization expense for intangible assets is approximately $2.0 billion in 2021 and 2022, and $1.9 billion in 2023, 2024, and 2025.

Indefinite-lived intangible assets, which relate to in-process R&D acquired in a business combination, were approximately $1.2 billion as of March 31, 2021 and December 31, 2020.

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Restructuring Plans

3 Months Ended

Mar. 31, 2021

Restructuring Plans

Restructuring Plans

Note 7 — Restructuring Plans

From 2017 to 2020, 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, 2020, the accrued balance associated with these actions was $25 million. No additional charges were recognized in the first three months of 2021. As of March 31, 2021, the accrued liabilities remaining in the Consolidated Balance Sheet related to these actions total $13 million and primarily represent severance obligations.

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.  In the first three months of 2021, charges of $1 million were recognized as Cost of products sold.  The following summarizes the activity for the first three months of 2021 related to these restructuring actions and the status of the related accrual as of March 31, 2021:

(in millions)
Accrued balance at December 31, 2020	$	70
Restructuring charges recorded in 2021		1
Payments and other adjustments		(13)
Accrued balance at March 31, 2021	$	58

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Incentive Stock Program

3 Months Ended

Mar. 31, 2021

Incentive Stock Program

Incentive Stock Program

Note 8 — Incentive Stock Program

In the first three months of 2021, Abbott granted 2,693,918 stock options, 478,490 restricted stock awards and 4,511,126 restricted stock units under its incentive stock program. At March 31, 2021, approximately 101 million shares were reserved for future grants. Information regarding the number of options outstanding and exercisable at March 31, 2021 is as follows:

	Outstanding		Exercisable
Number of shares		30,484,541		23,519,084
Weighted average remaining life (years)		6.2		5.4
Weighted average exercise price	$	62.17	$	51.23
Aggregate intrinsic value (in millions)	$	1,769	$	1,614

The total unrecognized share-based compensation cost at March 31, 2021 amounted to approximately $744 million which is expected to be recognized over the next three years.

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Financial Instruments, Derivatives and Fair Value Measures

3 Months Ended

Mar. 31, 2021

Financial Instruments, Derivatives and Fair Value Measures

Financial Instruments, Derivatives and Fair Value Measures

Note 9 — 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 March 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 March 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 other European currencies. For intercompany and trade payables and receivables, the currency exposures are primarily the U.S. dollar and European currencies. At March 31, 2021 and December 31, 2020, Abbott held the gross notional amount of $10.2 billion and $11.0 billion, respectively, of such foreign currency forward exchange contracts.

Abbott has designated a yen-denominated, 5-year term loan of approximately $542 million and $577 million as of March 31, 2021 and December 31, 2020, 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 March 31, 2021 and December 31, 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 March 31, 2021 and December 31, 2020:

	Fair Value - Assets					Fair Value - Liabilities
	March 31,		Dec. 31,			March 31,		Dec. 31,
(in millions)	2021		2020		Balance Sheet Caption	2021		2020		Balance Sheet Caption
Interest rate swaps designated as fair value hedges	$	141	$	210	Deferred income taxes and other assets	$	—	$	—	Post-employment obligations, deferred income taxes and other long-term liabilities
Foreign currency forward exchange contracts:
Hedging instruments		105		30	Prepaid expenses and other receivables		167		433	Other accrued liabilities
Others not designated as hedges		76		60	Prepaid expenses and other receivables		92		65	Other accrued liabilities
Debt designated as a hedge of net investment in a foreign subsidiary		—		—	n/a		542		577	Long-term debt
	$	322	$	300		$	801	$	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 for the three months ended March 31, 2021 and 2020.

	Gain (loss) Recognized in				Income (expense) and
	Other Comprehensive				Gain (loss) Reclassified
	Income (loss)				into Income
(in millions)	2021		2020		2021		2020		Income Statement Caption
Foreign currency forward exchange contracts designated as cash flow hedges	$	134	$	227	$	(23)	$	11	Cost of products sold
Debt designated as a hedge of net investment in a foreign subsidiary		35		(8)		—		—	n/a
Interest rate swaps designated as fair value hedges		n/a		n/a		(69)		168	Interest expense

Gains of $49 million and losses of $165 million were recognized in the three months ended March 31, 2021 and 2020, respectively, related to foreign currency forward exchange contracts not designated as a hedge. These amounts are reported in the Condensed Consolidated Statement of Earnings on the Net foreign exchange (gain) loss line.

The carrying values and fair values of certain financial instruments as of March 31, 2021 and December 31, 2020 are shown in the following table. 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 non-performance by these counterparties.

	March 31, 2021				December 31, 2020
	Carrying		Fair		Carrying		Fair
(in millions)	Value		Value		Value		Value
Long-term Investment Securities:
Equity securities	$	785	$	785	$	776	$	776
Other		47		47		45		45
Total Long-term Debt		(18,245)		(21,046)		(18,534)		(22,809)
Foreign Currency Forward Exchange Contracts:
Receivable position		181		181		90		90
(Payable) position		(259)		(259)		(498)		(498)
Interest Rate Hedge Contracts:
Receivable position		141		141		210		210

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
March 31, 2021:
Equity securities	$	391	$	391	$	—	$	—
Interest rate swap derivative financial instruments		141		—		141		—
Foreign currency forward exchange contracts		181		—		181		—
Total Assets	$	713	$	391	$	322	$	—
Fair value of hedged long-term debt	$	2,980	$	—	$	2,980	$	—
Foreign currency forward exchange contracts		259		—		259		—
Contingent consideration related to business combinations		67		—		—		67
Total Liabilities	$	3,306	$	—	$	3,239	$	67
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

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 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.  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.

