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SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D. C. 20549

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FORM 10-Q

(Mark One)

ý	QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the quarterly period ended March 31, 2002

OR

o	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

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ABBOTT LABORATORIES

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        Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 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 ý    No o

        As of March 31, 2002, the Corporation had 1,560,613,859 common shares without par value outstanding.

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PART I.    FINANCIAL INFORMATION

Abbott Laboratories and Subsidiaries
Condensed Consolidated Financial Statements
(Unaudited)

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Abbott Laboratories and Subsidiaries
Condensed Consolidated Statement of Earnings
(Unaudited)
(dollars and shares in thousands except per share data)

			Three Months Ended March 31
			2002			2001
Net Sales			$	4,189,289		$	3,559,880
Cost of products sold				1,896,077			1,643,318
Research and development				356,681			318,280
Acquired in-process research and development				—			1,015,000
Selling, general and administrative				891,686			747,013
	Total Operating Cost and Expenses			3,144,444			3,723,611
Operating Earnings (Loss)				1,044,845			(163,731	)
Net interest expense				52,886			26,721
(Income) Loss from TAP Pharmaceutical Products Inc. joint venture				(158,462	)		193,943
Net foreign exchange loss				24,723			9,070
Other (income) expense, net				(5,799	)		(4,781	)
	Earnings (Loss) Before Taxes			1,131,497			(388,684	)
Taxes on earnings (loss)				277,217			(165,071	)
Net Earnings (Loss)			$	854,280		$	(223,613	)
Basic Earnings (Loss) Per Common Share			$	0.55		$	(0.14	)
Diluted Earnings (Loss) Per Common Share			$	0.54		$	(0.14	)
Cash Dividends Declared Per Common Share			$	0.235		$	0.21
Average Number of Common Shares Outstanding Used for Basic Earnings Per Common Share				1,557,723			1,547,072
Dilutive Common Stock Options				21,675			—
Average Number of Common Shares Outstanding Plus Dilutive Common Stock Options				1,579,398			1,547,072
Outstanding Common Stock Options Having No Dilutive Effect				22,558			92,791

The accompanying notes to consolidated financial statements are an integral part of this statement.

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Abbott Laboratories and Subsidiaries
Condensed Consolidated Statement of Cash Flows
(Unaudited)
(dollars in thousands)

				Three Months Ended March 31
				2002			2001
Cash Flow From (Used in) Operating Activities:
	Net earnings (loss)			$	854,280		$	(223,613	)
	Adjustments to reconcile net earnings to net cash from operating activities—
	Depreciation				241,110			204,798
	Amortization of intangibles				82,011			25,270
	Acquired in-process research and development				—			1,015,000
	Trade receivables				62,891			74,907
	Inventories				(176,016	)		(166,095	)
	Other, net				99,337			(11,701	)
		Net Cash From Operating Activities			1,163,613			918,566
Cash Flow From (Used in) Investing Activities:
	Acquisition of the pharmaceutical business of BASF				—			(6,376,439	)
	Acquisitions of property and equipment				(324,914	)		(236,773	)
	Investment securities transactions				23,343			(29,884	)
	Other				5,765			11,808
		Net Cash (Used in) Investing Activities			(295,806	)		(6,631,288	)
Cash Flow From (Used in) Financing Activities:
	Proceeds from (repayments of) commercial paper, net				(390,000	)		5,506,000
	Other borrowing transactions, net				2,932			(8,147	)
	Common share transactions				108,431			30,896
	Dividends paid				(326,598	)		(288,803	)
		Net Cash (Used in) From Financing Activities			(605,235	)		5,239,946
Effect of exchange rate changes on cash and cash equivalents					25,033			50,748
Net Increase (Decrease) in Cash and Cash Equivalents					287,605			(422,028	)
Cash and Cash Equivalents, Beginning of Year					657,378			914,218
Cash and Cash Equivalents, End of Period				$	944,983		$	492,190

The accompanying notes to consolidated financial statements are an integral part of this statement.

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Abbott Laboratories and Subsidiaries
Condensed Consolidated Balance Sheet
(dollars in thousands)

					March 31 2002			December 31 2001
					(Unaudited)
Assets
Current Assets:
	Cash and cash equivalents				$	944,983		$	657,378
	Investment securities					48,896			56,162
	Trade receivables, less allowances of $178,082 in 2002 and $195,585 in 2001					2,644,357			2,812,727
	Inventories:
		Finished products				1,239,458			1,154,329
		Work in process				538,687			487,310
		Materials				555,708			570,396
			Total inventories			2,333,853			2,212,035
	Prepaid expenses, income taxes, and other receivables					2,103,432			2,680,887
			Total Current Assets			8,075,521			8,419,189
Investment Securities Maturing after One Year						634,211			647,214
Property and Equipment, at Cost						11,194,698			11,225,405
	Less: accumulated depreciation and amortization					5,724,564			5,673,858
	Net Property and Equipment					5,470,134			5,551,547
Deferred Charges and Income Taxes, Investment in Joint Ventures and Other Assets						1,311,087			1,384,153
Goodwill						3,240,160			3,177,646
Intangible Assets, net of amortization						4,034,663			4,116,674
					$	22,765,776		$	23,296,423
Liabilities and Shareholders' Investment
Current Liabilities:
	Short-term borrowings and current portion of long-term debt				$	2,576,102		$	2,953,335
	Trade accounts payable					1,017,189			1,525,215
	Salaries, income taxes, dividends payable, and other accruals					3,358,779			3,448,267
		Total Current Liabilities				6,952,070			7,926,817
Long-Term Debt						4,324,300			4,335,493
Other Liabilities and Deferrals						2,043,603			1,974,681
Shareholders' Investment:
	Preferred shares, one dollar par value Authorized—1,000,000 shares, none issued					—			—
	Common shares, without par value Authorized—2,400,000,000 shares Issued at stated capital amount—Shares: 2002: 1,576,557,543; 2001: 1,571,816,976					2,794,634			2,643,443
	Common shares held in treasury, at cost— Shares: 2002: 15,943,684; 2001: 17,286,684					(232,826	)		(252,438	)
	Unearned compensation—restricted stock awards					(91,283	)		(18,258	)
	Earnings employed in the business					7,783,047			7,281,395
	Accumulated other comprehensive loss					(807,769	)		(594,710	)
		Total Shareholders' Investment				9,445,803			9,059,432
					$	22,765,776		$	23,296,423

The accompanying notes to consolidated financial statements are an integral part of this statement.

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Abbott Laboratories and Subsidiaries
Notes to Condensed Consolidated Financial Statements
March 31, 2002
(Unaudited)

Note 1—Basis of Presentation

        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 results of operations, financial position and cash flows have been made. It is suggested that these statements be read in conjunction with the financial statements included in Abbott's Annual Report on Form 10-K for the year ended December 31, 2001.

Note 2—Supplemental Financial Information

Note 3—Taxes on Earnings

        Taxes on earnings reflect the estimated annual effective rates, and for 2001, include the effect of the charge for acquired in-process research and development and the adjustment to the TAP Pharmaceutical Products Inc. joint venture income relating to the Department of Justice investigation. The effective tax rates, net of the effect of the 2001 charges, are less than the statutory U.S. Federal income tax rate principally due to the domestic dividend exclusion and the benefit of tax exemptions in several taxing jurisdictions.

Note 4—Litigation and Environmental Matters

        Abbott is involved in various claims and legal proceedings including a number of antitrust suits and investigations in connection with the pricing of prescription pharmaceuticals. These suits and investigations 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 Abbott and certain other pharmaceutical manufacturers and pharmaceutical wholesalers as defendants. The cases seek treble damages, civil penalties, and injunctive and other relief. Abbott has filed a response to each of the complaints denying all substantive allegations.

        There are several lawsuits pending in connection with the sales of Hytrin. These suits allege that Abbott violated state or federal antitrust laws and, in some cases, unfair competition laws by signing patent settlement agreements with Geneva Pharmaceuticals, Inc. and Zenith Laboratories, Inc. Those agreements related to pending patent infringement lawsuits between Abbott and the two companies. Some of the suits also allege that Abbott violated various state or federal laws by filing frivolous patent

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infringement lawsuits to protect Hytrin from generic competition. The cases seek treble damages, civil penalties and other relief. Abbott has filed or intends to file a response to each of the complaints denying all substantive allegations.

        Abbott 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.

        Within the next year, legal proceedings may occur that may result in a change in the estimated reserves recorded by Abbott. 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 Abbott's financial position, cash flows, or results of operations.

Note 5—TAP Pharmaceutical Products Inc.

        In 2001, TAP Pharmaceutical Products Inc. (TAP) entered into an agreement with the United States Department of Justice to settle matters relating to its investigation involving TAP's marketing of its prostate cancer drug, Lupron. In the first quarter of 2001, Abbott's income from the TAP joint venture was reduced by a charge of $344 million relating to this investigation.

