(MARK ONE)
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☒
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ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
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☐
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TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
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Delaware
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32-0375147
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(State or other jurisdiction of
incorporation or organization)
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(I.R.S. employer
identification number)
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Title of Each Class
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Trading Symbol(s)
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Name of Each Exchange on Which Registered
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Common Stock, par value $0.01 per share
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ABBV
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New York Stock Exchange
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Chicago Stock Exchange
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1.375% Senior Notes due 2024
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ABBV24
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New York Stock Exchange
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0.750% Senior Notes due 2027
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ABBV27
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New York Stock Exchange
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2.125% Senior Notes due 2028
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ABBV28
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New York Stock Exchange
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1.250% Senior Notes due 2031
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ABBV31
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New York Stock Exchange
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Large Accelerated Filer
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☒
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Accelerated Filer
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☐
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Non-Accelerated Filer
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☐
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Smaller reporting company
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☐
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Emerging growth company
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☐
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Page No.
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Item 1.
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Item 1A.
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Item 1B.
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Item 2.
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Item 3.
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Item 4.
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Item 5.
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Item 6.
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Item 7.
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Item 7A.
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Item 8.
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Item 9.
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Item 9A.
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Item 9B.
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Item 10.
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Item 11.
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Item 12.
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Item 13.
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Item 14.
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Item 15.
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Item 16.
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Condition
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Principal Markets
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Rheumatoid arthritis (moderate to severe)
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North America, European Union
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Psoriatic arthritis
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North America, European Union
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Ankylosing spondylitis
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North America, European Union
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Adult Crohn's disease (moderate to severe)
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North America, European Union
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Plaque psoriasis (moderate to severe chronic)
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North America, European Union
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Juvenile idiopathic arthritis (moderate to severe polyarticular)
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North America, European Union
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Ulcerative colitis (moderate to severe)
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North America, European Union
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Axial spondyloarthropathy
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European Union
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Pediatric Crohn's disease (moderate to severe)
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North America, European Union
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Hidradenitis Suppurativa (moderate to severe)
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North America, European Union
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Pediatric enthesitis-related arthritis
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European Union
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Non-infectious intermediate, posterior and panuveitis
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North America, European Union
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(1)
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As used throughout the text of this report on Form 10-K, the terms "AbbVie" or "the company" refer to AbbVie Inc., a Delaware corporation, or AbbVie Inc. and its consolidated subsidiaries, as the context requires.
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2019 Form 10-K |
1
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•
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Chronic lymphocytic leukemia (CLL)/Small lymphocytic lymphoma (SLL) and CLL/SLL with 17p deletion;
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•
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Mantle cell lymphoma (MCL) who have received at least one prior therapy*;
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•
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Waldenström’s macroglobulinemia (WM);
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•
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Marginal zone lymphoma (MZL) who require systemic therapy and have received at least one prior anti-CD20-based therapy*; and
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•
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Chronic graft versus host disease (cGVHD) after failure of one or more lines of systemic therapy.
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2
| 2019 Form 10-K
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2019 Form 10-K |
3
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4
| 2019 Form 10-K
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2019 Form 10-K |
5
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•
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Phase 1—involves the first human tests in a small number of healthy volunteers or patients to assess safety, tolerability and potential dosing.
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•
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Phase 2—tests the drug's efficacy against the disease in a relatively small group of patients.
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•
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Phase 3—tests a drug that demonstrates favorable results in the earlier phases in a significantly larger patient population to further demonstrate efficacy and safety based on regulatory criteria.
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6
| 2019 Form 10-K
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2019 Form 10-K |
7
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8
| 2019 Form 10-K
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2019 Form 10-K |
9
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10
| 2019 Form 10-K
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2019 Form 10-K |
11
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12
| 2019 Form 10-K
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2019 Form 10-K |
13
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14
| 2019 Form 10-K
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•
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fluctuations in currency exchange rates;
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changes in medical reimbursement policies and programs;
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•
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multiple legal and regulatory requirements that are subject to change and that could restrict AbbVie's ability to manufacture, market and sell its products;
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differing local product preferences and product requirements;
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trade protection measures and import or export licensing requirements;
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international trade disruptions or disputes, including in connection with the ongoing trade negotiations between the United States and China;
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difficulty in establishing, staffing and managing operations;
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differing labor regulations;
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potentially negative consequences from changes in or interpretations of tax laws;
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2019 Form 10-K |
15
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•
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political and economic instability, including the United Kingdom’s exit from the European Union;
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sovereign debt issues;
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price and currency exchange controls, limitations on participation in local enterprises, expropriation, nationalization and other governmental action;
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inflation, recession and fluctuations in interest rates;
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potential deterioration in the economic position and credit quality of certain non-U.S. countries, including in Europe and Latin America; and
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potential penalties or other adverse consequences for violations of anti-corruption, anti-bribery and other similar laws and regulations, including the United States Foreign Corrupt Practices Act and the United Kingdom Bribery Act.
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16
| 2019 Form 10-K
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•
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changes in or interpretations of laws and regulations, including changes in accounting standards, taxation requirements, product marketing application standards, data privacy laws and environmental laws;
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differences between the fair value measurement of assets and liabilities and their actual value, particularly for pension and post-employment benefits, stock-based compensation, intangibles and goodwill; and for contingent liabilities such as litigation and contingent consideration, the absence of a recorded amount, or an amount recorded at the minimum, compared to the actual amount;
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changes in the rate of inflation (including the cost of raw materials, commodities and supplies), interest rates, market value of AbbVie's equity investments and the performance of investments held by it or its employee benefit trusts;
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2019 Form 10-K |
17
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•
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changes in the creditworthiness of counterparties that transact business with or provide services to AbbVie or its employee benefit trusts;
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changes in the ability of third parties that provide information technology, accounting, human resources, payroll and other outsourced services to AbbVie to meet their contractual obligations to AbbVie; and
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changes in business, economic and political conditions, including: war, political instability, terrorist attacks, the threat of future terrorist activity and related military action; natural disasters; the cost and availability of insurance due to any of the foregoing events; labor disputes, strikes, slow-downs, or other forms of labor or union activity; and pressure from third-party interest groups.
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18
| 2019 Form 10-K
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•
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the inability of AbbVie's stockholders to call a special meeting;
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the division of AbbVie's board of directors into three classes of directors, with each class serving a staggered three-year term;
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a provision that stockholders may only remove directors for cause;
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the ability of AbbVie's directors, and not stockholders, to fill vacancies on AbbVie's board of directors; and
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the requirement that the affirmative vote of stockholders holding at least 80% of AbbVie's voting stock is required to amend certain provisions in AbbVie's amended and restated certificate of incorporation and AbbVie's amended and restated by-laws relating to the number, term and election of AbbVie's directors, the filling of board vacancies, the calling of special meetings of stockholders and director and officer indemnification provisions.
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2019 Form 10-K |
19
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United States
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Outside the United States
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Abbott Park, Illinois*
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Campoverde di Aprilia, Italy
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Barceloneta, Puerto Rico
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Cork, Ireland
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North Chicago, Illinois
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Ludwigshafen, Germany
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Worcester, Massachusetts*
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Singapore*
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Wyandotte, Michigan*
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Sligo, Ireland
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*
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Leased property.
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20
| 2019 Form 10-K
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Name
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Age
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Position
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Richard A. Gonzalez
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66
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Chairman of the Board and Chief Executive Officer
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Michael E. Severino, M.D.*
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54
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Vice Chairman and President
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Laura J. Schumacher
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56
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Vice Chairman, External Affairs and Chief Legal Officer
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Carlos Alban
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57
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Vice Chairman, Chief Commercial Officer
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Henry O. Gosebruch*
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47
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Executive Vice President and Chief Strategy Officer
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Robert A. Michael*
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49
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Executive Vice President, Chief Financial Officer
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Timothy J. Richmond
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53
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Executive Vice President, Chief Human Resources Officer
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Azita Saleki-Gerhardt, Ph.D.
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56
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Executive Vice President, Operations
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Nicholas Donoghoe, M.D.*
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39
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Senior Vice President, Enterprise Innovation
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Thomas J. Hudson, M.D.*
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58
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Senior Vice President, Research & Development and Chief Scientific Officer
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Jeffrey R. Stewart*
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51
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Senior Vice President, U.S. Commercial Operations
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Brian L. Durkin*
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59
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Vice President, Controller
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*
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Dr. Severino was first appointed as a corporate officer in June 2014; Mr. Gosebruch was first appointed as a corporate officer in December 2015; Dr. Donoghoe was first appointed as a corporate officer in January 2019; Mr. Michael was first appointed as a corporate officer in December 2015; Dr. Hudson was first appointed as a corporate officer in July 2019; Mr. Stewart was first appointed as a corporate officer in December 2018; and Mr. Durkin was first appointed as a corporate officer in October 2018.
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2019 Form 10-K |
21
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22
| 2019 Form 10-K
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2019 Form 10-K |
23
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Period
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(a) Total
Number
of Shares
(or Units)
Purchased
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(b) Average
Price
Paid per Share
(or Unit)
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(c) Total
Number of
Shares (or Units)
Purchased as Part
of Publicly
Announced
Plans or
Programs
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(d) Maximum Number (or
Approximate Dollar Value) of
Shares (or Units) that May
Yet Be Purchased Under the
Plans or Programs
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October 1, 2019 - October 31, 2019
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4,293
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(1)
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$
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77.19
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(1)
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—
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$
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3,950,021,071
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November 1, 2019 - November 30, 2019
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1,086
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(1)
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$
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80.53
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(1)
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—
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$
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3,950,021,071
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December 1, 2019 - December 31, 2019
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1,016
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(1)
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$
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87.39
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(1)
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—
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$
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3,950,021,071
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Total
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6,395
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(1)
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$
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79.38
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(1)
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—
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$
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3,950,021,071
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1.
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In addition to AbbVie shares repurchased on the open market under a publicly announced program, if any, these shares also included the shares purchased on the open market for the benefit of participants in the AbbVie Employee Stock Purchase Plan – 4,293 in October; 1,086 in November; and 1,016 in December.
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24
| 2019 Form 10-K
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as of and for the years ended December 31 (in millions, except per share data)
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2019
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2018
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2017
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2016
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2015
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||||||||||
Statement of earnings data
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Net revenues
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$
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33,266
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$
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32,753
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$
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28,216
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$
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25,638
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$
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22,859
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Net earnings
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7,882
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5,687
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5,309
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5,953
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5,144
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Basic earnings per share
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$
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5.30
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$
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3.67
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$
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3.31
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$
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3.65
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$
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3.15
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Diluted earnings per share
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$
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5.28
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$
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3.66
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$
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3.30
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$
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3.63
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$
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3.13
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Cash dividends declared per common share
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$
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4.39
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$
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3.95
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$
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2.63
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$
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2.35
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$
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2.10
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Weighted-average basic shares outstanding
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1,481
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1,541
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1,596
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1,622
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1,625
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Weighted-average diluted shares outstanding
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1,484
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1,546
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1,603
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1,631
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1,637
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Balance sheet data
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Total assets (a)
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$
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89,115
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$
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59,352
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$
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70,786
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$
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66,099
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$
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53,050
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Long-term debt and finance lease obligations (a)(b)
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66,728
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36,611
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36,968
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36,465
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31,265
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(a)
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In November 2019, AbbVie issued $30.0 billion aggregate principal amount of floating rate and fixed rate unsecured senior notes at maturities ranging from 18 months to 30 years. AbbVie expects to use the net proceeds to fund a portion of the aggregate cash consideration due to Allergan shareholders in connection with the proposed acquisition and to pay related fees and expenses. See Note 5 to the Consolidated Financial Statements for information regarding the proposed acquisition and Note 10 for information on the senior notes.
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(b)
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Includes current portion of both long-term debt and finance lease obligations.
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2019 Form 10-K |
25
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26
| 2019 Form 10-K
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•
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Completion and successful integration of the proposed Allergan acquisition.
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Hematologic oncology revenue growth from both IMBRUVICA and VENCLEXTA.
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Immunology revenue growth driven by successful commercial launches of SKYRIZI and RINVOQ, as well as HUMIRA U.S. sales growth.
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Effective management of HUMIRA international biosimilar erosion.
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The favorable impact of pipeline products and indications recently approved or currently under regulatory review where approval is expected in 2020. These products are described in greater detail in the section labeled "Research and Development" included as part of this Item 7.
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In February 2019, the U.S. Food and Drug Administration (FDA) accepted for priority review AbbVie's New Drug Application (NDA) for upadacitinib, an investigational oral JAK1-selective inhibitor, for the treatment of adult patients with moderate to severe rheumatoid arthritis (RA).
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•
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In February 2019, AbbVie initiated a Phase 3 clinical trial to evaluate the efficacy and safety of upadacitinib in subjects with giant cell arteritis.
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2019 Form 10-K |
27
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•
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In August 2019, the FDA approved RINVOQ (upadacitinib) for the treatment of adults with moderately to severely active RA who have had an inadequate response or intolerance to methotrexate.
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In October 2019, AbbVie announced top-line results from its first Phase 3 clinical trial of RINVOQ in adult patients with active psoriatic arthritis (PsA). Results from the SELECT-PsA 2 study, which evaluated RINVOQ versus placebo in patients who did not adequately respond to treatment with one or more biologic DMARDs, showed that both doses of RINVOQ (15 mg and 30 mg) met the primary and key secondary endpoints at week 12. The safety profile was consistent with that of previous studies across indications, with no new safety risks detected.
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•
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In November 2019, AbbVie announced data from the Phase 2/3 SELECT-AXIS 1 trial in which twice as many adult patients with ankylosing spondylitis treated with RINVOQ achieved the primary endpoint at week 14 versus placebo. The safety profile was consistent with that of previous studies across indications, with no new safety risks detected.
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•
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In November 2019, AbbVie initiated a Phase 3 clinical trial to evaluate the efficacy and safety of RINVOQ in adult patients with axial spondyloarthritis.
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•
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In December 2019, the European Commission (EC) granted marketing authorization for RINVOQ for the treatment of adult patients with moderate to severe active rheumatoid arthritis who have had an inadequate response or intolerance to one or more DMARDs.
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•
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In February 2020, AbbVie announced top-line results from its second Phase 3 clinical trial of RINVOQ in adult patients with active PsA. Results from the SELECT-PsA 1 study, which evaluated RINVOQ versus placebo in patients who did not adequately respond to treatment with one or more non-biologic DMARDs, showed that both doses of RINVOQ (15 mg and 30 mg) met the primary and key secondary endpoints. The safety profile was consistent with that of previous studies across indications, with no new safety risks detected.
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•
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In March 2019, AbbVie initiated two Phase 3 clinical trials to evaluate the efficacy and safety of risankizumab, an investigational interleukin-23 (IL-23) inhibitor, in subjects with psoriatic arthritis.
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•
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In April 2019, the FDA approved SKYRIZI (risankizumab) for the treatment of moderate to severe plaque psoriasis in adults who are candidates for systemic therapy or phototherapy.
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•
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In April 2019, the EC granted marketing authorization for SKYRIZI for the treatment of moderate to severe plaque psoriasis in adult patients who are candidates for systemic therapy.
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•
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In January 2019, the FDA approved IMBRUVICA, in combination with GAZYVA (obinutuzumab), for adult patients with previously untreated chronic lymphocytic leukemia (CLL)/small lymphocytic lymphoma (SLL).
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•
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In June 2019, AbbVie announced results from the Phase 3 CLL12 trial, evaluating IMBRUVICA in patients with previously untreated CLL, which demonstrated that IMBRUVICA significantly improved event- and progression-free survival.
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•
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In November 2019, AbbVie submitted a supplemental New Drug Application (sNDA) to the FDA for IMBRUVICA in combination with rituximab for the first-line treatment of younger patients with CLL or SLL.
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•
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In March 2019, AbbVie announced that the FDA placed a partial clinical hold on all clinical trials evaluating VENCLEXTA for the investigational treatment of multiple myeloma (MM). The partial clinical hold followed a review of data from the ongoing Phase 3 BELLINI trial, a study in relapsed/refractory MM, in which a higher proportion of deaths was observed in the VENCLEXTA arm compared to the control arm of the trial. In June 2019, AbbVie announced that the FDA lifted the partial clinical hold placed on the Phase 3 CANOVA trial, evaluating VENCLEXTA for the investigational treatment of relapsed/refractory MM positive for the translocation (11;14) abnormality, based upon agreement on revisions to the CANOVA study protocol, including new risk mitigation measures, protocol-specified guidelines and updated futility criteria. This action does not impact any of the approved indications for VENCLEXTA, such as CLL or acute myeloid leukemia (AML).
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28
| 2019 Form 10-K
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•
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In May 2019, the FDA approved VENCLEXTA, in combination with obinutuzumab, for adult patients with previously untreated CLL/SLL. The approval was based on data from the Phase 3 CLL14 trial, evaluating the efficacy and safety of VENCLEXTA plus obinutuzumab versus obinutuzumab plus chlorambucil in previously untreated patients with CLL, which demonstrated that VENCLEXTA plus obinutuzumab prolonged progression-free survival and achieved higher rates of complete response and minimal residual disease-negativity compared to commonly used standard of care obinutuzumab plus chlorambucil.
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•
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In January 2020, AbbVie announced that the Committee for Medicinal Products for Human Use (CHMP) of the European Medicines Agency (EMA) granted a positive opinion for VENCLYXTO in combination with obinutuzumab for patients with previously untreated CLL.
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•
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In May 2019, AbbVie announced the decision to discontinue the Phase 3 INTELLANCE-1 study of depatuxizumab mafodotin (Depatux-M, previously known as ABT-414) in patients with newly diagnosed glioblastoma, whose tumors have EGFR (epidermal growth factor receptor) amplification, at an interim analysis. An Independent Data Monitoring Committee recommended stopping enrollment in INTELLANCE-1 due to lack of survival benefit for patients receiving Depatux-M compared with placebo when added to the standard regimen of radiation and temozolomide. Enrollment has been halted in all ongoing Depatux-M studies.
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•
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In July 2019, AbbVie announced that top-line results from the Phase 3 BROCADE3 study evaluating veliparib, an investigational, oral poly (adenosine diphosphate-ribose) polymerase (PARP) inhibitor, in combination with carboplatin and paclitaxel met its primary endpoint of progression-free survival in patients with HER2 negative germline BRCA-mutated advanced breast cancer.
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•
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In July 2019, AbbVie announced that top-line results from the Phase 3 VELIA study, conducted in collaboration with the GOG Foundation, Inc., evaluating veliparib with carboplatin and paclitaxel followed by veliparib maintenance therapy met its primary endpoint of progression-free survival in patients with newly diagnosed ovarian cancer, regardless of biomarker status.
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•
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In August 2019, AbbVie announced the decision to terminate the MERU trial, a Phase 3 study evaluating rovalpituzumab tesirine (Rova-T) as a first-line maintenance therapy for advanced small-cell lung cancer (SCLC). An Independent Data Monitoring Committee recommended terminating the study after results demonstrated no survival benefit at a pre-planned interim analysis for patients receiving Rova-T as compared with placebo. With the closing of the MERU trial, AbbVie announced the termination of the Rova-T research and development program.
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•
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In August 2019, the EC granted marketing authorization for MAVIRET (glecaprevir/pibrentasvir) to shorten the once-daily treatment duration from 12 to 8 weeks in treatment-naïve, compensated cirrhotic, chronic HCV patients with genotype (GT)1, 2, 4, 5 and 6 infection.
