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Abbott Reports Second-Quarter 2014 Results

Companies mentioned in this article: Abbott

ABBOTT PARK, Ill., July 16, 2014 /PRNewswire/ -- Abbott today announced financial results for the second quarter ended June 30, 2014.

    --  Ongoing diluted EPS was $0.54 in the second quarter, representing growth
        of 17.4 percent, and above the previous guidance range of $0.50 to
        $0.52; reported diluted EPS from continuing operations under GAAP was
        $0.30.


    --  Abbott is raising its full-year 2014 ongoing EPS guidance to $2.19 to
        $2.29 from $2.16 to $2.26, reflecting double-digit growth at the
        mid-point of the range. Projected full-year 2014 EPS from continuing
        operations under GAAP is $1.16 to $1.26. Guidance for both ongoing and
        GAAP EPS from continuing operations includes the developed markets
        branded generics pharmaceuticals business, which is expected to be
        reported as discontinued operations starting in the third quarter of
        2014.


    --  Second-quarter worldwide sales increased 3.0 percent on an operational
        basis and 1.9 percent on a reported basis, including an unfavorable 1.1
        percent effect of foreign exchange.


    --  On July 14, 2014, Abbott announced that it will sell its developed
        markets branded generics pharmaceuticals business to Mylan. This
        transaction is expected to positively impact Abbott's 2015 sales and
        earnings-per-share growth rates as the company focuses its branded
        generics pharmaceuticals business on emerging markets.


    --  In the second quarter, Abbott announced agreements to acquire Latin
        American pharmaceutical company, CFR Pharmaceuticals and Russian
        pharmaceutical company, Veropharm. CFR Pharmaceuticals will more than
        double Abbott's branded generics presence in Latin America. Through the
        acquisition of Veropharm, Abbott will immediately establish a larger
        footprint and manufacturing presence in Russia.
    --  On July 10, 2014, Abbott and Fonterra announced a strategic alliance to
        develop a proposed dairy farm hub in China, establishing direct
        ownership and operation of dairies and production of milk in China.

"We're ahead of our expectations through the first half of the year and are raising our EPS guidance range as we continue to shape the company for long-term growth," said Miles D. White, chairman and chief executive officer, Abbott.

Second-Quarter Business Overview

Following are sales by business segment and commentary for the second quarter and first half of the year:

Total Company
($ in millions)


                                                                                                                   % Change vs. 2Q13
                                                                                                                   -----------------

                                                              Sales 2Q14                           Int'l                             Total
                                                              ----------                           -----                             -----

                                                          U.S.           Int'l        Total             U.S.                    Operational       Reported         Operational        Reported
                                                          ----           -----        -----             ----                    -----------       --------         -----------        --------

    Total *                                                      1,561          3,990        5,551             0.1                            4.2              2.7                3.0               1.9
                                                                 -----          -----        -----             ---                            ---              ---                ---               ---

    Nutrition                                                      724          1,007        1,731             1.4                            4.4              1.7                3.1               1.6

    Diagnostics                                                    325            864        1,189             7.2                            4.9              3.9                5.5               4.8

    Established Pharmaceuticals                                     --         1,216        1,216             n/a                           2.3            (0.1)               2.3             (0.1)

    Medical Devices                                                490            883        1,373           (5.4)                           4.7              5.3                0.8               1.2


    * Total Abbott Sales include Other Sales of $42 million.

                                                                                                                            % Change vs. 1H13
                                                                                                                            -----------------

                                                             Sales 1H14                                                             Int'l                Total
                                                             ----------                                                             -----                -----

                                                          U.S.                             Int'l                    Total                     U.S.             Operational       Reported         Operational        Reported
                                                          ----                             -----                    -----                     ----             -----------       --------         -----------        --------

    Total *                                                      3,050                             7,745                  10,795                   (1.4)                    3.0              0.2                1.8             (0.3)
                                                                 -----                             -----                  ------                    ----                     ---              ---                ---              ----

    Nutrition                                                    1,413                             1,949                   3,362                   (1.3)                    2.2            (1.1)               0.7             (1.2)

    Diagnostics                                                    635                             1,671                   2,306                     6.6                     4.8              2.7                5.3               3.7

    Established Pharmaceuticals                                     --                            2,367                   2,367                     n/a                    0.8            (3.4)               0.8             (3.4)

    Medical Devices                                                958                             1,727                   2,685                   (6.1)                    4.7              3.8                0.6                --


    * Total Abbott Sales include Other Sales of $75 million.

    n/a = Not Applicable.

