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 September 30, 1995
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: (708) 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 October 31, 1995, the Corporation had 790,443,845 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 in thousands except per share data)
THREE MONTHS ENDED NINE MONTHS ENDED
SEPTEMBER 30 SEPTEMBER 30
-------------------------- ---------------------------
1995 1994 1995 1994
---------- ---------- ---------- ----------
Net Sales. . . . . . . . . . . . . . . . . . . . . $2,390,753 $2,254,817 $7,415,460 $6,674,095
---------- ---------- ---------- ----------
Cost of products sold. . . . . . . . . . . . . . . 1,070,253 1,015,831 3,245,187 2,926,919
Research and development . . . . . . . . . . . . . 255,829 239,390 790,364 711,176
Selling, general and administrative. . . . . . . . 521,754 515,568 1,652,863 1,481,491
---------- ---------- ---------- ----------
Total Operating Cost and Expenses. . . . . . . . 1,847,836 1,770,789 5,688,414 5,119,586
---------- ---------- ---------- ----------
Operating Earnings . . . . . . . . . . . . . . . . 542,917 484,028 1,727,046 1,554,509
---------- ---------- ---------- ----------
Interest expense . . . . . . . . . . . . . . . . . 18,420 12,776 50,224 36,525
Interest and dividend income . . . . . . . . . . . (13,173) (9,131) (37,385) (25,857)
Other (income) expense, net. . . . . . . . . . . . (4,246) (21,535) (21,020) (19,204)
---------- ---------- ---------- ----------
Earnings Before Taxes. . . . . . . . . . . . . . . 541,916 501,918 1,735,227 1,563,045
Taxes on Earnings. . . . . . . . . . . . . . . . . 159,865 150,576 511,892 468,914
---------- ---------- ---------- ----------
Net Earnings . . . . . . . . . . . . . . . . . . . $ 382,051 $ 351,342 $1,223,335 $1,094,131
---------- ---------- ---------- ----------
---------- ---------- ---------- ----------
Net Earnings Per Common Share. . . . . . . . . . . $.48 $.43 $1.53 $1.34
---------- ---------- ---------- ----------
---------- ---------- ---------- ----------
Cash Dividends Declared
Per Common Share . . . . . . . . . . . . . . . . $.21 $.19 $.63 $.57
---------- ---------- ---------- ----------
---------- ---------- ---------- ----------
The accompanying notes to condensed consolidated financial statements are an
integral part of this statement.
2
ABBOTT LABORATORIES AND SUBSIDIARIES
CONDENSED CONSOLIDATED BALANCE SHEET
(Dollars in Thousands)
SEPTEMBER 30 DECEMBER 31
----------- -----------
1995 1994
----------- -----------
(unaudited)
ASSETS
Current Assets:
Cash and cash equivalents. . . . . . . . . . . . . . . . . . . . . . . . $ 320,799 $ 290,272
Investment securities. . . . . . . . . . . . . . . . . . . . . . . . . . 93,872 25,056
Trade Receivables, less allowances of $156,408 in 1995
and $128,929 in 1994 . . . . . . . . . . . . . . . . . . . . . . . . . 1,470,651 1,468,519
Inventories:
Finished products. . . . . . . . . . . . . . . . . . . . . . . . . . . 511,010 514,715
Work in process. . . . . . . . . . . . . . . . . . . . . . . . . . . . 259,939 218,643
Materials. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 280,397 284,833
----------- -----------
Total Inventories . . . . . . . . . . . . . . . . . . . . . . . . . 1,051,346 1,018,191
Prepaid income taxes . . . . . . . . . . . . . . . . . . . . . . . . . . 559,848 549,091
Other prepaid expenses and receivables . . . . . . . . . . . . . . . . . 580,983 525,199
----------- -----------
Total Current Assets. . . . . . . . . . . . . . . . . . . . . . . . 4,077,499 3,876,328
----------- -----------
Investment Securities Maturing after One Year. . . . . . . . . . . . . . . 407,475 316,195
----------- -----------
Property and Equipment, at Cost. . . . . . . . . . . . . . . . . . . . . . 7,621,574 7,053,604
Less: accumulated depreciation and amortization. . . . . . . . . . . . . 3,438,766 3,132,754
----------- -----------
Net Property and Equipment. . . . . . . . . . . . . . . . . . . . . 4,182,808 3,920,850
