REG - Abbott Laboratories - Abbott Reports 2Qtr 2014 Earnings Results <Origin Href="QuoteRef">ABT.N</Origin> - Part 2

Abbott LaboratoriesAnnouncement

06/09/2014 16:43

- Part 2: For the preceding part double click  ID:nRSP5029Ma 

                              43           49            (14.2)        
 Net foreign exchange (gain) loss                                                                                                                                                                                                                                                                                                                                                                                                                                                                      3            40            (92.0)        
 Other (income) expense, net                                                                                                                                                                                                                                                                                                                                                                                                                                                                           6            (2)           n/m           
 Earnings from Continuing Operations before taxes                                                                                                                                                                                                                                                                                                                                                                                                                                                      1,160        1,155         0.4           
                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                
 Taxes on Earnings from Continuing Operations                                                                                                                                                                                                                                                                                                                                                                                                                                                          361          134           n/m       1)  
 Earnings from Continuing Operations                                                                                                                                                                                                                                                                                                                                                                                                                                                                   799          1,021         (21.7)        
                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                
 Earnings from Discontinued Operations, net of taxes                                                                                                                                                                                                                                                                                                                                                                                                                                                   42           --            n/m       2)  
                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                
 Net Earnings                                                                                                                                                                                                                                                                                                                                                                                                                                                                                          $841         $1,021        (17.6)        
                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                
 Net Earnings from Continuing Operations, excluding                                                                                                                                                                                                                                                                                                                                                                                                                                                                                             
 Specified Items, as described below                                                                                                                                                                                                                                                                                                                                                                                                                                                                   $1,470       $1,399        5.1       3)  
                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                
 Diluted Earnings per Common Share from Continuing Operations                                                                                                                                                                                                                                                                                                                                                                                                                                          $0.52        $0.64         (18.8)        
                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                
 Diluted Earnings per Common Share from Discontinued Operations  0.03                                                                                                                                                                                                                                                                                                                                                                                                                                           --           n/m            
                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                
 Diluted Earnings per Common Share                                                                                                                                                                                                                                                                                                                                                                                                                                                                     $0.55        $0.64         (14.1)        
                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                
 Diluted Earnings per Common Share from Continuing                                                                                                                                                                                                                                                                                                                                                                                                                                                                                              
 Operations, excluding Specified Items, as described below                                                                                                                                                                                                                                                                                                                                                                                                                                             $0.95        $0.88         8.0       3)  
                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                
 Average Number of Common Shares Outstanding                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                    
 Plus Dilutive Common Stock Options and Awards                                                                                                                                                                                                                                                                                                                                                                                                                                                         1,532        1,582                       
                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                
 1)                                                              Increase over prior year is a result of specified items, including non-recurring 2013 benefits of U.S. tax law changes enacted in 2013 related to 2012 results, and 2014 year-to-date tax expense associated with a one-time repatriation of 2014 ex-U.S. earnings, offset by a net favorable adjustment to 2014 tax expense related to the resolution of various tax positions from previous years.                                  
                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                       
 2)                                                              2014 Earnings from Discontinued Operations, net of taxes, includes a net favorable adjustment to tax expense of $42 million, or $0.03 per share, as a result of the resolution of various tax positions from previous years related to AbbVie operations.                                                                                                                                                                             
                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                       
 3)                                                              2014 Net Earnings from Continuing Operations, excluding Specified Items, excludes net after-tax charges of $671 million, or $0.43 per share, for intangible amortization expense, expenses associated with cost reduction initiatives, as well as year-to-date tax expense associated with a one-time repatriation of 2014 ex-U.S. earnings, partially offset by a net favorable adjustment to tax expense related to the resolution  
                                                                 of various tax positions from previous years.                                                                                                                                                                                                                                                                                                                                                                                         
                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                       
                                                                 2013 Net Earnings, excluding Specified Items, excludes after-tax charges of $481 million, or $0.31 per share, for intangible amortization expense, cost reduction initiatives and other costs. These items were partially offset by the favorable adjustment to tax expense of $103 million, or $0.07 per share, for the impact of U.S. tax law changes enacted in 2013 related to 2012 results.                                      
                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                       
 NOTES:                                                          
                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                       
 b)                                                              See tables below for an explanation of certain non-GAAP financial information.                                                                                                                                                                                                                                                                                                                                                        
                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                       
 n/m = Percent change is not meaningful.                         
 
