Full Press Release Details
ABBOTT PARK, Ill., Oct. 21, 2015 /PRNewswire/ -- Abbott (NYSE: ABT ) today announced financial results for the third quarter ended Sept. 30, 2015 .
"Despite currency headwinds, we are on track to deliver the financial commitments we set at the beginning of the year," said Miles D. White , chairman and chief executive officer, Abbott. "Our underlying growth is strong and we continue to see robust demand in emerging markets."
THIRD-QUARTER BUSINESS OVERVIEW
Note: Prior year financial results have been adjusted to exclude the sales from Abbott's developed markets branded generics pharmaceuticals and animal health businesses that were sold to Mylan and Zoetis, respectively, in the first quarter 2015. Therefore, sales and growth rates shown in the following charts represent continuing operations .
Following are sales by business segment and commentary for the third quarter and the first nine months of the year:
Total Company ($ in millions)
| % Change vs. 3Q14 | ||||||||||||||||
| Sales 3Q15 | Int'l | Total | ||||||||||||||
| U.S. | Int'l | Total | U.S. | Operational | Reported | Operational | Reported | |||||||||
| Total * | 1,574 | 3,576 | 5,150 | 0.8 | 15.4 | 1.6 | 10.9 | 1.4 | ||||||||
| Nutrition | 729 | 1,060 | 1,789 | (0.7) | 11.4 | 0.8 | 6.5 | 0.2 | ||||||||
| Diagnostics | 348 | 808 | 1,156 | 6.8 | 8.3 | (5.4) | 7.9 | (2.1) | ||||||||
| Established Pharmaceuticals | -- | 961 | 961 | n/a | 42.6 | 24.6 | 42.6 | 24.6 | ||||||||
| Medical Devices | 489 | 741 | 1,230 | (0.8) | 2.4 | (11.3) | 1.2 | (7.4) |
| % Change vs. 9M14 | ||||||||||||||||
| Sales 9M15 | Int'l | Total | ||||||||||||||
| U.S. | Int'l | Total | U.S. | Operational | Reported | Operational | Reported | |||||||||
| Total * | 4,668 | 10,549 | 15,217 | 1.9 | 14.5 | 2.3 | 10.6 | 2.2 | ||||||||
| Nutrition | 2,143 | 3,032 | 5,175 | (0.2) | 9.7 | 1.0 | 5.5 | 0.5 | ||||||||
| Diagnostics | 1,025 | 2,401 | 3,426 | 6.6 | 7.9 | (4.9) | 7.5 | (1.7) | ||||||||
| Established Pharmaceuticals | -- | 2,835 | 2,835 | n/a | 43.9 | 29.1 | 43.9 | 29.1 | ||||||||
| Medical Devices | 1,479 | 2,266 | 3,745 | 1.9 | 1.7 | (11.5) | 1.8 | (6.7) |
| * Total Abbott Sales from continuing operations include Other Sales of $36 million. |
| n/a = Not Applicable. |
| Note: Operational growth reflects percentage change over the prior year excluding the impact of exchange rates. |
Third-quarter 2015 worldwide sales of $5.2 billion increased 10.9 percent on an operational basis and 1.4 percent on a reported basis, including an unfavorable 9.5 percent effect of foreign exchange.
International sales increased 15.4 percent on an operational basis and 1.6 percent on a reported basis in the third quarter.
Emerging market sales increased 21.2 percent on an operational basis and 8.2 percent on a reported basis in the third quarter. Excluding the impact of 2014 acquisitions and foreign exchange, emerging market sales increased double digits in the quarter.
