UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D. C. 20549

 


 

FORM 8-K

 

CURRENT REPORT

Pursuant to Section 13 or 15(d) of the

Securities Exchange Act of 1934

 

July 17, 2019

Date of Report (Date of earliest event reported)

 

ABBOTT LABORATORIES

(Exact name of registrant as specified in charter)

 


 

Illinois

 

1-2189

 

36-0698440

(State or other Jurisdiction

 

(Commission File Number)

 

(IRS Employer

of Incorporation)

 

 

 

Identification No.)

 


 

100 Abbott Park Road

Abbott Park, Illinois 60064-6400

(Address of principal executive offices)(Zip Code)

 

Registrant’s telephone number, including area code:  (224) 667-6100

 

Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions:

 

o                                    Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425)

o                                    Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12)

o                                    Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b))

o                                    Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c))

 

Securities Registered Pursuant to Section 12(b) of the Act:

 

Title of Each Class

 

Trading
Symbol(s)

 

Name of Each Exchange
on Which Registered

Common Shares, Without Par Value

 

ABT

 

New York Stock Exchange
Chicago Stock Exchange

 

Indicate by check mark whether the registrant is an emerging growth company as defined in Rule 405 of the Securities Act of 1933 (§230.405 of this chapter) or Rule 12b-2 of the Securities Exchange Act of 1934 (§240.12b-2 of this chapter).

 

Emerging growth company   o

 

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act.   o

 

 

 


 

Item 2.02                                           Results of Operations and Financial Condition

 

On July 17, 2019, Abbott Laboratories announced its results of operations for the second quarter 2019.

 

Furnished as Exhibit 99.1, and incorporated herein by reference, is the news release issued by Abbott announcing those results.  In that news release, Abbott uses various non-GAAP financial measures including, among others, net earnings from continuing operations excluding specified items.  These non-GAAP financial measures adjust for factors that are unusual or unpredictable, such as expenses primarily associated with acquisitions and restructuring actions, charges related to cost reduction initiatives, the estimated impact of U.S. tax reform, the acquisition of an R&D asset and the cost associated with the early extinguishment of debt, charges related to impairment of certain assets, and tax benefits associated with specified items and share-based compensation.  These non-GAAP financial measures also exclude intangible amortization expense to provide greater visibility on the results of operations excluding these costs, similar to how Abbott’s management internally assesses performance.  Abbott’s management believes the presentation of these non-GAAP financial measures provides useful information to investors regarding Abbott’s results of operations as these non-GAAP financial measures allow investors to better evaluate ongoing business performance.  Abbott’s management also uses these non-GAAP financial measures internally to monitor performance of the businesses.  Abbott, however, cautions investors to consider these non-GAAP financial measures in addition to, and not as a substitute for, financial measures prepared in accordance with GAAP.

 

Item 9.01                                           Financial Statements and Exhibits

 

Exhibit No.

 

Exhibit

 

 

 

99.1

 

Press Release dated July 17, 2019 (furnished pursuant to Item 2.02).

 

2


 

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 hereunto duly authorized.

 

 

 

ABBOTT LABORATORIES

 

 

 

 

Date:  July 17, 2019

By:

/s/ Brian B. Yoor

 

 

Brian B. Yoor

 

 

Executive Vice President, Finance and Chief Financial Officer

 

3


Exhibit 99.1

 

 

News Release

 

Abbott Reports Second-Quarter 2019 Results

 

·                 Accelerated and sustainable growth driven by strong performance across portfolio

·                 Raising full-year guidance for organic sales growth to 7 to 8 percent

·                 Double-digit EPS growth exceeded expectations; raising full-year forecast

·                 Long-term growth drivers — FreeStyle Libre, MitraClip and Alinity — achieving exceptional growth

 

ABBOTT PARK, Ill., July 17, 2019 — Abbott today announced financial results for the second quarter ended June 30, 2019.

 

·                  Second-quarter worldwide sales of $8.0 billion increased 2.7 percent on a reported basis and 7.5 percent on an organic* basis.

·                  Reported diluted EPS from continuing operations under GAAP was $0.56 in the second quarter.

·                  Adjusted diluted EPS from continuing operations, which excludes specified items, was $0.82, above the previous guidance range.

·                  Abbott is raising its full-year 2019 outlook. Abbott projects organic sales growth of 7.0 to 8.0 percent1, diluted EPS from continuing operations on a GAAP basis of $2.06 to $2.12, and full-year adjusted diluted EPS from continuing operations of $3.21 to $3.27, reflecting double-digit growth.

·                  FreeStyle® Libre®, Abbott’s revolutionary continuous glucose monitoring system, achieved worldwide sales of $433 million in the quarter, an increase of 63.9 percent on a reported basis and 72.9 percent on an organic basis versus the prior year. In the U.S., FreeStyle Libre is now reimbursed for approximately 75 percent of people with private pharmacy benefit insurance.

·                  Worldwide sales of MitraClip® were $169 million in the quarter, an increase of 26.7 percent on a reported basis and 30.6 percent on an organic basis versus the prior year, including U.S. growth of 56.1 percent. Earlier this week, Abbott announced U.S. FDA approval of its next-generation MitraClip device, which offers enhancements and more sizes to offer doctors further options.

·                  In July, Abbott received U.S. FDA approval for its Alinity®-S diagnostics system, the latest technology for screening and protecting the U.S. blood and plasma supply. Alinity-S is designed to provide faster and more efficient results within a smaller space versus commercially available competitive systems, while maintaining the highest levels of accuracy.

 

“Our sales growth accelerated and is sustainable,” said Miles D. White, chairman and chief executive officer, Abbott. “We have great momentum and are raising our guidance above the strong outlook we previously set for the year.”

 

—more—

 


* See note on organic growth on the next page.

 


 

SECOND-QUARTER BUSINESS OVERVIEW

 

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

 

Organic sales growth:

 

·                  Excludes the prior year first and second-quarter results for a non-core business within U.S. Adult Nutrition, which was discontinued during the third quarter 2018; and

·                  Excludes the impact of foreign exchange.

 

Following are sales by business segment and commentary for the second quarter:

 

Total Company

($ in millions)

 

 

 

 

 

 

 

 

 

% Change vs. 2Q18

 

 

 

Sales 2Q19

 

Reported

 

Organic

 

 

 

U.S.

 

Int’l

 

Total

 

U.S.

 

Int’l

 

Total

 

U.S.