        TAP and Abbott have been named as defendants in several lawsuits alleging violations of various state or federal laws in connection with TAP's marketing and pricing of Lupron. Abbott intends to file a response to each of the lawsuits denying all substantive allegations.

        Within the next year, legal proceedings may occur that may result in a change in the estimated reserves recorded by TAP and Abbott. 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 Abbott's financial position, cash flows, or results of operations.

Note 6—U.S. Food and Drug Administration Consent Decree

        In November 1999, Abbott reached agreement with the U.S. government to have a consent decree entered to settle issues involving Abbott's diagnostics manufacturing operations in Lake County, Ill. The decree, which was amended in December 2000, requires Abbott to ensure its diagnostics manufacturing processes in Lake County conform with the U.S. Food and Drug Administration's (FDA) Quality System Regulation (QSR). The decree allows for the continued manufacture and distribution of medically necessary diagnostic products made in Lake County. However, Abbott is prohibited from manufacturing or distributing certain diagnostic products until Abbott ensures the processes in its Lake County diagnostics manufacturing operations conform with the QSR. The decree allows Abbott to export diagnostic products and components for sale and distribution outside the United States if they meet the export requirements of the Federal Food, Drug and Cosmetic Act. Under the terms of the amended consent decree, Abbott must ensure its diagnostics manufacturing operations are in conformance with the QSR by various dates through January 15, 2001. The FDA will determine Abbott's conformance with the QSR after an inspection of Abbott's facilities. The FDA concluded its inspection of Abbott's facilities and issued its observations in January 2002. In February 2002, Abbott submitted its response to those observations. The FDA is expected to respond back to Abbott in mid- to late-May 2002, at which time the FDA is expected to conclude whether the operations are in conformance with the QSR. If the FDA concludes that the operations are not in conformance with the QSR, Abbott may be subject to additional costs.

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Note 7—Comprehensive Income, net of tax
(dollars in thousands)

Note 8—Segment Information (dollars in millions)

        Revenue Segments—Abbott's principal business is the discovery, development, manufacture and sale of a broad line of health care products and services. Abbott's products are generally sold directly to retailers, wholesalers, hospitals, health care facilities, laboratories, physicians' offices and government agencies throughout the world. Abbott's reportable segments are as follows:

        Pharmaceutical Products—U.S. sales of a broad line of pharmaceuticals.

        Diagnostic Products—Worldwide sales of diagnostic systems for blood banks, hospitals, consumers, commercial laboratories and alternate-care testing sites.

        Hospital Products—U.S. sales of 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.

        Ross Products—U.S. sales of a broad line of adult and pediatric nutritional products, pediatric pharmaceuticals and consumer products.

        International—Non-U.S. sales of all of Abbott's pharmaceutical, hospital and nutritional products. Products sold by International are manufactured by domestic segments and by international manufacturing locations.

        Abbott's underlying accounting records are maintained on a legal entity basis for government and public reporting requirements. Segment disclosures are on a performance basis consistent with internal management reporting. Intersegment transfers of inventory are recorded at standard cost and are not a measure of segment operating earnings. The cost of some corporate functions and the cost of certain employee benefits are sold to segments at predetermined rates which approximate cost. Remaining costs, if any, are not allocated to revenue segments. The following segment information has been

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prepared in accordance with the internal accounting policies of Abbott, as described above, and may not be presented in accordance with generally accepted accounting principles.

		Three Months Ended March 31
		Net Sales to External Customers						Operating Earnings (Loss)
		2002			2001			2002			2001
Pharmaceutical		$	950		$	715		$	291		$	225
Diagnostics			679			704			62			85
Hospital			674			635			183			167
Ross			579			590			241			255
International			1,223			843			347			215
Total Reportable Segments			4,105			3,487			1,124			947
Other			84			73
Net Sales		$	4,189		$	3,560
Corporate functions									47			48
Benefit plans costs									31			20
Non-reportable segments									7			2
Net interest expense									53			27
Acquired in-process research and development									—			1,015
(Income) loss from TAP Pharmaceutical Products Inc.									(158	)		194
Net foreign exchange loss									25			9
Other expense (income), net									(12	)		21
Consolidated Earnings (Loss) Before Taxes								$	1,131		$	(389	)

Note 9—Restructuring Charges
(dollars in millions)

        In 2001, Abbott began implementing restructuring plans related primarily to the operations of the acquired pharmaceutical business of BASF. The following summarizes the restructuring activity:

Note 10—Sale of Selsun Blue Product Rights

        In the first quarter 2002, Abbott sold its U.S. Selsun Blue product rights and recorded the transaction in Net Sales in accordance with Abbott's revenue recognition accounting policies. Sale of the international product rights will be recorded as the appropriate regulatory approvals are received.

Note 11—Goodwill and Intangible Assets
(dollars in millions except per share amounts)

        Effective with the adoption of SFAS No. 142, "Goodwill and Other Intangible Assets," on January 1, 2002, goodwill is no longer subject to amortization over its estimated useful life. Goodwill

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will be subject to at least an annual assessment of impairment by applying a fair-value-based test. Abbott will complete its assessment of goodwill impairment by June 2002. In 2002, Abbott recorded goodwill of $62.5 primarily related to restructuring charges associated with the acquisition of the pharmaceutical business of BASF. There were no reductions of goodwill in 2002 relating to impairments or disposal of all or a portion of a business. For internal management reporting purposes, goodwill is not allocated to reportable segments.

        The following pro forma financial information reflects net income and diluted earnings per share as if goodwill and certain intangibles were not subject to amortization for the three months ended March 31, 2001.

        The gross amount and accumulated amortization of amortizable intangible assets is as follows:

        The estimated annual amortization expense for intangible assets as of December 31, 2001 is $328 in 2002, 2003 and 2004, $323 in 2005, and $314 in 2006. The net amount of intangible assets with indefinite lives, primarily registered tradenames, not subject to amortization is $148 at March 31, 2002 and December 31, 2001.

Note 12—Business Combinations

        On March 18, 2002, Abbott and Biocompatibles International plc reached an agreement for Abbott to acquire the cardiovascular stent business of Biocompatibles for approximately $235 million in cash. The transaction is expected to be completed in the second quarter of 2002, subject to regulatory approvals and customary closing conditions, and will result in a yet-to-be-determined charge for acquired in-process research and development.

        On March 2, 2001, Abbott acquired, for cash, the pharmaceutical business of BASF, which includes the global operations of Knoll Pharmaceuticals, for approximately $7.2 billion. The acquisition is accounted for under the purchase method of accounting.

Note 13—Subsequent Event

        In April 2002, Abbott announced a tender offer in Japan of $292 million to acquire the remaining 33.3 percent of the issued common shares of Hokuirku Seiyaku that it did not acquire through its purchase of the pharmaceutical business of BASF in 2001. The tender offer will commence on April 23, 2002 and expire on May 30, 2002.

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FINANCIAL REVIEW

Results of Operations—First Quarter of 2002 Compared with Same Period in 2001

The following table details sales by reportable segment for the first quarter 2002:

		Three Months Ended March 31
		Net Sales to External Customers
								Percentage Change (a)
		2002			2001
		(dollars in millions)
Pharmaceutical		$	950		$	715		32.8
Diagnostics			679			704		(3.6	)
Hospital			674			635		6.1
Ross			579			590		(1.9	)
International			1,223			843		45.1
Total Reportable Segments			4,105			3,487		17.7
Other			84			73
Net Sales		$	4,189		$	3,560		17.7
Total U.S.		$	2,572		$	2,293		12.2
Total International		$	1,617		$	1,267		27.6

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(a)

Percentage changes are based on unrounded numbers.

        Worldwide sales for the first quarter reflect primarily unit growth. Excluding the negative effect of the relatively stronger U.S. dollar, sales increased 20.2 percent over the first quarter 2001. Pharmaceutical and International segment sales were favorably impacted by the acquisition of the pharmaceutical business of BASF on March 2, 2001. Diluted earnings per common share for the quarter were 54 cents, compared to diluted loss per common share of 14 cents a year ago.

        Gross profit margin (sales less cost of products sold, including freight and distribution expenses) was 54.7 percent for the first quarter 2002, compared to 53.8 percent for the first quarter 2001. This increase was due primarily to favorable product mix; partially offset by increased intangibles amortization as a result of the acquisition of the pharmaceutical business of BASF.

        Research and development expenses for the first quarter 2002 increased 12.1 percent over the comparable 2001 period, excluding acquired in-process research and development of $1.015 billion in the first quarter of 2001. The majority of research and development expenditures continues to be concentrated on pharmaceutical products.

        Selling, general and administrative expenses for the first quarter 2002 increased 19.4 percent over the comparable 2001 period, due primarily to increased spending as a result of the acquisition of the pharmaceutical business of BASF and increased selling and marketing support for new and existing products.

