abt-20240630

Table of Contents

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

WASHINGTON, D.C. 20549

FORM 10-Q

(Mark One)


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

For the quarterly period ended June 30, 2024


o			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 x No o

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 x No o

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 x			Accelerated Filer o

Non-Accelerated Filer o			Smaller reporting company o

			Emerging growth company o

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. o

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

As of June 30, 2024, Abbott Laboratories had 1,739,897,004 common shares without par value outstanding.

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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			8
Notes to the Condensed Consolidated Financial Statements			9

Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations			25

Item 4. Controls and Procedures			32

Part II - Other Information			32

Item 1. Legal Proceedings			32

Item 2. Unregistered Sales of Equity Securities and Use of Proceeds			32

Item 5. Other Information			33

Item 6. Exhibits			33

Signature			34

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Abbott Laboratories and Subsidiaries

Condensed Consolidated Statement of Earnings

(Unaudited)

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


	Three Months Ended				Six Months Ended
	June 30				June 30
	2024		2023		2024		2023
Net sales	$	10,377	$	9,978	$	20,341	$	19,725

Cost of products sold, excluding amortization of intangible assets	4,603		4,483		9,066		8,814
Amortization of intangible assets	471		498		943		989
Research and development	698		715		1,382		1,369
Selling, general and administrative	2,936		2,740		5,895		5,502
Total operating cost and expenses	8,708		8,436		17,286		16,674

Operating earnings	1,669		1,542		3,055		3,051

Interest expense	140		159		281		312
Interest (income)	(82)		(98)		(162)		(199)
Net foreign exchange (gain) loss	(6)		21		(6)		27
Other (income) expense, net	10		(176)		(101)		(287)
Earnings before taxes	1,607		1,636		3,043		3,198
Taxes on earnings	305		261		516		505
Net Earnings	$	1,302	$	1,375	$	2,527	$	2,693

Basic Earnings Per Common Share	$	0.74	$	0.79	$	1.45	$	1.54

Diluted Earnings Per Common Share	$	0.74	$	0.78	$	1.44	$	1.53

Average Number of Common Shares Outstanding Used for Basic Earnings Per Common Share	1,743,040		1,740,359		1,741,595		1,741,051
Dilutive Common Stock Options	8,113		9,889		8,781		9,933
Average Number of Common Shares Outstanding Plus Dilutive Common Stock Options	1,751,153		1,750,248		1,750,376		1,750,984

Outstanding Common Stock Options Having No Dilutive Effect	8,855		5,474		6,892		5,474

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

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Abbott Laboratories and Subsidiaries

Condensed Consolidated Statement of Comprehensive Income

(Unaudited)

(dollars in millions)


	Three Months Ended				Six Months Ended
	June 30				June 30
	2024		2023		2024		2023
Net Earnings	$	1,302	$	1,375	$	2,527	$	2,693
Foreign currency translation gain (loss) adjustments	(36)		(52)		(422)		87
Net actuarial gains (losses) and amortization of net actuarial losses and prior service costs and credits, net of taxes of $— and $1 in 2024 and $(3) and $(3) in 2023	7		(6)		11		(4)
Net gains (losses) for derivative instruments designated as cash flow hedges, net of taxes of $27 and $57 in 2024 and $4 and $(54) in 2023	60		26		115		(103)
Other comprehensive income (loss)	31		(32)		(296)		(20)
Comprehensive Income	$	1,333	$	1,343	$	2,231	$	2,673


	June 30, 2024		December 31, 2023
Supplemental Accumulated Other Comprehensive Income (Loss) Information, net of tax:
Cumulative foreign currency translation (loss) adjustments	$	(6,926)	$	(6,504)
Net actuarial (losses) and prior service (costs) and credits	(1,365)		(1,376)
Cumulative gains (losses) on derivative instruments designated as cash flow hedges	156		41
Accumulated other comprehensive income (loss)	$	(8,135)	$	(7,839)

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

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Abbott Laboratories and Subsidiaries

Condensed Consolidated Balance Sheet

(Unaudited)

(dollars in millions)


