REG - Abbott Laboratories - 3rd Quarter Results <Origin Href="QuoteRef">ABT.N</Origin> - Part 2
29/10/2014 14:00
- Part 2: For the preceding part double click ID:nRSV0075Va
Continuing Operations $0.54 $0.44 22.7 4)
Discontinued Operations 0.08 0.11 (27.3) 2) 5)
Total $0.62 $0.55 12.7
Average Number of Common Shares Outstanding
Plus Dilutive Common Stock Options and Awards 1,520 1,567
NOTES:
a) See tables below for an explanation of certain non-GAAP financial information.
n/m = Percent change is not meaningful.
1) Increase over prior year is a result of specified items, including 2013 favorable adjustment to tax expense as a result of the resolution of various tax positions from previous years, and 2014 current quarter tax expense associated with a one-time repatriation of 2014 ex-U.S. earnings.
2) Earnings and Diluted Earnings per Common Share from Discontinued Operations reflect the reporting of the developed markets branded generics pharmaceuticals business as discontinued operations due to the pending sale of this business to Mylan.
3) 2013 Earnings from Discontinued Operations, net of taxes, also includes a favorable adjustment to tax expense of $193 million, or $0.12 per share, as a result of the resolution of various tax positions from a previous year related to AbbVie operations.
4) 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 current quarter tax expense associated with a one-time repatriation of 2014 ex-U.S. earnings.
2013 Net Earnings from Continuing Operations, excluding Specified Items, excludes after-tax charges of $44 million, or $0.03 per share, for intangible amortization expense; expenses associated with cost reduction initiatives; a philanthropic contribution to the Abbott Fund; and other costs, including integration and separation-related costs; partially offset by a favorable tax adjustment, as discussed in note 1.
5) 2014 Net Earnings from Discontinued Operations, excluding Specified Items, excludes net after-tax charges of $27 million, or $0.01 per share, primarily related to current quarter tax expense associated with a one-time repatriation of 2014 ex-U.S. earnings.
2013 Net Earnings from Discontinued Operations, excluding Specified Items, excludes a favorable tax adjustment of $193 million, or $0.12 per share, related to AbbVie operations, as discussed in note 3, partially offset by net after-tax charges of $56 million, or $0.03 per share, primarily related to cost reduction initiatives.
Abbott Laboratories and Subsidiaries
Consolidated Statement of Earnings
Nine Months Ended September 30, 2014 and 2013
(in millions, except per share data)
(unaudited)
9M14 9M13 % Change
Net Sales $14,957 $14,643 2.1
Cost of products sold, excluding amortization expense 6,918 6,854 0.9
Amortization of intangible assets 392 441 (11.2)
Research and development 989 1,012 (2.3)
Selling, general, and administrative 4,886 4,831 1.1
Total Operating Cost and Expenses 13,185 13,138 0.4
Operating earnings 1,772 1,505 17.8
Interest expense, net 53 64 (16.6)
Net foreign exchange (gain) loss 1 36 (98.5)
Other (income) expense, net 2 (28) n/m
Earnings from Continuing Operations before taxes 1,716 1,433 19.7
Taxes on Earnings from Continuing Operations 627 (71) n/m 1)
Earnings from Continuing Operations 1,089 1,504 (27.6)
Earnings from Discontinued Operations, net of taxes 291 483 (39.6) 2) 3)
Net Earnings $1,380 $1,987 (30.5)
Net Earnings from Continuing Operations, excluding
Specified Items, as described below $2,096 $1,842 13.8 4)
Net Earnings from Discontinued Operations, excluding
Specified Items, as described below 319 429 (25.6) 2) 5)
Net Earnings, excluding Specified Items, as described below $2,415 $2,271 6.3
Diluted Earnings per Common Share from:
Continuing Operations $0.71 $0.95 (25.3)
Discontinued Operations 0.19 0.30 (36.7) 2) 3)
Total $0.90 $1.25 (28.0)
Diluted Earnings per Common Share, excluding Specified
Items, as described below, from:
Continuing Operations $1.36 $1.16 17.2 4)
Discontinued Operations 0.21 0.27 (22.2) 2) 5)
Total $1.57 $1.43 9.8
Average Number of Common Shares Outstanding
Plus Dilutive Common Stock Options and Awards 1,529 1,576
NOTES:
a) See tables below for an explanation of certain non-GAAP
financial information.
n/m = Percent change is not meaningful.
