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SECURITIES AND EXCHANGE COMMISSION
FORM 10-K
WASHINGTON, D. C. 20549
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(MARK ONE)
/X/ ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(D) OF THE SECURITIES EXCHANGE
ACT OF 1934 [FEE REQUIRED]
OR
/ / TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(D) OF THE SECURITIES
EXCHANGE ACT OF 1934 [FEE REQUIRED]
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FOR THE FISCAL YEAR ENDED DECEMBER 31, 1994. COMMISSION FILE NUMBER 1-2189
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ABBOTT LABORATORIES
[LOGO]
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AN ILLINOIS CORPORATION 36-0698440
(I.R.S. employer identification number)
100 ABBOTT PARK ROAD (708) 937-6100
ABBOTT PARK, ILLINOIS 60064-3500 (telephone number)
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SECURITIES REGISTERED PURSUANT TO SECTION 12(B) OF THE ACT:
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NAME OF EACH EXCHANGE
ON WHICH REGISTERED
TITLE OF EACH CLASS
Common Shares, Without Par Value New York Stock Exchange
Chicago Stock Exchange
Pacific Stock Exchange
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INDICATE BY CHECK MARK WHETHER THE REGISTRANT (1) HAS FILED ALL REPORTS REQUIRED
TO BE FILED BY SECTION 13 OR 15(D) OF THE SECURITIES EXCHANGE ACT OF 1934 DURING
THE PRECEDING 12 MONTHS, AND (2) HAS BEEN SUBJECT TO SUCH FILING REQUIREMENTS
FOR THE PAST 90 DAYS.
YES __X__ NO _____
INDICATE BY CHECK MARK IF DISCLOSURE OF DELINQUENT FILERS PURSUANT TO ITEM 405
OF REGULATION S-K IS NOT CONTAINED HEREIN AND WILL NOT BE CONTAINED, TO THE BEST
OF THE REGISTRANT'S KNOWLEDGE, IN THE PROXY STATEMENT INCORPORATED BY REFERENCE
IN PART III OF THIS FORM 10-K OR ANY AMENDMENT TO THIS FORM 10-K. [ ]
THE AGGREGATE MARKET VALUE OF THE 733,819,146 SHARES OF VOTING STOCK HELD BY
NONAFFILIATES OF THE REGISTRANT, COMPUTED BY USING THE CLOSING PRICE AS REPORTED
ON THE CONSOLIDATED TRANSACTION REPORTING SYSTEM FOR ABBOTT LABORATORIES COMMON
SHARES WITHOUT PAR VALUE ON JANUARY 31, 1995, WAS APPROXIMATELY $25,958,852,290.
NUMBER OF COMMON SHARES OUTSTANDING AS OF JANUARY 31, 1995: 801,879,751.
DOCUMENTS INCORPORATED BY REFERENCE
PORTIONS OF THE ABBOTT LABORATORIES ANNUAL REPORT FOR THE YEAR ENDED DECEMBER
31, 1994 ARE INCORPORATED BY REFERENCE INTO PARTS I, II, AND IV.
PORTIONS OF THE 1995 ABBOTT LABORATORIES PROXY STATEMENT ARE INCORPORATED BY
REFERENCE INTO PART III.
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PART I
ITEM 1. BUSINESS
GENERAL DEVELOPMENT OF BUSINESS
Abbott Laboratories is an Illinois corporation, incorporated in 1900. The
Company's* principal business is the discovery, development, manufacture, and
sale of a broad and diversified line of health care products and services.
FINANCIAL INFORMATION RELATING TO INDUSTRY SEGMENTS,
GEOGRAPHIC AREAS, AND CLASSES OF SIMILAR PRODUCTS
Incorporated herein by reference is the footnote entitled "Industry Segment
and Geographic Area Information" of the Consolidated Financial Statements in the
Abbott Laboratories Annual Report for the year ended December 31, 1994 (1994
Annual Report), filed as an exhibit to this report. Also incorporated herein by
reference is the text and table of sales by class of similar products included
in the section of the 1994 Annual Report captioned "Financial Review."
NARRATIVE DESCRIPTION OF BUSINESS
PHARMACEUTICAL AND NUTRITIONAL PRODUCTS
Included in this segment is a broad line of adult and pediatric
pharmaceuticals and nutritionals. These products are sold primarily on the
prescription or recommendation of physicians or other health care professionals.
The segment also includes agricultural and chemical products, bulk
pharmaceuticals, and consumer products.
Principal pharmaceutical and nutritional products include the
anti-infectives clarithromycin, sold in the United States under the trademark
Biaxin-Registered Trademark- and outside the United States primarily under the
trademark Klacid-Registered Trademark-, and tosufloxacin, sold in Japan under
the trademark Tosuxacin-TM-; various forms of the antibiotic erythromycin, sold
primarily as PCE-Registered Trademark- or polymer coated erythromycin,
Erythrocin-Registered Trademark-, and E.E.S.-Registered Trademark-; agents for
the treatment of epilepsy, including Depakote-Registered Trademark-; a broad
line of cardiovascular products, including Loftyl-Registered Trademark-, a
vasoactive agent sold outside the United States; Hytrin-Registered Trademark-,
used as an anti-hypertensive and for the treatment of benign prostatic
hyperplasia; Abbokinase-Registered Trademark-, a thrombolytic drug;
Survanta-Registered Trademark-, a bovine derived lung surfactant; various forms
of prepared infant formula, including Similac-Registered Trademark-,
Isomil-Registered Trademark-, Alimentum-Registered Trademark-, Toddler's
Best-TM-, and NeoCare-TM-; and other medical and pediatric nutritionals,
including Ensure-Registered Trademark-, Ensure Plus-Registered Trademark-,
Ensure-Registered Trademark- High Protein, Jevity-Registered Trademark-,
Glucerna-Registered Trademark-, Advera-Registered Trademark-,
PediaSure-Registered Trademark-, Pedialyte-Registered Trademark-,
Pulmocare-Registered Trademark- and Gain-Registered Trademark-. Consumer
products include the dandruff shampoo Selsun Blue-Registered Trademark-;
Murine-Registered Trademark- eye care and ear care products;
Tronolane-Registered Trademark- hemorrhoid medication; and
Faultless-Registered Trademark- rubber sundry products. Agricultural, animal
health, and chemical products include plant growth regulators, including
ProGibb-Registered Trademark-; herbicides; larvicides, including
VectoBac-Registered Trademark-; and biologically derived insecticides, including
DiPel-Registered Trademark- and XenTari-Registered Trademark-.
Pharmaceutical and nutritional products are generally sold directly to
retailers, wholesalers, health care facilities, and government agencies. In most
cases, they are distributed from Company-owned distribution centers or public
warehouses. Certain products are co-marketed with other companies. In certain
overseas countries, some of these products are marketed and distributed through
distributors. Primary marketing efforts for pharmaceutical and nutritional
products are directed toward securing the prescription or recommendation of the
Company's brand of products by physicians or other health care professionals. In
the United States managed care purchasers, for example health maintenance
organizations (HMOs) and pharmacy benefit managers, are becoming increasingly
important customers. Competition is generally from other broad line and
specialized health care manufacturers. A significant aspect of competition is
the search for technological
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* As used throughout the text of this Report, the term "Company" refers to
Abbott Laboratories, an Illinois corporation, or Abbott Laboratories and its
consolidated subsidiaries, as the context requires.
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innovations. The introduction of new products by competitors and changes in
medical practices and procedures can result in product obsolescence. In
addition, the substitution of generic drugs for the brand prescribed has
increased competitive pressures on pharmaceutical products.
Consumer products are promoted directly to the public by consumer
advertising. These products are generally sold directly to retailers and
wholesalers. Competitive products are sold by other diversified consumer and
health care companies. Competitive factors include consumer advertising,
scientific innovation, price, and availability of generic product forms.
Agricultural, animal health and chemical products are generally sold to
agricultural distributors, animal health companies and pharmaceutical companies.
Competition is primarily from large chemical, animal health and agricultural
companies. Competition is based on numerous factors depending on the market
served. Competitive factors include product performance, quality, price, and
technological advantages.
The Company is the leading worldwide producer of the antibiotic
erythromycin. Similac-Registered Trademark- is the leading infant formula
product in the United States.
Under an agreement between the Company and Takeda Chemical Industries, Ltd.
of Japan (Takeda), TAP Pharmaceuticals Inc. (TAP), owned 50 percent by the
Company and 50 percent by Takeda, develops and markets in the United States
products based on Takeda research. TAP markets Lupron-Registered Trademark-, an
LH-RH analog, and Lupron Depot-Registered Trademark-, a sustained release form
of Lupron-Registered Trademark-, in the United States. These agents are used for
the treatment of advanced prostatic cancer, endometriosis, and central
precocious puberty. The Company also has marketing rights to certain Takeda
products in select Latin American markets. The Company also markets
Lupron-Registered Trademark-, Lupron Depot-Registered Trademark-, and Lupron
Depot-Ped-Registered Trademark- in select markets outside the United States.
HOSPITAL AND LABORATORY PRODUCTS
Hospital and laboratory products include diagnostic systems for blood banks,
hospitals, commercial laboratories, and alternate-care testing sites;
intravenous and irrigation fluids and related administration equipment,
including electronic drug delivery systems; drugs and drug delivery systems;
anesthetics; critical care products; and other medical specialty products for
hospitals and alternate-care sites.
The principal products included in this segment are parenteral (intravenous
or I.V.) solutions and related administration equipment sold as the
LifeCare-Registered Trademark- line of products,
LifeShield-Registered Trademark- needleless products, and
Venoset-Registered Trademark- products; irrigating fluids; parenteral
nutritionals such as Aminosyn-Registered Trademark- and
Liposyn-Registered Trademark-; Plum-Registered Trademark- and
Omni-Flow-Registered Trademark- electronic drug delivery systems; Abbott Pain
Manager-Registered Trademark-; patient-controlled analgesia (PCA) systems;
venipuncture products; hospital injectables including
FirstChoice-Registered Trademark- generics; premixed I.V. drugs in various
containers; ADD-Vantage-Registered Trademark- and Nutrimix-Registered Trademark-
drug and nutritional delivery systems; Anne-Registered Trademark- anesthetic
infusion systems; anesthetics, including Pentothal-Registered Trademark-,
isoflurane and enflurane; Calcijex-Registered Trademark-, an injectable agent
for treatment of bone disease in hemodialysis patients; critical care products
including Opticath-Registered Trademark- for oximetry,
Transpac-Registered Trademark- for hemodynamic monitoring, and specialty cardiac
products; screening tests for hepatitis B, HTLV-1, hepatitis B core, and
hepatitis C; tests for detection of AIDS antibodies and antigens, and other
infectious disease detection systems; tests for determining levels of abused
drugs with the ADx-Registered Trademark- instrument; physiological diagnostic
tests; cancer monitoring tests including tests for prostate specific antigen;
laboratory tests and therapeutic drug monitoring systems such as
TDx-Registered Trademark-; clinical chemistry systems such as Abbott
Spectrum-Registered Trademark-, Abbott Spectrum-Registered Trademark-
EPx-Registered Trademark-, Abbott Spectrum-Registered Trademark- CCx-TM-, and
Quantum-TM-; AxSym-Registered Trademark-, Commander-Registered Trademark- and
IMx-Registered Trademark- lines of diagnostic instruments and chemical reagents
used with immunoassay diagnostics; Abbott Vision-Registered Trademark-, a
desk-top blood analyzer; the Abbott TestPack-Registered Trademark- system for
diagnostic testing; a full line of hematology systems and reagents known as the
Cell-Dyn-Registered Trademark- series; and Abbott Maestro-TM-, a data management
system.
The Company markets hospital and laboratory products in the United States
and many other countries. These products are generally distributed to
wholesalers and directly to hospitals, laboratories, and physicians' offices
from distribution centers maintained by the Company. Sales are
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also made in the home infusion services market directly to patients receiving
treatment outside the hospital through marketing arrangements with hospitals and
other health care providers. Overseas sales are made either directly to
customers or through distributors, depending on the market served.
The hospital and laboratory products industry segment is highly competitive,
both in the United States and overseas. This segment is subject to competition
in technological innovation, price, convenience of use, service, instrument
warranty provisions, product performance, long-term supply contracts, and
product potential for overall cost effectiveness and productivity gains.
Products in this segment can be subject to rapid product obsolescence. The
Company has benefitted from technological advantages of certain of its current
products; however, these advantages may be reduced or eliminated as competitors
introduce new products.
The Company is one of the leading domestic manufacturers of I.V. and
irrigating solutions and related administration equipment, parenteral
nutritional products, anesthesia products, and drug delivery systems. It is also
the worldwide leader in in vitro diagnostic products, including thyroid tests,
therapeutic drug monitoring, cancer monitoring tests, diagnostic tests for the
detection of hepatitis and AIDS antibodies, and immunodiagnostic instruments.
INFORMATION WITH RESPECT TO THE COMPANY'S BUSINESS IN GENERAL
SOURCES AND AVAILABILITY OF RAW MATERIALS
The Company purchases, in the ordinary course of business, necessary raw
materials and supplies essential to the Company's operations from numerous
suppliers in the United States and overseas. There have been no recent
availability problems or significant supply shortages.
