10-QPeriod: Q1 FY2009

ABBOTT LABORATORIES Quarterly Report for Q1 Ended Mar 31, 2009

Filed May 5, 2009For Securities:ABT

Summary

Abbott Laboratories reported first-quarter 2009 results showing a slight decrease in net sales to $6.718 billion from $6.766 billion in the prior year, primarily due to unfavorable foreign exchange rates. Despite the marginal sales dip, net earnings saw a significant increase to $1.439 billion ($0.92 diluted EPS) from $938 million ($0.60 diluted EPS) in Q1 2008, largely driven by a substantial gain from the derecognition of a contingent liability related to the conclusion of the TAP Pharmaceutical Products Inc. joint venture. Excluding this one-time gain, earnings growth would be more modest, but still positive, reflecting operational strengths. The company completed the acquisition of Advanced Medical Optics (AMO) for approximately $1.4 billion in February 2009, bolstering its presence in vision care technologies. This strategic acquisition, along with another for Ibis Biosciences in molecular diagnostics, highlights Abbott's commitment to expanding its product portfolio and market reach, though it also contributed to increased selling, general, and administrative expenses. The company's financial position remains robust, with strong operating cash flow and ample liquidity to support its strategic initiatives and shareholder returns.

Financial Highlights

32 data points
Beta

Revenue

$6.72B

56.3% Gross Margin

Net Income

$1.44B

21.4% Net Margin

EPS (Diluted)

$0.92

Cash & Equivalents

$4.87B

Free Cash Flow

$446.57M

Financial Statements
Beta
Revenue$6.72B
Cost of Revenue$2.94B
Gross Profit$3.78B
SG&A Expenses$2.07B
Operating Expenses$5.66B
Operating Income$1.06B
Interest Expense$124.19M
Net Income$1.44B
EPS (Basic)$0.93
EPS (Diluted)$0.92
Shares Outstanding (Basic)1.55B
Shares Outstanding (Diluted)1.56B

Key Highlights

  • 1Net sales slightly declined by 0.7% to $6.718 billion, impacted by a strong U.S. dollar, with international sales seeing a 0.2% decrease.
  • 2Diluted Earnings Per Share (EPS) rose significantly to $0.92 from $0.60 in the prior year, boosted by a $797 million gain from derecognizing a contingent liability related to the TAP joint venture conclusion.
  • 3Completed the acquisition of Advanced Medical Optics (AMO) for approximately $1.4 billion in February 2009, expanding its ophthalmic and eye care offerings.
  • 4Acquired Ibis Biosciences for $175 million to strengthen its position in molecular diagnostics.
  • 5Research and development expenses increased by 5.0% to support pipeline development across various therapeutic areas.
  • 6Shareholder returns remained strong with cash dividends declared per common share increasing to $0.40 from $0.36.
  • 7The company maintained a strong liquidity position with $4.87 billion in cash and cash equivalents and $5.3 billion in unused credit lines.

Frequently Asked Questions

The primary driver for the substantial increase in net earnings was the derecognition of a $797 million contingent liability associated with the conclusion of the TAP Pharmaceutical Products Inc. joint venture. This event, which occurred in the first quarter of 2009, resulted in a one-time gain that significantly boosted reported net income.

The acquisition of AMO for approximately $1.4 billion in February 2009 and Ibis Biosciences for $175 million in January 2009 contributed to increased goodwill and intangible assets on the balance sheet. These acquisitions also led to higher selling, general, and administrative expenses due to acquisition-related costs and integration efforts. Financial results from AMO are included from its acquisition date in February 2009.

The Pharmaceutical Products segment saw a 5.7% decrease in net sales to $3.636 billion. This decline was attributed to decreased sales of Depakote due to expected generic competition, impacting U.S. Specialty product sales. However, the segment benefited from the inclusion of Lupron sales following the conclusion of the TAP joint venture in April 2008. The company forecasts strong growth for HUMIRA, expecting 15-20% worldwide sales growth, or 25-30% excluding currency impacts.

A relatively stronger U.S. dollar unfavorably impacted reported sales in the first quarter of 2009. Excluding the negative effect of foreign exchange, net sales would have increased by 5.4%. The stronger dollar decreased international sales by 11.1% and specifically impacted segment sales across Pharmaceutical Products, Nutritional Products, Diagnostic Products, and Vascular Products.