1) Increase over prior year is a result of specified items,
including 2013 favorable adjustments to tax expense as a result
of the resolution of various tax positions from previous years
and for the impact of U.S. tax law changes enacted in 2013
related to 2012 results, as well as 2014 year-to-date tax
expense associated with a one-time repatriation of 2014 ex-U.S.
earnings.
2) Earnings and Diluted Earnings per Common Share from Discontinued
Operations reflect the reporting of the developed markets
branded generics pharmaceuticals business as discontinued
operations due to the pending sale of this business to Mylan.
3) 2014 Earnings from Discontinued Operations, net of taxes, also
includes a net favorable adjustment to tax expense of $37
million, or $0.03 per share, as a result of the resolution of
various tax positions from previous years related to AbbVie
operations.
2013 Earnings from Discontinued Operations, net of taxes, also
includes a favorable adjustment to tax expense of $193 million,
or $0.12 per share, as a result of the resolution of various tax
positions from a previous year related to AbbVie operations.
4) 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 the acquisitions, as well as
year-to-date tax expense associated with a one-time repatriation
of 2014 ex-U.S. earnings.
2013 Net Earnings from Continuing Operations, excluding
Specified Items, excludes after-tax charges of $338 million, or
$0.21 per share, for intangible amortization expense, expenses
associated with cost reduction initiatives, a philanthropic
contribution to the Abbott Fund, and other costs, including
integration and separation-related costs, partially offset by
favorable tax adjustments, as discussed in note 1.
5) 2014 Net Earnings from Discontinued Operations, excluding
Specified Items, excludes net after-tax charges of $65 million,
or $0.05 per share, primarily related to intangible amortization
expense and cost reduction initiatives, as well as year-to-date
tax expense associated with a one-time repatriation of 2014 ex
-U.S. earnings, net of a favorable adjustment to tax expense
related to the resolution of various tax positions from previous
years; partially offset by a net favorable adjustment to tax
expense of $37 million, or $0.03 per share, related to AbbVie
operations, as discussed in note 3.
2013 Net Earnings from Discontinued Operations, excluding
Specified Items, excludes a favorable tax adjustment of $193
million, or $0.12 per share, related to AbbVie operations, as
discussed in note 3, partially offset by net after-tax charges
of $139 million, or $0.09 per share, primarily related to cost
reduction initiatives.
Non-GAAP Reconciliation of Financial Information
Abbott Laboratories and Subsidiaries
Non-GAAP Reconciliation of Financial Information
Third Quarter Ended September 30, 2014 and 2013
(in millions, except per share data)
(unaudited)
Reconciliation of Diluted Earnings per Common Share
3Q14
GAAP Disc Ops- Specified As
AbbVie Items Adjusted
Continuing Operations $0.29 -- $0.25 $0.54
Discontinued Operations $0.07 -- $0.01 $0.08
Total $0.36 -- $0.26 $0.62
Reconciliation of Financial Information
3Q14
As Specified As % to
Reported Items Adjusted Sales
(GAAP)
Continuing Operations
Intangible Amortization $132 ($132) --
Gross Margin 2,641 188 $2,829 55.4%
R&D 307 (2) 305 6.0%
SG&A 1,603 (100) 1,503 29.4%
Other (Income) Expense, Net (3) (4) (7)
Earnings before taxes 718 294 1,012
Taxes on Earnings 278 (86) 192
Net Earnings 440 380 820
Diluted Earnings per Share $0.29 $0.25 $0.54
Discontinued Operations
Net Earnings $98 $27 $125
Diluted Earnings per Share $0.07 $0.01 $0.08
Specified items for continuing operations 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 the acquisitions, as well as current quarter tax expense of $110 million
associated with a one-time repatriation of 2014 ex-U.S. earnings.
