FORM 10-Q
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D. C. 20549
(Mark One)
/X/ QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
For the quarterly period ended March 31, 1998
OR
/ / TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
For the transition period from __________________ to ____________________
Commission File No. 1-2189
ABBOTT LABORATORIES
An Illinois Corporation I.R.S. Employer Identification
No. 36-0698440
100 Abbott Park Road
Abbott Park, Illinois 60064-3500
Telephone: (847) 937-6l00
Indicate by check mark whether the registrant (l) has filed all reports required
to be filed by Section l3 or l5(d) of the Securities Exchange Act of l934 during
the preceding l2 months (or for such shorter period that the registrant was
required to file such reports), and (2) has been subject to such filing
requirements for the past 90 days. Yes X . No .
___ ____
As of April 30, 1998, the Corporation had 771,789,413 common shares
without par value outstanding.
PART 1 FINANCIAL INFORMATION
ABBOTT LABORATORIES AND SUBSIDIARIES
CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(UNAUDITED)
ABBOTT LABORATORIES AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENT OF EARNINGS
(UNAUDITED)
(DOLLARS AND SHARES IN THOUSANDS EXCEPT PER SHARE DATA)
THREE MONTHS ENDED MARCH 31
---------------------------
1998 1997
---------- ----------
Net Sales..................................... $3,044,913 $2,999,814
--------- ---------
Cost of products sold......................... 1,279,973 1,327,331
Research and development...................... 279,876 280,074
Selling, general and administrative........... 682,175 656,596
--------- ---------
Total Operating Cost and Expenses........... 2,242,024 2,264,001
--------- ---------
Operating Earnings............................ 802,889 735,813
--------- ---------
Interest expense.............................. 37,960 32,754
Interest income............................... (12,914) (11,723)
Other (income) expense, net................... (41,036) (43,836)
--------- ---------
Earnings Before Taxes......................... 818,879 758,618
Taxes on Earnings............................. 229,286 223,792
--------- ---------
Net Earnings.................................. $ 589,593 $ 534,826
--------- ---------
--------- ---------
Basic Earnings Per Common Share............... $.77 $.69
--------- ---------
--------- ---------
Diluted Earnings Per Common Share............. $.76 $.68
--------- ---------
--------- ---------
Cash Dividends Declared
Per Common Share............................ $.30 $.27
--------- ---------
--------- ---------
Average Number of Common Shares Outstanding
Used for Basic Earnings Per Common Share... 764,004 773,983
Dilutive Common Stock Options................. 10,541 10,640
--------- ---------
Average Number of Common Shares Outstanding
Plus Dilutive Common Stock Options.......... 774,545 784,623
--------- ---------
--------- ---------
Outstanding Employee Common Stock Options
Having No Dilutive Effect.................. 6,734 5,937
--------- ---------
--------- ---------
The accompanying notes to condensed consolidated financial statements are an
integral part of this statement.
ABBOTT LABORATORIES AND SUBSIDIARIES
CONDENSED CONSOLIDATED BALANCE SHEET
(DOLLARS IN THOUSANDS)
MARCH 31 DECEMBER 31
1998 1997
----------- -----------
(UNAUDITED)
ASSETS
Current Assets:
Cash and cash equivalents........................ $ 225,544 $ 230,024
Investment securities............................ 69,401 28,986
Trade Receivables, less allowances
of $183,677 in 1998 and $167,406 in 1997......... 1,701,232 1,782,326
Inventories:
Finished products.............................. 698,925 667,355
Work in process................................ 320,245 287,653
Materials...................................... 325,021 324,892
----------- -----------
Total Inventories........................... 1,344,191 1,279,900
Prepaid expenses, income taxes, and
other receivables............................. 1,841,436 1,716,972
----------- -----------
Total Current Assets........................ 5,181,804 5,038,208
----------- -----------
Investment Securities Maturing after One Year..... 573,701 630,967
----------- -----------
Property and Equipment, at Cost................... 8,899,831 8,790,157
Less: accumulated depreciation and amortization... 4,313,956 4,220,466
----------- -----------
Net Property and Equipment...................... 4,585,875 4,569,691
Deferred Charges, Intangible and Other Assets..... 1,773,722 1,822,202
----------- -----------
$12,115,102 $12,061,068
----------- -----------
----------- -----------
LIABILITIES AND SHAREHOLDERS' INVESTMENT
Current Liabilities:
Short-term borrowings and current portion
of long-term debt................................ $ 1,290,488 $ 1,781,352
Trade accounts payable........................... 942,589 1,001,058
Salaries, income taxes, dividends payable, and
other accruals................................. 2,493,498 2,252,058
----------- -----------
Total Current Liabilities................... 4,726,575 5,034,468
----------- -----------
Long-Term Debt.................................... 1,139,720 937,983
----------- -----------
Other Liabilities and Deferrals................... 1,107,095 1,089,940
----------- -----------
Shareholders' Investment:
Preferred shares, $1 par value
Authorized - 1,000,000 shares, none issued..... ... ...
Common shares, without par value
Authorized - 1,200,000,000 shares
Issued at stated capital amount -
Shares: 1998: 772,226,694;
1997: 773,234,252.................... 997,593 907,106
Earnings employed in the business................. 4,507,409 4,395,582
Accumulated other comprehensive income............ (276,042) (230,241)
----------- -----------
5,228,960 5,072,447
Less:
Common shares held in treasury, at cost -
Shares: 1998: 8,871,199; 1997: 9,140,199......... 46,818 48,238
Unearned compensation - restricted stock awards... 40,430 25,532
----------- -----------
Total Shareholders' Investment.............. 5,141,712 4,998,677
----------- -----------
$12,115,102 $12,061,068
----------- -----------
----------- -----------
The accompanying notes to condensed consolidated financial statements are an
integral part of this statement.
ABBOTT LABORATORIES AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENT OF CASH FLOWS
(UNAUDITED)
(DOLLARS IN THOUSANDS)
THREE MONTHS ENDED MARCH 31
---------------------------
1998 1997
---- ----
Cash Flow From (Used in) Operating Activities:
Net earnings....................................... $ 589,593 $ 534,826
Adjustments to reconcile net earnings to
net cash from operating activities -
Depreciation and amortization...................... 190,585 176,076
Trade Receivables.................................. 50,467 (93,688)
Inventories........................................ (86,212) 4,445
Other, Net......................................... 136,950 162,967
----------- ---------
Net Cash From Operating Activities............ 881,383 784,626
----------- ---------
Cash Flow From (Used in) Investing Activities:
Acquisitions of property, equipment and businesses (238,447) (220,069)
Investment Securities Transactions................. 16,778 15,394
Other.............................................. 4,388 5,857
----------- ---------
Net Cash (Used in) Investing Activities....... (217,281) (198,818)
----------- ---------
Cash Flow From (Used in) Financing Activities:
Borrowing transactions............................. (286,763) (175,842)
Common share transactions.......................... (171,709) (189,608)
Dividends paid..................................... (206,343) (185,905)
----------- ---------
Net Cash (Used in) Financing Activities....... (664,815) (551,355)
----------- ---------
Effect of exchange rate changes on cash and
cash equivalents................................... ( 3,767) (10,569)
----------- ---------
Net Increase (Decrease) in Cash and Cash Equivalents... (4,480) 23,884
Cash and Cash Equivalents, Beginning of Year........... 230,024 110,209
----------- ---------
Cash and Cash Equivalents, End of Period............... $ 225,544 $ 134,093
----------- ---------
----------- ---------
The accompanying notes to condensed consolidated financial statements are an
integral part of this statement.
ABBOTT LABORATORIES AND SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
MARCH 31, 1998
(UNAUDITED)
NOTE 1 - BASIS OF PREPARATION:
The accompanying unaudited, condensed consolidated financial statements have
been prepared pursuant to rules and regulations of the Securities and
Exchange Commission and, therefore, do not include all information and
footnote disclosures normally included in audited financial statements.
However, in the opinion of management, all adjustments (which include only
normal adjustments) necessary to present fairly the financial position, cash
flows, and results of operations have been made. It is suggested that these
statements be read in conjunction with the financial statements included in
the Company's Annual Report on Form 10-K for the year ended December 31, 1997.
NOTE 2 - TAXES ON EARNINGS:
Taxes on earnings reflect the estimated annual effective tax rates. The
effective tax rates are less than the statutory U. S. Federal income tax rate
principally due to tax incentive grants related to subsidiaries operating in
Puerto Rico, the Dominican Republic, Italy, Ireland, and the Netherlands.
NOTE 3 - LITIGATION AND ENVIRONMENTAL MATTERS:
The Company is involved in various claims and legal proceedings including
numerous antitrust suits and investigations in connection with the pricing of
prescription pharmaceuticals. In addition, the Company has been identified
as a potentially responsible party for investigation and cleanup costs at a
number of locations in the United States and Puerto Rico under Federal and
state remediation laws and is investigating potential contamination at a
number of Company-owned locations.
The matters above are discussed more fully in Note 10 to the financial
statements included in the Company's Annual Report on Form 10-K, which is
available upon request.
The Company expects that within the next year, progress in the legal proceedings
described above may cause a change in the estimated reserves recorded by the
Company. While it is not feasible to predict the outcome of such pending
claims, proceedings and investigations with certainty, management is of the
opinion that their ultimate disposition should not have a material adverse
effect on the Company's financial position, cash flows, or results of
operations.
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
MARCH 31, 1998
(UNAUDITED), CONTINUED
NOTE 4 - ACQUISITIONS:
On April 17, 1998, the Company acquired International Murex Technologies
Corporation for approximately $234 million in cash. Had this acquisition
taken place on January 1, 1997, consolidated sales and net income would not
have been significantly different from reported amounts.
NOTE 5 - COMPREHENSIVE INCOME:
THREE MONTHS ENDED MARCH 31
---------------------------
1998 1997
---------- ---------
Net Earnings $ 589,593 $ 534,826
---------- ---------
Other comprehensive income:
Foreign currency translation adjustments (45,595) (99,579)
Unrealized losses on marketable equity
securities (343) (4,704)
Tax benefit related to items of
other comprehensive income 137 1,882
---------- ---------
Other comprehensive income, net of tax (45,801) (102,401)
---------- ---------
Comprehensive Income 543,792 432,425
---------- ---------
---------- ---------
As of March 31, 1998, the cumulative balances for foreign currency translation
adjustments and the unrealized (gain) on marketable equity securities were $308
million and ($32) million, respectively.
NOTE 6 - ADOPTION OF STATEMENT OF POSITION
In the first quarter, 1998, the Company elected early adoption of the provisions
of the American Institution of Certified Public Accountants' Statement of
Position 98-1, "Accounting for the Costs of Computer Software Developed or
Obtained for Internal Use." Adoption of the provisions of this statement will
not have a material effect on the financial statements of the Company.
