ABBOTT PARK, Ill., Oct. 17, 2012 /PRNewswire/ -- Abbott (NYSE: ABT) today announced financial results for the third quarter ended Sept. 30, 2012.
"Abbott delivered another quarter of strong results with ongoing earnings per share up more than 10 percent, despite a challenging global economy," said Miles D. White, chairman and chief executive officer, Abbott. "There were several product launches across pharmaceuticals, vascular and diagnostics, which will contribute to future growth. In addition, we remain on track to separate into two leading health care companies on January 1, 2013."
The following is a summary of Third-Quarter 2012 sales by major business category.
% Change vs. 3Q11 |
||||||||||||||||||||
Sales ($ in millions) 3Q12 |
Int'l |
Total |
||||||||||||||||||
U.S. |
Int'l |
Total |
U.S. |
Operational |
Reported |
Operational |
Reported |
|||||||||||||
Total Sales |
4,214 |
5,559 |
9,773 |
3.1 |
4.7 |
(3.0) |
4.1 |
(0.4) |
||||||||||||
Proprietary Pharmaceuticals |
2,600 |
1,818 |
4,418 |
7.4 |
5.1 |
(4.1) |
6.4 |
2.4 |
||||||||||||
Nutritionals |
715 |
890 |
1,605 |
5.0 |
7.4 |
4.1 |
6.3 |
4.5 |
||||||||||||
Established Pharmaceuticals |
-- |
1,272 |
1,272 |
n/a |
2.3 |
(7.3) |
2.3 |
(7.3) |
||||||||||||
Core Laboratory Diagnostics |
162 |
692 |
854 |
2.7 |
8.3 |
1.5 |
7.2 |
1.7 |
||||||||||||
Molecular Diagnostics |
47 |
55 |
102 |
(13.6) |
4.7 |
(3.4) |
(4.3) |
(8.4) |
||||||||||||
Point of Care Diagnostics |
69 |
17 |
86 |
19.3 |
6.0 |
3.6 |
16.3 |
15.8 |
||||||||||||
Vasculara |
296 |
447 |
743 |
(24.0)a |
9.3 |
2.0 |
(6.3)a |
(10.2)a |
||||||||||||
Diabetes Care |
135 |
182 |
317 |
(7.1) |
(5.5) |
(12.5) |
(6.2) |
(10.3) |
||||||||||||
Medical Optics |
95 |
162 |
257 |
(1.4) |
(1.2) |
(5.9) |
(1.3) |
(4.3) |
||||||||||||
Other Sales |
95 |
24 |
119 |
12.2 |
(14.3) |
(28.6) |
4.7 |
0.7 |
||||||||||||
The following is a summary of Nine-Month 2012 sales by major business category.
% Change vs. 9M11 |
||||||||||||||||||||
Sales ($ in millions) 9M12 |
Int'l |
Total |
||||||||||||||||||
U.S. |
Int'l |
Total |
U.S. |
Operational |
Reported |
Operational |
Reported |
|||||||||||||
Total Sales |
12,115 |
16,922 |
29,037 |
5.0 |
5.9 |
(0.1) |
5.6 |
2.0 |
||||||||||||
Proprietary Pharmaceuticals |
7,138 |
5,732 |
12,870 |
7.4 |
8.7 |
1.6 |
8.0 |
4.7 |
||||||||||||
Nutritionals |
2,163 |
2,592 |
4,755 |
9.6 |
7.2 |
4.7 |
8.3 |
6.9 |
||||||||||||
Established Pharmaceuticals |
-- |
3,775 |
3,775 |
n/a |
2.7 |
(5.0) |
2.7 |
(5.0) |
||||||||||||
Core Laboratory Diagnostics |
511 |
2,080 |
2,591 |
10.2 |
6.8 |
1.7 |
7.4 |
3.3 |
||||||||||||
Molecular Diagnostics |
143 |
171 |
314 |
