Abbott Reports Second-Quarter 2018 Results

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.

  • Second-quarter worldwide sales of $7.8 billion increased 17.0 percent on a reported basis and 8.0 percent on an organic* basis.
  • Reported diluted EPS from continuing operations under GAAP was $0.40 in the second quarter.
  • Adjusted diluted EPS from continuing operations, which excludes specified items, was $0.73, above Abbott's previous guidance range.
  • Abbott is raising its full-year 2018 EPS guidance range, which continues to reflect strong double-digit growth. Abbott projects full-year diluted EPS from continuing operations on a GAAP basis of $1.34 to $1.40. Projected full-year adjusted diluted EPS from continuing operations is now $2.85 to $2.91.
  • In May, 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 second quarter, XIENCE Sierra also received national reimbursement in Japan to treat people with coronary artery disease.
  • 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 July, Abbott received U.S. FDA approval for a next-generation version of its leading MitraClip® heart valve repair device. This new version includes design advancements that simplify the minimally invasive procedure and enable more patients to be treated with MitraClip.

"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
Note: Management believes that measuring sales growth rates on an organic basis is an appropriate way for investors to best understand the underlying performance of the business.

Organic sales growth:

  • Excludes prior year results for the Abbott Medical Optics (AMO) and St. Jude Medical vascular closure businesses, which were divested during the first quarter 2017;
  • Excludes the current and prior year results for Rapid Diagnostics, which reflect results for Alere Inc., which was acquired on Oct. 3, 2017; and
  • Excludes the impact of foreign exchange.

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:
Abbott is a global healthcare company devoted to improving life through the development of products and technologies that span the breadth of healthcare. With a portfolio of leading, science-based offerings in diagnostics, medical devices, nutritionals and branded generic pharmaceuticals, Abbott serves people in more than 150 countries and employs approximately 99,000 people.

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 --
A Caution Concerning Forward-Looking Statements

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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SOURCE Abbott

 

Company Codes: NYSE:ABT
 
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