        As a result of the consent decree entered into with the U.S. government in 1999, as discussed in Note 6, Abbott is prohibited from manufacturing or distributing certain diagnostic products until Abbott ensures the processes in its Lake County, Ill., diagnostics manufacturing operations conform with the U.S. Food and Drug Administration's (FDA) Quality System Regulation (QSR). Under the terms of the amended consent decree, Abbott must ensure its diagnostics manufacturing operations are in conformance with the QSR by various dates through January 15, 2001. The FDA will determine Abbott's compliance with the QSR after an inspection of Abbott's facilities. The FDA concluded its

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inspection of Abbott's facilities and issued its observations in January 2002. In February 2002, Abbott submitted its response to those observations. The FDA is expected to respond back to Abbott in mid- to late-May 2002, at which time the FDA is expected to conclude whether the operations are in conformance with the QSR. If the FDA concludes that the operations are not in conformance with the QSR, Abbott may be subject to additional costs.

        The FDA announced in 1997 that all manufacturers of levothyroxine drug products (Synthroid), most of which had been on the market for many years, would be required as part of the agency's regulatory process to file either a New Drug Application (NDA), or a citizen petition showing that their products are not new drugs and therefore do not require an NDA. Synthroid's manufacturer at the time, Knoll Pharmaceutical Company, which Abbott acquired in March 2001, exercised the citizen petition option because of Synthroid's long history and excellent track record. On April 26, 2001, the FDA denied Knoll's petition. Abbott promptly responded to the FDA that Abbott would submit an NDA for Synthroid, which Abbott submitted on August 1, 2001. Abbott expects that the NDA review process will take approximately 10 to 12 months from the date the FDA filed the NDA. On July 11, 2001, the FDA published guidance on the distribution of levothyroxine sodium products during the NDA review process. The guidance allows Synthroid to remain on the market while the agency reviews the NDA Abbott has submitted for Synthroid. However, the guidance also requires that levothyroxine sodium products without approved NDAs are subject to gradually reducing quarterly limits on distribution as measured against the average monthly distribution during the six months ended August 1, 2001. By August 14, 2003, all levothyroxine sodium products without approved NDAs would be required to cease distribution. Upon NDA approval, the limits on distribution will be removed. In 2001, Abbott recorded U.S. net sales of Synthroid of $445 million.

Business Combination

        On March 18, 2002, Abbott and Biocompatibles International plc reached an agreement for Abbott to acquire the cardiovascular stent business of Biocompatibles for approximately $235 million in cash. The transaction is expected to be completed in the second quarter of 2002, subject to regulatory approvals and customary closing conditions, and will result in a yet-to-be-determined charge for acquired in-process research and development.

        On March 2, 2001, Abbott acquired, for cash, the pharmaceutical business of BASF, which includes the global operations of Knoll Pharmaceuticals, for approximately $7.2 billion. The acquisition is accounted for under the purchase method of accounting.

Restructuring Charges
(dollars in millions)

        In 2001, Abbott began implementing restructuring plans related primarily to the operations of the acquired pharmaceutical business of BASF. The following summarizes the restructuring activity:

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Sale of Selsun Blue Product Rights

        In the first quarter 2002, Abbott sold its U.S. Selsun Blue product rights and recorded the transaction in Net Sales in accordance with Abbott's revenue recognition accounting policies. Sale of the international product rights will be recorded as the appropriate regulatory approvals are received.

Net Interest Expense

        Net interest expense increased in the first quarter of 2002 due primarily to the acquisition of the pharmaceutical business of BASF in 2001.

Income from TAP Pharmaceutical Products Inc. Joint Venture

        For the three months ended March 31, 2001, Abbott's income from TAP Pharmaceutical Products Inc. (TAP) joint venture was adversely affected as a result of the U.S. Department of Justice investigation of TAP's marketing of Lupron as discussed in Note 5 to the condensed consolidated financial statements.

Taxes on Earnings

        Taxes on earnings reflect the estimated annual effective rates, and for 2001, include the effect of the charge for acquired in-process research and development and the adjustment to the TAP Pharmaceutical Products Inc. joint venture income relating to the Department of Justice investigation. The effective tax rates, net of these 2001 charges, are less than the statutory U.S. Federal income tax rate principally due to the domestic dividend exclusion and the benefit of tax exemptions in several taxing jurisdictions.

Earnings (in millions, except per share amounts)

        Abbott recorded certain nonrecurring charges to earnings in the first quarter 2001 primarily related to the acquisition of the pharmaceutical business of BASF and other items. Management's analysis of these nonrecurring items compared to reported net income and diluted earnings per share for the three months ended March 31, 2001, in accordance with generally accepted accounting principles (GAAP) is as follows:

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Liquidity and Capital Resources at March 31, 2002 Compared with December 31, 2001

        Net cash from operating activities for the first quarter 2002 totaled $1.2 billion. Abbott expects annual cash flow from operating activities to continue to approximate or exceed Abbott's capital expenditures and cash dividends.

        At March 31, 2002, Abbott had working capital of $1.1 billion compared to working capital of approximately $492 million at December 31, 2001. The increase in working capital in 2002 was primarily due to operating cash flows used to decrease short-term commercial paper borrowings.

        At March 31, 2002, Abbott's bond ratings were AA by Standard & Poor's Corporation and Aa3 by Moody's Investors Service. Abbott has readily available financial resources, including unused domestic lines of credit of $3.0 billion, which support domestic commercial paper borrowing arrangements.

        Under a registration statement filed with the Securities and Exchange Commission in February 2001, Abbott may issue up to $250 million of securities in the future in the form of debt securities or common shares without par value.

Legislative Issues

        Abbott's primary markets are highly competitive and subject to substantial government regulation. Abbott 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. Abbott 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 Abbott 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.

Private Securities Litigation Reform Act of 1995—A Caution Concerning Forward-Looking Statements

        Under the safe harbor provisions of the Private Securities Litigation Reform Act of 1995, Abbott cautions investors that any forward-looking statements or projections made by Abbott, including those made in this document, are subject to risks and uncertainties that may cause actual results to differ materially from those projected. Economic, competitive, governmental, technological and other factors that may affect Abbott's operations are discussed in Exhibit 99.1 to the Annual Report on Form 10-K.

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PART II. OTHER INFORMATION

Item 1.    Legal Proceedings

        Abbott is involved in various claims, legal proceedings and investigations, including those described below. 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 dispositions should not have a material adverse effect on Abbott's financial position, cash flows, or results of operations.

        In its 2001 Form 10-K, Abbott reported that a number of prescription pharmaceutical pricing antitrust suits were pending in federal and state courts as purported class actions alleging that Abbott, other pharmaceutical manufacturers and pharmaceutical wholesalers conspired to fix prices for prescription pharmaceuticals and/or to discriminate in pricing to retail pharmacies in violation of state and federal antitrust laws. The federal cases were pending in the United States District Court for the Northern District of Illinois under the Multidistrict Litigation Rules as In re: Brand Name Prescription Drug Antitrust Litigation, MDL 997. An order has been issued remanding the Sherman Act claims in the federal cases to their courts of original jurisdiction. The Robinson-Patman Act claims in the federal cases against Abbott remain pending in the Northern District of Illinois.

        As previously reported in Abbott's 2001 Form 10-K, six cases were pending as purported class actions on behalf of individuals or entities that allege generally that Abbott and other pharmaceutical companies reported false information in connection with certain drugs that are reimbursable under Medicare and Medicaid, and generally seek damages, treble damages, disgorgement of profits, restitution and attorneys' fees. The following three additional cases have been filed: Mary Robinson and Maggie Hudson v. Abbott Laboratories, Inc., Baxter International, Baxter Healthcare Corp., Baxter Pharmaceutical Products, Inc., Bayer Corp., Bristol-Myers Squibb Co., Glaxosmithkline Corp., Glaxo Wellcome, Inc., Pharmacia Corp., Pharmacia & Upjohn Co., Smith Kline Beecham Corp., and TAP Holdings, Inc., filed in March 2002 in the United States District Court for the Western District of Louisiana; State of Montana ex rel. Mike McGrath, Attorney General v. Abbott Laboratories, Inc., American Home Products Corporation, Amgen Inc., Astrazeneca, Aventis Pharma, Chiron, Baxter Pharmaceutical Products, Inc., Bristol-Myers Squibb Company, Dey, Inc., Smithkline Beecham Corporation d/b/a Glaxosmithkline Corporation, Pharmacia Corporation, Hoechst Marion Roussel, Inc., Immunex Corporation, Eli Lilly and Company, Schering-Plough Corp., Pharmacia & Upjohn Company, Smith Kline Beecham Corporation, Warrick Pharmaceuticals Corporation, and Does 1 through 200, filed in February 2002 in the First Judicial District Court for the State of Montana for Lewis and Clark County, Montana; and United Food and Commercial Workers Unions and Employers Midwest Health Benefits Fund, and Action Alliance of Senior Citizens of Greater Philadelphia v. Abbott Laboratories, filed in November 2001 in the United States District Court for the Northern District of Illinois. Some of the plaintiffs and defendants in the federal cases have moved to consolidate all of the federal cases under the Multidistrict Litigation Rules. The following previously reported case was removed to the United States District Court for the Central District of California: Shirley Geller v. Abbott Laboratories, Inc., Baxter International, Glaxo Wellcome, Inc., Smithkline Beecham, Bristol-Myers Squibb Company, and Does 1 through 100 (filed in October 2001 in state court in Superior Court for the County of Los Angeles, California).