 

Int’l

 

Total

 

Total *

 

2,850

 

5,129

 

7,979

 

5.5

 

1.3

 

2.7

 

6.0

 

8.3

 

7.5

 

Nutrition

 

786

 

1,089

 

1,875

 

0.7

 

1.1

 

0.9

 

2.3

 

7.0

 

5.1

 

Diagnostics

 

695

 

1,210

 

1,905

 

6.7

 

(0.9

)

1.7

 

6.7

 

6.0

 

6.2

 

Established Pharmaceuticals

 

 

1,108

 

1,108

 

n/a

 

(1.8

)

(1.8

)

n/a

 

6.1

 

6.1

 

Medical Devices

 

1,360

 

1,715

 

3,075

 

8.0

 

5.1

 

6.4

 

8.0

 

12.4

 

10.5

 

 


* Total Q2 2019 Abbott sales from continuing operations include Other Sales of $16 million.

 

 

 

 

 

 

 

 

 

% Change vs. 1H18

 

 

 

Sales 1H19

 

Reported

 

Organic

 

 

 

U.S.

 

Int’l

 

Total

 

U.S.

 

Int’l

 

Total

 

U.S.

 

Int’l

 

Total

 

Total *

 

5,604

 

9,910

 

15,514

 

4.2

 

1.3

 

2.4

 

4.8

 

8.6

 

7.3

 

Nutrition

 

1,533

 

2,134

 

3,667

 

(0.4

)

2.8

 

1.5

 

1.6

 

9.0

 

5.9

 

Diagnostics

 

1,419

 

2,327

 

3,746

 

4.9

 

(1.3

)

1.0

 

4.9

 

5.5

 

5.3

 

Established Pharmaceuticals

 

 

2,100

 

2,100

 

n/a

 

(3.3

)

(3.3

)

n/a

 

5.7

 

5.7

 

Medical Devices

 

2,635

 

3,335

 

5,970

 

6.8

 

5.3

 

5.9

 

6.8

 

12.5

 

10.0

 

 


* Total 1H 2019 Abbott sales from continuing operations include Other Sales of $31 million.

 

n/a = Not Applicable.

 

Note: In order to compute results excluding the impact of exchange rates, current year U.S. dollar sales are multiplied or divided, as appropriate, by the current year average foreign exchange rates and then those amounts are multiplied or divided, as appropriate, by the prior year average foreign exchange rates.

 

Second-quarter 2019 worldwide sales of $8.0 billion increased 2.7 percent on a reported basis. On an organic basis, worldwide sales increased 7.5 percent. Refer to pages 17 and 18 for a reconciliation of adjusted historical revenue.

 

2


 

Nutrition

($ in millions)

 

 

 

 

 

 

 

 

 

% Change vs. 2Q18

 

 

 

Sales 2Q19

 

Reported

 

Organic

 

 

 

U.S.

 

Int’l

 

Total

 

U.S.

 

Int’l

 

Total

 

U.S.

 

Int’l

 

Total

 

Total

 

786

 

1,089

 

1,875

 

0.7

 

1.1

 

0.9

 

2.3

 

7.0

 

5.1

 

Pediatric

 

475

 

576

 

1,051

 

1.3

 

(0.8

)

0.1

 

1.3

 

4.2

 

2.9

 

Adult

 

311

 

513

 

824

 

(0.2

)

3.4

 

2.0

 

3.9

 

10.4

 

7.9

 

 

 

 

 

 

 

 

 

 

% Change vs. 1H18

 

 

 

Sales 1H19

 

Reported

 

Organic

 

 

 

U.S.

 

Int’l

 

Total

 

U.S.

 

Int’l

 

Total

 

U.S.

 

Int’l

 

Total

 

Total

 

1,533

 

2,134

 

3,667

 

(0.4

)

2.8

 

1.5

 

1.6

 

9.0

 

5.9

 

Pediatric

 

928

 

1,152

 

2,080

 

1.2

 

2.2

 

1.8

 

1.2

 

7.6

 

4.7

 

Adult

 

605

 

982

 

1,587

 

(2.8

)

3.6

 

1.1

 

2.1

 

10.7

 

7.4

 

 

Worldwide Nutrition sales increased 0.9 percent on a reported basis in the second quarter. On an organic basis, sales increased 5.1 percent. Refer to pages 17 and 18 for a reconciliation of adjusted historical revenue.

 

Worldwide Pediatric Nutrition sales increased 0.1 percent on a reported basis in the second quarter, including an unfavorable 2.8 percent effect of foreign exchange, and increased 2.9 percent on an organic basis. Sales performance in the quarter was led by broad-based growth across several brands, and included above-market growth in several countries in Latin America and Asia.

 

Worldwide Adult Nutrition sales increased 2.0 percent on a reported basis in the second quarter and increased 7.9 percent on an organic basis. International Adult Nutrition sales increased 3.4 percent on a reported basis and 10.4 percent on an organic basis in the second quarter. Sales performance in the quarter was led by strong growth of Ensure®, Abbott’s market-leading complete and balanced nutrition brand, and Glucerna®, Abbott’s market-leading diabetes-specific nutrition brand.

 

3


 

Diagnostics

($ in millions)

 

 

 

 

 

 

 

 

 

% Change vs. 2Q18

 

 

 

Sales 2Q19

 

Reported

 

Organic

 

 

 

U.S.

 

Int’l

 

Total

 

U.S.

 

Int’l

 

Total

 

U.S.

 

Int’l

 

Total

 

Total

 

695

 

1,210

 

1,905

 

6.7

 

(0.9

)

1.7

 

6.7

 

6.0

 

6.2

 

Core Laboratory

 

272

 

897

 

1,169

 

9.7

 

1.9

 

3.6

 

9.7

 

9.3

 

9.4

 

Molecular

 

38

 

69

 

107

 

(0.9

)

(17.7

)

(12.4

)

(0.9

)

(13.2

)

(9.3

)

Point of Care

 

113

 

32

 

145

 

5.3

 

4.0

 

5.0

 

5.3

 

6.9

 

5.7

 

Rapid Diagnostics

 

272

 

212

 

484

 

5.4

 

(6.3

)

(0.1

)

5.4

 

(0.1

)

2.8

 

 

 

 

 

 

 

 

 

 

% Change vs. 1H18

 

 

 

Sales 1H19

 

Reported

 

Organic

 

 

 

U.S.

 

Int’l

 

Total

 

U.S.

 

Int’l

 

Total

 

U.S.