PATENTS, TRADEMARKS, AND LICENSES
The Company is aware of the desirability for patent and trademark protection
for its products. The Company owns, has applications pending for, and is
licensed under a substantial number of patents. Accordingly, where possible,
patents and trademarks are sought and obtained for the Company's products in the
United States and all countries of major marketing interest to the Company.
Principal trademarks and the products they cover are discussed in the Narrative
Description of Business on pages 1, 2 and 3. These, and various patents which
expire during the period 1995 to 2015, in the aggregate, are believed to be of
material importance in the operation of the Company's business. Although the
Company believes that no single patent, license, trademark (or related group of
patents, licenses, or trademarks) is material in relation to the Company's
business as a whole, clarithromycin is increasingly important to the Company's
Pharmaceutical and Nutritional Products industry segment. On December 8, 1994,
the President signed the Uruguay Round Agreements Act (P.L. 103-465)
implementing the Uruguay Round of the General Agreement on Tariffs and Trade
(GATT). Prior to such implementation, the patent on clarithromycin was scheduled
to expire in the United States in 2003. The intellectual property provisions of
GATT appear to extend this expiration date to 2005.
SEASONAL ASPECTS, CUSTOMERS, BACKLOG, AND RENEGOTIATION
There are no significant seasonal aspects to the Company's business. The
incidence of certain infectious diseases which occur at various times in
different areas of the world does, however, affect the demand for the Company's
anti-infective products. Orders for the Company's products are generally filled
on a current basis, and order backlog is not material to the Company's business.
No single customer accounted for sales equaling 10 percent or more of the
Company's consolidated net sales. No material portion of the Company's business
is subject to renegotiation of profits or termination of contracts at the
election of the government.
RESEARCH AND DEVELOPMENT
The Company spent $963,516,000 in 1994, $880,974,000 in 1993, and
$772,407,000 in 1992 on research to discover and develop new products and
processes and to improve existing products and processes. The Company continues
to concentrate research expenditures in pharmaceutical and diagnostic products.
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ENVIRONMENTAL MATTERS
The Company believes that its operations comply in all material respects
with applicable laws and regulations concerning environmental protection.
Regulations under federal and state environmental laws impose stringent
limitations on emissions and discharges to the environment from various
manufacturing operations. The Company's capital and operating expenditures for
pollution control in 1994 were approximately $20 million and $41 million,
respectively. Capital and operating expenditures for pollution control are
estimated to approximate $16 million and $38 million, respectively, in 1995.
The Company is participating as one of many potentially responsible parties
in investigation and/ or remediation at nine locations in the United States and
Puerto Rico under the Comprehensive Environmental Response, Compensation, and
Liability Act, commonly known as Superfund. The aggregate costs of remediation
at these sites by all identified parties are uncertain but have been subject to
widely ranging estimates totaling as much as several hundred million dollars. In
many cases, the Company believes that the actual costs will be lower than these
estimates, and the fraction for which the Company may be responsible is
anticipated to be considerably less and will be paid out over a number of years.
The Company expects to participate in the investigation or cleanup at these
sites. The Company is also voluntarily investigating potential contamination at
five Company-owned sites, and has initiated voluntary remediation at four
Company-owned sites, in cooperation with the Environmental Protection Agency
(EPA) or similar state agencies.
While it is not feasible to predict with certainty the costs related to the
previously described investigation and cleanup activities, the Company believes
that such costs, together with other expenditures to maintain compliance with
applicable laws and regulations concerning environmental protection, should not
have a material adverse effect on the Company's financial position, cash flows,
or results of operations.
EMPLOYEES
The Company employed 49,464 persons as of December 31, 1994.
REGULATION
The development, manufacture, sale, and distribution of the Company's
products are subject to comprehensive government regulation, and the general
trend is toward more stringent regulation. Government regulation by various
federal, state, and local agencies, which includes detailed inspection of and
controls over research and laboratory procedures, clinical investigations, and
manufacturing, marketing, sampling, distribution, recordkeeping, storage and
disposal practices, substantially increases the time, difficulty, and costs
incurred in obtaining and maintaining the approval to market newly developed and
existing products. Government regulatory actions can result in the seizure or
recall of products, suspension or revocation of the authority necessary for
their production and sale, and other civil or criminal sanctions.
Continuing studies of the utilization, safety, and efficacy of health care
products and their components are being conducted by industry, government
agencies, and others. Such studies, which employ increasingly sophisticated
methods and techniques, can call into question the utilization, safety, and
efficacy of previously marketed products and in some cases have resulted, and
may in the future result, in the discontinuance of marketing of such products
and give rise to claims for damages from persons who believe they have been
injured as a result of their use.
The cost of human health care products continues to be a subject of
investigation and action by governmental agencies, legislative bodies, and
private organizations in the United States and other countries. In the United
States, most states have enacted generic substitution legislation requiring or
permitting a dispensing pharmacist to substitute a different manufacturer's
version of a pharmaceutical product for the one prescribed. Federal and state
governments continue to press efforts to reduce costs of Medicare and Medicaid
programs, including restrictions on amounts agencies will reimburse for the use
of products. Manufacturers must pay certain statutorily-prescribed rebates on
Medicaid purchases for reimbursement on prescription drugs under state Medicaid
plans. In addition, the Federal government follows a diagnosis-related group
(DRG) payment system for certain
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institutional services provided under Medicare or Medicaid. The DRG system
entitles a health care facility to a fixed reimbursement based on discharge
diagnoses rather than actual costs incurred in patient treatment, thereby
increasing the incentive for the facility to limit or control expenditures for
many health care products. The Veterans Health Care Act of 1992 requires
manufacturers to extend additional discounts on pharmaceutical products to
various federal agencies, including the Department of Veterans Affairs,
Department of Defense, and Public Health Service entities and institutions.
In the United States, governmental cost-containment efforts have extended to
the federally subsidized Special Supplemental Food Program for Women, Infants,
and Children (WIC). All states participate in WIC and have sought and obtained
rebates from manufacturers of infant formula whose products are used in the
program. All of the states have also conducted competitive bidding for infant
formula contracts which require the use of specific infant formula products for
the state WIC program. The Child Nutrition and WIC Reauthorization Act of 1989
requires all states participating in WIC to engage in competitive bidding or to
use any other cost containment measure that yields savings equal to or greater
than the savings generated by a competitive bidding system.
Governmental regulatory agencies now require manufacturers to pay additional
fees. Under the Prescription Drug User Fee Act of 1992, the Federal Food and
Drug Administration imposes substantial fees on various aspects of the approval,
manufacture and sale of prescription drugs. Congress is now considering
expanding user fees to medical devices. The Company believes that such
legislation, if enacted, will add considerable expense for the Company.
The Company expects debate to continue during 1995 at both the federal and
the state level over the availability, method of delivery, and payment for
health care products and services. The Company believes that if legislation is
enacted, it could have the effect of reducing prices, or reducing the rate of
price increases, for health and medical insurance and medical products and
services.
International operations are also subject to a significant degree of
government regulation. Many countries, directly or indirectly through
reimbursement limitations, control the selling price of most health care
products. Furthermore, many developing countries limit the importation of raw
materials and finished products. International regulations are having an impact
on United States regulations, as well. The International Organization for
Standardization ("ISO") provides the voluntary criteria for regulating medical
devices within the European Economic Community. The Food and Drug Administration
("FDA") has announced that it will attempt to harmonize its regulation of
medical devices with that of the ISO. Recently published changes to the FDA's
regulations governing the manufacture of medical devices appear to encompass and
exceed the ISO's approach to regulating medical devices. The FDA's adoption of
the ISO's approach to regulation and other changes to the manner in which the
FDA regulates medical devices will increase the cost of compliance with those
regulations.
Efforts to reduce health care costs are also being made in the private
sector. Health care providers have responded by instituting various cost
reduction and containment measures.
It is not possible to predict the extent to which the Company or the health
care industry in general might be affected by the matters discussed above.
INTERNATIONAL OPERATIONS
The Company markets products in approximately 130 countries through
affiliates and distributors. Most of the products discussed in the preceding
sections of this report are sold outside the United States. In addition, certain
products of a local nature and variations of product lines to meet local
regulatory requirements and marketing preferences are manufactured and marketed
to customers outside the United States. International operations are subject to
certain additional risks inherent in conducting business outside the United
States, including price and currency exchange controls, changes in currency
exchange rates, limitations on foreign participation in local enterprises,
expropriation, nationalization, and other governmental action.
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ITEM 2. PROPERTIES
The Company's corporate offices are located at 100 Abbott Park Road, Abbott
Park, Illinois 60064-3500. The locations of a number of the Company's principal
plants are listed below.
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LOCATION INDUSTRY SEGMENTS OF PRODUCTS PRODUCED
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Abbott Park, Illinois Pharmaceutical and Nutritional Products, and
Hospital and Laboratory Products
Altavista, Virginia Pharmaceutical and Nutritional Products
Austin, Texas Hospital and Laboratory Products
Barceloneta, Puerto Rico Pharmaceutical and Nutritional Products, and
Hospital and Laboratory Products
Campoverde, Italy Pharmaceutical and Nutritional Products, and
Hospital and Laboratory Products
Casa Grande, Arizona Pharmaceutical and Nutritional Products
Columbus, Ohio Pharmaceutical and Nutritional Products
Delkenheim, Germany Hospital and Laboratory Products
Irving, Texas Hospital and Laboratory Products
Laurinburg, North Carolina Pharmaceutical and Nutritional Products, and
Hospital and Laboratory Products
Mexico City, Mexico Pharmaceutical and Nutritional Products, and
Hospital and Laboratory Products
Montreal, Canada Pharmaceutical and Nutritional Products, and
Hospital and Laboratory Products
Mountain View, California Hospital and Laboratory Products
North Chicago, Illinois Pharmaceutical and Nutritional Products, and
Hospital and Laboratory Products
Queenborough, England Pharmaceutical and Nutritional Products, and
Hospital and Laboratory Products
Rocky Mount, North Carolina Hospital and Laboratory Products
Salt Lake City, Utah Hospital and Laboratory Products
Santa Clara, California Hospital and Laboratory Products
Sligo/Donegal/Cootehill/ Pharmaceutical and Nutritional Products, and
Finisklin, Ireland Hospital and Laboratory Products
Sturgis, Michigan Pharmaceutical and Nutritional Products
St. Remy, France Pharmaceutical and Nutritional Products, and
Hospital and Laboratory Products
Tokyo, Japan Hospital and Laboratory Products
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In addition to the above, the Company has manufacturing facilities in six
other locations in the United States and Puerto Rico. Overseas manufacturing
facilities are located in 18 other countries. The Company's facilities are
deemed suitable, provide adequate productive capacity, and are utilized at
normal and acceptable levels.
In the United States and Puerto Rico, the Company owns seven distribution
centers. The Company also has eleven United States research and development
facilities located at Abbott Park, Illinois; Ashland, Ohio; Columbus, Ohio (2
locations); Irving, Texas; Long Grove, Illinois; Madera, California; Mountain
View, California; North Chicago, Illinois; Salt Lake City, Utah; and Santa
Clara, California. Overseas, the Company has research and development facilities
in Argentina, Australia, Canada, Germany, Italy, Japan, The Netherlands, and the
United Kingdom.
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The corporate offices, all manufacturing plants, and all other facilities in
the United States and overseas are owned or leased by the Company or
subsidiaries of the Company.
ITEM 3. LEGAL PROCEEDINGS
The Company is involved in various claims and legal proceedings including
(as of January 31, 1995) 24 antitrust suits, one shareholder derivative suit,
and 7 investigations in connection with the Company's sale and marketing of
infant formula products, 62 antitrust suits in connection with the Company's
pricing of prescription pharmaceuticals, and 143 product liability cases that
allege injuries to the offspring of women who ingested a synthetic estrogen
(DES) during pregnancy. These remaining DES cases are ordinary routine
litigation that is incidental to the business of the Company. The Company is
also involved in a civil administrative proceeding involving the Resource
Conservation and Recovery Act ("RCRA").