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•
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In September 2019, the FDA approved MAVYRET (glecaprevir/pibrentasvir) to shorten the once-daily treatment duration from 12 to 8 weeks in treatment-naïve, compensated cirrhotic, chronic HCV patients across all genotypes (GT1-6).
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•
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In January 2020, AbbVie announced that the CHMP of the EMA has recommended a change to the marketing authorization for MAVIRET to shorten once-daily treatment duration from 12 to 8 weeks in treatment-naïve, compensated cirrhotic, chronic HCV patients with GT 3 infection.
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•
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In May 2019, AbbVie initiated a Phase 3 clinical trial to evaluate the safety and tolerability of ABBV-951, a subcutaneous levodopa/carbidopa delivery system, in subjects with Parkinson's disease.
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•
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In July 2019, AbbVie announced the decision to discontinue the Phase 2 ARISE study evaluating ABBV-8E12, an investigational anti-tau antibody, in patients with progressive supranuclear palsy, after an Independent Data
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|
|
2019 Form 10-K |
29
|
•
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In July 2019, AbbVie submitted an NDA to the FDA for elagolix in combination with estradiol/norethindrone acetate (E2/NETA) daily add-back therapy for the management of heavy menstrual bleeding associated with uterine fibroids.
|
30
| 2019 Form 10-K
|
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|
2019 Form 10-K |
31
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32
| 2019 Form 10-K
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Percent change
|
||||||||||
years ended December 31 (dollars in millions)
|
2019
|
|
2018
|
|
2017
|
|
2019
|
|
2018
|
||||||||
Selling, general and administrative
|
$
|
6,942
|
|
|
$
|
7,399
|
|
|
$
|
6,295
|
|
|
(6
|
)%
|
|
18
|
%
|
as a percent of net revenues
|
21
|
%
|
|
23
|
%
|
|
22
|
%
|
|
|
|
|
|
|
|
|
|
|
|
Percent change
|
||||||||||
years ended December 31 (dollars in millions)
|
2019
|
|
2018
|
|
2017
|
|
2019
|
|
2018
|
||||||||
Research and development
|
$
|
6,407
|
|
|
$
|
10,329
|
|
|
$
|
5,007
|
|
|
(38
|
)%
|
|
>100%
|
|
as a percent of net revenues
|
19
|
%
|
|
32
|
%
|
|
18
|
%
|
|
|
|
|
|||||
Acquired in-process research and development
|
$
|
385
|
|
|
$
|
424
|
|
|
$
|
327
|
|
|
(9
|
)%
|
|
30
|
%
|
|
|
2019 Form 10-K |
33
|
years ended December 31 (in millions)
|
|
2019
|
|
2018
|
|
2017
|
||||||
Interest expense
|
|
$
|
1,784
|
|
|
$
|
1,348
|
|
|
$
|
1,150
|
|
Interest income
|
|
(275
|
)
|
|
(204
|
)
|
|
(146
|
)
|
|||
Interest expense, net
|
|
$
|
1,509
|
|
|
$
|
1,144
|
|
|
$
|
1,004
|
|
|
|
|
|
|
|
|
||||||
Net foreign exchange loss
|
|
$
|
42
|
|
|
$
|
24
|
|
|
$
|
348
|
|
Other expense, net
|
|
3,006
|
|
|
18
|
|
|
466
|
|
34
| 2019 Form 10-K
|
|
|
years ended December 31 (in millions)
|
2019
|
|
2018
|
|
2017
|
||||||
Cash flows from:
|
|
|
|
|
|
||||||
Operating activities
|
$
|
13,324
|
|
|
$
|
13,427
|
|
|
$
|
9,960
|
|
Investing activities
|
596
|
|
|
(1,006
|
)
|
|
(274
|
)
|
|||
Financing activities
|
18,708
|
|
|
(14,396
|
)
|
|
(5,512
|
)
|
|
|
2019 Form 10-K |
35
|
36
| 2019 Form 10-K
|
|
|
(in millions)
|
Total
|
|
Less than
one year
|
|
One to
three years
|
|
Three to
five years
|
|
More than
five years
|
||||||||||
Long-term debt, including current portion
|
$
|
67,233
|
|
|
$
|
3,750
|
|
|
$
|
14,150
|
|
|
$
|
7,625
|
|
|
$
|
41,708
|
|
Interest on long-term debt(a)
|
30,494
|
|
|
2,146
|
|
|
4,087
|
|
|
3,479
|
|
|
20,782
|
|
|||||
Non-cancelable operating and finance lease payments(f)
|
774
|
|
|
129
|
|
|
224
|
|
|
125
|
|
|
296
|
|
|||||
Purchase obligations and other(b)
|
3,532
|
|
|
3,295
|
|
|
186
|
|
|
45
|
|
|
6
|
|
|||||
Other long-term liabilities (c) (d) (e)
|
11,544
|
|
|
166
|
|
|
1,395
|
|
|
2,123
|
|
|
7,860
|
|
|||||
Total
|
$
|
113,577
|
|
|
$
|
9,486
|
|
|
$
|
20,042
|
|
|
$
|
13,397
|
|
|
$
|
70,652
|
|
(a)
|
Includes estimated future interest payments on long-term debt. Interest payments on debt are calculated for future periods using forecasted interest rates in effect at the end of 2019. Projected interest payments include the related effects of interest rate swap agreements. Certain of these projected interest payments may differ in the future based on changes in floating interest rates or other factors or events. The projected interest payments only pertain to obligations and agreements outstanding at December 31, 2019. See Note 10 to the Consolidated Financial Statements for additional information regarding the company's debt instruments and Note 11 for additional information on the interest rate swap agreements outstanding at December 31, 2019.
|
(b)
|
Includes the company's significant unconditional purchase obligations. These commitments do not exceed the company's projected requirements and are made in the normal course of business.
|
(c)
|
Excludes liabilities associated with the company's unrecognized tax benefits as it is not possible to reliably estimate the timing of the future cash outflows related to these liabilities. See Note 14 to the Consolidated Financial Statements for additional information on these unrecognized tax benefits.
|
(d)
|
Includes $7.3 billion of contingent consideration liabilities which are recorded at fair value on the consolidated balance sheet. Potential contingent consideration payments that exceed the fair value recorded on the consolidated balance sheet are not included in the table of contractual obligations. See Note 11 to the Consolidated Financial Statements for additional information regarding these liabilities.
|
(e)
|
Includes a one-time transition tax liability on a mandatory deemed repatriation of previously untaxed earnings of foreign subsidiaries resulting from U.S. tax reform enacted in 2017. The one-time transition tax is generally payable in eight annual installments. See Note 14 to the Consolidated Financial Statements for additional information regarding these tax liabilities.
|
(f)
|
Lease payments include approximately $350 million of contractual minimum lease payments for leases executed but not yet commenced. These leases will commence in 2020 with lease terms of approximately 11 years.
|
|
|
2019 Form 10-K |
37
|
38
| 2019 Form 10-K
|
|
|
(in millions)
|
Medicaid
and
Medicare
Rebates
|
|
Managed
Care
Rebates
|
|
Wholesaler
Chargebacks
|
||||||
Balance at December 31, 2016
|
$
|
1,167
|
|
|
$
|
1,167
|
|
|
$
|
383
|
|
Provisions
|
2,909
|
|
|
3,990
|
|
|
5,026
|
|
|||
Payments
|
(2,736
|
)
|
|
(3,962
|
)
|
|
(4,887
|
)
|
|||
Balance at December 31, 2017
|
1,340
|
|
|
1,195
|
|
|
522
|
|
|||
Provisions
|
3,493
|
|
|
4,729
|
|
|
6,659
|
|
|||
Payments
|
(3,188
|
)
|
|
(4,485
|
)
|
|
(6,525
|
)
|
|||
Balance at December 31, 2018
|
1,645
|
|
|
1,439
|
|
|
656
|
|
|||
Provisions
|
4,035
|
|
|
5,772
|
|
|
7,947
|
|
|||
Payments
|
(3,915
|
)
|
|
(5,275
|
)
|
|
(7,917
|
)
|
|||
Balance at December 31, 2019
|
$
|
1,765
|
|
|
$
|
1,936
|
|
|
$
|
686
|
|
|
50 basis point
|
||||||
(in millions) (brackets denote a reduction)
|
Increase
|
|
Decrease
|
||||
Defined benefit plans
|
|
|
|
||||
Service and interest cost
|
$
|
(76
|
)
|
|
$
|
92
|
|
Projected benefit obligation
|
(723
|
)
|
|
825
|
|
||
Other post-employment plans
|
|
|
|
||||
Service and interest cost
|
$
|
(11
|
)
|
|
$
|
14
|
|
Projected benefit obligation
|
(101
|
)
|
|
117
|
|
|
|
2019 Form 10-K |
39
|
|
One percentage point
|
||||||
(in millions) (brackets denote a reduction)
|
Increase
|
|
Decrease
|
||||
Service and interest cost
|
$
|
40
|
|
|
$
|
(28
|
)
|
Projected benefit obligation
|
244
|
|
|
(186
|
)
|
40
| 2019 Form 10-K
|
|
|
|
|
2019 Form 10-K |
41
|
|
|
2019
|
|
2018
|
||||||||||||||||||
(in millions)
|
Contract
amount
|
|
Weighted
average
exchange
rate
|
|
Fair and
carrying
value
receivable/(payable)
|
|
Contract
amount
|
|
Weighted
average
exchange
rate
|
|
Fair and
carrying
value
receivable/(payable)
|
||||||||||
Receive primarily U.S. dollars in exchange for the following currencies:
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||
Euro
|
$
|
6,217
|
|
|
1.116
|
|
|
$
|
(12
|
)
|
|
$
|
6,660
|
|
|
1.157
|
|
|
$
|
68
|
|
Japanese yen
|
820
|
|
|
108.7
|
|
|
—
|
|
|
1,076
|
|
|
111.5
|
|
|
(12
|
)
|
||||
Canadian dollar
|
504
|
|
|
1.324
|
|
|
(6
|
)
|
|
406
|
|
|
1.314
|
|
|
14
|
|
||||
British pound
|
427
|
|
|
1.305
|
|
|
(6
|
)
|
|
499
|
|
|
1.328
|
|
|
21
|
|
||||
All other currencies
|
1,508
|
|
|
n/a
|
|
|
(10
|
)
|
|
1,370
|
|
|
n/a
|
|
|
15
|
|
||||
Total
|
$
|
9,476
|
|
|
|
|
$
|
(34
|
)
|
|
$
|
10,011
|
|
|
|
|
$
|
106
|
|
42
| 2019 Form 10-K
|
|
|
|
|
|
2019 Form 10-K |
43
|
years ended December 31 (in millions, except per share data)
|
2019
|
|
2018
|
|
2017
|
||||||
Net revenues
|
$
|
33,266
|
|
|
$
|
32,753
|
|
|
$
|
28,216
|
|
|
|
|
|
|
|
||||||
Cost of products sold
|
7,439
|
|
|
7,718
|
|
|
7,042
|
|
|||
Selling, general and administrative
|
6,942
|
|
|
7,399
|
|
|
6,295
|
|
|||
Research and development
|
6,407
|
|
|
10,329
|
|
|
5,007
|
|
|||
Acquired in-process research and development
|
385
|
|
|
424
|
|
|
327
|
|
|||
Other operating expense (income)
|
(890
|
)
|
|
500
|
|
|
—
|
|
|||
Total operating costs and expenses
|
20,283
|
|
|
26,370
|
|
|
18,671
|
|
|||
Operating earnings
|
12,983
|
|
|
6,383
|
|
|
9,545
|
|
|||
|
|
|
|
|
|
||||||
Interest expense, net
|
1,509
|
|
|
1,144
|
|
|
1,004
|
|
|||
Net foreign exchange loss
|
42
|
|
|
24
|
|
|
348
|
|
|||
Other expense, net
|
3,006
|
|
|
18
|
|
|
466
|
|
|||
Earnings before income tax
|
8,426
|
|
|
5,197
|
|
|
7,727
|
|
|||
Income tax expense (benefit)
|
544
|
|
|
(490
|
)
|
|
2,418
|
|
|||
Net earnings
|
$
|
7,882
|
|
|
$
|
5,687
|
|
|
$
|
5,309
|
|
|
|
|
|
|
|
||||||
Per share data
|
|
|
|
|
|
||||||
Basic earnings per share
|
$
|
5.30
|
|
|
$
|
3.67
|
|
|
$
|
3.31
|
|
Diluted earnings per share
|
$
|
5.28
|
|
|
$
|
3.66
|
|
|
$
|
3.30
|
|
|
|
|
|
|
|
||||||
Weighted-average basic shares outstanding
|
1,481
|
|
|
1,541
|
|
|
1,596
|
|
|||
Weighted-average diluted shares outstanding
|
1,484
|
|
|
1,546
|
|
|
1,603
|
|
44
| 2019 Form 10-K
|
|
|
years ended December 31 (in millions)
|
2019
|
|
2018
|
|
2017
|
||||||
Net earnings
|
$
|
7,882
|
|
|
$
|
5,687
|
|
|
$
|
5,309
|
|
|
|
|
|
|
|
||||||
Foreign currency translation adjustments, net of tax expense (benefit) of $(4) in 2019, $(18) in 2018 and $34 in 2017
|
(98
|
)
|
|
(391
|
)
|
|
996
|
|
|||
Net investment hedging activities, net of tax expense (benefit) of $22 in 2019, $40 in 2018 and $(194) in 2017
|
74
|
|
|
138
|
|
|
(343
|
)
|
|||
Pension and post-employment benefits, net of tax expense (benefit) of $(323) in 2019, $35 in 2018 and $(94) in 2017
|
(1,243
|
)
|
|
197
|
|
|
(406
|
)
|
|||
Marketable security activities, net of tax expense (benefit) of $— in 2019, $— in 2018 and $(8) in 2017
|
10
|
|
|
(10
|
)
|
|
(46
|
)
|
|||
Cash flow hedging activities, net of tax expense (benefit) of $70 in 2019, $23 in 2018 and $(26) in 2017
|
141
|
|
|
313
|
|
|
(342
|
)
|
|||
Other comprehensive income (loss)
|
(1,116
|
)
|
|
247
|
|
|
(141
|
)
|
|||
Comprehensive income
|
$
|
6,766
|
|
|
$
|
5,934
|
|
|
$
|
5,168
|
|
|
|
2019 Form 10-K |
45
|
as of December 31 (in millions, except share data)
|
2019
|
|
2018
|
||||
Assets
|
|
|
|
||||
Current assets
|
|
|
|
||||
Cash and equivalents
|
$
|
39,924
|
|
|
$
|
7,289
|
|
Short-term investments
|
—
|
|
|
772
|
|
||
Accounts receivable, net
|
5,428
|
|
|
5,384
|
|
||
Inventories
|
1,813
|
|
|
1,605
|
|
||
Prepaid expenses and other
|
2,354
|
|
|
1,895
|
|
||
Total current assets
|
49,519
|
|
|
16,945
|
|
||
|
|
|
|
||||
Investments
|
93
|
|
|
1,420
|
|
||
Property and equipment, net
|
2,962
|
|
|
2,883
|
|
||
Intangible assets, net
|
18,649
|
|
|
21,233
|
|
||
Goodwill
|
15,604
|
|
|
15,663
|
|
||
Other assets
|
2,288
|
|
|
1,208
|
|
||
Total assets
|
$
|
89,115
|
|
|
$
|
59,352
|
|
|
|
|
|
||||
Liabilities and Equity
|
|
|
|
||||
Current liabilities
|
|
|
|
||||
Short-term borrowings
|
$
|
—
|
|
|
$
|
3,699
|
|
Current portion of long-term debt and finance lease obligations
|
3,753
|
|
|
1,609
|
|
||
Accounts payable and accrued liabilities
|
11,832
|
|
|
11,931
|
|
||
Total current liabilities
|
15,585
|
|
|
17,239
|
|
||
|
|
|
|
||||
Long-term debt and finance lease obligations
|
62,975
|
|
|
35,002
|
|
||
Deferred income taxes
|
1,130
|
|
|
1,067
|
|
||
Other long-term liabilities
|
17,597
|
|
|
14,490
|
|
||
|
|
|
|
||||
Commitments and contingencies
|
|
|
|
|
|
||
|
|
|
|
||||
Stockholders’ equity (deficit)
|
|
|
|
||||
Common stock, $0.01 par value, 4,000,000,000 shares authorized, 1,781,582,608 shares issued as of December 31, 2019 and 1,776,510,871 as of December 31, 2018
|
18
|
|
|
18
|
|
||
Common stock held in treasury, at cost, 302,671,146 shares as of December 31, 2019 and 297,686,473 as of December 31, 2018
|
(24,504
|
)
|
|
(24,108
|
)
|
||
Additional paid-in capital
|
15,193
|
|
|
14,756
|
|
||
Retained earnings
|
4,717
|
|
|
3,368
|
|
||
Accumulated other comprehensive loss
|
(3,596
|
)
|
|
(2,480
|
)
|
||
Total stockholders’ equity (deficit)
|
(8,172
|
)
|
|
(8,446
|
)
|
||
|
|
|
|
||||
Total liabilities and equity
|
$
|
89,115
|
|
|
$
|
59,352
|
|
46
| 2019 Form 10-K
|
|
|
years ended December 31 (in millions)
|
Common
shares
outstanding
|
|
Common
stock
|
|
Treasury
stock
|
|
Additional
paid-in
capital
|
|
Retained
earnings
|
|
Accumulated
other
comprehensive
loss
|
|
Total
|
|||||||||||||
Balance at December 31, 2016
|
1,593
|
|
|
$
|
18
|
|
|
$
|
(10,852
|
)
|
|
$
|
13,678
|
|
|
$
|
4,378
|
|
|
$
|
(2,586
|
)
|
|
$
|
4,636
|
|
Net earnings
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
5,309
|
|
|
—
|
|
|
5,309
|
|
||||||
Other comprehensive loss, net of tax
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(141
|
)
|
|
(141
|
)
|
||||||
Dividends declared
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(4,221
|
)
|
|
—
|
|
|
(4,221
|
)
|
||||||
Purchases of treasury stock
|
(15
|
)
|
|
—
|
|
|
(1,125
|
)
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(1,125
|
)
|
||||||
Stock-based compensation plans and other
|
14
|
|
|
—
|
|
|
54
|
|
|
592
|
|
|
(7
|
)
|
|
—
|
|
|
639
|
|
||||||
Balance at December 31, 2017
|
1,592
|
|
|
18
|
|
|
(11,923
|
)
|
|
14,270
|
|
|
5,459
|
|
|
(2,727
|
)
|
|
5,097
|
|
||||||
Adoption of new accounting standards(a)
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(1,733
|
)
|
|
—
|
|
|
(1,733
|
)
|
||||||
Net earnings
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
5,687
|
|
|
—
|
|
|
5,687
|
|
||||||
Other comprehensive income, net of tax
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
247
|
|
|
247
|
|
||||||
Dividends declared
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(6,045
|
)
|
|
—
|
|
|
(6,045
|
)
|
||||||
Purchases of treasury stock
|
(121
|
)
|
|
—
|
|
|
(12,215
|
)
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(12,215
|
)
|
||||||
Stock-based compensation plans and other
|
8
|
|
|
—
|
|
|
30
|
|
|
486
|
|
|
—
|
|
|
—
|
|
|
516
|
|
||||||
Balance at December 31, 2018
|
1,479
|
|
|
18
|
|
|
(24,108
|
)
|
|
14,756
|
|
|
3,368
|
|
|
(2,480
|
)
|
|
(8,446
|
)
|
||||||
Net earnings
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
7,882
|
|
|
—
|
|
|
7,882
|
|
||||||
Other comprehensive loss, net of tax
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(1,116
|
)
|
|
(1,116
|
)
|
||||||
Dividends declared
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(6,533
|
)
|
|
—
|
|
|
(6,533
|
)
|
||||||
Purchases of treasury stock
|
(5
|
)
|
|
—
|
|
|
(428
|
)
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(428
|
)
|
||||||
Stock-based compensation plans and other
|
5
|
|
|
—
|
|
|
32
|
|
|
437
|
|
|
—
|
|
|
—
|
|
|
469
|
|
||||||
Balance at December 31, 2019
|
1,479
|
|
|
$
|
18
|
|
|
$
|
(24,504
|
)
|
|
$
|
15,193
|
|
|
$
|
4,717
|
|
|
$
|
(3,596
|
)
|
|
$
|
(8,172
|
)
|
(a)
|
Adoption of new accounting standards primarily includes the cumulative-effect adjustment of Accounting Standards Update (ASU) No. 2016-16, Income Taxes (Topic 740): Intra-Entity Transfers of Assets Other Than Inventory.
