Second-quarter reported sales growth of 17.0 percent; GAAP EPS from continuing operations of $0.40
|
ABBOTT PARK, Ill., July 18, 2018 /PRNewswire/ -- Abbott (NYSE: ABT) today announced financial results for the second quarter ended June 30, 2018.
"All four of our businesses exceeded expectations and contributed to strong growth overall," said Miles D. White, chairman and chief executive officer, Abbott. "We forecast continued strong performance and are raising our full-year outlook despite recent currency shifts." * See note on organic growth below. SECOND-QUARTER BUSINESS OVERVIEW Organic sales growth:
Following are sales by business segment and commentary for the second quarter and first half 2018: Total Company
-------------
($ in millions)
% Change vs. 2Q17
-----------------
Sales 2Q18 Reported Organic
---------- -------- -------
U.S. Int'l Total U.S. Int'l Total U.S. Int'l Total
---- ----- ----- ----- ----- ----- -----
Total * 2,702 5,065 7,767 14.5 18.4 17.0 3.5 10.5 8.0
----- ----- ----- ---- ---- ---- --- ---- ---
Nutrition 781 1,077 1,858 1.0 12.5 7.3 1.0 10.7 6.4
Diagnostics 652 1,221 1,873 69.1 37.6 47.2 2.2 8.5 6.6
Established
Pharmaceuticals -- 1,129 1,129 n/a 10.5 10.5 n/a 12.3 12.3
Medical Devices 1,259 1,632 2,891 5.7 16.1 11.3 5.7 10.3 8.2
* Total 2018 Abbott sales
from continuing operations
include Other Sales of $16
million.
% Change vs. 1H17
-----------------
Sales 1H18 Reported Organic
---------- -------- -------
U.S. Int'l Total U.S. Int'l Total U.S. Int'l Total
---- ----- ----- ----- ----- ----- -----
Total * 5,377 9,780 15,157 14.8 18.0 16.8 4.2 9.3 7.5
----- ----- ------ ---- ---- ---- --- --- ---
Nutrition 1,539 2,075 3,614 2.4 11.0 7.2 2.4 8.1 5.6
Diagnostics 1,352 2,358 3,710 78.9 40.8 52.6 2.0 7.9 6.1
Established
Pharmaceuticals -- 2,173 2,173 n/a 10.2 10.2 n/a 9.7 9.7
Medical Devices 2,468 3,167 5,635 6.0 18.9 12.9 6.3 11.0 8.8
* Total 2018 Abbott sales from
continuing operations include
Other Sales of $25 million.
n/a = Not Applicable.
Note: In order to compute
results excluding the impact
of exchange rates, current
year U.S. dollar sales are
multiplied or divided, as
appropriate, by the current
year average foreign exchange
rates and then those amounts
are multiplied or divided, as
appropriate, by the prior
year average foreign exchange
rates.
Second-quarter 2018 worldwide sales of $7.8 billion increased 17.0 percent on a reported basis. On an organic basis, worldwide sales increased 8.0 percent. Refer to tables titled "Non-GAAP Reconciliation of Adjusted Historical Revenue" for a reconciliation of adjusted historical revenue. Nutrition
---------
($ in millions)
% Change vs. 2Q17
-----------------
Sales 2Q18 Reported Organic
---------- -------- -------
U.S. Int'l Total U.S. Int'l Total U.S. Int'l Total
---- ----- ----- ----- ----- ----- -----
Total 781 1,077 1,858 1.0 12.5 7.3 1.0 10.7 6.4
--- ----- ----- --- ---- --- --- ---- ---
Pediatric 469 582 1,051 2.1 10.2 6.4 2.1 8.1 5.3
Adult 312 495 807 (0.7) 15.2 8.5 (0.7) 13.9 7.8
% Change vs. 1H17
-----------------
Sales 1H18 Reported Organic
---------- -------- -------
U.S. Int'l Total U.S. Int'l Total U.S. Int'l Total
---- ----- ----- ----- ----- ----- -----
Total 1,539 2,075 3,614 2.4 11.0 7.2 2.4 8.1 5.6
----- ----- ----- --- ---- --- --- --- ---
Pediatric 917 1,128 2,045 2.9 10.3 6.8 2.9 7.2 5.2
Adult 622 947 1,569 1.6 11.9 7.6 1.6 9.3 6.1
Worldwide Nutrition sales increased 7.3 percent on a reported basis in the second quarter, including a favorable 0.9 percent effect of foreign exchange, and increased 6.4 percent on an organic basis. Worldwide Pediatric Nutrition sales increased 6.4 percent on a reported basis in the second quarter, including a favorable 1.1 percent effect of foreign exchange, and increased 5.3 percent on an organic basis. International sales increased 10.2 percent on a reported basis, including a favorable 2.1 percent effect of foreign exchange, and increased 8.1 percent on an organic basis. Strong performance in the quarter was led by growth in several countries across Asia, including Greater China, and Latin America. Worldwide Adult Nutrition sales increased 8.5 percent on a reported basis in the second quarter, including a favorable 0.7 percent effect of foreign exchange, and increased 7.8 percent on an organic basis. International sales increased 15.2 percent on a reported basis, including a favorable 1.3 percent effect of foreign exchange, and increased 13.9 percent on an organic basis. Sales performance was led by strong growth of Ensure®, Abbott's market-leading complete and balanced nutrition brand, and Glucerna®, Abbott's market-leading diabetes-specific nutrition brand. Diagnostics
-----------
($ in millions)
% Change vs. 2Q17
-----------------
Sales 2Q18 Reported Organic
---------- -------- -------
U.S. Int'l Total U.S. Int'l Total U.S. Int'l Total
---- ----- ----- ----- ----- ----- -----
Total * 652 1,221 1,873 69.1 37.6 47.2 2.2 8.5 6.6
--- ----- ----- ---- ---- ---- --- --- ---
Core Laboratory 248 880 1,128 6.8 11.7 10.6 6.8 7.9 7.7
Molecular 38 84 122 (7.3) 16.6 7.9 (7.3) 13.6 6.0
Point of Care 108 31 139 (3.9) 12.0 (0.8) (3.9) 9.7 (1.3)
Rapid
Diagnostics * 258 226 484 n/m n/m n/m n/m n/m n/m
* Rapid Diagnostics reflects
sales from Alere Inc., which
was acquired on Oct. 3, 2017.