The infant formula antitrust suits allege that the Company conspired with
one or more of its competitors to fix prices for infant formula and to restrain
trade and monopolize the market for infant formula products in violation of
state and federal antitrust laws. The suits have been brought on behalf of
individuals, the Nestle Food Company, and state government agencies and name the
Company, certain other infant formula manufacturers and, in some instances, the
American Academy of Pediatrics as defendants. The cases seek treble damages,
civil penalties and other relief. The Company has previously reported that cases
are pending in each of the following state courts: Calhoun County and Shelby
County, Alabama; Boulder County, Colorado; Okaloosa County, Florida; St. Clair
County, Illinois; Sedgwick County, Kansas; Parish of West Baton Rouge,
Louisiana; Calhoun County, Michigan; Hennepin County, Minnesota; Holmes County,
South Dakota; Harrison County and Travis County, Texas (2 cases); Kanwaha, West
Virginia; and, Milwaukee County, Wisconsin (2 cases). The cases which were
pending in Florida and in Colorado have now been dismissed on defendants'
motion. In addition, on October 27, 1994, a case was filed in state court in
Jefferson County, Kentucky; on October 28, 1994, a case was filed in state court
in Burleigh County, North Dakota; on November 21, 1994, a case was filed in
state court in Jackson County, North Carolina; on December 22, 1994, a case was
filed in state court in Suffolk County, Massachusetts; and on January 18, 1995,
a case was filed in Holmes County, Mississippi by the Mississippi Attorney
General. Three of these cases have now been removed to federal court: the
Kentucky case is pending in federal court in Louisville, Kentucky, the North
Dakota case is pending in federal court in Bismarck, North Dakota, and the
Massachusetts case is pending in federal court in Boston, Massachusetts. On
November 29, 1994, the Attorney General of Wisconsin sought the court's
permission to intervene in both of the cases which are pending in the Wisconsin
state courts. Although each of the cases which are pending in state court
purports to be a state consumer class action, the court has denied class
certification in the case that is pending in Michigan. The case brought by the
Nestle Food Company is pending in federal court in Los Angeles, California and
is scheduled for trial on May 9, 1995. The plaintiff is seeking treble damages
and asserts single damages of $257 million. The remaining cases are pending in
federal courts in Birmingham, Alabama, Tallahassee, Florida, Knoxville,
Tennessee, and Reno, Nevada and all purport to be state-wide consumer class
actions. The Company has filed or intends to file a response to each of the
complaints denying all substantive allegations. The shareholder derivative suit
is pending in state court in Cook County, Illinois, names all of the Company's
present directors (other than Allen F. Jacobson) and a former executive officer
as defendants and alleges that the defendants breached their fiduciary duty to
the Company by permitting antitrust violations in connection with the Company's
sale and marketing of infant formula products. The plaintiffs seek to hold the
defendants liable for an amount exceeding $140 million, in connection with the
Company's settlement of certain anti-trust litigation arising out of its
marketing of infant formula. The investigations are being conducted by the
Attorneys General of the states of California, Connecticut, Minnesota, New York,
Pennsylvania and Wisconsin and by the Canadian Bureau of Competition Policy. The
Canadian investigation is both civil and criminal in its scope.
The prescription pharmaceutical pricing antitrust suits allege that various
pharmaceutical manufacturers have conspired to fix prices for prescription
pharmaceuticals and/or to discriminate in pricing to retail pharmacies by
providing discounts to mail-order pharmacies, institutional pharmacies and HMOs
in violation of state and federal antitrust laws. The suits have been brought on
behalf
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of individuals and retail pharmacies and name both the Company and other
pharmaceutical manufacturers as well as pharmaceutical wholesalers and at least
one mail-order pharmacy company as defendants. The cases seek treble damages,
civil penalties and other relief. The Company has filed or intends to file a
response to each of the complaints denying all substantive allegations. On
February 4, 1994, all of the then pending prescription pharmaceutical pricing
antitrust cases were consolidated in the United States District Court for the
Northern District of Illinois under the Multidistrict Litigation Rules. These
cases are now known as IN RE: BRAND NAME PRESCRIPTION DRUG ANTITRUST LITIGATION,
MDL 997. As of September 30, 1994, the Company was named in 15 federal cases,
all of which were consolidated in the MDL 997 litigation and in 13 state cases.
Three of these state cases were subsequently dismissed. The 10 other state cases
are pending in the following state courts: Greene County, Alabama; San Francisco
County, California (7 cases); Dane County, Wisconsin; and Washington County,
Wisconsin. One additional purported class action was filed on January 16, 1995,
in King County, Washington on behalf of Washington consumers. Thirty-three
additional cases have been filed in federal court since September 30, 1994 and
have now been or will be consolidated in the MDL 997 litigation. Two of the
cases which are pending in the MDL 997 litigation were filed as class actions:
one on behalf of retail pharmacies and one on behalf of Alabama consumers. In
November the court hearing the MDL 997 litigation certified a nationwide class
of retail pharmacies which had purchased prescription drug products from any one
or more of the defendants during the period October 1989 to the present and
refused to certify a statewide class of Alabama consumers who had purchased the
defendant's prescription pharmaceuticals.
On February 23, 1994, the United States Environmental Protection Agency
("the EPA") instituted a civil administrative proceeding by filing a complaint
alleging that the Company burned hazardous waste at its North Chicago facility
in violation of the RCRA. The complaint seeks penalties of $991,775. The EPA
simultaneously issued an Administrative Order requiring the Company to take
certain actions to ensure future compliance with the RCRA. The Company filed an
answer to the complaint denying all substantive allegations.
While it is not feasible to predict the outcome of such pending claims,
proceedings, and investigations with certainty, management is of the opinion
that their ultimate disposition should not have a material adverse effect on the
Company's financial position, cash flows, or results of operations.
ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS
None.
EXECUTIVE OFFICERS OF THE REGISTRANT
Officers of the Company are elected annually by the board of directors at
the first meeting held after the annual shareholders meeting. Each officer holds
office until a successor has been duly elected and qualified or until the
officer's death, resignation, or removal. Vacancies may be filled at any meeting
of the board. Any officer may be removed by the board of directors when, in its
judgment, removal would serve the best interests of the Company.
Current corporate officers, and their ages as of February 10, 1995, are
listed below. The officers' principal occupations and employment from January
1990 to present and the dates of their first election as officers of the Company
are also shown. Unless otherwise stated, employment was by the Company for the
period indicated. There are no family relationships between any corporate
officers or directors.
DUANE L. BURNHAM**, 53
1990 -- Vice Chairman and Chief Executive Officer, and Director.
1990 to present -- Chairman of the Board and Chief Executive Officer, and
Director.
Elected Corporate Officer -- 1982.
THOMAS R. HODGSON**, 53
1990 -- Executive Vice President and Director.
1990 to present -- President and Chief Operating Officer, and Director.
Elected Corporate Officer -- 1980.
8
<PAGE>
ROBERT N. BECK**, 54
1990 to 1992 -- Executive Vice President, BankAmerica and Bank of America.
1992 to present -- Senior Vice President, Human Resources.
Elected Corporate Officer -- 1992.
PAUL N. CLARK**, 48
1990 -- Vice President, Pharmaceutical Products.
1990 to present -- Senior Vice President, Pharmaceutical Operations.
Elected Corporate Officer -- 1985.
GARY P. COUGHLAN**, 50
1990 -- Senior Vice President, Finance, Kraft General Foods.
1990 to present -- Senior Vice President, Finance and Chief Financial
Officer.
Elected Corporate Officer -- 1990.
JOSE M. DE LASA**, 53
1990 to 1994 -- Vice President and Associate General Counsel, Bristol-Myers
Squibb Company.
1994 -- Vice President, Secretary and Associate General Counsel,
Bristol-Myers Squibb Company.
1994 to present -- Senior Vice President, Secretary and General Counsel.
Elected Corporate Officer -- 1994.
JOHN G. KRINGEL**, 55
1990 -- Vice President, Hospital Products.
1990 to present -- Senior Vice President, Hospital Products.
Elected Corporate Officer -- 1981.
J. DUNCAN MCINTYRE**, 57
1990 -- Vice President, Europe.
1990 to present -- Senior Vice President, International Operations.
Elected Corporate Officer -- 1987.
THOMAS M. MCNALLY**, 47
1990 -- Vice President, Chemical and Agricultural Products.
1990 to 1993 -- Senior Vice President, Chemical and Agricultural Products.
1993 to present -- Senior Vice President, Ross Products.
Elected Corporate Officer -- 1989.
DAVID V. MILLIGAN**, 54
1990 to 1992 -- Vice President, Diagnostic Products Research and
Development.
1992 to 1994 -- Vice President, Pharmaceutical Products Research and
Development.
1994 to present -- Senior Vice President, Chief Scientific Officer.
Elected Corporate Officer -- 1984.
ROBERT L. PARKINSON, JR.**, 44
1990 -- Vice President, Corporate Hospital Marketing.
1990 to 1993 -- Vice President, European Operations.
1993 to present -- Senior Vice President, Chemical and Agricultural
Products.
Elected Corporate Officer -- 1989.
DAVID A. THOMPSON**, 53
1990 -- Vice President, Diagnostic Operations.
1990 to 1994 -- Senior Vice President, Diagnostic Operations.
1994 to present -- Senior Vice President, Strategic Improvement Processes.
Elected Corporate Officer -- 1982.
9
<PAGE>
MILES D. WHITE**, 39
1990 -- Director of Marketing for the U.S., Abbott Diagnostics Division.
1990 -- Business Unit General Manager, Physiological Diagnostics, Abbott
Diagnostics Division and Business Unit General Manager, Cancer
Diagnostics.
1990 to 1992 -- Divisional Vice President and General Manager, Hospital
Laboratory Sector.
1992 to 1993 -- Divisional Vice President and General Manager, Diagnostic
Systems and Operations.
1993 to 1994 -- Vice President, Diagnostic Systems and Operations.
1994 to present -- Senior Vice President, Diagnostic Operations.
Elected Corporate Officer -- 1993.
JOY A. AMUNDSON**, 40
1990 -- General Manager, Alternate Site.
1990 -- Divisional Vice President and General Manager, Hospital Products
Business Sector.
1990 to 1994 -- Vice President, Corporate Hospital Marketing.
1994 to present -- Vice President, HealthSystems.
Elected Corporate Officer -- 1990.
CHRISTOPHER B. BEGLEY, 42
1990 -- General Manager, Hospital Products Business Sector.
1990 to 1993 -- Divisional Vice President and General Manager, Hospital
Products Business Sector.
1993 to present -- Vice President, Hospital Products Business Sector.
Elected Corporate Officer -- 1993.
THOMAS D. BROWN, 46
1990 to 1992 -- Divisional Vice President, Western Hemisphere.
1992 to 1993 -- Divisional Vice President, Diagnostic Commercial Operations.
1993 to present -- Vice President, Diagnostic Commercial Operations.
Elected Corporate Officer -- 1993.
GARY R. BYERS**, 53
1990 to 1993 -- Divisional Vice President, Corporate Auditing.
1993 to present -- Vice President, Internal Audit.
Elected Corporate Officer -- 1993.
KENNETH W. FARMER**, 49
1990 to present -- Vice President, Management Information Services and
Administration.
Elected Corporate Officer -- 1985.
THOMAS C. FREYMAN**, 40
1990 to 1991 -- Treasurer, Abbott International, Ltd. (a subsidiary of the
Company).
1991 to present -- Vice President and Treasurer.
Elected Corporate Officer -- 1991.
JAY B. JOHNSTON, 51
1990 to 1992 -- President, Dainabot Co., Ltd. (an affiliate of the Company)
and General Manager Asia Pacific, Abbott Diagnostics
Division.
1992 -- Divisional Vice President, Business Development.
1992 to 1993 -- Divisional Vice President and General Manager, Diagnostic
Assays and Operations.
1993 to present -- Vice President, Diagnostic Assays and Operations.
Elected Corporate Officer -- 1993.
10
<PAGE>
JAMES J. KOZIARZ, 46
1990 -- General Manager, Hepatitis/Retrovirus Business Sector.
1990 to 1992 -- Divisional Vice President and General Manager, Diagnostic
Assays.
1992 to 1993 -- Divisional Vice President, Diagnostic Products Research and
Development.
1993 to present -- Vice President, Diagnostic Products Research and
Development.
Elected Corporate Officer -- 1993.
JOHN F. LUSSEN**, 53
1990 to present -- Vice President, Taxes.
Elected Corporate Officer -- 1985.
RICHARD H. MOREHEAD**, 60
1990 to present -- Vice President, Corporate Planning and Development.
Elected Corporate Officer -- 1985.
THEODORE A. OLSON**, 56
1990 to present -- Vice President and Controller.
Elected Corporate Officer -- 1988.
ANDRE G. PERNET, 50
1990 to 1992 -- Divisional Vice President, Therapeutic Area Ventures,
Pharmaceutical Products Division.
1992 to 1994 -- Divisional Vice President, Pharmaceutical Development,
Pharmaceutical Products Division.
1994 to present -- Vice President, Pharmaceutical Products Research and
Development.
Elected Corporate Officer -- 1994.
CARL A. SPALDING, 49
1990 to 1992 -- Vice President, International, Johnson & Johnson.
1992 to 1993 -- Divisional Vice President/General Manager, Ross Pediatric
Products.
1993 to present -- Vice President, Ross Pediatric Products.
Elected Corporate Officer -- 1993.
WILLIAM H. STADTLANDER, 49
1990 to 1992 -- Divisional Vice President, Medical Nutritionals.
1992 to 1993 -- Divisional Vice President and General Manager, Medical
Nutritionals.
1993 to present -- Vice President, Ross Medical Nutritional Products.
Elected Corporate Officer -- 1993.
DANIEL O. STRUBLE**, 54
1990 to present -- Vice President, Corporate Engineering.
Elected Corporate Officer -- 1987.
ELLEN M. WALVOORD**, 55
1990 to 1991 -- Director, Corporate Communications.
1991 -- Vice President, Investor Relations.
1991 to present -- Vice President, Investor Relations and Public Affairs.
Elected Corporate Officer -- 1991.
JOSEF WENDLER, 45
1990 -- General Manager, Austria & Switzerland.
1990 to 1992 -- Regional Director, Europe, Diagnostic Division.
1992 to 1993 -- Divisional Vice President, Pacific, Asia, Africa.
1993 to 1995 -- Vice President, Pacific/Asia /Africa Operations.