 

Int’l

 

Total

 

Total

 

1,419

 

2,327

 

3,746

 

4.9

 

(1.3

)

1.0

 

4.9

 

5.5

 

5.3

 

Core Laboratory

 

521

 

1,709

 

2,230

 

9.5

 

2.3

 

3.9

 

9.5

 

9.7

 

9.6

 

Molecular

 

78

 

137

 

215

 

1.6

 

(16.2

)

(10.4

)

1.6

 

(11.5

)

(7.3

)

Point of Care

 

222

 

58

 

280

 

1.8

 

(6.1

)

0.1

 

1.8

 

(3.2

)

0.7

 

Rapid Diagnostics

 

598

 

423

 

1,021

 

2.7

 

(8.3

)

(2.2

)

2.7

 

(2.2

)

0.6

 

 

Worldwide Diagnostics sales increased 1.7 percent on a reported basis in the second quarter, including an unfavorable 4.5 percent effect of foreign exchange, and increased 6.2 percent on an organic basis.

 

Core Laboratory Diagnostics sales increased 3.6 percent on a reported basis and 9.4 percent on an organic basis in the second quarter. Sales performance in the quarter was led by above-market growth internationally, where Abbott is achieving continued strong adoption of its Alinity family of innovative and highly differentiated diagnostic instruments. In July, Abbott received U.S. FDA approval for its Alinity-S (blood and plasma screening) diagnostics system and several testing assays, designed to provide faster and more efficient results within a smaller space, while maintaining the highest levels of accuracy.

 

Molecular Diagnostics sales decreased 12.4 percent on a reported basis in the second quarter, including an unfavorable 3.1 percent effect of foreign exchange, and decreased 9.3 percent on an organic basis. As expected, sales growth in the quarter was negatively impacted by non-governmental organization (NGO) purchasing patterns in Africa.

 

Point of Care Diagnostics sales increased 5.0 percent on a reported basis in the second quarter, including an unfavorable 0.7 percent effect of foreign exchange, and increased 5.7 percent on an organic basis. Sales growth was led by Abbott’s market-leading i-STAT® handheld system in the U.S. and internationally.

 

Rapid Diagnostics sales decreased 0.1 percent on a reported basis in the second quarter, including an unfavorable 2.9 percent effect of foreign exchange, and increased 2.8 percent on an organic basis. Organic sales growth was led by infectious disease testing in developed markets and cardio-metabolic testing globally.

 

4


 

Established Pharmaceuticals

($ in millions)

 

 

 

 

 

 

 

 

 

% Change vs. 2Q18

 

 

 

Sales 2Q19

 

Reported

 

Organic

 

 

 

U.S.

 

Int’l

 

Total

 

U.S.

 

Int’l

 

Total

 

U.S.

 

Int’l

 

Total

 

Total

 

 

1,108

 

1,108

 

n/a

 

(1.8

)

(1.8

)

n/a

 

6.1

 

6.1

 

Key Emerging Markets

 

 

853

 

853

 

n/a

 

(1.4

)

(1.4

)

n/a

 

7.9

 

7.9

 

Other

 

 

255

 

255

 

n/a

 

(3.1

)

(3.1

)

n/a

 

0.1

 

0.1

 

 

 

 

 

 

 

 

 

 

% Change vs. 1H18

 

 

 

Sales 1H19

 

Reported

 

Organic

 

 

 

U.S.

 

Int’l

 

Total

 

U.S.

 

Int’l

 

Total

 

U.S.

 

Int’l

 

Total

 

Total

 

 

2,100

 

2,100

 

n/a

 

(3.3

)

(3.3

)

n/a

 

5.7

 

5.7

 

Key Emerging Markets

 

 

1,605

 

1,605

 

n/a

 

(3.2

)

(3.2

)

n/a

 

7.6

 

7.6

 

Other

 

 

495

 

495

 

n/a

 

(3.6

)

(3.6

)

n/a

 

(0.4

)

(0.4

)

 

Established Pharmaceuticals sales decreased 1.8 percent on a reported basis in the second quarter, including an unfavorable 7.9 percent effect of foreign exchange, and increased 6.1 percent on an organic basis.

 

Key Emerging Markets include India, Brazil, Russia and China along with several additional emerging countries that represent the most attractive long-term growth opportunities for Abbott’s branded generics product portfolio. Sales in these geographies decreased 1.4 percent on a reported basis in the second quarter, including an unfavorable 9.3 percent effect of foreign exchange, and increased 7.9 percent on an organic basis, which was led by strong growth across several countries, including India and China.

 

Other sales decreased 3.1 percent on a reported basis in the second quarter, including an unfavorable 3.2 percent effect of foreign exchange, and increased 0.1 percent on an organic basis. As expected, Other sales growth was negatively impacted in the quarter by the recent discontinuation of a non-core, low-margin supply agreement.

 

5


 

Medical Devices

($ in millions)

 

 

 

 

 

 

 

 

 

% Change vs. 2Q18

 

 

 

Sales 2Q19

 

Reported

 

Organic

 

 

 

U.S.

 

Int’l

 

Total

 

U.S.

 

Int’l

 

Total

 

U.S.

 

Int’l

 

Total

 

Total

 

1,360

 

1,715

 

3,075

 

8.0

 

5.1

 

6.4

 

8.0

 

12.4

 

10.5

 

Cardiovascular and Neuromodulation

 

1,202

 

1,271

 

2,473

 

4.7

 

(0.2

)

2.1

 

4.7

 

6.5

 

5.6

 

Rhythm Management

 

273

 

275

 

548

 

(4.4

)

(3.8

)

(4.1

)

(4.4

)

3.3

 

(0.6

)

Electrophysiology

 

190

 

240

 

430

 

11.4

 

4.9

 

7.6

 

11.4

 

11.4

 

11.4

 

Heart Failure

 

149

 

52

 

201

 

27.1

 

12.0

 

22.8

 

27.1

 

18.2

 

24.6

 

Vascular

 

270

 

460

 

730

 

(4.9

)

(1.3

)

(2.7

)

(4.9

)

4.8

 

1.1

 

Structural Heart

 

152

 

200

 

352

 

29.0

 

1.7

 

11.9

 

29.0

 

9.1

 

16.6

 

Neuromodulation

 

168

 

44

 

212

 

(3.0

)

(10.4

)

(4.6

)

(3.0

)

(3.1

)

(3.0

)

Diabetes Care

 

158

 

444

 

602

 

42.1

 

23.9

 

28.2

 

42.1

 

33.1

 

35.3

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Vascular Product Lines:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Coronary and Endovasculara)

 

244

 

459

 

703

 

(2.4

)

(0.8

)

(1.3

)

(2.4

)

5.4

 

2.7

 

 


a)            Includes drug-eluting stents, balloon catheters, guidewires, vascular imaging/diagnostics products, vessel closure, carotid and other coronary and peripheral products.

