8-KRegulation FD

ABBOTT LABORATORIES 8-K Report, Regulation FD Disclosure (Apr 21, 2006)

Filed April 21, 2006For Securities:ABT

Summary

This 8-K filing from Abbott Laboratories, dated April 21, 2006, primarily provides an update on the financial implications of the previously announced Guidant vascular acquisition. The company is revising its full-year 2006 earnings-per-share (EPS) guidance downward due to expected dilution from the acquisition, primarily driven by non-cash intangible amortization. The original ongoing EPS guidance was $2.51 to $2.57, which has now been adjusted to $2.44 to $2.50, excluding specified items. While the acquisition is expected to be dilutive in 2006, Abbott anticipates it will become accretive in 2007, with a more significant positive impact projected for 2009. The company is also updating its second-quarter 2006 EPS guidance to reflect this dilution. Investors should note that the revised guidance conservatively assumes that revenue from an existing co-promotion agreement may not continue post-closing, with the potential for less dilution in 2006 and greater accretion in 2007 if the agreement persists.

Key Highlights

  • 1Abbott Laboratories is lowering its full-year 2006 ongoing EPS guidance from $2.51-$2.57 to $2.44-$2.50, excluding specified items.
  • 2The Guidant vascular acquisition is expected to cause approximately $0.07 per share of ongoing EPS dilution in 2006, including non-cash intangible amortization.
  • 3The company projects the Guidant transaction to be slightly accretive in 2007, improving to at least $0.15 accretion in 2009.
  • 4Second-quarter 2006 ongoing EPS guidance is revised to $0.56-$0.58, down from the previous $0.59-$0.61.
  • 5The updated guidance conservatively assumes a co-promotion agreement revenue stream may cease after the Guidant acquisition closes.
  • 6Specified items for full-year 2006 are estimated at $0.05 per share, with $0.01 in Q2 2006.
  • 7GAAP EPS guidance for full-year 2006 is projected to be $2.39-$2.45, and $0.55-$0.57 for Q2 2006, including specified items and Guidant acquisition impacts (excluding integration costs).

Frequently Asked Questions

Abbott is lowering its 2006 earnings guidance primarily due to the expected dilution from the ongoing Guidant vascular acquisition. This dilution is largely attributed to non-cash intangible amortization expenses related to the acquisition.

While the Guidant acquisition is expected to be dilutive in 2006, Abbott anticipates it will become accretive (earnings-enhancing) in 2007, with a projected accretion of at least $0.15 per share by 2009.

The company's updated guidance conservatively assumes that revenue from an existing co-promotion agreement will not continue after the Guidant acquisition closes. If this agreement does continue, the expected dilution in 2006 will be less than $0.07 per share, and the accretion in 2007 will be greater.

The company expects to incur one-time charges related to the Guidant acquisition, including acquired in-process R&D expenses and integration activities. Abbott plans to provide estimates for these specific items by its second-quarter earnings conference call.