1995 to present -- Vice President, European Operations.
Elected Corporate Officer -- 1993.
11
<PAGE>
DON G. WRIGHT**, 52
1990 to present -- Vice President, Corporate Quality Assurance and
Regulatory Affairs.
Elected Corporate Officer -- 1988.
- ---------
** Pursuant to Item 401(b) of Regulation S-K the Company has identified these
persons as "executive officers" within the meaning of Item 401(b).
PART II
ITEM 5. MARKET FOR THE REGISTRANT'S COMMON EQUITY AND RELATED STOCKHOLDER
MATTERS
PRINCIPAL MARKET
The principal market for the Company's common shares is the New York Stock
Exchange. Shares are also listed on the Chicago and Pacific Stock Exchanges and
are traded on the Boston, Cincinnati, and Philadelphia Exchanges. Overseas, the
Company's shares are listed on the London Stock Exchange and the Swiss Stock
Exchanges of Zurich, Basel, and Geneva.
<TABLE>
<CAPTION>
MARKET PRICE PER SHARE
------------------------------------------
1994 1993
-------------------- --------------------
HIGH LOW HIGH LOW
--------- --------- --------- ---------
<S> <C> <C> <C> <C>
First Quarter....................................................... 30 5/8 25 5/8 30 7/8 22 5/8
Second Quarter...................................................... 31 3/8 25 3/8 28 5/8 23 1/4
Third Quarter....................................................... 32 26 5/8 27 5/8 22 3/4
Fourth Quarter...................................................... 34 30 1/8 30 1/8 26 1/8
</TABLE>
Market prices are as reported by the New York Stock Exchange composite
transaction reporting system.
SHAREHOLDERS
There were 86,324 shareholders of record of Abbott common shares as of
December 31, 1994.
DIVIDENDS
Quarterly dividends of $.19 per share and $.17 per share were declared on
common shares in 1994 and 1993, respectively.
ITEM 6. SELECTED FINANCIAL DATA
Incorporated herein by reference for the years 1990 through 1994 are the
applicable portions of the section captioned "Summary of Selected Financial
Data" of the 1994 Annual Report.
ITEM 7. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS
OF OPERATIONS
Incorporated herein by reference is management's discussion and analysis of
financial condition and results of operations for the years 1994, 1993, and 1992
found under the section captioned "Financial Review" of the 1994 Annual Report.
ITEM 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA
Incorporated herein by reference are the portions of the 1994 Annual Report
captioned Consolidated Balance Sheet, Consolidated Statement of Earnings,
Consolidated Statement of Cash Flows, Consolidated Statement of Shareholders'
Investment, Notes to Consolidated Financial Statements and Report of Independent
Public Accountants (which contains the related report of Arthur Andersen LLP
dated January 13, 1995). Data relating to quarterly results is found in Note 8.
ITEM 9. DISAGREEMENTS ON ACCOUNTING AND FINANCIAL DISCLOSURE
None.
12
<PAGE>
PART III
ITEM 10. DIRECTORS AND EXECUTIVE OFFICERS OF THE REGISTRANT
Incorporated herein by reference are "Committees of the Board of Directors,"
"Information Concerning Nominees for Directors" and "Compliance with Section
16(a) of The Securities Exchange Act of 1934" found in the 1995 Abbott
Laboratories Proxy Statement ("1995 Proxy Statement").
ITEM 11. EXECUTIVE COMPENSATION
The material in the 1995 Proxy Statement under the heading "Executive
Compensation," other than the Report of the Compensation Committee, the
Performance Graph, and Security Ownership of Officers and Directors are hereby
incorporated by reference.
ITEM 12. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT
Incorporated herein by reference is the text found under the caption
"Information Concerning Security Ownership" and the material under the heading
"Security Ownership of Officers and Directors" in the 1995 Proxy Statement.
ITEM 13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
None.
PART IV
ITEM 14. EXHIBITS, FINANCIAL STATEMENT SCHEDULES, AND REPORTS ON FORM 8-K
(a) DOCUMENTS FILED AS PART OF THIS FORM 10-K.
1. FINANCIAL STATEMENTS: The Consolidated Financial Statements for the
years ended December 31, 1994, 1993, and 1992 and the related report of Arthur
Andersen LLP dated January 13, 1995 appearing under the portions of the 1994
Annual Report captioned Consolidated Balance Sheet, Consolidated Statement of
Earnings, Consolidated Statement of Cash Flows, Consolidated Statement of
Shareholders' Investment, Notes to Consolidated Financial Statements and Report
of Independent Public Accountants, respectively, are incorporated by reference
in response to Item 14(a)1. With the exception of the portions of the 1994
Annual Report specifically incorporated herein by reference, such Report shall
not be deemed filed as part of this Annual Report on Form 10-K or otherwise
deemed subject to the liabilities of Section 18 of the Securities Exchange Act
of 1934.
2. FINANCIAL STATEMENT SCHEDULES: The required financial statement
schedules are found on the pages indicated below. These schedules should be read
in conjunction with the Consolidated Financial Statements in the 1994 Annual
Report:
<TABLE>
<CAPTION>
SCHEDULES PAGE NO.
- ----------------------------------------------------------------- --------
<S> <C>
Valuation and Qualifying Accounts (Schedule II).................. 18
Schedules I, III, IV, and V are not submitted because they are
not applicable or not required.
Supplemental Report of Independent Public Accountants............ 19
Individual Financial Statements of the registrant have been
omitted pursuant to Rule 3.05, paragraph (1) of Regulation S-X.
</TABLE>
3. EXHIBITS REQUIRED BY ITEM 601 OF REGULATION S-K: The information called
for by this paragraph is incorporated herein by reference to the Exhibit Index
on pages 16 and 17 of this Form 10-K.
(b) REPORTS ON FORM 8-K DURING THE QUARTER ENDED DECEMBER 31, 1994:
No reports on Form 8-K were filed during the quarter ended December 31,
1994.
(c) EXHIBITS FILED (SEE EXHIBIT INDEX ON PAGES 16 AND 17).
(d) FINANCIAL STATEMENT SCHEDULES FILED (SEE PAGE 18).
13
<PAGE>
SIGNATURES
Pursuant to the requirements of Section 13 or 15(d) of the Securities
Exchange Act of 1934, Abbott Laboratories has duly caused this report to be
signed on its behalf by the undersigned, thereunto duly authorized.
ABBOTT LABORATORIES
By /s/ DUANE L. BURNHAM
Duane L. Burnham
Chairman of the Board and
Chief Executive Officer
Date: February 10, 1995
Pursuant to the requirements of the Securities Exchange Act of 1934, this
report has been signed below by the following persons on behalf of Abbott
Laboratories and in the capacities and on the dates indicated:
/s/ DUANE L. BURNHAM
Duane L. Burnham
Chairman of the Board,
Chief Executive Officer and
Director of Abbott Laboratories
(principal executive officer)
Date: February 10, 1995
/s/ GARY P. COUGHLAN
Gary P. Coughlan
Senior Vice President, Finance and
Chief Financial Officer
(principal financial officer)
Date: February 10, 1995
/s/ THOMAS R. HODGSON
Thomas R. Hodgson
President, Chief Operating Officer
and Director of Abbott Laboratories
Date: February 10, 1995
/s/ THEODORE A. OLSON
Theodore A. Olson
Vice President and Controller
(principal accounting officer)
Date: February 10, 1995
/s/ K. FRANK AUSTEN
K. Frank Austen, M.D.
Director of Abbott Laboratories
Date: February 10, 1995
/s/ H. LAURANCE FULLER
H. Laurance Fuller
Director of Abbott Laboratories
Date: February 10, 1995
/s/ BERNARD J. HAYHOE
Bernard J. Hayhoe
Director of Abbott Laboratories
Date: February 10, 1995
/s/ ALLEN F. JACOBSON
Allen F. Jacobson
Director of Abbott Laboratories
Date: February 10, 1995
/s/ DAVID A. JONES
David A. Jones
Director of Abbott Laboratories
Date: February 10, 1995
14
<PAGE>
/s/ BOONE POWELL, JR.
Boone Powell, Jr.
Director of Abbott Laboratories
Date: February 10, 1995
/s/ A. BARRY RAND
A. Barry Rand
Director of Abbott Laboratories
Date: February 10, 1995
/s/ W. ANN REYNOLDS
W. Ann Reynolds
Director of Abbott Laboratories
Date: February 10, 1995
/s/ WILLIAM D. SMITHBURG
William D. Smithburg
Director of Abbott Laboratories
Date: February 10, 1995
/s/ JOHN R. WALTER
John R. Walter
Director of Abbott Laboratories
Date: February 10, 1995
/s/ WILLIAM L. WEISS
William L. Weiss
Director of Abbott Laboratories
Date: February 10, 1995
15
<PAGE>
EXHIBIT INDEX
ABBOTT LABORATORIES
ANNUAL REPORT
FORM 10-K
1994
<TABLE>
<CAPTION>
REG.S-K
EXHIBIT
TABLE
ITEM NO.
- ----------
<S> <C>
3.1 * ARTICLES OF INCORPORATION--ABBOTT LABORATORIES, FILED AS
EXHIBIT 3.1 OF THE ABBOTT LABORATORIES QUARTERLY REPORT ON
FORM 10-Q FOR THE QUARTER ENDED MARCH 31, 1994.
3.2 CORPORATE BYLAWS--ABBOTT LABORATORIES.
4 INSTRUMENTS DEFINING THE RIGHTS OF SECURITY HOLDERS,
INCLUDING INDENTURES.
4.1 * Indenture dated as of October 1, 1993 between Abbott
Laboratories and Harris Trust and Savings Bank, filed as
Exhibit 4.1 to the Abbott Laboratories Quarterly Report for
the Quarter ended September 30, 1993 on Form 10-Q.
4.2 * Form of 5.6% Note issued pursuant to the Indenture filed as
Exhibit 4.2 to the Abbott Laboratories Quarterly Report for
the Quarter ended September 30, 1993 on Form 10-Q.
4.3 * Form of Medium-Term Note, Series A (Fixed Rate) to be issued
pursuant to the Indenture filed as Exhibit 4.3 to the Abbott
Laboratories Quarterly Report for the Quarter ended
September 30, 1993 on Form 10-Q.
4.4 * Form of Medium-Term Note, Series A (Floating Rate) to be
issued pursuant to the Indenture filed as Exhibit 4.4 to the
Abbott Laboratories Quarterly Report for the Quarter ended
September 30, 1993 on Form 10-Q.
4.5 * Resolution of the Company's Board of Directors filed as
Exhibit 4.5 to the Abbott Laboratories Quarterly Report for
the Quarter ended September 30, 1993 on Form 10-Q.
4.6 * Actions of the Authorized Officers with respect to the
Company's $200,000,000 5.60% Notes filed as Exhibit 4.6 to
the Abbott Laboratories Quarterly Report for the Quarter
ended September 30, 1993 on Form 10-Q.
4.7 * Actions of the Authorized Officers with respect to the
Company's Medium-Term Notes, Series A filed as Exhibit 4.7
to the Abbott Laboratories Quarterly Report for the Quarter
ended September 30, 1993 on Form 10-Q.
4.8 * Officers' Certificates and Company Order filed as Exhibit
4.7 to the Abbott Laboratories Quarterly Report for the
Quarter ended September 30, 1993 on Form 10-Q.
10 MATERIAL CONTRACTS.
10.1 * Supplemental Plan--Abbott Laboratories Extended Disability
Plan, filed as an exhibit (pages 50-51) to the 1992 Abbott
Laboratories Annual Report on Form 10-K.**
10.2 * The Abbott Laboratories 1981 Incentive Stock Program, filed
as an exhibit (pages 52-62) to the 1992 Abbott Laboratories
Annual Report on Form 10-K.**
10.3 * The Abbott Laboratories 1986 Incentive Stock Program, filed
as an exhibit (pages 37-59) to the 1989 Abbott Laboratories
Annual Report on Form 10-K.**
10.4 * The Abbott Laboratories 1991 Incentive Stock Program, filed
as an exhibit (pages 128-149) to the 1990 Abbott
Laboratories Annual Report on Form 10-K.**
10.5 * Consulting agreement between Abbott Laboratories and K.
Frank Austen, M.D. dated September 13, 1991, filed as an
exhibit (pages 63-66) to the 1992 Abbott Laboratories Annual
Report on Form 10-K.**
</TABLE>
16
<PAGE>
<TABLE>
<CAPTION>
REG.S-K
EXHIBIT
TABLE
ITEM NO.