    Note: Operational growth reflects percentage change over the prior year excluding the impact of exchange rates.

Second-quarter 2014 worldwide sales of $5.6 billion increased 3.0 percent on an operational basis, representing sequential improvement versus the first quarter, and Abbott is on track for sales growth acceleration in the second half of 2014. Sales increased 1.9 percent on a reported basis, including an unfavorable 1.1 percent effect of foreign exchange.

International sales, which comprise more than 70 percent of total Abbott sales, increased 4.2 percent on an operational basis and 2.7 percent on a reported basis in the second quarter.

Sales in emerging markets, which comprise more than 40 percent of total Abbott sales, increased 7.7 percent on an operational basis and 4.1 percent on a reported basis in the second quarter. The August 2013 sales disruption in International Nutrition is estimated to have reduced Abbott's sales growth in emerging markets by approximately 1.8 percentage points.

Abbott launched several new products in the second quarter. Highlights include the TECNIS(®) Symfony extended range of vision intraocular lens (IOL) in Europe and a new diabetes test on the ARCHITECT platform in the U.S. In addition, in its Nutrition business, Abbott opened two new manufacturing facilities and launched several new products to meet increasing global demand for pediatric and adult nutrition.

Nutrition
($ in millions)


                                                                   % Change vs. 2Q13
                                                                   -----------------

                  Sales 2Q14                         Int'l                          Total
                  ----------                         -----                          -----

              U.S.           Int'l       Total            U.S.                 Operational      Reported       Operational      Reported
              ----           -----       -----            ----                 -----------      --------       -----------      --------

    Total            724           1,007       1,731           1.4                          4.4            1.7              3.1             1.6
                     ---           -----       -----           ---                          ---            ---              ---             ---

    Pediatric        391             572         963           2.1                          0.5          (2.2)             1.1           (0.5)

    Adult            333             435         768           0.6                         10.0            7.5              5.7             4.4


                                                                     % Change vs. 1H13
                                                                     -----------------

                  Sales 1H14                         Int'l                              Total
                  ----------                         -----                              -----

              U.S.           Int'l       Total            U.S.                     Operational        Reported         Operational          Reported
              ----           -----       -----            ----                     -----------        --------         -----------          --------

    Total            1,413         1,949       3,362           (1.3)                             2.2            (1.1)                 0.7              (1.2)
                     -----         -----       -----            ----                              ---             ----                  ---               ----

    Pediatric          756         1,116       1,872           (1.6)                           (3.7)           (6.5)               (2.8)             (4.5)

    Adult              657           833       1,490           (1.1)                            11.1              7.1                  5.5                3.3

Worldwide Nutrition sales increased 3.1 percent in the second quarter on an operational basis and 1.6 percent on a reported basis, including an unfavorable 1.5 percent effect of foreign exchange. This business continues to expect full-year operating margin expansion.

Worldwide Pediatric Nutrition sales increased 1.1 percent on an operational basis and decreased 0.5 percent on a reported basis in the quarter, including an unfavorable 1.6 percent effect of foreign exchange. The August 2013 sales disruption in International Nutrition is estimated to have impacted the year-over-year sales growth comparison in International Pediatric Nutrition by approximately $40 million in the second quarter. Abbott is recapturing share in the affected markets, launched several new Pediatric Nutrition products during the quarter and opened a new state-of-the-art nutrition manufacturing plant in China. This plant will manufacture new Similac(®) QINTI((TM)) infant formula in Abbott's innovative packaging.

Worldwide Adult Nutrition sales increased 5.7 percent on an operational basis and 4.4 percent on a reported basis in the quarter, including an unfavorable 1.3 percent effect of foreign exchange. Sales growth in the quarter was led by strong growth of Ensure(®) and double-digit growth in emerging markets. Abbott continues to shape and grow priority international markets as it launches new products in 2014, including the recent launch of a new adult brand, Enevo((TM)) in Japan, Abbott's largest adult nutrition market outside of the U.S. Abbott also opened a new liquid nutrition manufacturing plant in the U.S. during the second quarter to meet increasing global demand for its adult nutrition brands.