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Litigation and Environmental Matters

3 Months Ended

Mar. 31, 2021

Litigation and Environmental Matters

Litigation and Environmental Matters

Note 10 — 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 $215 million to $250 million. The recorded accrual balance at March 31, 2021 for these proceedings and exposures was approximately $230 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.

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Post-Employment Benefits

3 Months Ended

Mar. 31, 2021

Post-Employment Benefits

Post-Employment Benefits

Note 11 — Post-Employment Benefits

Retirement plans consist of defined benefit, defined contribution, and medical and dental plans. Net periodic benefit costs, other than service costs, are recognized in the Other (income) expense, net line of the Condensed Consolidated Statement of Earnings. Net cost recognized in continuing operations for the three months ended March 31 for Abbott’s major defined benefit plans and post-employment medical and dental benefit plans is as follows:

	Defined Benefit Plans				Medical and Dental Plans
	March 31,		March 31,		March 31,		March 31,
(in millions)	2021		2020		2021		2020
Service cost — benefits earned during the period	$	100	$	85	$	14	$	12
Interest cost on projected benefit obligations		62		75		8		12
Expected return on plan assets		(211)		(192)		(7)		(7)
Net amortization of:
Actuarial loss, net		81		63		7		8
Prior service cost (credit)		—		—		(7)		(7)
Net cost — continuing operations	$	32	$	31	$	15	$	18

Abbott funds its domestic defined benefit plans according to IRS funding limitations.  International pension plans are funded according to similar regulations.  In the first three months of 2021 and 2020, $16 million and $320 million, respectively, were contributed to defined benefit plans.  Contributions made to post-employment medical and dental plans in the first three months of 2020 were $11 million. No contributions were made to the post-employment medical and dental plans in the first three months of 2021.

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Taxes on Earnings

3 Months Ended

Mar. 31, 2021

Taxes on Earnings

Taxes on Earnings

Note 12 — Taxes on Earnings

Taxes on earnings from continuing operations reflect the estimated annual effective rates and include charges for interest and penalties.  In the first three months of 2021 and 2020, taxes on earnings from continuing operations include approximately $80 million and $47 million, respectively, in excess tax benefits associated with share-based compensation.  Earnings from discontinued operations, net of tax, in the first three months of 2020 reflect the recognition of $20 million of net tax benefits primarily as a result of the resolution of various tax positions related to prior years.

Tax authorities in various jurisdictions regularly review Abbott’s income tax filings.  Abbott believes that it is reasonably possible that the recorded amount of gross unrecognized tax benefits may decrease approximately $50 million, including cash adjustments, within the next twelve months as a result of concluding various domestic and international tax matters.

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Segment Information

3 Months Ended

Mar. 31, 2021

Segment Information

Segment Information

Note 13 — Segment 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 is not presented in accordance with generally accepted accounting principles applied to the consolidated financial statements.

	Three Months Ended March 31
	Net Sales to External Customers				Operating Earnings
(in millions)	2021		2020		2021		2020
Established Pharmaceutical Products	$	1,070	$	1,044	$	169	$	181
Nutritional Products		2,036		1,904		467		459
Diagnostic Products		4,014		1,826		1,701		405
Medical Devices		3,320		2,937		1,007		803
Total Reportable Segments		10,440		7,711		3,344		1,848
Other		16		15
Net sales	$	10,456	$	7,726
Corporate functions and benefit plans costs						(114)		(132)
Net interest expense						(124)		(121)
Share-based compensation (a)						(288)		(233)
Amortization of intangible assets						(509)		(561)
Other, net (b)						(266)		(168)
Earnings from continuing operations before taxes					$	2,043	$	633

(a) Approximately 50 percent of the annual net cost of share-based awards will typically be recognized in the first quarter due to the timing of the granting of share-based awards.

(b) Other, net includes integration costs associated with the acquisition of St. Jude Medical and Alere, and restructuring charges. Other, net for the three months ended March 31, 2021 also includes costs related to certain litigation.

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New Accounting Standards (Policies)

3 Months Ended

Mar. 31, 2021

New Accounting Standards

Recently Adopted Accounting Standards

Recently Adopted Accounting Standards

In December 2019, the Financial Accounting Standards Board (FASB) issued Accounting Standards Update 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 condensed consolidated financial statements.