        In its 2001 Form 10-K, Abbott reported that a number of cases have been brought against TAP, Abbott and Takeda Chemical Industries, Ltd. in various courts that generally allege that TAP reported false pricing information in connection with Lupron, a product reimbursable under Medicare. The previously reported federal court cases have been consolidated in the United States District Court in Massachusetts under the Multidistrict Litigation Rules as In re Lupron Marketing and Sales Practices Litigation, MDL 1430. In its 2001 Form 10-K, Abbott reported that four cases were pending in various state courts. One of those cases, Southerland (filed October 29, 2001 in Lenoir County, North Carolina), was removed to federal court in November 2001 and was dismissed without prejudice on

14

---

January 16, 2002. Four additional state cases have been filed. These cases include: Farris (filed December 19, 2001 in San Francisco, California); Stetser (filed December 31, 2001 in New Hanover County, North Carolina); Benoit (filed February 22, 2002 in Jefferson County, Texas); and Swanston (filed March 15, 2002 in Maricopa County, Arizona). Each case purports to be a class or representative action on behalf of individuals and/or insurance plans that paid any portion of the twenty percent co-payment cost under Medicare for Lupron based on its average wholesale price. Two similar cases have been filed in the United States District Court in Massachusetts by insurance carriers, but not as class actions or representative actions. They are: Empire Healthchoice (filed January 3, 2002) and Blue Cross and Blue Shield of Florida (filed January 21, 2002). The cases generally seek treble damages and other relief. Abbott and TAP have filed or intend to file a response in each case denying all substantive allegations.

        Abbott has previously reported that Corwin v. Austin, a shareholder derivative action relating to the TAP settlement, was pending in the United States District Court for the Northern District of Illinois. On January 29, 2002, the Court granted plaintiff's motion to dismiss the case without prejudice.

Item 4.    Submission of Matters to a Vote of Security Holders

        The Company held its Annual Meeting of Shareholders on April 26, 2002. 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:

        (b)  The shareholders rejected a shareholder proposal regarding HIV/AIDS-TB-Malaria. 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:

Item 6.    Exhibits and Reports on Form 8-K

	a)		Exhibits
			2.1		Amendment to Purchase Agreement between BASF Aktiengesellschaft and Abbott Laboratories recorded on March 12, 2002—attached hereto.

15

---

			3.1		By-Laws of Abbott Laboratories, as amended and effective March 15, 2002—attached hereto.
			12.		Statement re: computation of ratio of earnings to fixed charges—attached hereto.
	b)		Reports on Form 8-K
			On March 21, 2002, Abbott Laboratories filed a Current Report on Securities and Exchange Commission Form 8-K reporting that on March 15, 2002, the Abbott Board of Directors adopted the recommendation of its Audit Committee that Arthur Andersen LLP be replaced as Abbott's auditors.
			On April 1, 2002, Abbott Laboratories filed an amended Current Report on Securities and Exchange Commission Form 8-K/A reporting that on March 15, 2002, the Abbott Board of Directors adopted the recommendation of its Audit Committee that Arthur Andersen LLP be dismissed as Abbott's auditors and that this will occur upon the later of: (i) the engagement of a new independent public accounting firm or (ii) the filing of Abbott's quarterly report on Securities and Exchange Commission Form 10-Q for the period ending March 31, 2002.

16

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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/  THOMAS C. FREYMAN       Thomas C. Freyman, Senior Vice President, Finance & Chief Financial Officer
Date: May 2, 2002

17

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EXHIBIT INDEX

Exhibit No.		Exhibit
2.1		Amendment to Purchase Agreement between BASF Aktiengesellschaft and Abbott Laboratories recorded on March 12, 2002—attached hereto.
3.1		By-Laws of Abbott Laboratories, as amended and effective March 15, 2002—attached hereto.
12		Statement re: computation of ratio of earnings to fixed charges—attached hereto.

---

QuickLinks

PART I. FINANCIAL INFORMATION
Condensed Consolidated Statement of Earnings
Condensed Consolidated Statement of Cash Flows
Condensed Consolidated Balance Sheet
Notes to Condensed Consolidated Financial Statements

PART II. OTHER INFORMATION
Item 1. Legal Proceedings
Item 4. Submission of Matters to a Vote of Security Holders
Item 6. Exhibits and Reports on Form 8-K

SIGNATURE
EXHIBIT INDEX

                                  AGREEMENT

     This Agreement dated March 11, 2002 ("Agreement") is by and between BASF
Aktiengesellschaft ("Seller") and Abbott Laboratories ("Purchaser").


                                 WITNESSETH:


     WHEREAS, Purchaser and Seller are parties to that certain Purchase
Agreement dated as of December 14, 2000 (Number 194 of the Roll of Deeds for
2000 for Dr. Norbert Meister, notar, at Frankfurt am Main), as amended by the
Amendment dated as of March 2, 2001 (Number 226 of the Roll of Deeds for 2001
of Dr. Gerhard Pilger, notar, at Frankfurt am Main); the Second Amendment
dated as of May 18, 2001 (Number 56 of the Roll of Deeds for 2001 of Dr.
Norbert Meister, notar, at Frankfurt am Main), and the Agreement and Third
Amendment to the Purchase Agreement dated July 24, 2001 (Number 741 of the
Roll of Deeds for 2001 of Dr. Gerhard Pilger, notar, at Frankfurt am Main),
pursuant to which Purchaser acquired the Shares and Transferred Patents
(collectively, the "Purchase Agreement"); and
     WHEREAS, the Parties have taken different positions as to the Pension
Indemnification Amount to be determined according to Section 21.4 of the
Purchase Agreement, Seller claiming a Seller Pension Indemnification Amount
of 39,747,609 Euro, Purchaser claiming a Purchaser Pension Indemnification
Amount of 26,252,000 Euro ("Pension Matters").
     WHEREAS, Purchaser had made a claim in an e-mail by John Poulos to
Seller's Joachim Scholz of January 14, 2002 with regard to IT Disentanglement
Costs of USD 25,000,000 as specified in Exhibit 1 which was attached to the
e-mail of January 14, 2002 ("IT Matters")



     WHEREAS, Purchaser had made a claim in an e-mail by John Poulos to
Seller's Joachim Scholz of January 14, 2002 with regard to unanticipated
clinical study costs for sibutramine as specified in Exhibit 2 which was
attached to the e-mail of January 14, 2002 ("Sibutramine Matter").
     WHEREAS, Purchaser had made a claim in an e-mail by John Poulos to
Seller's Joachim Scholz of January 14, 2002 with regard to revised terms of
the protium contract with BYK Gulden of USD 30,600,000 as specified in
Exhibit 3 which was attached to the e-mail of January 14, 2002 ("Protium
Matter").
     WHEREAS, the Parties have agreed to amicably settle the Pension Matter,
the IT Matter, the Sibutramine Matter and the Protium Matter.
     NOW, THEREFORE, in full and final settlement of the Pension Matter, the
IT Matter, the Sibutramine Matter and the Protium Matter the Parties agree as
follows:


1.   PENSION MATTER.
1.1  The Parties agree that the Purchaser Pension Indemnification Amount and
     the Seller Pension Indemnification Amount, as the case may be, is zero (0).
1.2  Seller shall take the actions described in Exhibit 4.


2.   PROTIUM MATTER
     The Parties have agreed to revise Section 15.1(I)(d) of the Purchase
     Agreement by deleting the clause beginning with "provided that" through
     the end of such Section and substituting therefore the following:
     The Parties acknowledge that Purchaser and certain of its Affiliates
     have entered into a new Distribution Agreement dated December 20, 2001
     with Byk Gulden (the "Byk Gulden Agreement") under financial terms and
     conditions which are less favorable to Purchaser than those in the
     Development and Distribution Agreement dated May 1, 1996 between Knoll,
     Ltd. and Byk Gulden. In satisfaction of Seller's obligations under this
     Section 15.1(I)(d), commencing on December 1, 2001 and continuing
     thereafter through the term of the Byk Gulden Agreement, Seller shall pay
     to Purchaser 28% of the Purchaser's net sales (the "Promotional Fee") of
     Protium in the United Kingdom, Ireland, Italy and Pakistan.