 

 

 

 

 

 

 

 

 

% Change vs. 1H18

 

 

 

Sales 1H19

 

Reported

 

Organic

 

 

 

U.S.

 

Int’l

 

Total

 

U.S.

 

Int’l

 

Total

 

U.S.

 

Int’l

 

Total

 

Total

 

2,635

 

3,335

 

5,970

 

6.8

 

5.3

 

5.9

 

6.8

 

12.5

 

10.0

 

Cardiovascular and Neuromodulation

 

2,325

 

2,477

 

4,802

 

2.4

 

0.1

 

1.2

 

2.4

 

6.7

 

4.6

 

Rhythm Management

 

525

 

537

 

1,062

 

(8.3

)

(4.4

)

(6.4

)

(8.3

)

2.4

 

(3.0

)

Electrophysiology

 

364

 

471

 

835

 

10.2

 

8.8

 

9.4

 

10.2

 

15.1

 

13.0

 

Heart Failure

 

292

 

93

 

385

 

26.6

 

9.1

 

21.9

 

26.6

 

15.5

 

23.6

 

Vascular

 

536

 

903

 

1,439

 

(5.9

)

(1.8

)

(3.4

)

(5.9

)

4.3

 

0.4

 

Structural Heart

 

288

 

388

 

676

 

27.0

 

1.7

 

11.2

 

27.0

 

9.2

 

15.8

 

Neuromodulation

 

320

 

85

 

405

 

(6.2

)

(8.4

)

(6.7

)

(6.2

)

(0.6

)

(5.0

)

Diabetes Care

 

310

 

858

 

1,168

 

57.1

 

23.8

 

31.2

 

57.1

 

33.1

 

38.4

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Vascular Product Lines:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Coronary and Endovasculara)

 

479

 

899

 

1,378

 

(2.5

)

(1.4

)

(1.8

)

(2.5

)

4.6

 

2.1

 

 


a)            Includes drug-eluting stents, balloon catheters, guidewires, vascular imaging/diagnostics products, vessel closure, carotid and other coronary and peripheral products.

 

Note: Insertable Cardiac Monitor (ICM) sales, which had previously been reported in Electrophysiology, are now included in Rhythm Management. Historical periods have been adjusted to reflect this change.

 

Worldwide Medical Devices sales increased 6.4 percent on a reported basis in the second quarter and increased 10.5 percent on an organic basis, led by double-digit growth in Electrophysiology, Heart Failure, Structural Heart and Diabetes Care.

 

In Electrophysiology, growth was led by strong performance in cardiac diagnostic and ablation catheters, which are used to help physicians accurately and effectively treat atrial fibrillation, a form of irregular heartbeat.

 

6


 

In Heart Failure, growth was driven by market adoption of Abbott’s HeartMate 3® left ventricular assist device following U.S. FDA approval as a destination (long-term use) therapy in late-2018.

 

Growth in Structural Heart was led by MitraClip, Abbott’s market-leading device for the minimally invasive treatment of mitral regurgitation (backflow of blood through a leaky mitral heart valve). Earlier this year, Abbott received U.S. FDA approval for a new, expanded indication for MitraClip to treat clinically significant secondary mitral regurgitation as a result of underlying heart failure. This new indication significantly expands the number of people that can be treated with MitraClip. Earlier this week, Abbott announced U.S. FDA approval of its next-generation MitraClip device, MitraClip G4, which offers an expanded range of clip sizes, an alternative leaflet grasping feature and facilitation of procedure assessment in real time to offer doctors further options when treating mitral valve disease.

 

In Diabetes Care, sales increased 28.2 percent on a reported basis and 35.3 percent on an organic basis in the second quarter. Sales growth in the quarter was led by FreeStyle Libre, Abbott’s revolutionary continuous glucose monitoring system, with worldwide sales of $433 million, an increase of 63.9 percent on a reported basis and 72.9 percent on an organic basis versus the prior year.

 

7


 

ABBOTT’S GUIDANCE FOR 2019

 

Abbott projects 2019 organic sales growth of 7.0 to 8.0 percent1, and diluted earnings per share from continuing operations under Generally Accepted Accounting Principles (GAAP) of $2.06 to $2.12. Abbott forecasts net specified items for the full year 2019 of $1.15 per share. Specified items include intangible amortization expense, acquisition-related expenses, charges associated with cost reduction initiatives and other expenses. Excluding specified items, projected adjusted diluted earnings per share from continuing operations would be $3.21 to $3.27 for the full year 2019.

 

Abbott is issuing third-quarter 2019 guidance for diluted earnings per share from continuing operations under GAAP of $0.53 to $0.55. Abbott forecasts specified items for the third quarter 2019 of $0.30 per share primarily related to intangible amortization, acquisition-related expenses, cost reduction initiatives and other expenses. Excluding specified items, projected adjusted diluted earnings per share from continuing operations would be $0.83 to $0.85 for the third quarter.

 

ABBOTT DECLARES 382ND CONSECUTIVE QUARTERLY DIVIDEND

 

On June 14, 2019, the board of directors of Abbott declared the company’s quarterly dividend of $0.32 per share. Abbott’s cash dividend is payable Aug. 15, 2019, to shareholders of record at the close of business on July 15, 2019.

 

Abbott has increased its dividend payout for 47 consecutive years and is a member of the S&P 500 Dividend Aristocrats Index, which tracks companies that have annually increased their dividend for at least 25 consecutive years.

 

8


 

About Abbott:

 

Abbott is a global healthcare leader that helps people live more fully at all stages of life. Our portfolio of life-changing technologies spans the spectrum of healthcare, with leading businesses and products in diagnostics, medical devices, nutritionals and branded generic medicines. Our 103,000 colleagues serve people in more than 160 countries.

 

Connect with us at www.abbott.com, on LinkedIn at www.linkedin.com/company/abbott-/, on Facebook at www.facebook.com/Abbott and on Twitter @AbbottNews and @AbbottGlobal.

 

Abbott will webcast its live second-quarter earnings conference call through its Investor Relations website at www.abbottinvestor.com at 8 a.m. Central time today. An archived edition of the webcast will be available later that day.