On July 10, 2014, Abbott and Fonterra announced a strategic alliance to develop a proposed dairy farm hub in China. The strategic alliance will establish direct ownership and operation of dairies and production of milk in China. This alliance will leverage Fonterra's expertise in dairy nutrition and farming in China and Abbott's continued commitment to business development in China.

Diagnostics
($ in millions)


                                                                             % Change vs. 2Q13
                                                                             -----------------

                      Sales 2Q14                       Int'l           Total
                      ----------                       -----           -----

                  U.S.           Int'l     Total             U.S.                         Operational       Reported        Operational         Reported
                  ----           -----     -----             ----                         -----------       --------        -----------         --------

    Total                325           864       1,189             7.2                                  4.9             3.9                 5.5               4.8
                         ---           ---       -----             ---                                  ---             ---                 ---               ---

    Core
     Laboratory          189           779         968            11.3                                  5.8             4.5                 6.8               5.8

    Molecular             52            64         116             0.5                                (5.3)          (4.0)              (2.8)            (2.1)

    Point of Care         84            21         105             3.0                                  7.1             6.4                 3.8               3.7


                                                                                % Change vs. 1H13
                                                                                -----------------

                      Sales 1H14                         Int'l            Total
                      ----------                         -----            -----

                  U.S.           Int'l       Total             U.S.                          Operational      Reported      Operational      Reported
                  ----           -----       -----             ----                          -----------      --------      -----------      --------

    Total                635           1,671       2,306              6.6                                 4.8           2.7              5.3           3.7
                         ---           -----       -----              ---                                 ---           ---              ---           ---

    Core
     Laboratory          371           1,502       1,873             11.1                                 4.9           2.5              6.0           4.1

    Molecular             98             129         227            (1.2)                                3.0           2.9              1.2           1.1

    Point of Care        166              40         206              2.0                                 8.5           7.0              3.3           3.0

Worldwide Diagnostics sales increased 5.5 percent in the second quarter on an operational basis and 4.8 percent on a reported basis, including an unfavorable 0.7 percent effect of foreign exchange. This business continues to invest in the development of several next-generation diagnostic platforms across all of its business units that are designed to positively impact patient care, improve service to customers, enhance laboratory productivity and reduce costs.

Core Laboratory Diagnostics sales increased 6.8 percent in the quarter on an operational basis and 5.8 percent on a reported basis, including an unfavorable 1.0 percent effect of foreign exchange. U.S. sales growth of 11.3 percent was primarily driven by continued market share gains as customers select Abbott's integrated and flexible solutions to manage large testing volumes and increase operational efficiencies. International sales growth of 5.8 percent on an operational basis was driven by continued strong growth in emerging markets. Also in the second quarter, Abbott launched a new test on its ARCHITECT platform in the U.S. to quickly and accurately diagnose, monitor and identify people at risk for diabetes.

Molecular Diagnostics sales decreased 2.8 percent in the quarter on an operational basis, impacted by the timing of tenders in the infectious disease business in several emerging markets, which are expected to drive higher growth in the second half of 2014. Sales decreased 2.1 percent on a reported basis, including a favorable 0.7 percent effect of foreign exchange.

Established Pharmaceuticals
($ in millions)


                                                                       % Change vs. 2Q13
                                                                       -----------------

                      Sales 2Q14                         Int'l                           Total
                      ----------                         -----                           -----

                   U.S.          Int'l       Total            U.S.                  Operational       Reported        Operational         Reported
                   ----          -----       -----            ----                  -----------       --------        -----------         --------

    Total                 --           1,216       1,216           n/a                            2.3           (0.1)                2.3             (0.1)
                         ---           -----       -----           ---                            ---            ----                 ---              ----

    Developed and
     Other Markets        --             600         600           n/a                          (4.7)          (4.4)              (4.7)            (4.4)

    Key Emerging
     Markets              --             616         616           n/a                            9.7             4.4                 9.7               4.4


                                                                              % Change vs. 1H13
                                                                              -----------------

                             Sales 1H14                         Int'l                           Total
                             ----------                         -----                           -----

                          U.S.          Int'l       Total            U.S.                  Operational       Reported        Operational         Reported
                          ----          -----       -----            ----                  -----------       --------        -----------         --------

    Total                        --           2,367       2,367           n/a                            0.8           (3.4)                0.8             (3.4)
                                ---           -----       -----           ---                            ---            ----                 ---              ----

    Developed and Other
     Markets                     --           1,220       1,220           n/a                          (3.1)          (4.3)              (3.1)            (4.3)

    Key Emerging Markets         --           1,147       1,147           n/a                            5.0           (2.4)                5.0             (2.4)


    n/a = Not Applicable.