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Revenue (Tables)

3 Months Ended

Mar. 31, 2021

Revenue

Schedule of reportable segment included under sales category

	Three Months Ended March 31, 2021						Three Months Ended March 31, 2020
(in millions)	U.S.		Int’l		Total		U.S.		Int’l		Total
Established Pharmaceutical Products —
Key Emerging Markets	$	—	$	821	$	821	$	—	$	813	$	813
Other		—		249		249		—		231		231
Total		—		1,070		1,070		—		1,044		1,044
Nutritionals —
Pediatric Nutritionals		508		558		1,066		518		571		1,089
Adult Nutritionals		328		642		970		294		521		815
Total		836		1,200		2,036		812		1,092		1,904
Diagnostics —
Core Laboratory		271		911		1,182		267		722		989
Molecular		175		272		447		65		74		139
Point of Care		92		37		129		103		35		138
Rapid Diagnostics		1,103		1,153		2,256		368		192		560
Total		1,641		2,373		4,014		803		1,023		1,826
Medical Devices —
Rhythm Management		241		278		519		228		246		474
Electrophysiology		179		252		431		164		224		388
Heart Failure		145		49		194		152		51		203
Vascular		219		416		635		230		395		625
Structural Heart		169		208		377		136		182		318
Neuromodulation		145		39		184		137		40		177
Diabetes Care		253		727		980		186		566		752
Total		1,351		1,969		3,320		1,233		1,704		2,937
Other		10		6		16		8		7		15
Total	$	3,838	$	6,618	$	10,456	$	2,856	$	4,870	$	7,726

Schedule of changes in contract liabilities

(in millions)
Contract Liabilities:
Balance at December 31, 2020	$	405
Unearned revenue from cash received during the period		174
Revenue recognized related to contract liability balance		(163)
Balance at March 31, 2021	$	416

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Supplemental Financial Information (Tables)

3 Months Ended

Mar. 31, 2021

Supplemental Financial Information

Summary of activity of allowance for doubtful accounts

(in millions)
Allowance for Doubtful Accounts:
Balance at December 31, 2020	$	288
Provisions/charges to income		15
Amounts charged off and other deductions		(8)
Balance at March 31, 2021	$	295

Schedule of long-term investments

	March 31,		December 31,
(in millions)	2021		2020
Long-term Investments:
Equity securities	$	785	$	776
Other		47		45
Total	$	832	$	821

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Changes in Accumulated Other Comprehensive Income (Loss) (Loss) (Tables)

3 Months Ended

Mar. 31, 2021

Changes in Accumulated Other Comprehensive Income (Loss)

Schedule of accumulated other comprehensive income (loss), net of taxes

	Three Months Ended March 31
									Cumulative Gains (Losses)
	Cumulative Foreign				Net Actuarial (Losses) and				on Derivative Instruments
	Currency Translation				Prior Service (Costs) and				Designated as Cash Flow
	Adjustments				Credits				Hedges
(in millions)	2021		2020		2021		2020		2021		2020
Balance at January 1	$	(4,859)	$	(4,924)	$	(3,871)	$	(3,540)	$	(216)	$	(1)
Other comprehensive income (loss) before reclassifications		(536)		(1,144)		22		7		96		176
Amounts reclassified from accumulated other comprehensive income		—		—		63		50		16		(10)
Net current period comprehensive income (loss)		(536)		(1,144)		85		57		112		166
Balance at March 31	$	(5,395)	$	(6,068)	$	(3,786)	$	(3,483)	$	(104)	$	165

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Restructuring Plans (Tables)

3 Months Ended

Mar. 31, 2021

Restructuring Plans

Summary of restructuring activity

(in millions)
Accrued balance at December 31, 2020	$	70
Restructuring charges recorded in 2021		1
Payments and other adjustments		(13)
Accrued balance at March 31, 2021	$	58

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Incentive Stock Programs (Tables)

3 Months Ended

Mar. 31, 2021

Incentive Stock Program

Schedule of stock options outstanding and exercisable

	Outstanding		Exercisable
Number of shares		30,484,541		23,519,084
Weighted average remaining life (years)		6.2		5.4
Weighted average exercise price	$	62.17	$	51.23
Aggregate intrinsic value (in millions)	$	1,769	$	1,614

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Financial Instruments, Derivatives and Fair Value Measures (Tables)

3 Months Ended

Mar. 31, 2021

Financial Instruments, Derivatives and Fair Value Measures

Summary of the amounts and location of certain derivative financial instruments

	Fair Value - Assets					Fair Value - Liabilities
	March 31,		Dec. 31,			March 31,		Dec. 31,
(in millions)	2021		2020		Balance Sheet Caption	2021		2020		Balance Sheet Caption
Interest rate swaps designated as fair value hedges	$	141	$	210	Deferred income taxes and other assets	$	—	$	—	Post-employment obligations, deferred income taxes and other long-term liabilities
Foreign currency forward exchange contracts:
Hedging instruments		105		30	Prepaid expenses and other receivables		167		433	Other accrued liabilities
Others not designated as hedges		76		60	Prepaid expenses and other receivables		92		65	Other accrued liabilities
Debt designated as a hedge of net investment in a foreign subsidiary		—		—	n/a		542		577	Long-term debt
	$	322	$	300		$	801	$	1,075

Schedule of derivatives gain (loss) in OCI and earnings

	Gain (loss) Recognized in				Income (expense) and
	Other Comprehensive				Gain (loss) Reclassified
	Income (loss)				into Income
(in millions)	2021		2020		2021		2020		Income Statement Caption
Foreign currency forward exchange contracts designated as cash flow hedges	$	134	$	227	$	(23)	$	11	Cost of products sold
Debt designated as a hedge of net investment in a foreign subsidiary		35		(8)		—		—	n/a
Interest rate swaps designated as fair value hedges		n/a		n/a		(69)		168	Interest expense