- ----------
<S> <C>
10.6 * Abbott Laboratories 401(k) Supplemental Plan, filed as
Exhibit 10.7 to the Abbott Laboratories 1993 Annual Report
on Form 10-K.**
10.7 * Abbott Laboratories Supplemental Pension Plan, filed as
Exhibit 10.8 to the Abbott Laboratories 1993 Annual Report
on Form 10-K.**
10.8 * The 1986 Abbott Laboratories Management Incentive Plan,
filed as Exhibit 10.9 to the Abbott Laboratories 1993 Annual
Report on Form 10-K.**
10.9 * Abbott Laboratories Non-Employee Directors' Fee Plan, filed
as Exhibit 10.10 to the Abbott Laboratories 1993 Annual
Report on Form 10-K.**
11 CALCULATION OF FULLY DILUTED EARNINGS PER SHARE.
12 COMPUTATION OF RATIO OF EARNINGS TO FIXED CHARGES.
13 THE PORTIONS OF THE ABBOTT LABORATORIES ANNUAL REPORT FOR
THE YEAR ENDED DECEMBER 31, 1994 CAPTIONED FINANCIAL REVIEW,
CONSOLIDATED BALANCE SHEET, CONSOLIDATED STATEMENT OF
EARNINGS, CONSOLIDATED STATEMENT OF CASH FLOWS, CONSOLIDATED
STATEMENT OF SHAREHOLDERS' INVESTMENT, NOTES TO CONSOLIDATED
FINANCIAL STATEMENTS, REPORT OF INDEPENDENT PUBLIC
ACCOUNTANTS, AND THE APPLICABLE PORTIONS OF THE SECTION
CAPTIONED SUMMARY OF FINANCIAL DATA FOR THE YEARS 1990
THROUGH 1994.
21 SUBSIDIARIES OF ABBOTT LABORATORIES.
23 CONSENT OF INDEPENDENT PUBLIC ACCOUNTANTS.
27 FINANCIAL DATA SCHEDULE.
The 1995 Abbott Laboratories Proxy Statement will be filed
with the Commission under separate cover on or about March
13, 1995.
</TABLE>
- ---------
* Incorporated herein by reference.
** Denotes management contract or compensatory plan or arrangement required to
be filed as an exhibit hereto.
The Company will furnish copies of any of the above exhibits to a
shareholder upon written request to the Corporate Secretary, Abbott
Laboratories, 100 Abbott Park Road, Abbott Park, Illinois 60064-3500.
17
<PAGE>
ABBOTT LABORATORIES AND SUBSIDIARIES
SCHEDULE II--VALUATION AND QUALIFYING ACCOUNTS
FOR THE YEARS ENDED DECEMBER 31, 1994, 1993, AND 1992
(DOLLARS IN THOUSANDS)
<TABLE>
<CAPTION>
AMOUNTS
BALANCE AT PROVISIONS CHARGED OFF, BALANCE AT
ALLOWANCES FOR DOUBTFUL BEGINNING CHARGED TO NET OF END OF
ACCOUNTS AND SALES DEDUCTIONS OF YEAR INCOME (A) RECOVERIES YEAR
- --------------------------------------------------------------------------- ---------- ----------- ------------ ----------
<S> <C> <C> <C> <C>
1994....................................................................... $116,925 $18,123 $ (6,119) $128,929
---------- ----------- ------------ ----------
---------- ----------- ------------ ----------
1993....................................................................... $106,857 $29,441 $(19,373) $116,925
---------- ----------- ------------ ----------
---------- ----------- ------------ ----------
1992....................................................................... $ 82,244 $41,598 $(16,985) $106,857
---------- ----------- ------------ ----------
---------- ----------- ------------ ----------
<FN>
- ---------
(a) Represents provisions related to allowances for doubtful accounts and the
net change in the allowances for sales deductions.
</TABLE>
18
<PAGE>
SUPPLEMENTAL REPORT OF INDEPENDENT PUBLIC ACCOUNTANTS
To Abbott Laboratories:
We have audited in accordance with generally accepted auditing standards,
the financial statements included in the Company's Annual Report incorporated by
reference in this Form 10-K, and have issued our report thereon dated January
13, 1995. Our audits were made for the purpose of forming an opinion on those
statements taken as a whole. Schedule II is the responsibility of the Company's
management, is presented for purposes of complying with the Securities and
Exchange Commission's rules, and is not part of the basic financial statements.
This schedule has been subjected to the auditing procedures applied in the
audits of the basic financial statements and, in our opinion, fairly states in
all material respects the financial data required to be set forth therein in
relation to the basic financial statements taken as a whole.
ARTHUR ANDERSEN LLP
Chicago, Illinois,
January 13, 1995
19
<PAGE>
BY-LAWS
OF
ABBOTT LABORATORIES
Adopted by the Board of Directors
of Abbott Laboratories at the
Annual Meeting, April 11, 1963
as amended and restated, effective February 10, 1995
<PAGE>
BY-LAWS OF ABBOTT LABORATORIES
ARTICLE I
OFFICES
The principal office of the Corporation in the State of Illinois shall
be located at the intersection of State Routes 43 and 137 in the County of Lake.
The Corporation may have such other offices either within or without the State
of Illinois as the business of the Corporation may require from time to time.
The registered office of the Corporation may be, but need not be,
identical with the principal office in the State of Illinois. The address of
the registered office may be changed from time to time by the Board of
Directors.
ARTICLE II
SHAREHOLDERS
SECTION 1. ANNUAL MEETING; TRANSACTION OF BUSINESS, NOMINATION OF
DIRECTORS. The annual meeting of the shareholders shall be held in the month of
April in each year on such date and at such time as the Board of Directors shall
provide. The meeting shall be held for the purpose of electing Directors and
for the transaction of such other business as is properly brought before the
meeting in accordance with these By-Laws. If the election of Directors shall
not be held on the day designated for any annual meeting, or at any adjournment
thereof, the Board of Directors shall cause the election to be held at a meeting
of the shareholders as soon thereafter as conveniently may be.
To be properly brought before the meeting, business must be either (a)
specified in the notice of meeting (or any supplement thereto) given by or at
the direction of the Board of Directors, (b) otherwise properly brought before
the meeting by or at the direction of the Board of Directors or (c) otherwise
properly brought before the meeting by a shareholder. In addition to any other
applicable requirements, for business to be properly brought before an annual
meeting by a shareholder, the shareholder must have given timely notice thereof
in writing to the Secretary. To be timely, a shareholder's notice must be
delivered to or mailed and received at the principal office of the Corporation,
not earlier than October 1 nor later than February 15 immediately prior to the
date of the meeting; PROVIDED, HOWEVER, that in the event that the date of such
meeting is not in the month of April and less than sixty-five days' notice or
prior public disclosure of the date of the meeting is given or made to
shareholders, notice by the shareholder to be timely must be so received not
later than the close of business on the fifteenth day following the day on which
such notice of the date of the annual meeting was mailed or such public
disclosure was made, whichever first occurs. A shareholder's notice to the
Secretary shall set forth as to each matter the shareholder proposes to bring
before the annual meeting (i) a brief description of the business desired to be
brought before the annual meeting and the reasons for conducting such business
at the annual meeting, (ii) the name and record address of the shareholder
proposing such business, (iii) the class and number of shares of the
<PAGE>
BY-LAWS Page 2
Corporation which are beneficially owned by the shareholder and (iv) any
material interest of the shareholder in such business.
Notwithstanding anything in these By-Laws to the contrary, no business
shall be conducted at the annual meeting except in accordance with the
procedures set forth in this Section 1, PROVIDED, HOWEVER, that nothing in this
Section 1 shall be deemed to preclude discussion by any shareholder of any
business properly brought before the annual meeting.
The Chairman of an annual meeting shall, if the facts warrant,
determine and declare to the meeting that business was not properly brought
before the meeting in accordance with the provisions of this Section 1, and if
he should so determine, he shall so declare to the meeting and such business not
properly brought before the meeting shall not be transacted.
Only persons who are nominated in accordance with the following
procedures shall be eligible for election as directors. Nominations of persons
for election to the Board of Directors of the Corporation at the annual meeting
may be made at such annual meeting of shareholders by or at the direction of the
Board of Directors, by any nominating committee or person appointed by the Board
of Directors, or by any shareholder of the Corporation entitled to vote for the
election of directors at such meeting who complies with the notice procedures
set forth in this Section 1. Such nominations, other than those made by or at
the direction of the Board of Directors or by a committee or person appointed by
the Board of Directors, shall be made pursuant to timely notice in writing to
the Secretary. To be timely, a shareholder's notice shall be delivered to or
mailed and received at the principal office of the Corporation not earlier than
October 1 nor later than February 15 immediately prior to that date of the
meeting; PROVIDED, HOWEVER, that in the event that the date of such meeting is
not in the month of April and less than sixty-five days' notice or prior public
disclosure of the date of the meeting is given or made to shareholders, notice
by the shareholder to be timely must be so received not later than the close of
business on the fifteenth day following the day on which such notice of the date
of the meeting was mailed or such public disclosure was made, whichever first
occurs. Such shareholder's notice to the Secretary shall set forth: (a) as to
each person whom the shareholder proposes to nominate for election or re-
election as a director, (i) the name, age, business address and residence
address of the person, (ii) the principal occupation or employment of the
person, (iii) the class and number of shares of capital stock of the Corporation
which are beneficially owned by the person and (iv) any other information
relating to the person that is required to be disclosed in solicitations for
proxies for election of directors pursuant to Regulation 14A under the
Securities Exchange Act of 1934, as amended; and (b) as to the shareholder
giving the notice, (i) the name and record address of such shareholder and (ii)
the class and number of shares of the Corporation which are beneficially owned
by such shareholder. The Corporation may require any proposed nominee to
furnish such other information as may reasonably be required by the Corporation
to determine the eligibility of such proposed nominee to serve as director of
the Corporation. No person shall be eligible for election as a director of the
Corporation unless nominated in accordance with the procedures set forth herein.
The Chairman of the meeting shall, if the facts warrant, determine and
declare to the meeting that a nomination was not made in accordance with the
foregoing procedure, and if he should so determine, he shall so declare to the
meeting and the defective nomination shall be disregarded.
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SECTION 2. SPECIAL MEETINGS. Special meetings of the shareholders
may be called by the Chairman of the Board, the President, the Board of
Directors or by the holders of not less than one-fifth of all the outstanding
shares entitled to vote on the matter for which the meeting is called.
SECTION 3. PLACE OF MEETING. The Board of Directors may designate
any place, either within or without the State of Illinois, as the place of
meeting for any annual meeting or for any special meeting called by the Board of
Directors. If no designation is made, or if a special meeting be otherwise
called, the place of meeting shall be the principal office of the Corporation in
the State of Illinois.
SECTION 4. NOTICE OF MEETINGS. Written notice stating the place, day
and hour of the meeting and, in the case of a special meeting, the purpose or
purposes for which the meeting is called, shall be delivered not less than ten
nor more than sixty days before the date of the meeting, or in the case of a
merger, consolidation, share exchange, dissolution or sale, lease or exchange of
assets not less than twenty nor more than sixty days before the meeting, either
personally or by mail, by or at the direction of the Chairman of the Board, the
President, or the Secretary or the persons calling the meeting, to each
shareholder of record entitled to vote at such meeting. If mailed, such notice
shall be deemed to be delivered when deposited in the United States mail,
addressed to the shareholder at his or her address as it appears on the records
of the Corporation, with postage thereon prepaid.
SECTION 5. FIXING RECORD DATE. For the purpose of determining
shareholders entitled to notice of or to vote at any meeting of shareholders, or
shareholders entitled to receive payment of any dividend, or in order to make a
determination of shareholders for any other proper purpose, the Board of
Directors of the Corporation may fix in advance a date as the record date for
any such determination of shareholders, such date in any case to be not more
than sixty days and, for a meeting of shareholders, not less than ten days, or
in the case of a merger, consolidation, share exchange, dissolution or sale,
lease or exchange of assets not less than twenty days, immediately preceding
such meeting.
SECTION 6. VOTING LISTS. The Secretary shall make, or cause to have
made, within twenty days after the record date for a meeting of shareholders or
ten days before such meeting, whichever is earlier, a complete list of the
shareholders entitled to vote at such meeting, arranged in alphabetical order,
with the address of and the number of shares held by each, which list, for a
period of ten days prior to such meeting, shall be kept on file at the
registered office of the Corporation and shall be subject to inspection by any
shareholder and to copying at the shareholder's expense, at any time during
usual business hours. Such list shall also be produced and kept open at the
time and place of the meeting and shall be subject to the inspection of any
shareholder during the whole time of the meeting. The original share ledger or
transfer book, or a duplicate thereof kept in this State, shall be prima facie
evidence as to who are the shareholders entitled to examine such list or share
ledger or transfer book or to vote at any meeting of shareholders.
SECTION 7. QUORUM. A majority of the outstanding shares of the
Corporation, represented in person or by proxy, shall constitute a quorum at a
meeting of shareholders;
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BY-LAWS Page 4
provided, that if less than a majority of the shares are represented at said
meeting, a majority of the shares so represented may adjourn the meeting from
time to time without further notice. If a quorum is present, the affirmative
vote of the majority of the shares represented at the meeting shall be the act
of the shareholders, unless the vote of a greater number or voting by classes is
required by The Business Corporation Act of 1983 or the Articles of
Incorporation.
SECTION 8. PROXIES. A shareholder may appoint a proxy to vote or
otherwise act for the shareholder by signing an appropriate form and delivering
it to the person so appointed; provided, however, no shareholder may name more
than three persons as proxies to attend and to vote the shareholder's shares at
any meeting of shareholders. No proxy shall be valid after the expiration of
eleven months from the date thereof unless otherwise provided in the proxy.