	June 30, 2024		December 31, 2023
Assets
Current Assets:
Cash and cash equivalents	$	6,987	$	6,896
Short-term investments	232		383
Trade receivables, less allowances of $441 in 2024 and $444 in 2023	6,854		6,565
Inventories:
Finished products	4,060		3,946
Work in process	880		807
Materials	1,874		1,817
Total inventories	6,814		6,570
Prepaid expenses and other receivables	2,232		2,256
Total Current Assets	23,119		22,670
Investments	877		799
Property and equipment, at cost	22,061		21,933
Less: accumulated depreciation and amortization	11,828		11,779
Net property and equipment	10,233		10,154
Intangible assets, net of amortization	7,827		8,815
Goodwill	23,308		23,679
Deferred income taxes and other assets	7,653		7,097
	$	73,017	$	73,214
Liabilities and Shareholders’ Investment
Current Liabilities:
Trade accounts payable	$	4,125	$	4,295
Salaries, wages and commissions	1,389		1,597
Other accrued liabilities	5,071		5,422
Dividends payable	959		955
Income taxes payable	601		492
Current portion of long-term debt	1,615		1,080
Total Current Liabilities	13,760		13,841
Long-term debt	13,139		13,599
Post-employment obligations, deferred income taxes and other long-term liabilities	6,558		6,947
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: 2024: 1,990,029,292; 2023: 1,987,883,852	24,858		24,869
Common shares held in treasury, at cost — Shares: 2024: 250,131,563; 2023: 253,807,494	(15,759)		(15,981)
Earnings employed in the business	38,354		37,554
Accumulated other comprehensive income (loss)	(8,135)		(7,839)
Total Abbott Shareholders’ Investment	39,318		38,603
Noncontrolling Interests in Subsidiaries	242		224
Total Shareholders’ Investment	39,560		38,827
	$	73,017	$	73,214

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

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Abbott Laboratories and Subsidiaries

Condensed Consolidated Statement of Shareholders’ Investment

(Unaudited)

(in millions except shares and per share data)


	Three Months Ended June 30
	2024		2023
Common Shares:
Balance at March 31
Shares: 2024: 1,989,789,999; 2023: 1,986,904,170	$	24,726	$	24,488
Issued under incentive stock programs
Shares: 2024: 239,293; 2023: 277,321	13		14
Share-based compensation	124		119
Issuance of restricted stock awards	(5)		(9)
Balance at June 30
Shares: 2024: 1,990,029,292; 2023: 1,987,181,491	$	24,858	$	24,612

Common Shares Held in Treasury:
Balance at March 31
Shares: 2024: 250,155,515; 2023: 247,957,371	$	(15,761)	$	(15,307)
Issued under incentive stock programs
Shares: 2024: 27,310; 2023: 157,305	2		10
Purchased
Shares: 2024: 3,358; 2023: 4,023,445	—		(425)
Balance at June 30
Shares: 2024: 250,131,563; 2023: 251,823,511	$	(15,759)	$	(15,722)

Earnings Employed in the Business:
Balance at March 31	$	38,011	$	35,868
Net earnings	1,302		1,375
Cash dividends declared on common shares (per share — 2024: $0.55; 2023: $0.51)	(961)		(889)
Effect of common and treasury share transactions	2		1
Balance at June 30	$	38,354	$	36,355

Accumulated Other Comprehensive Income (Loss):
Balance at March 31	$	(8,166)	$	(8,039)
Other comprehensive income (loss)	31		(32)
Balance at June 30	$	(8,135)	$	(8,071)

Noncontrolling Interests in Subsidiaries:
Balance at March 31	$	233	$	222
Noncontrolling Interests’ share of income, business combinations, net of distributions and share repurchases	9		8
Balance at June 30	$	242	$	230

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

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Abbott Laboratories and Subsidiaries

Condensed Consolidated Statement of Shareholders’ Investment

(Unaudited)

(in millions except shares and per share data)