Deferred Charges and Other Assets. . . . . . . . . . . . . . . . . . . . . 402,100 410,351
----------- -----------
$ 9,069,882 $ 8,523,724
----------- -----------
----------- -----------
LIABILITIES AND SHAREHOLDERS' INVESTMENT
Current Liabilities:
Short-term borrowings and current portion of long-term debt. . . . . . . $ 937,193 $ 772,503
Trade accounts payable . . . . . . . . . . . . . . . . . . . . . . . . . 665,932 671,100
Salaries, income taxes, dividends payable, and other accruals. . . . . . 1,963,794 2,032,263
----------- -----------
Total Current Liabilities . . . . . . . . . . . . . . . . . . . . . 3,566,919 3,475,866
----------- -----------
Long-Term Debt . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 435,297 287,091
----------- -----------
Other Liabilities and Deferrals. . . . . . . . . . . . . . . . . . . . . . 791,559 711,367
----------- -----------
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 -
1995: 801,874,446 shares; 1994: 813,046,602 shares. . . . . . . . . 568,005 505,170
Earnings employed in the business. . . . . . . . . . . . . . . . . . . . . 3,822,581 3,652,434
Cumulative translation adjustments . . . . . . . . . . . . . . . . . . . . (57,874) (51,124)
----------- -----------
4,332,712 4,106,480
Less:
Common shares held in treasury, at cost -
1995: 9,722,379 shares; 1994: 9,766,880 shares . . . . . . . . . . . . . 51,310 51,545
Unearned compensation - restricted stock awards. . . . . . . . . . . . . . 5,295 5,535
----------- -----------
Total Shareholders' Investment. . . . . . . . . . . . . . . . . . . 4,276,107 4,049,400
----------- -----------
$ 9,069,882 $ 8,523,724
----------- -----------
----------- -----------
The accompanying notes to condensed consolidated financial statements are an
integral part of this statement.
3
ABBOTT LABORATORIES AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENT OF CASH FLOWS
(UNAUDITED)
(Dollars in thousands)
NINE MONTHS ENDED SEPTEMBER 30
---------------------------------
1995 1994
---------- ----------
Cash Flow From (Used in) Operating Activities:
Net earnings . . . . . . . . . . . . . . . . . . . . . . $1,223,335 $1,094,131
Adjustments to reconcile net earnings to
net cash from operating activities -
Depreciation and amortization. . . . . . . . . . . . . . 399,494 391,049
Trade receivables. . . . . . . . . . . . . . . . . . . . 5,039 (100,140)
Inventories. . . . . . . . . . . . . . . . . . . . . . . (30,789) (87,128)
Other, net . . . . . . . . . . . . . . . . . . . . . . . (42,680) 322,531
---------- ----------
Net Cash From Operating Activities. . . . . . . . . 1,554,399 1,620,443
---------- ----------
Cash Flow From (Used in) Investing Activities:
Acquisitions of property and equipment . . . . . . . . . (698,881) (689,270)
Investment securities transactions . . . . . . . . . . . (160,778) (83,754)
Other. . . . . . . . . . . . . . . . . . . . . . . . . . 17,239 21,425
---------- ----------
Net Cash (Used in) Investing Activities . . . . . . (842,420) (751,599)
---------- ----------
Cash Flow From (Used in) Financing Activities:
Borrowing transactions . . . . . . . . . . . . . . . . . 299,834 (85,855)
Common share transactions. . . . . . . . . . . . . . . . (490,873) (413,802)
Dividends paid . . . . . . . . . . . . . . . . . . . . . (487,309) (448,899)
---------- ----------
Net Cash (Used in) Financing Activities . . . . . . (678,348) (948,556)
---------- ----------
Effect of exchange rate changes on cash and
cash equivalents . . . . . . . . . . . . . . . . . . . . (3,104) 1,067
---------- ----------
Net Increase (Decrease) in Cash and Cash Equivalents . . . . 30,527 (78,645)
Cash and Cash Equivalents, Beginning of Year . . . . . . . . 290,272 300,676
---------- ----------
Cash and Cash Equivalents, End of Period . . . . . . . . . . $ 320,799 $ 222,031
---------- ----------
---------- ----------
The accompanying notes to condensed consolidated financial statements are an
integral part of this statement.