Established Pharmaceuticals sales increased 2.3 percent in the second quarter on an operational basis, representing sequential improvement versus the first quarter. Sales decreased 0.1 percent on a reported basis, including an unfavorable 2.4 percent effect of foreign exchange.

Developed and Other Markets include developed markets, such as Western Europe and Japan, and other emerging markets globally. Sales in these geographies were in line with expectations and decreased 4.7 percent in the quarter on an operational basis and 4.4 percent on a reported basis, including a favorable 0.3 percent effect of foreign exchange.

Key Emerging Markets include India, Russia, Brazil and China, along with 10 additional emerging markets that represent the most attractive long-term growth opportunities for Abbott's branded generics product portfolio. Sales in these geographies increased 9.7 percent on an operational basis in the quarter driven by double-digit sales growth in India, Brazil and China. Sales increased 4.4 percent on a reported basis, including an unfavorable 5.3 percent effect of foreign exchange. Based upon current exchange rates, this business would have an improved comparison from the impact of foreign exchange in Key Emerging Markets in the second half of 2014.

Abbott announced several transactions in the quarter in its Established Pharmaceuticals business to continue to shape Abbott for long-term growth. On July 14, 2014, Abbott announced that it will sell its developed markets branded generics pharmaceuticals business to Mylan. This transaction is expected to positively impact Abbott's 2015 sales and earnings-per-share growth rates as the company focuses its branded generics pharmaceuticals business entirely on emerging markets. The transaction is expected to close in the first quarter of 2015.

Abbott also announced two acquisitions in the quarter in its Established Pharmaceuticals business. On May 16, 2014, Abbott announced an agreement to acquire Latin American pharmaceutical company CFR Pharmaceuticals. This acquisition more than doubles Abbott's branded generics presence in Latin America and immediately establishes Abbott among the top 10 pharmaceutical companies in the region. Abbott expects to complete the acquisition of CFR Pharmaceuticals by the end of the third quarter of 2014. Additionally, on June 23, 2014, Abbott announced an agreement to acquire Veropharm, a leading Russian pharmaceutical company, which would allow Abbott to immediately establish a larger footprint and manufacturing presence in Russia. Abbott expects to complete the acquisition of Veropharm in the fourth quarter of 2014.

Medical Devices
($ in millions)


                                                                                    % Change vs. 2Q13
                                                                                    -----------------

                                 Sales 2Q14                       Int'l              Total
                                 ----------                       -----              -----

                              U.S.          Int'l     Total             U.S.                          Operational        Reported         Operational          Reported
                              ----          -----     -----             ----                          -----------        --------         -----------          --------

    Total                           490           883       1,373             (5.4)                                 4.7              5.3                  0.8                1.2
                                    ---           ---       -----              ----                                  ---              ---                  ---                ---

    Vascular                        281           484         765             (1.9)                                 3.4              4.3                  1.4                1.9

    Diabetes Care                    98           196         294            (27.3)                                 2.0              2.5               (10.1)             (9.8)

    Medical Optics                  111           203         314              14.5                                 10.9             10.9                 12.2               12.2


    Vascular Product Lines:

    DES/BVSa)                       110           260         370            (13.8)                               (0.5)           (0.5)               (4.9)             (4.9)

    Other Coronary Productsb)        50           100         150               0.8                                  3.0              4.2                  2.2                3.1

    Endovascularc)                   68            68         136               9.8                                 17.1             19.1                 13.3               14.2


                                                                                                                                         % Change vs. 1H13
                                                                                                                                         -----------------

                                                                  Sales 1H14                                           Int'l              Total
                                                                  ----------                                           -----              -----

                                                               U.S.                            Int'l       Total             U.S.                          Operational      Reported        Operational         Reported
                                                               ----                            -----       -----             ----                          -----------      --------        -----------         --------