Nutrition ($ in millions)
| % Change vs. 3Q14 | ||||||||||||||||
| Sales 3Q15 | Int'l | Total | ||||||||||||||
| U.S. | Int'l | Total | U.S. | Operational | Reported | Operational | Reported | |||||||||
| Total | 729 | 1,060 | 1,789 | (0.7) | 11.4 | 0.8 | 6.5 | 0.2 | ||||||||
| Pediatric | 397 | 609 | 1,006 | 3.2 | 14.0 | 4.7 | 9.7 | 4.1 | ||||||||
| Adult | 332 | 451 | 783 | (4.9) | 8.2 | (4.1) | 2.6 | (4.5) |
| % Change vs. 9M14 | ||||||||||||||||
| Sales 9M15 | Int'l | Total | ||||||||||||||
| U.S. | Int'l | Total | U.S. | Operational | Reported | Operational | Reported | |||||||||
| Total | 2,143 | 3,032 | 5,175 | (0.2) | 9.7 | 1.0 | 5.5 | 0.5 | ||||||||
| Pediatric | 1,183 | 1,753 | 2,936 | 3.2 | 10.3 | 3.1 | 7.4 | 3.1 | ||||||||
| Adult | 960 | 1,279 | 2,239 | (4.2) | 8.8 | (1.7) | 3.2 | (2.8) |
Worldwide Nutrition sales increased 6.5 percent in the third quarter on an operational basis and 0.2 percent on a reported basis, including an unfavorable 6.3 percent effect of foreign exchange.
Worldwide Pediatric Nutrition sales increased 9.7 percent on an operational basis and 4.1 percent on a reported basis in the quarter, including an unfavorable 5.6 percent effect of foreign exchange. Sales growth in the quarter was led by continued market uptake of Eleva™ in the premium segment of the Chinese market and Similac ® Advance ® non-GMO in the U.S. During the quarter, Abbott launched Similac Sensitive Non-GMO and Go & Grow by Similac Non-GMO in the U.S., providing parents with additional formula choices.
Worldwide Adult Nutrition sales increased 2.6 percent on an operational basis and decreased 4.5 percent on a reported basis in the quarter, including an unfavorable 7.1 percent effect of foreign exchange. Further category expansion is driving strong international performance, including double-digit growth in Latin America . As expected, U.S. Adult Nutrition sales were impacted by competitive and market dynamics.
Diagnostics ($ in millions)
| % Change vs. 3Q14 | ||||||||||||||||
| Sales 3Q15 | Int'l | Total | ||||||||||||||
| U.S. | Int'l | Total | U.S. | Operational | Reported | Operational | Reported | |||||||||
| Total | 348 | 808 | 1,156 | 6.8 | 8.3 | (5.4) | 7.9 | (2.1) | ||||||||
| Core Laboratory | 205 | 720 | 925 | 8.2 | 8.1 | (5.9) | 8.1 | (3.1) | ||||||||
| Molecular | 47 | 66 | 113 | (7.4) | 10.4 | (2.9) | 2.8 | (4.8) | ||||||||
| Point of Care | 96 | 22 | 118 | 11.9 | 11.5 | 1.9 | 11.8 | 10.0 |
| % Change vs. 9M14 | ||||||||||||||||
| Sales 9M15 | Int'l | Total | ||||||||||||||
| U.S. | Int'l | Total | U.S. | Operational | Reported | Operational | Reported | |||||||||
| Total | 1,025 | 2,401 | 3,426 | 6.6 | 7.9 | (4.9) | 7.5 | (1.7) | ||||||||
| Core Laboratory | 596 | 2,142 | 2,738 | 6.3 | 7.3 | (5.5) | 7.1 | (3.2) | ||||||||
| Molecular | 145 | 195 | 340 | (2.8) | 12.9 | (0.7) | 6.1 | (1.6) | ||||||||
| Point of Care | 284 | 64 | 348 | 13.1 | 12.2 | 3.6 | 12.9 | 11.2 |
Worldwide Diagnostics sales increased 7.9 percent in the third quarter on an operational basis and decreased 2.1 percent on a reported basis, including an unfavorable 10.0 percent effect of foreign exchange. This business continues to deliver above-market growth across emerging and developed markets, while continuing to expand margins and develop next-generation diagnostic platforms.