	Six Months Ended June 30
	2024		2023
Common Shares:
Balance at January 1
Shares: 2024: 1,987,883,852; 2023: 1,986,519,278	$	24,869	$	24,709
Issued under incentive stock programs
Shares: 2024: 2,145,440; 2023: 662,213	100		30
Share-based compensation	446		415
Issuance of restricted stock awards	(557)		(542)
Balance at June 30
Shares: 2024: 1,990,029,292; 2023: 1,987,181,491	$	24,858	$	24,612

Common Shares Held in Treasury:
Balance at January 1
Shares: 2024: 253,807,494; 2023: 248,724,257	$	(15,981)	$	(15,229)
Issued under incentive stock programs
Shares: 2024: 3,865,565; 2023: 4,090,470	244		252
Purchased
Shares: 2024: 189,634; 2023: 7,189,724	(22)		(745)
Balance at June 30
Shares: 2024: 250,131,563; 2023: 251,823,511	$	(15,759)	$	(15,722)

Earnings Employed in the Business:
Balance at January 1	$	37,554	$	35,257
Net earnings	2,527		2,693
Cash dividends declared on common shares (per share — 2024: $1.10; 2023: $1.02)	(1,921)		(1,779)
Effect of common and treasury share transactions	194		184
Balance at June 30	$	38,354	$	36,355

Accumulated Other Comprehensive Income (Loss):
Balance at January 1	$	(7,839)	$	(8,051)
Other comprehensive income (loss)	(296)		(20)
Balance at June 30	$	(8,135)	$	(8,071)

Noncontrolling Interests in Subsidiaries:
Balance at January 1	$	224	$	219
Noncontrolling Interests’ share of income, business combinations, net of distributions and share repurchases	18		11
Balance at June 30	$	242	$	230

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

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Abbott Laboratories and Subsidiaries

Condensed Consolidated Statement of Cash Flows

(Unaudited)

(dollars in millions)


	Six Months Ended June 30
	2024		2023
Cash Flow From (Used in) Operating Activities:
Net earnings	$	2,527	$	2,693
Adjustments to reconcile net earnings to net cash from operating activities —
Depreciation	667		617
Amortization of intangible assets	943		989
Share-based compensation	445		413
Trade receivables	(476)		37
Inventories	(513)		(667)
Other, net	(608)		(1,736)
Net Cash From Operating Activities	2,985		2,346

Cash Flow From (Used in) Investing Activities:
Acquisitions of property and equipment	(931)		(887)
Acquisitions of businesses and technologies, net of cash acquired	—		(826)
Proceeds from business dispositions	1		40
Sales (purchases) of other investment securities, net	49		(7)
Other	3		5
Net Cash From (Used in) Investing Activities	(878)		(1,675)

Cash Flow From (Used in) Financing Activities:
Net borrowings (repayments) of short-term debt and other	(170)		(29)
Proceeds from issuance of long-term debt	221		1
Repayments of long-term debt	(18)		(2)
Purchases of common shares	(229)		(966)
Proceeds from stock options exercised	147		77
Dividends paid	(1,918)		(1,780)
Net Cash From (Used in) Financing Activities	(1,967)		(2,699)

Effect of exchange rate changes on cash and cash equivalents	(49)		(19)

Net Increase (Decrease) in Cash and Cash Equivalents	91		(2,047)
Cash and Cash Equivalents, Beginning of Year	6,896		9,882
Cash and Cash Equivalents, End of Period	$	6,987	$	7,835

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

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Abbott Laboratories and Subsidiaries

Notes to the Condensed Consolidated Financial Statements

June 30, 2024

(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, 2023. The condensed consolidated financial statements include the accounts of the parent company and subsidiaries, after elimination of intercompany transactions.

Note 2 — New Accounting Standards

Recent Accounting Standards Not Yet Adopted

In November 2023, the Financial Accounting Standards Board (FASB) issued Accounting Standards Update (ASU) 2023-07, Segment Reporting (Topic 280): Improvements to Reportable Segment Disclosures, which expands the breadth and frequency of required segment disclosures. The guidance is required to be applied retrospectively to all periods presented in the financial statements. The standard becomes effective for Abbott for full year 2024 reporting and for interim periods beginning in the first quarter of 2025. Abbott is currently evaluating the impact of this new standard on its consolidated financial statements.