4
ABBOTT LABORATORIES AND SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
SEPTEMBER 30, 1995
(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, 1994.
NOTE 2 - EARNINGS PER COMMON SHARE:
Earnings per common share amounts are computed by using the weighted average
number of common shares outstanding. These shares averaged 797,321,000 for the
nine months ended September 30, 1995 and 814,480,000 for the same period
in 1994.
NOTE 3 - 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.
5
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
SEPTEMBER 30, 1995
(Unaudited), Continued
NOTE 4 - LITIGATION AND ENVIRONMENTAL MATTERS:
The Company is involved in various claims and legal proceedings including
numerous antitrust suits and investigations in connection with the sale and
marketing of infant formula products and 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 remediation laws and is voluntarily
investigating potential contamination at a number of Company-owned locations.
The matters above are discussed more fully in Item 1, Business - Environmental
Matters, and Item 3, Legal Proceedings, in the Annual Report on Form 10-K, which
is available upon request, and in Part II, Item 1, Legal Proceedings, in this
Form.
While it is not feasible to predict the outcome of such pending claims,
proceedings, investigations and remediation activities 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.
6
FINANCIAL REVIEW
RESULTS OF OPERATIONS - THIRD QUARTER AND FIRST NINE MONTHS 1995 COMPARED WITH
SAME PERIODS IN 1994
Worldwide sales for the third quarter and first nine months increased
6.0 percent and 11.1 percent, respectively, over the comparable 1994 periods.
Net earnings increased 8.7 percent and 11.8 percent, respectively, in the third
quarter and first nine months 1995. Earnings per share increased 11.6 percent
and 14.2 percent, respectively, in the third quarter and first nine months 1995.
Gross profit margin (sales less cost of products sold, including freight and
distribution expenses) was 55.2 percent for the 1995 third quarter, compared to
54.9 percent for the third quarter of 1994. Gross margin for the first nine
months was 56.2 percent, compared to 56.1 percent a year earlier. These
increases are due to favorable product mix, primarily higher sales of
pharmaceuticals, and productivity improvements; partially offset by higher
project expenses for new products, higher excess capacity costs for anticipated
unit growth, and the effects of inflation.
Research and development expenses were $255.8 million and $790.4 million for the
third quarter and first nine months 1995, respectively. This represented
10.7 percent of net sales for both the quarter and year-to-date period, compared
to 10.6 percent and 10.7 percent in 1994. The majority of research and
development expenditures continues to be concentrated on pharmaceutical and
diagnostic products.
Selling, general and administrative expenses for the third quarter and first
nine months 1995 increased 1.2 percent and 11.6 percent, respectively, over the
comparable prior year periods, including the adverse effects of the relatively
weaker U.S. dollar of 2.2 percent and 2.5 percent, respectively. Selling,
general, and administrative expenses also increased as a result of additional
selling and marketing support for new and existing products, primarily in the
pharmaceutical and nutritional segment, and was partially offset by lower third
quarter litigation charges in 1995. The nine month results reflect
contributions to the Company's charitable foundation and charges against
earnings for certain settled and pending litigation.