Core Laboratory Diagnostics sales increased 8.1 percent in the quarter on an operational basis and decreased 3.1 percent on a reported basis, including an unfavorable 11.2 percent effect of foreign exchange. Operational sales growth in the quarter was led by double-digit growth in emerging markets and continued share gains resulting from customer-focused solutions that help laboratories manage large testing volumes and increase operational efficiencies.
Molecular Diagnostics sales increased 2.8 percent in the quarter on an operational basis and decreased 4.8 percent on a reported basis, including an unfavorable 7.6 percent effect of foreign exchange. Infectious disease testing, which remains Abbott's core focus area in Molecular Diagnostics, increased double digits in the quarter on an operational basis. As expected, U.S. growth was impacted by the planned scale down of the genetics business and continued market dynamics in oncology.
Point of Care Diagnostics sales increased 11.8 percent in the quarter on an operational basis as this business continues to enhance its product offering and expand its geographic presence. Sales increased 10.0 percent on a reported basis, including an unfavorable 1.8 percent effect of foreign exchange.
Established Pharmaceuticals ($ in millions)
Note: Prior year financial results have been adjusted to exclude the sales from the developed markets branded generics pharmaceuticals business, which was sold to Mylan on Feb. 27, 2015 . Therefore, sales and growth rates shown in the following charts represent continuing operations .
| % Change vs. 3Q14 | ||||||||||||||||
| Sales 3Q15 | Int'l | Total | ||||||||||||||
| U.S. | Int'l | Total | U.S. | Operational | Reported | Operational | Reported | |||||||||
| Total | -- | 961 | 961 | n/a | 42.6 | 24.6 | 42.6 | 24.6 | ||||||||
| Key Emerging Markets | -- | 698 | 698 | n/a | 37.1 | 18.9 | 37.1 | 18.9 | ||||||||
| Other | -- | 263 | 263 | n/a | 60.2 | 42.8 | 60.2 | 42.8 |
| % Change vs. 9M14 | ||||||||||||||||
| Sales 9M15 | Int'l | Total | ||||||||||||||
| U.S. | Int'l | Total | U.S. | Operational | Reported | Operational | Reported | |||||||||
| Total | -- | 2,835 | 2,835 | n/a | 43.9 | 29.1 | 43.9 | 29.1 | ||||||||
| Key Emerging Markets | -- | 2,078 | 2,078 | n/a | 41.5 | 26.0 | 41.5 | 26.0 | ||||||||
| Other | -- | 757 | 757 | n/a | 51.0 | 38.3 | 51.0 | 38.3 |
Established Pharmaceuticals sales increased 42.6 percent in the third quarter on an operational basis and 24.6 percent on a reported basis, including an unfavorable 18.0 percent effect of foreign exchange. Excluding the impact of 2014 acquisitions and foreign exchange, sales increased double digits in the quarter.
Sales in Key Emerging Markets increased 37.1 percent on an operational basis and 18.9 percent on a reported basis, including an unfavorable 18.2 percent effect of foreign exchange. Operational sales growth in the quarter was led by India , Russia , Brazil , China , and several markets throughout Latin America .