Each proxy continues in full force and effect until revoked by the person
executing it prior to the vote pursuant thereto, except as otherwise provided by
law. Such revocation may be effected by a writing delivered to the Secretary of
the Corporation stating that the proxy is revoked or by a subsequent proxy
executed by, or by attendance at the meeting and voting in person by, the person
executing the proxy. The dates contained on the forms of proxy presumptively
determine the order of execution, regardless of the postmark dates on the
envelopes in which they were mailed.
SECTION 9. VOTING OF SHARES. Each outstanding share, regardless of
class, shall be entitled to one vote in each matter submitted to a vote at a
meeting of shareholders and, in all elections for Directors, every shareholder
shall have the right to vote the number of shares owned by such shareholder for
as many persons as there are Directors to be elected, or to cumulate such votes
and give one candidate as many votes as shall equal the number of Directors
multiplied by the number of such shares or to distribute such cumulative votes
in any proportion among any number of candidates; provided that, vacancies on
the Board of Directors may be filled as provided in Section 9, Article III of
these By-Laws. A shareholder may vote either in person or by proxy.
SECTION 10. VOTING OF SHARES BY CERTAIN HOLDERS. Shares of this
Corporation held by the Corporation in a fiduciary capacity may be voted and
shall be counted in determining the total number of outstanding shares entitled
to vote at any given time.
Shares registered in the name of another corporation, domestic or
foreign, may be voted by any officer, agent, proxy or other legal representative
authorized to vote such shares under the law of incorporation of such
corporation.
Shares registered in the name of a deceased person, a minor ward or a
person under legal disability may be voted by his or her administrator,
executor, or court appointed guardian, either in person or by proxy without a
transfer of such shares into the name of such administrator, executor, or court
appointed guardian. Shares registered in the name of a trustee may be voted by
him or her, either in person or by proxy.
Shares registered in the name of a receiver may be voted by such
receiver, and shares held by or under the control of a receiver may be voted by
such receiver without the transfer thereof into his or her name if authority so
to do is contained in an appropriate order of the court by which such receiver
was appointed.
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A shareholder whose shares are pledged shall be entitled to vote such
shares until the shares have been transferred into the name of the pledgee, and
thereafter the pledgee shall be entitled to vote the shares so transferred.
SECTION 11. VOTING BY BALLOT. Voting on any question or in any
election may be viva voce unless the presiding officer shall order that voting
be by ballot.
SECTION 12. INSPECTORS OF ELECTION. The Board of Directors in
advance of any meeting of shareholders may appoint inspectors to act at such
meeting or any adjournment thereof. If inspectors of election are not so
appointed, the officer or person acting as chairman at any such meeting may, and
on the request of any shareholder or his proxy, shall make such appointment. In
case any person appointed as inspector shall fail to appear or to act, the
vacancy may be filled by appointment made by the Board of Directors in advance
of the meeting or at the meeting by the officer or person acting as chairman.
Such inspectors shall ascertain and report the number of shares
represented at the meeting, based upon their determination of the validity and
effect of proxies; count all votes and report the results; and do such other
acts as are proper to conduct the election and voting with impartiality and
fairness to all the shareholders.
Each report of an inspector shall be in writing and signed by him or
her or by a majority of them if there be more than one inspector acting at such
meeting. If there is more than one inspector, the report of a majority shall be
the report of the inspectors. The report of the inspector or inspectors on the
number of shares represented at the meeting and the results of the voting shall
be prima facie evidence thereof.
ARTICLE III
DIRECTORS
SECTION l. GENERAL POWERS. The business and affairs of the
Corporation shall be managed under the direction of the Board of Directors.
SECTION 2. NUMBER, TENURE AND QUALIFICATIONS. The number of
Directors of the Corporation shall be thirteen. The terms of all Directors
shall expire at the next annual meeting of shareholders following their
election. Despite the expiration of a Director's term, he or she shall continue
to serve until the next meeting of shareholders at which Directors are elected.
Directors need not be residents of Illinois or shareholders of the Corporation.
SECTION 3. REGULAR MEETINGS. A regular annual meeting of the Board
of Directors shall be held without other notice than this By-Law, immediately
after, and at the same place as, the annual meeting of shareholders. Other
regular meetings of the Board of Directors shall be held at the principal office
of the Corporation on the second Friday of every month at 9:00 a.m. without
other notice than this By-Law. The Board of Directors may provide, by
resolution, for the holding of the regular monthly meetings at a different time
and place, either within or
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BY-LAWS Page 6
without the State of Illinois, or for the omission of the regular monthly
meeting altogether. Where the Board of Directors has, by resolution, changed or
omitted regular meetings, no other notice than such resolution shall be given.
SECTION 4. SPECIAL MEETINGS. Special meetings of the Board of
Directors may be called by or at the request of the Chairman of the Board, the
Chairman of the Executive Committee, the President, or of any four Directors.
The persons authorized to call special meetings of the Board of Directors may
fix any place, either within or without the State of Illinois, as the place for
holding any special meeting of the Board of Directors.
SECTION 5. NOTICE. Notice of any special meeting shall be given at
least one day prior thereto if notice is given personally or at least two days
prior thereto if notice is given by mail or telegram. If mailed, such notice
shall be deemed to be delivered when deposited in the United States mail
addressed to the Director at his business address, with postage thereon prepaid.
If notice be given by telegram, such notice shall be deemed to be delivered when
the telegram so addressed is delivered to the telegraph company. Any Director
may waive notice of any meeting by signing a written waiver of notice either
before or after the meeting. Attendance of a Director at any meeting shall
constitute a waiver of notice of such meeting, except where a Director attends a
meeting for the express purpose of objecting to the transaction of any business
because the meeting is not lawfully called or convened. Neither the business to
be transacted at, nor the purpose of, any regular or special meeting of the
Board of Directors need be specified in the notice or waiver of notice of such
meeting.
SECTION 6. QUORUM. A majority of the number of Directors fixed by
these By-Laws shall constitute a quorum for transaction of business at any
meeting of the Board of Directors; provided, that if less than a majority of
such number of Directors are present at said meeting, a majority of the
Directors present may adjourn the meeting from time to time without further
notice.
SECTION 7. MANNER OF VOTING. The act of the majority of the
Directors present at a meeting at which a quorum is present shall be the act of
the Board of Directors.
SECTION 8. INFORMAL ACTION BY DIRECTORS. Any action required to be
taken at a meeting of the Board of Directors, or any other action which may be
taken at a meeting of the Board of Directors or a committee thereof, may be
taken without a meeting if a consent in writing, setting forth the action so
taken, shall be signed by all of the Directors entitled to vote with respect to
the subject matter thereof, or by all the members of such committee, as the case
may be.
The consent shall be evidenced by one or more written approvals, each
of which sets forth the action taken and bears the signature of one or more
Directors. All the approvals evidencing the consent shall be delivered to the
Secretary of the Corporation to be filed in the corporate records. The action
taken shall be effective when all the Directors have approved the consent unless
the consent specifies a different effective date.
Any such consent signed by all the Directors or all the members of a
committee shall have the same effect as a unanimous vote.
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SECTION 9. VACANCIES. Any vacancy occurring in the Board of
Directors and any directorship to be filled by reason of an increase in the
number of Directors, may be filled by election at an annual meeting or at a
special meeting of shareholders called for that purpose. A Director elected to
fill a vacancy shall serve until the next annual meeting of shareholders. A
majority of Directors then in office may also fill one or more vacancies arising
between meetings of shareholders by reason of an increase in the number of
Directors or otherwise, and any Director so selected shall serve until the next
annual meeting of shareholders, provided that at no time may the number of
Directors selected to fill vacancies in this manner during any interim period
between meetings of shareholders exceed 33-1/3 per cent of the total membership
of the Board of Directors.
SECTION 10. PRESUMPTION OF ASSENT. A Director of the Corporation who
is present at a meeting of the Board of Directors or any committee thereof at
which action on any corporate matter is taken is conclusively presumed to have
assented to the action taken unless his or her dissent is entered in the minutes
of the meeting or unless he or she files his or her written dissent to such
action with the person acting as the secretary of the meeting before the
adjournment thereof or forwards such dissent by registered or certified mail to
the Secretary of the Corporation immediately after the adjournment of the
meeting. Such right to dissent shall not apply to a Director who voted in favor
of such action.
SECTION 11. APPOINTMENT OF AUDITORS. Upon the recommendation of the
Audit Committee, the Board of Directors shall appoint annually a firm of
independent public accountants as auditors of the Corporation. Such appointment
shall be submitted to the shareholders for ratification at the Annual Meeting
next following such appointment. Should the holders of a majority of the shares
represented at the meeting fail to ratify the appointment of any firm as
auditors of the Corporation, or should the Board of Directors for any reason
determine that such appointment be terminated, the Board of Directors shall
appoint another firm of independent public accountants to act as auditors of the
Corporation and such appointment shall be submitted to the shareholders for
ratification at the Annual or Special Shareholders Meeting next following such
appointment.
ARTICLE IV
COMMITTEES
SECTION 1. APPOINTMENT. A majority of the Board of Directors may
create one or more committees and appoint members of the Board to serve on the
committee or committees. Each committee shall have three or more members, who
serve at the pleasure of the Board. The Board shall designate one member of
each committee to be chairman of the committee. The Board shall designate a
secretary of each committee who may be, but need not be, a member of the
committee or the Board.
SECTION 2. COMMITTEE MEETINGS. A majority of any committee shall
constitute a quorum and a majority of the committee is necessary for committee
action. A committee may act by unanimous consent in writing without a meeting.
Committee meetings may be called by the
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BY-LAWS Page 8
Chairman of the Board, the chairman of the committee, or any two of the
committee's members. The time and place of committee meetings shall be
designated in the notice of such meeting. Notice of each committee meeting
shall be given to each committee member. Each Committee shall keep minutes of
its proceedings and such minutes shall be distributed to the Board of Directors.
SECTION 3. EXECUTIVE COMMITTEE. The Board shall appoint an Executive
Committee. A majority of the members of the Committee shall be selected from
those Directors who are not then serving as full-time employees of the
Corporation or any of its subsidiaries.
SECTION 4. DUTIES OF THE EXECUTIVE COMMITTEE. The Executive
Committee may, when the Board of Directors is not in session, exercise the
authority of the Board in the management of the business and affairs of the
Corporation; provided, however, the Committee may not:
(1) authorize distributions;
(2) approve or recommend to shareholders any act the Business
Corporation Act of 1983 requires to be approved by shareholders;
(3) fill vacancies on the Board or on any of its committees;
(4) elect or remove Officers or fix the compensation of any member of
the Committee;
(5) adopt, amend or repeal the By-Laws;
(6) approve a plan of merger not requiring shareholder approval;
(7) authorize or approve reacquisition of shares, except according to
a general formula or method prescribed by the Board;
(8) authorize or approve the issuance or sale, or contract for sale,
of shares or determine the designation and relative rights, preferences, and
limitations of a series of shares, except that the Board may direct the
Committee to fix the specific terms of the issuance or sale or contract for sale
or the number of shares to be allocated to particular employees under an
employee benefit plan; or
(9) amend, alter, repeal, or take action inconsistent with any
resolution or action of the Board of Directors when the resolution or action of
the Board of Directors provides by its terms that it shall not be amended,
altered or repealed by action of the Committee.
SECTION 5. AUDIT COMMITTEE. The Board of Directors shall appoint an
Audit Committee. All of the members of the Committee shall be selected from
those Directors who are not then serving as full-time employees of the
Corporation or any of its subsidiaries.
SECTION 6. DUTIES OF THE AUDIT COMMITTEE. The Audit Committee shall:
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BY-LAWS Page 9
(1) recommend to the Board of Directors annually a firm of
independent public accountants to act as auditors of the Corporation;
(2) review with the auditors in advance the scope of and fees for
their annual audit;
(3) review with the auditors and the management, from time to time,
the Corporation's accounting principles, policies, and practices and its
reporting policies and practices;
(4) review with the auditors annually the results of their audit; and
(5) review from time to time with the auditors and the Corporation's
financial personnel the adequacy of the Corporation's accounting, financial and
operating controls.
SECTION 7. COMPENSATION COMMITTEE. The Board of Directors shall
appoint a Compensation Committee. The members of the Committee shall be
selected from those Directors who are not then serving as full-time employees of
the Corporation or any of its subsidiaries and who are "disinterested persons"
under Rule 16b-3 promulgated under the Securities Exchange Act of 1934, or any
similar successor rule.
SECTION 8. DUTIES OF THE COMPENSATION COMMITTEE. The Compensation
Committee shall:
(1) administer the stock option plans of the Corporation;
(2) review, at least annually, the compensation of Directors who are
not then serving as full-time employees of the Corporation or any of its
subsidiaries and recommend for approval by the Board any change in the
compensation of such Directors;
(3) review at least annually, the compensation of all Officers of the
Corporation. The committee shall have the authority to approve changes in the
base compensation, and any proposed special separation arrangements of Officers,
except the Chairman of the Board of Directors and the President, whose base
compensation, and any special separation arrangements, shall be subject to
approval by the Board of Directors.
SECTION 9. NOMINATIONS COMMITTEE. The Board of Directors shall
appoint a Nominations Committee. A majority of the members of the Committee
shall be selected from those Directors who are not then serving as full-time
employees of the Corporation or any of its subsidiaries.