|
|
|
2019 Form 10-K |
47
|
years ended December 31 (in millions) (brackets denote cash outflows)
|
2019
|
|
2018
|
|
2017
|
||||||
Cash flows from operating activities
|
|
|
|
|
|
||||||
Net earnings
|
$
|
7,882
|
|
|
$
|
5,687
|
|
|
$
|
5,309
|
|
Adjustments to reconcile net earnings to net cash from operating activities:
|
|
|
|
|
|
||||||
Depreciation
|
464
|
|
|
471
|
|
|
425
|
|
|||
Amortization of intangible assets
|
1,553
|
|
|
1,294
|
|
|
1,076
|
|
|||
Change in fair value of contingent consideration liabilities
|
3,091
|
|
|
49
|
|
|
626
|
|
|||
Stock-based compensation
|
430
|
|
|
421
|
|
|
365
|
|
|||
Upfront costs and milestones related to collaborations
|
490
|
|
|
1,061
|
|
|
470
|
|
|||
Gain on divestitures
|
(330
|
)
|
|
—
|
|
|
—
|
|
|||
Intangible asset impairment
|
1,030
|
|
|
5,070
|
|
|
354
|
|
|||
Impacts related to U.S. tax reform
|
—
|
|
|
424
|
|
|
1,242
|
|
|||
Other, net
|
43
|
|
|
76
|
|
|
84
|
|
|||
Changes in operating assets and liabilities:
|
|
|
|
|
|
||||||
Accounts receivable
|
(74
|
)
|
|
(591
|
)
|
|
(391
|
)
|
|||
Inventories
|
(231
|
)
|
|
(226
|
)
|
|
93
|
|
|||
Prepaid expenses and other assets
|
97
|
|
|
(499
|
)
|
|
(118
|
)
|
|||
Accounts payable and other liabilities
|
(1,121
|
)
|
|
190
|
|
|
425
|
|
|||
Cash flows from operating activities
|
13,324
|
|
|
13,427
|
|
|
9,960
|
|
|||
|
|
|
|
|
|
||||||
Cash flows from investing activities
|
|
|
|
|
|
||||||
Acquisitions and investments
|
(1,135
|
)
|
|
(736
|
)
|
|
(308
|
)
|
|||
Acquisitions of property and equipment
|
(552
|
)
|
|
(638
|
)
|
|
(529
|
)
|
|||
Purchases of investment securities
|
(583
|
)
|
|
(1,792
|
)
|
|
(2,230
|
)
|
|||
Sales and maturities of investment securities
|
2,699
|
|
|
2,160
|
|
|
2,793
|
|
|||
Other
|
167
|
|
|
—
|
|
|
—
|
|
|||
Cash flows from investing activities
|
596
|
|
|
(1,006
|
)
|
|
(274
|
)
|
|||
|
|
|
|
|
|
||||||
Cash flows from financing activities
|
|
|
|
|
|
||||||
Net change in commercial paper borrowings
|
(699
|
)
|
|
299
|
|
|
23
|
|
|||
Proceeds from issuance of other short-term borrowings
|
—
|
|
|
3,002
|
|
|
—
|
|
|||
Repayments of other short-term borrowings
|
(3,000
|
)
|
|
—
|
|
|
—
|
|
|||
Proceeds from issuance of long-term debt
|
31,482
|
|
|
5,963
|
|
|
—
|
|
|||
Repayments of long-term debt and finance lease obligations
|
(1,536
|
)
|
|
(6,035
|
)
|
|
(25
|
)
|
|||
Debt issuance costs
|
(424
|
)
|
|
(40
|
)
|
|
—
|
|
|||
Dividends paid
|
(6,366
|
)
|
|
(5,580
|
)
|
|
(4,107
|
)
|
|||
Purchases of treasury stock
|
(629
|
)
|
|
(12,014
|
)
|
|
(1,410
|
)
|
|||
Proceeds from the exercise of stock options
|
8
|
|
|
73
|
|
|
254
|
|
|||
Payments of contingent consideration liabilities
|
(163
|
)
|
|
(78
|
)
|
|
(268
|
)
|
|||
Other, net
|
35
|
|
|
14
|
|
|
21
|
|
|||
Cash flows from financing activities
|
18,708
|
|
|
(14,396
|
)
|
|
(5,512
|
)
|
|||
Effect of exchange rate changes on cash and equivalents
|
7
|
|
|
(39
|
)
|
|
29
|
|
|||
Net change in cash and equivalents
|
32,635
|
|
|
(2,014
|
)
|
|
4,203
|
|
|||
Cash and equivalents, beginning of year
|
7,289
|
|
|
9,303
|
|
|
5,100
|
|
|||
|
|
|
|
|
|
||||||
Cash and equivalents, end of year
|
$
|
39,924
|
|
|
$
|
7,289
|
|
|
$
|
9,303
|
|
|
|
|
|
|
|
||||||
Other supplemental information
|
|
|
|
|
|
||||||
Interest paid, net of portion capitalized
|
$
|
1,794
|
|
|
$
|
1,215
|
|
|
$
|
1,099
|
|
Income taxes paid (received)
|
1,447
|
|
|
(35
|
)
|
|
1,696
|
|
48
| 2019 Form 10-K
|
|
|
|
|
|
|
2019 Form 10-K |
49
|
50
| 2019 Form 10-K
|
|
|
as of December 31 (in millions)
|
2019
|
|
2018
|
||||
Finished goods
|
$
|
485
|
|
|
$
|
473
|
|
Work-in-process
|
942
|
|
|
862
|
|
||
Raw materials
|
386
|
|
|
270
|
|
||
Inventories
|
$
|
1,813
|
|
|
$
|
1,605
|
|
as of December 31 (in millions)
|
2019
|
|
2018
|
||||
Land
|
$
|
72
|
|
|
$
|
73
|
|
Buildings
|
1,613
|
|
|
1,603
|
|
||
Equipment
|
6,012
|
|
|
6,362
|
|
||
Construction in progress
|
491
|
|
|
358
|
|
||
Property and equipment, gross
|
8,188
|
|
|
8,396
|
|
||
Less accumulated depreciation
|
(5,226
|
)
|
|
(5,513
|
)
|
||
Property and equipment, net
|
$
|
2,962
|
|
|
$
|
2,883
|
|
|
|
2019 Form 10-K |
51
|
52
| 2019 Form 10-K
|
|
|
|
|
2019 Form 10-K |
53
|
54
| 2019 Form 10-K
|
|
|
|
years ended December 31 (in millions)
|
2019
|
|
2018
|
|
2017
|
||||||
Interest expense
|
$
|
1,784
|
|
|
$
|
1,348
|
|
|
$
|
1,150
|
|
Interest income
|
(275
|
)
|
|
(204
|
)
|
|
(146
|
)
|
|||
Interest expense, net
|
$
|
1,509
|
|
|
$
|
1,144
|
|
|
$
|
1,004
|
|
as of December 31 (in millions)
|
2019
|
|
2018
|
||||
Sales rebates
|
$
|
4,484
|
|
|
$
|
3,939
|
|
Dividends payable
|
1,771
|
|
|
1,607
|
|
||
Accounts payable
|
1,452
|
|
|
1,546
|
|
||
Salaries, wages and commissions
|
830
|
|
|
787
|
|
||
Royalty and license arrangements
|
324
|
|
|
304
|
|
||
Other
|
2,971
|
|
|
3,748
|
|
||
Accounts payable and accrued liabilities
|
$
|
11,832
|
|
|
$
|
11,931
|
|
as of December 31 (in millions)
|
2019
|
|
2018
|
||||
Contingent consideration liabilities
|
$
|
7,201
|
|
|
$
|
4,306
|
|
Income taxes payable
|
3,453
|
|
|
4,311
|
|
||
Pension and other post-employment benefits
|
2,949
|
|
|
1,840
|
|
||
Liabilities for unrecognized tax benefits
|
2,772
|
|
|
2,726
|
|
||
Other
|
1,222
|
|
|
1,307
|
|
||
Other long-term liabilities
|
$
|
17,597
|
|
|
$
|
14,490
|
|
|
|
|
2019 Form 10-K |
55
|
|
Years ended December 31,
|
||||||||||
(in millions, except per share data)
|
2019
|
|
2018
|
|
2017
|
||||||
Basic EPS
|
|
|
|
|
|
||||||
Net earnings
|
$
|
7,882
|
|
|
$
|
5,687
|
|
|
$
|
5,309
|
|
Earnings allocated to participating securities
|
40
|
|
|
30
|
|
|
26
|
|
|||
Earnings available to common shareholders
|
$
|
7,842
|
|
|
$
|
5,657
|
|
|
$
|
5,283
|
|
Weighted-average basic shares outstanding
|
1,481
|
|
|
1,541
|
|
|
1,596
|
|
|||
Basic earnings per share
|
$
|
5.30
|
|
|
$
|
3.67
|
|
|
$
|
3.31
|
|
|
|
|
|
|
|
||||||
Diluted EPS
|
|
|
|
|
|
||||||
Net earnings
|
$
|
7,882
|
|
|
$
|
5,687
|
|
|
$
|
5,309
|
|
Earnings allocated to participating securities
|
40
|
|
|
30
|
|
|
26
|
|
|||
Earnings available to common shareholders
|
$
|
7,842
|
|
|
$
|
5,657
|
|
|
$
|
5,283
|
|
Weighted-average shares of common stock outstanding
|
1,481
|
|
|
1,541
|
|
|
1,596
|
|
|||
Effect of dilutive securities
|
3
|
|
|
5
|
|
|
7
|
|
|||
Weighted-average diluted shares outstanding
|
1,484
|
|
|
1,546
|
|
|
1,603
|
|
|||
Diluted earnings per share
|
$
|
5.28
|
|
|
$
|
3.66
|
|
|
$
|
3.30
|
|
|
56
| 2019 Form 10-K
|
|
|
|
|
|
2019 Form 10-K |
57
|
years ended December 31 (in millions)
|
|
2019
|
|
2018
|
|
2017
|
||||||
United States - Janssen's share of profits (included in cost of products sold)
|
|
$
|
1,803
|
|
|
$
|
1,372
|
|
|
$
|
1,001
|
|
International - AbbVie's share of profits (included in net revenues)
|
|
844
|
|
|
622
|
|
|
429
|
|
|||
Global - AbbVie's share of other costs (included in respective line items)
|
|
321
|
|
|
326
|
|
|
288
|
|
|
(in millions)
|
|
||
Balance as of December 31, 2017
|
$
|
15,785
|
|
Foreign currency translation
|
(122
|
)
|
|
Balance as of December 31, 2018
|
15,663
|
|
|
Foreign currency translation
|
(59
|
)
|
|
Balance as of December 31, 2019
|
$
|
15,604
|
|
|
2019
|
|
2018
|
||||||||||||||||||||
as of December 31 (in millions)
|
Gross
carrying
amount
|
|
Accumulated
amortization
|
|
Net
carrying
amount
|
|
Gross
carrying
amount
|
|
Accumulated
amortization
|
|
Net
carrying
amount
|
||||||||||||
Definite-lived intangible assets
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||
Developed product rights
|
$
|
19,547
|
|
|
$
|
(6,405
|
)
|
|
$
|
13,142
|
|
|
$
|
15,872
|
|
|
$
|
(5,614
|
)
|
|
$
|
10,258
|
|
License agreements
|
7,798
|
|
|
(2,291
|
)
|
|
5,507
|
|
|
7,865
|
|
|
(1,810
|
)
|
|
6,055
|
|
||||||
Total definite-lived intangible assets
|
27,345
|
|
|
(8,696
|
)
|
|
18,649
|
|
|
23,737
|
|
|
(7,424
|
)
|
|
16,313
|
|
||||||
Indefinite-lived research and development
|
—
|
|
|
—
|
|
|
—
|
|
|
4,920
|
|
|
—
|
|
|
4,920
|
|
||||||
Total intangible assets, net
|
$
|
27,345
|
|
|
$
|
(8,696
|
)
|
|
$
|
18,649
|
|
|
$
|
28,657
|
|
|
$
|
(7,424
|
)
|
|
$
|
21,233
|
|
58
| 2019 Form 10-K
|
|
|
(in billions)
|
2020
|
|
2021
|
|
2022
|
|
2023
|
|
2024
|
||||||||||
Anticipated annual amortization expense
|
$
|
1.8
|
|
|
$
|
2.0
|
|
|
$
|
2.3
|
|
|
$
|
2.4
|
|
|
$
|
2.5
|
|
|
|
|
2019 Form 10-K |
59
|
|
(in millions)
|
Balance sheet caption
|
December 31,
2019 |
||
Assets
|
|
|
||
Operating
|
Other assets
|
$
|
344
|
|
Finance
|
Property and equipment, net
|
23
|
|
|
Total lease assets
|
|
$
|
367
|
|
Liabilities
|
|
|
||
Operating
|
|
|
||
Current
|
Accounts payable and accrued liabilities
|
$
|
109
|
|
Noncurrent
|
Other long-term liabilities
|
251
|
|
|
Finance
|
|
|
||
Current
|
Current portion of long-term debt and finance lease obligations
|
7
|
|
|
Noncurrent
|
Long-term debt and finance lease obligations
|
20
|
|
|
Total lease liabilities
|
|
$
|
387
|
|
year ended December 31 (in millions)
|
|
2019
|
||
Operating lease cost
|
|
$
|
124
|
|
Short-term lease cost
|
|
34
|
|
|
Variable lease cost
|
|
62
|
|
|
Total lease cost
|
|
$
|
220
|
|
60
| 2019 Form 10-K
|
|
|
|
December 31,
2019 |
|
Weighted-average remaining lease term (years)
|
|
|
Operating
|
5
|
|
Finance
|
3
|
|
Weighted-average discount rate
|
|
|
Operating
|
3.9
|
%
|
Finance
|
3.9
|
%
|
year ended December 31 (in millions)
|
2019
|
||
Cash paid for amounts included in the measurement of lease liabilities
|
|
||
Operating cash flows from operating leases
|
$
|
125
|
|
Right-of-use assets obtained in exchange for new operating lease liabilities
|
26
|
|
(in millions)
|
Operating
leases
|
|
Finance
leases
|
|
Total (a)(b)
|
||||||
2020
|
$
|
119
|
|
|
$
|
10
|
|
|
$
|
129
|
|
2021
|
104
|
|
|
9
|
|
|
113
|
|
|||
2022
|
59
|
|
|
8
|
|
|
67
|
|
|||
2023
|
38
|
|
|
1
|
|
|
39
|
|
|||
2024
|
22
|
|
|
—
|
|
|
22
|
|
|||
Thereafter
|
58
|
|
|
—
|
|
|
58
|
|
|||
Total lease payments
|
400
|
|
|
28
|
|
|
428
|
|
|||
Less: Interest
|
40
|
|
|
1
|
|
|
41
|
|
|||
Present value of lease liabilities
|
$
|
360
|
|
|
$
|
27
|
|
|
$
|
387
|
|
(a)
|
Total lease payments exclude approximately $350 million of contractual minimum lease payments for leases executed but not yet commenced. These leases will commence in 2020 with lease terms of approximately 11 years.
|
(b)
|
Lease payments recognized as part of lease liabilities for optional renewal periods are insignificant.
|
|
|
2019 Form 10-K |
61
|
|
as of December 31 (dollars in millions)
|
Effective
interest rate
in 2019(a)
|
|
2019
|
|
Effective
interest rate
in 2018(a)
|
|
2018
|
||||||
Senior notes issued in 2012
|
|
|
|
|
|
|
|
||||||
2.90% notes due 2022
|
2.97
|
%
|
|
$
|
3,100
|
|
|
2.97
|
%
|
|
$
|
3,100
|
|
4.40% notes due 2042
|
4.46
|
%
|
|
2,600
|
|
|
4.46
|
%
|
|
2,600
|
|
||
Senior notes issued in 2015
|
|
|
|
|
|
|
|
||||||
2.50% notes due 2020
|
2.65
|
%
|
|
3,750
|
|
|
2.65
|
%
|
|
3,750
|
|
||
3.20% notes due 2022
|
3.28
|
%
|
|
1,000
|
|
|
3.28
|
%
|
|
1,000
|
|
||
3.60% notes due 2025
|
3.66
|
%
|
|
3,750
|
|
|
3.66
|
%
|
|
3,750
|
|
||
4.50% notes due 2035
|
4.58
|
%
|
|
2,500
|
|
|
4.58
|
%
|
|
2,500
|
|
||
4.70% notes due 2045
|
4.73
|
%
|
|
2,700
|
|
|
4.73
|
%
|
|
2,700
|
|
||
Senior notes issued in 2016
|
|
|
|
|
|
|
|
||||||
2.30% notes due 2021
|
2.40
|
%
|
|
1,800
|
|
|
2.40
|
%
|
|
1,800
|
|
||
2.85% notes due 2023
|
2.91
|
%
|
|
1,000
|
|
|
2.91
|
%
|
|
1,000
|
|
||
3.20% notes due 2026
|
3.28
|
%
|
|
2,000
|
|
|
3.28
|
%
|
|
2,000
|
|
||
4.30% notes due 2036
|
4.37
|
%
|
|
1,000
|
|
|
4.37
|
%
|
|
1,000
|
|
||
4.45% notes due 2046
|
4.50
|
%
|
|
2,000
|
|
|
4.50
|
%
|
|
2,000
|
|
||
Senior Euro notes issued in 2016
|
|
|
|
|
|
|
|
||||||
0.375% notes due 2019 (€1,400 principal)
|
0.55
|
%
|
|
—
|
|
|
0.55
|
%
|
|
1,604
|
|
||
1.375% notes due 2024 (€1,450 principal)
|
1.46
|
%
|
|
1,625
|
|
|
1.46
|
%
|
|
1,661
|
|
||
2.125% notes due 2028 (€750 principal)
|
2.18
|
%
|
|
840
|
|
|
2.18
|
%
|
|
859
|
|
||
Senior notes issued in 2018
|
|
|
|
|
|
|
|
||||||
3.375% notes due 2021
|
3.51
|
%
|
|
1,250
|
|
|
3.51
|
%
|
|
1,250
|
|
||
3.75% notes due 2023
|
3.84
|
%
|
|
1,250
|
|
|
3.84
|
%
|
|
1,250
|
|
||
4.25% notes due 2028
|
4.38
|
%
|
|
1,750
|
|
|
4.38
|
%
|
|
1,750
|
|
||
4.875% notes due 2048
|
4.94
|
%
|
|
1,750
|
|
|
4.94
|
%
|
|
1,750
|
|
||
Senior Euro notes issued in 2019
|
|
|
|
|
|
|
|
||||||
0.75% notes due 2027 (€750 principal)
|
0.86
|
%
|
|
840
|
|
|
—
|
|
|
—
|
|
||
1.25% notes due 2031 (€650 principal)
|
1.30
|
%
|
|
728
|
|
|
—
|
|
|
—
|
|
||
Senior notes issued in 2019
|
|
|
|
|
|
|
|
||||||
Floating rate notes due May 2021
|
2.08
|
%
|
|
750
|
|
|
—
|
|
|
—
|
|
||
Floating rate notes due November 2021
|
2.12
|
%
|
|
750
|
|
|
—
|
|
|
—
|
|
||
Floating rate notes due 2022
|
2.29
|
%
|
|
750
|
|
|
—
|
|
|
—
|
|
||
2.15% notes due 2021
|
2.23
|
%
|
|
1,750
|
|
|
—
|
|
|
—
|
|
||
2.30% notes due 2022
|
2.42
|
%
|
|
3,000
|
|
|
—
|
|
|
—
|
|
||
2.60% notes due 2024
|
2.69
|
%
|
|
3,750
|
|
|
—
|
|
|
—
|
|
||
2.95% notes due 2026
|
3.02
|
%
|
|
4,000
|
|
|
—
|
|
|
—
|
|
||
3.20% notes due 2029
|
3.25
|
%
|
|
5,500
|
|
|
—
|
|
|
—
|
|
||
4.05% notes due 2039
|
4.11
|
%
|
|
4,000
|
|
|
—
|
|
|
—
|
|
||
4.25% notes due 2049
|
4.29
|
%
|
|
5,750
|
|
|
—
|
|
|
—
|
|
||
Other
|
|
|
|
27
|
|
|
|
|
|
36
|
|
||
Fair value hedges
|
|
|
(48
|
)
|
|
|
|
(466
|
)
|
||||
Unamortized bond discounts
|
|
|
(161
|
)
|
|
|
|
(120
|
)
|
||||
Unamortized deferred financing costs
|
|
|
(323
|
)
|
|
|
|
(163
|
)
|
||||
Total long-term debt and finance lease obligations
|
|
|
66,728
|
|
|
|
|
36,611
|
|
||||
Current portion
|
|
|
3,753
|
|
|
|
|
1,609
|
|
||||
Noncurrent portion
|
|
|
$
|
62,975
|
|
|
|
|
$
|
35,002
|
|
(a)
|
Excludes the effect of any related interest rate swaps.