 

— Private Securities Litigation Reform Act of 1995 —

A Caution Concerning Forward-Looking Statements

 

Some statements in this news release may be forward-looking statements for purposes of the Private Securities Litigation Reform Act of 1995. Abbott cautions that these forward-looking statements are subject to risks and uncertainties that may cause actual results to differ materially from those indicated in the forward-looking statements. Economic, competitive, governmental, technological and other factors that may affect Abbott’s operations are discussed in Item 1A, “Risk Factors’’ to our Annual Report on Securities and Exchange Commission Form 10-K for the year ended Dec. 31, 2018, and are incorporated by reference. Abbott undertakes no obligation to release publicly any revisions to forward-looking statements as a result of subsequent events or developments, except as required by law.

 

Abbott Financial:

Scott Leinenweber, 224-668-0791

Michael Comilla, 224-668-1872

Laura Dauer, 224-667-2299

 

Abbott Media:

Darcy Ross, 224-667-3655

Elissa Maurer, 224-668-3309

 


1 Abbott has not provided the GAAP financial measure for organic sales growth on a forward-looking basis because the company is unable to predict the impact of foreign exchange due to the unpredictability of future changes in foreign exchange rates, which could significantly impact reported sales growth.

 

9


 

Abbott Laboratories and Subsidiaries

Condensed Consolidated Statement of Earnings

Second Quarter Ended June 30, 2019 and 2018

(in millions, except per share data)

(unaudited)

 

 

 

2Q19

 

2Q18

 

% Change

 

 

 

Net Sales

 

$

7,979

 

$

7,767

 

2.7

 

 

 

 

 

 

 

 

 

 

 

 

 

Cost of products sold, excluding amortization expense

 

3,279

 

3,282

 

(0.1

)

 

 

Amortization of intangible assets

 

483

 

562

 

(14.0

)

 

 

Research and development

 

577

 

575

 

0.3

 

 

 

Selling, general, and administrative

 

2,434

 

2,466

 

(1.3

)

 

 

Total Operating Cost and Expenses

 

6,773

 

6,885

 

(1.6

)

 

 

 

 

 

 

 

 

 

 

 

 

Operating earnings

 

1,206

 

882

 

36.6

 

 

 

 

 

 

 

 

 

 

 

 

 

Interest expense, net

 

146

 

189

 

(22.1

)

 

 

Net foreign exchange (gain) loss

 

(4

)

(6

)

(37.8

)

 

 

Other (income) expense, net

 

(38

)

(78

)

(50.1

)

 

 

Earnings from Continuing Operations before taxes

 

1,102

 

777

 

41.6

 

 

 

 

 

 

 

 

 

 

 

 

 

Tax expense on Earnings from Continuing Operations

 

96

 

59

 

60.2

 

 

 

Earnings from Continuing Operations

 

1,006

 

718

 

40.1

 

 

 

 

 

 

 

 

 

 

 

 

 

Earnings from Discontinued Operations, net of taxes

 

 

15

 

n/m

 

 

 

 

 

 

 

 

 

 

 

 

 

Net Earnings

 

$

1,006

 

$

733

 

37.3

 

 

 

 

 

 

 

 

 

 

 

 

 

Earnings from Continuing Operations, excluding Specified Items, as described below

 

$

1,465

 

$

1,295

 

13.1

 

1

)

 

 

 

 

 

 

 

 

 

 

Diluted Earnings per Common Share from:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Continuing Operations

 

$

0.56

 

$

0.40

 

40.0

 

 

 

 

 

 

 

 

 

 

 

 

 

Discontinued Operations

 

 

0.01

 

n/m

 

 

 

 

 

 

 

 

 

 

 

 

 

Total

 

$

0.56

 

$

0.41

 

36.6

 

 

 

 

 

 

 

 

 

 

 

 

 

Diluted Earnings per Common Share from Continuing Operations, excluding Specified Items, as described below

 

$

0.82

 

$

0.73

 

12.3

 

1

)

 

 

 

 

 

 

 

 

 

 

Average Number of Common Shares Outstanding Plus Dilutive Common Stock Options

 

1,781

 

1,769

 

 

 

 

 

 

NOTES:

 

See tables on page 14 for an explanation of certain non-GAAP financial information.

 

n/m = Percent change is not meaningful.

 

See footnotes on the following page.

 

10


 


1)             2019 Net Earnings and Diluted Earnings per Common Share from Continuing Operations, excluding Specified Items, excludes net after-tax charges of $459 million, or $0.26 per share, for intangible amortization expense and other expenses primarily associated with acquisitions and restructuring actions.

 

2018 Net Earnings and Diluted Earnings per Common Share from Continuing Operations, excluding Specified Items, excludes net after-tax charges of $577 million, or $0.33 per share, for intangible amortization expense and other expenses primarily associated with acquisitions and restructuring actions.

 

11


 

Abbott Laboratories and Subsidiaries

Condensed Consolidated Statement of Earnings

First Half Ended June 30, 2019 and 2018

(in millions, except per share data)

(unaudited)

 

 

 

1H19

 

1H18

 

% Change

 

 

 

Net Sales

 

$

15,514

 

$

15,157

 

2.4

 

 

 

 

 

 

 

 

 

 

 

 

 

Cost of products sold, excluding amortization expense

 

6,439

 

6,349

 

1.4

 

 

 

Amortization of intangible assets

 

969

 

1,146

 

(15.4

)

 

 

Research and development

 

1,249

 

1,164

 

7.3

 

1

)

Selling, general, and administrative

 

4,912

 

5,008

 

(1.9

)

 

 

Total Operating Cost and Expenses

 

13,569

 

13,667

 

(0.7

)

 

 

 

 

 

 

 

 

 

 

 

 

Operating earnings

 

1,945

 

1,490

 

30.5

 

 

 

 

 

 

 

 

 

 

 

 

 

Interest expense, net

 

294

 

388

 

(24.2

)

 

 

Net foreign exchange (gain) loss

 

2

 

(9

)

n/m

 

 

 

Debt extinguishment costs

 

 

14

 

n/m

 

 

 

Other (income) expense, net

 

(85

)

(111

)

(23.4

)

 

 

Earnings from Continuing Operations before taxes

 

1,734

 

1,208

 

43.5

 

 

 

 

 

 

 

 

 

 

 

 

 

Tax expense on Earnings from Continuing Operations

 

56

 

81

 

(31.6

)

2

)