Organic growth rates above
exclude results from the
Rapid Diagnostics business.
% Change vs. 1H17
-----------------
Sales 1H18 Reported Organic
---------- -------- -------
U.S. Int'l Total U.S. Int'l Total U.S. Int'l Total
---- ----- ----- ----- ----- ----- -----
Total * 1,352 2,358 3,710 78.9 40.8 52.6 2.0 7.9 6.1
----- ----- ----- ---- ---- ---- --- --- ---
Core Laboratory 476 1,671 2,147 6.2 12.7 11.2 6.2 7.3 7.0
Molecular 77 163 240 (10.7) 17.0 6.4 (10.7) 12.6 3.7
Point of Care 218 62 280 (1.7) 17.3 1.9 (1.7) 14.0 1.3
Rapid
Diagnostics * 581 462 1,043 n/m n/m n/m n/m n/m n/m
* Rapid Diagnostics reflects
sales from Alere Inc., which
was acquired on Oct. 3, 2017.
Organic growth rates above
exclude results from the
Rapid Diagnostics business.
n/m = Percent change is not
meaningful.
Worldwide Diagnostics sales increased 47.2 percent on a reported basis in the second quarter. On an organic basis, sales increased 6.6 percent. Refer to tables titled "Non-GAAP Reconciliation of Adjusted Historical Revenue" for a reconciliation of adjusted historical revenue. Core Laboratory Diagnostics sales increased 10.6 percent on a reported basis in the second quarter, including a favorable 2.9 percent effect of foreign exchange, and increased 7.7 percent on an organic basis. Growth in the quarter was driven by continued share gains globally. Molecular Diagnostics sales increased 7.9 percent on a reported basis in the second quarter, including a favorable 1.9 percent effect of foreign exchange, and increased 6.0 percent on an organic basis. Worldwide sales were led by strong growth in infectious disease testing, Abbott's core area of focus in the molecular diagnostics market, which was partially offset by a planned scale down in other testing areas, primarily in the U.S. Point of Care Diagnostics sales decreased 0.8 percent on a reported basis in the second quarter, including a favorable 0.5 percent effect of foreign exchange, and decreased 1.3 percent on an organic basis. Rapid Diagnostics worldwide sales of $484 million were led by infectious disease and cardiometabolic testing. Established Pharmaceuticals
---------------------------
($ in millions)
% Change vs. 2Q17
-----------------
Sales 2Q18 Reported Organic
---------- -------- -------
U.S. Int'l Total U.S. Int'l Total U.S. Int'l Total
---- ----- ----- ----- ----- ----- -----
Total -- 1,129 1,129 n/a 10.5 10.5 n/a 12.3 12.3
--- ----- ----- ---- ---- ---- ---- ---- ----
Key
Emerging
Markets -- 866 866 n/a 8.4 8.4 n/a 12.0 12.0
Other -- 263 263 n/a 17.9 17.9 n/a 13.6 13.6
% Change vs. 1H17
-----------------
Sales 1H18 Reported Organic
---------- -------- -------
U.S. Int'l Total U.S. Int'l Total U.S. Int'l Total
---- ----- ----- ----- ----- ----- -----
Total -- 2,173 2,173 n/a 10.2 10.2 n/a 9.7 9.7
--- ----- ----- ---- ---- ---- ---- --- ---
Key
Emerging
Markets -- 1,659 1,659 n/a 8.6 8.6 n/a 9.5 9.5
Other -- 514 514 n/a 15.9 15.9 n/a 10.1 10.1
Established Pharmaceuticals sales increased 10.5 percent on a reported basis in the second quarter, including an unfavorable 1.8 percent effect of foreign exchange, and increased 12.3 percent on an organic basis. Key Emerging Markets comprise several countries that represent the most attractive long-term growth opportunities for Abbott's branded generics product portfolio. Sales in these geographies increased 8.4 percent on a reported basis in the second quarter, including an unfavorable 3.6 percent effect of foreign exchange, and increased 12.0 percent on an organic basis. Sales growth was led by double-digit growth across several geographies, including India and China. Medical Devices
---------------
($ in millions)
% Change vs. 2Q17
-----------------
Sales 2Q18 Reported Organic
---------- -------- -------
U.S. Int'l Total U.S. Int'l Total U.S. Int'l Total
---- ----- ----- ----- ----- ----- -----
Total 1,259 1,632 2,891 5.7 16.1 11.3 5.7 10.3 8.2
----- ----- ----- --- ---- ---- --- ---- ---
Cardiovascular and
Neuromodulation 1,147 1,274 2,421 3.4 10.7 7.1 3.4 5.4 4.4
Rhythm Management 262 281 543 (3.6) 0.5 (1.5) (3.6) (4.4) (4.0)
Electrophysiology 193 235 428 25.0 24.6 24.8 25.0 18.7 21.6
Heart Failure 117 46 163 (5.0) 27.6 2.4 (5.0) 21.4 1.0
Vascular 284 466 750 (3.8) 7.0 2.6 (3.8) 2.0 (0.3)
Structural Heart 118 197 315 13.9 19.7 17.5 13.9 13.3 13.5
Neuromodulation 173 49 222 7.4 5.2 6.9 7.4 0.3 5.8
Diabetes Care 112 358 470 37.6 40.5 39.8 37.6 32.4 33.6
% Change vs. 1H17
-----------------
Sales 1H18 Reported Organic
---------- -------- -------
U.S. Int'l Total U.S. Int'l Total U.S. Int'l Total
---- ----- ----- ----- ----- ----- -----
Total 2,468 3,167 5,635 6.0 18.9 12.9 6.3 11.0 8.8
----- ----- ----- --- ---- ---- --- ---- ---
Cardiovascular and
Neuromodulation 2,270 2,474 4,744 4.6 12.9 8.7 4.9 5.6 5.3
Rhythm Management 526 552 1,078 (1.2) 4.2 1.5 (1.2) (2.9) (2.1)
Electrophysiology 375 444 819 25.4 23.4 24.3 25.4 15.7 20.1
Heart Failure 231 85 316 (0.6) 22.5 4.7 (0.6) 14.3 2.8
Vascular 570 919 1,489 (4.9) 10.2 3.9 (4.0) 3.9 0.6
Structural Heart 227 381 608 7.8 21.5 16.0 7.8 12.4 10.6
Neuromodulation 341 93 434 14.8 8.8 13.5 14.8 1.1 11.8
Diabetes Care 198 693 891 26.5 46.9 41.8 26.5 35.5 33.3
