SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
Pursuant to Section 13 or 15(d) of the
Securities Exchange Act of 1934
August 22, 2003
Date of Report (Date of earliest event reported)
(Exact name of registrant as specified in its charter)
|(State or other Jurisdiction
|(Commission File Number)||(I.R.S. Employer
100 Abbott Park Road
Abbott Park, Illinois 60064-6400
(Address of principal executive offices)(Zip Code)
Registrant's telephone number, including area code: (847) 937-6100
Filed as Exhibit 99.1, and incorporated herein by reference, is the news release issued by Abbott announcing the spin-off of much of Abbott's core global hospital products business.
|99.1||Press Release dated August 22, 2003|
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 hereunto duly authorized.
Dated: August 22, 2003
/s/ THOMAS C. FREYMAN
|Name: Thomas C. Freyman|
|Title: Senior Vice President, Finance and
Chief Financial Officer
|99.1||Press Release dated August 22, 2003|
[Abbott Laboratories Health Care Worldwide Logo]
Abbott Park, Illinois 60064-6096
For Immediate Release
ABBOTT LABORATORIES TO CREATE GLOBAL PUBLIC
HOSPITAL PRODUCTS COMPANY WITH $2.5 BILLION IN SALES
New Company Will Be a Leading Manufacturer of Hospital Products in United States; Abbott to Focus on Proprietary Technologies and Higher-Growth Platforms
ABBOTT PARK, Ill., Aug. 22, 2003Abbott Laboratories plans to create one of the largest manufacturers of hospital products in the United States by spinning off much of Abbott's core global hospital products business.
The new, independent hospital products company will have approximately 14,000 employees worldwide, more than 5,000 customers and a large portion of Abbott's core hospital products business, including the related international hospital business. The new company's business will include: medication delivery systems, such as electronic drug-delivery systems, infusion therapy and critical care products; generic pharmaceuticals, including acute-care injectables and other generic anesthetics; and other businesses, including intensive care pharmaceuticals such as Precedex® (dexmedetomidine HCl), Abbokinase® (urokinase), and Corlopam® (fenoldopam mesylate), as well as contract manufacturing. The new company, to be named later, will be headquartered in Lake Forest, Ill., north of Chicago.
"The creation of the new hospital products company will provide greater value for Abbott shareholders in the coming years because it will enable Abbott to increase its focus and investment on higher-growth segments in our medical products business and sustain a technologically advanced, higher-growth medical and pharmaceutical products portfolio," said Miles D. White, chairman and chief executive officer, Abbott Laboratories.
"At the same time, the new company will be able to focus on using its leading positions in the manufacture and supply of hospital products to provide technology solutions for the hospital customer and drive business performance. With enhanced strategic, financial and operational flexibility, the new company will have freedom to pursue alliances and other expansion opportunities," said Mr. White.
Christopher B. Begley, the current president of Abbott's U.S. hospital business, will become chief executive officer of the new company. Begley has spent the majority of his 30-year career in the hospital products business, is a 17-year veteran of Abbott, and has served in numerous management
positions in Abbott's hospital and health systems businesses. David A. Jones, co-founder and chairman of Humana Inc., and a retired Abbott board member, will serve as the new company's chairman of the board.
"I am pleased to head the new company, which brings proven leadership in the hospital products business," said Begley. "With $2.5 billion in global sales, we will have a nearly 70-year track record of delivering high-quality hospital products to our customers, and we will be the only company of our size focused solely on the hospital customer. We also have a committed team of talented, dynamic employees who will propel the new company forward, continuing to offer technology solutions for the hospital all while investing in future opportunities that will best serve our patients and customers and deliver greater value for shareholders."
The spin-off is intended to take the form of a tax-free distribution to Abbott shareholders of a new publicly traded stock for the new company. Abbott has already submitted a letter ruling request to the Internal Revenue Service to confirm the tax-free nature of this transaction and will file an application to list the new company on the New York Stock Exchange. The expected stock distribution ratio will be determined at a future date. The transaction will not impact Abbott's dividend. The transaction is expected to be completed in the first half of 2004.