     Such payments shall be made for each Fiscal Quarter. As used herein, a
     "Fiscal Quarter" shall be a consecutive three-month period commencing on
     December 1st, March 1st, June 1st and September 1st. Purchaser shall within
     15 business days of each calendar quarter provide an accounting of its net
     sales of Protium to Seller and the amount of the Promotional Fee. Seller
     shall pay the Promotional Fee to Purchaser within thirty days after receipt
     by Seller of the statement from Purchaser that sets forth the amount of the
     Promotional Fee. Seller shall be entitled annually, at Seller's expense, to
     audit the calculation of the Promotional Fee. The Promotional Fee shall be
     limited to an aggregate amount that, calculated from the date hereof, has a
     net present value of US$30,600,000, with such net present value being
     calculated with an assumed discount rate of 12.5% (the "NPV Cap"). At such
     time as the amount of the Promotional Fee made by Seller to Purchaser
     equals the NPV Cap, Seller shall have no further liability to Purchaser
     under this Subsection 15.1(I). Attached as Exhibit 3a is an example of the
     calculation of the Promotional Fee and the application of the NPV Cap.


3.   EBEWE INSURANCE CLAIM.
3.1  Section 24.19 of the Purchase Agreement is deleted in its entirety.
3.2  Seller shall, at the direction of Purchaser, continue to prosecute,
     bearing its own expenses, the EBEWE insurance claims. Seller shall use its
     best efforts to settle the EBEWE insurance claims as soon as possible, any
     settlement being subject to Purchaser's approval. Should the proceeds or
     recovery from the EBEWE insurance claims be paid to Seller, Seller shall
     pay such proceeds or recovery to Purchaser or as designated by Purchaser,
     provided, that in this case Purchaser holds Seller harmless and indemnifies
     Seller for any claims by EBEWE based on such payment.


4.   SAMe INVENTORY. Seller hereby waves any claims against Purchaser for
     SAMe products delivered to Purchaser on an "as is" basis (former Knoll
     Bioresearch



         SPA, San Antonino, Switzerland) and hereby assigns any claims it may
         have with regard to the quality of such delivery to Purchaser.

5.       ALLOCATION.
         Within sixty (60) days after the execution of this Agreement,
         Purchaser will propose an allocation of the adjustment to the Aggregate
         Purchase Price based upon the adjustments agreed to by the parties in
         the Third Amendment to the Purchase Agreement and in this Agreement.
         The parties will agree to a revised Exhibit 8.1 within sixty (60) days
         thereafter.

6.       RESERVATION OF RIGHTS.
         Except with regard to the matters expressly dealt with in this
         Agreement, nothing in this Agreement shall be deemed to be a waiver
         by either Party of any right that such Party may have under and in
         accordance with the terms of the Purchase Agreement as amended hereby,
         or an agreement to forbear from exercising any right or remedy with
         respect to any provision in the Purchase Agreement including
         Sections 15 and 18. Purchaser specifically reserves its rights and
         remedies under the Purchase Agreement, the documents delivered in
         connection therewith and applicable law.

7.       NOTICES.
         All notices, statements and other communications to be given with
         respect to this Agreement shall be in the English language and sent by
         registered mail, by facsimile transmission or by messenger to the
         parties at the following addresses or at such other addresses as shall
         be specified by the parties:

                  If to Seller:             BASF Aktiengesellschaft
                                            Central Legal Department
                                            67056 Ludwigshafen, Germany
                                            Fax: 49-621-60-20410





                  If to Purchaser:          Abbott Laboratories
                                            D-364, Bldg. AP6D
                                            100 Abbott Park Road
                                            Abbott Park, IL 60064-6020
                                            Fax: 847-938-6277
                                            Attn: General Counsel

8.       ENTIRE AGREEMENT; WRITTEN FORM.
         (a)      Except with regard to the matters expressly dealt with in this
                  Agreement, the Purchase Agreement shall remain in full force
                  and effect and, together with this Agreement and the
                  Disclosure Letter, shall constitute the entire agreement of
                  the Parties with respect to the subject thereof and hereof and
                  supercede all other prior agreements and undertakings both
                  written and oral among the Parties with respect to the subject
                  matter thereof and hereof. In the event of any translation of
                  this Agreement, the English version shall govern.
         (b)      Any changes in this Agreement, including, but not limited to,
                  this clause shall only be valid if made in writing and
                  executed by both Seller and Purchaser or, if necessary, in a
                  stricter form.

9.       ASSIGNMENT. Neither Seller nor Purchaser may assign any rights or
         obligations under this Agreement to any third party without the consent
         of the respective other Party.

10.      GOVERNMENT LAW; JURISDICTION.
         (a)      This Agreement shall be governed by and construed in
                  accordance with the laws of the Federal Republic of Germany,
                  without regard to its choice of law rules.
         (b)      Except as otherwise expressly stated elsewhere in this
                  Agreement, all disputes arising out of or in connection with
                  this Agreement, including any question regarding its
                  existence, validity or termination, shall be referred to





                  and finally resolved by arbitration in accordance with the
                  Rules of the German Institute of Arbitration e.V. (DIS)
                  without recourse to the ordinary courts of law, provided that
                  the Chairman of the Arbitral Tribunal shall not be of the same
                  nationality as that of any of the parties to a given dispute.
                  The place of arbitration shall be Frankfurt, Germany; the
                  language of the arbitration shall be English.

11.      EXPENSES.
         (a)      Except as specifically provided otherwise in this Agreement,
                  each Party shall bear its own expenses and fees (including
                  attorneys', accountants', consultants' and advisors' fees) in
                  connection with this Agreement or any of the actions
                  contemplated herein.
         (b)      Fees and costs triggered by the implementation of this
                  Agreement, including but not limited to any notarial fees, any
                  transfer or sales Tax (including any value added Tax and stamp
                  duties and property transfer Tax according to Section 5,
                  Paragraph 3 Grunderwerbssteuergesetz) and any registration or
                  publication fees shall be borne by Purchaser.

12.      SEVERABILITY.
         Should any of the provisions of this Agreement be or become fully or
         partly invalid or unenforceable, the remainder of the Agreement shall
         be valid or enforceable. The invalid or unenforceable provision shall
         be replaced by a provision which shall come as close as possible to the
         economic purpose of the invalid provision. Any gaps in this Agreement
         shall be filled by a provision which the parties as prudent businessmen
         would be in good faith have agreed to, had they considered the matter
         not covered by this Agreement.





This deed and the Exhibits 1 and 4 were read aloud in the presence of the deputy
notary and signed in their own hands by the persons appearing and the deputy
notary.

The Exhibits 2, 3 and 3a have been shown to the persons appearing; they waived
reading and signed them page by page:

[ILLEGIBLE]

[ILLEGIBLE]

[ILLEGIBLE]

[SEAL OF DR. GERHARD PILGER NOTAR IN FRANKFURT AM MAIN]


 EXHIBIT 1


                               IT DISENTANGLEMENT

                                  JANUARY 2002



                              DISENTANGLEMENT COST

      -     During the integration of BASF-Pharma, Abbott incurred unanticipated
            costs for the extrication from the BASF supported IT environment.

      -     Costs incurred based on decisions supporting Abbott's business
            requirements were not included in the disentanglement costs
            summarized on pages 16-20.


                                                                               2


                           DUE DILIGENCE CONCLUSIONS

      -     During the due diligence process, BASF provided documents leading
            to the following seven conclusions:

            1.    BASF-Pharma "operates largely as an independent company"
                  consisting of a "fully separated IT System" and operated on a
                  "near stand-alone basis" to BASF.

            2.    SAP was the pervasive enterprise application throughout the
                  worldwide BASF-Pharma organization.


                                                                               3


                           DUE DILIGENCE CONCLUSIONS

            3.    Lotus Notes was the pervasive groupware and e-mail system
                  throughout BASF-Pharma.

            4.    Siebel had been selected as the standard SFA (Sales Force
                  Automation) system and had been deployed throughout
                  BASF-Pharma.

            5.    LABSQ had been selected as the standard LIMS (Laboratory
                  Information Management System) and was deployed throughout
                  BASF-Pharma.


                                                                               4


                            DUE DILIGENCE CONCLUSIONS

            6.    Documentum had been selected as the standard document
                  management system and was deployed throughout BASF-Pharma.

            7.    Oracle had been selected as the standard database and was
                  deployed throughout BASF-Pharma.


                                                                               5


IT ENVIRONMENT EXPECTATIONS

    - The aforementioned seven conclusions resulted in the the following
      expectations:

            1.    Abbott would acquire substantial worldwide SAP implementations
                  which would require minimal extraction from BASF.
            2.    BASF-Pharma operated in a global SAP environment.
            3.    Lotus Notes groupware technology was used pervasively to
                  communicate throughout the enterprise. Groupware and e-mail
                  technologies other than Notes would not be encountered.