Schedule of carrying values and fair values of certain financial instruments

	March 31, 2021				December 31, 2020
	Carrying		Fair		Carrying		Fair
(in millions)	Value		Value		Value		Value
Long-term Investment Securities:
Equity securities	$	785	$	785	$	776	$	776
Other		47		47		45		45
Total Long-term Debt		(18,245)		(21,046)		(18,534)		(22,809)
Foreign Currency Forward Exchange Contracts:
Receivable position		181		181		90		90
(Payable) position		(259)		(259)		(498)		(498)
Interest Rate Hedge Contracts:
Receivable position		141		141		210		210

Schedule of assets and liabilities measured at fair value on a recurring basis

			Basis of Fair Value Measurement
			Quoted		Significant
			Prices in		Other		Significant
	Outstanding		Active		Observable		Unobservable
(in millions)	Balances		Markets		Inputs		Inputs
March 31, 2021:
Equity securities	$	391	$	391	$	—	$	—
Interest rate swap derivative financial instruments		141		—		141		—
Foreign currency forward exchange contracts		181		—		181		—
Total Assets	$	713	$	391	$	322	$	—
Fair value of hedged long-term debt	$	2,980	$	—	$	2,980	$	—
Foreign currency forward exchange contracts		259		—		259		—
Contingent consideration related to business combinations		67		—		—		67
Total Liabilities	$	3,306	$	—	$	3,239	$	67
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

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Post-Employment Benefits (Tables)

3 Months Ended

Mar. 31, 2021

Post-Employment Benefits

Schedule of components of the net periodic benefit cost for the entity's major defined benefit plans and post-employment medical and dental benefit plans

	Defined Benefit Plans				Medical and Dental Plans
	March 31,		March 31,		March 31,		March 31,
(in millions)	2021		2020		2021		2020
Service cost — benefits earned during the period	$	100	$	85	$	14	$	12
Interest cost on projected benefit obligations		62		75		8		12
Expected return on plan assets		(211)		(192)		(7)		(7)
Net amortization of:
Actuarial loss, net		81		63		7		8
Prior service cost (credit)		—		—		(7)		(7)
Net cost — continuing operations	$	32	$	31	$	15	$	18

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Segment Information (Tables)

3 Months Ended

Mar. 31, 2021

Segment Information

Schedule of segment information - net sales and operating earnings

	Three Months Ended March 31
	Net Sales to External Customers				Operating Earnings
(in millions)	2021		2020		2021		2020
Established Pharmaceutical Products	$	1,070	$	1,044	$	169	$	181
Nutritional Products		2,036		1,904		467		459
Diagnostic Products		4,014		1,826		1,701		405
Medical Devices		3,320		2,937		1,007		803
Total Reportable Segments		10,440		7,711		3,344		1,848
Other		16		15
Net sales	$	10,456	$	7,726
Corporate functions and benefit plans costs						(114)		(132)
Net interest expense						(124)		(121)
Share-based compensation (a)						(288)		(233)
Amortization of intangible assets						(509)		(561)
Other, net (b)						(266)		(168)
Earnings from continuing operations before taxes					$	2,043	$	633

(a) Approximately 50 percent of the annual net cost of share-based awards will typically be recognized in the first quarter due to the timing of the granting of share-based awards.

(b) Other, net includes integration costs associated with the acquisition of St. Jude Medical and Alere, and restructuring charges. Other, net for the three months ended March 31, 2021 also includes costs related to certain litigation.