SECTION 10. DUTIES OF THE NOMINATIONS COMMITTEE. The Nominations
Committee shall:
(1) develop general criteria for selection of and qualifications
desirable in members of the Board of Directors and Officers of the Corporation
and aid the Board in identifying and attracting qualified candidates to stand
for election to such positions;
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BY-LAWS Page 10
(2) recommend to the Board annually a slate of nominees to be
proposed by the Board to the shareholders as nominees for election as Directors,
and, from time to time, recommend persons to fill any vacancy on the Board;
(3) review annually, or more often if appropriate, the performance of
individual members of the management of the Corporation and the membership and
performance of committees of the Board and make recommendations deemed necessary
or appropriate to the Board;
(4) recommend to the Board persons to be elected as Officers of the
Corporation; and
(5) serve in an advisory capacity to the Board of Directors and
Chairman of the Board on matters of organization, management succession plans
and major changes in the organizational structure of the Corporation.
SECTION 11. BOARD AFFAIRS COMMITTEE. The Board of Directors shall
appoint a Board Affairs Committee. All of the members of the Committee shall be
selected from those Directors who are not then serving as full-time employees of
the Corporation or any of its subsidiaries.
SECTION 12. DUTIES OF THE BOARD AFFAIRS COMMITTEE. The Board Affairs
Committee shall serve in an advisory capacity to the Board of Directors and
Chairman of the Board on the conduct of the Board activities.
ARTICLE V
OFFICERS
SECTION 1. NUMBER. The Officers of the Corporation shall be the
Chairman of the Board, the President, one or more Executive, Group or Senior
Vice Presidents, one or more Vice Presidents, a Treasurer, a Secretary, a
Controller, a General Counsel and such Assistant Treasurers and Assistant
Secretaries as the Board of Directors may elect. Any two or more offices may be
held by the same person.
SECTION 2. ELECTION AND TERM OF OFFICE. The Officers of the
Corporation shall be elected annually by the Board of Directors at the first
meeting of the Board of Directors held after each annual meeting of
shareholders. If the election of Officers shall not be held at such meeting,
such election shall be held as soon thereafter as conveniently may be.
Vacancies or new offices may be filled at any meeting of the Board of Directors.
Each Officer shall hold office until his or her successor shall have been duly
elected and shall have qualified or until his or her death or until he or she
shall resign or shall have been removed in the manner hereinafter provided.
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BY-LAWS Page 11
SECTION 3. REMOVAL OF OFFICERS. Any Officer may be removed by the
Board of Directors whenever in its judgment the best interests of the
Corporation will be served thereby.
SECTION 4. VACANCIES. A vacancy in any office because of death,
resignation, removal, disqualification or otherwise, may be filled by the Board
of Directors for the unexpired portion of the term.
SECTION 5. CHAIRMAN OF THE BOARD OF DIRECTORS. The Chairman of the
Board of Directors shall be the Chief Executive Officer of the Corporation. The
Chairman shall be responsible for the overall management of the Corporation
subject to the direction of the Board of Directors. The Chairman shall preside
at all meetings of the Board of Directors and the shareholders.
SECTION 6. PRESIDENT. The President shall be the Chief Operating
Officer. The President shall perform such duties as may be prescribed by the
Board of Directors or by the Chairman.
SECTION 7. EXECUTIVE, GROUP AND SENIOR VICE PRESIDENTS. Each
Executive, Group, or Senior Vice President shall be responsible for supervising
and coordinating a major area of the Corporation's activities subject to the
direction of the Chairman of the Board or the President.
SECTION 8. VICE PRESIDENTS. Each of the Vice Presidents shall be
responsible for those activities designated by an Executive, Group, or Senior
Vice President, the President, the Chairman of the Board or by the Board of
Directors.
SECTION 9. TREASURER. The Treasurer shall administer the investment,
financing, insurance and credit activities of the Corporation.
SECTION 10. SECRETARY. The Secretary will be the custodian of the
corporate records and of the seal of the Corporation, will countersign
certificates for shares of the Corporation, and in general will perform all
duties incident to the office of Secretary. The Secretary shall have the
authority to certify the By-Laws, resolutions of the shareholders and the Board
of Directors and committees thereof, and other documents of the Corporation as
true and correct copies thereof.
SECTION 11. CONTROLLER. The Controller will conduct the accounting
activities of the Corporation, including the maintenance of the Corporation's
general and supporting ledgers and books of account, operating budgets, and the
preparation and consolidation of financial statements.
SECTION 12. GENERAL COUNSEL. The General Counsel will be the chief
consultant of the Corporation on legal matters. He or she will supervise all
matters of legal import concerning the interests of the Corporation.
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BY-LAWS Page 12
SECTION 13. ASSISTANT TREASURER. The Assistant Treasurer shall, in
the absence or incapacity of the Treasurer, perform the duties and exercise the
powers of the Treasurer, and shall perform such other duties as shall from time
to time be given to him or her by the Treasurer.
SECTION 14. ASSISTANT SECRETARY. The Assistant Secretary shall, in
the absence or incapacity of the Secretary, perform the duties and exercise the
powers of the Secretary, and shall perform such other duties as shall from time
to time be given to him or her by the Secretary. The Assistant Secretary shall
be, with the Secretary, keeper of the books, records, and the seal of the
Corporation, and shall have the authority to certify the By-Laws, resolutions
and other documents of the Corporation.
SECTION 15. GENERAL POWERS OF OFFICERS. The Chairman of the Board,
the President, and any Executive, Group or Senior Vice President, may sign
without countersignature any deeds, mortgages, bonds, contracts, reports to
public agencies, or other instruments whether or not the Board of Directors has
expressly authorized execution of such instruments, except in cases where the
signing and execution thereof shall be expressly delegated by the Board of
Directors or by these By-Laws solely to some other Officer or agent of the
Corporation, or shall be required by law to be otherwise signed or executed.
Any other Officer of this Corporation may sign contracts, reports to public
agencies, or other instruments which are in the regular course of business and
within the scope of his or her authority, except where the signing and execution
thereof shall be expressly delegated by the Board of Directors or by these
By-Laws to some other Officer or agent of the Corporation, or shall be required
by law to be otherwise signed or executed.
ARTICLE VI
CERTIFICATES FOR SHARES AND THEIR TRANSFER
SECTION 1. CERTIFICATES FOR SHARES. Certificates representing shares
of the Corporation shall be in such form as may be determined by the Board of
Directors. Such certificates shall be signed by any one of the Chairman of the
Board, the President or an Executive Vice President, and shall be countersigned
by the Secretary or an Assistant Secretary and shall be sealed with the seal, or
a facsimile of the seal, of the Corporation. If a certificate is countersigned
by a Transfer Agent or Registrar, other than the Corporation itself or its
employee, any other signatures or countersignature on the certificate may be
facsimiles. In case any Officer of the Corporation, or any officer or employee
of the Transfer Agent or Registrar who has signed or whose facsimile signature
has been placed upon such certificate ceases to be an Officer of the
Corporation, or an officer or employee of the Transfer Agent or Registrar before
such certificate is issued, the certificate may be issued by the Corporation
with the same effect as if the Officer of the Corporation, or the officer or
employee of the Transfer Agent or Registrar had not ceased to be such at the
date of its issue. Each certificate representing shares shall state: that the
Corporation is organized under the laws of the State of Illinois; the name of
the person to whom issued; the number and class of shares; and the designation
of the series, if any, which such certificate represents. Each certificate
shall be consecutively numbered or otherwise identified. The name of the person
to whom the shares
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BY-LAWS Page 13
represented thereby are issued, with the number of shares and date of issue,
shall be entered on the books of the Corporation. All certificates surrendered
to the Corporation for transfer shall be canceled, and no new certificate shall
be issued in replacement until the former certificate for a like number of
shares shall have been surrendered and canceled, except in the case of lost,
destroyed or mutilated certificates.
SECTION 2. TRANSFER AGENT AND REGISTRAR. The Board of Directors may
from time to time appoint such Transfer Agents and Registrars in such locations
as it shall determine, and may, in its discretion, appoint a single entity to
act in the capacity of both Transfer Agent and Registrar in any one location.
SECTION 3. TRANSFERS OF SHARES. Transfers of shares of the
Corporation shall be made only on the books of the Corporation at the request of
the holder of record thereof or of his attorney, lawfully constituted in
writing, and on surrender for cancellation of the certificate for such shares.
The person in whose name shares stand on the books of the Corporation shall be
deemed the owner thereof for all purposes as regards the Corporation.
SECTION 4. LOST, DESTROYED OR MUTILATED CERTIFICATES. In case of
lost, destroyed or mutilated certificates, duplicate certificates shall be
issued to the person claiming the loss, destruction or mutilation, provided:
(a) that the claimant furnishes an affidavit stating the facts of
such loss, destruction or mutilation so far as known to him or her and
further stating that the affidavit is made to induce the Corporation
to issue a duplicate certificate or certificates; and that issuance of
the duplicate certificate or certificates is approved:
(i) in a case involving a certificate or certificates for more
than l,000 shares, by the Chairman of the Board, the President,
an Executive Vice President, or the Secretary; or
(ii) in a case involving a certificate or certificates for l,000
shares or less, by the Transfer Agent appointed by the Board of
Directors for the transfer of the shares represented by such
certificate or certificates,
upon receipt of a bond, with one or more sureties, in the amount to be
determined by the party giving such approval; or
(b) that issuance of the said duplicate certificate or certificates
is approved by the Board of Directors upon such terms and conditions
as it shall determine.
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ARTICLE VII
FISCAL YEAR
The fiscal year of the Corporation shall begin on the first day of
January in each year and end on the last day of December in each year.
ARTICLE VIII
VOTING SHARES OR INTERESTS IN OTHER CORPORATIONS
The Chairman of the Board, the President, an Executive, Group, or
Senior Vice President and each of them, shall have the authority to act for the
Corporation by voting any shares or exercising any other interest owned by the
Corporation in any other corporation or other business association, including
wholly or partially owned subsidiaries of the Corporation, such authority to
include, but not be limited to, power to attend any meeting of any such
corporation or other business association, to vote shares in the election of
directors and upon any other matter coming before any such meeting, to waive
notice of any such meeting and to consent to the holding thereof without notice,
and to appoint a proxy or proxies to represent the Corporation at any such
meeting with all the powers that the said Officer would have under this section
if personally present.
ARTICLE IX
DISTRIBUTIONS TO SHAREHOLDERS
The Board of Directors may authorize, and the Corporation may make,
distributions to its shareholders, subject to any restriction in the Articles of
Incorporation and subject also to the limitations prescribed by law.
ARTICLE X
SEAL
The Corporate Seal of the Corporation shall be in the form of a circle
in the center of which is the insignia "[stylized Abbott "A" logo]" and
shall have inscribed thereon the name of the Corporation and the words "an
Illinois Corporation."
<PAGE>
BY-LAWS Page 15
ARTICLE XI
WAIVER OF NOTICE
Whenever any notice whatever is required to be given under the
provisions of these By-Laws or under the provisions of the Articles of
Incorporation or under the provisions of The Business Corporation Act of 1983, a
waiver thereof in writing, signed by the person or persons entitled to such
notice, whether before or after the time stated therein, shall be deemed
equivalent to the giving of such notice. Attendance at any meeting shall
constitute waiver of notice thereof unless the person at the meeting objects to
the holding of the meeting because proper notice was not given.
ARTICLE XII
AMENDMENTS
These By-Laws may be made, altered, amended or repealed by the
shareholders or the Board of Directors.