                                                                               6


IT ENVIRONMENT EXPECTATIONS

            4.    A standard LIMS application (LABSQ) was globally deployed.
            5.    A standard SFA (Siebel) was globally deployed.
            6.    A common database platform (Oracle) was globally deployed.
                  License transfers were partially addressed in the purchase
                  agreement amendment document.
            7.    A common document management application (Documentum) was
                  globally deployed.


                                                                               7


IT ENVIRONMENT EXPECTATIONS

            8.    Wide Area Network (WAN) components (routers, modems, etc) were
                  owned and operated by BASF-Pharma. This was addressed in the
                  purchase agreement amendment document.
            9.    Local Area Network (LAN) components were owned and operated
                  by BASF-Pharma and operated independently of BASF. This was
                  addressed in the purchase agreement amendment document.
            10.   BASF-Pharma owned and operated their own data centers.


                                                                               8


IT ENVIRONMENT EXPECTATIONS

            11.   BASF-Pharma possessed clear ownership of software licenses
                  and would be able to provide proof of ownership for software
                  installed on their computing platforms. License count transfer
                  was addressed in the purchase agreement amendment document.
            12.   Very limited or no segregation between BASF's and Abbott's
                  respective networks would be required due to the "fully
                  separated nature" of the IT system.
            13.   BASF-Pharma was performing their own network account
                  administration


                                                                               9


IT ENVIRONMENT EXPECTATIONS

            14.   BASF-Pharma owned or was named leaseholder for all computing
                  technology.
            15.   BASF-Pharma owned or was named leaseholder for telephone
                  equipment.

                                                                              10


                             ACTUAL IT ENVIRONMENT

- -    Abbott IT professionals encountered an IT environment significantly
     different than the one proposed in the data room documents.

                                                                              11




                           US ENTANGLEMENT BACKGROUND

- -    The degree of BASF intercompany reliance was near absolute.

- -    Most business processes for the US, BBC (now known as ABC), and Canada were
     handled out of a central instance of SAP, known as CAT (Continental
     Americas Template) housed in the BASF data center in Mount Olive, NJ.
     Business functions supported by this application included supply chain,
     manufacturing and finance.

- -    An additional SAP instance housed in Mount Olive, NJ, known as TSP,
     processed some of the technical purchasing needs and plant maintenance
     records.

- -    All network infrastructure, including e-mail, telecommunications and most
     voice communications was managed by BASF corporate and charged back to the
     operating companies.

                                                                              12



                              EUROPE ENTANGLEMENT
                                   BACKGROUND


- -    Most of the telecommunications infrastructure and some application support
     was handled by BASF. Additionally, the global Novell Directory Services
     (NDS) network security was developed and maintained by BASF in
     Ludwigshafen.

- -    NDS is the network authentication model used throughout the world for those
     people logging into the BASF network and is therefore, highly integrated
     into the BASF network security model. All sites allowing BASF network
     access use this security capability.

- -    Intercompany IT reliance varied significantly by site and installed
     technology. Some sites, such as Ludwigshafen, Italy, Spain and the UK,
     offered greater disentanglement obstacles due to higher level of business
     application intercompany IT reliance. Others sites, such as those in the
     eastern European countries and Portugal, have less reliance on BASF
     application support.

- -    Additionally, some affiliate locations house both BASF and Abbott
     employees. This co-location of employees introduces additional complexity
     including segregation of the Abbott people from the BASF network (and visa
     versa) and voice communications.

- -    BASF Notes e-mail infrastructure support was site specific with some sites
     relying on BASF and others operating independently.

                                                                              13




                            OTHER EX-US ENTANGLEMENT
                                   BACKGROUND


LATIN AMERICA:

- -    Much of the telecommunications infrastructure and some applications support
     was handled by BASF. The degree of entanglement varied significantly by
     site and installed technology.

- -    Columbia's business processes were being supported by the CAT template
     housed in Mount Olive, NJ. Other sites, such as Brazil, operated somewhat
     independently and offered less disentanglement complexities.

- -    BASF Notes e-mail infrastructure support was site specific with some sites
     relying on BASF and others operating independently.

PACIFIC ASIA AFRICA:

- -    Offered the least amount of disentanglement from BASF. However, due to the
     lack of BASF corporate IT infrastructure and standard application
     deployment, little technical detail was available.

- -    Site surveys and visits were conducted throughout March and April to
     determine the amount of entanglement, technology deployment and number of
     connected locations.

- -    Few sites possessed connections to the BASF network and relied on Internet
     mail for e-mail communications back to BASF. BASF business application
     support was minimal.

                                                                              14


                             ACTUAL IT ENVIRONMENT

- -    These IT environmental differences caused Abbott to invest in application
     and infrastructure disentanglement in order to remove the dependence on
     BASF. These investments were unexpected, given BASF's provided
     documentation. These costs are summarized on pages 16-20.

                                                                              15


                           ESTIMATED DISENTANGLEMENT
                           COSTS BY GEOGRAPHY ($000)



                                                             Total
                                                             -----
                                                         
US application disentanglement                               6,222
US infrastructure                                            6,257
Total US                                                    12,479

Ex-US application                                            3,647
Ex-US infrastructure                                         8,877
Total Ex-US                                                 12,524

Grand Total                                                 25,003*


* Proposed amount to be reimbursed by BASF.


                                                                             16



                                US APPLICATION
                         DISENTANGLEMENT COSTS ($000)



Item                                                         Total
- ----                                                         -----
                                                          

Order processing and EDI                                       341
HR and Financial systems                                       872
CAT extraction from Mount Olive                              4,486
R & D server relocation                                        400
Transfer SPRINT data to US                                     100
Disentanglement travel expenses                                 23

Total                                                        6,222



                                                                             17



                               US INFRASTRUCTURE
                         DISENTANGLEMENT COSTS ($000)



Item                                                         Total
- ----                                                         -----
                                                          

Wide area network                                              172
(routers, switches, phone systems, firewalls)
Disentangle from BASF Novell security                        2,991
(including Notes disentanglement)
Oracle and MDL licenses                                      2,429
(difference between Abbott and BASF licenses)
Desktop migration                                              665
(transition from BASF owned lease)

Total                                                        6,257



                                                                             18



                               EX-US APPLICATION
                         DISENTANGLEMENT COSTS ($000)



Item                                                         Total
- ----                                                         -----
                                                          

Ludwigshafen data center                                     3,408
MSS sales system                                                54
Netherlands migration from MUCCS                                44
Spain H/R disentanglement                                       51
Italy AS/400                                                    90

Total                                                        3,647



                                                                             19



                               EX-US INFRASTRUCTURE
                         DISENTANGLEMENT COSTS ($000)



Item                                                         Total
- ----                                                         -----
                                                          

Wide area network                                            2,422
(routers, switches, phone systems, firewalls)
Disentangle from BASF Novell security                        6,329
(including Notes disentanglement)
Oracle licenses                                                126
(difference between Abbott and BASF licensing practice)

Total                                                        8,877



                                                                             20



EXHIBIT 2

                         SIBUTRAMINE EU CLINICAL STUDY
                              EXTERNAL COSTS ONLY



               Activity                      2002-2008 Costs ($MM)
               --------                      ---------------------
                                               
     Staffing                                     $  7.86
     Operating                                    $  2.11
     Overhead                                     $  2.99
     Contingency                                  $  1.14
     Nat. Co-ord.                                 $  3.01
     Meetings/Travel                              $ 14.73
     Investigator Fees                            $ 60.00
     Other Expenses                               $  5.00

          Subtotal                                $ 96.84

     Laboratory Tests                             $  2.50

     CRO Costs                                    $ 22.60

     Total External Costs                         $121.94

     Clinical Costs per BASF
     Senior Management
     discussions/due diligence.                   $ 67.50
     (Euro 75 MM).

     Difference                                   $ 54.44


     Comments
     -    The above clinical study reflects 12,800 patients (consistent with
          BASF estimate of 12,500).
     -    The CPMP has approved the protocol for this study.
     -    The above clinical cost estimate reflects external costs only. We are
          in the process of preparing internal cost estimates for this clinical
          study.



Exhibit 3

                                                                    Confidential

                              ABBOTT LABORATORIES
          TOTAL WORLDWIDE PROTIUM -- NPV IMPACT PER THE BASF CONTRACT
                                     ($MM)



                                         Last 9 Mo
                                              2001      2002      2003      2004      2005      2006
                                         ---------      ----      ----      ----      ----      ----
                                                                              
TOTAL ABBOTT NET SALES                        24,0      35,0      37,0      39,0      41,0      43,0

EARNINGS BEFORE INTEREST & TAXES               7,9      11,6      14,1      14,8      17,6      18,5

WORKING CAPITAL CASH FLOW                     (5,8)     (2,7)     (0,6)     (0,5)     (0,5)     (0,5)
                                              ----      ----      ----      ----      ----      ----

TOTAL CASH FLOW                                2,1       8,9      13,5      14,4      17,0      18,0


                               2001-2006     NPV @ 12.5%          51,4



                                   EXHIBIT 3a



                                              2002      2003      2004      2005      2006
                                              ----      ----      ----      ----      ----
                                                                       
Total Abbott Net Sales of Pantoprazole
(Protium)                                     40.3      43.7      46.9      49.3       8.8

Promotional Fee paid to Abbott (28% of
Net Sales)*                                   11.3      12.2      10.7       0.0       0.0

NPV @ 12.5% (Fees paid to Abbott by BASF)     30.6


     * 28% of Net Sales until $30.6 MM is paid (NPV basis).