Medical Devices ($ in millions)
| % Change vs. 3Q14 | ||||||||||||||||
| Sales 3Q15 | Int'l | Total | ||||||||||||||
| U.S. | Int'l | Total | U.S. | Operational | Reported | Operational | Reported | |||||||||
| Total | 489 | 741 | 1,230 | (0.8) | 2.4 | (11.3) | 1.2 | (7.4) | ||||||||
| Vascular | 278 | 394 | 672 | (1.0) | 1.5 | (12.0) | 0.5 | (7.8) | ||||||||
| Diabetes Care | 98 | 177 | 275 | (3.8) | 3.5 | (10.8) | 1.0 | (8.4) | ||||||||
| Medical Optics | 113 | 170 | 283 | 2.6 | 3.1 | (10.0) | 3.0 | (5.3) | ||||||||
| Vascular Product Lines: | ||||||||||||||||
| Coronary Devices a) | 191 | 336 | 527 | 4.8 | 1.1 | (12.4) | 2.3 | (6.8) | ||||||||
| Endovascular b) | 73 | 58 | 131 | 5.8 | 4.0 | (10.5) | 4.9 | (2.1) | ||||||||
| a) Includes DES / BVS product portfolio, structural heart, guidewires, balloon catheters, and other coronary products. | ||||||||||||||||
| b) Includes vessel closure, carotid stents and other peripheral products. |
| % Change vs. 9M14 | ||||||||||||||||
| Sales 9M15 | Int'l | Total | ||||||||||||||
| U.S. | Int'l | Total | U.S. | Operational | Reported | Operational | Reported | |||||||||
| Total | 1,479 | 2,266 | 3,745 | 1.9 | 1.7 | (11.5) | 1.8 | (6.7) | ||||||||
| Vascular | 859 | 1,233 | 2,092 | 3.8 | 0.8 | (12.2) | 2.0 | (6.3) | ||||||||
| Diabetes Care | 293 | 527 | 820 | (1.1) | 5.2 | (9.2) | 3.0 | (6.5) | ||||||||
| Medical Optics | 327 | 506 | 833 | (0.1) | 0.4 | (12.3) | 0.2 | (7.9) | ||||||||
| Vascular Product Lines: | ||||||||||||||||
| Coronary Devices a) | 571 | 1,055 | 1,626 | 5.2 | 0.1 | (12.8) | 1.6 | (7.2) | ||||||||
| Endovascular b) | 210 | 178 | 388 | 7.3 | 5.4 | (9.0) | 6.3 | (0.9) |
| a) Includes DES / BVS product portfolio, structural heart, guidewires, balloon catheters, and other coronary products. |
| b) Includes vessel closure, carotid stents and other peripheral products. |
Worldwide Medical Devices sales increased 1.2 percent in the third quarter on an operational basis and decreased 7.4 percent on a reported basis, including an unfavorable 8.6 percent effect of foreign exchange.
Worldwide sales of Vascular products increased 0.5 percent in the quarter on an operational basis and decreased 7.8 percent on a reported basis, including an unfavorable 8.3 percent effect of foreign exchange. Sales of Abbott's MitraClip ® device for the treatment of mitral regurgitation increased double digits globally, as Abbott continues to build the market for this first-in-class device. During the quarter, Abbott continued to broaden its foundation as a leader in the treatment of mitral valve disease with the acquisition of Tendyne Holdings Inc. and an option agreement to acquire Cephea Valve Technologies. Abbott also launched XIENCE™ Alpine, its drug-eluting stent system designed for enhanced performance in complex interventions, and Absorb™ GT1, its bioresorbable vascular scaffold, in several markets across Europe and Asia .
Worldwide Diabetes Care sales increased 1.0 percent in the quarter on an operational basis and decreased 8.4 percent on a reported basis, including an unfavorable 9.4 percent effect of foreign exchange. Abbott's FreeStyle ® Libre Flash Glucose Monitoring System contributed to international sales growth in the quarter.
Worldwide Medical Optics sales increased 3.0 percent in the quarter on an operational basis and decreased 5.3 percent on a reported basis, including an unfavorable 8.3 percent effect of foreign exchange. Sales of cataract products, which represent approximately 70 percent of Medical Optics sales, increased high single digits, outpacing growth of the global cataract market, led by continued adoption of recently launched products in the premium intraocular lens segment.
ABBOTT NARROWS ITS FULL-YEAR 2015 EARNINGS-PER-SHARE GUIDANCE
Abbott narrowed its full-year 2015 guidance range for earnings per share from continuing operations, excluding specified items, to $2.14 to $2.16 . The mid-point of this range remains unchanged from previous guidance.
Abbott forecasts net specified items related to continuing operations for the full year 2015 of approximately $0.55 per share. Specified items include intangible amortization expense, charges associated with cost reduction initiatives, and expenses related to acquisitions, partially offset by a gain on the sale of a portion of Abbott's position in Mylan stock as well as a decrease in the fair value of contingent consideration related to a business acquisition.