|
62
| 2019 Form 10-K
|
|
|
|
|
2019 Form 10-K |
63
|
as of and for the years ending December 31 (in millions)
|
|
||
2020
|
$
|
3,750
|
|
2021
|
6,300
|
|
|
2022
|
7,850
|
|
|
2023
|
2,250
|
|
|
2024
|
5,375
|
|
|
Thereafter
|
41,708
|
|
|
Total obligations and commitments
|
67,233
|
|
|
Fair value hedges, unamortized bond discounts, deferred financing costs and finance lease obligations
|
(505
|
)
|
|
Total long-term debt and finance lease obligations
|
$
|
66,728
|
|
64
| 2019 Form 10-K
|
|
|
|
|
|
2019 Form 10-K |
65
|
|
Fair value -
Derivatives in asset position
|
|
Fair value -
Derivatives in liability position
|
||||||||||||
as of December 31 (in millions)
|
Balance sheet caption
|
2019
|
2018
|
|
Balance sheet caption
|
2019
|
2018
|
||||||||
Foreign currency forward exchange contracts
|
|
|
|
|
|
|
|
||||||||
Designated as cash flow hedges
|
Prepaid expenses and other
|
$
|
3
|
|
$
|
113
|
|
|
Accounts payable and accrued liabilities
|
$
|
14
|
|
$
|
—
|
|
Designated as net investment hedges
|
Prepaid expenses and other
|
—
|
|
—
|
|
|
Accounts payable and accrued liabilities
|
24
|
|
—
|
|
||||
Not designated as hedges
|
Prepaid expenses and other
|
19
|
|
19
|
|
|
Accounts payable and accrued liabilities
|
18
|
|
26
|
|
||||
Interest rate swap contracts
|
|
|
|
|
|
|
|
||||||||
Designated as cash flow hedges
|
Other assets
|
3
|
|
—
|
|
|
Other long-term liabilities
|
—
|
|
—
|
|
||||
Designated as fair value hedges
|
Prepaid expenses and other
|
—
|
|
—
|
|
|
Accounts payable and accrued liabilities
|
2
|
|
—
|
|
||||
Designated as fair value hedges
|
Other assets
|
28
|
|
—
|
|
|
Other long-term liabilities
|
74
|
|
466
|
|
||||
Total derivatives
|
|
$
|
53
|
|
$
|
132
|
|
|
|
$
|
132
|
|
$
|
492
|
|
years ended in December 31 (in millions)
|
|
2019
|
|
2018
|
|
2017
|
||||||
Foreign currency forward exchange contracts
|
|
|
|
|
|
|
||||||
Designated as cash flow hedges
|
|
$
|
(5
|
)
|
|
$
|
175
|
|
|
$
|
(250
|
)
|
Designated as net investment hedges
|
|
33
|
|
|
—
|
|
|
—
|
|
|||
Interest rate swap contracts designated as cash flow hedges
|
|
4
|
|
|
—
|
|
|
—
|
|
|||
Treasury rate lock agreements designated as cash flow hedges
|
|
383
|
|
|
—
|
|
|
—
|
|
66
| 2019 Form 10-K
|
|
|
years ended December 31 (in millions)
|
Statement of earnings caption
|
2019
|
|
2018
|
|
2017
|
||||||
Foreign currency forward exchange contracts
|
|
|
|
|
|
|
||||||
Designated as cash flow hedges
|
Cost of products sold
|
$
|
167
|
|
|
$
|
(161
|
)
|
|
$
|
118
|
|
Designated as net investment hedges
|
Interest expense, net
|
27
|
|
|
—
|
|
|
—
|
|
|||
Not designated as hedges
|
Net foreign exchange loss
|
(70
|
)
|
|
83
|
|
|
(96
|
)
|
|||
Treasury rate lock agreements designated as cash flow hedges
|
Interest expense, net
|
3
|
|
|
—
|
|
|
—
|
|
|||
Interest rate swap contracts
|
|
|
|
|
|
|
||||||
Designated as cash flow hedges
|
Interest expense, net
|
1
|
|
|
—
|
|
|
—
|
|
|||
Designated as fair value hedges
|
Interest expense, net
|
418
|
|
|
(71
|
)
|
|
(63
|
)
|
|||
Debt designated as hedged item in fair value hedges
|
Interest expense, net
|
(418
|
)
|
|
71
|
|
|
63
|
|
•
|
Level 1—Valuations based on unadjusted quoted prices in active markets for identical assets that the company has the ability to access;
|
•
|
Level 2—Valuations based on quoted prices for similar instruments in active markets, quoted prices for identical or similar instruments in markets that are not active and model-based valuations in which all significant inputs are observable in the market; and
|
•
|
Level 3—Valuations using significant inputs that are unobservable in the market and include the use of judgment by the company's management about the assumptions market participants would use in pricing the asset or liability.
|
|
|
|
Basis of fair value measurement
|
||||||||||||
(in millions)
|
Total
|
|
Quoted prices in active markets for
identical assets
(Level 1)
|
|
Significant other
observable
inputs
(Level 2)
|
|
Significant
unobservable
Inputs
(Level 3)
|
||||||||
Assets
|
|
|
|
|
|
|
|
||||||||
Cash and equivalents
|
$
|
39,924
|
|
|
$
|
1,542
|
|
|
$
|
38,382
|
|
|
$
|
—
|
|
Debt securities
|
3
|
|
|
—
|
|
|
3
|
|
|
—
|
|
||||
Equity securities
|
24
|
|
|
24
|
|
|
—
|
|
|
—
|
|
||||
Interest rate swap contracts
|
31
|
|
|
—
|
|
|
31
|
|
|
—
|
|
||||
Foreign currency contracts
|
22
|
|
|
—
|
|
|
22
|
|
|
—
|
|
||||
Total assets
|
$
|
40,004
|
|
|
$
|
1,566
|
|
|
$
|
38,438
|
|
|
$
|
—
|
|
Liabilities
|
|
|
|
|
|
|
|
||||||||
Interest rate swap contracts
|
$
|
76
|
|
|
$
|
—
|
|
|
$
|
76
|
|
|
$
|
—
|
|
Foreign currency contracts
|
56
|
|
|
—
|
|
|
56
|
|
|
—
|
|
||||
Contingent consideration
|
7,340
|
|
|
—
|
|
|
—
|
|
|
7,340
|
|
||||
Total liabilities
|
$
|
7,472
|
|
|
$
|
—
|
|
|
$
|
132
|
|
|
$
|
7,340
|
|
|
|
2019 Form 10-K |
67
|
|
|
|
Basis of fair value measurement
|
||||||||||||
(in millions)
|
Total
|
|
Quoted prices in active markets for
identical assets
(Level 1)
|
|
Significant other
observable
inputs
(Level 2)
|
|
Significant
unobservable
Inputs
(Level 3)
|
||||||||
Assets
|
|
|
|
|
|
|
|
||||||||
Cash and equivalents
|
$
|
7,289
|
|
|
$
|
1,209
|
|
|
$
|
6,080
|
|
|
$
|
—
|
|
Time deposits
|
568
|
|
|
—
|
|
|
568
|
|
|
—
|
|
||||
Debt securities
|
1,536
|
|
|
—
|
|
|
1,536
|
|
|
—
|
|
||||
Equity securities
|
4
|
|
|
4
|
|
|
—
|
|
|
—
|
|
||||
Foreign currency contracts
|
132
|
|
|
—
|
|
|
132
|
|
|
—
|
|
||||
Total assets
|
$
|
9,529
|
|
|
$
|
1,213
|
|
|
$
|
8,316
|
|
|
$
|
—
|
|
Liabilities
|
|
|
|
|
|
|
|
||||||||
Interest rate swap contracts
|
$
|
466
|
|
|
$
|
—
|
|
|
$
|
466
|
|
|
$
|
—
|
|
Foreign currency contracts
|
26
|
|
|
—
|
|
|
26
|
|
|
—
|
|
||||
Contingent consideration
|
4,483
|
|
|
—
|
|
|
—
|
|
|
4,483
|
|
||||
Total liabilities
|
$
|
4,975
|
|
|
$
|
—
|
|
|
$
|
492
|
|
|
$
|
4,483
|
|
years ended December 31 (in millions)
|
2019
|
|
2018
|
|
2017
|
||||||
Beginning balance
|
$
|
4,483
|
|
|
$
|
4,534
|
|
|
$
|
4,213
|
|
Change in fair value recognized in net earnings
|
3,091
|
|
|
49
|
|
|
626
|
|
|||
Payments
|
(234
|
)
|
|
(100
|
)
|
|
(305
|
)
|
|||
Ending balance
|
$
|
7,340
|
|
|
$
|
4,483
|
|
|
$
|
4,534
|
|
68
| 2019 Form 10-K
|
|
|
|
|
|
|
Basis of fair value measurement
|
||||||||||||||
(in millions)
|
Book value
|
Approximate
fair values
|
|
Quoted prices in active markets for
identical assets
(Level 1)
|
|
Significant other
observable
inputs
(Level 2)
|
|
Significant
unobservable
Inputs
(Level 3)
|
||||||||||
Liabilities
|
|
|
|
|
|
|
|
|
||||||||||
Current portion of long-term debt and finance lease obligations, excluding fair value hedges
|
$
|
3,755
|
|
$
|
3,760
|
|
|
$
|
3,753
|
|
|
$
|
7
|
|
|
$
|
—
|
|
Long-term debt and finance lease obligations, excluding fair value hedges
|
63,021
|
|
66,651
|
|
|
66,631
|
|
|
20
|
|
|
—
|
|
|||||
Total liabilities
|
$
|
66,776
|
|
$
|
70,411
|
|
|
$
|
70,384
|
|
|
$
|
27
|
|
|
$
|
—
|
|
|
|
|
|
Basis of fair value measurement
|
||||||||||||||
(in millions)
|
Book value
|
Approximate
fair values
|
|
Quoted prices in active markets for
identical assets
(Level 1)
|
|
Significant other
observable
inputs
(Level 2)
|
|
Significant
unobservable
Inputs
(Level 3)
|
||||||||||
Liabilities
|
|
|
|
|
|
|
|
|
||||||||||
Short-term borrowings
|
$
|
3,699
|
|
$
|
3,693
|
|
|
$
|
—
|
|
|
$
|
3,693
|
|
|
$
|
—
|
|
Current portion of long-term debt and finance lease obligations, excluding fair value hedges
|
1,609
|
|
1,617
|
|
|
1,609
|
|
|
8
|
|
|
—
|
|
|||||
Long-term debt and finance lease obligations, excluding fair value hedges
|
35,468
|
|
34,052
|
|
|
34,024
|
|
|
28
|
|
|
—
|
|
|||||
Total liabilities
|
$
|
40,776
|
|
$
|
39,362
|
|
|
$
|
35,633
|
|
|
$
|
3,729
|
|
|
$
|
—
|
|
|
Amortized cost
|
|
Gross unrealized
|
|
Fair value
|
||||||||||
(in millions)
|
|
Gains
|
|
Losses
|
|
||||||||||
Asset backed securities
|
$
|
423
|
|
|
$
|
—
|
|
|
$
|
(2
|
)
|
|
$
|
421
|
|
Corporate debt securities
|
1,042
|
|
|
1
|
|
|
(9
|
)
|
|
1,034
|
|
||||
Other debt securities
|
81
|
|
|
—
|
|
|
—
|
|
|
81
|
|
||||
Total
|
$
|
1,546
|
|
|
$
|
1
|
|
|
$
|
(11
|
)
|
|
$
|
1,536
|
|
|
|
2019 Form 10-K |
69
|
|
|
Defined benefit plans
|
|
Other post-employment plans
|
||||||||||||
as of and for the years ended December 31 (in millions)
|
2019
|
|
2018
|
|
2019
|
|
2018
|
||||||||
Projected benefit obligations
|
|
|
|
|
|
|
|
||||||||
Beginning of period
|
$
|
6,618
|
|
|
$
|
6,985
|
|
|
$
|
561
|
|
|
$
|
813
|
|
Service cost
|
269
|
|
|
285
|
|
|
25
|
|
|
26
|
|
||||
Interest cost
|
259
|
|
|
227
|
|
|
29
|
|
|
25
|
|
||||
Employee contributions
|
2
|
|
|
2
|
|
|
—
|
|
|
—
|
|
||||
Actuarial (gain) loss
|
1,703
|
|
|
(614
|
)
|
|
451
|
|
|
(287
|
)
|
||||
Benefits paid
|
(206
|
)
|
|
(191
|
)
|
|
(17
|
)
|
|
(16
|
)
|
||||
Other, primarily foreign currency translation adjustments
|
1
|
|
|
(76
|
)
|
|
1
|
|
|
—
|
|
||||
End of period
|
8,646
|
|
|
6,618
|
|
|
1,050
|
|
|
561
|
|
||||
Fair value of plan assets
|
|
|
|
|
|
|
|
||||||||
Beginning of period
|
5,637
|
|
|
5,399
|
|
|
—
|
|
|
—
|
|
||||
Actual return on plan assets
|
946
|
|
|
(384
|
)
|
|
—
|
|
|
—
|
|
||||
Company contributions
|
727
|
|
|
873
|
|
|
17
|
|
|
16
|
|
||||
Employee contributions
|
2
|
|
|
2
|
|
|
—
|
|
|
—
|
|
||||
Benefits paid
|
(206
|
)
|
|
(191
|
)
|
|
(17
|
)
|
|
(16
|
)
|
||||
Other, primarily foreign currency translation adjustments
|
10
|
|
|
(62
|
)
|
|
—
|
|
|
—
|
|
||||
End of period
|
7,116
|
|
|
5,637
|
|
|
—
|
|
|
—
|
|
||||
Funded status, end of period
|
$
|
(1,530
|
)
|
|
$
|
(981
|
)
|
|
$
|
(1,050
|
)
|
|
$
|
(561
|
)
|
|
|
|
|
|
|
|
|
||||||||
Amounts recognized on the consolidated balance sheets
|
|
|
|
|
|
|
|
||||||||
Other assets
|
$
|
395
|
|
|
$
|
321
|
|
|
$
|
—
|
|
|
$
|
—
|
|
Accounts payable and accrued liabilities
|
(8
|
)
|
|
(8
|
)
|
|
(18
|
)
|
|
(15
|
)
|
||||
Other long-term liabilities
|
(1,917
|
)
|
|
(1,294
|
)
|
|
(1,032
|
)
|
|
(546
|
)
|
||||
Net obligation
|
$
|
(1,530
|
)
|
|
$
|
(981
|
)
|
|
$
|
(1,050
|
)
|
|
$
|
(561
|
)
|
Actuarial loss, net
|
$
|
3,633
|
|
|
$
|
2,516
|
|
|
$
|
469
|
|
|
$
|
25
|
|
Prior service cost (credit)
|
10
|
|
|
11
|
|
|
(16
|
)
|
|
(22
|
)
|
||||
Accumulated other comprehensive loss
|
$
|
3,643
|
|
|
$
|
2,527
|
|
|
$
|
453
|
|
|
$
|
3
|
|
70
| 2019 Form 10-K
|
|
|
years ended December 31 (in millions)
|
2019
|
|
2018
|
|
2017
|
||||||
Defined benefit plans
|
|
|
|
|
|
||||||
Actuarial loss
|
$
|
1,231
|
|
|
$
|
209
|
|
|
$
|
412
|
|
Amortization of actuarial loss and prior service cost
|
(109
|
)
|
|
(140
|
)
|
|
(107
|
)
|
|||
Foreign exchange loss (gain) and other
|
(6
|
)
|
|
(13
|
)
|
|
46
|
|
|||
Total loss
|
$
|
1,116
|
|
|
$
|
56
|
|
|
$
|
351
|
|
Other post-employment plans
|
|
|
|
|
|
||||||
Actuarial loss (gain)
|
$
|
451
|
|
|
$
|
(287
|
)
|
|
$
|
149
|
|
Amortization of actuarial loss and prior service credit
|
(1
|
)
|
|
(1
|
)
|
|
—
|
|
|||
Total loss (gain)
|
$
|
450
|
|
|
$
|
(288
|
)
|
|
$
|
149
|
|
years ended December 31 (in millions)
|
2019
|
|
2018
|
|
2017
|
||||||
Defined benefit plans
|
|
|
|
|
|
||||||
Service cost
|
$
|
269
|
|
|
$
|
285
|
|
|
$
|
236
|
|
Interest cost
|
259
|
|
|
227
|
|
|
204
|
|
|||
Expected return on plan assets
|
(474
|
)
|
|
(439
|
)
|
|
(382
|
)
|
|||
Amortization of actuarial loss and prior service cost
|
109
|
|
|
140
|
|
|
107
|
|
|||
Net periodic benefit cost
|
$
|
163
|
|
|
$
|
213
|
|
|
$
|
165
|
|
Other post-employment plans
|
|
|
|
|
|
||||||
Service cost
|
$
|
25
|
|
|
$
|
26
|
|
|
$
|
26
|
|
Interest cost
|
29
|
|
|
25
|
|
|
24
|
|
|||
Amortization of actuarial loss and prior service credit
|
1
|
|
|
1
|
|
|
—
|
|
|||
Net periodic benefit cost
|
$
|
55
|
|
|
$
|
52
|
|
|
$
|
50
|
|
as of December 31
|
2019
|
|
2018
|
||
Defined benefit plans
|
|
|
|
||
Discount rate
|
3.0
|
%
|
|
4.0
|
%
|
Rate of compensation increases
|
4.6
|
%
|
|
4.6
|
%
|
Other post-employment plans
|
|
|
|
||
Discount rate
|
3.6
|
%
|
|
4.6
|
%
|
|
|
2019 Form 10-K |
71
|
years ended December 31
|
2019
|
|
2018
|
|
2017
|
|||
Defined benefit plans
|
|
|
|
|
|
|||
Discount rate for determining service cost
|
4.0
|
%
|
|
3.4
|
%
|
|
3.9
|
%
|
Discount rate for determining interest cost
|
4.0
|
%
|
|
3.1
|
%
|
|
3.7
|
%
|
Expected long-term rate of return on plan assets
|
7.6
|
%
|
|
7.7
|
%
|
|
7.8
|
%
|
Expected rate of change in compensation
|
4.6
|
%
|
|
4.4
|
%
|
|
4.4
|
%
|
Other post-employment plans
|
|
|
|
|
|
|||
Discount rate for determining service cost
|
4.7
|
%
|
|
4.0
|
%
|
|
4.9
|
%
|
Discount rate for determining interest cost
|
4.3
|
%
|
|
3.7
|
%
|
|
4.1
|
%
|
|
One percentage point
|
||||||
year ended December 31, 2019 (in millions) (brackets denote a reduction)
|
Increase
|
|
Decrease
|
||||
Service cost and interest cost
|
$
|
13
|
|
|
$
|
(10
|
)
|
Projected benefit obligation
|
244
|
|
|
(186
|
)
|
|
|
|
Basis of fair value measurement
|
||||||||||||
as of December 31 (in millions)
|
2019
|
|
Quoted prices in active markets for
identical assets
(Level 1)
|
|
Significant other
observable
inputs
(Level 2)
|
|
Significant
unobservable
inputs
(Level 3)
|
||||||||
Equities
|
|
|
|
|
|
|
|
||||||||
U.S. large cap(a)
|
$
|
884
|
|
|
$
|
884
|
|
|
$
|
—
|
|
|
$
|
—
|
|
U.S. mid cap(b)
|
138
|
|
|
138
|
|
|
—
|
|
|
—
|
|
||||
International(c)
|
349
|
|
|
349
|
|
|
—
|
|
|
—
|
|
||||
Fixed income securities
|
|
|
|
|
|
|
|
||||||||
U.S. government securities(d)
|
149
|
|
|
21
|
|
|
128
|
|
|
—
|
|
||||
Corporate debt instruments(d)
|
372
|
|
|
112
|
|
|
260
|
|
|
—
|
|
||||
Non-U.S. government securities(d)
|
202
|
|
|
84
|
|
|
118
|
|
|
—
|
|
||||
Other(d)
|
320
|
|
|
318
|
|
|
2
|
|
|
—
|
|
||||
Absolute return funds(e)
|
296
|
|
|
4
|
|
|
292
|
|
|
—
|
|
||||
Real assets
|
9
|
|
|
9
|
|
|
—
|
|
|
—
|
|
||||
Other(f)
|
132
|
|
|
132
|
|
|
—
|
|
|
—
|
|
||||
Total
|
$
|
2,851
|
|
|
$
|
2,051
|
|
|
$
|
800
|
|
|
$
|
—
|
|
Total assets measured at NAV
|
4,265
|
|
|
|
|
|
|
|
|||||||
Fair value of plan assets
|
$
|
7,116
|
|
|
|
|
|
|
|
|
|
|
72
| 2019 Form 10-K
|
|
|
|
|
|
Basis of fair value measurement
|
||||||||||||
as of December 31 (in millions)
|
2018
|
|
Quoted prices in active markets for
identical assets
(Level 1)
|
|
Significant other
observable
inputs
(Level 2)
|
|
Significant
unobservable
inputs
(Level 3)
|
||||||||
Equities
|
|
|
|
|
|
|
|
||||||||
U.S. large cap(a)
|
$
|
719
|
|
|
$
|
719
|
|
|
$
|
—
|
|
|
$
|
—
|
|
U.S. mid cap(b)
|
67
|
|
|
67
|
|
|
—
|
|
|
—
|
|
||||
International(c)
|
226
|
|
|
226
|
|
|
—
|
|
|
—
|
|
||||
Fixed income securities
|
|
|
|
|
|
|
|
||||||||
U.S. government securities(d)
|
140
|
|
|
21
|
|
|
119
|
|
|
—
|
|
||||
Corporate debt instruments(d)
|
385
|
|
|
123
|
|
|
262
|
|
|
—
|
|
||||
Non-U.S. government securities(d)
|
175
|
|
|
48
|
|
|
127
|
|
|
—
|
|
||||
Other(d)
|
232
|
|
|
225
|
|
|
7
|
|
|
—
|
|
||||
Absolute return funds(e)
|
261
|
|
|
3
|
|
|
258
|
|
|
—
|
|
||||
Real assets
|
7
|
|
|
7
|
|
|
—
|
|
|
—
|
|
||||
Other(f)
|
147
|
|
|
147
|
|
|
—
|
|
|
—
|
|
||||
Total
|
$
|
2,359
|
|
|
$
|
1,586
|
|
|
$
|
773
|
|
|
$
|
—
|
|
Total assets measured at NAV
|
3,278
|
|
|
|
|
|
|
|
|||||||
Fair value of plan assets
|
$
|
5,637
|
|
|
|
|
|
|
|
|
|
|
(a)
|
A mix of index funds and actively managed equity accounts that are benchmarked to various large cap indices.