Worldwide Medical Devices sales increased 11.3 percent on a reported basis in the second quarter. On an organic basis, sales increased 8.2 percent. Refer to tables titled "Non-GAAP Reconciliation of Adjusted Historical Revenue" for a reconciliation of adjusted historical revenue. Cardiovascular and Neuromodulation sales growth in the quarter was led by double-digit growth in Electrophysiology and Structural Heart. In Electrophysiology, growth was led by strong performance in cardiac mapping and ablation as well as share gains from the recent U.S. launch of Abbott's Confirm Rx™ Insertable Cardiac Monitor (ICM), the world's first and only smartphone-compatible ICM designed to help physicians remotely identify cardiac arrhythmias. In May, Abbott announced U.S. FDA clearance of Advisor HD Grid Mapping Catheter, Sensor Enabled, which creates highly detailed maps of the heart and expands Abbott's leading electrophysiology product portfolio. In Vascular, during the second quarter, Abbott received approval from the U.S. FDA for XIENCE Sierra, the newest generation of its gold-standard coronary stent system, which offers design and technology advances to provide an easier implant and greater ability to treat complex blockages. During the quarter, XIENCE Sierra also received national reimbursement in Japan to treat people with coronary artery disease. Growth in Structural Heart was driven by several product areas across Abbott's broad portfolio, including AMPLATZER™ PFO Occluder and MitraClip, Abbott's market-leading device for the minimally invasive treatment of mitral regurgitation. In July, Abbott announced U.S. FDA approval for a next-generation version of MitraClip, with an enhanced design that provides even greater precision and accuracy. In Diabetes Care, where sales increased 39.8 percent on a reported basis and 33.6 percent on an organic basis, growth was led by continued rapid market uptake of FreeStyle® Libre, Abbott's revolutionary sensor-based continuous glucose monitoring (CGM) system, which removes the need for routine fingersticks1 for people with diabetes. ABBOTT'S FULL-YEAR EARNINGS-PER-SHARE GUIDANCE Abbott projects 2018 diluted earnings per share from continuing operations under Generally Accepted Accounting Principles (GAAP) of $1.34 to $1.40. Abbott forecasts net specified items for the full year 2018 of approximately $1.51 per share. Specified items include intangible amortization expense, acquisition-related expenses, charges associated with cost reduction initiatives and other expenses. Excluding specified items, projected adjusted diluted earnings per share from continuing operations would be $2.85 to $2.91 for the full year 2018. Abbott is issuing third-quarter 2018 guidance for diluted earnings per share from continuing operations under GAAP of $0.32 to $0.34. Abbott forecasts specified items for the third quarter 2018 of $0.41 primarily related to intangible amortization, acquisition-related expenses, cost reduction initiatives and other expenses. Excluding specified items, projected adjusted diluted earnings per share from continuing operations would be $0.73 to $0.75 for the third quarter. ABBOTT DECLARES 378TH CONSECUTIVE QUARTERLY DIVIDEND On June 8, 2018, the board of directors of Abbott declared the company's quarterly dividend of $0.28 per share. Abbott's cash dividend is payable Aug. 15, 2018, to shareholders of record at the close of business on July 13, 2018. Abbott has increased its dividend payout for 46 consecutive years and is a member of the S&P 500 Dividend Aristocrats Index, which tracks companies that have annually increased their dividend for at least 25 consecutive years. About Abbott: Visit Abbott at www.abbott.com and connect with us on Twitter at @AbbottNews. Abbott will webcast its live second-quarter earnings conference call through its Investor Relations website at www.abbottinvestor.com at 8 a.m. Central time today. An archived edition of the webcast will be available later that day. -- Private Securities Litigation Reform Act of 1995 -- Some statements in this news release may be forward-looking statements for purposes of the Private Securities Litigation Reform Act of 1995. Abbott cautions that these forward-looking statements are subject to risks and uncertainties that may cause actual results to differ materially from those indicated in the forward-looking statements. Economic, competitive, governmental, technological and other factors that may affect Abbott's operations are discussed in Item 1A, "Risk Factors'' to our Annual Report on Securities and Exchange Commission Form 10-K for the year ended Dec. 31, 2017, and are incorporated by reference. Abbott undertakes no obligation to release publicly any revisions to forward-looking statements as a result of subsequent events or developments, except as required by law. (1) Fingersticks are required
for treatment decisions when
you see Check Blood Glucose
symbol, when symptoms do not
match system readings, when
you suspect readings may be
inaccurate, or when you
experience symptoms that may
be due to high or low blood
glucose.