    Total                                                            958                             1,727       2,685             (6.1)                               4.7             3.8                 0.6                --
                                                                     ---                             -----       -----              ----                                ---             ---                 ---               ---

    Vascular                                                         546                               957       1,503             (2.7)                               3.6             2.8                 1.2               0.7

    Diabetes Care                                                    195                               382         577            (27.4)                               2.9             2.3               (9.8)           (10.1)

    Medical Optics                                                   217                               388         605              14.3                                9.5             7.7                11.1               9.9


    Vascular Product Lines:

    DES/BVSa)                                                        221                               517         738            (13.0)                               0.9           (1.0)              (3.7)            (4.9)

    Other Coronary Productsb)                                         98                               197         295               1.7                                0.7             0.7                 1.0               1.0

    Endovascularc)                                                   127                               130         257               4.8                               15.3            16.1                 9.8              10.2


    a) Includes drug-eluting stents and bioresorbable vascular scaffold (BVS) product portfolio.

    b) Includes guide wires, balloon catheters and other coronary products.

    c) Includes vessel closure, carotid stents and other peripheral products.

Worldwide Medical Devices sales increased 0.8 percent in the second quarter on an operational basis and 1.2 percent on a reported basis, including a favorable 0.4 percent effect of foreign exchange.

Worldwide sales of Vascular products increased 1.4 percent in the quarter on an operational basis and 1.9 percent on a reported basis, including a favorable 0.5 percent effect of foreign exchange. International sales comprise approximately 65 percent of the total Vascular business and increased 3.4 percent operationally, primarily driven by sales growth of MitraClip(®), Abbott's first-in-class device for the treatment of mitral regurgitation, and double-digit growth in Endovascular products. In addition, data presented at international medical meetings continue to reinforce strong clinical results of the Absorb Bioresorbable Vascular Scaffold in a broad range of patients. In the U.S., strong sales growth in Endovascular products, including sales of the Supera(®) peripheral stent, was offset by a decline in drug-eluting stent (DES) sales due to a year-over-year decline in the DES market and market share.

Worldwide Diabetes Care sales decreased 10.1 percent in the quarter on an operational basis and 9.8 percent on a reported basis, including a favorable 0.3 percent effect of foreign exchange. As expected, U.S. sales continue to be impacted by CMS reimbursement reductions and market dynamics. Outside of the U.S., Abbott is driving growth in emerging markets and expects to bring its FreeStyle(®) Libre next-generation glucose sensing technology to Europe in the second half of 2014.

Worldwide Medical Optics sales increased 12.2 percent in the quarter on an operational and a reported basis. Sales of cataract products, which represent nearly 70 percent of Medical Optics sales, increased strong double digits, outpacing the growth of the global cataract market. This performance was driven by continued share gains of recently launched products, including TECNIS OptiBlue and TECNIS OptiBlue Preloaded IOLs in Japan and TECNIS Toric IOL in the U.S. and Japan, as well as further penetration of Abbott's Catalys(®) Precision Laser System for cataract surgery. Abbott recently received CE Mark for TECNIS Symfony extended range of vision IOL, which is a new premium lens that is intended to provide patients a continuous range of vision, including far, intermediate and near distances, with reduced incidence of halo and glare.

Abbott raises its full-year 2014 earnings-per-share guidance range

Abbott is raising its full-year 2014 ongoing earnings-per-share guidance range to $2.19 to $2.29 from $2.16 to $2.26, representing double-digit growth at the mid-point of the range. This guidance includes the developed markets branded generics pharmaceuticals business.

Abbott continues to forecast net specified items for the full year 2014 of $1.03 per share. Specified items include intangible amortization expense and charges associated with cost reduction initiatives, as well as 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. The forecast for specified items excludes deal and other expenses, to be provided at a future date, related to the recently announced acquisitions and sale of the developed markets branded generics pharmaceuticals business.

Including net specified items and prior to the reclassification of the developed markets branded generics pharmaceuticals business as discontinued operations starting in the third quarter of 2014, projected earnings per share from continuing operations under Generally Accepted Accounting Principles (GAAP) would be $1.16 to $1.26 for the full year 2014.