Including net specified items, projected earnings per share from continuing operations under U.S. Generally Accepted Accounting Principles (GAAP) would be $1.59 to $1.61 for the full year 2015.
ABBOTT DECLARES 367 TH CONSECUTIVE QUARTERLY DIVIDEND
On September 17, 2015 , the board of directors of Abbott declared the company's quarterly dividend of $0.24 per share. Abbott's cash dividend is payable on November 15, 2015 , to shareholders of record at the close of business on October 15, 2015 .
Abbott is a member of the S&P 500 Dividend Aristocrats Index, which tracks companies that have annually increased their dividend for 25 consecutive years.
Abbott is a global healthcare company devoted to improving life through the development of products and technologies that span the breadth of healthcare. With a portfolio of leading, science-based offerings in diagnostics, medical devices, nutritionals and branded generic pharmaceuticals, Abbott serves people in more than 150 countries and employs approximately 73,000 people.
Visit Abbott at www.abbott.com and connect with us on Twitter at @AbbottNews.
Abbott will webcast its live third-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 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. 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, 2014 , 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 Laboratories and Subsidiaries | |||||||
| Consolidated Statement of Earnings | |||||||
| Third Quarter Ended September 30, 2015 and 2014 | |||||||
| (in millions, except per share data) | |||||||
| (unaudited) | |||||||
| 3Q15 | 3Q14 | % Change | |||||
| Net Sales | $5,150 | $5,079 | 1.4 | ||||
| Cost of products sold, excluding amortization expense | 2,242 | 2,319 | (3.3) | ||||
| Amortization of intangible assets | 151 | 132 | 14.1 | ||||
| Research and development | 378 | 305 | 23.7 | ||||
| Selling, general, and administrative | 1,666 | 1,595 | 4.5 | ||||
| Total Operating Cost and Expenses | 4,437 | 4,351 | 2.0 | ||||
| Operating earnings | 713 | 728 | (2.0) | ||||
| Interest expense, net | 16 | 17 | (5.4) | ||||
| Net foreign exchange (gain) loss | (14) | (1) | n/m | ||||
| Other (income) expense, net | (3) | (3) | (12.7) | ||||
| Earnings from Continuing Operations before taxes | 714 | 715 | (0.2) | ||||
| Taxes on Earnings from Continuing Operations | 118 | 277 | (57.2) | ||||
| Earnings from Continuing Operations | 596 | 438 | 35.8 | ||||
| Earnings (Loss) from Discontinued Operations, net of taxes | (32) | 100 | n/m | 1) | |||
| Gain on Sale of Discontinued Operations, net of taxes | 16 | -- | n/m | ||||
| Net Earnings (Loss) from Discontinued Operations, net of taxes | (16) | 100 | n/m | 1) | |||
| Net Earnings | $580 | $538 | 7.6 | ||||
| Net Earnings from Continuing Operations, excluding Specified Items, as described below | |||||||
| $821 | $818 | 0.3 | 2) | ||||
| Diluted Earnings (Loss) per Common Share from: | |||||||
| Continuing Operations | $0.39 | $0.29 | 34.5 | ||||
| Discontinued Operations | (0.01) | 0.07 | n/m | 1) | |||
| Total | $0.38 | $0.36 | 5.6 | ||||
| Diluted Earnings per Common Share from Continuing | |||||||
| Operations, excluding Specified Items, as described below | $0.54 | $0.54 | -- | 2) | |||
| Average Number of Common Shares Outstanding | |||||||
| Plus Dilutive Common Stock Options | 1,505 | 1,520 |
| NOTES: |
| See tables below for an explanation of certain non-GAAP financial information. |
| n/m = Percent change is not meaningful. |
| See footnotes below. |