Abbott Laboratories and Subsidiaries
Condensed Consolidated Statement of Earnings
Second Quarter Ended June 30, 2018 and 2017
(in millions, except per share data)
(unaudited)
2Q18 2Q17 %
Change
Net Sales $7,767 $6,637 17.0
Cost of products sold, excluding amortization expense 3,282 3,189 2.9
Amortization of intangible assets 562 392 43.2
Research and development 575 520 10.5
Selling, general, and administrative 2,466 2,150 14.7
Total Operating Cost and Expenses 6,885 6,251 10.1
----- -----
Operating earnings 882 386 n/m 1)
Interest expense, net 189 183 2.7
Net foreign exchange (gain) (6) (12) (50.7)
Other (income) expense, net (78) (80) (3.1) 1)
--- ---
Earnings from Continuing Operations before taxes 777 295 n/m
Tax expense on Earnings from Continuing Operations 59 25 n/m
Earnings from Continuing Operations 718 270 n/m
Earnings from Discontinued Operations, net of taxes 15 13 19.1
--- ---
Net Earnings $733 $283 n/m
==== ====
Earnings from Continuing Operations, excluding
Specified Items, as described below $1,295 $1,096 18.1 2)
====== ======
Diluted Earnings per Common Share from:
Continuing Operations $0.40 $0.15 n/m
Discontinued Operations 0.01 0.01 n/m
Total $0.41 $0.16 n/m
===== =====
Diluted Earnings per Common Share from Continuing
Operations, excluding Specified Items, as described below $0.73 $0.62 17.7 2)
===== =====
Average Number of Common Shares Outstanding
Plus Dilutive Common Stock Options 1,769 1,749
NOTES:
See tables titled "Non-GAAP
Reconciliation of Financial
Information From Continuing
Operations" for an explanation
of certain non-GAAP financial
information.
n/m = Percent change is not
meaningful.
See footnotes below.
1) Effective January 1, 2018, Abbott
adopted Accounting Standards Update
2017-07, Compensation - Retirement
Benefits (Topic 715): Improving the
Presentation of Net Periodic Pension
Cost and Net Periodic Postretirement
Benefit Cost, which resulted in a
retrospective reclassification of
approximately $40 million of net
pension-related income from
Operating earnings to Other (income)
expense, net for the second quarter
of 2017.
2) 2018 Net Earnings and Diluted
Earnings per Common Share from
Continuing Operations, excluding
Specified Items, excludes net
after-tax charges of $577 million,
or $0.33 per share, for intangible
amortization expense and other
expenses primarily associated with
acquisitions and restructuring
actions.
2017 Net Earnings and Diluted
Earnings per Common Share from
Continuing Operations, excluding
Specified Items, excludes net
after-tax charges of $826 million,
or $0.47 per share, for intangible
amortization expense and other
expenses primarily associated with
acquisitions and restructuring
actions.
Abbott Laboratories and Subsidiaries
Condensed Consolidated Statement of Earnings
First Half Ended June 30, 2018 and 2017
(in millions, except per share data)
(unaudited)
1H18 1H17 %
Change
Net Sales $15,157 $12,972 16.8
Cost of products sold, excluding amortization expense 6,349 6,251 1.6
Amortization of intangible assets 1,146 914 25.4
Research and development 1,164 1,073 8.4
Selling, general, and administrative 5,008 4,590 9.1
Total Operating Cost and Expenses 13,667 12,828 6.5
------ ------
Operating earnings 1,490 144 n/m 1)
Interest expense, net 388 387 0.1
Net foreign exchange (gain) (9) (28) (66.5)
Debt extinguishment costs 14 -- n/m
Other (income) expense, net (111) (1,246) (91.1) 1) 2)
---- ------
Earnings from Continuing Operations before taxes 1,208 1,031 17.2
Tax expense on Earnings from Continuing Operations 81 375 (78.4) 3)
Earnings from Continuing Operations 1,127 656 71.8
Earnings from Discontinued Operations, net of taxes 24 46 (49.5) 4)
--- ---
Net Earnings $1,151 $702 63.9
====== ====
Earnings from Continuing Operations, excluding
Specified Items, as described below $2,345 $1,939 20.9 5)
====== ======
Diluted Earnings per Common Share from:
Continuing Operations $0.63 $0.37 70.3
Discontinued Operations 0.01 0.03 (66.7) 4)
Total $0.64 $0.40 60.0
===== =====
Diluted Earnings per Common Share from Continuing
Operations, excluding Specified Items, as described below $1.32 $1.11 18.9 5)
===== =====
Average Number of Common Shares Outstanding
Plus Dilutive Common Stock Options 1,767 1,742
NOTES:
See tables titled "Non-GAAP
Reconciliation of Financial
Information From Continuing
Operations" for an explanation
of certain non-GAAP financial
information.
n/m = Percent change is not
meaningful.