NOTE 7 - STOCK SPLIT:
On February 13, 1998, the Company announced a two-for-one stock split.
Shareholders of record at the close of business on May 1, 1998 will be issued an
additional share of the Company's common stock on May 29, 1998 for each share
owned on the record date. The number of shares and the per share amounts
included in the March 31, 1998 and December 31, 1997 condensed consolidated
financial statements have not been restated for the stock split.
FINANCIAL REVIEW
RESULTS OF OPERATIONS - FIRST QUARTER 1998 COMPARED WITH FIRST QUARTER 1997
Worldwide sales for the first quarter increased 1.5 percent to $3.045 billion
from $3.000 billion in 1997. Excluding the negative effect of the
relatively stronger U.S. dollar, sales increased 5.1 percent in the first
quarter 1998 compared to 1997. Net earnings increased 10.2 percent over the
prior year quarter. Basic earnings per common share and diluted earnings per
common share increased 11.6 percent and 11.8 percent, respectively, over the
prior year.
Gross profit margin (sales less cost of products sold, including freight and
distribution expenses) of 58.0 percent for the first quarter was up from 55.8
percent one year ago. This increase was primarily due to productivity
improvements and cost savings, partially offset by unfavorable product mix,
primarily slower sales of pharmaceuticals.
Research and development expenses were $279.9 million in the first quarter
1998. This represented 9.2 percent of net sales, compared to 9.3 percent in
1997. The majority of research and development expenditures continues to be
concentrated on pharmaceutical and diagnostic products.
Selling, general, and administrative expenses for the first quarter increased
3.9 percent from the prior year, net of the favorable effect of the
relatively stronger U.S. dollar of 3.9%. This net increase reflects
inflation and additional selling and marketing support for new and existing
products, primarily for pharmaceutical and nutritional products.
Other (income) expense, net, includes net foreign exchange losses of $7.4
million in the 1998 first quarter, compared with net foreign exchange gains
of $10.9 million in the same quarter last year.
FINANCIAL REVIEW
(CONTINUED)
INDUSTRY SEGMENTS
Industry segment sales for the first quarter 1998 and the related change from
the comparable 1997 period are shown in the table below. The Pharmaceutical and
Nutritional Products segment includes a broad line of adult and pediatric
pharmaceuticals and nutritionals, which are sold primarily on the prescription
or recommendation of physicians or other health care professionals; consumer
products; agricultural and chemical products; and bulk pharmaceuticals. The
Hospital and Laboratory Products segment includes diagnostic systems for
consumers, blood banks, hospitals, commercial laboratories and alternate-care
testing sites; intravenous and irrigation fluids and related administration
equipment; drugs and drug delivery systems; anesthetics; critical care products;
and other medical specialty products for hospitals and alternate-care sites.
Domestic and international sales for the first quarter primarily reflect unit
growth. Total sales were unfavorably affected 3.6 percent and international
sales were unfavorably affected 9.5 percent by the relatively stronger U. S.
dollar in the first quarter.
FIRST QUARTER
-------------
SEGMENT SALES 1998 PERCENT
(in millions of dollars) SALES INCREASE
- ----------------------------------------------------------------------------
Pharmaceutical and Nutritional Products:
Domestic $1,200.1 0.1
- ----------------------------------------------------------------------------
International 606.9 (3.2)
- ----------------------------------------------------------------------------
1,807.0 (1.1)
Hospital and Laboratory Products:
Domestic 736.4 13.0
- ----------------------------------------------------------------------------
International 501.5 (3.9)
- ----------------------------------------------------------------------------
1,237.9 5.5
Total All Segments:
Domestic 1,936.5 4.6
- ----------------------------------------------------------------------------
International 1,108.4 (3.5)
- ----------------------------------------------------------------------------
$3,044.9 1.5
- ----------------------------------------------------------------------------
- ----------------------------------------------------------------------------
FINANCIAL REVIEW
(CONTINUED)
LIQUIDITY AND CAPITAL RESOURCES AT MARCH 31, 1998
COMPARED WITH DECEMBER 31, 1997
Net cash from operating activities for the first quarter 1998 totaled $881
million. The Company expects annual cash flow from operating activities to
continue to approximate or exceed the Company's capital expenditures and cash
dividends. The Company funded the acquisition of Murex through commercial
paper borrowings.
The Company has maintained its favorable bond ratings (AAA by Standard &
Poor's Corporation and Aa1 by Moody's Investors Service) and continues to
have readily available financial resources, including unused domestic lines
of credit of $1.5 billion at March 31, 1998. These lines of credit support
domestic commercial paper borrowing arrangements.
In the first quarter 1998, the Company issued $200 million of debt securities
under a registration statement filed with the Securities and Exchange Commission
in June 1996. The Company may issue up to an additional $200 million under this
registration statement.
During the first quarter 1998, the Company continued its program to purchase its
common shares. The Company purchased and retired 2,688,000 shares during this
period at a cost of $199 million. As of March 31, 1998, an additional
11,012,000 shares may be purchased in future periods under authorization granted
by the Board of Directors in December 1997.
LEGISLATIVE ISSUES
The Company's primary markets are highly competitive and subject to
substantial government regulation. The Company expects debate to continue at
both the federal and the state levels over the availability, method of
delivery, and payment for health care products and services. The Company
believes that if legislation is enacted, it could have the effect of reducing
prices, or reducing the rate of price increases for medical products and
services. International operations are also subject to a significant degree
of government regulation. It is not possible to predict the extent to which
the Company or the health care industry in general might be adversely
affected by these factors in the future. A more complete discussion of these
factors is contained in Item 1, Business, in the Annual Report on Form 10-K,
which is available upon request.
PART II. OTHER INFORMATION
ITEM 1. LEGAL PROCEEDINGS
The Company's 10-K for the fiscal year ended December 31, 1997
described two antitrust suits and five investigations (as of January 31,
1998) in connection with the Company's sale and marketing of infant formula
products. During the first quarter of 1998, the court denied the Company's
motion to dismiss the case pending in state court in St. Louis, Missouri.
As reported in the Company's 10-K for the fiscal year ended
December 31, 1997, the Company is involved in numerous antitrust suits and
two investigations regarding the Company's pricing of pharmaceutical
products. As of March 31, 1998, 120 federal cases are pending in the United
States District Court for the Northern District of Illinois as In re: Brand
Name Prescription Drug Antitrust Litigation, MDL 997. Four cases previously
pending in federal court were remanded to state court. Numerous appeals have
arisen out of the case pending in the MDL 997 litigation which has been
certified as a class action on behalf of certain retail pharmacies. The
petition of the Company (along with other defendants) for certiorari to the
United States Supreme Court seeking a reversal of the Court of Appeals'
rulings on certain issues was denied on March 23, 1998. The federal retail
pharmacy class action trial is scheduled to begin in September 1998.
As of March 31, 1998, there were 25 cases pending in state court
and one case pending in a District of Columbia court. As noted above, the
following four cases were remanded to state court by the federal court in the
MDL 997 litigations: Clark County, Alabama, Dade County, Florida, Johnson
County, Kansas, and Davidson County, Tennessee. The Company has entered
into settlement agreements to settle the retail pharmacy lawsuits in
Washington County, Wisconsin and one of the suits in Hennepin County,
Minnesota. The settlement agreement in the Minnesota lawsuit was approved on
December 30, 1997. The settlement agreement in the Wisconsin lawsuit was
approved on February 16, 1998. Under the settlement agreements, the Company
did not admit liability but did pay $42,767.32 in connection with the
Minnesota lawsuit and $147,877.78 in connection with the Wisconsin lawsuit.
Motions for certification as a consumer class action were denied in Maine,
Michigan, and Minnesota. Appeals of the consumer class certification
decisions are pending in Maine and Michigan. Trial in the individual
consumer case pending in Michigan is scheduled for July 1998.
The Company's 10-K for the fiscal year ended December 31, 1997
described five cases (as of January 31, 1998) involving the Company's patents
for terazosin hydrochloride, a drug the Company sells under the trademark
Hytrin-Registered Trademark-. On March 31, 1998, the Company and Zenith
reached an agreement that resolved the litigation between the parties. In
the settlement, Zenith acknowledged the validity of Abbott's terazosin
hydrochloride patents and agreed to refrain from selling a generic version of
terazosin hydrochloride until the expiration of one of Abbott's patents for
terazosin hydrochloride (patent No. 4,251,532). On April 1, 1998, the
Company and Geneva reached an agreement under which Geneva will not market
its Food and Drug Administration approved generic terazosin hydrochloride
capsules until resolution of the pending litigation between the parties. The
Company agreed to make quarterly payments to Zenith and Geneva until the date
on which they may enter the market for terazosin hydrochloride under their
agreements. Both Zenith and Geneva would be free to enter the market for
terazosin hydrochloride in the United States if certain of the Company's
patents for terazosin hydrochloride were determined to be invalid or if
another company legally enters the generic market in the United States. On
April 6, 1998, the Company sued Warner Chilcott, Inc. ("Warner") alleging
infringement of one of the Company's patents for terazosin hydrochloride.
Warner filed counterclaims alleging, among other things that the Company's
agreements with Zenith and Geneva and its course of conduct with respect to
terazosin hydrochloride violate the Antitrust laws. Warner seeks unspecified
damages.
While it is not feasible to predict the outcome of such pending
claims, proceedings, and investigations with certainty, management is of the
opinion that their ultimate disposition should not have a material adverse
effect on the Company's financial position, cash flows, or results of
operations.
Item 4. Submission of Matters to a Vote of Security Holders
The Company held its Annual Meeting of Shareholders on April
24, 1998. The following is a summary of the matters voted on at that meeting.