In December 2023, the FASB issued ASU 2023-09, Income Taxes (Topic 740): Improvements to Income Tax Disclosures, which requires an entity to disclose annually additional information related to the company's income tax rate reconciliation and income taxes paid during the period. The guidance should be applied prospectively with the option to apply the standard retrospectively. The standard becomes effective for Abbott for full year 2025 reporting. Abbott is currently evaluating the impact of this new standard on its consolidated financial statements.

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Abbott Laboratories and Subsidiaries

Notes to the Condensed Consolidated Financial Statements

June 30, 2024

(Unaudited)

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 tables provide detail by sales category:


	Three Months Ended June 30, 2024						Three Months Ended June 30, 2023
(in millions)	U.S.		Int’l		Total		U.S.		Int’l		Total
Established Pharmaceutical Products —
Key Emerging Markets	$	—	$	988	$	988	$	—	$	990	$	990
Other	—		306		306		—		297		297
Total	—		1,294		1,294		—		1,287		1,287
Nutritionals —
Pediatric Nutritionals	564		495		1,059		507		517		1,024
Adult Nutritionals	369		722		1,091		374		678		1,052
Total	933		1,217		2,150		881		1,195		2,076
Diagnostics —
Core Laboratory	327		1,002		1,329		311		982		1,293
Molecular	33		94		127		43		98		141
Point of Care	107		49		156		99		43		142
Rapid Diagnostics	345		238		583		508		233		741
Total	812		1,383		2,195		961		1,356		2,317
Medical Devices —
Rhythm Management	292		315		607		269		314		583
Electrophysiology	287		340		627		245		308		553
Heart Failure	244		77		321		226		69		295
Vascular	275		449		724		264		451		715
Structural Heart	258		306		564		219		279		498
Neuromodulation	192		51		243		185		42		227
Diabetes Care	637		1,011		1,648		505		919		1,424
Total	2,185		2,549		4,734		1,913		2,382		4,295

Other	4		—		4		3		—		3

Total	$	3,934	$	6,443	$	10,377	$	3,758	$	6,220	$	9,978

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Abbott Laboratories and Subsidiaries

Notes to the Condensed Consolidated Financial Statements

June 30, 2024

(Unaudited)

Note 3 — Revenue (Continued)


	Six Months Ended June 30, 2024						Six Months Ended June 30, 2023
(in millions)	U.S.		Int’l		Total		U.S.		Int’l		Total
Established Pharmaceutical Products —
Key Emerging Markets	$	—	$	1,916	$	1,916	$	—	$	1,902	$	1,902
Other	—		604		604		—		574		574
Total	—		2,520		2,520		—		2,476		2,476
Nutritionals —
Pediatric Nutritionals	1,078		990		2,068		966		982		1,948
Adult Nutritionals	733		1,417		2,150		727		1,368		2,095
Total	1,811		2,407		4,218		1,693		2,350		4,043
Diagnostics —
Core Laboratory	637		1,897		2,534		600		1,875		2,475
Molecular	75		181		256		90		198		288
Point of Care	205		90		295		192		84		276
Rapid Diagnostics	826		498		1,324		1,414		552		1,966
Total	1,743		2,666		4,409		2,296		2,709		5,005
Medical Devices —
Rhythm Management	563		606		1,169		529		581		1,110
Electrophysiology	556		658		1,214		483		575		1,058
Heart Failure	481		145		626		444		132		576
Vascular	529		884		1,413		482		850		1,332
Structural Heart	491		588		1,079		429		530		959
Neuromodulation	373		96		469		340		83		423
Diabetes Care	1,226		1,991		3,217		984		1,753		2,737
Total	4,219		4,968		9,187		3,691		4,504		8,195

Other	7		—		7		6		—		6

Total	$	7,780	$	12,561	$	20,341	$	7,686	$	12,039	$	19,725

Products sold by the Diagnostics segment include various types of diagnostic tests to detect the COVID-19 coronavirus. In the second quarter of 2024 and 2023, COVID-19 testing-related sales totaled $102 million and $263 million, respectively. In the first six months of 2024 and 2023, Abbott’s COVID-19 testing-related sales totaled $306 million and $993 million, respectively.