 
Non-GAAP Reconciliation of Financial Information 
 
 Abbott Laboratories and Subsidiaries                   
 Non-GAAP Reconciliation of Financial Information       
 Second Quarter Ended June 30, 2014 and 2013            
 (in millions, except per share data)                   
 (unaudited)                                            
                                                        
                                                               2Q14       
                                                               As                Specified         As           % to    
                                                               Reported          Items             Adjusted     Sales   
                                                               (GAAP)                                                   
                                                                                                                        
 Intangible Amortization Expense                               $161              ($161)            --                   
 Gross Margin                                                  2,884             188               $3,072       55.3%   
 R&D                                                           335               (1)               334          6.0%    
 SG&A                                                          1,788             (96)              1,692        30.5%   
 Other (Income) Expense, Net                                   3                 (2)               1                    
 Earnings from Continuing Operations before taxes              737               287               1,024                
 Taxes on Earnings from Continuing Operations                  277               (82)              195                  
 Net Earnings from Continuing Operations                       460               369               829                  
 Diluted Earnings per Share from Continuing Operations  $0.30             $0.24             $0.54               
 
 
Specified items reflect intangible amortization expense of $161 million and
other expenses, primarily associated with cost reduction initiatives of $126
million, as well as current quarter tax expense of $123 million associated
with a one-time repatriation of 2014 ex-U.S. earnings. 
 
                                                               2Q13       
                                                               As                Specified         As           % to    
                                                               Reported          Items             Adjusted     Sales   
                                                               (GAAP)                                                   
                                                                                                                        
 Intangible Amortization Expense                               $197              ($197)            --                   
 Gross Margin                                                  2,704             291               $2,995       55.0%   
 R&D                                                           363               (8)               355          6.5%    
 SG&A                                                          1,714             (17)              1,697        31.2%   
 Earnings from Continuing Operations before taxes              601               316               917                  
 Taxes on Earnings from Continuing Operations                  125               68                193                  
 Net Earnings from Continuing Operations                       476               248               724                  
 Diluted Earnings per Share from Continuing Operations  $0.30             $0.16             $0.46               
 
 
Specified items, as previously identified in Abbott's earnings release dated
July 17, 2013, reflect intangible amortization expense of $197 million and
other expenses, primarily associated with cost reduction initiatives of $119
million. 
 
 Abbott Laboratories and Subsidiaries                   
 Non-GAAP Reconciliation of Financial Information       
 First Half Ended June 30, 2014 and 2013                
 (in millions, except per share data)                   
 (unaudited)                                            
                                                        
                                                               1H14       
                                                               As                Specified         As           % to    
                                                               Reported          Items             Adjusted     Sales   
                                                               (GAAP)                                                   
                                                                                                                        
 Intangible Amortization Expense                               $335              ($335)            --                   
 Gross Margin                                                  5,484             418               $5,902       54.7%   
 R&D                                                           722               (50)              672          6.2%    
 SG&A                                                          3,550             (182)             3,368        31.2%   
 Other (Income) Expense, Net                                   6                 (5)               1                    
 Earnings from Continuing Operations before taxes              1,160             655               1,815                
 Taxes on Earnings from Continuing Operations                  361               (16)              345                  
 Net Earnings from Continuing Operations                       799               671               1,470                
 Diluted Earnings per Share from Continuing Operations  $0.52             $0.43             $0.95               
 
 
Specified items reflect intangible amortization expense of $335 million and
other expenses, primarily associated with cost reduction initiatives of $320
million, as well as year-to-date tax expense of $198 million associated with a
one-time repatriation of 2014 ex-U.S. earnings, partially offset by a net
favorable adjustment to tax expense of $58 million related to the resolution
of various tax positions from previous years. 
 
