Abbott Laboratories 10-Q for FY2020 Q1

Abbott Laboratories (ABT)

10-Q 2020-04-29 For: 2020-03-31

Added on April 11, 2026

About this 10-Q

Abbott Laboratories filed this 10-Q on April 29, 2020, covering the quarter ended March 31, 2020 (FY2020 Q1).

Headline figures

Quarter ended March 31, 2020, as reported in this filing, compared with the same period a year earlier where the filing states it.

Revenue: $7.73B; up 2.5% from $7.54B a year earlier
Net income: $564M; down 16.1% from net income of $672M a year earlier
Diluted EPS: $0.31; down 18.4% from $0.38 a year earlier

Search and read filings like this one from Claude or ChatGPT with the SEC filings MCP server →

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.


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


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	17

Item 4. Controls and Procedures	22

Part II - Other Information

Item 1. Legal Proceedings	22

Item 1A. Risk Factors	22

Item 2. Unregistered Sales of Equity Securities and Use of Proceeds	23

Item 6. Exhibits	24

Signature	25


	Three Months Ended March 31
	2020		2019
Net sales	$	7,726	$	7,535

Cost of products sold, excluding amortization of intangible assets		3,281		3,160
Amortization of intangible assets		561		486
Research and development		578		672
Selling, general and administrative		2,548		2,478
Total operating cost and expenses		6,968		6,796

Operating earnings		758		739

Interest expense		139		171
Interest (income)		(18)		(23)
Net foreign exchange (gain) loss		5		6
Other (income) expense, net		(1)		(47)
Earnings from continuing operations before tax		633		632
Tax expense (benefit) on earnings from continuing operations		89		(40)
Earnings from continuing operations		544		672

Earnings from discontinued operations, net of tax		20		—

Net Earnings	$	564	$	672

Basic Earnings Per Common Share —
Continuing operations	$	0.31	$	0.38
Discontinued operations		0.01		—
Net earnings	$	0.32	$	0.38

Diluted Earnings Per Common Share —
Continuing operations	$	0.30	$	0.38
Discontinued operations		0.01		—
Net earnings	$	0.31	$	0.38

Average Number of Common Shares Outstanding Used for Basic Earnings Per Common Share		1,768,901		1,763,278
Dilutive Common Stock Options		11,677		13,295
Average Number of Common Shares Outstanding Plus Dilutive Common Stock Options		1,780,578		1,776,573

Outstanding Common Stock Options Having No Dilutive Effect		4,035		4,011


	Three Months Ended March 31
	2020		2019
Net Earnings	$	564	$	672
Foreign currency translation gain (loss) adjustments		(1,144)		122
Net actuarial gains (losses) and amortization of net actuarial (losses) and prior service (cost) and credits, net of taxes of $15 in 2020 and $7 in 2019		57		23
Net gains (losses) for derivative instruments designated as cash flow hedges, net of taxes of $48 in 2020 and $(8) in 2019		166		(29)
Other comprehensive income (loss)		(921)		116
Comprehensive Income (Loss)	$	(357)	$	788

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


	March 31,		December 31,
	2020		2019
Supplemental Accumulated Other Comprehensive Income (Loss) Information, net of tax:
Cumulative foreign currency translation (loss) adjustments	$	(6,068)	$	(4,924)
Net actuarial (losses) and prior service (cost) and credits		(3,483)		(3,540)
Cumulative gains (losses) on derivative instruments designated as cash flow hedges		165		(1)
Accumulated Other Comprehensive Income (Loss)	$	(9,386)	$	(8,465)


	Three Months Ended March 31, 2020						Three Months Ended March 31, 2019
(in millions)	U.S.		Int’l		Total		U.S.		Int’l		Total
Established Pharmaceutical Products —
Key Emerging Markets	$	—	$	813	$	813	$	—	$	752	$	752
Other		—		231		231		—		240		240
Total		—		1,044		1,044		—		992		992

Nutritionals —
Pediatric Nutritionals		518		571		1,089		453		576		1,029
Adult Nutritionals		294		521		815		294		469		763
Total		812		1,092		1,904		747		1,045		1,792

Diagnostics —
Core Laboratory		267		722		989		249		812		1,061
Molecular		65		74		139		40		68		108
Point of Care		103		35		138		109		26		135
Rapid Diagnostics		368		192		560		326		211		537
Total		803		1,023		1,826		724		1,117		1,841