(1.9) |
6.7 |
0.2 |
2.7 |
(0.8) |
||||||||||||
Point of Care Diagnostics |
203 |
55 |
258 |
17.6 |
12.7 |
10.8 |
16.5 |
16.1 |
||||||||||||
Vascularb |
945 |
1,367 |
2,312 |
(19.5)b |
7.5 |
2.5 |
(5.2)b |
(7.8)b |
||||||||||||
Diabetes Care |
418 |
547 |
965 |
2.6 |
(4.3) |
(9.7) |
(1.5) |
(4.8) |
||||||||||||
Medical Optics |
299 |
513 |
812 |
0.4 |
0.7 |
(2.8) |
0.6 |
(1.6) |
||||||||||||
Other Sales |
295 |
90 |
385 |
13.5 |
(7.5) |
(14.9) |
7.5 |
5.4 |
||||||||||||
Notes: |
1) |
See "Consolidated Statement of Earnings" for more information. |
2) |
"Operational" growth reflects percentage change over the prior year excluding the impact of exchange rates. |
|
a |
In the third quarter, excluding the expected decline of certain royalty and supply arrangement revenues (including Promus), worldwide operational sales increased 3.9 percent, worldwide reported sales decreased 0.6 percent, and U.S. Vascular sales decreased 5.2 percent. |
|
b |
Year to date, excluding the expected decline of certain royalty and supply arrangement revenues (including Promus), worldwide operational sales increased 4.3 percent, worldwide reported sales increased 1.2 percent, and U.S. Vascular sales decreased 1.3 percent. |
|
n/a = Not applicable |
The following is a summary of Third-Quarter 2012 sales for select products.
% Change vs. 3Q11 |
||||||||||||||||||
Sales ($ in millions) 3Q12 |
Int'l |
Total |
||||||||||||||||
U.S. |
Int'l |
Total |
U.S. |
Operational |
Reported |
Operational |
Reported |
|||||||||||
HUMIRA |
1,135 |
1,190 |
2,325 |
27.0 |
7.5 |
(2.2) |
15.7 |
10.1 |
||||||||||
TRILIPIX/TriCor (fenofibrate) |
331 |
73 |
404 |
(4.1) |
14.3 |
3.6 |
(1.0) |
(2.8) |
||||||||||
AndroGel |
279 |
8 |
287 |
34.1 |
0.1 |
(2.6) |
32.8 |
32.7 |
||||||||||
Kaletra |
72 |
195 |
267 |
(11.5) |
0.4 |
(9.3) |
(2.9) |
(9.9) |
||||||||||
Lupron |
133 |
56 |
189 |
(9.2) |
(9.1) |
(14.9) |
(9.2) |
(11.0) |
||||||||||
Niaspan |
232 |
-- |
232 |
(5.3) |
n/a |
n/a |
(5.3) |
(5.3) |
||||||||||
Synthroid |
132 |
25 |
157 |
1.5 |
5.7 |
(5.9) |
2.2 |
0.2 |
||||||||||
Creon |
92 |
71 |
163 |
5.3 |
(3.5) |
(13.7) |
1.0 |
(4.0) |
||||||||||
Pediatric Nutritionals |
348 |
507 |
855 |
7.9 |
5.0 |
2.5 |
6.1 |
4.6 |
||||||||||
Adult Nutritionals |
366 |
383 |
749 |
3.1 |
10.5 |
6.2 |
6.9 |
4.7 |
||||||||||
Xience Drug-Eluting Stents |
138 |
257 |
395 |
(2.5) |
10.4 |
3.9 |
5.8 |
1.6 |
||||||||||
Other Coronary Productsc |
47 |
99 |
146 |
(3.8) |
9.3 |
1.8 |
5.0 |
--- |
||||||||||
Endovasculard |
60 |
50 |
110 |
(3.9) |
7.3 |
(1.7) |
1.1 |
(2.9) |
||||||||||
The following is a summary of Nine-Month 2012 sales for select products.