|
(b)
|
A mix of index funds and actively managed equity accounts that are benchmarked to various mid cap indices.
|
(c)
|
A mix of index funds and actively managed equity accounts that are benchmarked to various non-U.S. equity indices in both developed and emerging markets.
|
(d)
|
Securities held by actively managed accounts, index funds and mutual funds.
|
(e)
|
Primarily funds having global mandates with the flexibility to allocate capital broadly across a wide range of asset classes and strategies, including but not limited to equities, fixed income, commodities, financial futures, currencies and other securities, with objectives to outperform agreed upon benchmarks of specific return and volatility targets.
|
(f)
|
Investments in cash and cash equivalents.
|
|
|
2019 Form 10-K |
73
|
years ending December 31 (in millions)
|
Defined
benefit plans
|
|
Other
post-employment
plans
|
||||
2020
|
$
|
221
|
|
|
$
|
18
|
|
2021
|
235
|
|
|
21
|
|
||
2022
|
251
|
|
|
24
|
|
||
2023
|
268
|
|
|
26
|
|
||
2024
|
286
|
|
|
29
|
|
||
2025 to 2029
|
1,737
|
|
|
186
|
|
|
|
Years ended December 31,
|
||||||||||
(in millions)
|
2019
|
|
2018
|
|
2017
|
||||||
Cost of products sold
|
$
|
29
|
|
|
$
|
27
|
|
|
$
|
23
|
|
Research and development
|
171
|
|
|
169
|
|
|
159
|
|
|||
Selling, general and administrative
|
230
|
|
|
225
|
|
|
183
|
|
|||
Pre-tax compensation expense
|
430
|
|
|
421
|
|
|
365
|
|
|||
Tax benefit
|
80
|
|
|
73
|
|
|
73
|
|
|||
After-tax compensation expense
|
$
|
350
|
|
|
$
|
348
|
|
|
$
|
292
|
|
74
| 2019 Form 10-K
|
|
|
(options in thousands, aggregate intrinsic value in millions)
|
Options
|
|
Weighted-
average
exercise price
|
|
Weighted-
average
remaining
life (in years)
|
|
Aggregate
intrinsic value
|
|||||
Outstanding at December 31, 2018
|
6,143
|
|
|
$
|
55.05
|
|
|
6.2
|
|
$
|
242
|
|
Granted
|
1,002
|
|
|
79.02
|
|
|
|
|
|
|||
Exercised
|
(375
|
)
|
|
23.72
|
|
|
|
|
|
|||
Lapsed
|
(9
|
)
|
|
20.09
|
|
|
|
|
|
|||
Outstanding at December 31, 2019
|
6,761
|
|
|
$
|
60.39
|
|
|
5.9
|
|
$
|
207
|
|
Exercisable at December 31, 2019
|
4,924
|
|
|
$
|
51.90
|
|
|
4.9
|
|
$
|
186
|
|
(share units in thousands)
|
Share units
|
|
Weighted-average
grant date fair value
|
|||
Outstanding at December 31, 2018
|
9,868
|
|
|
$
|
79.90
|
|
Granted
|
5,584
|
|
|
78.03
|
|
|
Vested
|
(4,616
|
)
|
|
71.30
|
|
|
Forfeited
|
(604
|
)
|
|
82.19
|
|
|
Outstanding at December 31, 2019
|
10,232
|
|
|
$
|
81.72
|
|
|
|
2019 Form 10-K |
75
|
2019
|
|
2018
|
|
2017
|
||||||||||||
Date Declared
|
|
Payment Date
|
|
Dividend Per Share
|
|
Date Declared
|
|
Payment Date
|
|
Dividend Per Share
|
|
Date Declared
|
|
Payment Date
|
|
Dividend Per Share
|
11/01/19
|
|
02/14/20
|
|
$1.18
|
|
11/02/18
|
|
02/15/19
|
|
$1.07
|
|
10/27/17
|
|
02/15/18
|
|
$0.71
|
09/06/19
|
|
11/15/19
|
|
$1.07
|
|
09/07/18
|
|
11/15/18
|
|
$0.96
|
|
09/08/17
|
|
11/15/17
|
|
$0.64
|
06/20/19
|
|
08/15/19
|
|
$1.07
|
|
06/14/18
|
|
08/15/18
|
|
$0.96
|
|
06/22/17
|
|
08/15/17
|
|
$0.64
|
02/21/19
|
|
05/15/19
|
|
$1.07
|
|
02/15/18
|
|
05/15/18
|
|
$0.96
|
|
02/16/17
|
|
05/15/17
|
|
$0.64
|
76
| 2019 Form 10-K
|
|
|
(in millions) (brackets denote losses)
|
Foreign
currency
translation
adjustments
|
|
Net investment hedging
activities
|
|
Pension
and post-
employment
benefits
|
|
Marketable security activities
|
|
Cash flow hedging
activities
|
|
Total
|
||||||||||||
Balance as of December 31, 2016
|
$
|
(1,435
|
)
|
|
$
|
140
|
|
|
$
|
(1,513
|
)
|
|
$
|
46
|
|
|
$
|
176
|
|
|
$
|
(2,586
|
)
|
Other comprehensive income (loss) before reclassifications
|
680
|
|
|
(343
|
)
|
|
(480
|
)
|
|
29
|
|
|
(230
|
)
|
|
(344
|
)
|
||||||
Net losses (gains) reclassified from accumulated other comprehensive loss
|
316
|
|
|
—
|
|
|
74
|
|
|
(75
|
)
|
|
(112
|
)
|
|
203
|
|
||||||
Net current-period other comprehensive income (loss)
|
996
|
|
|
(343
|
)
|
|
(406
|
)
|
|
(46
|
)
|
|
(342
|
)
|
|
(141
|
)
|
||||||
Balance as of December 31, 2017
|
(439
|
)
|
|
(203
|
)
|
|
(1,919
|
)
|
|
—
|
|
|
(166
|
)
|
|
(2,727
|
)
|
||||||
Other comprehensive income (loss) before reclassifications
|
(391
|
)
|
|
138
|
|
|
84
|
|
|
(14
|
)
|
|
156
|
|
|
(27
|
)
|
||||||
Net losses reclassified from accumulated other comprehensive loss
|
—
|
|
|
—
|
|
|
113
|
|
|
4
|
|
|
157
|
|
|
274
|
|
||||||
Net current-period other comprehensive income (loss)
|
(391
|
)
|
|
138
|
|
|
197
|
|
|
(10
|
)
|
|
313
|
|
|
247
|
|
||||||
Balance as of December 31, 2018
|
(830
|
)
|
|
(65
|
)
|
|
(1,722
|
)
|
|
(10
|
)
|
|
147
|
|
|
(2,480
|
)
|
||||||
Other comprehensive income (loss) before reclassifications
|
(98
|
)
|
|
95
|
|
|
(1,330
|
)
|
|
12
|
|
|
298
|
|
|
(1,023
|
)
|
||||||
Net losses (gains) reclassified from accumulated other comprehensive loss
|
—
|
|
|
(21
|
)
|
|
87
|
|
|
(2
|
)
|
|
(157
|
)
|
|
(93
|
)
|
||||||
Net current-period other comprehensive income (loss)
|
(98
|
)
|
|
74
|
|
|
(1,243
|
)
|
|
10
|
|
|
141
|
|
|
(1,116
|
)
|
||||||
Balance as of December 31, 2019
|
$
|
(928
|
)
|
|
$
|
9
|
|
|
$
|
(2,965
|
)
|
|
$
|
—
|
|
|
$
|
288
|
|
|
$
|
(3,596
|
)
|
|
|
2019 Form 10-K |
77
|
years ended December 31 (in millions) (brackets denote gains)
|
2019
|
|
2018
|
|
2017
|
||||||
Net investment hedging activities
|
|
|
|
|
|
||||||
Gains on derivative amount excluded from effectiveness testing(a)
|
$
|
(27
|
)
|
|
$
|
—
|
|
|
$
|
—
|
|
Tax expense
|
6
|
|
|
—
|
|
|
—
|
|
|||
Total reclassifications, net of tax
|
$
|
(21
|
)
|
|
$
|
—
|
|
|
$
|
—
|
|
Pension and post-employment benefits
|
|
|
|
|
|
||||||
Amortization of actuarial losses and other(b)
|
$
|
110
|
|
|
$
|
141
|
|
|
$
|
107
|
|
Tax benefit
|
(23
|
)
|
|
(28
|
)
|
|
(33
|
)
|
|||
Total reclassifications, net of tax
|
$
|
87
|
|
|
$
|
113
|
|
|
$
|
74
|
|
Cash flow hedging activities
|
|
|
|
|
|
||||||
Losses (gains) on foreign currency forward exchange contracts(c)
|
$
|
(167
|
)
|
|
$
|
161
|
|
|
$
|
(118
|
)
|
Gains on treasury rate lock agreements and interest rate swap contracts(a)
|
(4
|
)
|
|
—
|
|
|
—
|
|
|||
Tax expense (benefit)
|
14
|
|
|
(4
|
)
|
|
6
|
|
|||
Total reclassifications, net of tax
|
$
|
(157
|
)
|
|
$
|
157
|
|
|
$
|
(112
|
)
|
(a)
|
Amounts are included in interest expense, net (see Note 11).
|
(b)
|
Amounts are included in the computation of net periodic benefit cost (see Note 12).
|
(c)
|
Amounts are included in cost of products sold (see Note 11).