Abbott will retain the following proprietary pharmaceuticals, including related portions of the international hospital business: hospital operating room pharmaceuticals, such as Ultane®/Sevorane® (sevoflurane), Anzemet® (dolasetron mesylate injection) and proprietary neuromuscular blockers; proprietary hospital pharmaceuticals such as Calcijex® (calcitriol injection), Zemplar® (paricalcitol injection), Simdax® (levosimendan); pain management products; and portions of the international hospital business, all of which will become part of Abbott's global pharmaceuticals business. Abbott will also retain Abbott Vascular Devices, including the Perclose, Biocompatibles and JOMED assets, and the recently acquired Spinal Concepts, which will continue to be operated through Abbott's Medical Products Group.
Abbott Laboratories is a global, broad-based health care company devoted to the discovery, development, manufacture and marketing of pharmaceuticals, nutritionals, and medical products, including devices and diagnostics. The company employs more than 70,000 people and markets its products in more than 130 countries. In 2002, the company's sales were $17.7 billion.
Abbott's news releases and other information are available on the company's Web site at www.abbott.com. Abbott will webcast a live conference call regarding this announcement through its Investor Relations Web site at www.abbottinvestor.com at 7:45 a.m. Central time today, August 22, 2003. Slides are also posted on the site that provide an overview of the transaction.
Anzemet® is a registered trademark of Aventis.
Simdax® is a registered trademark of Orion.
Private Securities Litigation Reform Act of 1995
A Caution Concerning Forward-Looking Statements
Some statements in this news release may be forward-looking statements for purposes of the Private Securities Litigation Reform Act of 1995. Abbott cautions that these forward-looking statements are subject to risks and uncertainties that may cause actual results to differ materially from those indicated in the forward-looking statements. Economic, competitive, governmental, technological and other factors that may affect Abbott's operations are discussed in Exhibit 99.1 of our Securities and Exchange Commission Form 10-Q for the period ended June 30, 2003, and are incorporated by reference. Abbott undertakes no obligation to release publicly any revisions to forward-looking statements as the result of subsequent events or developments.
QUESTIONS AND ANSWERS
The new company will focus on providing technology solutions for the hospital market through its leading positions in the manufacture and supply of a broad range of hospital products. Through enhanced strategic, financial and operational flexibility, this company is well positioned to seize new opportunities to expand its businesses globally.
Abbott will continue to build on a broad-based business model that provides a balance of leading pharmaceuticals and advanced technology medical products and nutritionals. This spin-off will allow Abbott to focus its investment on expanding these highly innovative, technologically advanced businesses.
Abbott will retain: hospital operating room pharmaceuticals, proprietary hospital pharmaceuticals and pain management products, and portions of the international hospital business, all of which will become part of Abbott's global pharmaceuticals business. Abbott will also retain Abbott Vascular Devices, including the Perclose, Biocompatibles and JOMED assets, and the recently acquired Spinal Concepts, which will continue to be operated through Abbott's Medical Products Group.
Based on current estimates, we can provide a general financial overview at this time. These estimates are before consideration of any costs required to run the new company as an independent entity. Annual sales for the new company as it exists within Abbott today are
approximately $2.5 billion, with around 15 percent of those sales coming from outside the United States. As a percentage of sales, the gross margin ratio has been in the mid-30s, R&D expense in the low single digits and SG&A expense of around 10 percent. Net income is more than $300 million with operating cash flow (after capital expenditures) of approximately $300 million. Net assets associated with this business are estimated at $2 billion. The new company will employ approximately 14,000 people worldwide, with nearly 4,800 of those employed outside the United States.
As part of the separation, we are planning for the new company to raise debt, the proceeds of which will be paid to Abbott. The level of debt will be established with the objective of the new company carrying an investment-grade debt rating. The payment and level of cash dividends by the new company after the separation will be based upon a number of factors, including the results of operations, cash flow, and financial requirements of the new company. The declaration and payment of any dividends will be at the discretion of the new company's board of directors.