See footnotes below.
1) Effective January 1, 2018, Abbott
adopted Accounting Standards Update
2017-07, Compensation - Retirement
Benefits (Topic 715): Improving the
Presentation of Net Periodic Pension
Cost and Net Periodic Postretirement
Benefit Cost, which resulted in a
retrospective reclassification of
approximately $80 million of net
pension-related income from
Operating earnings to Other (income)
expense, net for the first half of
2017.
2) 2017 Other (income) expense, net
includes a pretax gain of $1.151
billion from the sale of the AMO
business.
3) 2018 Tax expense on Earnings from
Continuing Operations includes the
impact of approximately $71 million
in excess tax benefits associated
with share-based compensation.
2017 Tax expense on Earnings from
Continuing Operations includes the
tax associated with a $1.151
billion pretax gain on the sale of
the AMO business.
4) 2018 and 2017 Earnings and Diluted
Earnings per Common Share from
Discontinued Operations, net of
taxes primarily relates to a net
tax benefit as a result of the
resolution of various tax positions
from prior years.
5) 2018 Net Earnings and Diluted
Earnings per Common Share from
Continuing Operations, excluding
Specified Items, excludes net
after-tax charges of $1.218
billion, or $0.69 per share, for
intangible amortization expense and
other expenses primarily associated
with acquisitions and restructuring
actions.
2017 Net Earnings and Diluted
Earnings per Common Share from
Continuing Operations, excluding
Specified Items, excludes net
after-tax charges of $1.283
billion, or $0.74 per share, for
intangible amortization expense and
other expenses primarily associated
with acquisitions and restructuring
actions, partially offset by a gain
on the sale of the AMO business.
Abbott Laboratories and Subsidiaries
Non-GAAP Reconciliation of Financial Information From Continuing Operations
Second Quarter Ended June 30, 2018 and 2017
(in millions, except per share data)
(unaudited)
2Q18
----
As Specified As % to
Reported Items Adjusted Sales
(GAAP)
-----
Intangible
Amortization $562 $(562) --
Gross Margin 3,923 677 $4,600 59.2%
R&D 575 (24) 551 7.1%
SG&A 2,466 (79) 2,387 30.7%
Interest expense,
net 189 (2) 187
Other (income)
expense, net (78) 44 (34)
Earnings from
Continuing
Operations before
taxes 777 738 1,515
Tax expense on
Earnings from
Continuing
Operations 59 161 220
Earnings from
Continuing
Operations 718 577 1,295
Diluted Earnings
per Share from
Continuing
Operations $0.40 $0.33 $0.73
Specified items reflect intangible amortization expense of $562 million and other expenses of $176 million, primarily associated with acquisitions, restructuring actions and other expenses. See tables titled "Details of Specified Items" for additional details regarding specified items. 2Q17
----
As Specified As % to
Reported Items Adjusted Sales
(GAAP)
-----
Intangible
Amortization $392 $(392) --
Gross
Margin 3,056 895 $3,951 59.5%
R&D 520 (15) 505 7.6%
SG&A 2,150 (138) 2,012 30.3%
Interest
expense,
net 183 (2) 181
Other
(income)
expense,
net (80) 32 (48)
Earnings
from
Continuing
Operations
before
taxes 295 1,018 1,313
Tax
expense
on
Earnings
from
Continuing
Operations 25 192 217
Earnings
from
Continuing
Operations 270 826 1,096
Diluted
Earnings
per
Share
from
Continuing
Operations $0.15 $0.47 $0.62
Note: The As Reported and As
Adjusted amounts reflect the
impact of adopting the new
accounting rules related to the
recognition of retirement
benefits - See Footnote 1 on
table titled "Condensed
Consolidated Statement of
Earnings" for additional
information.
Specified items reflect intangible amortization expense of $392 million and other expenses of $626 million, primarily associated with acquisitions, including approximately $430 million of inventory step-up amortization related to St. Jude Medical and other expenses. See tables titled "Details of Specified Items" for additional details regarding specified items.