                                                               1H13       
                                                               As                Specified         As           % to    
                                                               Reported          Items             Adjusted     Sales   
                                                               (GAAP)                                                   
                                                                                                                        
 Intangible Amortization Expense                               $396              ($396)            --                   
 Gross Margin                                                  5,451             544               $5,995       55.4%   
 R&D                                                           709               (5)               704          6.5%    
 SG&A                                                          3,500             (48)              3,452        31.9%   
 Net Foreign Exchange (Gain) Loss                              40                (15)              25                   
 Other (Income) Expense, Net                                   (2)               (3)               (5)                  
 Earnings from Continuing Operations before taxes              1,155             615               1,770                
 Taxes on Earnings from Continuing Operations                  134               237               371                  
 Net Earnings from Continuing Operations                       1,021             378               1,399                
 Diluted Earnings per Share from Continuing Operations  $0.64             $0.24             $0.88               
 
 
Specified items, as previously identified in Abbott's earnings release dated
July 17, 2013, reflect intangible amortization expense of $396 million and
other expenses, primarily associated with cost reduction initiatives of $219
million, as well as a favorable tax expense adjustment of $103 million for the
impact of U.S. tax law changes enacted in 2013 related to 2012 results. 
 
Tax Rate Reconciliation 
 
A reconciliation of the second-quarter tax rates for 2014 and 2013 is shown
below: 
 
                                                                                                                                                                                      2Q14                     
 (dollars in millions)                                                                                                                                             Pre-Tax Income 1)        Taxes on Earnings    Tax        
                                                                                                                                                                                                                 Rate       
 As reported (GAAP)                                                                                                                                                $737                     $277                 37.6%      
 Specified items                                                                                                                                                   287                      (82)                        2)  
 Excluding specified items                                                                                                                                         $1,024                   $195                 19.0%      
                                                                                                                                                                                                                              
                                                                                                                                                                                                                              
                                                                                                                                                                                      2Q13                     
 (dollars in millions)                                                                                                                                             Pre-Tax Income 1)        Taxes on Earnings    Tax        
                                                                                                                                                                                                                 Rate       
 As reported (GAAP)                                                                                                                                                $601                     $125                 20.8%      
 Specified items                                                                                                                                                   316                      68                              
 Excluding specified items                                                                                                                                         $917                     $193                 21.0%      
                                                                                                                                                                   
 1)                         Earnings from Continuing Operations before income taxes.                                                                               
                                                                                                                                                                   
 2)                         Specified items include current quarter tax expense of $123 million associated with a one-time repatriation of 2014 ex-U.S. earnings.  
 
 
A reconciliation of the year-to-date tax rates for 2014 and 2013 is shown
below: 
 
                                                                                                                                                                                                                                                                                                                                        1H14                     
 (dollars in millions)                                                                                                                                                                                                                                                                                               Pre-Tax Income 3)        Taxes on Earnings    Tax        
                                                                                                                                                                                                                                                                                                                                                                   Rate       
 As reported (GAAP)                                                                                                                                                                                                                                                                                                  $1,160                   $361                 31.1%      
 Specified items                                                                                                                                                                                                                                                                                                     655                      (16)                        4)  
 Excluding specified items                                                                                                                                                                                                                                                                                           $1,815                   $345                 19.0%      
                                                                                                                                                                                                                                                                                                                                                                                
                                                                                                                                                                                                                                                                                                                                                                                
                                                                                                                                                                                                                                                                                                                                        1H13                     
 (dollars in millions)                                                                                                                                                                                                                                                                                               Pre-Tax Income 3)        Taxes on Earnings    Tax        
                                                                                                                                                                                                                                                                                                                                                                   Rate       
 As reported (GAAP)                                                                                                                                                                                                                                                                                                  $1,155                   $134                 11.6%      
 Specified items                                                                                                                                                                                                                                                                                                     615                      237                         5)  
 Excluding specified items                                                                                                                                                                                                                                                                                           $1,770                   $371                 21.0%      
                                                                                                                                                                                                                                                                                                                     
 3)                         Earnings from Continuing Operations before income taxes.                                                                                                                                                                                                                                 
                                                                                                                                                                                                                                                                                                                     
 4)                         Specified items include year-to-date tax expense of $198 million associated with a one-time repatriation of 2014 ex-U.S. earnings, partially offset by a net favorable adjustment to tax expense of $58 million related to the resolution of various tax positions from previous years.  
                                                                                                                                                                                                                                                                                                                     
 5)                         Specified items include a favorable adjustment to tax expense of $103 million for the impact of U.S. tax law changes enacted in 2013 related to 2012 results.                                                                                                                            
 
 
CONTACT: Financial, Brian Yoor, (847) 937-6343, or Tina Ventura, (847)
935-9390, or Scott Leinenweber, (847) 935-1898; Media, Scott Stoffel, (847)
936-9502, or Angela Duff, (847) 938-6894 
 
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