Remaining Performance Obligations

As of June 30, 2024, the estimated revenue expected to be recognized in the future related to performance obligations that are unsatisfied (or partially unsatisfied) was approximately $4.8 billion in the Diagnostics segment and approximately $493 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.

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Abbott Laboratories and Subsidiaries

Notes to the Condensed Consolidated Financial Statements

June 30, 2024

(Unaudited)

Note 3 — Revenue (Continued)

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 FASB 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 the 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, 2023	$	545
Unearned revenue from cash received during the period	232
Revenue recognized related to contract liability balance	(233)
Balance at June 30, 2024	$	544

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. Net earnings allocated to common shares for the three months ended June 30, 2024 and 2023 were $1.297 billion and $1.370 billion, respectively, and for the six months ended June 30, 2024 and 2023 were $2.517 billion and $2.682 billion, respectively.

In the second quarter of 2024, Abbott sold a non-core business related to its Established Pharmaceutical Products segment. Abbott recorded a loss of approximately $143 million on the sale in Other (income) expense, net in its Condensed Consolidated Statement of Earnings. Net assets which primarily related to inventory and net property and equipment and had a carrying value of $28 million were included in the sale. The loss on the sale also included $116 million of cumulative foreign currency translation adjustment previously recorded in Accumulated other comprehensive income (loss).

Other, net in Net cash from operating activities in the Condensed Consolidated Statement of Cash Flows for the first six months of 2024 includes $289 million of pension contributions and the payment of cash taxes of approximately $747 million. The first six months of 2023 included $290 million of pension contributions and the payment of cash taxes of approximately $837 million.

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Abbott Laboratories and Subsidiaries

Notes to the Condensed Consolidated Financial Statements

June 30, 2024

(Unaudited)

Note 4 — Supplemental Financial Information (Continued)

The following summarizes the activity for the first six months of 2024 related to the allowance for doubtful accounts as of June 30, 2024:


(in millions)
Allowance for Doubtful Accounts:
Balance at December 31, 2023	$	241
Provisions/charges to income	42
Amounts charged off and other deductions	(28)
Balance at June 30, 2024	$	255

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 June 30, 2024 and December 31, 2023 are as follows:


(in millions)	June 30, 2024		December 31, 2023
Long-term Investments:
Equity securities	$	549	$	555
Other	328		244
Total	$	877	$	799

The increase in Abbott’s long-term investments as of June 30, 2024 versus the balance as of December 31, 2023 primarily relates to additional investments and earnings from equity method investments, partially offset by the impairment of certain securities.

Abbott’s equity securities as of June 30, 2024 include $311 million of investments in mutual funds that are held in a rabbi trust. 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 June 30, 2024 with a carrying value of $162 million that are accounted for under the equity method of accounting and other equity investments with a carrying value of approximately $65 million that do not have a readily determinable fair value.

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Abbott Laboratories and Subsidiaries

Notes to the Condensed Consolidated Financial Statements

June 30, 2024

(Unaudited)

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 June 30
	Cumulative Foreign Currency Translation (Loss) Adjustments				Net Actuarial (Losses) and Prior Service (Costs) and Credits				Cumulative Gains (Losses) on Derivative Instruments Designated as Cash Flow Hedges
(in millions)	2024		2023		2024		2023		2024		2023
Balance at March 31	$	(6,890)	$	(6,594)	$	(1,372)	$	(1,491)	$	96	$	46
Other comprehensive income (loss) before reclassifications	(152)		(52)		3		1		77		80
Amounts reclassified from accumulated other comprehensive income	116		—		4		(7)		(17)		(54)
Net current period comprehensive income (loss)	(36)		(52)		7		(6)		60		26
Balance at June 30	$	(6,926)	$	(6,646)	$	(1,365)	$	(1,497)	$	156	$	72