(a) The shareholders elected the Company's entire Board of
Directors. The persons elected to the Company's Board of Directors and the
number of shares cast for and the number of shares withheld, with respect to
each of these persons, were as follows:
Name Votes For Votes Withheld
K. Frank Austen, M.D. 644,878,769 8,534,278
Duane L. Burnham 649,189,909 4,223,138
Paul N. Clark 649,229,974 4,183,073
H. Laurance Fuller 646,543,750 6,869,297
Thomas R. Hodgson 649,236,127 4,176,920
David A. Jones 648,672,816 4,740,231
The Lord Owen CH 649,117,785 4,295,262
Robert L. Parkinson, Jr. 649,186,045 4,227,002
Boone Powell, Jr. 646,617,575 6,795,472
Addison Barry Rand 646,540,057 6,872,990
W. Ann Reynolds, Ph.D. 648,864,446 4,548,601
Roy S. Roberts 648,949,509 4,463,538
William D. Smithburg 645,922,563 7,490,484
John R. Walter 648,186,179 5,226,868
William L. Weiss 646,289,205 7,123,842
Miles D. White 649,259,002 4,154,045
(b) The shareholders approved the adoption of the 1998 Abbott
Laboratories Performance Incentive Plan. The number of shares cast in favor of
the approval of the 1998 Abbott Laboratories Performance Incentive Plan, the
number against, and the number abstaining were as follows:
For Against Abstain
----------- ---------- ---------
606,116,758 41,787,264 5,509,025
(c) The shareholders ratified the appointment of Arthur Andersen
LLP as auditors of the Company. The number of shares cast in favor of the
ratification of Arthur Andersen LLP, the number against, and the number
abstaining were as follows:
For Against Abstain
----------- ---------- ---------
649,678,052 2,159,959 1,575,036
(d) The shareholders rejected a shareholder proposal that the
Company adopt the CERES Principles. The number of shares cast in favor of the
shareholder proposal, the number against, the number abstaining, and the number
of broker non-votes were as follows:
For Against Abstain Broker Non-Vote
---------- ----------- ---------- ----------------
43,508,171 491,955,075 33,871,791 84,078,010
Item 6. Exhibits and Reports on Form 8-K
a) Exhibits
3.1 Articles of Incorporation of Abbott Laboratories, as
amended and effective May 1, 1998 - attached hereto.
3.2 Amendment to Articles of Incorporation of Abbott
Laboratories - attached hereto.
3.3 By-Laws of Abbott Laboratories, as amended and
effective April 24, 1998 - attached hereto.
10.1 1998 Abbott Laboratories Incentive Performance Plan*-
attached hereto.
11. Statement re: computation of per share earnings -
attached hereto.
12. Statement re: computation of ratio of earnings to
fixed charges - attached hereto.
27. Financial Data Schedule - attached hereto.
* Denotes management contract or compensatory plan or
arrangement required to be filed as an exhibit hereto.
b) Reports on Form 8-K
None
SIGNATURE
Pursuant to the requirements of the Securities and Exchange Act
of 1934, the registrant has duly caused this report to be signed on its behalf
by the undersigned thereunto duly authorized.
ABBOTT LABORATORIES
/s/ Theodore A. Olson
-----------------------------------
Date: May 14, 1998 Theodore A. Olson, Vice President
and Controller (Principal Accounting
Officer)
A B B 0 T T
L A B 0 R A T 0 R I E S
RESTATED ARTICLES OF INCORPORATION
RESTATED ARTICLE R-I
1. The name of the corporation is: Abbott Laboratories.
2. The corporation was incorporated March 6, 1900 under the name: The
Abbott Alkaloidal Company.
3. Subsequent corporate names and the dates of their adoption are:
Name Date Adopted
------------------- ------------
Abbott Laboratories May 29, 1915
RESTATED ARTICLE R-II
The address of its registered office in the State of Illinois on the date of
adoption of this Amendment and Restatement of Articles of Incorporation was:
14th Street and Sheridan Road, North Chicago, Illinois, County of Lake, and the
name of its Registered Agent at said address was: Laurence R. Lee.
RESTATED ARTICLE R-III
The duration of the corporation is: Perpetual.
RESTATED ARTICLE R-IV
The purpose or purposes for which the corporation is organized are:
(1) To manufacture, purchase or otherwise acquire, own, sell, mortgage,
pledge, assign, convey, transfer, or otherwise dispose of, to invest, trade,
deal in and deal with all kinds of medicines, medicinal preparations and
supplies; chemical products, pharmaceutical products, drugs, druggists'
sundries, surgical instruments, dressings and supplies, dental instruments,
dressings and supplies, dentifrices, preparations used by dentists, and in
dentistry and oral surgery; hospital preparations and supplies; medicines,
preparations and instruments used in the cure and care of animals; perfumes and
perfumery, toilet preparations, and other articles generally dealt in the retail
drug trade; instruments, supplies and
preparations used for medicinal, sanitary and other health purposes; and in
general all instruments, preparations and supplies that appertain to
pharmacy, pharmacology, medicines, drugs, sanitation and health.
(2) To own and operate laboratories for experimentation and research in
the fields of chemistry, pharmacology, biology and physics, or such other fields
as the corporation may engage in under its charter.
(3) To manufacture, purchase, or in any manner acquire, own, mortgage,
pledge, sell, assign, convey, transfer, or otherwise dispose of, to invest,
trade, deal in and deal with, goods, wares and merchandise, and personal
property of every class and description wherever situated or located.
(4) To develop, apply for, purchase, lease, acquire, hold, use, take or
grant licenses in respect of, mortgage, pledge, lease, sell, assign or otherwise
dispose of, letters patent of the United States or any foreign country, patent
rights, licenses, privileges, inventions, devices, improvements, and processes,
formulas, copyrights, trade marks and trade names.
(5) To purchase or otherwise acquire the whole or any part of the
property, assets, business, good will and rights and to undertake or assume the
whole or any part of the bonds, mortgages, franchises, leases, contracts,
indebtedness, liabilities and obligations of any person, firm, association,
corporation or organization, and to pay for the same or any part or combination
thereof in cash, shares of the capital stock, bonds, debentures, debenture
stock, notes, or other obligations of the corporation or otherwise, or by
undertaking and assuming the whole or any part of the liabilities or obligations
of the transferor; and to hold or in any manner dispose of the whole or any part
of the property and assets so acquired, and to conduct in any lawful manner the
whole or any part of the business so acquired and to exercise all the powers
necessary or convenient in and about the conduct, management and carrying on of
such business.
(6) To purchase, subscribe for, acquire, own, hold, sell, exchange,
assign, transfer, mortgage, pledge or otherwise dispose of shares of voting
trust certificates for shares of the capital stock, or any bonds, notes,
securities or evidence of indebtedness created by any other corporation or
corporations organized under the laws of this state or any other state or
district or country, nation or government to issue in exchange therefor shares
of the capital stock, bonds, notes or other obligations of the corporation and
while the owners thereof to exercise all the rights, powers and privileges of
ownership including the right to vote on any shares of stock or voting trust
certificates so owned; to promote, lend money to any corporation or association
of which any bonds, stocks, voting trust certificates, or other securities or
evidences of indebtedness shall be held by or for this corporation, or in which
or in the welfare of which, this corporation shall have any
-2-
interest, and to do any acts and things permitted by law and designed to
protect, preserve, improve or enhance the value of any such bonds, stocks or
other securities or evidences of indebtedness or the property of this
corporation.
(7) In general, to carry on any other lawful business whatsoever in
connection with the foregoing or which is calculated directly or indirectly to
promote the interest of the corporation or to enhance the value of its
properties and to have and exercise all the rights, powers and privileges, which
are now or may hereafter be conferred by the laws of Illinois, to execute, from
time to time, general or special powers of attorney to persons, firms,
associations or corporations either in the United States or in any other
country, state or locality, and to revoke same as and when the Board of
Directors may determine; and so far as law will permit, to do any or all of the
things hereinbefore set forth to the same extent as natural persons might or
could do, and in any part of the world, either as principal, agent, contractor,
or otherwise, or through corporations of which it may own the stock or
securities, or any part thereof, or otherwise, and either alone or in company
with others.
(8) To have all other powers possessed by corporations organized or
operating under the general corporation law of the State of Illinois.
RESTATED ARTICLE R-V
The aggregate number of shares which the Corporation is authorized to issue is
2,401,000,000 divided into two classes. The designation of each class, the
number of shares of each class, and the par value, if any, of the shares of each
class, or a statement that the shares of any class are without par value, are as
follows:
Par Value per
Share or State-
ment that Shares
Series Number of are Without Par
Class (if any) Shares Value
- ---------------- ----------- ------------------ ------------------
Preferred Shares Issuable in 1,000,000 $1 per share
series
Common Shares None 2,400,000,000 Without par value
The preferences, qualifications, limitations, restrictions and the special or
relative rights in respect of the shares of each class are:
SECTION A
The Preferred Shares
1. The Preferred Shares may be issued in one or more series and
-3-
with such designation for each such series sufficient to distinguish the
shares thereof from the shares of all other series and classes, as shall be
stated and expressed in the resolution or resolutions providing for the issue
of each such series adopted by the Board of Directors. The Board of
Directors in any such resolution or resolutions is hereby expressly
authorized to divide the Preferred Shares into series and to fix and
determine the relative rights and preferences of the shares of any series so
established as to:
(i) The rate per annum at which the holders of shares shall be
entitled to receive dividends.
(ii) The price at and the terms and conditions on which shares
may be redeemed.
(iii) The amount payable upon shares in event of involuntary
liquidation.
(iv) The amount payable upon shares in event of voluntary
liquidation.
(v) The sinking fund provisions, if any, for the redemption or
purchase of shares.
(vi) The terms and conditions on which shares may be converted,
if the shares are issued with the privilege of conversion.
The Board of Directors may increase the number of shares designated for any
existing series by a resolution adding to such series authorized and
unissued Preferred Shares not designated for any other series.
2. All preferred Shares of any one series shall be identical with each other
in all respects, except that shares of any one series issued at different times
as provided in paragraph 3 of this Section A, may differ as to the dates from
which dividends thereon shall be cumulative.
3. Before any dividends on the Common Shares or on any other class or classes
of shares of the Corporation, ranking junior to the Preferred Shares with
respect to payment of dividends, shall be paid or declared or set apart for
payment, the holders of Preferred Shares shall be entitled to receive when and
as declared by the Board of Directors, cumulative cash dividends, out of any
funds legally available for the declaration of dividends and in the case of each
series at the rate per annum, and no more, for the particular series fixed in
the resolution or resolutions providing for the issue of such series of
Preferred Shares, adopted by the Board of Directors, payable quarterly on such
dates, in each year, as may be fixed in such resolution or resolutions. With
respect to each series of the Preferred Shares, such dividends shall be
cumulative from the respective dates of issue thereof. No dividends shall be
paid on any series of the Preferred Shares in respect of any dividend period
unless
-4-
all cumulative dividends accrued prior to said dividend period with respect
to all Preferred Shares of each other series shall have been paid or declared
and set aside for payment.
4. The holders of Preferred Shares shall be entitled to vote as a class and
otherwise as provided by law.
5. Preferred shares which have been redeemed or shall have been purchased,
converted or otherwise acquired by the Corporation may thereafter be reissued
under such terms and conditions, not inconsistent with the provisions of this
Section A, as the Board of Directors may thereafter determine.