Other (income) expense, net, includes net foreign exchange losses of
$3.5 million and $19.0 million, respectively, for the third quarter and first
nine months 1995 compared with net foreign exchange losses of $1.9 million and
$29.5 million for the corresponding prior year periods.
7
FINANCIAL REVIEW
(Continued)
INDUSTRY SEGMENTS
Industry segment sales for the third quarter and first nine months 1995 and the
related change from the comparable 1994 periods 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 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 third quarter and first nine months
1995 primarily reflect unit growth. International sales were favorably affected
4.4 percent by the relatively weaker dollar in the third quarter. On a year-to-
date basis, international sales were favorably affected 5.7 percent by the
relatively weaker U.S. dollar.
Third Quarter Nine Months
- --------------------------------------------------------------------------------------------------------------
SEGMENT SALES 1995 Percent 1995 Percent
(in millions of dollars) Sales Increase Sales Increase
- --------------------------------------------------------------------------------------------------------------
Pharmaceutical and Nutritional Products:
Domestic $ 840.0 0.6 $2,715.2 10.1
- --------------------------------------------------------------------------------------------------------------
International 463.0 23.6 1,456.8 28.2
- --------------------------------------------------------------------------------------------------------------
1,303.0 7.7 4,172.0 15.8
Hospital and Laboratory Products:
Domestic 574.8 1.5 1,738.5 2.0
- --------------------------------------------------------------------------------------------------------------
International 513.0 7.1 1,505.0 10.1
- --------------------------------------------------------------------------------------------------------------
1,087.8 4.1 3,243.5 5.6
Total All Segments:
Domestic 1,414.8 1.0 4,453.7 6.8
- --------------------------------------------------------------------------------------------------------------
International 976.0 14.3 2,961.8 18.3
- --------------------------------------------------------------------------------------------------------------
$2,390.8 6.0 $7,415.5 11.1
- --------------------------------------------------------------------------------------------------------------
- --------------------------------------------------------------------------------------------------------------
8
FINANCIAL REVIEW
(continued)
LIQUIDITY AND CAPITAL RESOURCES AT SEPTEMBER 30, 1995
COMPARED WITH DECEMBER 31, 1994
Net cash from operating activities for the first nine months 1995 totaled
$1.554 billion. 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 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
$400 million at September 30, 1995. These lines of credit support domestic
commercial paper borrowing arrangements.
During the first nine months 1995, the Company continued its program to purchase
its common shares. The Company purchased and retired 14,645,000 shares during
this period at a cost of $553 million. As of September 30, 1995, an additional
18,725,000 shares may be purchased in future periods under authorization granted
by the Board of Directors in September 1995.
In May 1995, the Company issued $150 million in senior debt securities under a
registration statement filed with the Securities and Exchange Commission in
1993. Net proceeds were used to retire short-term borrowings and for the
purchase of the Company's common shares. The Company may issue up to an
additional $150 million of debt securities in the future under this registration
statement.
LEGISLATIVE ISSUES
The Company's primary markets are highly competitive and subject to substantial
government regulation. The Company expects debate to continue during 1995 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 health and medical
insurance and 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.
9
PART II. OTHER INFORMATION
ITEM 1. LEGAL PROCEEDINGS
The Company is involved in various claims and legal
proceedings in connection with the Company's marketing of infant
formula products including antitrust suits, governmental
investigations, and one shareholder derivative suit, as described
in the Company's Form 10-K for 1994 and its Form 10-Q for the
quarters ended March 31 and June 30, 1995. Their current status
is described below.
The infant formula antitrust cases that were pending in federal
courts in Alabama, Kentucky, Mississippi, Nevada, North Dakota, and
Tennessee were remanded to state courts. The Nevada and Tennessee cases
were then dismissed by the state trial courts and are now on appeal.
The case that had been pending in state court in Shelby County,
Alabama was voluntarily dismissed. The cases that were pending
in state courts in Colorado, Florida, and North Carolina also
have been dismissed by their trial courts and are now on appeal.