% Change vs. 9M11 |
||||||||||||||||||
Sales ($ in millions) 9M12 |
Int'l |
Total |
||||||||||||||||
U.S. |
Int'l |
Total |
U.S. |
Operational |
Reported |
Operational |
Reported |
|||||||||||
HUMIRA |
2,964 |
3,621 |
6,585 |
26.1 |
14.5 |
6.3 |
19.3 |
14.4 |
||||||||||
TRILIPIX/TriCor (fenofibrate) |
897 |
224 |
1,121 |
(6.9) |
2.8 |
(5.2) |
(4.9) |
(6.5) |
||||||||||
AndroGel |
787 |
24 |
811 |
28.0 |
6.4 |
3.1 |
27.2 |
27.1 |
||||||||||
Kaletra |
196 |
567 |
763 |
(12.9) |
(7.0) |
(13.6) |
(8.6) |
(13.5) |
||||||||||
Lupron |
414 |
175 |
589 |
3.4 |
(8.2) |
(13.2) |
(0.5) |
(2.2) |
||||||||||
Niaspan |
634 |
-- |
634 |
(11.7) |
n/a |
n/a |
(11.7) |
(11.7) |
||||||||||
Synthroid |
383 |
78 |
461 |
(1.0) |
10.7 |
0.8 |
1.0 |
(0.7) |
||||||||||
Creon |
248 |
223 |
471 |
7.7 |
9.6 |
0.8 |
8.6 |
4.3 |
||||||||||
Pediatric Nutritionals |
1,079 |
1,499 |
2,578 |
15.9 |
7.3 |
5.5 |
10.7 |
9.6 |
||||||||||
Adult Nutritionals |
1,075 |
1,093 |
2,168 |
4.4 |
7.0 |
3.6 |
5.7 |
4.0 |
||||||||||
Xience Drug-Eluting Stents |
427 |
772 |
1,199 |
4.1 |
7.1 |
3.0 |
6.1 |
3.4 |
||||||||||
Other Coronary Productsc |
147 |
301 |
448 |
(2.5) |
4.4 |
(0.8) |
2.2 |
(1.3) |
||||||||||
Endovasculard |
182 |
156 |
338 |
(1.5) |
8.1 |
1.4 |
2.9 |
(0.2) |
||||||||||
Notes: |
1) |
See "Consolidated Statement of Earnings" for more information. |
|
2) |
"Operational" growth reflects percentage change over the prior year excluding the impact of exchange rates. |
||
c |
Includes guide wires, balloon catheters and other coronary products. |
||
d |
Includes vessel closure, carotid stents and other peripheral products. |
||
n/a = Not applicable |
Business Highlights
Released Data from the Phase 2b Aviator Study in Hepatitis C
Announced the release of initial results from the Phase 2b Aviator study of Abbott's investigational all-oral interferon-free regimen for the treatment of HCV. Data showed sustained virological response at 12 weeks post treatment (SVR12) in 99 percent of treatment-naive and 93 percent of null responders for GT1 patients taking a combination of ABT-450/r, ABT-267, ABT-333 and ribavirin.
Announced European Launch of Next-Generation XIENCE Xpedition Drug Eluting Stent
Announced that Abbott's XIENCE Xpedition® Drug Eluting Stent System received CE Mark in Europe for the treatment of coronary artery disease. Xpedition combines the safety and efficacy of XIENCE and features a new stent delivery system designed to optimize acute performance, particularly in challenging coronary anatomies. Xpedition is available in one of the broadest size matrices on the European market.
Received Approval for Eighth HUMIRA Indication in Europe
Received European approval for HUMIRA® for the treatment of axial spondyloarthritis (axSpA), a condition associated with chronic back pain and stiffness that can also be accompanied by arthritis and inflammation. HUMIRA is the first and only medication for this chronic condition. This approval marks the eighth major indication for HUMIRA in the European Union.
Launched the Absorb Bioresorbable Vascular Scaffold in More Than 30 Countries
Announced the launch of Absorb™, the world's first drug eluting bioresorbable vascular scaffold (BVS), in more than 30 countries across Europe and parts of Asia Pacific and Latin America. Absorb is a first-of-its-kind device for the treatment of coronary artery disease. It works by restoring blood flow to the heart similar to a metallic drug eluting stent, but then dissolves into the body, leaving behind a treated vessel.
Announced Collaboration with Astellas in CMV Vaccine Trial
Signed an agreement with Astellas Pharma Global Development for a Phase 3 clinical trial for ASP0113, an investigational vaccine for preventing cytomegalovirus (CMV) reactivation in transplant patients. Abbott's RealTime CMV assay, which is performed on the Abbott m2000 System, will be used to monitor patients for CMV viral load in order to assess the vaccine's efficacy.