Abbott declares 362(nd) quarterly dividend

On June 13, 2014, the board of directors of Abbott declared the company's quarterly dividend of $0.22 per share. Abbott's cash dividend is payable Aug. 15, 2014, to shareholders of record at the close of business on July 15, 2014.

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.

About Abbott

Abbott (NYSE: ABT) 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 69,000 people.

Visit Abbott at www.abbott.com and connect with us on Twitter at @AbbottNews.

Abbott will webcast its live second-quarter earnings conference call through its Investor Relations website at www.abbottinvestor.com at 8 a.m. Central time today. An archived edition of the 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, 2013, 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

                                   Second Quarter Ended June 30, 2014 and 2013

                                      (in millions, except per share data)

                                                   (unaudited)


                                     2Q14                                 2Q13        % Change
                                     ----                                 ----        --------

    Net Sales                               $5,551                             $5,446             1.9


    Cost of products sold,
     excluding amortization
     expense                                 2,506                              2,545           (1.5)

    Amortization of intangible
     assets                                    161                                197          (18.3)

    Research and development                   335                                363           (7.5)

    Selling, general, and
     administrative                          1,788                              1,714             4.3

    Total Operating Cost and
     Expenses                                4,790                              4,819           (0.6)
                                             -----                              -----


    Operating earnings                         761                                627            21.2


    Interest expense, net                       20                                 23          (18.8)

    Net foreign exchange (gain)
     loss                                        1                                 11          (92.8)

    Other (income) expense, net                  3                                (8)    n/m
                                               ---                                ---

    Earnings from Continuing
     Operations before taxes                   737                                601            22.7


    Taxes on Earnings from
     Continuing Operations                     277                                125     n/m          1)

    Earnings from Continuing
     Operations                                460                                476           (3.4)


    Earnings from Discontinued
     Operations, net of taxes                    6                                 --    n/m          2)
                                               ---                                ---


    Net Earnings                              $466                               $476           (2.2)
                                              ====                               ====


    Net Earnings from Continuing
     Operations, excluding

    Specified Items, as described
     below                                    $829                               $724            14.6   3)
                                              ====                               ====


    Diluted Earnings per Common
     Share from Continuing
     Operations                              $0.30                              $0.30              --


    Diluted Earnings per Common
     Share from Discontinued
     Operations                                 --                                --             --


    Diluted Earnings per Common
     Share                                   $0.30                              $0.30              --
                                             =====                              =====


    Diluted Earnings per Common
     Share from Continuing

    Operations, excluding
     Specified Items, as described
     below                                   $0.54                              $0.46            17.4   3)
                                             =====                              =====


    Average Number of Common
     Shares Outstanding

    Plus Dilutive Common Stock
     Options and Awards                      1,517                              1,577


             1)     Increase over prior year is driven
                    primarily by 2014 current quarter
                    tax expense associated with a
                    one-time repatriation of 2014
                    ex-U.S. earnings, which is
                    classified as a specified item.


             2)     2014 Earnings from Discontinued
                    Operations, net of taxes,
                    includes a net favorable
                    adjustment to tax expense of $6
                    million, primarily 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 $369 million, or $0.24
                    per share, for intangible
                    amortization expense, expenses
                    associated with cost reduction
                    initiatives, 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 $248 million, or $0.16
                    per share, for intangible
                    amortization expense, cost
                    reduction initiatives and other
                    costs.


    NOTES:


             a)     See tables below for an
                    explanation of certain non-GAAP
                    financial information.


    n/m = Percent change is not meaningful.


                                     Abbott Laboratories and Subsidiaries

                                      Consolidated Statement of Earnings

                                    First Half Ended June 30, 2014 and 2013

                                     (in millions, except per share data)

                                                  (unaudited)


                                   1H14                                    1H13         % Change
                                   ----                                    ----         --------

    Net Sales                             $10,795                               $10,824           (0.3)


    Cost of products sold,
     excluding amortization
     expense                                4,976                                 4,977              --

    Amortization of intangible
     assets                                   335                                   396          (15.4)

    Research and development                  722                                   709             1.8

    Selling, general, and
     administrative                         3,550                                 3,500             1.4

    Total Operating Cost and
     Expenses                               9,583                                 9,582              --
                                            -----                                 -----


    Operating earnings                      1,212                                 1,242           (2.5)


    Interest expense, net                      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.

SOURCE Abbott