6. In the event of any voluntary or involuntary liquidation, dissolution or
winding up of the Corporation, and before any distribution of the assets of the
Corporation shall be made to or set apart for the holders of the Common Shares
or of any other class of shares of the Corporation ranking junior to the
Preferred Shares with respect to payment of dividends or upon dissolution,
liquidation or winding up of the Corporation, the holders of the shares of each
series of the Preferred Shares then outstanding shall be entitled to receive
payment of such amount, as shall be stated and expressed in the resolution or
resolutions adopted by the Board of Directors providing for the issue of such
series; but such holders upon receipt of such payment shall be entitled to no
further payment.
7. In case of any liquidation, dissolution or winding up of the Corporation,
if the amounts payable with respect to all series of Preferred Shares then
outstanding are not paid in full, the shares of all series of the Preferred
Shares shall share proportionately in accordance with the respective amounts
which would be payable on said shares if all amounts payable were paid in full.
8. A consolidation or merger of the Corporation with or into one or more
corporations shall not be deemed to be a liquidation, dissolution or winding up
within the meaning of this Section A.
SECTION B
The Common Shares
1. Subject to the limitations set forth in Section A of this Restated Article
R-V, the holders of Common Shares shall be entitled to dividends if, when and as
the same shall be declared by the Board of Directors out of funds of the
Corporation legally available thereof.
2. The holders of Common Shares shall be entitled to vote as provided by law.
-5-
SECTION C
The Preferred and Common Shares
No holder of shares of any class of the Corporation shall be entitled as of
right to subscribe to or purchase any additional or increased shares of any
class (whether now or hereafter authorized), or obligations convertible into any
class or classes of shares (whether now or hereafter authorized), or shares of
any class convertible into shares of any other class or classes (whether now or
hereafter authorized), or obligations, shares or other securities carrying
warrants or rights to subscribe to shares of the Corporation of any class or
classes (whether now or hereafter authorized), but any and all shares, bonds,
debentures or other securities or obligations, whether or not convertible into
shares or carrying warrants entitling the holders thereof to subscribe to
shares, may be issued, sold or disposed of from time to time by the board of
Directors to such persons, firms or corporations and for such consideration (so
far as may be permitted by law, by the Articles of Incorporation of the
Corporation, and by the terms of any resolution creating any series of Preferred
Shares) as the Board of Directors shall from time to time in its absolute
discretion determine. Among other things the Board of Directors shall have the
right at any time and from time to time to offer, sell and issue shares of any
class of the Corporation, or obligations, shares or other securities carrying
warrants or rights to subscribe to shares of the Corporation of any class or
classes, to employees of the Corporation and to employees of subsidiaries of the
Corporation without first offering the same to its share holders, for such
prices or considerations, and upon such terms and conditions as the Board of
Directors shall from time to time determine, and upon any such issuance and
sale, or plan or proposal to issue and sell, the Board of Directors may classify
employees as in its discretion it may deem advisable, and may differentiate
between classes, and exclude any class from participation. The fact that an
employee may be a director or an officer of the Corporation, or any of its
subsidiaries, shall not disqualify him from participation as an employee in any
such issuance or sale to employees.
-6-
RESTATED ARTICLE R-VI
1. A director of the corporation shall not be personally liable to the
corporation or its shareholders for monetary damages for breach of
fiduciary duty as a director, except for liability (i) for any breach of
the director's duty of loyalty to the corporation or its shareholders, (ii)
for acts or omissions not in good faith or that involve intentional
misconduct or a knowing violation of law, (iii) under Section 8.65 of the
Illinois Business Corporation Act, or (iv) for any transaction from which
the director derived an improper personal benefit; provided that the
foregoing provision shall not eliminate or limit the liability of a
director for any act or omission occurring before the date this provision
became effective.
2. Any person who was or is a party, or is threatened to be made a party to
any threatened, pending or completed action, suit or proceeding, whether
civil, criminal, administrative or investigative, by reason of the fact
that he or she is or was a director, officer, employee or agent of the
corporation, or who is or was serving at the request of the corporation as
a director, officer, employee or agent of another corporation, partnership,
joint venture, trust or other enterprise, shall, in the case of persons who
are or were directors or officers of the corporation, and may, as to such
other persons, be indemnified (and the corporation shall, in the case of
persons who are or were directors or officers of the corporation, and may,
as to such other persons, advance expenses incurred in defending such
actions, suits or proceedings) to the fullest extent now or hereafter
permitted by law.
3. The foregoing right of indemnification and advancement of expenses shall
not be deemed exclusive of any other rights to which those seeking
indemnification or advancement of expenses may be entitled under any bylaw,
agreement, vote of shareholders or disinterested directors or otherwise.
-7-
RESTATED ARTICLE R-VII
1. The class and number of shares issued on the date of adoption of this
Restatement of the Articles of Incorporation and the stated capital and paid-in
surplus as of such date were:
Stated Capital
Series Number of Par with Respect
Class (If Any) Shares Value Thereto
- ----- -------- --------- ----- ---------------
Common None 4,388,318 $5 $41,889,395.75
Paid-in Surplus $ None
Total Stated Capital and Paid-in Surplus $41,889,395.75
2. The class and number of shares and the stated capital and paid-in
surplus set forth in paragraph 1 above are changed by this Amendment and
Restatement as follows:
Effective as of the close of business on the date of filing this Amendment and
Restatement with the Secretary of State of Illinois each of the presently issued
Common Shares of $5 par value is hereby changed into three Common Shares without
par value authorized by this amendment to and restatement of Articles of
Incorporation. The amendment does not affect stated capital or paid-in surplus.
RESTATED ARTICLE R-VIII
The foregoing Restated Articles R-I to R-VII are an amendment constituting a
restatement of the Articles of Incorporation of Abbott Laboratories, effective
as of the date of issuance of the Certificate of Amendment of Articles of
Incorporation by the Secretary of State, and shall from that time supersede and
stand in lieu of the Corporation's pre-existing Articles of Incorporation.
-8-
ARTICLE R-IX
A majority of the directors then in office may fill one or more vacancies
occurring in the board of directors arising between meetings of shareholders by
reason of an increase in the number of directors or otherwise and any director
so elected shall serve until the next annual meeting of shareholders, provided
that at no time may the number of directors selected to fill vacancies in this
manner during any interim period between meetings of shareholders exceed 33-1/3
percent of the total membership of the board of directors.
-9-
Exhibit 3.2
RESOLUTION
RESOLVED: That, effective as of the close of business on May 1, 1998, each
issued whole common share without par value of this Corporation ("Common
Share[s]") is split and shall become two issued whole Common Shares and each
unissued authorized Common Share is split and shall become two unissued
authorized Common Shares; and
RESOLVED: That, the first paragraph of Restated Article R-V of the Restated
Articles of Incorporation of the Corporation is amended effective as of the
close of business on May 1, 1998 by changing the number 1,201,000,000 in the
first sentence of that paragraph to 2,401,000,000 and by changing the number
of authorized common shares without par value shown in the table in that
paragraph from 1,200,000,000 to 2,400,000,000; and
RESOLVED: That, certificates for issued whole Common Shares shall continue to
represent only the number of shares set forth in such certificates.
Certificates representing the number of Common Shares by which the
Corporation's outstanding Common Shares shall increase by reason of the share
split hereby authorized shall be distributed on May 29, 1998 to holders of
record of the outstanding Common Shares as of the close of business on May 1,
1998. The dollar amount of the capital accounts of this Corporation shall
not be affected by this share split. The Common Shares so distributed shall
be validly issued, fully paid and non-assessable;
BY-LAWS
OF
ABBOTT LABORATORIES
Adopted by the Board of Directors
of Abbott Laboratories at the
Annual Meeting, April 11, 1963
as amended and restated, effective April 24, 1998
BY-LAWS OF ABBOTT LABORATORIES
ARTICLE I
OFFICES
The principal office of the Corporation in the State of Illinois shall be
located at the intersection of State Routes 43 and 137 in the County of Lake.
The Corporation may have such other offices either within or without the State
of Illinois as the business of the Corporation may require from time to time.
The registered office of the Corporation may be, but need not be, identical
with the principal office in the State of Illinois. The address of the
registered office may be changed from time to time by the Board of Directors.
ARTICLE II
SHAREHOLDERS
SECTION 1. ANNUAL MEETING; TRANSACTION OF BUSINESS, NOMINATION OF
DIRECTORS. The annual meeting of the shareholders shall be held in the month of
April in each year on such date and at such time as the Board of Directors shall
provide. The meeting shall be held for the purpose of electing Directors and
for the transaction of such other business as is properly brought before the
meeting in accordance with these By-Laws. If the election of Directors shall
not be held on the day designated for any annual meeting, or at any adjournment
thereof, the Board of Directors shall cause the election to be held at a meeting
of the shareholders as soon thereafter as conveniently may be.
To be properly brought before the meeting, business must be either (a)
specified in the notice of meeting (or any supplement thereto) given by or at
the direction of the Board of Directors, (b) otherwise properly brought before
the meeting by or at the direction of the Board of Directors or (c) otherwise
properly brought before the meeting by a shareholder. In addition to any other
applicable requirements, for business to be properly brought before an annual
meeting by a shareholder, the shareholder must have given timely notice thereof
in writing to the Secretary. To be timely, a shareholder's notice must be
delivered to or mailed and received at the principal office of the Corporation,
not earlier than October 1 nor later than February 15 immediately prior to the
date of the meeting; PROVIDED, HOWEVER, that in the event that the date of such
meeting is not in the month of April and less than sixty-five days' notice or
prior public disclosure of the date of the meeting is given or made to
shareholders, notice by the shareholder to be timely must be so received not
later than the close of business on the fifteenth day following the day on which
such notice of the date of the annual meeting was mailed or such
BY-LAWS Page 2
public disclosure was made, whichever first occurs. A shareholder's notice
to the Secretary shall set forth as to each matter the shareholder proposes
to bring before the annual meeting (i) a brief description of the business
desired to be brought before the annual meeting and the reasons for
conducting such business at the annual meeting, (ii) the name and record
address of the shareholder proposing such business, (iii) the class and
number of shares of the Corporation which are beneficially owned by the
shareholder and (iv) any material interest of the shareholder in such
business.
Notwithstanding anything in these By-Laws to the contrary, no business
shall be conducted at the annual meeting except in accordance with the
procedures set forth in this Section 1, PROVIDED, HOWEVER, that nothing in this
Section 1 shall be deemed to preclude discussion by any shareholder of any
business properly brought before the annual meeting.
The Chairman of an annual meeting shall, if the facts warrant, determine
and declare to the meeting that business was not properly brought before the
meeting in accordance with the provisions of this Section 1, and if he should so
determine, he shall so declare to the meeting and such business not properly
brought before the meeting shall not be transacted.