Received FDA Approval of Omnilink Elite Vascular Balloon-Expandable Stent System
Announced U.S. Food and Drug Administration (FDA) approval of the Omnilink Elite® Vascular Balloon-Expandable Stent System for the treatment of iliac artery disease, a form of peripheral artery disease that affects the lower extremities.
Received CE Mark for Testosterone Assay to Measure the Hormone at Low Levels
Announced CE Marking in Europe for a testosterone assay with improved sensitivity and clinical utility. With a simple blood test, the ARCHITECT 2nd Generation Testosterone Assay can accurately measure the wide range of testosterone levels to help diagnose related conditions in a number of different patient populations and clinical settings.
Received Expanded HUMIRA Indication for Crohn's Patients in Europe
Announced that the European Commission approved HUMIRA for the treatment of moderately active Crohn's disease in adult patients who have had an inadequate response to conventional therapy. HUMIRA has been approved for severely active Crohn's disease in adults in Europe since 2007.
Received U.S. FDA Approval of HUMIRA for the Treatment of Ulcerative Colitis
Announced U.S. FDA approval of HUMIRA in adult patients with moderately to severely active ulcerative colitis (UC) who have had an inadequate response to conventional therapy. The approval makes HUMIRA the first and only self-administered biologic and the first new treatment approved for UC patients in more than seven years. UC is the seventh approved indication for HUMIRA in the United States.
Abbott narrows ongoing earnings-per-share outlook for 2012
Abbott is narrowing its ongoing earnings-per-share guidance for the full-year 2012 to $5.06 to $5.08 from $5.00 to $5.10, reflecting another year of strong performance.
Abbott forecasts net specified items for the full-year 2012 of $1.23 per share, primarily associated with separation costs, in-process R&D, acquisition integration and cost-reduction initiatives, partially offset by the resolution of various tax positions from a previous year. Including these net specified items, projected earnings per share under Generally Accepted Accounting Principles (GAAP) would be $3.83 to $3.85 for the full-year 2012. Our forecast of specified items now includes approximately $0.50 per share of debt extinguishment costs associated with the planned separation, expected to be incurred in the fourth quarter.
Abbott declares 355th quarterly dividend
On Sept. 13, 2012, the board of directors of Abbott declared the company's quarterly common dividend of 51 cents per share. The cash dividend is payable Nov. 15, 2012, to shareholders of record at the close of business on Oct. 15, 2012. This marks the 355th consecutive dividend paid by Abbott since 1924. Abbott is a member of the S&P 500 Dividend Aristocrats Index, which tracks companies that have annually increased their dividends for 25 consecutive years.
About Abbott
Abbott is a global, broad-based health care company devoted to the discovery, development, manufacture and marketing of pharmaceuticals and medical products, including nutritionals, devices and diagnostics. The company employs approximately 91,000 people and markets its products in more than 130 countries.
Abbott's news releases and other information are available on the company's Web site at www.abbott.com. Abbott will webcast its live third-quarter earnings conference call through its Investor Relations Web site at www.abbottinvestor.com at 8 a.m. Central time today. An archived edition of the call will be available after 11 a.m. Central time.
— 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, including the planned separation of the research-based pharmaceutical company from the diversified medical products company and the expected financial results of the two companies after the separation. 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, 2011 and in Item 1A, "Risk Factors," to our quarterly report on Securities and Exchange Commission Form 10-Q for the quarter ended June 30, 2012, 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.