| 1) | 2014 Earnings and Diluted Earnings per Common Share from Discontinued Operations reflect financial results from the developed markets branded generics pharmaceuticals and animal health businesses, and favorable adjustments to tax expense as a result of the resolution of various tax positions from previous years related to AbbVie operations. |
| 2) | 2015 Net Earnings from Continuing Operations, excluding Specified Items, excludes net after-tax charges of $225 million, or $0.15 per share, for intangible amortization expense, expenses associated with cost reduction initiatives and other expenses related to acquisitions. |
| 2014 Net Earnings from Continuing Operations, excluding Specified Items, excludes net after-tax charges of $380 million, or $0.25 per share, for intangible amortization expense, expenses associated with cost reduction initiatives and deal and other expenses related to the acquisitions, as well as the tax expense associated with a one-time repatriation of 2014 ex-U.S. earnings. |
| Abbott Laboratories and Subsidiaries | |||||||
| Consolidated Statement of Earnings | |||||||
| Nine Months Ended September 30, 2015 and 2014 | |||||||
| (in millions, except per share data) | |||||||
| (unaudited) | |||||||
| 9M15 | 9M14 | % Change | |||||
| Net Sales | $15,217 | $14,891 | 2.2 | ||||
| Cost of products sold, excluding amortization expense | 6,541 | 6,881 | (4.9) | ||||
| Amortization of intangible assets | 458 | 392 | 16.9 | ||||
| Research and development | 1,036 | 984 | 5.3 | ||||
| Selling, general, and administrative | 5,130 | 4,864 | 5.5 | ||||
| Total Operating Cost and Expenses | 13,165 | 13,121 | 0.3 | ||||
| Operating earnings | 2,052 | 1,770 | 15.9 | ||||
| Interest expense, net | 49 | 54 | (8.9) | ||||
| Net foreign exchange (gain) loss | (63) | -- | n/m | ||||
| Other (income) expense, net | (287) | 2 | n/m | 1) | |||
| Earnings from Continuing Operations before taxes | 2,353 | 1,714 | 37.2 | ||||
| Taxes on Earnings from Continuing Operations | 442 | 627 | (29.5) | ||||
| Earnings from Continuing Operations | 1,911 | 1,087 | 75.7 | ||||
| Earnings (Loss) from Discontinued Operations, net of taxes | (7) | 293 | n/m | ||||
| Gain on Sale of Discontinued Operations, net of taxes | 1,752 | -- | n/m | ||||
| Net Earnings from Discontinued Operations, net of taxes | 1,745 | 293 | n/m | 2) | |||
| Net Earnings | $3,656 | $1,380 | 165.0 | ||||
| Net Earnings from Continuing Operations, excluding | |||||||
| Specified Items, as described below | $2,326 | $2,094 | 11.0 | 3) | |||
| Diluted Earnings per Common Share from: | |||||||
| Continuing Operations | $1.26 | $0.71 | 77.5 | ||||
| Discontinued Operations | 1.15 | 0.19 | n/m | 2) | |||
| Total | $2.41 | $0.90 | n/m | ||||
| Diluted Earnings per Common Share from Continuing | |||||||
| Operations, excluding Specified Items, as described below | $1.53 | $1.36 | 12.5 | 3) | |||
| Average Number of Common Shares Outstanding | |||||||
| Plus Dilutive Common Stock Options | 1,509 | 1,529 |
| NOTES: |
| See tables below for an explanation of certain non-GAAP financial information. |
| n/m = Percent change is not meaningful. |
| See footnotes below. |
| 1) | 2015 Other (income) expense includes a gain on the sale of a portion of Abbott's position in Mylan stock and a decrease in the fair value of contingent consideration related to a business acquisition, both reported as specified items. |
| 2) | 2015 Earnings and Diluted Earnings per Common Share from Discontinued Operations reflect the after-tax gain of $1.752 billion on the sale of the developed markets branded generics pharmaceuticals and animal health businesses to Mylan on Feb. 27, 2015 and Zoetis on Feb. 10, 2015, respectively; the first-quarter financial results from these businesses up to the date of sale; and an unfavorable adjustment to tax expense as a result of the resolution of various tax positions from previous years related to AbbVie operations. |