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Revenue (Details) $ in Millions	3 Months Ended
	Mar. 31, 2021 USD ($) segment	Mar. 31, 2020 USD ($) segment
Revenue
Number of reportable segments | segment	4	4
Net sales	$ 10,456	$ 7,726
U.S.
Revenue
Net sales	3,838	2,856
Int'l
Revenue
Net sales	6,618	4,870
Established Pharmaceutical Products
Revenue
Net sales	1,070	1,044
Established Pharmaceutical Products | Int'l
Revenue
Net sales	1,070	1,044
Nutritional Products
Revenue
Net sales	2,036	1,904
Nutritional Products | U.S.
Revenue
Net sales	836	812
Nutritional Products | Int'l
Revenue
Net sales	1,200	1,092
Diagnostic Products
Revenue
Net sales	4,014	1,826
Diagnostic Products | U.S.
Revenue
Net sales	1,641	803
Diagnostic Products | Int'l
Revenue
Net sales	2,373	1,023
Medical Devices
Revenue
Net sales	3,320	2,937
Medical Devices | U.S.
Revenue
Net sales	1,351	1,233
Medical Devices | Int'l
Revenue
Net sales	1,969	1,704
Other
Revenue
Net sales	16	15
Other | U.S.
Revenue
Net sales	10	8
Other | Int'l
Revenue
Net sales	6	7
Key Emerging Markets | Established Pharmaceutical Products
Revenue
Net sales	821	813
Key Emerging Markets | Established Pharmaceutical Products | Int'l
Revenue
Net sales	821	813
Other | Established Pharmaceutical Products
Revenue
Net sales	249	231
Other | Established Pharmaceutical Products | Int'l
Revenue
Net sales	249	231
Pediatric Nutritionals | Nutritional Products
Revenue
Net sales	1,066	1,089
Pediatric Nutritionals | Nutritional Products | U.S.
Revenue
Net sales	508	518
Pediatric Nutritionals | Nutritional Products | Int'l
Revenue
Net sales	558	571
Adult Nutritionals | Nutritional Products
Revenue
Net sales	970	815
Adult Nutritionals | Nutritional Products | U.S.
Revenue
Net sales	328	294
Adult Nutritionals | Nutritional Products | Int'l
Revenue
Net sales	642	521
Core Laboratory | Diagnostic Products
Revenue
Net sales	1,182	989
Core Laboratory | Diagnostic Products | U.S.
Revenue
Net sales	271	267
Core Laboratory | Diagnostic Products | Int'l
Revenue
Net sales	911	722
Molecular | Diagnostic Products
Revenue
Net sales	447	139
Molecular | Diagnostic Products | U.S.
Revenue
Net sales	175	65
Molecular | Diagnostic Products | Int'l
Revenue
Net sales	272	74
Point of Care | Diagnostic Products
Revenue
Net sales	129	138
Point of Care | Diagnostic Products | U.S.
Revenue
Net sales	92	103
Point of Care | Diagnostic Products | Int'l
Revenue
Net sales	37	35
Rapid Diagnostics | Diagnostic Products
Revenue
Net sales	2,256	560
Rapid Diagnostics | Diagnostic Products | U.S.
Revenue
Net sales	1,103	368
Rapid Diagnostics | Diagnostic Products | Int'l
Revenue
Net sales	1,153	192
Rhythm Management | Medical Devices
Revenue
Net sales	519	474
Rhythm Management | Medical Devices | U.S.
Revenue
Net sales	241	228
Rhythm Management | Medical Devices | Int'l
Revenue
Net sales	278	246
Electrophysiology | Medical Devices
Revenue
Net sales	431	388
Electrophysiology | Medical Devices | U.S.
Revenue
Net sales	179	164
Electrophysiology | Medical Devices | Int'l
Revenue
Net sales	252	224
Heart Failure | Medical Devices
Revenue
Net sales	194	203
Heart Failure | Medical Devices | U.S.
Revenue
Net sales	145	152
Heart Failure | Medical Devices | Int'l
Revenue
Net sales	49	51
Vascular | Medical Devices
Revenue
Net sales	635	625
Vascular | Medical Devices | U.S.
Revenue
Net sales	219	230
Vascular | Medical Devices | Int'l
Revenue
Net sales	416	395
Structural Heart | Medical Devices
Revenue
Net sales	377	318
Structural Heart | Medical Devices | U.S.
Revenue
Net sales	169	136
Structural Heart | Medical Devices | Int'l
Revenue
Net sales	208	182
Neuromodulation | Medical Devices
Revenue
Net sales	184	177
Neuromodulation | Medical Devices | U.S.
Revenue
Net sales	145	137
Neuromodulation | Medical Devices | Int'l
Revenue
Net sales	39	40
Diabetes Care | Medical Devices
Revenue
Net sales	980	752
Diabetes Care | Medical Devices | U.S.
Revenue
Net sales	253	186
Diabetes Care | Medical Devices | Int'l
Revenue
Net sales	$ 727	$ 566

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Revenue - Remaining Performance Obligations (Details) $ in Millions	3 Months Ended
	Mar. 31, 2021 USD ($)
Diagnostic Products
Remaining Performance Obligations
Remaining performance obligations	$ 3,800
Medical Devices
Remaining Performance Obligations
Remaining performance obligations	$ 400
Revenue, Remaining Performance Obligation, Expected Timing of Satisfaction, Start Date [Axis]: 2021-04-01
Remaining Performance Obligations
Expected timing of satisfaction period (in months)	24 months
Percentage of remaining performance obligation expected to be recognized in period	60.00%
Revenue, Remaining Performance Obligation, Expected Timing of Satisfaction, Start Date [Axis]: 2023-04-01
Remaining Performance Obligations
Expected timing of satisfaction period (in months)	12 months
Percentage of remaining performance obligation expected to be recognized in period	17.00%

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Revenue - Practical Expedient (Details)	3 Months Ended
	Mar. 31, 2021
Revenue
Practical expedient in remaining performance obligations related to contracts	true

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Revenue - Other Contract Assets and Liabilities (Details) $ in Millions	3 Months Ended
	Mar. 31, 2021 USD ($)
Contract Liabilities
Balance at beginning of period	$ 405
Unearned revenue from cash received during the period	174
Revenue recognized related to contract liability balance	(163)
Balance at end of period	$ 416

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Supplemental Financial Information - Income Statement (Details) - USD ($) $ in Millions	3 Months Ended
	Mar. 31, 2021	Mar. 31, 2020
Supplemental Financial Information
Earnings from continuing operations allocated to common shares	$ 1,785	$ 541
Net earnings allocated to common shares	$ 1,785	$ 561

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Supplemental Financial Information - Cash Flows (Details) - USD ($) $ in Millions	3 Months Ended
	Mar. 31, 2021	Mar. 31, 2020
Cash flow disclosures
Payment of cash taxes	$ 270	$ 125
Net tax benefits primarily as a result of the resolution of various tax positions related to prior years related to discontinued operation		20
Defined Benefit Plans
Cash flow disclosures
Pension contributions	$ 16	$ 320