Abbott Laboratories and Subsidiaries Consolidated Statement of Earnings Third Quarter Ended Sept. 30, 2012 and 2011 (in millions, except per share data) (unaudited) |
|||||||
2012 |
2011 |
% Change |
|||||
Net Sales |
$ 9,773 |
$ 9,817 |
(0.4) |
||||
Cost of products sold |
3,698 |
3,973 |
(6.9) |
1) |
|||
Research and development |
1,164 |
1,010 |
15.3 |
||||
Selling, general and administrative |
2,922 |
4,239 |
(31.1) |
2) |
|||
Total Operating Cost and Expenses |
7,784 |
9,222 |
(15.6) |
||||
Operating earnings |
1,989 |
595 |
n/m |
||||
Net interest expense |
134 |
103 |
29.2 |
||||
Net foreign exchange (gain) loss |
(6) |
(5) |
n/m |
||||
Other (income) expense, net |
(11) |
(5) |
n/m |
||||
Earnings before taxes |
1,872 |
502 |
n/m |
||||
Taxes on earnings |
(71) |
199 |
n/m |
3) |
|||
Net Earnings |
$ 1,943 |
$ 303 |
n/m |
||||
Net Earnings Excluding Specified Items, as described below |
$ 2,084 |
$ 1,850 |
12.6 |
4) |
|||
Diluted Earnings per Common Share |
$ 1.21 |
$ 0.19 |
n/m |
||||
Diluted Earnings Per Common Share, Excluding Specified Items, as described below |
$ 1.30 |
$ 1.18 |
10.2 |
4) |
|||
Average Number of Common Shares Outstanding Plus Dilutive Common Stock Options and Awards |
1,594 |
1,568 |
|||||
1) |
2012 Cost of products sold decline was due in part to foreign exchange rates. |
2) |
2011 Selling, general and administrative expense includes $1.5 billion of litigation reserves related to previously disclosed litigation. |
3) |
2012 Taxes on earnings includes a favorable adjustment to tax expense of $386 million, or $0.24 per share, as a result of the resolution of various tax positions from a previous year. This favorable item is classified as a specified item and excluded from ongoing results, as discussed below. |
4) |
2012 Net Earnings Excluding Specified Items excludes after-tax charges of $406 million, or $0.25 per share, for restructurings, and $121 million, or $0.08 per share, for separation costs. These items were partially offset by a favorable adjustment from the resolution of a previous year's tax positions for $386 million, or $0.24 per share. |
2011 Net Earnings Excluding Specified Items excludes after-tax charges of $1.4 billion, or $0.92 per share, related to litigation reserves (see Footnote 2 above), $75 million, or $0.05 per share, associated with the acquisition of Solvay Pharmaceuticals, and $78 million, or $0.05 per share, for cost reduction initiatives and other. These items were partially offset by a favorable adjustment to tax expense of $51 million, or $0.03 per share, as a result of the resolution of various international and U.S. tax positions from prior years. |
|
NOTE: See attached questions and answers section for further explanation of Consolidated Statement of Earnings line items. |
|
n/m = Percent change is not meaningful. |
Abbott Laboratories and Subsidiaries Consolidated Statement of Earnings Nine Months Ended Sept. 30, 2012 and 2011 (in millions, except per share data) (unaudited) |
|||||||
2012 |
2011 |
% Change |
|||||
Net Sales |
$ 29,037 |
$ 28,474 |
2.0 |
||||
Cost of products sold |
11,060 |
11,702 |
(5.5) |
1) |
|||
Research and development |
3,181 |
2,978 |
6.8 |
||||
Acquired in-process and collaborations research and development |
260 |
273 |
4.6 |
||||
Selling, general and administrative |
8,867 |
9,851 |
(10.0) |
2) |
|||
Total Operating Cost and Expenses |
23,368 |
24,804 |
(5.8) |
||||
Operating earnings |
5,669 |
3,670 |
54.5 |
||||
Net interest expense |
350 |
343 |
2.1 |
||||
Net foreign exchange (gain) loss |
4 |
(48) |
n/m |
||||
Other (income) expense, net |
(74) |
130 |
n/m |
3) |
|||
Earnings before taxes |
5,389 |
3,245 |
66.1 |
||||
Taxes on earnings |
479 |
135 |
n/m |
4) |
|||
Net Earnings |
$ 4,910 |
$ 3,110 |
57.9 |
||||
Net Earnings Excluding Specified Items, as described below |
$ 5,698 |
$ 5,037 |
13.1 |
5) |
|||
Diluted Earnings per Common Share |
$ 3.06 |
$ 1.98 |
54.5 |
||||
Diluted Earnings Per Common Share, Excluding Specified Items, as described below |
$ 3.56 |
$ 3.21 |
10.9 |
5) |
|||
Average Number of Common Shares Outstanding Plus Dilutive Common Stock Options and Awards |
1,591 |
1,564 |
|||||
1) |
2012 Cost of products sold decline was due in part to foreign exchange rates. |