| 2014 Earnings and Diluted Earnings per Common Share from Discontinued Operations reflect financial results from the developed markets branded generics pharmaceuticals and animal health businesses, and favorable adjustments to tax expense as a result of the resolution of various tax positions from previous years related to AbbVie operations and the developed markets branded generics pharmaceuticals business. | |
| 3) | 2015 Net Earnings from Continuing Operations, excluding Specified Items, excludes net after-tax charges of $415 million, or $0.27 per share, for intangible amortization expense, expenses associated with cost reduction initiatives and other expenses related to acquisitions, partially offset by a gain on the sale of a portion of Abbott's position in Mylan stock and a decrease in the fair value of contingent consideration related to a business acquisition. |
| 2014 Net Earnings from Continuing Operations, excluding Specified Items, excludes net after-tax charges of $1.007 billion, or $0.65 per share, for intangible amortization expense, expenses associated with cost reduction initiatives and deal and other expenses related to acquisitions, as well as the tax expense associated with a one-time repatriation of 2014 ex-U.S. earnings. |
NON-GAAP RECONCILIATION OF FINANCIAL INFORMATION FROM CONTINUING OPERATIONS
| Abbott Laboratories and Subsidiaries | ||||||||
| Non-GAAP Reconciliation of Financial Information From Continuing Operations | ||||||||
| Third Quarter Ended September 30, 2015 and 2014 | ||||||||
| (in millions, except per share data) | ||||||||
| (unaudited) | ||||||||
| 3Q15 | ||||||||
| As Reported (GAAP) | Specified Items | As Adjusted | % to Sales | |||||
| Intangible Amortization | $151 | ($151) | -- | |||||
| Gross Margin | 2,757 | 206 | 2,963 | 57.5% | ||||
| R&D | 378 | (59) | 319 | 6.2% | ||||
| SG&A | 1,666 | (46) | 1,620 | 31.4% | ||||
| Other (Income) Expense, Net | (3) | 12 | 9 | |||||
| Earnings from Continuing Operations before taxes | 714 | 299 | 1,013 | |||||
| Taxes on Earnings from Continuing Operations | 118 | 74 | 192 | |||||
| Net Earnings from Continuing Operations | 596 | 225 | 821 | |||||
| Diluted Earnings per Share from Continuing Operations | $0.39 | $0.15 | $0.54 |
Specified items reflect intangible amortization expense of $151 million and other expenses of $148 million , primarily associated with cost reduction initiatives and acquisitions.
| 3Q14 | ||||||||
| Historical GAAP Adj for Disc Ops 1) | Specified Items | As Adjusted | % to Sales | |||||
| Intangible Amortization | $132 | ($132) | -- | |||||
| Gross Margin | 2,628 | 188 | 2,816 | 55.4% | ||||
| R&D | 305 | (2) | 303 | 6.0% | ||||
| SG&A | 1,595 | (100) | 1,495 | 29.4% | ||||
| Other (Income) Expense, Net | (3) | (4) | (7) | |||||
| Earnings from Continuing Operations before taxes | 715 | 294 | 1,009 | |||||
| Taxes on Earnings from Continuing Operations | 277 | (86) | 191 | |||||
| Net Earnings from Continuing Operations | 438 | 380 | 818 | |||||
| Diluted Earnings per Share from Continuing Operations | $0.29 | $0.25 | $0.54 |
Specified items reflect intangible amortization expense of $132 million and other expenses of $162 million , primarily associated with cost reduction initiatives and deal and other expenses related to acquisitions, as well as tax expense of $110 million associated with a one-time repatriation of 2014 ex-U.S. earnings.
