Document

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 September 30, 2020


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

For the transition period from to

Commission File Number: 001-35565

AbbVie Inc.



(Exact name of registrant as specified in its charter)
Delaware		32-0375147
(State or other jurisdiction of incorporation or organization)		(I.R.S. employer identification number)

1 North Waukegan Road

North Chicago, Illinois 60064-6400

Telephone: (847) 932-7900

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 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 (§232.405 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 ☒

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 Stock, par value $0.01 per share	ABBV	New York Stock Exchange
		Chicago Stock Exchange
1.375% Senior Notes due 2024	ABBV24	New York Stock Exchange
0.750% Senior Notes due 2027	ABBV27	New York Stock Exchange
2.125% Senior Notes due 2028	ABBV28	New York Stock Exchange
1.250% Senior Notes due 2031	ABBV31	New York Stock Exchange

As of October 27, 2020, AbbVie Inc. had 1,765,473,923 shares of common stock at $0.01 par value outstanding.

AbbVie Inc. and Subsidiaries

Table of Contents



PART I.	FINANCIAL INFORMATION
		Page

Item 1.	FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA	2
Item 2.	MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS	31
Item 3.	QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK	41
Item 4.	CONTROLS AND PROCEDURES	42

PART II.	OTHER INFORMATION

Item 1.	LEGAL PROCEEDINGS	43
Item 1A.	RISK FACTORS	43
Item 2.	UNREGISTERED SALES OF EQUITY SECURITIES AND USE OF PROCEEDS	43
Item 6.	EXHIBITS	44



2020 Form 10-Q \|	1

PART I. FINANCIAL INFORMATION

ITEM 1. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA

AbbVie Inc. and Subsidiaries

Condensed Consolidated Statements of Earnings (unaudited)



	Three months ended September 30,				Nine months ended September 30,
(in millions, except per share data)	2020		2019		2020		2019
Net revenues	$	12,902	$	8,479	$	31,946	$	24,562

Cost of products sold	5,050		1,920		10,703		5,433
Selling, general and administrative	2,846		1,657		8,068		4,991
Research and development	1,706		2,285		4,667		4,865
Acquired in-process research and development	45		—		898		246
Total operating costs and expenses	9,647		5,862		24,336		15,535
Operating earnings	3,255		2,617		7,610		9,027

Interest expense, net	620		420		1,662		1,054
Net foreign exchange loss	20		19		54		31
Other expense, net	115		177		989		2,590
Earnings before income tax expense	2,500		2,001		4,905		5,352
Income tax expense	187		117		321		271
Net earnings	2,313		1,884		4,584		5,081
Net earnings attributable to noncontrolling interest	5		—		4		—
Net earnings attributable to AbbVie Inc.	$	2,308	$	1,884	$	4,580	$	5,081

Per share data
Basic earnings per share attributable to AbbVie Inc.	$	1.30	$	1.27	$	2.78	$	3.41
Diluted earnings per share attributable to AbbVie Inc.	$	1.29	$	1.26	$	2.77	$	3.41

Weighted-average basic shares outstanding	1,769		1,481		1,633		1,480
Weighted-average diluted shares outstanding	1,774		1,483		1,637		1,483

The accompanying notes are an integral part of these condensed consolidated financial statements.



2020 Form 10-Q \|	2

AbbVie Inc. and Subsidiaries
Condensed Consolidated Statements of Comprehensive Income (unaudited)



	Three months ended September 30,						Nine months ended September 30,
(in millions)	2020			2019			2020			2019
Net earnings	$	2,313		$	1,884		$	4,584		$	5,081

Foreign currency translation adjustments, net of tax expense (benefit) of $15 for the three months and $11 for the nine months ended September 30, 2020 and $(16) for the three months and $(10) for the nine months ended September 30, 2019	512			(256		)	726			(288		)
Net investment hedging activities, net of tax expense (benefit) of $(85) for the three months and $(125) for the nine months ended September 30, 2020 and $45 for the three months and $53 for the nine months ended September 30, 2019	(314		)	156			(455		)	184
Pension and post-employment benefits, net of tax expense (benefit) of $10 for the three months and $37 for the nine months ended September 30, 2020 and $7 for the three months and $19 for the nine months ended September 30, 2019	35			33			134			78
Marketable security activities, net of tax expense (benefit) of $— for the three months and $— for the nine months ended September 30, 2020 and $— for the three months and $— for the nine months ended September 30, 2019	—			(1		)	—			10
Cash flow hedging activities, net of tax expense (benefit) of $(9) for the three months and $(13) for the nine months ended September 30, 2020 and $18 for the three months and $9 for the nine months ended September 30, 2019	(57		)	31			(68		)	(32		)
Other comprehensive income (loss)	176			(37		)	337			(48		)
Comprehensive income	2,489			1,847			4,921			5,033
Comprehensive income attributable to noncontrolling interest	5			—			4			—
Comprehensive income attributable to AbbVie Inc.	$	2,484		$	1,847		$	4,917		$	5,033

The accompanying notes are an integral part of these condensed consolidated financial statements.