2) |
2011 Selling, general and administrative expense includes $1.5 billion of litigation reserves related to previously disclosed litigation. |
3) |
Other (income) expense, net for 2011 includes a charge of $137 million for the impact of Abbott's change to a calendar year end for the international operations that were previously reported on a November 30 year-end. |
4) |
2012 Taxes on earnings includes a favorable adjustment to tax expense of $386 million, or $0.24 per share, as a result of the resolution of various tax positions from a previous year. 2011 Taxes on earnings includes a favorable adjustment to tax expense of $570 million, or $0.36 per share, as a result of the resolution of various international and U.S. tax positions from prior years. These favorable items are classified as specified items and excluded from ongoing results, as discussed below. |
5) |
2012 Net Earnings Excluding Specified Items excludes after-tax charges of $493 million, or $0.31 per share, for restructurings, $219 million, or $0.14 per share, for separation costs, $272 million, or $0.17 per share, for acquired in-process R&D and R&D payments, $111 million, or $0.07 per share, related to litigation reserves, and $79 million, or $0.05 per share, for integration related expenses. These items were partially offset by a favorable adjustment from the resolution of a previous year's tax positions for $386 million, or $0.24 per share. |
2011 Net Earnings Excluding Specified Items excludes after-tax charges of $1.4 billion, or $0.92 per share, related to litigation reserves (see Footnote 2 above), $216 million, or $0.14 per share, associated with the acquisition of Solvay Pharmaceuticals, $109 million, or $0.07 per share, for restructuring in the pharmaceutical business, $161 million, or $0.10 per share, for cost reduction initiatives and other, $137 million, or $0.09 per share, for the 2009 and 2010 impact of the change to a calendar year end for international operations, $273 million, or $0.17 per share, relating to acquired in-process R&D related to the Reata and Biotest collaborations, $76 million, or $0.05 per share, for the impairment of an R&D intangible asset, and $80 million, or $0.05 per share, for other litigation reserves. These items were partially offset by a favorable adjustment from the resolution of international and U.S. tax positions from prior years for $570 million, or $0.36 per share. |
|
n/m = Percent change is not meaningful. |
Questions & Answers
Q1) What were sources of sales growth in the quarter?
A1) Excluding foreign exchange, worldwide sales increased 4.1 percent. Reported sales decreased 0.4 percent, including an unfavorable 4.5 percent effect of foreign exchange. In emerging markets, sales increased more than 10 percent, excluding foreign exchange, with strong double-digit growth in many of the key emerging markets across Abbott's businesses.
Worldwide Nutritionals sales increased 6.3 percent in the quarter, excluding an unfavorable 1.8 percent effect of foreign exchange. U.S. Nutritionals increased 5.0 percent, with U.S. Pediatric Nutritionals sales growth of 7.9 percent on continued share gains of our infant formula, Similac®, and continued double-digit growth of PediaSure®. U.S. Adult Nutritionals grew 3.1 percent, driven by growth of Ensure® and Glucerna®. International Nutritionals increased 7.4 percent, excluding an unfavorable 3.3 percent effect of foreign exchange, driven by continued growth of both the pediatric and adult segments, partially offset by the transition to a direct distribution model in certain markets.
Global sales of Core Laboratory Diagnostics increased 7.2 percent, excluding an unfavorable 5.5 percent effect of foreign exchange, driven by 8.3 percent international growth, excluding an unfavorable 6.8 percent effect of foreign exchange. Point of Care Diagnostics also contributed to global Diagnostics sales growth in the quarter.
Worldwide Proprietary Pharmaceuticals sales increased 6.4 percent, excluding an unfavorable 4.0 percent effect of foreign exchange, driven by strong growth across key franchises including HUMIRA and AndroGel®.
Q2) What is the status of Abbott's planned separation into two leading health care companies?