|
|
years ended December 31 (in millions)
|
2019
|
|
2018
|
|
2017
|
||||||
Domestic
|
$
|
(2,784
|
)
|
|
$
|
(4,274
|
)
|
|
$
|
(2,678
|
)
|
Foreign
|
11,210
|
|
|
9,471
|
|
|
10,405
|
|
|||
Total earnings before income tax expense
|
$
|
8,426
|
|
|
$
|
5,197
|
|
|
$
|
7,727
|
|
years ended December 31 (in millions)
|
2019
|
|
2018
|
|
2017
|
||||||
Current
|
|
|
|
|
|
||||||
Domestic
|
$
|
102
|
|
|
$
|
593
|
|
|
$
|
6,204
|
|
Foreign
|
320
|
|
|
434
|
|
|
376
|
|
|||
Total current taxes
|
$
|
422
|
|
|
$
|
1,027
|
|
|
$
|
6,580
|
|
Deferred
|
|
|
|
|
|
||||||
Domestic
|
$
|
(137
|
)
|
|
$
|
(1,497
|
)
|
|
$
|
(4,898
|
)
|
Foreign
|
259
|
|
|
(20
|
)
|
|
736
|
|
|||
Total deferred taxes
|
$
|
122
|
|
|
$
|
(1,517
|
)
|
|
$
|
(4,162
|
)
|
Total income tax expense (benefit)
|
$
|
544
|
|
|
$
|
(490
|
)
|
|
$
|
2,418
|
|
78
| 2019 Form 10-K
|
|
|
years ended December 31
|
2019
|
|
2018
|
|
2017
|
|||
Statutory tax rate
|
21.0
|
%
|
|
21.0
|
%
|
|
35.0
|
%
|
Effect of foreign operations
|
(8.4
|
)
|
|
(28.7
|
)
|
|
(12.2
|
)
|
U.S. tax credits
|
(3.3
|
)
|
|
(7.3
|
)
|
|
(4.0
|
)
|
Impacts related to U.S. tax reform
|
(1.6
|
)
|
|
8.2
|
|
|
12.0
|
|
Stock-based compensation excess tax benefit
|
(0.2
|
)
|
|
(1.5
|
)
|
|
(0.9
|
)
|
Tax audit settlements
|
(4.7
|
)
|
|
(2.5
|
)
|
|
(1.2
|
)
|
Deferred tax remeasurements due to change in tax rate
|
3.1
|
|
|
—
|
|
|
—
|
|
All other, net
|
0.6
|
|
|
1.4
|
|
|
2.6
|
|
Effective tax rate
|
6.5
|
%
|
|
(9.4
|
)%
|
|
31.3
|
%
|
|
|
2019 Form 10-K |
79
|
as of December 31 (in millions)
|
2019
|
|
2018
|
||||
Deferred tax assets
|
|
|
|
||||
Compensation and employee benefits
|
$
|
810
|
|
|
$
|
529
|
|
Accruals and reserves
|
371
|
|
|
371
|
|
||
Chargebacks and rebates
|
477
|
|
|
417
|
|
||
Advance payments
|
615
|
|
|
867
|
|
||
Net operating losses and other credit carryforwards
|
838
|
|
|
228
|
|
||
Other
|
406
|
|
|
353
|
|
||
Total deferred tax assets
|
3,517
|
|
|
2,765
|
|
||
Valuation allowances
|
(731
|
)
|
|
(103
|
)
|
||
Total net deferred tax assets
|
2,786
|
|
|
2,662
|
|
||
Deferred tax liabilities
|
|
|
|
||||
Excess of book basis over tax basis of intangible assets
|
(2,712
|
)
|
|
(2,940
|
)
|
||
Excess of book basis over tax basis in investments
|
(249
|
)
|
|
(211
|
)
|
||
Other
|
(440
|
)
|
|
(250
|
)
|
||
Total deferred tax liabilities
|
(3,401
|
)
|
|
(3,401
|
)
|
||
Net deferred tax liabilities
|
$
|
(615
|
)
|
|
$
|
(739
|
)
|
years ended December 31 (in millions)
|
2019
|
|
2018
|
|
2017
|
||||||
Beginning balance
|
$
|
2,852
|
|
|
$
|
2,701
|
|
|
$
|
1,168
|
|
Increase due to current year tax positions
|
113
|
|
|
163
|
|
|
1,768
|
|
|||
Increase due to prior year tax positions
|
499
|
|
|
110
|
|
|
16
|
|
|||
Decrease due to prior year tax positions
|
(21
|
)
|
|
(36
|
)
|
|
(2
|
)
|
|||
Settlements
|
(749
|
)
|
|
(79
|
)
|
|
(233
|
)
|
|||
Lapse of statutes of limitations
|
(33
|
)
|
|
(7
|
)
|
|
(16
|
)
|
|||
Ending balance
|
$
|
2,661
|
|
|
$
|
2,852
|
|
|
$
|
2,701
|
|
80
| 2019 Form 10-K
|
|
|
|
|
|
2019 Form 10-K |
81
|
82
| 2019 Form 10-K
|
|
|
|
|
2019 Form 10-K |
83
|
|
years ended December 31 (in millions)
|
2019
|
|
2018
|
|
2017
|
|||||||
Immunology
|
|
|
|
|
|
|||||||
HUMIRA
|
United States
|
$
|
14,864
|
|
|
$
|
13,685
|
|
|
$
|
12,361
|
|
|
International
|
4,305
|
|
|
6,251
|
|
|
6,066
|
|
|||
|
Total
|
$
|
19,169
|
|
|
$
|
19,936
|
|
|
$
|
18,427
|
|
SKYRIZI
|
United States
|
$
|
311
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
International
|
44
|
|
|
—
|
|
|
—
|
|
|||
|
Total
|
$
|
355
|
|
|
$
|
—
|
|
|
$
|
—
|
|
RINVOQ
|
United States
|
$
|
47
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
International
|
—
|
|
|
—
|
|
|
—
|
|
|||
|
Total
|
$
|
47
|
|
|
$
|
—
|
|
|
$
|
—
|
|
Hematologic Oncology
|
|
|
|
|
|
|||||||
IMBRUVICA
|
United States
|
$
|
3,830
|
|
|
$
|
2,968
|
|
|
$
|
2,144
|
|
|
Collaboration revenues
|
844
|
|
|
622
|
|
|
429
|
|
|||
|
Total
|
$
|
4,674
|
|
|
$
|
3,590
|
|
|
$
|
2,573
|
|
VENCLEXTA
|
United States
|
$
|
521
|
|
|
$
|
247
|
|
|
$
|
89
|
|
|
International
|
271
|
|
|
97
|
|
|
33
|
|
|||
|
Total
|
$
|
792
|
|
|
$
|
344
|
|
|
$
|
122
|
|
HCV
|
|
|
|
|
|
|||||||
MAVYRET
|
United States
|
$
|
1,473
|
|
|
$
|
1,614
|
|
|
$
|
277
|
|
|
International
|
1,420
|
|
|
1,824
|
|
|
213
|
|
|||
|
Total
|
$
|
2,893
|
|
|
$
|
3,438
|
|
|
$
|
490
|
|
VIEKIRA
|
United States
|
$
|
—
|
|
|
$
|
3
|
|
|
$
|
61
|
|
|
International
|
36
|
|
|
175
|
|
|
723
|
|
|||
|
Total
|
$
|
36
|
|
|
$
|
178
|
|
|
$
|
784
|
|
Other Key Products
|
|
|
|
|
|
|||||||
Creon
|
United States
|
$
|
1,041
|
|
|
$
|
928
|
|
|
$
|
831
|
|
Lupron
|
United States
|
$
|
720
|
|
|
$
|
726
|
|
|
$
|
669
|
|
|
International
|
167
|
|
|
166
|
|
|
160
|
|
|||
|
Total
|
$
|
887
|
|
|
$
|
892
|
|
|
$
|
829
|
|
Synthroid
|
United States
|
$
|
786
|
|
|
$
|
776
|
|
|
$
|
781
|
|
Synagis
|
International
|
$
|
718
|
|
|
$
|
726
|
|
|
$
|
738
|
|
Duodopa
|
United States
|
$
|
97
|
|
|
$
|
80
|
|
|
$
|
61
|
|
|
International
|
364
|
|
|
350
|
|
|
294
|
|
|||
|
Total
|
$
|
461
|
|
|
$
|
430
|
|
|
$
|
355
|
|
Sevoflurane
|
United States
|
$
|
74
|
|
|
$
|
74
|
|
|
$
|
78
|
|
|
International
|
274
|
|
|
317
|
|
|
332
|
|
|||
|
Total
|
$
|
348
|
|
|
$
|
391
|
|
|
$
|
410
|
|
Kaletra
|
United States
|
$
|
38
|
|
|
$
|
55
|
|
|
$
|
71
|
|
|
International
|
245
|
|
|
281
|
|
|
352
|
|
|||
|
Total
|
$
|
283
|
|
|
$
|
336
|
|
|
$
|
423
|
|
AndroGel
|
United States
|
$
|
172
|
|
|
$
|
469
|
|
|
$
|
577
|
|
ORILISSA
|
United States
|
$
|
91
|
|
|
$
|
11
|
|
|
$
|
—
|
|
|
International
|
2
|
|
|
—
|
|
|
—
|
|
|||
|
Total
|
$
|
93
|
|
|
$
|
11
|
|
|
$
|
—
|
|
All other
|
|
$
|
511
|
|
|
$
|
308
|
|
|
$
|
876
|
|
Total net revenues
|
$
|
33,266
|
|
|
$
|
32,753
|
|
|
$
|
28,216
|
|
84
| 2019 Form 10-K
|
|
|
years ended December 31 (in millions)
|
2019
|
|
2018
|
|
2017
|
||||||
United States
|
$
|
23,907
|
|
|
$
|
21,524
|
|
|
$
|
18,251
|
|
Japan
|
1,211
|
|
|
1,591
|
|
|
764
|
|
|||
Germany
|
909
|
|
|
1,292
|
|
|
1,157
|
|
|||
Canada
|
813
|
|
|
730
|
|
|
659
|
|
|||
France
|
695
|
|
|
783
|
|
|
730
|
|
|||
Spain
|
472
|
|
|
611
|
|
|
521
|
|
|||
United Kingdom
|
372
|
|
|
855
|
|
|
807
|
|
|||
Italy
|
372
|
|
|
652
|
|
|
475
|
|
|||
Brazil
|
359
|
|
|
350
|
|
|
410
|
|
|||
The Netherlands
|
163
|
|
|
352
|
|
|
362
|
|
|||
All other countries
|
3,993
|
|
|
4,013
|
|
|
4,080
|
|
|||
Total net revenues
|
$
|
33,266
|
|
|
$
|
32,753
|
|
|
$
|
28,216
|
|
as of December 31 (in millions)
|
2019
|
|
2018
|
||||
United States and Puerto Rico
|
$
|
2,026
|
|
|
$
|
1,993
|
|
Europe
|
646
|
|
|
599
|
|
||
All other
|
290
|
|
|
291
|
|
||
Total long-lived assets
|
$
|
2,962
|
|
|
$
|
2,883
|
|
|
|
2019 Form 10-K |
85
|
|
(in millions except per share data)
|
2019
|
|
2018
|
||||
First Quarter
|
|
|
|
||||
Net revenues
|
$
|
7,828
|
|
|
$
|
7,934
|
|
Gross margin
|
6,134
|
|
|
6,007
|
|
||
Net earnings(a)
|
2,456
|
|
|
2,783
|
|
||
Basic earnings per share
|
$
|
1.65
|
|
|
$
|
1.74
|
|
Diluted earnings per share
|
$
|
1.65
|
|
|
$
|
1.74
|
|
Cash dividends declared per common share
|
$
|
1.07
|
|
|
$
|
0.96
|
|
Second Quarter
|
|
|
|
||||
Net revenues
|
$
|
8,255
|
|
|
$
|
8,278
|
|
Gross margin
|
6,436
|
|
|
6,344
|
|
||
Net earnings(b)
|
741
|
|
|
1,983
|
|
||
Basic earnings per share
|
$
|
0.49
|
|
|
$
|
1.26
|
|
Diluted earnings per share
|
$
|
0.49
|
|
|
$
|
1.26
|
|
Cash dividends declared per common share
|
$
|
1.07
|
|
|
$
|
0.96
|
|
Third Quarter
|
|
|
|
||||
Net revenues
|
$
|
8,479
|
|
|
$
|
8,236
|
|
Gross margin
|
6,559
|
|
|
6,401
|
|
||
Net earnings(c)
|
1,884
|
|
|
2,747
|
|
||
Basic earnings per share
|
$
|
1.27
|
|
|
$
|
1.81
|
|
Diluted earnings per share
|
$
|
1.26
|
|
|
$
|
1.81
|
|
Cash dividends declared per common share
|
$
|
1.07
|
|
|
$
|
0.96
|
|
Fourth Quarter
|
|
|
|
||||
Net revenues
|
$
|
8,704
|
|
|
$
|
8,305
|
|
Gross margin
|
6,698
|
|
|
6,283
|
|
||
Net earnings (loss)(d)
|
2,801
|
|
|
(1,826
|
)
|
||
Basic earnings (loss) per share
|
$
|
1.88
|
|
|
$
|
(1.23
|
)
|
Diluted earnings (loss) per share
|
$
|
1.88
|
|
|
$
|
(1.23
|
)
|
Cash dividends declared per common share
|
$
|
1.18
|
|
|
$
|
1.07
|
|
(a)
|
First quarter results in 2019 included after-tax charges of $171 million related to the change in fair value of contingent consideration liabilities and restructuring charges of $133 million. First quarter results in 2018 included an after-tax benefit of $148 million related to the change in fair value of contingent consideration liabilities partially offset by after-tax litigation reserves charges of $100 million.
|
(b)
|
Second quarter results in 2019 included an after-tax charge of $2.3 billion related to the change in fair value of contingent consideration liabilities resulting from the April 2019 regulatory approvals of SKYRIZI for the treatment of moderate to severe plaque psoriasis. Second quarter results in 2018 included after-tax charges of $500 million as a result of a collaboration agreement extension with Calico and $485 million related to the change in fair value of contingent consideration liabilities.
|
(c)
|
Third quarter results in 2019 included after-tax charges of $912 million related to intangible asset impairment and $182 million related to the change in fair value of contingent consideration liabilities. Third quarter results in 2018 included after-tax litigation reserves charges of $176 million and $95 million related to the change in fair value of contingent consideration liabilities.
|
86
| 2019 Form 10-K
|
|
|
(d)
|
Fourth quarter results in 2019 included an after-tax charge of $438 million related to the change in fair value of contingent consideration liabilities offset by after-tax income of $435 million from a legal settlement related to an intellectual property dispute with a third party and $297 million from an amended and restated license agreement between AbbVie and Reata. Fourth quarter results in 2018 included an after-tax intangible asset impairment charge of $4.5 billion partially offset by an after-tax benefit of $375 million related to the change in fair value of contingent consideration liabilities.
|
|
|
2019 Form 10-K |
87
|
88
| 2019 Form 10-K
|
|
|
|
|
Sales rebate accruals for Medicaid, Medicare and managed care programs
|
Description of the Matter
|
|
As discussed in Note 2 to the consolidated financial statements under the caption “Revenue Recognition,” the Company established provisions for sales rebates in the same period as the related product is sold. At December 31, 2019, the Company had $4,484 million in sales rebate accruals, a large portion of which were for rebates provided to pharmacy benefit managers, state government Medicaid programs, insurance companies that administer Medicare drug plans and private entities for Medicaid, Medicare and managed care programs. In order to establish these sales rebate accruals, the Company estimated its rebates based upon the identification of the products subject to a rebate, the applicable price and rebate terms and the estimated lag time between the sale and payment of the rebate.
Auditing the Medicaid, Medicare and managed care sales rebate accruals was complex and required significant auditor judgment because the accruals consider multiple subjective and complex estimates and assumptions. These estimates and assumptions included the estimated inventory in the distribution channel, which impacts the lag time between the sale to the customer and payment of the rebate and the final payer related to product sales, which impacts the applicable price and rebate terms. In deriving these estimates and assumptions, the Company used both internal and external sources of information to estimate product in the distribution channels, payer mix, prescription volumes and historical experience. Management supplemented its historical data analysis with qualitative adjustments based upon changes in rebate trends, rebate programs and contract terms, legislative changes, or other significant events which indicate a change in the reserve is appropriate.
|
How We Addressed the Matter in Our Audit
|
|
We obtained an understanding, evaluated the design and tested the operating effectiveness of controls over the Company’s sales rebate accruals for Medicaid, Medicare and managed care programs. This included testing controls over management’s review of the significant assumptions and other inputs used in the estimation of Medicaid, Medicare and managed care rebates, among others, including the significant assumptions discussed above. The testing was inclusive of management’s controls to evaluate the accuracy of its reserve judgments to actual rebates paid, rebate validation and processing, and controls to ensure that the data used to evaluate and support the significant assumptions was complete, accurate and, where applicable, verified to external data sources.
To test the sales rebate accruals for Medicaid, Medicare, and managed care programs, our audit procedures included, among others, understanding and evaluating the significant assumptions and underlying data used in management’s calculations. Our testing of significant assumptions included corroboration to external data sources. We evaluated the reasonableness of assumptions in light of industry and economic trends, product profiles, and other regulatory factors. We assessed the historical accuracy of management’s estimates by comparing actual activity to previous estimates and performed analytical procedures, based on internal and external data sources, to evaluate the completeness of the reserves. For Medicaid, we involved a specialist with an understanding of statutory reimbursement requirements to assess the consistency of the Company’s calculation methodologies with applicable government regulations and policy.
|
|
|
Valuation of contingent consideration
|
Description of the Matter
|
|
As discussed in Note 2 to the consolidated financial statements under the caption “Business Combinations” and in Note 11 under the caption “Financial Instruments and Fair Value Measures,” the Company recognized contingent consideration liabilities at the estimated fair value on the acquisition date in connection with applying the acquisition method of accounting for business combinations. Subsequent changes to the fair value of the contingent consideration liabilities were recorded within the consolidated statement of earnings in the period of change. At December 31, 2019, the Company had $7,340 million in contingent consideration liabilities, which represented a ‘Level 3’ fair value measurement in the fair value hierarchy due to the significant unobservable inputs used in determining the fair value and the use of management judgment about the assumptions market participants would use in pricing the liabilities.
Auditing the valuation of contingent consideration liabilities was complex and required significant auditor judgment due to the use of a Monte Carlo simulation model and the high degree of subjectivity in evaluating certain assumptions required to estimate the fair value of contingent royalty payments. In particular, the fair value measurement was sensitive to the significant assumptions underlying the estimated amount of future sales of the acquired products. Management utilized its expertise within the industry and knowledge of clinical development and regulatory approval processes to determine certain of these assumptions.
|
|
|
2019 Form 10-K |
89
|
How We Addressed the Matter in Our Audit
|
|
We obtained an understanding, evaluated the design and tested the operating effectiveness of controls over the Company’s contingent consideration liabilities process including, among others, management’s process to establish the significant assumptions and measure the liability. This included testing controls over management’s review of the significant assumptions and other inputs used in the determination of fair value. The testing was inclusive of key management review controls to monitor and evaluate clinical development of the acquired products and estimated future sales, and controls to ensure that the data used to evaluate and support the significant assumptions was complete, accurate and, where applicable, verified to external data sources.
To test the estimated fair value of contingent consideration liabilities, our audit procedures included, among others, inspecting the terms of the executed agreement, assessing the Monte Carlo simulation model used and testing the key contractual inputs and significant assumptions discussed above. We evaluated the assumptions and judgments in light of observable industry and economic trends and standards, external data sources and regulatory factors. Estimated amounts of future sales were evaluated for reasonableness in relation to internal and external analyses, clinical development progress and timelines, probability of success benchmarks, and regulatory notices. Our procedures included evaluating the data sources used by management in determining its assumptions and, where necessary, included an evaluation of available information that either corroborated or contradicted management’s conclusions. We involved a valuation specialist to assess the Company’s Monte Carlo simulation model and to perform corroborative fair value calculations.
|
90
| 2019 Form 10-K
|
|
|
|
|
|
|
2019 Form 10-K |
91
|
92
| 2019 Form 10-K
|
|
|
|
|
2019 Form 10-K |
93
|
|
94
| 2019 Form 10-K
|
|
|
|
|
|
|
2019 Form 10-K |
95
|
|
(1)
|
Includes 837,960 shares issuable under AbbVie's Incentive Stock Program pursuant to awards granted by Abbott and adjusted into AbbVie awards in connection with AbbVie's separation from Abbott.
|
(2)
|
The weighted-average exercise price does not include outstanding restricted stock units, restricted stock awards and performance shares that have no exercise price.
|
(3)
|
Excludes shares issuable upon the exercise of stock options and pursuant to other rights granted under the Stemcentrx 2011 Equity Incentive Plan, which was assumed by AbbVie upon the consummation of its acquisition of Stemcentrx, Inc. As of December 31, 2019, 103,874 options remained outstanding under this plan. The options have a weighted-average exercise price of $16.36. No further awards will be granted under this plan.
|
(b)
|
Information Concerning Security Ownership. Incorporated herein by reference is the material under the heading "Securities Ownership—Securities Ownership of Executive Officers and Directors" in the 2020 AbbVie Inc. Proxy Statement. The 2020 Definitive Proxy Statement will be filed on or about March 19, 2020.
|
|
|
96
| 2019 Form 10-K
|
|
|
|
(a)
|
Documents filed as part of this Form 10-K.
|
(1)
|
Financial Statements: See Item 8, "Financial Statements and Supplementary Data," on page 43 hereof, for a list of financial statements.
|
(2)
|
Financial Statement Schedules: All schedules omitted are inapplicable or the information required is shown in the consolidated financial statements or notes thereto.
|
(3)
|
Exhibits Required by Item 601 of Regulation S-K: The information called for by this paragraph is set forth in Item 15(b) below.
|
(b)
|
Exhibits:
|
Exhibit
Number
|
|
Exhibit Description
|
|
|
|
||
|
|
||
|
|
||
|
|
||
|
|
||
|
|
||
|
|
||
|
|
||
|
|
||
|
|
||
|
|
||
|
|
||
|
|
|
|
2019 Form 10-K |
97
|
Exhibit
Number
|
|
Exhibit Description
|
|
|
|
||
|
|
||
|
|
||
|
|
||
|
|
||
|
|
||
|
|
||
|
|
||
|
|
||
|
|
||
|
|
||
|
|
||
|
|
||
|
|
||
|
|
||
|
|
||
|
|
||
|
|
||
|
|
||
|
|
||
|
|
98
| 2019 Form 10-K
|
|
|
Exhibit
Number
|
|
Exhibit Description
|
|
|
|
||
|
|
||
|
|
||
|
|
||
|
|
||
|
|
||
|
|
||
|
|
||
|
|
||
|
|
||
|
|
||
|
|
||
|
|
||
|
|
||
|
|
||
|
|
||
|
|
||
|
|
||
|
|
||
|
|
||
|
|
||
|
|
||
|
|
||
|
|
|
|
2019 Form 10-K |
99
|
Exhibit
Number
|
|
Exhibit Description
|
|
101
|
|
|
The following financial statements and notes from the AbbVie Inc. Annual Report on Form 10-K for the year ended December 31, 2019 filed on February 21, 2020, formatted in Inline XBRL (eXtensible Business Reporting Language): (i) Consolidated Statements of Earnings; (ii) Consolidated Statements of Comprehensive Income; (iii) Consolidated Balance Sheets; (iv) Consolidated Statements of Equity; (v) Consolidated Statements of Cash Flows; and (vi) the Notes to Consolidated Financial Statements.
|
104
|
|
|
Cover Page Interactive Data File (the cover page from the AbbVie Inc. Annual Report on Form 10-K formatted as Inline XBRL and contained in Exhibit 101).
|
|
|
|
The AbbVie Inc. 2020 Definitive Proxy Statement will be filed with the Securities and Exchange Commission under separate cover on or about March 19, 2020.
|
*
|
Incorporated herein by reference. Commission file number 001-35565.
|
**
|
Denotes management contract or compensatory plan or arrangement required to be filed as an exhibit hereto.
|
100
| 2019 Form 10-K
|
|
|
|
|
|
2019 Form 10-K |
101
|
AbbVie Inc.
|
||||
By:
|
|
/s/ RICHARD A. GONZALEZ
|
||
|
|
Name:
|
|
Richard A. Gonzalez
|
|
|
Title:
|
|
Chairman of the Board and
Chief Executive Officer
|
Date:
|
|
February 21, 2020
|
/s/ RICHARD A. GONZALEZ
|
|
/s/ ROBERT A. MICHAEL
|
Richard A. Gonzalez
Chairman of the Board and
Chief Executive Officer
(Principal Executive Officer)
|
|
Robert A. Michael
Executive Vice President,
Chief Financial Officer
(Principal Financial Officer)
|
|
|
|
/s/ BRIAN L. DURKIN
|
|
|
Brian L. Durkin
Vice President, Controller
(Principal Accounting Officer)
|
|
|
|
|
|
/s/ ROBERT J. ALPERN, M.D.
|
|
/s/ ROXANNE S. AUSTIN
|
Robert J. Alpern, M.D.