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Supplemental Financial Information - Allowance for Doubtful Accounts (Details) $ in Millions	3 Months Ended
	Mar. 31, 2021 USD ($)
Allowances for Doubtful Accounts and Product Returns
Balance at December 31, 2020	$ 288
Provisions/charges to income	15
Amounts charged off and other deductions	(8)
Balance at March 31, 2021	$ 295

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Supplemental Financial Information - Investments (Details) - USD ($) $ in Millions	Mar. 31, 2021	Dec. 31, 2020
Investments
Long-term Investments	$ 832	$ 821
Equity method investments carrying value	289
Equity investment without readily determinable fair value	105
Equity securities
Investments
Long-term Investments	785	776
Other
Investments
Long-term Investments	47	$ 45
St Jude Medical | Equity securities
Investments
Securities in mutual funds held in a rabbi trust	$ 375

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Changes in Accumulated Other Comprehensive Income (Loss) (Details) - USD ($) $ in Millions	3 Months Ended
	Mar. 31, 2021	Mar. 31, 2020
Changes in accumulated other comprehensive income (loss), net of income taxes
Beginning of the period	$ 32,784
Net current period comprehensive income (loss)	(339)	$ (921)
End of the period	33,562
Cumulative Foreign Currency Translation Adjustments
Changes in accumulated other comprehensive income (loss), net of income taxes
Beginning of the period	(4,859)	(4,924)
Other comprehensive income (loss) before reclassifications	(536)	(1,144)
Net current period comprehensive income (loss)	(536)	(1,144)
End of the period	(5,395)	(6,068)
Net Actuarial (Losses) and Prior Service (Costs) and Credits
Changes in accumulated other comprehensive income (loss), net of income taxes
Beginning of the period	(3,871)	(3,540)
Other comprehensive income (loss) before reclassifications	22	7
Amounts reclassified from accumulated other comprehensive income	63	50
Net current period comprehensive income (loss)	85	57
End of the period	(3,786)	(3,483)
Cumulative Gains (Losses) on Derivative Instruments Designated as Cash Flow Hedges
Changes in accumulated other comprehensive income (loss), net of income taxes
Beginning of the period	(216)	(1)
Other comprehensive income (loss) before reclassifications	96	176
Amounts reclassified from accumulated other comprehensive income	16	(10)
Net current period comprehensive income (loss)	112	166
End of the period	$ (104)	$ 165

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Goodwill and Intangible Assets - Goodwill (Details) - USD ($) $ in Millions	3 Months Ended
	Mar. 31, 2021	Dec. 31, 2020
Goodwill and Intangible Assets
Goodwill	$ 23,384	$ 23,744
Decrease in goodwill from foreign currency translation adjustments	360
Amount of reductions of goodwill relating to impairments	0
Established Pharmaceutical Products
Goodwill and Intangible Assets
Goodwill	2,900
Nutritional Products
Goodwill and Intangible Assets
Goodwill	286
Diagnostic Products
Goodwill and Intangible Assets
Goodwill	3,800
Medical Devices
Goodwill and Intangible Assets
Goodwill	$ 16,300

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Goodwill and Intangible Assets - Intangible Assets (Details) - USD ($) $ in Millions	3 Months Ended
	Mar. 31, 2021	Dec. 31, 2020
Goodwill and Intangible Assets
Gross amount of amortizable intangible assets	$ 27,500	$ 27,800
Accumulated amortization of intangible assets	14,500	14,200
Increase (Decrease) in intangible assets due to foreign currency translation adjustments	(94)
Estimated annual amortization expense, intangible assets, 2021	2,000
Estimated annual amortization expense, intangible assets, 2022	2,000
Estimated annual amortization expense, intangible assets, 2023	1,900
Estimated annual amortization expense, intangible assets, 2024	1,900
Estimated annual amortization expense, intangible assets, 2025	1,900
Indefinite-lived intangible assets related to in-process R&D acquired in a business combination	$ 1,200	$ 1,200

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Restructuring Plans - Plans (Details) - USD ($) $ in Millions	3 Months Ended
	Mar. 31, 2021	Dec. 31, 2020
Restructuring costs
Restructuring reserve	$ 58	$ 70
Additional charges	1
St Jude and Alere Integrations
Restructuring costs
Restructuring reserve	13	$ 25
Additional charges	0
Streamline of Operations and Improve Efficiencies
Restructuring costs
Additional charges	$ 1

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Restructuring Plans - Activity (Details) $ in Millions	3 Months Ended
	Mar. 31, 2021 USD ($)
Restructuring Plans
Accrued balance at beginning of the period	$ 70
Restructuring charges recorded in 2021	1
Payments and other adjustments	(13)
Accrued balance at end of the period	$ 58

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Incentive Stock Programs - General (Details)	3 Months Ended
	Mar. 31, 2021 shares
Incentive Stock Program
Incentive stock program, shares reserved for future grants	101,000,000
Stock options
Incentive Stock Program
Stock options granted during the period (in shares)	2,693,918
Restricted stock awards
Incentive Stock Program
Grants in period, restricted stock (in shares)	478,490
Restricted stock units
Incentive Stock Program
Awards and units granted during period (in shares)	4,511,126