Medical Devices -
Rhythm Management		228		246		474		252		262		514
Electrophysiology		164		224		388		174		231		405
Heart Failure		152		51		203		143		41		184
Vascular		230		395		625		266		443		709
Structural Heart		136		182		318		136		188		324
Neuromodulation		137		40		177		152		41		193
Diabetes Care		186		566		752		152		414		566
Total		1,233		1,704		2,937		1,275		1,620		2,895

Other		8		7		15		8		7		15
Total	$	2,856	$	4,870	$	7,726	$	2,754	$	4,781	$	7,535


(in millions)
Contract Liabilities
Balance at December 31, 2019	$	294
Unearned revenue from cash received during the period		105
Revenue recognized related to contract liability balance		(94)
Balance at March 31, 2020	$	305


(in millions)
Allowance for Doubtful Accounts
Balance at December 31, 2019	$	228
Impact of adopting ASU 2016-13		7
Provisions/charges to income		21
Amounts charged off and other deductions		(15)
Balance at March 31, 2020	$	241


	Three Months Ended March 31
									Cumulative Gains
									(Losses) on
					Net Actuarial				Derivative
	Cumulative Foreign				(Losses) and Prior				Instruments
	Currency Translation				Service (Costs)				Designated as
	Adjustments				and Credits				Cash Flow Hedges
(in millions)	2020		2019		2020		2019		2020		2019
Balance at January 1	$	(4,924)	$	(4,912)	$	(3,540)	$	(2,726)	$	(1)	$	52
Other comprehensive income (loss) before reclassifications		(1,144)		122		7		(1)		176		(17)
Amounts reclassified from accumulated other comprehensive income		—		—		50		24		(10)		(12)
Net current period comprehensive income (loss)		(1,144)		122		57		23		166		(29)
Balance at March 31	$	(6,068)	$	(4,790)	$	(3,483)	$	(2,703)	$	165	$	23


(in millions)
Accrued balance at December 31, 2019	$	46
Restructuring charges recorded in 2020		9
Payments and other adjustments		(18)
Accrued balance at March 31, 2020	$	37


	Outstanding		Exercisable
Number of shares		32,412,976		23,330,203
Weighted average remaining life (years)		6.5		5.5
Weighted average exercise price	$	53.83	$	44.69
Aggregate intrinsic value (in millions)	$	849	$	798


	Fair Value - Assets					Fair Value - Liabilities
	March 31,		Dec. 31,			March 31,		Dec. 31,
(in millions)	2020		2019		Balance Sheet Caption	2020		2019		Balance Sheet Caption

Interest rate swaps designated as fair value hedges	$	216	$	48	Deferred income taxes and other assets	$	—	$	—	Post-employment obligations, deferred income taxes and other long-term liabilities

Foreign currency forward exchange contracts:
Hedging instruments		247		110	Prepaid expenses and other receivables		92		56	Other accrued liabilities
Others not designated as hedges		117		38	Prepaid expenses and other receivables		97		33	Other accrued liabilities
Debt designated as a hedge of net investment in a foreign subsidiary		—		—	n/a		554		546	Long-term debt
	$	580	$	196		$	743	$	635


	Gain (loss) Recognized in Other				Income (expense) and Gain (loss)
	Comprehensive Income (loss)				Reclassified into Income
(in millions)	2020		2019		2020		2019		Income Statement Caption

Foreign currency forward exchange contracts designated as cash flow hedges	$	227	$	(19)	$	11	$	15	Cost of products sold

Debt designated as a hedge of net investment in a foreign subsidiary		(8)		—		—		—	n/a

Interest rate swaps designated as fair value hedges		n/a		n/a		168		43	Interest expense


	March 31,		December 31,
	2020		2019
Assets
Current Assets:
Cash and cash equivalents	$	3,377	$	3,860
Short-term investments		291		280
Trade receivables, less allowances of $389 in 2020 and $384 in 2019		5,292		5,425
Inventories:
Finished products		2,873		2,784
Work in process		615		560
Materials		1,080		972
Total inventories		4,568		4,316
Prepaid expenses and other receivables		1,970		1,786
Total Current Assets		15,498		15,667
Investments		790		883
Property and equipment, at cost		16,707		16,799
Less: accumulated depreciation and amortization		8,800		8,761
Net property and equipment		7,907		8,038
Intangible assets, net of amortization		16,265		17,025
Goodwill		22,927		23,195
Deferred income taxes and other assets		3,390		3,079
	$	66,777	$	67,887
Liabilities and Shareholders’ Investment
Current Liabilities:
Short-term borrowings	$	204	$	201
Trade accounts payable		3,181		3,252
Salaries, wages and commissions		949		1,237
Other accrued liabilities		4,408		4,035
Dividends payable		637		635
Income taxes payable		165		226
Current portion of long-term debt		1,264		1,277
Total Current Liabilities		10,808		10,863
Long-term debt		16,804		16,661
Post-employment obligations, deferred income taxes and other long-term liabilities		8,738		9,062
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: 2020: 1,978,112,501 ; 2019: 1,976,855,085		23,731		23,853
Common shares held in treasury, at cost — Shares: 2020: 209,267,175 ; 2019: 214,351,838		(9,913)		(10,147)