Earnings from Continuing Operations

 

1,678

 

1,127

 

48.9

 

 

 

 

 

 

 

 

 

 

 

 

 

Earnings from Discontinued Operations, net of taxes

 

 

24

 

n/m

 

 

 

 

 

 

 

 

 

 

 

 

 

Net Earnings

 

$

1,678

 

$

1,151

 

45.9

 

 

 

 

 

 

 

 

 

 

 

 

 

Earnings from Continuing Operations, excluding Specified Items, as described below

 

$

2,591

 

$

2,345

 

10.5

 

3

)

 

 

 

 

 

 

 

 

 

 

Diluted Earnings per Common Share from:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Continuing Operations

 

$

0.94

 

$

0.63

 

49.2

 

 

 

 

 

 

 

 

 

 

 

 

 

Discontinued Operations

 

 

0.01

 

n/m

 

 

 

 

 

 

 

 

 

 

 

 

 

Total

 

$

0.94

 

$

0.64

 

46.9

 

 

 

 

 

 

 

 

 

 

 

 

 

Diluted Earnings per Common Share from Continuing Operations, excluding Specified Items, as described below

 

$

1.45

 

$

1.32

 

9.8

 

3

)

 

 

 

 

 

 

 

 

 

 

Average Number of Common Shares Outstanding Plus Dilutive Common Stock Options

 

1,779

 

1,767

 

 

 

 

 

 

NOTES:

 

See tables on page 15 for an explanation of certain non-GAAP financial information.

 

n/m = Percent change is not meaningful.

 

See footnotes on the following page.

 

12


 


1)             In the first six months of 2019, in conjunction with the acquisition of Cephea Valve Technologies, Inc., Abbott acquired an R&D asset valued at $102 million, which was immediately expensed.

 

2)             2019 Tax expense on Earnings from Continuing Operations includes the impact of a $78 million reduction of the transition tax associated with the Tax Cuts and Jobs Act (TCJA) and approximately $90 million in excess tax benefits associated with share-based compensation.

 

2018 Tax expense on Earnings from Continuing Operations includes the impact of approximately $71 million in excess tax benefits associated with share-based compensation.

 

3)             2019 Net Earnings and Diluted Earnings per Common Share from Continuing Operations, excluding Specified Items, excludes net after-tax charges of $913 million, or $0.51 per share, for intangible amortization expense and other expenses primarily associated with acquisitions and restructuring actions.

 

2018 Net Earnings and Diluted Earnings per Common Share from Continuing Operations, excluding Specified Items, excludes net after-tax charges of $1.218 billion, or $0.69 per share, for intangible amortization expense and other expenses primarily associated with acquisitions and restructuring actions.

 

13


 

Abbott Laboratories and Subsidiaries

Non-GAAP Reconciliation of Financial Information From Continuing Operations

Second Quarter Ended June 30, 2019 and 2018

(in millions, except per share data)

(unaudited)

 

 

 

2Q19

 

 

 

As
Reported
(GAAP)

 

Specified
Items

 

As
Adjusted

 

% to
Sales

 

 

 

 

 

 

 

 

 

 

 

Intangible Amortization

 

$

483

 

$

(483

)

 

 

 

Gross Margin

 

4,217

 

522

 

$

4,739

 

59.4

%

R&D

 

577

 

(12

)

565

 

7.1

%

SG&A

 

2,434

 

(46

)

2,388

 

29.9

%

Other (income) expense, net

 

(38

)

(16

)

(54

)

 

 

Earnings from Continuing Operations before taxes

 

1,102

 

596

 

1,698

 

 

 

Tax expense on Earnings from Continuing Operations

 

96

 

137

 

233

 

 

 

Earnings from Continuing Operations

 

1,006

 

459

 

1,465

 

 

 

Diluted Earnings per Share from Continuing Operations

 

$

0.56

 

$

0.26

 

$

0.82

 

 

 

 

Specified items reflect intangible amortization expense of $483 million and other expenses of $113 million, primarily associated with acquisitions, restructuring actions and other expenses. See page 19 for additional details regarding specified items.

 

 

 

2Q18

 

 

 

As
Reported
(GAAP)

 

Specified
Items

 

As
Adjusted

 

% to
Sales

 

 

 

 

 

 

 

 

 

 

 

Intangible Amortization

 

$

562

 

$

(562

)

 

 

 

Gross Margin

 

3,923

 

677

 

$

4,600

 

59.2

%

R&D

 

575

 

(24

)

551

 

7.1

%

SG&A

 

2,466

 

(79

)

2,387

 

30.7

%

Interest expense, net

 

189

 

(2

)

187

 

 

 

Other (income) expense, net

 

(78

)

44

 

(34

)

 

 

Earnings from Continuing Operations before taxes

 

777

 

738

 

1,515

 

 

 

Tax expense on Earnings from Continuing Operations

 

59

 

161

 

220

 

 

 

Earnings from Continuing Operations

 

718

 

577

 

1,295

 

 

 

Diluted Earnings per Share from Continuing Operations

 

$

0.40

 

$

0.33

 

$

0.73

 

 

 

 

Specified items reflect intangible amortization expense of $562 million and other expenses of $176 million, primarily associated with acquisitions, restructuring actions and other expenses. See page 20 for additional details regarding specified items.

 

14


 

Abbott Laboratories and Subsidiaries

Non-GAAP Reconciliation of Financial Information From Continuing Operations

First Half Ended June 30, 2019 and 2018

(in millions, except per share data)

(unaudited)

 

 

 

1H19

 

 

 

As
Reported
(GAAP)

 

Specified
Items

 

As
Adjusted

 

% to
Sales

 

 

 

 

 

 

 

 

 

 

 

Intangible Amortization

 

$

969

 

$

(969

)

 

 

 

Gross Margin

 

8,106

 

1,049

 

$

9,155

 

59.0

%

R&D

 

1,249

 

(127

)

1,122

 

7.2

%

SG&A

 

4,912

 

(91

)

4,821

 

31.1

%

Other (income) expense, net

 

(85

)

(29

)

(114

)

 

 

Earnings from Continuing Operations before taxes

 

1,734

 

1,296

 

3,030

 

 

 

Tax expense on Earnings from Continuing Operations

 

56

 

383

 

439

 

 

 

Earnings from Continuing Operations

 

1,678

 

913

 

2,591

 

 

 

Diluted Earnings per Share from Continuing Operations

 

$

0.94

 

$

0.51

 

$

1.45

 

 

 

 

Specified items reflect intangible amortization expense of $969 million and other expenses of $327 million, primarily associated with acquisitions, restructuring actions and other expenses. See page 21 for additional details regarding specified items.