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Incentive Stock Programs - Options (Details) $ / shares in Units, $ in Millions	3 Months Ended
	Mar. 31, 2021 USD ($) $ / shares shares
Incentive Stock Program
Total unrecognized compensation cost	$ 744
Total unrecognized compensation cost, recognition period	3 years
Stock options
Incentive Stock Program
Stock options outstanding, number of shares | shares	30,484,541
Exercisable options, number of shares | shares	23,519,084
Stock options outstanding, weighted-average remaining life	6 years 2 months 12 days
Exercisable options, weighted-average remaining life	5 years 4 months 24 days
Stock options outstanding, weighted-average exercise price (in dollars per share) | $ / shares	$ 62.17
Exercisable options, weighted-average exercise price (in dollars per share) | $ / shares	$ 51.23
Aggregate intrinsic value of options outstanding	$ 1,769
Aggregate intrinsic value of options exercisable	$ 1,614

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Financial Instruments, Derivatives and Fair Value Measures - Contracts (Details) - USD ($) $ in Millions	3 Months Ended
	Mar. 31, 2021	Dec. 31, 2020
Designated as hedging instrument | Yen-denominated long-term debt | Net investment hedges
Financial Instruments, Derivatives and Fair Value Measures
Term loan	$ 542	$ 577
Debt Instrument, Term	5 years
Designated as hedging instrument | Foreign currency forward exchange contracts | Cash flow hedges
Financial Instruments, Derivatives and Fair Value Measures
Gross notional amount	$ 8,600	8,100
Minimum length of time over which accumulated gains and losses will be recognized in Cost of products sold	12 months
Maximum length of time over which accumulated gains and losses will be recognized in Cost of products sold	18 months
Designated as hedging instrument | Interest rate swaps | Fair value hedges
Financial Instruments, Derivatives and Fair Value Measures
Gross notional amount	$ 2,900	2,900
Not designated as hedging instrument | Foreign currency forward exchange contracts
Financial Instruments, Derivatives and Fair Value Measures
Gross notional amount	$ 10,200	$ 11,000

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Financial Instruments, Derivatives and Fair Value Measures - Location of Derivative Instruments (Details) - USD ($) $ in Millions	Mar. 31, 2021	Dec. 31, 2020
Derivative instruments and fair value
Fair Value - Assets	$ 322	$ 300
Fair Value - Liabilities	801	1,075
Designated as hedging instrument | Interest rate swaps | Deferred income taxes and other assets | Fair value hedges
Derivative instruments and fair value
Fair Value - Assets	141	210
Designated as hedging instrument | Foreign currency forward exchange contracts | Prepaid expenses and other receivables
Derivative instruments and fair value
Fair Value - Assets	105	30
Designated as hedging instrument | Foreign currency forward exchange contracts | Other accrued liabilities
Derivative instruments and fair value
Fair Value - Liabilities	167	433
Designated as hedging instrument | Debt | Long-term Debt | Net investment hedges
Derivative instruments and fair value
Fair Value - Liabilities	542	577
Not designated as hedging instrument | Foreign currency forward exchange contracts | Prepaid expenses and other receivables
Derivative instruments and fair value
Fair Value - Assets	76	60
Not designated as hedging instrument | Foreign currency forward exchange contracts | Other accrued liabilities
Derivative instruments and fair value
Fair Value - Liabilities	$ 92	$ 65

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Financial Instruments, Derivatives and Fair Value Measures - Gain or Loss (Details) - USD ($) $ in Millions	3 Months Ended
	Mar. 31, 2021	Mar. 31, 2020
Foreign currency forward exchange contracts | Not designated as hedging instrument
Gain (loss) on derivatives
Income (expense) and Gains (loss) Reclassified into Income	$ 49	$ (165)
Foreign currency forward exchange contracts | Cash flow hedges | Designated as hedging instrument | Cost of products sold
Gain (loss) on derivatives
Gain (loss) Recognized in Other Comprehensive Income (loss)	134	227
Income (expense) and Gains (loss) Reclassified into Income	(23)	11
Debt | Net investment hedges | Designated as hedging instrument
Gain (loss) on derivatives
Gain (loss) Recognized in Other Comprehensive Income (loss)	35	(8)
Interest rate swaps | Fair value hedges | Designated as hedging instrument | Interest expense
Gain (loss) on derivatives
Income (expense) and Gains (loss) Reclassified into Income	$ (69)	$ 168

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Financial Instruments, Derivatives and Fair Value Measures - Carrying Value and Fair Value (Details) - USD ($) $ in Millions	Mar. 31, 2021	Dec. 31, 2020
Fair value, asset and liability measures
Long-term Investments	$ 832	$ 821
Equity securities
Fair value, asset and liability measures
Long-term Investments	785	776
Carrying Value
Fair value, asset and liability measures
Total Long-Term debt	(18,245)	(18,534)
Foreign currency forward exchange contracts, receivable position	181	90
Foreign currency forward exchange contracts, (payable) position	(259)	(498)
Interest rate hedge contracts, receivable position	141	210
Carrying Value | Equity securities
Fair value, asset and liability measures
Long-term Investments	785	776
Carrying Value | Other
Fair value, asset and liability measures
Long-term Investments	47	45
Fair Value
Fair value, asset and liability measures
Total Long-Term debt	(21,046)	(22,809)
Foreign currency forward exchange contracts, receivable position	181	90
Foreign currency forward exchange contracts, (payable) position	(259)	(498)
Interest rate hedge contracts, receivable position	141	210
Fair Value | Equity securities
Fair value, asset and liability measures
Long-term Investments	785	776
Fair Value | Other
Fair value, asset and liability measures
Long-term Investments	$ 47	$ 45