Director of AbbVie Inc.
|
|
Roxanne S. Austin
Director of AbbVie Inc.
|
|
|
|
/s/ WILLIAM H.L. BURNSIDE
|
|
/s/ BRETT J. HART
|
William H.L. Burnside
Director of AbbVie Inc.
|
|
Brett J. Hart
Director of AbbVie Inc.
|
|
|
|
/s/ EDWARD M. LIDDY
|
|
/s/ MELODY B. MEYER
|
Edward M. Liddy
Director of AbbVie Inc.
|
|
Melody B. Meyer
Director of AbbVie Inc.
|
|
|
|
/s/ EDWARD J. RAPP
|
|
/s/ REBECCA B. ROBERTS
|
Edward J. Rapp
Director of AbbVie Inc.
|
|
Rebecca B. Roberts
Director of AbbVie Inc.
|
|
|
|
/s/ GLENN F. TILTON
|
|
/s/ FREDERICK H. WADDELL
|
Glenn F. Tilton
Director of AbbVie Inc.
|
|
Frederick H. Waddell
Director of AbbVie Inc.
|
102
| 2019 Form 10-K
|
|
|
•
|
100% of the principal amount of the Notes of that series to be redeemed; and
|
•
|
the sum of the present values of the remaining scheduled payments (through the Par Call Date with respect to such Notes assuming for such purpose that such Notes matured on the applicable Par Call Date) of principal and interest on the Notes to be redeemed (exclusive of interest accrued to the date of redemption) discounted to the date of redemption on an annual basis (ACTUAL/ACTUAL (ICMA)) at the applicable Comparable Bond Rate (as defined below) plus 25 basis points for the 2027 Notes and 30 basis points for the 2031 Notes.
|
•
|
100% of the principal amount of the Notes of that series to be redeemed; and
|
•
|
the sum of the present values of the remaining scheduled payments of principal and interest on the Notes to be redeemed (exclusive of interest accrued to the date of redemption) discounted to the date of redemption on an annual basis (ACTUAL/ACTUAL (ICMA)) at the applicable Comparable Bond Rate (as defined below) plus 25 basis points for the 2024 Notes and 30 basis points for the 2028 Notes.
|
(1)
|
to any tax, assessment or other governmental charge that would not have been imposed but for the holder (or the beneficial owner for whose benefit such holder holds such Note), or a fiduciary, settlor, beneficiary, member or shareholder of the holder if the holder is an estate, trust, partnership or corporation, or a person holding a power over an estate or trust administered by a fiduciary holder, being considered as:
|
(a)
|
being or having been engaged in a trade or business in the United States or having or having had a permanent establishment in the United States;
|
(b)
|
having a current or former connection with the United States (other than a connection arising solely as a result of the ownership of the Notes or the receipt of any payment or the enforcement of any rights thereunder), including being or having been a citizen or resident of the United States;
|
(c)
|
being or having been a personal holding company, a passive foreign investment company or a controlled foreign corporation for U.S. federal income tax purposes or a corporation that has accumulated earnings to avoid U.S. federal income tax;
|
(d)
|
being or having been a “10-percent shareholder” of AbbVie as defined in section 871(h)(3) of the U.S. Internal Revenue Code of 1986, as amended (the “Code”), or any successor provision; or
|
(e)
|
being a bank receiving payments on an extension of credit made pursuant to a loan agreement entered into in the ordinary course of its trade or business;
|
(2)
|
to any holder that is not the sole beneficial owner of the Notes, or a portion of the Notes, or that is a fiduciary, partnership or limited liability company, but only to the extent that a beneficial owner with respect to the holder, a beneficiary or settlor with respect to the fiduciary, or a beneficial owner or member of the partnership or limited liability company would not have been entitled to the payment of an additional amount had the beneficiary, settlor, beneficial owner or member received directly its beneficial or distributive share of the payment;
|
(3)
|
to any tax, assessment or other governmental charge that would not have been imposed but for the failure of the holder or beneficial owner or any other person to comply with certification, identification or information reporting requirements concerning the nationality, residence, identity or connection with the United States of the holder or beneficial owner of the Notes, if compliance is required by statute, by regulation of the United States or any taxing authority therein or by an applicable income tax treaty to which the United States is a party as a precondition to exemption from such tax, assessment or other governmental charge;
|
(4)
|
to any tax, assessment or other governmental charge that is imposed otherwise than by withholding by AbbVie or a paying agent from the payment;
|
(5)
|
to any tax, assessment or other governmental charge that would not have been imposed but for a change in law, regulation, or administrative or judicial interpretation that becomes effective more than 15 days after the payment becomes due or is duly provided for, whichever occurs later;
|
(6)
|
to any estate, inheritance, gift, sales, excise, transfer, wealth, capital gains or personal property tax or similar tax, assessment or other governmental charge;
|
(7)
|
to any tax, assessment or other governmental charge required to be withheld by any paying agent from any payment of principal of or interest on any Note, if such payment can be made without such withholding by at least one other paying agent;
|
(8)
|
to any tax, assessment or other governmental charge that would not have been imposed but for the presentation by the holder of any Note, where presentation is required, for payment on a date more than 30 days after the date on which payment became due and payable or the date on which payment thereof is duly provided for, whichever occurs later;
|
(9)
|
to any tax, assessment or other governmental charge that would not have been imposed or withheld but for the beneficial owner being a bank (i) purchasing the Notes in the ordinary course of its lending business or (ii) that is neither (A) buying the Notes for investment purposes only nor (B) buying the Notes for resale to a third-party that either is not a bank or holding the Notes for investment purposes only;
|
(10)
|
to any tax, assessment or other governmental charge imposed under Sections 1471 through 1474 of the Code (or any amended or successor provisions), any current or future regulations or official interpretations thereof, any agreement entered into pursuant to Section 1471(b) of the Code, any intergovernmental agreement entered into in connection with the implementation of such sections of the Code or any fiscal or regulatory legislation, rules or practices adopted pursuant to any such intergovernmental agreement; or
|
(11)
|
in the case of any combination of items (1), (2), (3), (4), (5), (6), (7), (8), (9) and (10).
|
•
|
rank equally in right of payment with all of AbbVie’s existing and future unsecured, unsubordinated indebtedness, liabilities and other obligations;
|
•
|
rank senior in right of payment to all of AbbVie’s future indebtedness that is subordinated to the Notes;
|
•
|
are effectively subordinated in right of payment to all of AbbVie’s existing and future secured indebtedness, to the extent of the value of the assets securing such indebtedness; and
|
•
|
are structurally subordinated in right of payment to all existing and future indebtedness, liabilities and other obligations of AbbVie’s subsidiaries.
|
•
|
Mortgages on property of, or on any shares of stock or Debt of, any Person existing at the time such Person becomes a Domestic Subsidiary;
|
•
|
Mortgages in favor of AbbVie or any Subsidiary thereof;
|
•
|
Mortgages on property of AbbVie or a Domestic Subsidiary in favor of the United States of America or any State thereof, or any department, agency or instrumentality or political subdivision of the United States of America or any State thereof, or in favor of any other country, or any political subdivision thereof, to secure partial, progress, advance or other payments pursuant to any contract or statute;
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•
|
Mortgages on property, shares of stock or Debt existing at the time of acquisition thereof (including acquisition through merger or consolidation);
|
•
|
Mortgages to secure the payment of all or any part of the cost of acquisition, construction, development or improvement of the underlying property, or to secure debt incurred to provide funds for any such purpose, provided that the commitment of the creditor to extend the credit secured by any such Mortgage shall have been obtained not later than 365 days after the later of (a) the completion of the acquisition, construction, development or improvement of such property or (b) the placing in operation of such property;
|
•
|
with respect to each series of Notes, Mortgages existing on the first date on which a Note of such series was authenticated by the Trustee under the Indenture;
|
•
|
Mortgages incurred in connection with pollution control, industrial revenue or similar financings;
|
•
|
Mortgages created in substitution of or as replacements for any Mortgages referred to in the foregoing list, inclusive, provided that, based on a good faith determination of an officer of AbbVie, the property encumbered under any such substitute or replacement Mortgage is substantially similar in nature to the property encumbered by the otherwise permitted Mortgage which is being replaced; and
|
•
|
any extension, renewal or replacement (or successive extensions, renewals or replacements), as a whole or in part, of any Debt secured by any Mortgage referred to in the foregoing list, inclusive, provided that (i) such extension, renewal or replacement Mortgage shall be limited to all or a part of the same property, shares of stock or debt that secured the Mortgage extended, renewed or replaced (plus improvements on such property, and plus any property relating to a specific project, the completion of which is funded pursuant to clause (ii)(b) below), and (ii) the Debt secured by such Mortgage at such time is not increased (other than (a) by an amount equal to any related financing
|
•
|
AbbVie or such Domestic Subsidiary could incur Debt secured by a Mortgage under the restrictions described above under “Restrictions on Secured Debt” on the Principal Domestic Property to be leased back in an amount equal to the Attributable Debt with respect to such Sale and Leaseback Transaction without equally and ratably securing the Notes; or
|
•
|
AbbVie, within 180 days after the sale or transfer by AbbVie or by any such Domestic Subsidiary, applies to the retirement of AbbVie’s Funded Debt, an amount equal to the greater of (1) the net proceeds of the sale of the Principal Domestic Property sold and leased back pursuant to such arrangement; or (2) the fair market value of the Principal Domestic Property so sold and leased back at the time of entering into such arrangements (as determined by any two of the following: the chairman of the board of AbbVie, its chief executive officer, an executive vice president, a senior vice president or a vice president, and the chief financial officer, the treasurer or an assistant treasurer), subject to credits for certain voluntary retirements of Funded Debt.
|
•
|
“Attributable Debt” means (except as otherwise provided in this paragraph), as to any particular lease under which any Person is at the time liable for a term of more than 12 months, at any date as of which the amount thereof is to be determined (the “Determination Date”), the total net amount of rent required to be paid by such Person under such lease during the remaining term thereof (excluding any subsequent renewal or other extension options held by the lessee), discounted from the respective due dates thereof to the Determination Date at the rate of 8% per annum, compounded monthly. The net amount of rent required to be paid under any such lease for any such period shall be the aggregate amount of the rent payable by the lessee with respect to such period after excluding amounts required to be paid on account of maintenance and repairs, services, insurance, taxes, assessments, water rates and similar charges and contingent rents (such as those based on sales or monetary inflation). If any lease is terminable by the lessee upon the payment of a penalty, if under the terms of the lease the termination right is not exercisable until after the Determination Date, and if the amount of such penalty discounted to the Determination Date at the rate of 8% per annum compounded monthly is less than the net amount of rentals payable after the time as of which such termination could occur (the “Termination Time”) discounted to the Determination Date at the rate of 8% per annum compounded monthly, then such discounted penalty amount shall be used instead of such discounted amount of net rentals payable after the Termination Time in calculating the Attributable Debt for such lease. If any lease is terminable by the lessee upon the payment of a penalty, if such termination right is exercisable on the Determination Date, and if the amount of the net rentals payable under such lease after the Determination Date discounted to the Determination Date at the rate of 8% per annum
|
•
|
“Consolidated Net Assets” means the aggregate amount of assets (less applicable reserves and other properly deductible items) after deducting therefrom all current liabilities, as set forth on the consolidated balance sheet of AbbVie and its consolidated Subsidiaries prepared as of the end of a fiscal quarter in accordance with generally accepted accounting principles, which AbbVie shall have most recently filed with the Securities and Exchange Commission or otherwise distributed to its shareholders prior to the time as of which “Consolidated Net Assets” shall be determined (which calculation shall give pro forma effect to any acquisition by or disposition of assets of AbbVie or any of its Subsidiaries involving the payment or receipt by AbbVie or any of its Subsidiaries, as applicable, of consideration (whether in the form of cash or non-cash consideration) in excess of $500,000,000 that has occurred since the end of such fiscal quarter, as if such acquisition or disposition had occurred on the last day of such fiscal quarter).
|
•
|
“Domestic Subsidiary” means any Subsidiary of AbbVie that transacts substantially all of its business or maintains substantially all of its property within the United States of America (excluding its territories and possessions and Puerto Rico); provided, however, that the term shall not include any Subsidiary which (1) is engaged primarily in the financing of operations outside of the United States of America or in leasing personal property or financing inventory, receivables or other property or (2) does not own a Principal Domestic Property.
|
•
|
“Funded Debt” means indebtedness of AbbVie (other than the Notes or indebtedness subordinated in right of payment to the Notes) or indebtedness of a wholly-owned Domestic Subsidiary for borrowed money, having a stated maturity more than 12 months from the date of application of Sale and Leaseback Transaction proceeds or which is extendible at the option of the obligor thereon to a date more than 12 months from the date of such application.
|
•
|
“Mortgage” means any mortgage, pledge, lien, security interest, conditional sale or other title retention agreement or other similar encumbrance.
|
•
|
“Person” means any individual, partnership, corporation (including a business trust), joint stock company, trust, unincorporated association, joint venture, limited liability company or other entity, or a government or any political subdivision or agency thereof.
|
•
|
“Principal Domestic Property” means any building, structure or other facility, together with the land upon which it is erected and fixtures comprising a part thereof, used primarily for manufacturing, processing, research, warehousing or distribution and located in the United States of America (excluding its territories and possessions and Puerto Rico), owned or leased by AbbVie or any Domestic Subsidiary and having a net book value which, on the date the determination as to whether a property is a Principal Domestic Property is being made, exceeds 2% of Consolidated Net Assets of AbbVie other than any such building, structure or other facility or a portion thereof (i) which is an air or water pollution control facility financed by State or local governmental obligations or (ii) which the chairman of the board, chief executive officer, an executive vice president, a senior vice president or a vice president and the chief financial officer, treasurer or assistant treasurer of AbbVie determine in good faith, at any time on or prior to such date, is not of material importance to the total business conducted, or assets owned, by AbbVie and its Subsidiaries as an entirety.
|
•
|
“Sale and Leaseback Transaction” means any arrangement with any bank, insurance company or other lender or investor (not including AbbVie or any Subsidiary) or to which any such lender or investor is a party, providing for the leasing by AbbVie or any Domestic Subsidiary for a period, including renewals, in excess of three years of any Principal Domestic Property which has been or is to be sold or transferred, more than 180 days after the acquisition thereof or the completion of construction and commencement of full operation thereof, by AbbVie or any Domestic Subsidiary to such lender or investor or to any person to whom funds have been or are to be advanced by such lender or investor on the security of such Principal Domestic Property.
|
•
|
“Subsidiary” means any Person which is a corporation, partnership, joint venture, limited liability company, trust or estate, and of which AbbVie directly or indirectly owns or controls stock or other interests, which under ordinary circumstances (not dependent upon the happening of a contingency) has the voting power to elect a majority of the board of directors, managers, trustees or equivalent of such Person; provided, however, that the term shall not include any such Person if and for so long as (i) such Person does not own a Principal Domestic Property and (ii) the chairman of the board, chief executive officer, an executive vice president, a senior vice president or a vice president and the chief financial officer, treasurer or assistant treasurer of AbbVie determine in good faith at least annually that the existing aggregate investments by AbbVie and its Domestic Subsidiaries (including all guarantees and other extensions of credit) in such Person are not of material importance to the total business conducted, or assets owned, by AbbVie and its Subsidiaries, as an entirety.
|
•
|
“Trustee” means the Person named as the “Trustee” in the Indenture until a successor Trustee shall have become such pursuant to the applicable provisions of the Indenture, and thereafter “Trustee” shall mean or include each Person who is then a Trustee under the Indenture, and if at any time there is more than one such Person, “Trustee” as used with respect to the Notes of any series shall mean the Trustee with respect to the Notes of that series.
|
•
|
the Person formed by such consolidation or into which AbbVie is merged or the Person which acquires by conveyance or transfer, or which leases, AbbVie’s properties and assets substantially as an entirety shall be a corporation, limited liability company or partnership, shall be organized and validly existing under the laws of the United States of America, any state thereof or the District of Columbia and shall expressly assume AbbVie’s obligations on the Notes under a supplemental indenture;
|
•
|
immediately after giving effect to such transaction and treating any indebtedness which becomes an obligation of AbbVie or a Subsidiary as a result of such transaction as having been incurred by AbbVie or such Subsidiary at the time of such transaction, no event of default, and no event which, after notice or lapse of time or both, would become an event of default, shall have happened and be continuing;
|
•
|
if, as a result of any such consolidation or merger or such conveyance, transfer or lease, AbbVie’s properties or assets would become subject to a mortgage, pledge, lien, security interest or other encumbrance which would not be permitted by the Indenture, AbbVie or such successor Person, as the case may be, shall take such steps as shall be necessary to effectively secure the Notes equally and ratably with, or prior to, all indebtedness secured thereby; and
|
•
|
AbbVie has delivered to the Trustee an officers’ certificate and an opinion of counsel stating compliance with these provisions.
|
(1)
|
failure to pay interest or premium on that series of Notes when due, continued for a period of 30 days;
|
(2)
|
failure to pay the principal on that series of Notes when due;
|
(3)
|
failure to perform, or breach, under any other covenant or warranty applicable to that series of Notes and not otherwise specifically dealt with in the definition of “event of default,” continued for a period of 90 days after the giving of written notice to AbbVie by the Trustee or to AbbVie and the Trustee by holders of at least 25% in principal amount of outstanding Notes of that series (provided that, in the case of the 2027 Notes and the 2031 Notes, such notice may not be given with respect to any action taken, and reported publicly or to holders of the 2027 Notes or the 2031 Notes, as applicable, more than two years prior to such notice); or
|
(4)
|
specified events of bankruptcy, insolvency or reorganization of AbbVie.
|
•
|
in the payment of the principal of or any premium or interest on that series of Notes; or
|
•
|
in respect of a covenant or provision which under the Indenture cannot be modified or amended without the consent of the holder of each outstanding Note of that series affected.
|
•
|
such holder has previously given written notice to the Trustee of a continuing event of default with respect to that series of Notes;
|
•
|
the holders of not less than 25% in principal amount of the outstanding Notes of that series shall have made written request to the Trustee to institute proceedings in respect of such event of default in its own name as Trustee under the Indenture;
|
•
|
such holders or holders making the request have offered to the Trustee reasonable indemnity against the costs, expenses and liabilities to be incurred in compliance with such request;
|
•
|
the Trustee for 60 days after its receipt of such notice, request and offer of indemnity has failed to institute any such proceeding; and
|
•
|
during that 60-day period, the holders of a majority in principal amount of that series of Notes do not give the Trustee a direction inconsistent with such request.