Only persons who are nominated in accordance with the following procedures
shall be eligible for election as directors. Nominations of persons for
election to the Board of Directors of the Corporation at the annual meeting may
be made at such annual meeting of shareholders by or at the direction of the
Board of Directors, by any nominating committee or person appointed by the Board
of Directors, or by any shareholder of the Corporation entitled to vote for the
election of directors at such meeting who complies with the notice procedures
set forth in this Section 1. Such nominations, other than those made by or at
the direction of the Board of Directors or by a committee or person appointed by
the Board of Directors, shall be made pursuant to timely notice in writing to
the Secretary. To be timely, a shareholder's notice shall be delivered to or
mailed and received at the principal office of the Corporation not earlier than
October 1 nor later than February 15 immediately prior to that date of the
meeting; PROVIDED, HOWEVER, that in the event that the date of such meeting is
not in the month of April and less than sixty-five days' notice or prior public
disclosure of the date of the meeting is given or made to shareholders, notice
by the shareholder to be timely must be so received not later than the close of
business on the fifteenth day following the day on which such notice of the
date of the meeting was mailed or such public disclosure was made, whichever
first occurs. Such shareholder's notice to the Secretary shall set forth: (a)
as to each person whom the shareholder proposes to nominate for election or
re-election as a director, (i) the name, age, business address and residence
address of the person, (ii) the principal occupation or employment of the
person, (iii) the class and number of shares of capital stock of the Corporation
which are beneficially owned by the person and (iv) any other information
relating to the person that is required to be disclosed in solicitations for
proxies for election of directors pursuant to Regulation 14A under the
Securities Exchange Act of 1934, as amended; and (b) as to the shareholder
giving the notice, (i) the name and record address of such shareholder and (ii)
the class and number of shares of the Corporation which are beneficially owned
by such shareholder. The Corporation
BY-LAWS Page 3
may require any proposed nominee to furnish such other information as may
reasonably be required by the Corporation to determine the eligibility of
such proposed nominee to serve as director of the Corporation. No person
shall be eligible for election as a director of the Corporation unless
nominated in accordance with the procedures set forth herein.
The Chairman of the meeting shall, if the facts warrant, determine and
declare to the meeting that a nomination was not made in accordance with the
foregoing procedure, and if he should so determine, he shall so declare to the
meeting and the defective nomination shall be disregarded.
SECTION 2. SPECIAL MEETINGS. Special meetings of the shareholders may be
called by the Chairman of the Board, the President, the Board of Directors or by
the holders of not less than one-fifth of all the outstanding shares entitled to
vote on the matter for which the meeting is called.
SECTION 3. PLACE OF MEETING. The Board of Directors may designate any
place, either within or without the State of Illinois, as the place of meeting
for any annual meeting or for any special meeting called by the Board of
Directors. If no designation is made, or if a special meeting be otherwise
called, the place of meeting shall be the principal office of the Corporation in
the State of Illinois.
SECTION 4. NOTICE OF MEETINGS. Written notice stating the place, day and
hour of the meeting and, in the case of a special meeting, the purpose or
purposes for which the meeting is called, shall be delivered not less than ten
nor more than sixty days before the date of the meeting, or in the cases of a
merger, consolidation, share exchange, dissolution or sale, lease or exchange of
assets not less than twenty nor more than sixty days before the meeting, either
personally or by mail, by or at the direction of the Chairman of the Board, the
President, or the Secretary or the persons calling the meeting, to each
shareholder of record entitled to vote at such meeting. If mailed, such notice
shall be deemed to be delivered when deposited in the United States mail,
addressed to the shareholder at his or her address as it appears on the records
of the Corporation, with postage thereon prepaid.
SECTION 5. FIXING RECORD DATE. For the purpose of determining
shareholders entitled to notice of or to vote at any meeting of shareholders, or
shareholders entitled to receive payment of any dividend, or in order to make a
determination of shareholders for any other proper purpose, the Board of
Directors of the Corporation may fix in advance a date as the record date for
any such determination of shareholders, such date in any case to be not more
than sixty days and, for a meeting of shareholders, not less than ten days, or
in the case of a merger, consolidation, share exchange, dissolution or sale,
lease or exchange of assets not less than twenty days, immediately preceding
such meeting.
SECTION 6. VOTING LISTS. The Secretary shall make, or cause to have made,
within twenty days after the record date for a meeting of shareholders or ten
days before such meeting,
BY-LAWS Page 4
whichever is earlier, a complete list of the shareholders entitled to vote at
such meeting, arranged in alphabetical order, with the address of and the
number of shares held by each, which list, for a period of ten days prior to
such meeting, shall be kept on file at the registered office of the
Corporation and shall be subject to inspection by any shareholder and to
copying at the shareholder's expense, at any time during usual business
hours. Such list shall also be produced and kept open at the time and place
of the meeting and shall be subject to the inspection of any shareholder
during the whole time of the meeting. The original share ledger or transfer
book, or a duplicate thereof kept in this State, shall be prima facie
evidence as to who are the shareholders entitled to examine such list or
share ledger or transfer book or to vote at any meeting of shareholders.
SECTION 7. QUORUM. A majority of the outstanding shares of the
Corporation entitled to vote on a matter, represented in person or by proxy,
shall constitute a quorum for consideration of such matter at a meeting of
shareholders. If a quorum is present, the affirmative vote of the majority
of the shares represented at the meeting and entitled to vote on a matter
shall be the act of the shareholders, unless the vote of a greater number or
voting by classes is required by The Business Corporation Act of 1983 or the
Articles of Incorporation, as in effect on the date of such determination.
If a quorum is not present, a majority of the shares of the Corporation
entitled to vote on a matter and represented in person or by proxy at such
meeting may adjourn the meeting from time to time without further notice.
SECTION 8. PROXIES. A shareholder may appoint a proxy to vote or
otherwise act for the shareholder by signing an appropriate form and
delivering it to the person so appointed; provided, however, no shareholder
may name more than three persons as proxies to attend and to vote the
shareholder's shares at any meeting of shareholders. No proxy shall be valid
after the expiration of eleven months from the date thereof unless otherwise
provided in the proxy. Each proxy continues in full force and effect until
revoked by the person executing it prior to the vote pursuant thereto, except
as otherwise provided by law. Such revocation may be effected by a writing
delivered to the Secretary of the Corporation stating that the proxy is
revoked or by a subsequent proxy executed by, or by attendance at the meeting
and voting in person by, the person executing the proxy. The dates contained
on the forms of proxy presumptively determine the order of execution,
regardless of the postmark dates on the envelopes in which they were mailed.
SECTION 9. VOTING OF SHARES. Each outstanding share, regardless of
class, shall be entitled to one vote in each matter submitted to a vote at a
meeting of shareholders and, in all elections for Directors, every
shareholder shall have the right to vote the number of shares owned by such
shareholder for as many persons as there are Directors to be elected, or to
cumulate such votes and give one candidate as many votes as shall equal the
number of Directors multiplied by the number of such shares or to distribute
such cumulative votes in any proportion among any number of candidates;
provided that, vacancies on the Board of Directors may be filled as provided
in Section 9, Article III of these By-Laws. A shareholder may vote either in
person or by proxy.
BY-LAWS Page 5
SECTION 10. VOTING OF SHARES BY CERTAIN HOLDERS. Shares of this
Corporation held by the Corporation in a fiduciary capacity may be voted and
shall be counted in determining the total number of outstanding shares entitled
to vote at any given time.
Shares registered in the name of another corporation, domestic or foreign,
may be voted by any officer, agent, proxy or other legal representative
authorized to vote such shares under the law of incorporation of such
corporation.
Shares registered in the name of a deceased person, a minor ward or a
person under legal disability may be voted by his or her administrator,
executor, or court appointed guardian, either in person or by proxy without a
transfer of such shares into the name of such administrator, executor, or
court appointed guardian. Shares registered in the name of a trustee may be
voted by him or her, either in person or by proxy.
Shares registered in the name of a receiver may be voted by such receiver,
and shares held by or under the control of a receiver may be voted by such
receiver without the transfer thereof into his or her name if authority so to do
is contained in an appropriate order of the court by which such receiver was
appointed.
A shareholder whose shares are pledged shall be entitled to vote such
shares until the shares have been transferred into the name of the pledgee, and
thereafter the pledgee shall be entitled to vote the shares so transferred.
SECTION 11. VOTING BY BALLOT. Voting on any question or in any election
may be viva voce unless the presiding officer shall order that voting be by
ballot.
SECTION 12. INSPECTORS OF ELECTION. The Board of Directors in advance of
any meeting of shareholders may appoint inspectors to act at such meeting or any
adjournment thereof. If inspectors of election are not so appointed, the
officer or person acting as chairman at any such meeting may, and on the request
of any shareholder or his proxy, shall make such appointment. In case any
person appointed as inspector shall fail to appear or to act, the vacancy may be
filled by appointment made by the Board of Directors in advance of the meeting
or at the meeting by the officer or person acting as chairman.
Such inspectors shall ascertain and report the number of shares represented
at the meeting, based upon their determination of the validity and effect of
proxies; count all votes and report the results; and do such other acts as are
proper to conduct the election and voting with impartiality and fairness to all
the shareholders.
Each report of an inspector shall be in writing and signed by him or her or
by a majority of them if there be more than one inspector acting at such
meeting. If there is more than one inspector, the report of a majority shall be
the report of the inspectors. The report of the inspector or inspectors on the
number of shares represented at the meeting and the results of the
BY-LAWS Page 6
voting shall be prima facie evidence thereof.
ARTICLE III
DIRECTORS
SECTION 1. GENERAL POWERS. The business and affairs of the Corporation
shall be managed under the direction of the Board of Directors.
SECTION 2. NUMBER, TENURE AND QUALIFICATIONS. The number of Directors of
the Corporation shall be sixteen. The terms of all Directors shall expire at
the next annual meeting of shareholders following their election. Despite the
expiration of a Director's term, he or she shall continue to serve until the
next meeting of shareholders at which Directors are elected. Directors need not
be residents of Illinois or shareholders of the Corporation.
SECTION 3. REGULAR MEETINGS. A regular annual meeting of the Board of
Directors shall be held without other notice than this By-Law, immediately
after, and at the same place as, the annual meeting of shareholders. Other
regular meetings of the Board of Directors shall be held at the principal office
of the Corporation on the second Friday of every month at 9:00 a.m. without
other notice than this By-Law. The Board of Directors may provide, by
resolution, for the holding of the regular monthly meetings at a different time
and place, either within or without the State of Illinois, or for the omission
of the regular monthly meeting altogether. Where the Board of Directors has, by
resolution, changed or omitted regular meetings, no other notice than such
resolution shall be given.