Specified items for discontinued operations are primarily related to current
quarter tax expense associated with a one-time repatriation of 2014 ex-U.S.
earnings.
Reconciliation of Diluted Earnings per Common Share
3Q13
Historical Disc Ops- Historical Disc Ops-AbbVie Specified Items As
GAAP EPD DM GAAP Adjusted
Adj for EPD DM
Continuing Operations $0.49 ($0.08) $0.41 -- $0.03 $0.44
Discontinued Operations $0.12 $0.08 $0.20 ($0.12) $0.03 $0.11
Total $0.61 -- $0.61 ($0.12) $0.06 $0.55
Reconciliation of Financial Information
3Q13
Historical GAAP Disc Ops- Historical GAAP Disc Ops- Specified Items As % to Sales
EPD DM Adj for EPD DM AbbVie Adjusted
Continuing Operations
Intangible Amortization $197 ($51) $146 -- ($146) --
Gross Margin 2,722 (298) 2,424 -- 216 $2,640 54.7%
R&D 357 (18) 339 -- (11) 328 6.8%
SG&A 1,735 (123) 1,612 -- (110) 1,502 31.1%
Other Non-Operating Items 2 (10) (8) -- -- (8)
Earnings before taxes 628 (147) 481 -- 337 818
Taxes on Earnings (145) (18) (163) -- 293 130
Net Earnings 773 (129) 644 -- 44 688
Diluted Earnings per Share $0.49 ($0.08) $0.41 -- $0.03 $0.44
Discontinued Operations
Net Earnings $193 $129 $322 ($193) $56 $185
Diluted Earnings per Share $0.12 $0.08 $0.20 ($0.12) $0.03 $0.11
Specified items for continuing operations reflect intangible amortization
expense of $146 million; expenses associated with cost reduction initiatives
of $81 million; a philanthropic contribution to the Abbott Fund of $40
million; and other expenses of $70 million, including integration and
separation-related costs; partially offset by a favorable adjustment to tax
expense of $237 million related to the resolution of various tax provisions
from previous years.
Specified items for discontinued operations are primarily related to cost
reductions initiatives.
Abbott Laboratories and Subsidiaries
Non-GAAP Reconciliation of Financial Information
Nine Months Ended September 30, 2014 and 2013
(in millions, except per share data)
(unaudited)
Reconciliation of Diluted Earnings per Common Share
9M14
GAAP Disc Ops- Specified As
AbbVie Items Adjusted
Continuing Operations $0.71 -- $0.65 $1.36
Discontinued Operations $0.19 ($0.03) $0.05 $0.21
Total $0.90 ($0.03) $0.70 $1.57
Reconciliation of Financial Information
9M14
As Disc Ops- Specified As % to
Reported AbbVie Items Adjusted Sales
(GAAP)
Continuing Operations
Intangible Amortization $392 -- ($392) --
Gross Margin 7,647 -- 530 $8,177 54.7%
R&D 989 -- (53) 936 6.3%
SG&A 4,886 -- (280) 4,606 30.8%
Other (Income) Expense, Net 2 -- (8) (6)
Earnings before taxes 1,716 -- 871 2,587
Taxes on Earnings 627 -- (136) 491
Net Earnings 1,089 -- 1,007 2,096
Diluted Earnings per Share $0.71 -- $0.65 $1.36
Discontinued Operations
Net Earnings $291 ($37) $65 $319
Diluted Earnings per Share $0.19 ($0.03) $0.05 $0.21
Specified items for continuing operations 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 the acquisitions, as well as year-to-date tax expense of $264 million
associated with a one-time repatriation of 2014 ex-U.S. earnings.
Specified items for discontinued operations are primarily related to
intangible amortization expense, cost reduction initiatives, as well as
year-to-date tax expense associated with a one-time repatriation of 2014
ex-U.S. earnings, net of a favorable adjustment to tax expense related to the
resolution of various tax positions from previous years.