Abbott Laboratories and Subsidiaries
Non-GAAP Reconciliation of Financial Information From Continuing Operations
First Half Ended June 30, 2018 and 2017
(in millions, except per share data)
(unaudited)
1H18
----
As Specified As % to
Reported Items Adjusted Sales
(GAAP)
-----
Intangible Amortization $1,146 $(1,146) --
Gross Margin 7,662 1,324 $8,986 59.3%
R&D 1,164 (67) 1,097 7.2%
SG&A 5,008 (169) 4,839 31.9%
Interest expense, net 388 (2) 386
Net foreign exchange
(gain) loss (9) (1) (10)
Debt extinguishment
costs 14 (14) --
Other (income) expense,
net (111) 42 (69)
Earnings from Continuing
Operations before taxes 1,208 1,535 2,743
Tax expense on Earnings
from Continuing
Operations 81 317 398
Earnings from Continuing
Operations 1,127 1,218 2,345
Diluted Earnings per
Share from Continuing
Operations $0.63 $0.69 $1.32
Specified items reflect intangible amortization expense of $1.146 billion and other expenses of $389 million, primarily associated with acquisitions, restructuring actions and other expenses. See tables titled "Details of Specified Items" for additional details regarding specified items. 1H17
----
As Specified As % to
Reported Items Adjusted Sales
(GAAP)
-----
Intangible
Amortization $914 $(914) --
Gross
Margin 5,807 1,879 $7,686 59.2%
R&D 1,073 (55) 1,018 7.8%
SG&A 4,590 (505) 4,085 31.5%
Interest
expense,
net 387 (19) 368
Other
(income)
expense,
net (1,246) 1,166 (80)
Earnings
from
Continuing
Operations
before
taxes 1,031 1,292 2,323
Tax
expense
on
Earnings
from
Continuing
Operations 375 9 384
Earnings
from
Continuing
Operations 656 1,283 1,939
Diluted
Earnings
per
Share
from
Continuing
Operations $0.37 $0.74 $1.11
Note: The As Reported and As
Adjusted amounts reflect the
impact of adopting the new
accounting rules related to the
recognition of retirement
benefits - See Footnote 1 on
table titled "Condensed
Consolidated Statement of
Earnings" for additional
information.
Specified items reflect intangible amortization expense of $914 million and other expenses of $1.529 billion, primarily associated with acquisitions, including approximately $820 million of inventory step-up amortization related to St. Jude Medical, charges related to restructuring actions and other expenses, partially offset by a gain of $1.151 billion from the sale of the AMO business. See tables titled "Details of Specified Items" for additional details regarding specified items. A reconciliation of the second-quarter tax rates for continuing operations for 2018 and 2017 is shown below: 2Q18
----
($ in millions) Pre-Tax Taxes on Tax
Income Earnings Rate
------ -------- ----
As reported (GAAP) $777 $59 7.7%
Specified items 738 161
--- ---
Excluding specified items $1,515 $220 14.5%
2Q17
----
($ in millions) Pre-Tax Taxes on Tax
Income Earnings Rate
------ -------- ----
As reported (GAAP) $295 $25 8.4% 1)
Specified items 1,018 192
----- ---
Excluding specified items $1,313 $217 16.5%
1) Reported tax rate on a GAAP basis
for the second quarter of 2017
includes the impact of
approximately $25 million in excess
tax benefits associated with share-
based compensation.
A reconciliation of the year-to-date tax rates for continuing operations for 2018 and 2017 is shown below: 1H18
----
($ in millions) Pre-Tax Taxes on Tax
Income Earnings Rate
------ -------- ----
As reported (GAAP) $1,208 $81 6.7% 2)
Specified items 1,535 317
----- ---
Excluding specified items $2,743 $398 14.5%
1H17
----
($ in millions) Pre-Tax Taxes on Tax
Income Earnings Rate
------ -------- ----
As reported (GAAP) $1,031 $375 36.4% 3)
Specified items 1,292 9
----- ---
Excluding specified items $2,323 $384 16.5%
2) Reported tax rate on a GAAP basis
for 2018 includes the impact of
approximately $71 million in excess
tax benefits associated with share-
based compensation.
3) Reported tax rate on a GAAP basis
for 2017 includes the impact of
taxes associated with a $1.151
billion pretax gain on the sale of
the AMO business.
Abbott Laboratories and Subsidiaries
Non-GAAP Reconciliation of Adjusted Historical Revenue
Second Quarter Ended June 30, 2018 and 2017
($ in millions) (unaudited)
2Q18 2Q17 % Change vs. 2Q17
---- ---- -----------------
Non-GAAP
--------
Abbott Rapid Adjusted Abbott Reported Reported Organica)
Reported Diagnostics Revenue Reported
-------- ----------- ------- --------
Total Company 7,767 (484) 7,283 6,637 17.0 9.7 8.0
U.S. 2,702 (258) 2,444 2,360 14.5 3.5 3.5
Int'l 5,065 (226) 4,839 4,277 18.4 13.1 10.5
Total Diagnostics 1,873 (484) 1,389 1,273 47.2 9.1 6.6
U.S. 652 (258) 394 385 69.1 2.2 2.2
Int'l 1,221 (226) 995 888 37.6 12.1 8.5
Rapid Diagnostics 484 (484) -- -- n/m n/m n/m
U.S. 258 (258) -- -- n/m n/m n/m
Int'l 226 (226) -- -- n/m n/m n/m
a) In order to compute results
excluding the impact of
exchange rates, current year
U.S. dollar sales are
multiplied or divided, as
appropriate, by the current
year average foreign exchange
rates and then those amounts
are multiplied or divided, as
appropriate, by the prior
year average foreign exchange
rates.