SECTION 4. SPECIAL MEETINGS. Special meetings of the Board of Directors
may be called by or at the request of the Chairman of the Board, the Chairman of
the Executive Committee, the President, or of any four Directors. The persons
authorized to call special meetings of the Board of Directors may fix any place,
either within or without the State of Illinois, as the place for holding any
special meeting of the Board of Directors.
SECTION 5. NOTICE. Notice of any special meeting shall be given: (i)
at least one day prior thereto if the notice is given personally or by an
electronic transmission, (ii) at least two business days prior thereto if the
notice is given by having it delivered by a third party entity that provides
delivery services in the ordinary course of business and guarantees delivery
of the notice to the Director no later than the following business day, and
(iii) at least seven days prior thereto if the notice is given by mail. For
this purpose, the term "electronic transmission" may include, but shall not
be limited to, a telex, facsimile, or other electronic means. Notice shall
be delivered to the Director's business address and/or telephone number and
shall be deemed given upon electronic transmission, upon delivery to the
third party delivery service, or upon being deposited in the United States
mail with postage thereon prepaid. Any Director may waive notice of any
meeting by signing a written waiver of notice either before or after the
meeting. Attendance of a Director at any meeting shall constitute a waiver of
notice of such meeting,
BY-LAWS Page 7
except where a Director attends a meeting for the express purpose of
objecting to the transaction of any business because the meeting is not
lawfully called or convened. Neither the business to be transacted at, nor
the purpose of, any regular or special meeting of the Board of Directors need
to be specified in the notice or waiver of notice of such meeting.
SECTION 6. QUORUM. A majority of the number of Directors fixed by these
By-Laws shall constitute a quorum for transaction of business at any meeting of
the Board of Directors; provided, that if less than a majority of such number of
Directors are present at said meeting, a majority of the Directors present may
adjourn the meeting from time to time without further notice.
SECTION 7. MANNER OF VOTING. The act of the majority of the Directors
present at a meeting at which a quorum is present shall be the act of the Board
of Directors.
SECTION 8. INFORMAL ACTION BY DIRECTORS. Any action required to be taken
at a meeting of the Board of Directors, or any other action which may be taken
at a meeting of the Board of Directors or a committee thereof, may be taken
without a meeting if a consent in writing, setting forth the action so taken,
shall be signed by all of the Directors entitled to vote with respect to the
subject matter thereof, or by all the members of such committee, as the case may
be.
The consent shall be evidenced by one or more written approvals, each of
which sets forth the action taken and bears the signature of one or more
Directors. All the approvals evidencing the consent shall be delivered to the
Secretary of the Corporation to be filed in the corporate records. The action
taken shall be effective when all the Directors have approved the consent unless
the consent specifies a different effective date.
Any such consent signed by all the Directors or all the members of a
committee shall have the same effect as a unanimous vote.
SECTION 9. VACANCIES. Any vacancy occurring in the Board of Directors and
any directorship to be filled by reason of an increase in the number of
Directors, may be filled by election at an annual meeting or at a special
meeting of shareholders called for that purpose. A Director elected to fill a
vacancy shall serve until the next annual meeting of shareholders. A majority
of Directors then in office may also fill one or more vacancies arising between
meetings of shareholders by reason of an increase in the number of Directors or
otherwise, and any Director so selected shall serve until the next annual
meeting of shareholders, provided that at no time may the number of Directors
selected to fill vacancies in this manner during any interim period between
meetings of shareholders exceed 33-1/3 per cent of the total membership of the
Board of Directors.
SECTION 10. PRESUMPTION OF ASSENT. A Director of the Corporation who is
present at a meeting of the Board of Directors or any committee thereof at which
action on any
BY-LAWS Page 8
corporate matter is taken is conclusively presumed to have assented to the
action taken unless his or her dissent is entered in the minutes of the
meeting or unless he or she files his or her written dissent to such action
with the person acting as the secretary of the meeting before the adjournment
thereof or forwards such dissent by registered or certified mail to the
Secretary of the Corporation immediately after the adjournment of the
meeting. Such right to dissent shall not apply to a Director who voted in
favor of such action.
SECTION 11. APPOINTMENT OF AUDITORS. Upon the recommendation of the
Audit Committee, the Board of Directors shall appoint annually a firm of
independent public accountants as auditors of the Corporation. Such
appointment shall be submitted to the shareholders for ratification at the
Annual Meeting next following such appointment. Should the holders of a
majority of the shares represented at the meeting fail to ratify the
appointment of any firm as auditors of the Corporation, or should the Board
of Directors for any reason determine that such appointment be terminated,
the Board of Directors shall appoint another firm of independent public
accountants to act as auditors of the Corporation and such appointment shall
be submitted to the shareholders for ratification at the Annual or Special
Shareholders Meeting next following such appointment.
ARTICLE IV
COMMITTEES
SECTION 1. APPOINTMENT. A majority of the Board of Directors may
create one or more committees and appoint members of the Board to serve on
the committee or committees. Each committee shall have three or more
members, who serve at the pleasure of the Board. The Board shall designate
one member of each committee to be chairman of the committee. The Board
shall designate a secretary of each committee who may be, but need not be, a
member of the committee or the Board.
SECTION 2. COMMITTEE MEETINGS. A majority of any committee shall
constitute a quorum and a majority of the committee is necessary for
committee action. A committee may act by unanimous consent in writing
without a meeting. Committee meetings may be called by the Chairman of the
Board, the chairman of the committee, or any two of the committee's members.
The time and place of committee meetings shall be designated in the notice of
such meeting. Notice of each committee meeting shall be given to each
committee member. Each Committee shall keep minutes of its proceedings and
such minutes shall be distributed to the Board of Directors.
SECTION 3. EXECUTIVE COMMITTEE. The Board shall appoint an Executive
Committee. A majority of the members of the Committee shall be selected from
those Directors who are not then serving as full-time employees of the
Corporation or any of its subsidiaries.
SECTION 4. DUTIES OF THE EXECUTIVE COMMITTEE. The Executive
BY-LAWS Page 9
Committee may, when the Board of Directors is not in session, exercise the
authority of the Board in the management of the business and affairs of the
Corporation; provided, however, the Committee may not:
(1) authorize distributions;
(2) approve or recommend to shareholders any act the Business
Corporation Act of 1983 requires to be approved by shareholders.
(3) fill vacancies on the Board or on any of its committees;
(4) elect or remove Officers or fix the compensation of any member of
the Committee;
(5) adopt, amend or repeal the By-Laws;
(6) approve a plan of merger not requiring shareholder approval;
(7) authorize or approve reacquisition of shares, except according to
a general formula or method prescribed by the Board;
(8) authorize or approve the issuance or sale, or contract for sale,
of shares or determine the designation and relative rights,
preferences, and limitations of a series of shares, except that
the Board may direct the Committee to fix the specific terms of
the issuance or sale or contract for sale or the number of shares
to be allocated to particular employees under an employee benefit
plan; or
(9) amend, alter, repeal, or take action inconsistent with any
resolution or action of the Board of Directors when the
resolution or action of the Board of Directors provides by its
terms that it shall not be amended, altered or repealed by
action of the Committee.
SECTION 5. AUDIT COMMITTEE. The Board of Directors shall appoint an Audit
Committee. All of the members of the Committee shall be selected from those
Directors who are not then serving as full-time employees of the Corporation or
any of its subsidiaries.
SECTION 6. DUTIES OF THE AUDIT COMMITTEE. The Audit Committee shall:
(1) recommend to the Board of Directors annually a firm of
independent public accountants to act as auditors of the
Corporation;
(2) review with the auditors in advance the scope of and fees for
their annual
BY-LAWS Page 10
audit;
(3) review with the auditors and the management, from time to time,
the Corporation's accounting principles, policies, and practices
and its reporting policies and practices;
(4) review with the auditors annually the results of their audit; and
(5) review from time to time with the auditors and the Corporation's
financial personnel the adequacy of the Corporation's accounting,
financial and operating controls.
SECTION 7. COMPENSATION COMMITTEE. The Board of Directors shall appoint a
Compensation Committee. The members of the Committee shall be selected from
those Directors who are not then serving as full-time employees of the
Corporation or any of its subsidiaries and who are "non-employee directors"
under Rule 16b-3 promulgated under the Securities Exchange Act of 1934, or any
similar successor rule.
SECTION 8. DUTIES OF THE COMPENSATION COMMITTEE. The Compensation
Committee shall:
(1) administer the stock option plans of the Corporation;
(2) review, at least annually, the compensation of Directors who are
not then serving as full-time employees of the Corporation or any
of its subsidiaries and recommend for approval by the Board any
change in the compensation of such Directors;
(3) review, at least annually, the compensation of all Officers of
the Corporation. The committee shall have the authority to
approve changes in the base compensation, and any proposed
special separation arrangements of Officers, except the Chairman
of the Board of Directors and the President, whose base
compensation, and any special separation arrangements, shall be
subject to approval by the Board of Directors.
SECTION 9. NOMINATIONS AND BOARD AFFAIRS COMMITTEE. The Board of
Directors shall appoint a Nominations and Board Affairs Committee. A majority
of the members of the Committee shall be selected from those Directors who are
not then serving as full-time employees of the Corporation or any of its
subsidiaries.
SECTION 10. DUTIES OF THE NOMINATIONS AND BOARD AFFAIRS COMMITTEE. The
Nominations and Board Affairs Committee shall:
BY-LAWS
Page 11
(1) develop general criteria for selection of and qualifications
desirable in members of the Board of Directors and Officers of
the Corporation and aid the Board in identifying and attracting
qualified candidates to stand for election to such positions;
(2) recommend to the Board annually a slate of nominees to be
proposed by the Board to the shareholders as nominees for
election as Directors, and, from time to time, recommend persons
to fill any vacancy on the Board;
(3) review annually, or more often if appropriate, the performance of
individual members of the management of the Corporation and the
membership and performance of committees of the Board and make
recommendations deemed necessary or appropriate to the Board;
(4) recommend to the Board persons to be elected as Officers of the
Corporation; and
(5) serve in an advisory capacity to the Board of Directors and
Chairman of the Board on matters of organization, management
succession plans, major changes in the organizational structure
of the Corporation, and the conduct of Board activities,
including assisting in the evaluation of the Board's own
performance.
ARTICLE V
OFFICERS
SECTION 1. NUMBER. The Officers of the Corporation shall be the Chairman
of the Board, the President, one or more Executive, Group or Senior Vice
Presidents, one or more Vice Presidents, a Treasurer, a Secretary, a Controller,
a General Counsel and such Assistant Treasurers and Assistant Secretaries as the
Board of Directors may elect. Any two or more offices may be held by the same
person.