Reconciliation of Diluted Earnings per Common Share
9M13
Historical Disc Ops-EPD DM Historical Disc Ops-AbbVie Specified Items As
GAAP GAAP Adj for EPD DM Adjusted
Continuing Operations $1.13 ($0.18) $0.95 -- $0.21 $1.16
Discontinued Operations $0.12 $0.18 $0.30 ($0.12) $0.09 $0.27
Total $1.25 -- $1.25 ($0.12) $0.30 $1.43
Reconciliation of Financial Information
9M13
Historical GAAP Disc Ops-EPD DM Historical GAAP Adj Disc Ops- Specified Items As % to Sales
for EPD DM AbbVie Adjusted
Continuing Operations
Intangible Amortization $593 ($152) $441 -- ($441) --
Gross Margin 8,173 (825) 7,348 -- 656 $8,004 54.7%
R&D 1,066 (54) 1,012 -- (16) 996 6.8%
SG&A 5,234 (403) 4,831 -- (155) 4,676 31.9%
Other Non-Operating Items 89 (17) 72 -- (18) 54
Earnings before taxes 1,784 (351) 1,433 -- 845 2,278
Taxes on Earnings (10) (61) (71) -- 507 436
Net Earnings 1,794 (290) 1,504 -- 338 1,842
Diluted Earnings per Share $1.13 ($0.18) $0.95 -- $0.21 $1.16
Discontinued Operations
Net Earnings $193 $290 $483 ($193) $139 $429
Diluted Earnings per Share $0.12 $0.18 $0.30 ($0.12) $0.09 $0.27
Specified items for continuing operations reflect intangible amortization
expense of $441 million; expenses associated with cost reduction initiatives
of $185 million; a philanthropic contribution to the Abbott Fund of $40
million; and other costs of $179 million, including integration and
separation-related costs; partially offset by favorable adjustments to tax
expense of $237 million related to the resolution of various tax positions
from previous years and $103 million for the impact of U.S. tax law changes
enacted in 2013 related to 2012 results.
Specified items for discontinued operations are primarily related to cost
reductions initiatives.
Reconciliation of Tax Rate for Continuing Operations
A reconciliation of the third-quarter tax rates for continuing operations for
2014 and 2013 is shown below:
3Q14
(dollars in millions) Pre-Tax Taxes on Tax
Income Earnings Rate
As reported (GAAP) $718 $278 38.7%
Specified items 294 (86) 1)
Excluding specified items $1,012 $192 19.0%
3Q13
(dollars in millions) Pre-Tax Taxes on Tax
Income Earnings Rate
As reported (GAAP) $481 ($163) (33.9%)
Specified items 337 293 2)
Excluding specified items $818 $130 15.8%
1) Specified items include current quarter tax expense of $110 million associated with a one-time repatriation of 2014 ex-U.S. earnings.
2) Specified items include a favorable adjustment to tax expense of $237 million from the resolution of various tax positions from previous years.
A reconciliation of the year-to-date tax rates for continuing operations for
2014 and 2013 is shown below:
9M14
(dollars in millions) Pre-Tax Taxes on Tax
Income Earnings Rate
As reported (GAAP) $1,716 $627 36.6%
Specified items 871 (136) 3)
Excluding specified items $2,587 $491 19.0%
9M13
(dollars in millions) Pre-Tax Taxes on Tax
Income Earnings Rate
As reported (GAAP) $1,433 ($71) (5.0%)
Specified items 845 507 4)
Excluding specified items $2,278 $436 19.1%
3) Specified items include year-to-date tax expense of $264 million associated with a one-time repatriation of 2014 ex-U.S. earnings.
4) Specified items include favorable adjustments to tax expense of $237 million related to the resolution of various tax positions from previous years and $103 million for the impact of U.S. tax law changes enacted in 2013 related to 2012 results.
Additional Financial Information
Reconciliation of the Reported 2014 Sales between Continuing and Discontinued Operations
($ in millions)
2014 Sales
Total Sales, Incl. Discontinued Operations Continuing
Discontinued Operations Operations
$ Operational % Change vs. PY $ $ Operational % Change vs. PY
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