Abbott Laboratories and Subsidiaries
Non-GAAP Reconciliation of Adjusted Historical Revenue
First Half Ended June 30, 2018 and 2017
($ in millions) (unaudited)
1H18 1H17 % Change vs. 1H17
---- ---- -----------------
Non-GAAP
--------
Abbott Rapid Adjusted Abbott Divested Adjusted Reported Reported Organicb)
Reported Diagnostics Revenue Reported Businessesa) Revenue
-------- ----------- ------- -------- ----------- -------
Total Company 15,157 (1,043) 14,114 12,972 (187) 12,785 16.8 10.4 7.5
U.S. 5,377 (581) 4,796 4,684 (84) 4,600 14.8 4.2 4.2
Int'l 9,780 (462) 9,318 8,288 (103) 8,185 18.0 13.8 9.3
Total Diagnostics 3,710 (1,043) 2,667 2,431 -- 2,431 52.6 9.7 6.1
U.S. 1,352 (581) 771 756 -- 756 78.9 2.0 2.0
Int'l 2,358 (462) 1,896 1,675 -- 1,675 40.8 13.2 7.9
Rapid Diagnostics 1,043 (1,043) -- -- -- -- n/m n/m n/m
U.S. 581 (581) -- -- -- -- n/m n/m n/m
Int'l 462 (462) -- -- -- -- n/m n/m n/m
Total Medical Devices 5,635 -- 5,635 4,991 (12) 4,979 12.9 13.2 8.8
U.S. 2,468 -- 2,468 2,327 (6) 2,321 6.0 6.3 6.3
Int'l 3,167 -- 3,167 2,664 (6) 2,658 18.9 19.1 11.0
Cardiovascular and
Neuromodulation 4,744 -- 4,744 4,363 (12) 4,351 8.7 9.0 5.3
U.S. 2,270 -- 2,270 2,171 (6) 2,165 4.6 4.9 4.9
Int'l 2,474 -- 2,474 2,192 (6) 2,186 12.9 13.1 5.6
Vascular 1,489 -- 1,489 1,434 (12) 1,422 3.9 4.7 0.6
U.S. 570 -- 570 599 (6) 593 (4.9) (4.0) (4.0)
Int'l 919 -- 919 835 (6) 829 10.2 10.9 3.9
a) Reflects sales related to
the AMO and St. Jude Medical
vascular closure businesses
prior to divesting in the
first quarter 2017.
b) In order to compute results
excluding the impact of
exchange rates, current year
U.S. dollar sales are
multiplied or divided, as
appropriate, by the current
year average foreign exchange
rates and then those amounts
are multiplied or divided, as
appropriate, by the prior
year average foreign exchange
rates.
Abbott Laboratories and Subsidiaries
Details of Specified Items
Second Quarter Ended June 30, 2018
(in millions, except per share data)
(unaudited)
Acquisition or Restructuring Intangible Other (c) Total
Divestiture- and Cost Amortization Specifieds
related (a) Reduction
Initiatives (b)
---
Gross Margin $37 $78 $562 $ -- $677
R&D (5) (1) -- (18) (24)
SG&A (75) (4) -- -- (79)
Interest
expense, net -- -- -- (2) (2)
Other
(income)
expense, net (5) -- -- 49 44
--- --- --- --- ---
Earnings from
Continuing
Operations
before taxes $122 $83 $562 $(29) 738
---- --- ---- ----
Tax expense on Earnings from Continuing
Operations (d) 161
---
Earnings from Continuing Operations $577
====
Diluted Earnings per Share from Continuing
Operations $0.33
=====
The table above provides additional details
regarding the specified items described on
tables titled "Non-GAAP Reconciliation of
Financial Information From Continuing
Operations."
a) Acquisition-related expenses
include costs for legal,
accounting, tax, and other services
related to business acquisitions,
integration costs which represent
incremental costs directly related
to integrating the acquired
businesses and include expenditures
for consulting, retention,
severance, and the integration of
systems, processes and business
activities, and fair value
adjustments to contingent
consideration related to a business
acquisition.
b) Restructuring and cost reduction
initiative expenses include
severance, outplacement, inventory
write-downs, asset impairments,
accelerated depreciation, and other
direct costs associated with
specific restructuring plans and
cost reduction initiatives.
Restructuring and cost reduction
plans consist of distinct
initiatives to streamline
operations including the
consolidation and rationalization
of business activities and
facilities, workforce reductions,
the transfer of product lines
between manufacturing facilities,
and the transfer of other business
activities between sites.
c) Other (income) expense, net relates
to an increase in fair value of an
investment, partially offset by the
acquisition of an R&D asset.
d) Reflects the net tax benefit
associated with the specified items
and excess tax benefits associated
with share-based compensation.
Abbott Laboratories and Subsidiaries
Details of Specified Items
Second Quarter Ended June 30, 2017
(in millions, except per share data)
(unaudited)
Acquisition or Restructuring Intangible Total
Divestiture- and Cost Amortization Specifieds
related (a) Reduction
Initiatives (b)
---
Gross Margin $438 $65 $392 $895
R&D (12) (3) -- (15)
SG&A (134) (4) -- (138)
Interest
expense, net (2) -- -- (2)
Other
(income)
expense, net 32 -- -- 32
--- --- --- ---
Earnings from
Continuing
Operations
before taxes $554 $72 $392 1,018
---- --- ----
Tax expense on Earnings from Continuing
Operations (c) 192
---
Earnings from Continuing Operations $826
====
Diluted Earnings per Share from Continuing
Operations $0.47
=====
The table above provides additional details
regarding the specified items described on
tables titled "Non-GAAP Reconciliation of
Financial Information From Continuing
Operations."
a) Acquisition-related expenses
include costs for legal,
accounting, tax, and other services
related to business acquisitions
and integration costs which
represent incremental costs
directly related to integrating the
acquired businesses and include
expenditures for consulting,
retention, severance, and the
integration of systems, processes
and business activities, fair value
adjustments to contingent
consideration related to a business
acquisition, and inventory step-up
amortization. The specified items
in interest expense include
amortization expense associated
with acquisition-related bridge
facility fees. Divestiture-related
expenses include incremental costs
to separate the divested
businesses.
b) Restructuring and cost reduction
initiative expenses include
severance, outplacement, inventory
write-downs, asset impairments,
accelerated depreciation, and other
direct costs associated with
specific restructuring plans and
cost reduction initiatives.