	Six Months Ended June 30
	Cumulative Foreign Currency Translation (Loss) Adjustments				Net Actuarial (Losses) and Prior Service (Costs) and Credits				Cumulative Gains (Losses) on Derivative Instruments Designated as Cash Flow Hedges
(in millions)	2024		2023		2024		2023		2024		2023
Balance at January 1	$	(6,504)	$	(6,733)	$	(1,376)	$	(1,493)	$	41	$	175
Other comprehensive income (loss) before reclassifications	(538)		87		5		3		145		38
Amounts reclassified from accumulated other comprehensive income	116		—		6		(7)		(30)		(141)
Net current period comprehensive income (loss)	(422)		87		11		(4)		115		(103)
Balance at June 30	$	(6,926)	$	(6,646)	$	(1,365)	$	(1,497)	$	156	$	72

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 13 — Post-Employment Benefits for additional details.

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Abbott Laboratories and Subsidiaries

Notes to the Condensed Consolidated Financial Statements

June 30, 2024

(Unaudited)

Note 6 — Business Acquisition

On September 22, 2023, Abbott completed the acquisition of Bigfoot Biomedical, Inc. (Bigfoot), which furthers Abbott's efforts to develop connected solutions for making diabetes management more personal and precise. The purchase price, the final allocation of acquired assets and liabilities, and the revenue and net income contributed by Bigfoot since the date of acquisition are not material to Abbott's condensed consolidated financial statements.

On April 27, 2023, Abbott completed the acquisition of Cardiovascular Systems, Inc. (CSI) for $20 per common share, which equated to a purchase price of $851 million. The transaction was funded with cash on hand and accounted for as a business combination. CSI's atherectomy system, which is used in treating peripheral and coronary artery disease, adds complementary technologies to Abbott's portfolio of vascular device offerings.

The final allocation of the purchase price of the CSI acquisition resulted in the recording of two non-deductible developed technology intangible assets totaling $305 million; a non-deductible in-process research and development asset of $15 million, which will be accounted for as an indefinite-lived intangible asset until regulatory approval or discontinuation; non-deductible goodwill of $369 million; net deferred tax assets of $46 million and other net assets of $116 million. The goodwill is identifiable to the Medical Devices reportable segment and is attributable to expected synergies from combining operations, as well as intangible assets that do not qualify for separate recognition. Revenues and earnings of CSI included in Abbott's condensed consolidated financial statements since the acquisition date are not material to Abbott's consolidated revenue and earnings.

Note 7 — Goodwill and Intangible Assets

The total amount of goodwill reported was $23.3 billion at June 30, 2024 and $23.7 billion at December 31, 2023. The amount of goodwill related to reportable segments at June 30, 2024 was $2.6 billion for the Established Pharmaceutical Products segment, $285 million for the Nutritional Products segment, $3.5 billion for the Diagnostic Products segment, and $16.9 billion for the Medical Devices segment. Foreign currency translation adjustments decreased goodwill by approximately $332 million in the first six months of 2024. Goodwill decreased $39 million due to the finalization of purchase accounting for business acquisitions. There were no reductions of goodwill relating to impairments in the first six months of 2024.

The gross amount of amortizable intangible assets, primarily product rights and technology, was $27.5 billion and $27.7 billion as of June 30, 2024 and December 31, 2023, respectively. Accumulated amortization was $20.5 billion and $19.7 billion as of June 30, 2024 and December 31, 2023, respectively. In the first six months of 2024, intangible assets decreased $46 million due to foreign currency translation and $8 million due to an impairment charge. Abbott’s estimated annual amortization expense for intangible assets is approximately $1.9 billion in 2024, $1.7 billion in 2025, $1.6 billion in 2026, $1.3 billion in 2027 and $0.7 billion in 2028.

Indefinite-lived intangible assets, which relate to in-process research and development (IPR&D) acquired in a business combination, were approximately $798 million as of June 30, 2024 and $787 million as of December 31, 2023. In the second quarter of 2024, IPR&D increased $35 million due to the finalization of purchase accounting related to a business acquisition. This increase was partially offset by $25 million of charges recorded on the Research and development line of the Condensed Consolidated Statement of Earnings for the impairment of an indefinite-lived intangible asset related to the Medical Devices reportable segment.