 

 

 

1H18

 

 

 

As
Reported
(GAAP)

 

Specified
Items

 

As
Adjusted

 

% to

Sales

 

 

 

 

 

 

 

 

 

 

 

Intangible Amortization

 

$

1,146

 

$

(1,146

)

 

 

 

Gross Margin

 

7,662

 

1,324

 

$

8,986

 

59.3

%

R&D

 

1,164

 

(67

)

1,097

 

7.2

%

SG&A

 

5,008

 

(169

)

4,839

 

31.9

%

Interest expense, net

 

388

 

(2

)

386

 

 

 

Net foreign exchange (gain) loss

 

(9

)

(1

)

(10

)

 

 

Debt extinguishment costs

 

14

 

(14

)

 

 

 

Other (income) expense, net

 

(111

)

42

 

(69

)

 

 

Earnings from Continuing Operations before taxes

 

1,208

 

1,535

 

2,743

 

 

 

Tax expense on Earnings from Continuing Operations

 

81

 

317

 

398

 

 

 

Earnings from Continuing Operations

 

1,127

 

1,218

 

2,345

 

 

 

Diluted Earnings per Share from Continuing Operations

 

$

0.63

 

$

0.69

 

$

1.32

 

 

 

 

Specified items reflect intangible amortization expense of $1.146 billion and other expenses of $389 million, primarily associated with acquisitions, restructuring actions and other expenses. See page 22 for additional details regarding specified items.

 

15


 

A reconciliation of the second-quarter tax rates for continuing operations for 2019 and 2018 is shown below:

 

 

 

2Q19

 

($ in millions)

 

Pre-Tax

Income

 

Taxes on
Earnings

 

Tax
Rate

 

As reported (GAAP)

 

$

1,102

 

$

96

 

8.7

%

Specified items

 

596

 

137

 

 

 

Excluding specified items

 

$

1,698

 

$

233

 

13.7

%

 

 

 

2Q18

 

($ in millions)

 

Pre-Tax

Income

 

Taxes on

Earnings

 

Tax
Rate

 

As reported (GAAP)

 

$

777

 

$

59

 

7.7

%

Specified items

 

738

 

161

 

 

 

Excluding specified items

 

$

1,515

 

$

220

 

14.5

%

 

A reconciliation of the year-to-date tax rates for continuing operations for 2019 and 2018 is shown below:

 

 

 

1H19

 

 

 

($ in millions)

 

Pre-Tax
Income

 

Taxes on
Earnings

 

Tax
Rate

 

 

 

As reported (GAAP)

 

$

1,734

 

$

56

 

3.2

%

1

)

Specified items

 

1,296

 

383

 

 

 

 

 

Excluding specified items

 

$

3,030

 

$

439

 

14.5

%

 

 

 

 

 

1H18

 

 

 

($ in millions)

 

Pre-Tax
Income

 

Taxes on
Earnings

 

Tax
Rate

 

 

 

As reported (GAAP)

 

$

1,208

 

$

81

 

6.7

%

2

)

Specified items

 

1,535

 

317

 

 

 

 

 

Excluding specified items

 

$

2,743

 

$

398

 

14.5

%

 

 

 


1)             Reported tax rate on a GAAP basis for 2019 includes the impact of a $78 million reduction of the transition tax associated with the TCJA and approximately $90 million in excess tax benefits associated with share-based compensation.

 

2)             Reported tax rate on a GAAP basis for 2018 includes the impact of approximately $71 million in excess tax benefits associated with share-based compensation.

 

16


 

Abbott Laboratories and Subsidiaries

Non-GAAP Reconciliation of Adjusted Historical Revenue

Second Quarter Ended June 30, 2019 and 2018

($ in millions) (unaudited)

 

 

 

2Q19

 

2Q18

 

% Change vs. 2Q18

 

 

 

Abbott

 

Abbott

 

Discontinued

 

Adjusted

 

 

 

Non-GAAP

 

 

 

Reported

 

Reported

 

Businessa)

 

Revenue

 

Reported

 

Reported

 

Organicb)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Total Company

 

7,979

 

7,767

 

(13

)

7,754

 

2.7

 

2.9

 

7.5

 

U.S.

 

2,850

 

2,702

 

(13

)

2,689

 

5.5

 

6.0

 

6.0

 

Int’l

 

5,129

 

5,065

 

 

5,065

 

1.3

 

1.3

 

8.3

 

Total Nutrition

 

1,875

 

1,858

 

(13

)

1,845

 

0.9

 

1.6

 

5.1

 

U.S.

 

786

 

781

 

(13

)

768

 

0.7

 

2.3

 

2.3

 

Int’l

 

1,089

 

1,077

 

 

1,077

 

1.1

 

1.1

 

7.0

 

Adult

 

824

 

807

 

(13

)

794

 

2.0

 

3.6

 

7.9

 

U.S.

 

311

 

312

 

(13

)

299

 

(0.2

)

3.9

 

3.9

 

Int’l

 

513

 

495

 

 

495

 

3.4

 

3.4

 

10.4

 

 


a) Reflects sales related to a non-core product line within the U.S. Adult Nutrition business, which was discontinued during the third quarter 2018.

b) In order to compute results excluding the impact of exchange rates, current year U.S. dollar sales are multiplied or divided, as appropriate, by the current year average foreign exchange rates and then those amounts are multiplied or divided, as appropriate, by the prior year average foreign exchange rates.

 

17


 

Abbott Laboratories and Subsidiaries

Non-GAAP Reconciliation of Adjusted Historical Revenue

First Half Ended June 30, 2019 and 2018

($ in millions) (unaudited)

 

 

 

1H19

 

1H18

 

% Change vs. 1H18

 

 

 

Abbott 

 

Abbott 

 

Discontinued

 

Adjusted 

 

 

 

Non-GAAP

 

 

 

Reported

 

Reported

 

Businessa)

 

Revenue

 

Reported

 

Reported

 

Organicb)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Total Company

 

15,514

 

15,157

 

(30

)

15,127

 

2.4

 

2.6

 

7.3

 

U.S.

 

5,604

 

5,377

 

(30

)

5,347

 

4.2

 

4.8

 

4.8

 

Int’l

 

9,910

 

9,780

 

 

9,780

 

1.3

 

1.3

 

8.6

 

Total Nutrition

 

3,667

 

3,614

 

(30

)

3,584

 

1.5

 

2.3

 

5.9

 

U.S.