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Financial Instruments, Derivatives and Fair Value Measures - Bases of Measurement (Details) - Recurring - USD ($) $ in Millions	Mar. 31, 2021	Dec. 31, 2020
Fair value, asset and liability measures
Equity securities	$ 391	$ 386
Interest rate swap derivative financial instruments, assets	141	210
Foreign currency forward exchange contracts	181	90
Total Assets	713	686
Fair value of hedged long-term debt	2,980	3,049
Foreign currency forward exchange contracts	259	498
Contingent consideration related to business combinations	67	68
Total Liabilities	3,306	3,615
Quoted Prices in Active Markets
Fair value, asset and liability measures
Equity securities	391	386
Total Assets	391	386
Significant Other Observable Inputs
Fair value, asset and liability measures
Interest rate swap derivative financial instruments, assets	141	210
Foreign currency forward exchange contracts	181	90
Total Assets	322	300
Fair value of hedged long-term debt	2,980	3,049
Foreign currency forward exchange contracts	259	498
Total Liabilities	3,239	3,547
Significant Unobservable Inputs
Fair value, asset and liability measures
Contingent consideration related to business combinations	67	68
Total Liabilities	$ 67	$ 68

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Litigation and Environmental Matters (Details) $ in Millions	Mar. 31, 2021 USD ($)
Loss Contingencies
Maximum expected cleanup exposure for individual site	$ 4
Maximum expected cleanup exposure in aggregate	10
Legal proceedings and environmental exposures
Loss Contingencies
Recorded accrual balance for legal proceedings and exposures	230
Legal proceedings and environmental exposures | Minimum
Loss Contingencies
Estimation of possible loss	215
Legal proceedings and environmental exposures | Maximum
Loss Contingencies
Estimation of possible loss	$ 250

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Post-Employment Benefits - (Details) - USD ($) $ in Millions	3 Months Ended
	Mar. 31, 2021	Mar. 31, 2020
Defined Benefit Plans
Defined benefit plan net periodic benefit cost
Service cost - benefits earned during the period	$ 100	$ 85
Interest cost on projected benefit obligations	62	75
Expected return on plan assets	(211)	(192)
Net amortization of:
Actuarial loss, net	81	63
Net cost - continuing operations	32	31
Post-employment Obligations and Other Long-term Liabilities:
Company contributions	16	320
Medical and Dental Plans
Defined benefit plan net periodic benefit cost
Service cost - benefits earned during the period	14	12
Interest cost on projected benefit obligations	8	12
Expected return on plan assets	(7)	(7)
Net amortization of:
Actuarial loss, net	7	8
Prior service cost (credit)	(7)	(7)
Net cost - continuing operations	15	18
Post-employment Obligations and Other Long-term Liabilities:
Company contributions	$ 0	$ 11

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Taxes on Earnings (Details) - USD ($) $ in Millions	3 Months Ended
	Mar. 31, 2021	Mar. 31, 2020
Taxes on Earnings
Excess tax benefits associated with share-based compensation	$ (80)	$ (47)
Net tax benefits primarily as a result of the resolution of various tax positions related to prior years related to discontinued operation		$ 20
Decrease reasonably possible in gross unrecognized tax benefits	$ 50

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Segment Information (Details) - USD ($) $ in Millions	3 Months Ended
	Mar. 31, 2021	Mar. 31, 2020
Segment Information
Net Sales to External Customers	$ 10,456	$ 7,726
Operating Earnings	2,109	758
Amortization of intangible assets	(509)	(561)
Earnings from continuing operations before tax	$ 2,043	633
Annual share-based awards recognized in first quarter (as a percent)	50.00%
Established Pharmaceutical Products
Segment Information
Net Sales to External Customers	$ 1,070	1,044
Nutritional Products
Segment Information
Net Sales to External Customers	2,036	1,904
Diagnostic Products
Segment Information
Net Sales to External Customers	4,014	1,826
Medical Devices
Segment Information
Net Sales to External Customers	3,320	2,937
Other
Segment Information
Net Sales to External Customers	16	15
Total Reportable Segment Operating Earnings
Segment Information
Net Sales to External Customers	10,440	7,711
Operating Earnings	3,344	1,848
Total Reportable Segment Operating Earnings | Established Pharmaceutical Products
Segment Information
Net Sales to External Customers	1,070	1,044
Operating Earnings	169	181
Total Reportable Segment Operating Earnings | Nutritional Products
Segment Information
Net Sales to External Customers	2,036	1,904
Operating Earnings	467	459
Total Reportable Segment Operating Earnings | Diagnostic Products
Segment Information
Net Sales to External Customers	4,014	1,826
Operating Earnings	1,701	405
Total Reportable Segment Operating Earnings | Medical Devices
Segment Information
Net Sales to External Customers	3,320	2,937
Operating Earnings	1,007	803
Reconciling items
Segment Information
Corporate functions and benefit plans costs	(114)	(132)
Net interest expense	(124)	(121)
Share-based compensation	(288)	(233)
Amortization of intangible assets	(509)	(561)
Other, net	$ (266)	$ (168)