A2) In October 2011, Abbott announced plans to separate into two publicly traded companies, one in diversified medical products and the other in research-based pharmaceuticals. The diversified medical products company will consist of Abbott's branded generic pharmaceuticals, devices, diagnostics and nutritionals businesses, and will retain the Abbott name. The research-based pharmaceutical company, named AbbVie, will include Abbott's current portfolio of proprietary pharmaceuticals and biologics.
The transaction is intended to take the form of a tax-free distribution to Abbott shareholders of a new publicly traded stock for AbbVie. The stock distribution ratio will be determined at a future date. It is expected that the two companies will each pay a dividend that, when combined, will at least equal the current Abbott dividend at the time of separation.
We continue to expect the separation to be completed on Jan. 1, 2013.
Q3) How did specified items affect reported results?
A3) Specified items impacted third-quarter results as follows:
3Q12 |
|||
(dollars in millions, except earnings-per-share) |
Earnings |
||
Pre-tax |
After-tax |
EPS |
|
As reported (GAAP) |
$1,872 |
$1,943 |
$1.21 |
Adjusted for specified items: |
|||
Resolution of tax positions |
-- |
($386) |
($0.24) |
Restructuring/Integration |
$478 |
$406 |
$0.25 |
Separation costs |
$102 |
$121 |
$0.08 |
As adjusted |
$2,452 |
$2,084 |
$1.30 |
Restructuring/Integration is associated with new and previously announced restructuring actions across the businesses. Separation costs are expenses related to the planned separation of Abbott into two leading health care companies.
The 2012 Taxes on earnings line item of the Consolidated Statement of Earnings includes a favorable adjustment to tax expense of $386 million, or $0.24 per share, as a result of the resolution of various tax positions from a previous year. The impact of the remaining specified items by line item is as follows (dollars in millions):
3Q12 |
|||||
Cost of Products Sold |
R&D |
SG&A |
Net Interest Expense |
Other (Income)/ Expense |
|
As reported (GAAP) |
$3,698 |
$1,164 |
$2,922 |
$134 |
($11) |
Adjusted for specified items: |
|||||
Restructuring/Integration |
($155) |
($166) |
($153) |
-- |
($4) |
Separation costs |
($3) |
($4) |
($75) |
($20) |
-- |
As adjusted |
$3,540 |
$994 |
$2,694 |
$114 |
($15) |
Q4) What was the gross margin ratio in the quarter?
A4) The gross margin ratio before and after specified items is shown below (dollars in millions):
3Q12 |
|||
Cost of Products Sold |
Gross Margin |
Gross Margin % |
|
As reported (GAAP) |
$3,698 |
$6,075 |
62.2% |
Adjusted for specified items: |
|||
Restructuring/integration/other |
($158) |
$158 |
1.6% |
As adjusted |
$3,540 |
$6,233 |
63.8% |
The adjusted gross margin ratio was 63.8 percent in the third quarter, an increase of 340 basis points from the prior year quarter. Half of this improvement was due to exchange, while the other half resulted from the various margin improvement initiatives we're implementing across our businesses.
Q5) What was the tax rate?
A5) The ongoing tax rate this quarter was 15.0 percent, in line with expectations.
3Q12 |
|||
Pre-Tax |
Taxes on |
Tax |
|
Income |
Earnings |
Rate |
|
As reported (GAAP) |
$1,872 |
($71) |
(3.8%) |
Specified items |
$580 |
$439 |
75.6% |
Excluding specified items |
$2,452 |
$368 |
15.0% |
Q6) What are the key areas of focus in Abbott's pharmaceutical pipeline?
A6) We have made significant progress in 2012 advancing our pharmaceutical pipeline, which currently includes more than 20 compounds or new indications in Phase 2 or Phase 3 development. Following are highlights:
Phase 3 Pharmaceutical Pipeline Programs
Phase 2 Pharmaceutical Pipeline Programs
Q7) What are the key areas of focus in Abbott's diversified medical products pipeline?
A7) Abbott's diversified medical products pipeline includes game-changing medical technologies, next-generation diagnostic systems, new formulations, new packaging, new flavors, and other brand enhancements. Following are highlights:
SOURCE Abbott