	Three Months Ended March 31
	2020		2019
Common Shares:
Balance at January 1
Shares: 2020: 1,976,855,085; 2019: 1,971,189,465	$	23,853	$	23,512
Issued under incentive stock programs
Shares: 2020: 1,257,416; 2019: 2,283,041		53		76
Share-based compensation		245		237
Issuance of restricted stock awards		(420)		(364)
Balance at March 31
Shares: 2020: 1,978,112,501; 2019: 1,973,472,506	$	23,731	$	23,461

Common Shares Held in Treasury:
Balance at January 1
Shares: 2020: 214,351,838; 2019: 215,570,043	$	(10,147)	$	(9,962)
Issued under incentive stock programs
Shares: 2020: 5,333,626; 2019: 6,544,927		253		303
Purchased
Shares: 2020: 248,963; 2019: 266,128		(19)		(20)
Balance at March 31
Shares: 2020: 209,267,175; 2019: 209,291,244	$	(9,913)	$	(9,679)

Earnings Employed in the Business:
Balance at January 1	$	25,847	$	24,560
Impact of adoption of new accounting standard		(5)		—
Net earnings		564		672
Cash dividends declared on common shares (per share — 2020: $0.36; 2019: $0.32)		(641)		(568)
Effect of common and treasury share transactions		21		(51)
Balance at March 31	$	25,786	$	24,613

Accumulated Other Comprehensive Income (Loss):
Balance at January 1	$	(8,465)	$	(7,586)
Other comprehensive income (loss)		(921)		116
Balance at March 31	$	(9,386)	$	(7,470)

Noncontrolling Interests in Subsidiaries:
Balance at January 1	$	213	$	198
Noncontrolling Interests’ share of income, business combinations, net of distributions and share repurchases		(4)		6
Balance at March 31	$	209	$	204


	Three Months Ended March 31
	2020		2019
Cash Flow From (Used in) Operating Activities:
Net earnings	$	564	$	672
Adjustments to reconcile net earnings to net cash from operating activities -
Depreciation		267		267
Amortization of intangible assets		561		486
Share-based compensation		233		226
Trade receivables		(104)		(170)
Inventories		(437)		(286)
Other, net		(369)		(483)
Net Cash From Operating Activities		715		712

Cash Flow From (Used in) Investing Activities:
Acquisitions of property and equipment		(360)		(335)
Acquisitions of businesses and technologies, net of cash acquired		—		(78)
Sales (purchases) of other investment securities, net		(36)		2
Other		3		15
Net Cash (Used in) Investing Activities		(393)		(396)

Cash Flow From (Used in) Financing Activities:
Net borrowings (repayments) of short-term debt and other		51		13
Repayments of long-term debt		(1)		(500)
Purchases of common shares		(236)		(217)
Proceeds from stock options exercised		89		127
Dividends paid		(638)		(565)
Net Cash (Used in) Financing Activities		(735)		(1,142)

Effect of exchange rate changes on cash and cash equivalents		(70)		4

Net Decrease in Cash and Cash Equivalents		(483)		(822)
Cash and Cash Equivalents, Beginning of Year		3,860		3,844
Cash and Cash Equivalents, End of Period	$	3,377	$	3,022


	March 31, 2020				December 31, 2019
	Carrying		Fair		Carrying		Fair
(in millions)	Value		Value		Value		Value

Long-term Investment Securities:
Equity securities	$	741	$	741	$	836	$	836
Other		49		49		47		47
Total Long-term Debt		(18,068)		(20,998)		(17,938)		(20,772)
Foreign Currency Forward Exchange Contracts:
Receivable position		364		364		148		148
(Payable) position		(189)		(189)		(89)		(89)
Interest Rate Hedge Contracts:
Receivable position		216		216		48		48