|
•
|
to evidence the succession of another Person to AbbVie and the assumption by any such successor of the obligations of AbbVie in the Indenture or any supplemental indenture, and in the Notes;
|
•
|
to add to the covenants of AbbVie for the benefit of the holders of all or any series of Notes or to surrender any right or power conferred upon AbbVie by the Indenture or any supplemental indenture;
|
•
|
to add any additional events of default for the benefit of holders of all or any series of Notes;
|
•
|
to add to or change any of the provisions of the Indenture or any supplemental indenture to such extent as shall be necessary to permit or facilitate the issuance of debt securities in certain other forms;
|
•
|
to add to, change or eliminate any of the provisions of the Indenture or any supplemental indenture in respect of one or more series of Notes, provided that any such addition, change or elimination (i) shall neither (A) apply to any Note of any series created prior to the execution of such supplemental indenture affecting such modification and entitled to the benefit of such provision nor (B) modify the rights of the holder of any such Note with respect to such provision or (ii) shall become effective only when there is no such Note outstanding;
|
•
|
to secure the Notes pursuant to the requirements of the Indenture or the requirements of any supplemental indenture or to otherwise provide any security for, or add any guarantees of or additional obligors on, the Notes of all or any series;
|
•
|
to establish the form or terms of Notes of any series in accordance with the terms of the Indenture;
|
•
|
to supplement any of the provisions of the Indenture to such extent as shall be necessary to permit or facilitate the defeasance and discharge of a particular series of Notes in accordance with the provisions in the Indenture;
|
•
|
to evidence and provide for the acceptance of the appointment of a successor trustee with respect to the Notes of one or more series and to add to or change any of the provisions of the Indenture or any supplemental indenture as shall be necessary to provide for or facilitate the administration of the trusts under the Indenture or such supplemental indenture by more than one trustee pursuant to the requirements set forth in the Indenture; or
|
•
|
to cure any ambiguity or to correct or supplement any provision of the Indenture or any supplemental indenture which may be defective or inconsistent with any other provision in the Indenture or any supplemental indenture, or to make any other provisions with respect to matters or questions arising under the Indenture or any supplemental indenture as shall not adversely affect the interests of the holders of any series of Notes in any material respect.
|
•
|
change the stated maturity of the principal of, or any installment of principal of or interest thereon, or reduce the principal amount thereof or the rate of interest thereon or any premium payable upon the redemption thereof, or change any place of payment where, or the coin or currency in which, such Notes or any premium or interest thereon is payable, or impair the right to institute suit for the enforcement of any such payment on or after the stated maturity thereof (or, in the case of redemption, on or after the redemption date);
|
•
|
reduce the percentage in principal amount of the Notes of any series, the consent of whose holders is required in the Indenture for consent for any waiver of compliance with certain provisions of the Indenture or certain defaults under the Indenture and their consequences; or
|
•
|
modify the provisions set forth in the two bullets above or the paragraph immediately preceding the two bullets above or modify provisions relating to the waiver of past defaults or the waiver of certain covenants in the Indenture, in each case, other than to increase the percentage in principal amount of the Notes required to modify such provisions or to provide that certain other provisions of the Indenture cannot be modified or waived without the consent of the holder of each outstanding Note affected by such modification.
|
•
|
will be discharged from any and all obligations in respect of the Notes of a series, except for certain obligations set forth in the Indenture that survive such discharge (“legal defeasance”); or
|
•
|
may omit to comply with certain restrictive covenants of the Indenture, including those described under “Certain Covenants of AbbVie” and “Consolidation, Merger and Sale of Assets,” and the occurrence of an event described in clause (3) under “Events of Default” with respect to any such covenants will no longer be an event of default (“covenant defeasance”);
|
•
|
AbbVie irrevocably deposits or causes to be deposited with the Trustee, as trust funds in trust for the purpose of making the following payments, specifically pledged as security for, and dedicated solely to, the benefit of the holders of such Notes, in money in an amount, euro-denominated government instruments, which through the scheduled payment of principal and interest in respect thereof in accordance with their terms will provide, not later than one day before the due date of any payment, money in an amount, or a combination thereof, sufficient, without reinvestment, in the opinion of a nationally recognized firm of independent public accountants to pay and discharge all the principal of and premium, if any, and interest on the Notes of that series on the dates such payments are due, which may include one or more redemption dates that AbbVie designates, in accordance with the terms of the Notes of that series;
|
•
|
no event of default or event which with notice or lapse of time, or both, would become an event of default with respect to Notes of such series shall have occurred and be continuing on the date of such deposit or insofar as an event of default resulting from certain events involving AbbVie’s bankruptcy or insolvency are concerned, at any time during the period ending on the 121st day after such date of the deposit or, if longer, ending on the day following the expiration of the longest preference period applicable to AbbVie in respect of such deposit (it being understood that this condition will not be deemed satisfied until the expiration of such period);
|
•
|
such defeasance will not cause the Trustee to have a conflicting interest with respect to any of AbbVie’s securities or result in the trust arising from such deposit to constitute, unless it is qualified as, a regulated investment company under the Investment Company Act of 1940, as amended;
|
•
|
the defeasance will not result in a breach or violation of, or constitute a default under, the Indenture or any other agreement or instrument to which AbbVie is a party or by which AbbVie is bound;
|
•
|
AbbVie has delivered an opinion of counsel to the effect that the beneficial owners of Notes will not recognize income, gain or loss for federal income tax purposes as a result of the defeasance and will be subject to federal income tax in the same manner as if the defeasance had not occurred, which opinion of counsel, in the case of legal defeasance, must refer to and be based upon a published ruling of the Internal Revenue Service, a private ruling of the Internal Revenue Service addressed to AbbVie, or otherwise a change in applicable federal income tax law occurring after the date of the Indenture; and
|
•
|
AbbVie shall have delivered an officer’s certificate and an opinion of counsel stating that the conditions to such defeasance set forth in the Indenture have been complied with.
|
(1)
|
either (a) all the Notes of such series theretofore authenticated and delivered (except lost, stolen or destroyed Notes which have been replaced or paid and Notes for whose payment money has theretofore been deposited in trust or segregated and held in trust by AbbVie and thereafter repaid to it or discharged from such trust) have been delivered to the Trustee for cancellation or (b) all of the Notes of such series not theretofore delivered to the Trustee for cancellation (i) have become due and payable, (ii) will become due and payable at their stated maturity within one year or (iii) if redeemable at AbbVie’s option, are to be called for redemption within one year under arrangements satisfactory to the Trustee for the giving of notice of redemption by the Trustee in the name, and at the expense, of AbbVie, and AbbVie has irrevocably deposited or caused to be deposited with the Trustee funds in an amount sufficient to pay and discharge the entire indebtedness on the Notes of such series not theretofore delivered to the Trustee for cancellation, for principal of, premium, if any, and interest on the Notes of such series to the date of such deposit (in the case of Notes which have become due and payable), or to their stated maturity or the redemption date, as the case may be (provided that in connection with any discharge relating to any redemption that requires the payment of a premium, the amount deposited shall be sufficient for purposes of the Indenture to the extent that an amount is deposited with the Trustee equal to the premium calculated as of the date of the notice of redemption, with any deficit as of the redemption date only required to be deposited with the Trustee on or prior to the redemption date), together with irrevocable instructions from AbbVie directing the Trustee to apply such funds to the payment thereof at maturity or redemption, as the case may be;
|
(2)
|
AbbVie has paid or caused to be paid all other sums payable under the Indenture in respect of such series of Notes; and
|
(3)
|
AbbVie has delivered to the Trustee an officers’ certificate and an opinion of counsel, each stating that all conditions precedent under the Indenture relating to the satisfaction and discharge of the Indenture with respect to such series of Notes have been complied with.
|
•
|
during a period beginning at the opening of business 15 days before the day of the mailing of a notice of redemption of Notes of that series selected for redemption and ending at the close of business on the day of such mailing; or
|
•
|
so selected for redemption in whole or in part, except the unredeemed portion of any Note being redeemed in part.
|
Domestic Subsidiaries
|
|
Incorporation
|
|
|
|
AbbVie Biopharmaceuticals LLC
|
|
Delaware
|
|
|
|
AbbVie Bioresearch Center Inc.
|
|
Delaware
|
|
|
|
AbbVie Biotech Ventures Inc.
|
|
Delaware
|
|
|
|
AbbVie Biotherapeutics Inc.
|
|
Delaware
|
|
|
|
AbbVie Endocrine Inc.
|
|
Delaware
|
|
|
|
AbbVie Endocrinology Inc.
|
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Delaware
|
|
|
|
AbbVie Finance Corporation
|
|
Delaware
|
|
|
|
AbbVie Finance LLC
|
|
Delaware
|
|
|
|
AbbVie Holdings Inc.
|
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Delaware
|
|
|
|
AbbVie Pharmaceuticals LLC
|
|
Delaware
|
|
|
|
AbbVie Products LLC
|
|
Georgia
|
|
|
|
AbbVie Purchasing LLC
|
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Delaware
|
|
|
|
AbbVie Resources Inc.
|
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Delaware
|
|
|
|
AbbVie Resources International Inc.
|
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Delaware
|
|
|
|
AbbVie Respiratory LLC
|
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Delaware
|
|
|
|
AbbVie Stemcentrx LLC
|
|
Delaware
|
|
|
|
AbbVie US Holdings LLC
|
|
Delaware
|
|
|
|
AbbVie US LLC
|
|
Delaware
|
|
|
|
AbbVie Ventures LLC
|
|
Delaware
|
|
|
|
Aeropharm Technology, LLC
|
|
Delaware
|
|
|
|
BioDisplay Technologies, Inc.
|
|
Illinois
|
|
|
|
Fremont Holding L.L.C.
|
|
Delaware
|
|
|
|
IEP Pharmaceutical Devices, LLC
|
|
Delaware
|
|
|
|
Knoll Pharmaceutical Company
|
|
New Jersey
|
|
|
|
KOS Pharmaceuticals, Inc.
|
|
Delaware
|
|
|
|
Life Properties Inc.
|
|
Delaware
|
|
|
|
Mavupharma, Inc.
|
|
Delaware
|
|
|
|
Organics L.L.C.
|
|
Delaware
|
|
|
|
Pharmacyclics LLC
|
|
Delaware
|
|
|
|
Rowell Laboratories, Inc.
|
|
Minnesota
|
|
|
|
Sapphire Merger Sub, Inc.
|
|
Delaware
|
|
|
|
Suffolk Merger Sub, Inc.
|
|
Delaware
|
|
|
|
Unimed Pharmaceuticals, LLC
|
|
Delaware
|
|
|
|
Venice Subsidiary LLC
|
|
Delaware
|
Foreign Subsidiaries
|
|
Incorporation
|
|
|
|
AbbVie S.A.
|
|
Argentina
|
|
|
|
AbbVie Pty Ltd
|
|
Australia
|
|
|
|
AbbVie GmbH
|
|
Austria
|
|
|
|
AbbVie Bahamas Ltd.
|
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Bahamas
|
|
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|
AbbVie SA
|
|
Belgium
|
|
|
|
AbbVie Ltd
|
|
Bermuda
|
|
|
|
AbbVie Biotechnology Ltd
|
|
Bermuda
|
|
|
|
AbbVie Holdings Unlimited
|
|
Bermuda
|
|
|
|
AbbVie d.o.o.
|
|
Bosnia
|
|
|
|
AbbVie Farmacêutica Ltda.
|
|
Brazil
|
|
|
|
AbbVie Participações Ltda.
|
|
Brazil
|
|
|
|
AbbVie EOOD
|
|
Bulgaria
|
|
|
|
AbbVie Corporation
|
|
Canada
|
|
|
|
AbbVie Holdings Corporation
|
|
Canada
|
|
|
|
Pharmacyclics Cayman Ltd.
|
|
Cayman Islands
|
|
|
|
Stemcentrx Cayman Ltd.
|
|
Cayman Islands
|
|
|
|
AbbVie Productos Farmacéuticos Limitada
|
|
Chile
|
|
|
|
AbbVie Pharmaceutical Trading (Shanghai) Co., Ltd.
|
|
China
|
|
|
|
Pharmacyclics (Shanghai) Management Consulting Service Limited
|
|
China
|
|
|
|
AbbVie S.A.S.
|
|
Colombia
|
|
|
|
AbbVie d.o.o.
|
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Croatia
|
|
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AbbVie Limited
|
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Cyprus
|
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AbbVie s.r.o.
|
|
Czech Republic
|
|
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AbbVie A/S
|
|
Denmark
|
|
|
|
AbbVie, S.R.L.
|
|
Dominican Republic
|
|
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AbbVie L.L.C.
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Egypt
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AbbVie Oy
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Finland
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AbbVie SAS
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France
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AbbVie Biotechnology GmbH
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Germany
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AbbVie Deutschland GmbH & Co. KG
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Germany
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AbbVie Komplementär GmbH
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Germany
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AbbVie Pharmaceuticals GmbH
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Germany
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AbbVie Real Estate Management GmbH
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Germany
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AbbVie (Gibraltar) Holdings Limited
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Gibraltar
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AbbVie (Gibraltar) Limited
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Gibraltar
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AbbVie Pharmaceuticals Societe Anonyme
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Greece
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AbbVie, S.A.
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Guatemala
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AbbVie Limited
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Hong Kong
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AbbVie Kft.
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Hungary
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AbbVie Ireland Holdings Limited
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Ireland
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AbbVie Ireland Unlimited Company
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Ireland
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AbbVie Limited
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Ireland
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AbbVie Manufacturing Management Limited
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Ireland
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Fournier Laboratories Ireland Limited
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Ireland
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Pharmacyclics (Europe) Limited
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Ireland
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AbbVie Biopharmaceuticals Ltd.
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Israel
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AbbVie S.r.l.
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Italy
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AbbVie GK
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Japan
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AbbVie UK Ltd
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Jersey
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AbbVie Ltd
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Korea, South
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AbbVie SIA
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Latvia
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AbbVie UAB
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Lithuania
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AbbVie Biotherapeutics S.àr.l.
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Luxembourg
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AbbVie (Gibraltar) Holdings Limited Luxembourg S.C.S.
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Luxembourg
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AbbVie International S.à r.l.
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Luxembourg
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AbbVie Investments S.à r.l.
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Luxembourg
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AbbVie Overseas S.àr.l.
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Luxembourg
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AbbVie Sdn. Bhd.
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Malaysia
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AbbVie Farmacéuticos, S.A. de C.V.
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Mexico
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AbbVie B.V.
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Netherlands
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AbbVie Central Finance B.V.
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Netherlands
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AbbVie Finance B.V.
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Netherlands
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AbbVie Ireland NL B.V.
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Netherlands
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AbbVie Japan Holdings B.V.
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Netherlands
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AbbVie Logistics B.V.
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Netherlands
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AbbVie Nederland Holdings B.V.
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Netherlands
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AbbVie Pharmaceuticals B.V.
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Netherlands
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AbbVie Research B.V.
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Netherlands
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AbbVie Venezuela B.V.
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Netherlands
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AbbVie Venezuela Holdings B.V.
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Netherlands
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AbbVie Limited
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New Zealand
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AbbVie AS
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Norway
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AbbVie, S. de R.L.
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Panama
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AbbVie Polska Sp. z o.o.
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Poland
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AbbVie Sp. z o.o.
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Poland
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AbbVie, L.da
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Portugal
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AbbVie Promoção, L.da
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Portugal
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AbbVie Corp
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Puerto Rico
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Knoll LLC
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Puerto Rico
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AbbVie S.R.L
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Romania
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AbbVie Trading S.R.L.
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Romania
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AbbVie Limited Liability Company
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Russia
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AbbVie Operations Singapore Pte. Ltd.
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Singapore
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AbbVie Pte. Ltd.
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Singapore
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AbbVie Holdings s.r.o.
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Slovakia
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AbbVie s.r.o.
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Slovakia
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AbbVie Biofarmacevtska druzba d.o.o.
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Slovenia
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AbbVie (Pty) Ltd.
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South Africa
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AbbVie Spain, S.L.
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Spain
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AbbVie AB
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Sweden
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AbbVie AG
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Switzerland
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AbbVie Biopharmaceuticals GmbH
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Switzerland
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Pharmacyclics Switzerland GmbH
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Switzerland
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AbbVie Ltd.
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Thailand
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AbbVie Sarl
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Tunisia
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AbbVie Tıbbi İlaçlar Sanayi ve Ticaret Limited Şirketi
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Turkey
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AbbVie Australasia Holdings Limited
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United Kingdom
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AbbVie Biotherapeutics Limited
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United Kingdom
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AbbVie Investments Limited
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United Kingdom
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AbbVie Ltd
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United Kingdom
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AbbVie Trustee Company Limited
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United Kingdom
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AbbVie UK Holdco Limited
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United Kingdom
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AbbVie S.A.
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Uruguay
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AbbVie Pharmaceuticals SCA.
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Venezuela
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Consent of Independent Registered Public Accounting Firm
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1.
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I have reviewed this annual report on Form 10-K of AbbVie Inc.;
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2.
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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;
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3.
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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 AbbVie as of, and for, the periods presented in this report;
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4.
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AbbVie’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 AbbVie and have:
|
(a)
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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 AbbVie, 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;
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(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;
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(c)
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Evaluated the effectiveness of AbbVie’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
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(d)
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Disclosed in this report any change in AbbVie’s internal control over financial reporting that occurred during AbbVie’s most recent fiscal quarter that has materially affected, or is reasonably likely to materially affect, AbbVie’s internal control over financial reporting; and
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5.
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AbbVie’s other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to AbbVie’s auditors and the audit committee of AbbVie’s board of directors:
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(a)
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All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect AbbVie’s ability to record, process, summarize and report financial information; and
|
(b)
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Any fraud, whether or not material, that involves management or other employees who have a significant role in AbbVie’s internal control over financial reporting.
|
Date: February 21, 2020
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/s/ Richard A. Gonzalez
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Richard A. Gonzalez, Chairman of the Board
and Chief Executive Officer
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1.
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I have reviewed this annual report on Form 10-K of AbbVie Inc.;
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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 AbbVie as of, and for, the periods presented in this report;
|
4.
|
AbbVie’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 AbbVie 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 AbbVie, 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)
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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;
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(c)
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Evaluated the effectiveness of AbbVie’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
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(d)
|
Disclosed in this report any change in AbbVie’s internal control over financial reporting that occurred during AbbVie’s most recent fiscal quarter that has materially affected, or is reasonably likely to materially affect, AbbVie’s internal control over financial reporting; and
|
5.
|
AbbVie’s other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to AbbVie’s auditors and the audit committee of AbbVie’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 AbbVie’s ability to record, process, summarize and report financial information; and
|
(b)
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Any fraud, whether or not material, that involves management or other employees who have a significant role in AbbVie’s internal control over financial reporting.
|
Date: February 21, 2020
|
/s/ Robert A. Michael
|
|
Robert A. Michael, Executive Vice President,
Chief Financial Officer
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(1)
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The Report fully complies with the requirements of section 13(a) or 15(d) of the Securities Exchange Act of 1934; and
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(2)
|
The information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Company.
|
/s/ Richard A. Gonzalez
|
Richard A. Gonzalez
Chairman of the Board and
Chief Executive Officer
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(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 A. Michael
|
Robert A. Michael
Executive Vice President, Chief Financial Officer
|