8-KOther Events

ABBOTT LABORATORIES 8-K Report, Corporate Update (Sep 22, 2010)

Filed September 22, 2010For Securities:ABT

Summary

Abbott Laboratories (ABT) filed an 8-K on September 22, 2010, to report a voluntary recall of certain Similac-brand powder infant formulas. This recall impacts the U.S., Puerto Rico, Guam, and several Caribbean nations. The company estimates the recall will result in approximately $100 million in sales returns, which will be accounted for as a reduction to third-quarter 2010 revenue. Despite this significant recall, Abbott Laboratories reaffirmed its previously issued third-quarter and full-year 2010 ongoing earnings-per-share guidance. The company also indicated that it expects to incur a one-time, specified charge in the third quarter for recall-related expenses, such as inventory destruction, though the exact amount will be quantified later. This filing provides transparency on an operational issue that could affect near-term sales but aims to reassure investors about the company's overall earnings outlook.

Key Highlights

  • 1Voluntary recall of certain Similac-brand powder infant formulas initiated on September 21, 2010.
  • 2Recall impacts U.S., Puerto Rico, Guam, and select Caribbean countries.
  • 3Estimated sales returns due to the recall are approximately $100 million.
  • 4The $100 million in sales returns will be recognized as a reduction to Q3 2010 revenue.
  • 5Abbott reaffirmed its Q3 2010 ongoing EPS guidance of $1.03 to $1.05.
  • 6Abbott reaffirmed its full-year 2010 ongoing EPS guidance of $4.13 to $4.18.
  • 7A one-time, specified charge for recall-related expenses (e.g., inventory destruction) will be incurred in Q3 2010, to be quantified later.

Frequently Asked Questions

The primary reason for this filing is to announce Abbott Laboratories' voluntary recall of certain Similac-brand powder infant formulas due to an operational issue. The company is proactively informing investors and the public about this product recall.

Abbott estimates approximately $100 million in sales returns due to the recall, which will be recorded as a reduction to third-quarter 2010 revenue. Additionally, the company anticipates a one-time charge for recall-related expenses in the third quarter, which will be quantified at a later date.

No, Abbott has reaffirmed its previously issued ongoing earnings-per-share guidance for both the third quarter of 2010 ($1.03 to $1.05) and the full year 2010 ($4.13 to $4.18). This indicates the company believes the recall's impact, while material to revenue in the short term, will not significantly alter its overall profitability targets.

The recall affects the United States, Puerto Rico, Guam, and some countries in the Caribbean.