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Abbott Laboratories and Subsidiaries

Notes to the Condensed Consolidated Financial Statements

June 30, 2024

(Unaudited)

Note 8 — Restructuring Plans

In 2024, Abbott management approved plans to streamline operations in order to reduce costs and improve efficiencies in its diagnostic, medical devices and nutritional businesses, including the discontinuation of its ZonePerfect® product line. In the six months ended June 30, 2024, Abbott recorded employee related severance and other charges of $59 million, of which $38 million was recorded in Cost of products sold, $2 million was recorded in Research and development, and $19 million was recorded in Selling, general and administrative expenses. Payments related to these actions totaled $8 million in the first six months of 2024 and the remaining liabilities totaled $51 million at June 30, 2024. In addition, Abbott recognized asset impairment charges of $28 million related to these restructuring plans.

In 2023 and 2022, Abbott management approved plans to restructure or streamline various operations in order to reduce costs in its medical devices, diagnostic, nutritional and established pharmaceutical businesses. The following summarizes the activity related to these restructuring actions and the status of the related accruals as of June 30, 2024:


(in millions)	Total
Accrued balance at December 31, 2023	$	137
Payments and other adjustments	(69)
Accrued balance at June 30, 2024	$	68

Note 9 — Incentive Stock Programs

In the first six months of 2024, Abbott granted 1,683,097 stock options, 404,597 restricted stock awards and 5,265,995 restricted stock units under its incentive stock program. At June 30, 2024, approximately 60 million shares were reserved for future grants. Information regarding the number of options outstanding and exercisable at June 30, 2024 is as follows:


	Outstanding		Exercisable
Number of shares	28,058,739		24,125,493
Weighted average remaining life (years)	4.8		4.2
Weighted average exercise price	$	78.94	$	73.34
Aggregate intrinsic value (in millions)	$	815	$	815

The total unrecognized share-based compensation cost at June 30, 2024 amounted to approximately $675 million which is expected to be recognized over the next three years.

Note 10 — Debt and Lines of Credit

On June 26, 2024, Abbott modified its existing, yen-denominated 5-year term loan scheduled to mature in November 2024. The amended terms include a net increase in principal debt from ¥59.8 billion to ¥92.0 billion, with a new maturity date in June 2029. The modified, 5-year term loan bears interest at the Tokyo Interbank Offered Rate (TIBOR) plus a fixed spread, and the interest rate is reset quarterly. The net proceeds equated to approximately $201 million.

Abbott has readily available financial resources, including unused lines of credit that support commercial paper borrowing arrangements and provide Abbott with the ability to borrow up to $5 billion on an unsecured basis. On January 29, 2024, Abbott terminated its 2020 Five Year Credit Agreement (2020 Agreement) and entered into a new Five Year Credit Agreement (Revolving Credit Agreement). There were no outstanding borrowings under the 2020 Agreement at the time of its termination. Any borrowings under the Revolving Credit Agreement will mature and be payable on January 29, 2029 and will bear interest, at Abbott’s option, based on either a base rate or Secured Overnight Financing Rate (SOFR), plus an applicable margin based on Abbott’s credit ratings.

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Abbott Laboratories and Subsidiaries

Notes to the Condensed Consolidated Financial Statements

June 30, 2024

(Unaudited)

Note 11 — Financial Instruments, Derivatives and Fair Value Measures

Certain Abbott foreign subsidiaries enter into foreign currency forward exchange contracts to manage exposures to changes in foreign exchange rates, primarily for anticipated intercompany purchases by those subsidiaries whose functional currencies are not the U.S. dollar. These contracts, with gross notional amounts totaling $7.2 billion at June 30, 2024 and $7.3 billion at December 31, 2023, 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 June 30, 2024 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 June 30, 2024 and December 31, 2023, Abbott held the gross notional amounts of $13.0 billion and $13.8 billion, respectively, of such foreign currency forward exchange contracts.