			Basis of Fair Value Measurement
			Quoted		Significant
			Prices in		Other		Significant
	Outstanding		Active		Observable		Unobservable
(in millions)	Balances		Markets		Inputs		Inputs
March 31, 2020:
Equity securities	$	304	$	304	$	—	$	—
Interest rate swap derivative financial instruments		216		—		216		—
Foreign currency forward exchange contracts		364		—		364		—
Total Assets	$	884	$	304	$	580	$	—

Fair value of hedged long-term debt	$	3,064	$	—	$	3,064	$	—
Foreign currency forward exchange contracts		189		—		189		—
Contingent consideration related to business combinations		67		—		—		67
Total Liabilities	$	3,320	$	—	$	3,253	$	67

December 31, 2019:
Equity securities	$	357	$	357	$	—	$	—
Interest rate swap derivative financial instruments		48		—		48		—
Foreign currency forward exchange contracts		148		—		148		—
Total Assets	$	553	$	357	$	196	$	—

Fair value of hedged long-term debt	$	2,890	$	—	$	2,890	$	—
Foreign currency forward exchange contracts		89		—		89		—
Contingent consideration related to business combinations		68		—		—		68
Total Liabilities	$	3,047	$	—	$	2,979	$	68


	Defined Benefit Plans				Medical and Dental Plans
	March 31,		March 31,		March 31,		March 31,
(in millions)	2020		2019		2020		2019
Service cost - benefits earned during the period	$	85	$	64	$	12	$	6
Interest cost on projected benefit obligations		75		84		12		13
Expected return on plan assets		(192)		(178)		(7)		(7)
Net amortization of:
Actuarial loss, net		63		33		8		6
Prior service cost (credit)		—		—		(7)		(8)
Net cost - continuing operations	$	31	$	3	$	18	$	10


	Three Months Ended March 31
	Net Sales to				Operating
	External Customers				Earnings
(in millions)	2020		2019		2020		2019
Established Pharmaceutical Products	$	1,044	$	992	$	181	$	159
Nutritional Products		1,904		1,792		459		380
Diagnostic Products		1,826		1,841		405		434
Medical Devices		2,937		2,895		803		847
Total Reportable Segments		7,711		7,520		1,848		1,820
Other		15		15
Net sales	$	7,726	$	7,535
Corporate functions and benefit plans costs						(132)		(102)
Net interest expense						(121)		(148)
Share-based compensation (a)						(233)		(226)
Amortization of intangible assets						(561)		(486)
Other, net (b)						(168)		(226)
Earnings from continuing operations before taxes					$	633	$	632


	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)	2020		2019		Change		Exchange		Exchange

Established Pharmaceutical Products	$	1,044	$	992	5.2	%	(4.1)	%	9.3	%
Nutritional Products		1,904		1,792	6.3		(1.0)		7.3
Diagnostic Products		1,826		1,841	(0.8)		(1.5)		0.7
Medical Devices		2,937		2,895	1.4		(1.5)		2.9
Total Reportable Segments		7,711		7,520	2.5		(1.8)		4.3
Other		15		15	5.3		(1.1)		6.4
Net sales	$	7,726	$	7,535	2.5		(1.8)		4.3

Total U.S.	$	2,856	$	2,754	3.7		—		3.7

Total International	$	4,870	$	4,781	1.8		(2.8)		4.6


						(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, 2020 - January 31, 2020	2,957	⁽¹⁾	$	85.89	0	$	3,270,234,923	⁽²⁾
February 1, 2020 - February 29, 2020	0	⁽¹⁾	$	0	0	$	3,270,234,923	⁽²⁾
March 1, 2020 - March 31, 2020	0	⁽¹⁾	$	0	0	$	3,270,234,923	⁽²⁾
Total	2,957	⁽¹⁾	$	85.89	0	$	3,270,234,923	⁽²⁾


Exhibit No.		Exhibit

3.1		By-Laws of Abbott Laboratories, as amended and restated, effective April 24, 2020, filed as Exhibit 3.1 to the Abbott Laboratories Current Report on Form 8-K filed on February 27, 2020.

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, 2020, 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).


ABBOTT LABORATORIES


By:	/s/ Robert E. Funck, Jr.
	Robert E. Funck, Jr.
	Executive Vice President, Finance and Chief Financial Officer

	Date: April 29, 2020