SECTION 2. ELECTION AND TERM OF OFFICE. The Officers of the Corporation
shall be elected annually by the Board of Directors at the first meeting of the
Board of Directors held after each annual meeting of shareholders. If the
election of Officers shall not be held at such meeting, such election shall be
held as soon thereafter as conveniently may be. Vacancies or new offices may be
filled at any meeting of the Board of Directors. Each Officer shall hold office
until his or her successor shall have been duly elected and shall have qualified
or until his or her death or until he or she shall resign or shall have been
removed in the manner hereinafter provided.
BY-LAWS Page 12
SECTION 3. REMOVAL OF OFFICERS. Any Officer may be removed by the Board
of Directors whenever in its judgment the best interests of the Corporation will
be served thereby.
SECTION 4. VACANCIES. A vacancy in any office because of death,
resignation, removal, disqualification or otherwise, may be filled by the Board
of Directors for the unexpired portion of the term.
SECTION 5. CHAIRMAN OF THE BOARD OF DIRECTORS. The Chairman of the Board
of Directors shall be the Chief Executive Officer of the Corporation. The
Chairman shall be responsible for the overall management of the Corporation
subject to the direction of the Board of Directors. The Chairman shall preside
at all meetings of the Board of Directors and the shareholders.
SECTION 6. PRESIDENT. The President shall be the Chief Operating
Officer. The President shall perform such duties as may be prescribed by the
Board of Directors or by the Chairman.
SECTION 7. EXECUTIVE, GROUP AND SENIOR VICE PRESIDENTS. Each Executive,
Group, or Senior Vice President shall be responsible for supervising and
coordinating a major area of the Corporation's activities subject to the
direction of the Chairman of the Board or the President.
SECTION 8. VICE PRESIDENTS. Each of the Vice Presidents shall be
responsible for those activities designated by an Executive, Group, or Senior
Vice President, the President, the Chairman of the Board or by the Board of
Directors.
SECTION 9. TREASURER. The Treasurer shall administer the investment,
financing, insurance and credit activities of the Corporation.
SECTION 10. SECRETARY. The Secretary will be the custodian of the
corporate records and of the seal of the Corporation, will countersign
certificates for shares of the Corporation, and in general will perform all
duties incident to the office of the Secretary. The Secretary shall have the
authority to certify the By-laws, resolutions of the shareholders and the Board
of Directors and committees thereof, and other documents of the Corporation as
true and correct copies hereof.
SECTION 11. CONTROLLER. The Controller will conduct the accounting
activities of the Corporation, including the maintenance of the Corporation's
general and supporting ledgers and books of account, operating budgets, and
the preparation and consolidation of financial statements.
SECTION 12. GENERAL COUNSEL. The General Counsel will be the chief
consultant of the Corporation on legal matters. He or she will supervise all
matters of legal import
BY-LAWS Page 13
concerning the interests of the Corporation.
SECTION 13. ASSISTANT TREASURER. The Assistant Treasurer shall, in the
absence or incapacity of the Treasurer, perform the duties and exercise the
powers of the Treasurer, and shall perform such other duties as shall from time
to time be given to him or her by the Treasurer.
SECTION 14. ASSISTANT SECRETARY. The Assistant Secretary shall, in the
absence or incapacity of the Secretary, perform the duties and exercise the
powers of the Secretary, and shall perform such other duties as shall from time
to time be given to him or her by the Secretary. The Assistant Secretary shall
be, with the Secretary, keeper of the books, records, and the seal of the
Corporation, and shall have the authority to certify the By-Laws, resolutions
and other documents of the Corporation.
SECTION 15. GENERAL POWERS OF OFFICERS. The Chairman of the Board, the
President, and any Executive, Group or Senior Vice President, may sign
without countersignature any deeds, mortgages, bonds, contracts, reports to
public agencies, or other instruments whether or not the Board of Directors
has expressly authorized execution of such instruments, except in cases where
the signing and execution thereof shall be expressly delegated by the Board
of Directors or by these By-Laws solely to some other Officer or agent of the
Corporation, or shall be required by law to be otherwise signed or executed.
Any other Officer of this Corporation may sign contracts, reports to public
agencies, or other instruments which are in the regular course of business
and within the scope of his or her authority, except where the signing and
execution thereof shall be expressly delegated by the Board of Directors or
by these By-Laws to some other Officer or agent of the Corporation, or shall
be required by law to be otherwise signed or executed.
ARTICLE VI
CERTIFICATES FOR SHARES AND THEIR TRANSFER
SECTION 1. CERTIFICATES FOR SHARES. Certificates representing shares
of the Corporation shall be in such form as may be determined by the Board of
Directors. Such certificates shall be signed by any one of the Chairman of the
Board, the President or an Executive Vice President, and shall be countersigned
by the Secretary or an Assistant Secretary and shall be sealed with the seal, or
a facsimile of the seal, of the Corporation. If a certificate is countersigned
by a Transfer Agent or Registrar, other than the Corporation itself or its
employee, any other signatures or countersignature on the certificate may be
facsimiles. In case any Officer of the Corporation, or any officer or employee
of the Transfer Agent or Registrar who has signed or whose facsimile signature
has been placed upon such certificate ceases to be an Officer of the
Corporation, or an officer or employee of the Transfer Agent or Registrar before
such certificate is issued, the certificate may be issued by the Corporation
with the same effect as if the Officer of the Corporation, or the officer or
employee of the Transfer Agent or Registrar had not ceased to
BY-LAWS Page 14
be such at the date of its issue. Each certificate representing shares shall
state: that the Corporation is organized under the laws of the State of
Illinois; the name of the person to whom issued; the number and class of
shares; and the designation of the series, if any, which such certificate
represents. Each certificate shall be consecutively numbered or otherwise
identified. The name of the person to whom the shares represented thereby
are issued, with the number of shares and date of issue, shall be entered on
the books of the Corporation. All certificates surrendered to the
Corporation for transfer shall be canceled, and no new certificate shall be
issued in replacement until the former certificate for a like number of
shares shall have been surrendered and canceled, except in the case of lost,
destroyed or mutilated certificates.
SECTION 2. TRANSFER AGENT AND REGISTRAR. The Board of Directors may
from time to time appoint such Transfer Agents and Registrars in such locations
as it shall determine, and may, in its discretion, appoint a single entity to
act in the capacity of both Transfer Agent and Registrar in any one location.
SECTION 3. TRANSFER OF SHARES. Transfers of shares of the Corporation
shall be made only on the books of the Corporation at the request of the holder
of record thereof or of his attorney, lawfully constituted in writing, and on
surrender for cancellation of the certificate for such shares. The person in
whose name shares stand on the books of the Corporation shall be deemed the
owner thereof for all purposes as regards the Corporation.
SECTION 4. LOST, DESTROYED OR MUTILATED CERTIFICATES. In case of lost,
destroyed or mutilated certificates, duplicate certificates shall be issued to
the person claiming the loss, destruction or mutilation, provided:
(a) That the claimant furnishes an affidavit stating the facts of such
loss, destruction or mutilation so far as known to him or her and
further stating that the affidavit is made to induce the Corporation
to issue a duplicate certificate or certificates; and that issuance of
the duplicate certificate or certificates is approved:
(i) in a case involving a certificate or certificates for more than
1,000 shares, by the Chairman of the Board, the President, an
Executive Vice President, or the Secretary; or
(ii) in a case involving a certificate or certificates for 1,000
shares or less, by the Transfer Agent appointed by the Board of
Directors for the transfer of the shares represented by such
certificate or certificates,
upon receipt of a bond, with one or more sureties, in the amount to be
determined by the party giving such approval; or
(b) that issuance of the said duplicate certificate or certificates is
approved by the Board of Directors upon such terms and conditions as
it shall determine.
BY-LAWS Page 15
ARTICLE VII
FISCAL YEAR
The fiscal year of the Corporation shall begin on the first day of January
in each year and end on the last day of December in each year.
ARTICLE VIII
VOTING SHARES OR INTERESTS IN OTHER CORPORATIONS
The Chairman of the Board, the President, an Executive, Group, or Senior
Vice President and each of them, shall have the authority to act for the
Corporation by voting any shares or exercising any other interest owned by the
Corporation in any other corporation or other business association, including
wholly or partially owned subsidiaries of the Corporation, such authority to
include, but not be limited to, power to attend any meeting of any such
corporation or other business association, to vote shares in the election of
directors and upon any other matter coming before any such meeting, to waive
notice of any such meeting and to consent to the holding thereof without notice,
and to appoint a proxy or proxies to represent the Corporation at any such
meeting with all the powers that the said Officer would have under this section
if personally present.
ARTICLE IX
DISTRIBUTIONS TO SHAREHOLDERS
The Board of Directors may authorize, and the Corporation may make,
distributions to its shareholders, subject to any restriction in the Articles of
Incorporation and subject also to the limitations prescribed by law.
ARTICLE X
SEAL
The Corporate Seal of the Corporation shall be in the form of a circle
in the center of which is the insignia ["LOGO"] and shall have inscribed
thereon the name of the Corporation and the words "an Illinois Corporation."
ARTICLE XI
WAIVER OF NOTICE
Whenever any notice whatever is required to be given under the provisions
of these By-Laws
BY-LAWS Page 16
or under the provisions of the Articles of Incorporation or under the
provisions of The Business Corporation Act of 1983, a waiver thereof in
writing, signed by the person or persons entitled to such notice, whether
before or after the time stated therein, shall be deemed equivalent to the
giving of such notice. Attendance at any meeting shall constitute waiver of
notice thereof unless the person at the meeting objects to the holding of the
meeting because proper notice was not given.
ARTICLE XII
AMENDMENTS
These By-Laws may be made, altered, amended or repealed by the shareholders
or the Board of Directors.
Exhibit 10.1
1998 ABBOTT LABORATORIES PERFORMANCE INCENTIVE PLAN
SECTION 1. ESTABLISHMENT AND PURPOSES
1.1 ESTABLISHMENT OF THE PLAN. Abbott Laboratories ("Abbott") hereby
establishes the "1998 Abbott Laboratories Performance Incentive Plan" (the
"Plan"), as set forth in this document.
Subject to approval by Abbott's shareholders at the 1998 Annual Meeting
of the Shareholders, the Plan shall become effective as of January 1, 1998
(the "Effective Date") and shall remain in effect as provided in Section 6.1
hereof.
1.2 PURPOSES OF THE PLAN. The purposes of the Plan are to:
(a) Prove flexibility to Abbott in its ability to attract, motivate,
and retain the services of participants in the Plan
("Participants") who make significant contributions to Abbott's
success and to allow Participants to share in the success of Abbott.
(b) Optimize the profitability and growth of Abbott through incentives
which are consistent with Abbott's goals and which link the
performance objectives of Participants to those of Abbott's
shareholders; and
(c) Provide Participants with an incentive for excellence in individual
performance.