Abbott has designated a yen-denominated, 5-year term loan of $573 million and $419 million as of June 30, 2024 and December 31, 2023, respectively, as a hedge of the net investment in certain foreign subsidiaries. The change in the value of the debt is due to the net incremental borrowing of $201 million discussed in Note 10 — Debt and Lines of Credit, as well as changes in foreign exchange rates, recorded in Accumulated other comprehensive income (loss), net of tax.

Abbott is a party to interest rate hedge contracts with a notional amount totaling approximately $2.2 billion at June 30, 2024 and December 31, 2023 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.

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Abbott Laboratories and Subsidiaries

Notes to the Condensed Consolidated Financial Statements

June 30, 2024

(Unaudited)

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

The following table summarizes the amounts and location of certain derivative and non-derivative financial instruments as of June 30, 2024 and December 31, 2023:


	Fair Value - Assets					Fair Value - Liabilities
(in millions)	June 30, 2024		December 31, 2023		Balance Sheet Caption	June 30, 2024		December 31, 2023		Balance Sheet Caption
Interest rate swaps designated as fair value hedges:
Non-current	$	—	$	—	Deferred income taxes and other assets	$	74	$	95	Post-employment obligations, deferred income taxes and other long-term liabilities
Current	—		—		Prepaid expenses and other receivables	17		—		Other accrued liabilities
Foreign currency forward exchange contracts:
Hedging instruments	161		88		Prepaid expenses and other receivables	21		134		Other accrued liabilities
Others not designated as hedges	49		81		Prepaid expenses and other receivables	36		97		Other accrued liabilities
Debt designated as a hedge of net investment in a foreign subsidiary	—		—		n/a	573		419		Long-term debt
	$	210	$	169		$	721	$	745

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Abbott Laboratories and Subsidiaries

Notes to the Condensed Consolidated Financial Statements

June 30, 2024

(Unaudited)

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

The following table summarizes the activity for foreign currency forward exchange contracts designated as cash flow hedges 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 and six months ended June 30, 2024 and 2023.


	Gain (loss) Recognized in Other Comprehensive Income (loss)								Income (expense) and Gain (loss) Reclassified into Income
	Three Months Ended June 30				Six Months Ended June 30				Three Months Ended June 30				Six Months Ended June 30
(in millions)	2024		2023		2024		2023		2024		2023		2024		2023		Income Statement Caption
Foreign currency forward exchange contracts designated as cash flow hedges	$	111	$	90	$	238	$	27	$	25	$	63	$	43	$	189	Cost of products sold
Debt designated as a hedge of net investment in a foreign subsidiary	23		38		47		33		—		—		—		—		n/a
Interest rate swaps designated as fair value hedges	n/a		n/a		n/a		n/a		28		(6)		4		3		Interest expense

Gains of $43 million and $39 million were recognized in the three months ended June 30, 2024 and 2023, respectively, related to foreign currency forward exchange contracts not designated as a hedge. A gain of $135 million and a loss of $64 million were recognized in the six months ended June 30, 2024 and 2023, 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 June 30, 2024 and December 31, 2023 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.


	June 30, 2024				December 31, 2023
(in millions)	Carrying Value		Fair Value		Carrying Value		Fair Value
Long-term Investment Securities:
Equity securities	$	549	$	549	$	555	$	555
Other	328		328		244		244
Total Long-term Debt	(14,754)		(14,252)		(14,679)		(14,769)
Foreign Currency Forward Exchange Contracts:
Receivable position	210		210		169		169
(Payable) position	(57)		(57)		(231)		(231)
Interest Rate Hedge Contracts:

(Payable) position	(91)		(91)		(95)		(95)

The fair value of the debt was determined based on significant other observable inputs, including current interest rates.

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Abbott Laboratories and Subsidiaries

Notes to the Condensed Consolidated Financial Statements

June 30, 2024

(Unaudited)

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

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
(in millions)	Outstanding Balances		Quoted Prices in Active Markets		Significant Other Observable Inputs		Significant Unobservable Inputs
June 30, 2024:
Equity securities	$	322	$	322	$	—	$	—
Foreign currency forward exchange contracts	210		—		210		—
Total Assets	$	532	$	322	$	210	$	—