2020 Form 10-Q \|	3

AbbVie Inc. and Subsidiaries
Condensed Consolidated Balance Sheets



(in millions, except share data)	September 30, 2020			December 31, 2019
	(unaudited)
Assets
Current assets
Cash and equivalents	$	7,890		$	39,924
Short-term investments	60			—
Accounts receivable, net	8,416			5,428
Inventories	3,474			1,813
Prepaid expenses and other	3,169			2,354
Total current assets	23,009			49,519

Investments	246			93
Property and equipment, net	4,986			2,962
Intangible assets, net	74,643			18,649
Goodwill	42,801			15,604
Other assets	3,936			2,288
Total assets	$	149,621		$	89,115

Liabilities and Equity
Current liabilities
Short-term borrowings	$	54		$	—
Current portion of long-term debt and finance lease obligations	4,723			3,753
Accounts payable and accrued liabilities	19,404			11,832
Total current liabilities	24,181			15,585

Long-term debt and finance lease obligations	82,282			62,975
Deferred income taxes	4,485			1,130
Other long-term liabilities	23,384			17,597

Commitments and contingencies

Stockholders’ equity (deficit)
Common stock, $0.01 par value, 4,000,000,000 shares authorized, 1,789,544,701 shares issued as of September 30, 2020 and 1,781,582,608 as of December 31, 2019	18			18
Common stock held in treasury, at cost, 24,250,071 shares as of September 30, 2020 and 302,671,146 as of December 31, 2019	(1,972		)	(24,504		)
Additional paid-in capital	17,148			15,193
Retained earnings	3,335			4,717
Accumulated other comprehensive loss	(3,259		)	(3,596		)
Total stockholders' equity (deficit)	15,270			(8,172		)
Noncontrolling interest	19			—
Total equity (deficit)	15,289			(8,172		)

Total liabilities and equity	$	149,621		$	89,115

The accompanying notes are an integral part of these condensed consolidated financial statements.



2020 Form 10-Q \|	4

AbbVie Inc. and Subsidiaries
Condensed Consolidated Statements of Equity (unaudited)



(in millions)	Common shares outstanding	Common stock		Treasury stock			Additional paid-in capital		Retained earnings			Accumulated other comprehensive loss			Noncontrolling interest			Total
Balance at June 30, 2019	1,478	$	18	$	(24,505	)	$	15,028	$	3,384		$	(2,491	)	$	—		$	(8,566	)
Net earnings attributable to AbbVie Inc.	—	—		—			—		1,884			—			—			1,884
Other comprehensive loss, net of tax	—	—		—			—		—			(37		)	—			(37		)
Dividends declared	—	—		—			—		(1,595		)	—			—			(1,595		)
Purchases of treasury stock	—	—		(3		)	—		—			—			—			(3		)
Stock-based compensation plans and other	1	—		7			84		—			—			—			91
Balance at September 30, 2019	1,479	$	18	$	(24,501	)	$	15,112	$	3,673		$	(2,528	)	$	—		$	(8,226	)

Balance at June 30, 2020	1,764	$	18	$	(1,958	)	$	16,953	$	3,130		$	(3,435	)	$	24		$	14,732
Net earnings attributable to AbbVie Inc.	—	—		—			—		2,308			—			—			2,308
Other comprehensive income, net of tax	—	—		—			—		—			176			—			176
Dividends declared	—	—		—			—		(2,103		)	—			—			(2,103		)
Purchases of treasury stock	—	—		(20		)	—		—			—			—			(20		)
Stock-based compensation plans and other	1	—		6			195		—			—			—			201
Change in noncontrolling interest	—	—		—			—		—			—			(5		)	(5		)
Balance at September 30, 2020	1,765	$	18	$	(1,972	)	$	17,148	$	3,335		$	(3,259	)	$	19		$	15,289

Balance at December 31, 2018	1,479	$	18	$	(24,108	)	$	14,756	$	3,368