Restructuring and cost reduction
plans consist of distinct
initiatives to streamline
operations including the
consolidation and rationalization
of business activities and
facilities, workforce reductions,
the transfer of product lines
between manufacturing facilities,
and the transfer of other business
activities between sites. Any gains
related to the divestiture of a
facility as part of a restructuring
program are also included in this
category.
c) Reflects the net tax benefit
associated with the specified items
and excess tax benefits associated
with share-based compensation.
Abbott Laboratories and Subsidiaries
Details of Specified Items
First Half Ended June 30, 2018
(in millions, except per share data)
(unaudited)
Acquisition or Restructuring Intangible Other (c) Total
Divestiture- and Cost Amortization Specifieds
related (a) Reduction
Initiatives (b)
---
Gross Margin $82 $96 $1,146 $ -- $1,324
R&D (21) (3) -- (43) (67)
SG&A (161) (8) -- -- (169)
Interest expense, net -- -- -- (2) (2)
Net foreign exchange
(gain) loss -- (1) -- -- (1)
Debt extinguishment
costs -- -- -- (14) (14)
Other (income)
expense, net (7) -- -- 49 42
--- --- --- --- ---
Earnings from
Continuing Operations
before taxes $271 $108 $1,146 $10 1,535
---- ---- ------ ---
Tax expense on Earnings from Continuing Operations (d) 317
---
Earnings from Continuing Operations $1,218
======
Diluted Earnings per Share from Continuing Operations $0.69
=====
The table above provides additional details
regarding the specified items described on
tables titled "Non-GAAP Reconciliation of
Financial Information From Continuing
Operations."
a) Acquisition-related expenses include
costs for legal, accounting, tax,
and other services related to
business acquisitions, integration
costs which represent incremental
costs directly related to
integrating the acquired businesses
and include expenditures for
consulting, retention, severance,
and the integration of systems,
processes and business activities,
fair value adjustments to contingent
consideration related to a business
acquisition, and inventory step-up
amortization.
b) Restructuring and cost reduction
initiative expenses include
severance, outplacement, inventory
write-downs, asset impairments,
accelerated depreciation, and other
direct costs associated with
specific restructuring plans and
cost reduction initiatives.
Restructuring and cost reduction
plans consist of distinct
initiatives to streamline operations
including the consolidation and
rationalization of business
activities and facilities, workforce
reductions, the transfer of product
lines between manufacturing
facilities, and the transfer of
other business activities between
sites.
c) Other (income) expense, net relates
to the acquisition of R&D assets and
the cost associated with the early
extinguishment of debt, partially
offset by an increase in fair value
of an investment.
d) Reflects the net tax benefit
associated with the specified items
and excess tax benefits associated
with share-based compensation.
Abbott Laboratories and Subsidiaries
Details of Specified Items
First Half Ended June 30, 2017
(in millions, except per share data)
(unaudited)
Acquisition or Restructuring Intangible Total
Divestiture- and Cost Amortization Specifieds
related (a) Reduction
Initiatives (b)
---
Gross Margin $844 $121 $914 $1,879
R&D (26) (29) -- (55)
SG&A (486) (19) -- (505)
Interest
expense, net (19) -- -- (19)
Other
(income)
expense, net 1,200 (34) -- 1,166
----- --- --- -----
Earnings from
Continuing
Operations
before taxes $175 $203 $914 1,292
---- ---- ----
Tax expense on Earnings from Continuing
Operations (c) 9
---
Earnings from Continuing Operations $1,283
======
Diluted Earnings per Share from Continuing
Operations $0.74
=====
The table above provides additional details
regarding the specified items described on
tables titled "Non-GAAP Reconciliation of
Financial Information From Continuing
Operations."
a) Acquisition-related expenses
include bankers' fees and costs for
legal, accounting, tax, and other
services related to business
acquisitions, integration costs
which represent incremental costs
directly related to integrating the
acquired businesses and include
expenditures for consulting,
retention, severance, and the
integration of systems, processes
and business activities, fair value
adjustments to contingent
consideration related to a business
acquisition, and inventory step-up
amortization. The specified items
in interest expense include
amortization expense associated
with acquisition-related bridge
facility fees. Divestiture-related
expenses include incremental costs
to separate the divested businesses
as well as bankers' fees and costs
for legal, accounting, tax, and
other services related to the
divestitures.
b) Restructuring and cost reduction
initiative expenses include
severance, outplacement, inventory
write-downs, asset impairments,
accelerated depreciation, and other
direct costs associated with
specific restructuring plans and
cost reduction initiatives.
Restructuring and cost reduction
plans consist of distinct
initiatives to streamline
operations including the
consolidation and rationalization
of business activities and
facilities, workforce reductions,
the transfer of product lines
between manufacturing facilities,
and the transfer of other business
activities between sites. Any gains
related to the divestiture of a
facility as part of a restructuring
program are also included in this
category.
c) Reflects the net tax benefit
associated with the specified items
and excess tax benefits associated
with share-based compensation.
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