Net Sales will be calculated using the exchange rate used by Purchaser for its
financial accounting and reporting purposes.


EXHIBIT 4


BELGIUM: In regard of the pension entitlements as of March 02, 2001 of
members who elected to transfer their past service pension benefits from
Seller to Purchaser, Seller shall procure that the amount of 913,049.19 EUR
(assumed payment date: March 10, 2002) is paid to an account to be specified
by Purchaser.

BRAZIL (PENSION PLAN): In regard of the Pension Liabilities as of March 02,
2001 Seller shall procure that (i) for the non contributing members with a
DB-minimum benefit the amount of 567,639 BRL per annum for the period between
March 02, 2001 and the actual date of payment plus 6% interest per annum for
the period between March 02, 2001 and the actual date of payment and (ii) for
the DC-members and former Knoll employees with a vested DC-benefit
entitlement the amount of 4,642,390 BRL increased with the net return of
invested assets under the Knoll section for the period between March 02,
2001 and the actual date of payment are paid to an account to be specified by
Purchaser. An excess of pension assets over the Pension Liabilities will be
credited to all the Knoll section members and non-members based on the
individual DC accounts for the contributing and vested DC-members, the
present value of the current pension benefit paid for the pensioners and the
PBO-value of the minimum DB-benefit of non-contributing plan members. The
respective actions are described in a document called "Termo de Retirada da
Patrocinadora Knoll Produtos Quimicos e Farmaceuticos Ltda. do Plano de
Aposentadoria da BASF Sociedade de Previdencia Privada" signed by BASF S.A.
and Abbott Laboratorios do Brasil Ltda. dated January 14, 2002.

BRAZIL (GENERAL MANAGER): BASF hereby transfers the former International
Group Insurance Contract (insured with Victoria; policy number GV 2693594/30)
financing the Pension Liabilities for the General Manager to Purchaser with
effect of March 02, 2001.

CANADA: In regard of the Pension Liabilities as of March 02, 2001 Seller
shall procure that the amount of 5,071,131 CAD plus 6% interest per annum for
the period between March 02, 2001 and the actual date of payment is paid to
an account to be specified by Purchaser.

IRELAND: With regard to the Pension Liabilities as of March 02, 2001 of
members who elect to transfer their past service pension benefits from Seller
to Purchaser, Seller shall procure that the amounts per employee specified
in the report of the Seller's actuary Towers Perrin dated June 29, 2001
adjusted as per the email from Seller's actuary dated September 04, 2001 as
confirmed by Purchaser's actuary Hewitt plus 6% interest per annum for the
period between March 02, 2001 and the actual date of payment is paid to an
account to be specified by Purchaser plus contributions made during the
participation period including adequate interest, less an agreed
administration charge and less a deduction of risk premiums for insured
death-in service benefits paid by the Seller for the Knoll employees during
the participation period in Seller's Group Pension Arrangement.

                                       1




NETHERLANDS: As the Knoll/Abbott company in the Netherlands wishes to stay in
the BASF Group Insurance Separate Account Arrangement (insured with Zwitser
Leven; policy number GN 3513) until December 31, 2002 (i) Purchaser agrees to
pay the necessary contributions and administration charges, the latter being
determined proportionately to Knoll's policy reserve as compared with the
total policy reserve under the BASF Group Insurance Separate Account
Arrangement, for the participation period after March 02, 2001, and Seller
shall procure that (ii) dividends achieved under the separate accounting will
be appropriately paid back to the Knoll/Abbott company in the Netherlands
during the participation period and (iii) an amount equal to the policy
reserve (any possible free reserves or provisions excluded) as of December 31,
2002 for all Knoll-members transferring their past service pension benefits to
a pension arrangement of Purchaser in fulfilment of their Pension Liabilities
as of December 31, 2002 is paid to an account of an insurance company or
pension fund according to the Pensioen-en Spaarfondsenwet (Pension and Savings
Act) further to be specified by Purchaser. If it is not possible to negotiate
a reasonable policy separation prior to December 31, 2003, BASF agrees to
maintain Abbott/Knoll in the BASF Group Insurance Separate Account Arrangement
(until expiry) based upon the above said parameters.

UK: With regard to the Pension Liabilities as of March 02, 2001 of members
who elected to transfer their past service pension benefits from Seller to
Purchaser, Seller shall procure that the amounts per employee specified in
the actuarial report of Seller's actuary Towers Perrin as confirmed by
Purchaser's actuary Hewitt plus 6% interest per annum for the period between
March 02, 2001 and the actual date of payment is paid to an account to be
specified by Purchaser plus contributions made during the participation
period including adequate interest, less an agreed administration charge and
less a deduction of risk premiums for insured death-in service benefits paid
by the Seller for the Knoll employees during the participation period in
Seller's Group Pension Arrangement.

                                       2



                                                          BEGLAUBIGTE ABSCHRIFT


                                POWER OF ATTORNEY

I, the undersigned

                              Michael G. Strohmeier
                            with business address at
                           Jones, Day, Reavis & Pogue
                             Chicago, Illinois, USA

hereby grant a substitute power of attorney on behalf of

                              Abbott Laboratories
                           Abbott Park, Illinois, USA
                     -hereinafter referred to as the "Company"-

to

                               Ansgar C. Rempp
                                Jens U. Boeck
                               and Ercan Acikel
                         each with business address at
                           Jones, Day, Reavis & Pogue
                                 Frankfurt, Germany

according to the power of attorney dated February 23, 2001 granted to me by
the Company (the "Original Power of Attorney"), a copy of which is attached
hereto, to individually represent the Company within the scope and
limitations provided for by the Original Power of Attorney.

Illinois, July 19, 2001

/s/ MICHAEL G. STROHMEIER
- -------------------------------------
Michael G. Strohmeier


SUBSCRIBED AND SWORN TO                     ----------------------------------
before me this 19th day of July, 2001                "OFFICIAL SEAL"
                                                      SONIA ARCHER
/s/ Sonia Archer                             Notary Public, State of Illinois
- -------------------------------------         My Commission Expires 08/26/03
Notary Public                               ----------------------------------





                                POWER OF ATTORNEY

We, the undersigned company

                               Abbott Laboratories
                            Abbott Park, Illinois, USA
                      hereinafter referred to as the "Company"

hereby grant powers of attorney to

                                James L. Tyree
                            with business address at
                               Abbott Laboratories
                           Abbott Park, Illinois, USA

                                 Brian J. Smith
                           with business address at
                               Abbott Laboratories
                           Abbott Park, Illinois, USA

                             Charles N. Bensinger III
                             with business address at
                            Jones, Day, Reavis & Pogue
                              Chicago, Illinois, USA

                                      and

                              Michael G. Strohmeier
                            with business address at
                           Jones, Day, Reavis & Pogue
                             Chicago, Illinois, USA


to individually represent the Company in connection with the transactions
contemplated by the purchase agreement dated as of December 14, 2000 (the
"Purchase Agreement") between BASF Aktiengesellschaft, a stock corporation
organized under the laws of the Federal Republic of Germany ("BASF") and the
Company, including, but not limited to, (i) any amendments to the Purchase
Agreement; (ii) the sale of all of the issued and outstanding shares of
capital stock of (a) Knoll AG, a stock corporation organized under the laws
of the Federal Republic of Germany, and (b) BASF Pharmaceutical Corporation,
a Delaware corporation; (iii) the sale to the Company and/or any of its
subsidiaries of all of shares capital stock or other equity interests
directly or indirectly owned by BASF; (iv) the sale and transfer of certain
patents, trademarks, tradenames and other intellectual property, and to enter
into any kinds of agreements and commitments, including the right to grant
substitute and additional powers of attorney, as any of them deem necessary
and appropriate in connection therewith.





Our representatives shall be authorized to make all statements they deem
necessary or appropriate in this context. Furthermore, our representatives
shall be released from the restrictions set forth in Section 181 of the
German Civil Code.

ABBOTT LABORATORIES

Illinois, 23 day of February, 2001.


by :


/s/ Gary P. Coughlan
- ----------------------------------------
Gary P. Coughlan, Senior Vice President,
Finance and Chief Financial Officer





STATE OF ILLINOIS    )
                     ) ss.
COUNTY OF LAKE       )


      The undersigned, a Notary Public in and for the County and State
aforesaid, does hereby certify that Gary P. Coughlan, personally known to me
to be a duly appointed officer of Abbott Laboratories, an Illinois
corporation, appeared before me this day in person and acknowledged under
oath that in such capacity he or she signed and delivered this certificate
pursuant to authority duly given to him by said corporation.