| Abbott Laboratories and Subsidiaries | ||||||||
| Non-GAAP Reconciliation of Financial Information From Continuing Operations | ||||||||
| Nine Months Ended September 30, 2015 and 2014 | ||||||||
| (in millions, except per share data) | ||||||||
| (unaudited) | ||||||||
| 9M15 | ||||||||
| As Reported (GAAP) | Specified Items | As Adjusted | % to Sales | |||||
| Intangible Amortization | $458 | ($458) | -- | |||||
| Gross Margin | 8,218 | 577 | $8,795 | 57.8% | ||||
| R&D | 1,036 | (81) | 955 | 6.3% | ||||
| SG&A | 5,130 | (155) | 4,975 | 32.7% | ||||
| Other (Income) Expense, Net | (287) | 294 | 7 | |||||
| Earnings from Continuing Operations before taxes | 2,353 | 519 | 2,872 | |||||
| Taxes on Earnings from Continuing Operations | 442 | 104 | 546 | |||||
| Net Earnings from Continuing Operations | 1,911 | 415 | 2,326 | |||||
| Diluted Earnings per Share from Continuing Operations | $1.26 | $0.27 | $1.53 |
Specified items reflect intangible amortization expense of $458 million and other expenses of $348 million , primarily associated with cost reduction initiatives and acquisitions, partially offset by a gain on the sale of a portion of Abbott's position in Mylan stock of $207 million and a decrease in the fair value of contingent consideration related to a business acquisition.
| 9M14 | ||||||||
| Historical GAAP Adj for Disc Ops 1) | Specified Items | As Adjusted | % to Sales | |||||
| Intangible Amortization | $392 | ($392) | -- | |||||
| Gross Margin | 7,618 | 530 | 8,148 | 54.7% | ||||
| R&D | 984 | (53) | 931 | 6.3% | ||||
| SG&A | 4,864 | (280) | 4,584 | 30.8% | ||||
| Other (Income) Expense, Net | 2 | (8) | (6) | |||||
| Earnings from Continuing Operations before taxes | 1,714 | 871 | 2,585 | |||||
| Taxes on Earnings from Continuing Operations | 627 | (136) | 491 | |||||
| Net Earnings from Continuing Operations | 1,087 | 1,007 | 2,094 | |||||
| Diluted Earnings per Share from Continuing Operations | $0.71 | $0.65 | $1.36 |
Specified items reflect intangible amortization expense of $392 million and other expenses of $479 million , primarily associated with cost reduction initiatives and deal and other expenses related to acquisitions, as well as tax expense of $264 million associated with a one-time repatriation of 2014 ex-U.S. earnings.
RECONCILIATION OF TAX RATE FOR CONTINUING OPERATIONS
A reconciliation of the third-quarter tax rates for continuing operations for 2015 and 2014 is shown below:
| 3Q15 | |||||||
| ($ in millions) | Pre-Tax Income | Taxes on Earnings | Tax Rate | ||||
| As reported (GAAP) | $714 | $118 | 16.6% | ||||
| Specified items | 299 | 74 | |||||
| Excluding specified items | $1,013 | $192 | 19.0% | ||||
| 3Q14 | |||||||
| ($ in millions) | Pre-Tax Income | Taxes on Earnings | Tax Rate | ||||
| As reported (GAAP) | $715 | $277 | 38.7% | 1) | |||
| Specified items | 294 | (86) | |||||
| Excluding specified items | $1,009 | $191 | 19.0% |
A reconciliation of the year-to-date tax rates for continuing operations for 2015 and 2014 is shown below:
| 9M15 | |||||||
| ($ in millions) | Pre-Tax Income | Taxes on Earnings | Tax Rate | ||||
| As reported (GAAP) | $2,353 | $442 | 18.8% | ||||
| Specified items | 519 | 104 | |||||
| Excluding specified items | $2,872 | $546 | 19.0% | ||||
| 9M14 | |||||||
| ($ in millions) | Pre-Tax Income | Taxes on Earnings | Tax Rate | ||||
| As reported (GAAP) | $1,714 | $627 | 36.6% | 2) | |||
| Specified items | 871 | (136) | |||||
| Excluding specified items | $2,585 | $491 | 19.0% |