 

1,533

 

1,539

 

(30

)

1,509

 

(0.4

)

1.6

 

1.6

 

Int’l

 

2,134

 

2,075

 

 

2,075

 

2.8

 

2.8

 

9.0

 

Adult

 

1,587

 

1,569

 

(30

)

1,539

 

1.1

 

3.0

 

7.4

 

U.S.

 

605

 

622

 

(30

)

592

 

(2.8

)

2.1

 

2.1

 

Int’l

 

982

 

947

 

 

947

 

3.6

 

3.6

 

10.7

 

 


a) Reflects sales related to a non-core product line within the U.S. Adult Nutrition business, which was discontinued during the third quarter 2018.

b) In order to compute results excluding the impact of exchange rates, current year U.S. dollar sales are multiplied or divided, as appropriate, by the current year average foreign exchange rates and then those amounts are multiplied or divided, as appropriate, by the prior year average foreign exchange rates. 

 

18


 

Abbott Laboratories and Subsidiaries

Details of Specified Items

Second Quarter Ended June 30, 2019

(in millions, except per share data)

(unaudited)

 

 

 

Acquisition or
Divestiture-
related (a)

 

Restructuring
and Cost
Reduction
Initiatives (b)

 

Intangible
Amortization

 

Other (c)

 

Total
Specifieds

 

Gross Margin

 

$

18

 

$

21

 

$

483

 

$

 

$

522

 

R&D

 

(7

)

(5

)

 

 

(12

)

SG&A

 

(44

)

(2

)

 

 

(46

)

Other (income) expense, net

 

(7

)

 

 

(9

)

(16

)

Earnings from Continuing Operations before taxes

 

$

76

 

$

28

 

$

483

 

$

9

 

596

 

Tax expense on Earnings from Continuing Operations (d)

 

 

 

 

 

 

 

 

 

137

 

Earnings from Continuing Operations

 

 

 

 

 

 

 

 

 

$

459

 

Diluted Earnings per Share from Continuing Operations

 

 

 

 

 

 

 

 

 

$

0.26

 

 

The table above provides additional details regarding the specified items described on page 14.

 


a)             Acquisition-related expenses include costs for tax and other services related to business acquisitions, integration costs which represent incremental costs directly related to integrating the acquired businesses and include expenditures for retention, severance, and the integration of systems, processes and business activities, and fair value adjustments to contingent consideration related to a business acquisition.

 

b)             Restructuring and cost reduction initiative expenses include severance, outplacement, inventory write-downs, asset impairments, accelerated depreciation, and other direct costs associated with specific restructuring plans and cost reduction initiatives. Restructuring and cost reduction plans consist of distinct initiatives to streamline operations including the consolidation and rationalization of business activities and facilities, workforce reductions, the transfer of product lines between manufacturing facilities, and the transfer of other business activities between sites.

 

c)              Other (income) expense, net primarily relates to the impairment of an equity investment.

 

d)             Reflects the net tax benefit associated with the specified items and excess tax benefits associated with share-based compensation.

 

19


 

Abbott Laboratories and Subsidiaries

Details of Specified Items

Second Quarter Ended June 30, 2018

(in millions, except per share data)

(unaudited)

 

 

 

Acquisition or
Divestiture-
related (a)

 

Restructuring
and Cost
Reduction
Initiatives (b)

 

Intangible
Amortization

 

Other (c)

 

Total
Specifieds

 

Gross Margin

 

$

37

 

$

78

 

$

562

 

$

 

$

677

 

R&D

 

(5

)

(1

)

 

(18

)

(24

)

SG&A

 

(75

)

(4

)

 

 

(79

)

Interest expense, net

 

 

 

 

(2

)

(2

)

Other (income) expense, net

 

(5

)

 

 

49

 

44

 

Earnings from Continuing Operations before taxes

 

$

122

 

$

83

 

$

562

 

$

(29

)

738

 

Tax expense on Earnings from Continuing Operations (d)

 

 

 

 

 

 

 

 

 

161

 

Earnings from Continuing Operations

 

 

 

 

 

 

 

 

 

$

577

 

Diluted Earnings per Share from Continuing Operations

 

 

 

 

 

 

 

 

 

$

0.33

 

 

The table above provides additional details regarding the specified items described on page 14.

 


a)             Acquisition-related expenses include costs for legal, accounting, tax, and other services related to business acquisitions, integration costs which represent incremental costs directly related to integrating the acquired businesses and include expenditures for consulting, retention, severance, and the integration of systems, processes and business activities, and fair value adjustments to contingent consideration related to a business acquisition.

 

b)             Restructuring and cost reduction initiative expenses include severance, outplacement, inventory write-downs, asset impairments, accelerated depreciation, and other direct costs associated with specific restructuring plans and cost reduction initiatives. Restructuring and cost reduction plans consist of distinct initiatives to streamline operations including the consolidation and rationalization of business activities and facilities, workforce reductions, the transfer of product lines between manufacturing facilities, and the transfer of other business activities between sites.

 

c)              Other (income) expense, net relates to an increase in fair value of an investment, partially offset by the acquisition of an R&D asset.

 

d)             Reflects the net tax benefit associated with the specified items and excess tax benefits associated with share-based compensation.

 

20


 

Abbott Laboratories and Subsidiaries

Details of Specified Items

First Half Ended June 30, 2019

(in millions, except per share data)

(unaudited)

 

 

 

Acquisition or
Divestiture-
related (a)

 

Restructuring
and Cost
Reduction
Initiatives (b)

 

Intangible
Amortization

 

Other (c)

 

Total
Specifieds

 

Gross Margin

 

$

37

 

$

43

 

$

969

 

$

 

$

1,049

 

R&D

 

(14

)

(10

)

 

(103

)

(127

)

SG&A

 

(87

)

(4

)

 

 

(91

)

Other (income) expense, net

 

(10

)

 

 

(19

)

(29

)

Earnings from Continuing Operations before taxes

 

$

148

 

$

57

 

$

969

 

$

122

 

1,296

 

Tax expense on Earnings from Continuing Operations (d)

 

 

 

 

 

 

 

 

 

383

 

Earnings from Continuing Operations

 

 

 

 

 

 

 

 

 

$

913

 

Diluted Earnings per Share from Continuing Operations

 

 

 

 

 

 

 

 

 

$

0.51