      GIVEN under my hand and seal this 23 day of February, 2001.




                              /s/ Judith Pacheco
                              ----------------------
                              Notary Public   ---------------------------------
                                                        OFFICIAL SEAL
                                                       Judith Pacheco
                                               Notary Public, State of Illinois
                                                 My Commission Expires 10/4/03
                                              ---------------------------------



My Commission expires: 10/4/03





Die wortliche Ubereinstimmung vorstehender Ablichtung mit der mir
vorliegenden Urschrift beglaubige ich hiermit.


Frankfurt am Main, den 11. Marz 2002




                                                  /s/ Dr. Mattke
                               [SEAL]                 Dr. Mattke
                                             als amtlich bestellter Vertrater
                                               des Notars Dr. Gerhard Pilger





                                                          BEGLAUBIGTE ABSCHRIFT
BASF Aktiengesellschaft                                           BASF




                                     VOLLMACHT



Hiermit erteilen wir

                           Frau Tanja Brandner
                           geschaftsansassig
                           Pilger & Mattke
                           Wiesenau 43
                           60323 Frankfurt am Main

Vollmacht, BASF Aktiengesellschaft bei der notariellen Beurkundung des
beigefugten "Agreement" zwischen BASF Aktiengesellschaft und Abbott
Laboratories am 11.03.2002 zu vertreten.


Ludwigshafen, 11.03.2002

BASF Aktiengesellschaft


/s/ DR. THOMAS BECKER                  /s/ WOLFGANG WONDE
- -----------------------------          ------------------
Dr. Thomas Becker                      Wolfgang Wonde
(Prokurist)                            (Prokurist)




                                                                               
Telefon +49 821 50-0 (Vermittlung)      Sitz der Gessellschaft:                      Aufsichtsratavorsitzender; Berthold Leibinger
Telefax +49 821 60-42525 (Zentrale)     67056 Ludwigshafen, Deutschland              Vorstend: Jurgen Strube, Vorsitzender;
Telex 45499-0 bas d (Vermittlung)       Registergericht: Amtsgericht Ludwigshafen    Max Dietrich Kjey, steliv, Vorsitzender;
E-Mail: Info.service@basf-ag.de         Eintragungsnummer: HRB 3000                  Helmut Becks; John Feldmann;
Internet: www.basf.de                   Bankverbindung:                              Jurgen Hambrecht; Klaus Peter Lubbe;
                                        Wintershall Bank GmbH 34119 Kassel,          Stefan Marcinowski; Peter Oakley;
                                        Girokonto 400 505 (BLZ 520 200 00)           Eggert Voscherau

                                     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 March 15, 2002



                         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 the first business day of January
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
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


BY-LAWS
                                                                          Page 2


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 the first business day of January 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 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 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.


BY-LAWS
                                                                          Page 3


     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 Chief Executive Officer, 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
Chief Executive Officer, 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, 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


BY-LAWS
                                                                          Page 4


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 delivering a valid appointment to the
person so appointed or such person's agent; PROVIDED, HOWEVER, no shareholder
may name more than two persons as proxies to attend and to vote the
shareholder's shares at any meeting of shareholders. Without limiting the
manner in which a shareholder may appoint such a proxy pursuant to these
By-Laws, the following shall constitute valid means by which a shareholder
may make such an appointment:

     (a)  A shareholder may sign a proxy appointment form. The shareholder's
          signature may be affixed by any reasonable means, including, but not
          limited to, by facsimile signature.

     (b)  A shareholder may transmit or authorize the transmission of a
          telegram, cablegram, or other means of electronic transmission;
          provided that any such transmission must either set forth or be
          submitted with information from which it can be determined that the
          telegram, cablegram, or other electronic transmission was authorized
          by the shareholder. If it is determined that the telegram, cablegram,
          or other electronic transmission is valid, the inspectors or, if there
          are no inspectors, such other persons making that determination shall
          specify the information upon which they relied.

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 appointing the proxy 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 delivery of a valid proxy by, or by
the attendance at the meeting and voting in person by the person appointing the
proxy. The dates of the proxy shall presumptively determine the order of
appointment.

     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-LAWS
                                                                          Page 5


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.

     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.


BY-LAWS
                                                                          Page 6


     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 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 fourteen. 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 Chief Executive Officer, 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


BY-LAWS
                                                                          Page 7


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, 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.


BY-LAWS
                                                                          Page 8


     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 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. 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.

                                   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.


BY-LAWS
                                                                          Page 9


     SECTION 4. DUTIES OF THE EXECUTIVE COMMITTEE. The Executive 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 audit;


BY-LAWS
                                                                         Page 10


          (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, the Chief Executive Officer, 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:

          (1)  develop general criteria for selection of and qualifications
               desirable in members of the Board of Directors and Officers of
               the Corporation and aid


BY-LAWS
                                                                         Page 11


               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.

     SECTION 11. PUBLIC POLICY COMMITTEE. The Board of Directors shall appoint a
Public Policy 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 12. DUTIES OF THE PUBLIC POLICY COMMITTEE. The Public Policy
Committee shall have an advisory role with respect to public policy, regulatory
and government affairs issues that affect the Corporation.

                                    ARTICLE V

                                    OFFICERS

     SECTION 1. NUMBER. The Officers of the Corporation shall be the Chairman of
the Board, the Chief Executive Officer, one or more Presidents, 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 or the
Chairman of the Board may appoint. Any two offices may be held by the same
person.

     SECTION 2. ELECTION AND TERM OF OFFICE. The Board of Directors may elect
any Officer. The Chairman of the Board may appoint any Vice President, a
Controller, a Treasurer, a Secretary and any Assistant Treasurers and Assistant
Secretaries.


BY-LAWS
                                                                         Page 12


     The Officers of the Corporation shall be elected or appointed annually.
Each year, the Board of Directors shall elect Officers at the first meeting of
the Board of Directors held after the annual meeting of shareholders. If the
Board of Directors does not elect Officers at such meeting, such election shall
be held as soon thereafter as conveniently may be. Each year, immediately
following the election of Officers by the Board of Directors or as soon
thereafter as conveniently may be, the Chairman of the Board shall appoint such
additional Officers within the scope of the Chairman's authority as the Chairman
deems necessary or appropriate.

     Vacancies or new offices may be filled at any time as set forth in Section
4 of this Article V.

     Each Officer shall hold office until his or her successor shall have been
duly elected or appointed 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.

     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. Any Officer appointed by the Chairman of the Board may be
removed by the Chairman whenever, in the Chairman's 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. A vacancy in any office
appointed by the Chairman of the Board may be filled by the Chairman of the
Board for the unexpired portion of the term.

     SECTION 5. CHAIRMAN OF THE BOARD OF DIRECTORS AND CHIEF EXECUTIVE OFFICER.
The Chairman shall preside at all meetings of the Board of Directors and the
shareholders. The Chief Executive Officer shall be responsible for the overall
management of the Corporation subject to the direction of the Board of
Directors.

     SECTION 6. PRESIDENT. Each President shall be the Chief Operating Officer
of a major area of the Corporation's activities and shall perform such duties as
may be prescribed by the Board of Directors or the Chief Executive Officer.

     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 Chief Executive Officer or a 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, a President, the Chief Executive Officer, or the Board of
Directors.


BY-LAWS
                                                                         Page 13


     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 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
Chief Executive Officer, any 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 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.


BY-LAWS
                                                                         Page 14


                                   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 Chief Executive Officer, 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 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


BY-LAWS
                                                                         Page 15


          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 Chief Executive
               Officer, 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.

                                   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 Chief Executive Officer, 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.


BY-LAWS
                                                                         Page 16


                                   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 "[CORPORATE SEAL]" 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 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 12


                               Abbott Laboratories

                Computation of Ratio of Earnings to Fixed Charges

                                   (Unaudited)

                       (DOLLARS IN MILLIONS EXCEPT RATIOS)




                                                                           Three Months Ended
                                                                             March 31, 2002
                                                                           -------------------
                                                                       

 Net Earnings                                                                     $854
 Add (deduct):
   Taxes on earnings                                                               277
   Minority interest                                                                 5
                                                                               -------
 Net Earnings as adjusted                                                       $1,136
                                                                               -------
 Fixed Charges:
   Interest on long-term and short-term debt                                        63
   Capitalized interest cost                                                         3
   Rental expense representative of an interest factor                              13
                                                                               -------
 Total Fixed Charges                                                                79
                                                                               -------
 Total adjusted earnings available for payment of fixed charges                 $1,215
                                                                               =======
 Ratio of earnings to fixed charges                                               15.4
                                                                               =======


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) Abbott 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.