The case that was pending in state court in the parish of West
Baton Rouge, Louisiana has been removed to federal court in Baton
Rouge, Louisiana. On June 19, 1995, a jury in federal court in
Los Angeles, California found in favor of the Company and the
American Academy of Pediatrics in the infant formula antitrust
case brought by Nestle Food Company ("Nestle"). Nestle has
appealed this verdict.
Infant formula cases in state courts in Kansas and
Wisconsin (2 cases) have been certified as state consumer class
actions. Class certification has been denied with respect to two
of the infant formula cases pending in state courts in Michigan
and Minnesota. The plaintiffs in the Michigan case have appealed
the denial of class certification.
On July 7, 1995, the Minnesota Attorney General brought suit
against the Company and certain other infant formula manufacturers in state
court in Minnesota alleging that the Company conspired with one or more of
its competitors to fix prices for infant formula and to restrain trade and
monopolize the market for infant formula products in violation of state
antitrust laws. The Minnesota Attorney General is seeking treble damages,
statutory penalties, civil penalties, injunctive relief, attorneys' fees and
costs and other relief. The Company has filed a response denying all
substantive allegations. The Company has previously disclosed that the
Minnesota Attorney General was conducting an investigation. As of September
30, 1995, 1 Canadian provincial and 5 other state investigations are pending.
As of September 30, 1995, in addition to the 5 infant
formula antitrust cases that are on appeal in the state courts,
16 cases are pending in state courts. The cases are pending in
Alabama (2 cases), Illinois, Kansas, Kentucky, Michigan,
Minnesota (2 cases), Mississippi, North Dakota, South Dakota,
Texas (2 cases), West Virginia, and Wisconsin (2 cases). As of
September 30, 1995, in addition to the infant formula antitrust
case that is on appeal in the federal courts, a total of 3 cases
are pending in federal district courts in Florida, Louisiana, and
Massachusetts. The shareholder derivative action is pending in state
court in Cook County, Illinois.
The Company's 10-Q for the fiscal quarter ended June
30, 1995 reported 122 antitrust suits in connection with the
Company's pricing of prescription pharmaceuticals. During the
third quarter, the Company was served with 5 new antitrust suits
regarding the Company's pricing of prescription pharmaceuticals.
Two of these cases were consolidated in the litigation that is
pending in federal court in Chicago, Illinois and is known as IN
RE: BRAND NAME PRESCRIPTION DRUG ANTITRUST LITIGATION, MDL 997.
The three other cases were filed in state court. One was filed
on July 5, 1995 in Alameda County, California on behalf of
California consumers. One was filed on August 8, 1995 in Yavapai
County, Arizona on behalf of Arizona consumers. The third was
filed on July 13, 1995 in New York County, New York on behalf of
New York consumers. Each of these 3 cases purports to be a class
action. The cases allege that various pharmaceutical
manufacturers have conspired to fix prices for prescription
pharmaceuticals and/or to discriminate in pricing to retail
pharmacies by providing discounts to mail-order pharmacies,
institutional pharmacies and HMOs in violation of state and
federal antitrust laws. The suits have been brought on behalf of
individuals and retail pharmacies and name both the Company and
other pharmaceutical manufacturers as well as pharmaceutical
wholesalers and at least one mail-order pharmacy company as
defendants. The plaintiffs in these cases seek treble damages in
an unspecified amount, civil penalties, injunctive and other
relief. The Company has filed or intends to file a response to
each of the complaints denying all substantive allegations. The
Company has previously disclosed that one of the cases which is
pending in the MDL 997 litigation has been certified as a class
action. On August 16, 1995 the state court in San Francisco
County, California certified a consumer class action on behalf of
California consumers. The defendants are appealing the
certification. In addition, an amended complaint has been filed
in the state court case pending in Greene County, Alabama
purporting to be a class action on behalf of Alabama retail
pharmacists. As of September 30, 1995, a total of 127 antitrust
suits are pending in state and federal courts in connection with
the Company's pricing of prescription pharmaceuticals.