SECTION 2. ADMINISTRATION
2.1 GENERAL. The Plan shall be administered by the Compensation
Committee (the "Committee") appointed by the Board of Directors of Abbott
(the "Board").
2.2 AUTHORITY OF THE COMMITTEE. The Committee will have full authority
to administer the Plan, including the authority to interpret and construe any
provision of the Plan, and all rules, regulations and interpretations shall
be conclusive and binding on all persons. The Committee has sole
responsibility for selecting Participants, establishing performance
objectives, setting award targets, and determining award amounts.
2.3 DELEGATION BY THE COMMITTEE. The Committee from time to time may
delegate the performance of certain ministerial functions in connection with
the Plan, such as the keeping of records, to such person or persons as the
Committee may select. The cost of administration of the Plan will be paid by
Abbott.
SECTION 3. ELIGIBILITY AND PARTICIPATION
3.1 ELIGIBILITY AND PARTICIPATION. Eligibility for participation in
the Plan shall be limited to senior officers of Abbott and its subsidiaries.
Participants in the Plan will be determined annually by the Committee from
those senior officers eligible to participate in the Plan.
SECTION 4. PERFORMANCE OBJECTIVES
4.1 PERFORMANCE OBJECTIVES. The Plan's performance objectives (the
"Performance Objectives") shall be determined with reference to Abbott's
consolidated net earnings prepared in accordance with generally accepted
accounting principles.
4.2 INDIVIDUAL BASE AWARD ALLOCATION--DEFINED. The base award
allocation for the Chief Executive Officer, if a Participant for such fiscal
year, shall be .0015 of the consolidated net earnings of Abbott for that
fiscal year. The base award allocation for the Chief Operating Officer, if a
Participant for such fiscal year, shall be .0010 of the consolidated net
earnings of Abbott for that fiscal year. The base award allocation for any
other Participant shall be .00075 of the consolidated net earnings of Abbott
for that fiscal year. Each such base award will be increased by interest, at
prevailing market rates, accrued on awards deferred or paid to grantor
trusts.
SECTION 5. FINAL AWARDS
5.1 FINAL AWARD ALLOCATION. As soon as practical after the close of
each fiscal year, a Participant's final award allocation will be determined
solely on the basis of the Performance Objectives. In determining a
Participant's final award allocation, the Committee will have the discretion
to reduce but not increase a Participant's base award allocation (as
increased by the last sentence of Section 4.2), provided that a Participant's
individual performance will be considered by the Committee in exercising that
discretion.
5.2 PAYMENT OF AWARDS. A Participant's final award allocation will be
paid or deferred in the manner and at the time(s) established by the
Committee.
SECTION 6. DURATION, AMENDMENT, AND TERMINATION
6.1 DURATION OF THE PLAN. The Plan shall commence on the Effective
Date, as described in Section 1.1 hereof, and shall remain in effect until
terminated by the Board.
6.2 AMENDMENT AND TERMINATION. The Board, in its sole discretion, may
modify or amend any or all of the provisions of the Plan at any time and,
without notice, may suspend or terminate it entirely. However, no such
modification may, without the consent of the Participant, reduce the right of
a Participant to a payment or distribution to which the Participant is
entitled by reason of an outstanding award allocation.
SECTION 7. SUCCESSORS
7.1 OBLIGATIONS. All obligations of Abbott under the Plan with respect
to awards granted hereunder shall be binding on any successor to Abbott,
whether the existence of such successor is the result of a direct or indirect
purchase, merger, consolidation, or otherwise, of all or substantially all of
the business and/or assets of Abbott.
EXHIBIT 11
ABBOTT LABORATORIES AND SUBSIDIARIES
CALCULATION OF EARNINGS PER COMMON SHARE
(DOLLARS AND SHARES IN MILLIONS EXCEPT PER SHARE AMOUNTS)
THREE MONTHS ENDED MARCH 31
---------------------------
1998 1997
---- ----
1. Net earnings $ 589.6 $ 534.8
--------- ---------
2. Average number of common shares
outstanding 764.0 774.0
--------- ---------
3. Basic earnings per common share
(1 divided by 2) $ .77 $ .69
--------- ---------
--------- ---------
4. Diluted earnings per common share:
a. Stock options granted and outstanding
for which the market price at
quarter-end exceeds
the option price 27.8 28.6
--------- ---------
--------- ---------
b. Aggregate proceeds to the Company
from the exercise of options in 4.a:
1. Cash received upon exercise $ 1,181.8 $ 942.8
---------- ----------
2. Tax benefits to be credited
to earnings employed in the
business 82.0 63.6
---------- ----------
Total proceeds (sum of 1-2) $ 1,263.8 $ 1,006.4
---------- ----------
---------- ----------
c. Average market price of the
Company's common stock $ 72.846 $ 56.038
---------- ----------
---------- ----------
d. Shares which could be repurchased
under the treasury stock
method (4.b. divided by 4.c.) 17.3 18.0
---------- ----------
---------- ----------
e. Addition to average outstanding
shares (4.a. - 4.d.) 10.5 10.6
---------- ----------
---------- ----------
f. Shares for diluted earnings per common
share calculation (2. + 4.e.) 774.5 784.6
---------- ----------
---------- ----------
g. Diluted earnings per common share
(1. divided by 4.f.) $ .76 $ .68
---------- ----------
---------- ----------
EXHIBIT 12
ABBOTT LABORATORIES
CALCULATION OF RATIO OF EARNINGS TO FIXED CHARGES
(UNAUDITED)
(MILLIONS OF DOLLARS)
THREE MONTHS ENDED
MARCH 31, 1998
-------------------
Net Earnings $ 590
Add (deduct):
Income Taxes 229
Minority Interest 2
----------
Net earnings as adjusted $ 821
----------
Fixed Charges:
Interest on long-term and
short-term debt $ 38
Capitalized interest cost 3
Rental expense representative
of an interest factor 10
----------
Total Fixed Charges 51
----------
Total adjusted earnings available for
payment of fixed charges $ 872
----------
----------
Ratio of earnings to fixed charges 17.1
----------
----------
NOTE: For the purpose of calculating this ratio, (i) earnings have been
calculated by adjusting net earnings for taxes on earnings; interest
expense; capitalized interest cost, net of amortization; minority
interest; and the portion of rentals representative of the interest
factor, (ii) the Company considers one-third of rental expense to be
the amount representing return on capital, and (iii) fixed charges
comprise total interest expense, including capitalized interest and
such portion of rentals.
5
1,000
3-MOS
DEC-31-1998
JAN-01-1998
MAR-31-1998
225,544
69,401
1,884,909
183,677
1,344,191
5,181,804
8,899,831
4,313,956
12,115,102
4,726,575
1,139,720
0
0
997,593
4,144,119
12,115,102
3,044,913
3,044,913
1,279,973
1,279,973
279,876
16,504
37,960
818,879
229,286
589,593
0
0
0
589,593
0.77
0.76
Other Expenses consist of research and development expenses.
5
1,000
3-MOS 6-MOS 9-MOS YEAR
DEC-31-1997 DEC-31-1997 DEC-31-1997 DEC-31-1996
JAN-01-1997 JAN-01-1997 JAN-01-1997 JAN-01-1996
MAR-31-1997 JUN-30-1997 SEP-30-1997 DEC-31-1996
134,093 126,521 129,404 110,209
18,138 18,669 36,180 12,875
1,891,897 1,891,914 1,866,881 1,862,231
160,700 163,245 166,768 153,424
1,199,715 1,263,986 1,252,421 1,238,205
4,627,438 4,587,932 4,653,093 4,480,902
8,355,593 8,568,669 8,656,445 8,370,283
3,932,048 4,067,168 4,153,953 3,908,740
11,200,394 11,433,526 11,575,997 11,125,600
4,377,610 4,513,758 4,721,152 4,343,717
931,227 931,055 939,485 932,898
0 0 0 0
0 0 0 0
741,200 783,063 802,682 694,380
4,114,968 4,154,107 4,039,610 4,125,802
11,200,394 11,433,526 11,575,997 11,125,600
2,999,814 5,900,222 8,765,406 11,013,460
2,999,814 5,900,222 8,765,406 11,013,460
1,327,331 2,544,374 3,786,216 4,731,998
1,327,331 2,544,374 3,786,216 4,731,998
280,074 600,222 927,019 1,204,841
9,322 14,755 17,260 7,389
32,754 64,142 97,612 95,445
758,618 1,498,376 2,151,836 2,669,550
223,792 442,021 624,032 787,517
534,826 1,056,355 1,527,804 1,882,033
0 0 0 0
0 0 0 0
0 0 0 0
534,826 1,056,355 1,527,804 1,882,033
0.69 1.37 1.98 2.41
0.68 1.35 1.95 2.38
Other expenses consist of research and development expenses.
5
1,000
3-MOS 6-MOS 9-MOS YEAR
DEC-31-1996 DEC-31-1996 DEC-31-1996 DEC-31-1995
JAN-01-1996 JAN-01-1996 JAN-01-1996 JAN-01-1995
MAR-31-1996 JUN-30-1996 SEP-30-1996 DEC-31-1995
87,922 111,482 139,896 281,197
44,035 66,189 39,274 34,500
1,718,488 1,791,459 1,700,153 1,721,028
156,167 147,550 150,415 157,990
1,156,918 1,195,242 1,224,705 1,110,941
4,113,266 4,326,405 4,273,851 4,226,711
7,895,249 8,044,533 8,242,116 7,762,442
3,621,131 3,709,198 3,839,638 3,512,904
9,312,020 10,553,874 10,669,342 9,412,580
3,491,495 4,526,824 4,287,888 3,790,314
433,724 433,437 682,166 435,198
0 0 0 0
0 0 0 0
608,933 628,216 659,274 581,562
3,956,734 4,012,280 4,054,696 3,815,285
9,312,020 10,553,874 10,669,342 9,412,580
2,672,177 5,371,417 8,017,611 10,012,194
2,672,177 5,371,417 8,017,611 10,012,194
1,156,217 2,300,164 3,477,411 4,325,805
1,156,217 2,300,164 3,477,411 4,325,805
268,616 573,462 852,432 1,072,745
13,838 4,465 23,999 32,462
17,607 39,835 68,030 69,532
681,005 1,348,272 1,945,275 2,395,319
200,896 397,740 573,856 706,619
480,109 950,532 1,371,419 1,688,700
0 0 0 0
0 0 0 0
0 0 0 0
480,109 950,532 1,371,419 1,688,700
0.61 1.21 1.75 2.12
0.60 1.20 1.73 2.10
Other expenses consist of research and development expenses