On February 23, 1994, the United States Environmental
Protection Agency ("USEPA") instituted a civil administrative
proceeding by filing a complaint alleging that the Company burned
hazardous waste at its North Chicago facility in violation of the
Resource Conservation and Recovery Act ("RCRA"). On September
29, 1995, the Company and the USEPA concluded the proceeding by
executing a settlement agreement. Under the settlement
agreement, the Company does not admit liability but does agree to
make a settlement payment of $182,654 to the USEPA and to spend
at least $160,000 in equipment modifications at its North Chicago
facility.
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 6. EXHIBITS AND REPORTS ON FORM 8-K
(a) Exhibits
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.
(b) Reports on Form 8-K
No reports on Form 8-K were filed during the
quarter ended September 30, 1995.
SIGNATURE
Pursuant to the requirements of the Securities 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: November 13, 1995 Theodore A. Olson, Vice President
and Controller (Principal
Accounting Officer)
EXHIBIT 11
ABBOTT LABORATORIES AND SUBSIDIARIES
CALCULATION OF FULLY DILUTED EARNINGS PER SHARE
(Dollars and Shares in Millions Except Per Share Amounts)
NINE MONTHS ENDED SEPTEMBER 30
------------------------------
1995 1994
----------- ----------
1. Net earnings $ 1,223.3 $ 1,094.1
--------- ---------
2. Average number of shares outstanding 797.3 814.5
--------- ---------
3. Earnings per share based upon average
outstanding shares (1 divided by 2) $ 1.53 $ 1.34
--------- ---------
--------- ---------
4. Fully diluted earnings per share:
a. Stock options granted and outstanding for
which the market price at quarter-end
exceeds the option price 30.0 18.1
--------- ---------
--------- ---------
b. Aggregate proceeds to the Company from
the exercise of options in 4.a. $ 828.1 $ 321.7
--------- ---------
--------- ---------
c. Market price of the Company's common
stock at quarter-end $ 42.625 $ 31.375
--------- ---------
--------- ---------
d. Shares which could be repurchased
under the treasury stock
method (4.b. divided by 4.c.) 19.4 10.3
--------- ---------
--------- ---------
e. Addition to average outstanding shares
(4.a. - 4.d.) 10.6 7.8
--------- ---------
--------- ---------
f. Shares for fully diluted earnings per
share calculation (2. + 4.e.) 807.9 822.3
--------- ---------
--------- ---------
g. Fully diluted earnings per share
(1. divided by 4.f.) $ 1.51 $ 1.33
--------- ---------
--------- ---------
EXHIBIT 12
ABBOTT LABORATORIES
CALCULATION OF RATIO OF EARNINGS TO FIXED CHARGES
(Unaudited)
(Millions of Dollars)
NINE MONTHS ENDED
SEPTEMBER 30, 1995
------------------
Net Earnings $ 1,223
Add (deduct):
Income taxes 512
Capitalized interest cost, net
of amortization (5)
Minority interest 15
---------
Net earnings as adjusted $ 1,745
---------
Fixed Charges:
Interest on long-term and
short-term debt 50
Capitalized interest cost 14
Rental expense representative
of an interest factor 19
---------
Total Fixed Charges 83
---------
Total adjusted earnings available for
payment of fixed charges $ 1,828
---------
---------
Ratio of earnings to fixed charges 22.0
---------
---------
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
9-MOS
DEC-31-1995
JAN-01-1995
SEP-30-1995
320,799
93,872
1,627,059
156,408
1,051,346
4,077,499
7,621,574
3,438,766
9,069,882
3,566,919
435,297
568,005
0
0
3,708,102
9,069,882
7,415,460
7,415,460
3,245,187
3,245,187
790,364
34,583
50,224
1,735,227
511,892
1,223,335
0
0
0
1,223,335
1.53
1.51
OTHER EXPENSES CONSIST OF RESEARCH AND DEVELOPMENT EXPENSES.