<PAGE>
EXHIBIT 11
ABBOTT LABORATORIES AND SUBSIDIARIES
COMPUTATION OF PER SHARE EARNINGS
(Dollars and shares in millions except per share figures)
<TABLE>
<CAPTION>
Year Ended December 31,
---------------------------------
1994 1993 1992
-------- -------- --------
<S> <C> <C> <C>
1. Net earnings $1,516.7 $1,399.1 $1,239.1
-------- -------- --------
2. Average number of shares outstanding
during the year 812.2 829.0 844.1
-------- -------- --------
3. Earnings per share based upon average
outstanding share (1. DIVIDED BY 2.) $1.87 $1.69 $1.47
-------- -------- --------
-------- -------- --------
4. Fully diluted earnings per share:
a. Stock options granted and outstanding
for which the market price at year-end
exceeds the option price. 17.4 18.7 20.1
-------- -------- --------
-------- -------- --------
b. Aggregate proceeds to the Company
from the exercise of options in 4.a. $317.4 $297.0 $295.1
-------- -------- --------
-------- -------- --------
c. Market price of the Company's
common stock at year-end $32.63 $29.63 $30.38
-------- -------- --------
-------- -------- --------
d. Shares which could be repurchased
under the treasury stock method
(4.b. DIVIDED BY 4.c.) 9.7 10.0 9.7
-------- -------- --------
-------- -------- --------
e. Addition to average outstanding shares
(4.a. - 4.d.) 7.7 8.7 10.4
-------- -------- --------
-------- -------- --------
f. Shares for fully diluted earnings
per share calculation (2. + 4.e.) 819.9 837.7 854.5
-------- -------- --------
-------- -------- --------
g. Fully diluted earnings per share
(1. DIVIDED BY 4.f.) $1.85 $1.67 $1.45
-------- -------- --------
-------- -------- --------
</TABLE>
<PAGE>
EXHIBIT 12
ABBOTT LABORATORIES
CALCULATION OF RATIO OF EARNINGS TO FIXED CHARGES
(Unaudited)
(Millions of Dollars Except Ratios)
<TABLE>
<CAPTION>
Year Ended December 31
-------------------------------------------------
1994 1993 1992 1991 1990
------ ------ ------ ------ ------
<S> <C> <C> <C> <C> <C>
Net Earnings . . . . . . . . . . . . . . . . . . . . . . . . $1,517 $1,399 $1,239 $1,089 $ 966
Add (deduct):
Income taxes. . . . . . . . . . . . . . . . . . . . . . 650 544 500 456 385
Capitalized interest cost, net
of amortization. . . . . . . . . . . . . . . . . . (7) (6) (14) (10) (3)
Equity in earnings of 20%-49% owned
companies, less dividends received . . . . . . . . ... (1) ... (9) (4)
Minority interest . . . . . . . . . . . . . . . . . . . 12 13 7 3 (1)
------ ------ ------ ------ ------
Net earnings as adjusted. . . . . . . . . . . . . . . . $2,172 $1,949 $1,732 $1,529 $1,343
------ ------ ------ ------ ------
Fixed Charges:
Interest on long-term and
short-term debt. . . . . . . . . . . . . . . . . . $ 50 $ 54 $ 53 $ 64 $ 91
Capitalized interest cost . . . . . . . . . . . . . . . 18 16 24 18 10
Rental expense representative
of an interest factor. . . . . . . . . . . . . . . 26 26 25 20 20
------ ------ ------ ------ ------
Total Fixed Charges. . . . . . . . . . . . . . . . . . . . . 94 96 102 102 121
------ ------ ------ ------ ------
Total adjusted earnings available for
payment of fixed charges. . . . . . . . . . . . . . . . $2,266 $2,045 $1,834 $1,631 $1,464
------ ------ ------ ------ ------
------ ------ ------ ------ ------
Ratio of earnings to fixed charges . . . . . . . . . . . . . 24.1 21.3 18.0 16.0 12.1
------ ------ ------ ------ ------
------ ------ ------ ------ ------
</TABLE>
NOTE: For the purpose of calculating this ratio, (i) earnings have been
calculated by adjusting net earnings for taxes on earnings; interest
expense; capitalized interest cost, net of amortization; minority
interest; and the portion of rentals representative of the interest
factor, (ii) the Company considers one-third of rental expense to be
the amount representing return on capital, and (iii) fixed charges
comprise total interest expense, including capitalized interest and
such portion of rentals.
<PAGE>
Exhibit 13
The portions of the Abbott Laboratories Annual Report for the year ended
December 31, 1994 captioned Financial Review, Consolidated Balance Sheet,
Consolidated Statement of Earnings, Consolidated Statement of Cash Flows,
Consolidated Statement of Shareholders' Investment, Notes to Consolidated
Financial Statements, Report of Independent Public Accountants, and the
applicable portions of the section captioned Summary of Financial Data for the
Years 1990 through 1994.
Abbott Laboratories and Subsidiaries
CONSOLIDATED BALANCE SHEET
(Dollars in Thousands)
<TABLE>
<CAPTION>
ASSETS
December 31
------------------------------------
1994 1993 1992
---------- ---------- ----------
<S> <C> <C> <C>
Current Assets:
Cash and cash equivalents...................... $ 290,272 $ 300,676 $ 116,576
Investment securities.......................... 25,056 78,149 141,601
Trade receivables, less allowances of -
1994: $128,929; 1993: $116,925; 1992: $106,857. 1,468,519 1,336,222 1,244,396
Inventories -
Finished products............................ 514,715 476,548 421,932
Work in process.............................. 218,643 216,493 190,163
Materials.................................... 284,833 247,492 251,713
---------- ---------- ----------
Total inventories.......................... 1,018,191 940,533 863,808
Prepaid income taxes........................... 549,091 458,026 477,387
Other prepaid expenses and receivables......... 525,199 471,929 387,970
---------- ---------- ----------
Total Current Assets........................... 3,876,328 3,585,535 3,231,738
---------- ---------- ----------
Investment Securities Maturing after One Year.... 316,195 221,815 270,639
---------- ---------- ----------
Property and Equipment, at Cost:
Land........................................... 145,634 137,636 120,617
Buildings...................................... 1,349,668 1,261,620 1,064,974
Equipment...................................... 4,764,296 4,169,279 3,735,259
Construction in progress....................... 794,006 652,611 576,291
---------- ---------- ----------
7,053,604 6,221,146 5,497,141
Less: accumulated depreciation
and amortization............................. 3,132,754 2,710,155 2,397,903
---------- ---------- ----------
Net Property and Equipment..................... 3,920,850 3,510,991 3,099,238
Deferred Charges and Other Assets................ 410,351 370,228 339,621
---------- ---------- ----------
$8,523,724 $7,688,569 $6,941,236
========== ========== ==========
</TABLE>
The accompanying notes to consolidated financial statements are an integral part
of this statement.
<PAGE>
Abbott Laboratories and Subsidiaries
CONSOLIDATED BALANCE SHEET
(Dollars in Thousands)
LIABILITIES AND SHAREHOLDERS' INVESTMENT
<TABLE>
<CAPTION>
December 31
------------------------------------
1994 1993 1992
---------- ---------- ----------
<S> <C> <C> <C>
Current Liabilities:
Short-term borrowings and current portion of
long-term debt............................... $ 772,503 $ 843,594 $ 916,263
Trade accounts payable......................... 671,100 638,509 597,226
Salaries, wages and commissions................ 270,539 215,432 196,259
Other accrued liabilities...................... 1,140,154 933,049 905,877
Dividends payable.............................. 152,515 139,600 125,300
Income taxes payable........................... 469,055 324,749 41,583
---------- ---------- ----------
Total Current Liabilities...................... 3,475,866 3,094,933 2,782,508
---------- ---------- ----------
Long-Term Debt................................... 287,091 306,840 110,018
---------- ---------- ----------
Other Liabilities and Deferrals:
Deferred income taxes.......................... 55,597 51,383 321,301
Other.......................................... 655,770 560,484 379,768
---------- ---------- ----------
Total Other Liabilities and Deferrals.......... 711,367 611,867 701,069
---------- ---------- ----------
Shareholders' Investment:
Preferred shares, one dollar par value
Authorized - 1,000,000 shares, none issued... --- --- ---
Common shares, without par value
Authorized - 1,200,000,000 shares
Issued at stated capital amount -
1994: 813,046,602 shares; 1993: 830,941,614
shares; 1992: 846,017,815 shares............. 505,170 469,828 442,390
Earnings employed in the business................ 3,652,434 3,364,952 2,990,689
Cumulative translation adjustments............... (51,124) (100,716) (23,131)
---------- ---------- ----------
4,106,480 3,734,064 3,409,948
Less:
Common shares held in treasury, at cost -
1994: 9,766,880 shares; 1993: 9,811,930 shares;
1992: 9,965,386 shares......................... 51,545 51,783 52,593
Unearned compensation - restricted stock awards.. 5,535 7,352 9,714
---------- ---------- ----------
Total Shareholders' Investment................. 4,049,400 3,674,929 3,347,641
---------- ---------- ----------
$8,523,724 $7,688,569 $6,941,236
========== ========== ==========
</TABLE>
<PAGE>
Abbott Laboratories and Subsidiaries
CONSOLIDATED STATEMENT OF EARNINGS
(Dollars in Thousands Except Per Share Data)
<TABLE>
<CAPTION>
Year Ended December 31
------------------------------------
1994 1993 1992
---------- ---------- ----------
<S> <C> <C> <C>
Net Sales...................................... $9,156,009 $8,407,843 $7,851,912
---------- ---------- ----------
Cost of products sold.......................... 3,993,831 3,684,727 3,505,273
Research and development....................... 963,516 880,974 772,407
Selling, general and administrative............ 2,054,455 1,988,176 1,833,220
Provision for product withdrawal............... --- (70,000) 215,000
---------- ---------- ----------
Total Operating Cost and Expenses............ 7,011,802 6,483,877 6,325,900
---------- ---------- ----------
Operating Earnings............................. 2,144,207 1,923,966 1,526,012
Interest expense............................... 49,722 54,283 52,961
Interest and dividend income................... (36,907) (37,821) (42,250)
Other (income) expense, net.................... (35,298) (35,726) 48,534
Gain on sale of investment..................... --- --- (271,986)
---------- ---------- ----------
Earnings Before Taxes.......................... 2,166,690 1,943,230 1,738,753
Taxes on earnings.............................. 650,007 544,104 499,696
---------- ---------- ----------
Net Earnings................................... $1,516,683 $1,399,126 $1,239,057
========== ========== ==========
Earnings Per Common Share...................... $1.87 $1.69 $1.47
===== ===== =====
Average Number of Common Shares Outstanding.... 812,236,000 828,988,000 844,122,000
=========== =========== ===========
</TABLE>
The accompanying notes to consolidated financial statements are an integral part
of this statement.
<PAGE>
Abbott Laboratories and Subsidiaries
CONSOLIDATED STATEMENT OF CASH FLOWS
(Dollars in Thousands)
<TABLE>
<CAPTION>
Year Ended December 31
------------------------------------
1994 1993 1992
---------- ---------- ----------
<S> <C> <C> <C>
Cash Flow From (Used in) Operating Activities:
Net earnings.................................... $1,516,683 $1,399,126 $1,239,057
Adjustments to reconcile net earnings to
net cash from operating activities -
Depreciation and amortization................... 510,504 484,081 427,782
Exchange (gains) losses, net.................... 8,600 41,795 24,925
Investing and financing (gains) losses, net..... 21,834 (6,038) 36,511
Trade receivables............................... (109,623) (192,451) (181,085)
Inventories..................................... (52,293) (91,490) (109,087)
Prepaid expenses and other assets............... (183,705) (93,759) (114,009)
Trade accounts payable and other liabilities.... 360,216 96,095 276,617
Income taxes payable............................ 139,921 279,550 (154,876)
Provision for product withdrawal................ --- (70,000) 215,000
Gain on sale of investment...................... --- --- (271,986)
---------- ---------- ----------
Net Cash From Operating Activities............ 2,212,137 1,846,909 1,388,849
---------- ---------- ----------
Cash Flow From (Used in) Investing Activities:
Acquisitions of property, equipment and
businesses.................................... (929,488) (952,732) (1,007,247)
Purchases of investment securities.............. (226,728) (335,915) (178,727)
Proceeds from sales of investment securities.... 185,268 447,983 496,120
Other........................................... 26,863 46,826 22,277
---------- ---------- ----------
Net Cash Used in Investing Activities......... (944,085) (793,838) (667,577)
---------- ---------- ----------
Cash Flow From (Used in) Financing Activities:
Proceeds from borrowings with original
maturities of more than three months.......... 107,868 289,429 196,487
Repayments of borrowings with original
maturities of more than three months.......... (89,977) (197,090) (213,833)
Proceeds from (repayments of) other borrowings.. (115,725) 30,124 381,848
Purchases of common shares...................... (615,946) (465,822) (607,598)
Proceeds from stock options exercised........... 36,214 27,536 74,027
Dividends paid.................................. (602,356) (548,044) (488,413)
---------- ---------- ----------
Net Cash Used in Financing Activities......... (1,279,922) (863,867) (657,482)
---------- ---------- ----------
</TABLE>
<PAGE>
Abbott Laboratories and Subsidiaries
CONSOLIDATED STATEMENT OF CASH FLOWS (CONTINUED)
(Dollars in Thousands)
<TABLE>
<CAPTION>
Year Ended December 31
------------------------------------
1994 1993 1992
---------- ---------- ----------
<S> <C> <C> <C>
Effect of exchange rate changes on cash and
cash equivalents................................. 1,466 (5,104) (7,609)
---------- ---------- ----------
Net Increase (Decrease) in Cash and Cash Equivalents (10,404) 184,100 56,181
Cash and Cash Equivalents, Beginning of Year....... 300,676 116,576 60,395
---------- ---------- ----------
Cash and Cash Equivalents, End of Year............. $ 290,272 $ 300,676 $ 116,576
========== ========== ==========
Supplemental Cash Flow Information:
Income taxes paid............................... $ 571,215 $ 332,834 $ 702,897
Interest paid................................... 50,157 52,477 58,709
</TABLE>
The accompanying notes to consolidated financial statements are an integral part
of this statement.
<PAGE>
Abbott Laboratories and Subsidiaries
CONSOLIDATED STATEMENT OF SHAREHOLDERS' INVESTMENT
(Dollars in Thousands Except Per Share Data)
<TABLE>
<CAPTION>
Year Ended December 31
------------------------------------
1994 1993 1992
---------- ---------- ----------
<S> <C> <C> <C>
Common Shares:
Issued at Beginning of Year
Shares: 1994: 830,941,614; 1993: 846,017,815;
1992: 860,765,782............................ $ 469,828 $ 442,390 $ 361,008
Issued under incentive stock programs
Shares: 1994: 3,247,207; 1993: 2,602,920;
1992: 5,865,601.............................. 38,638 29,619 61,683
Tax benefit from sale of option shares and
vesting of restricted stock awards
(no share effect)............................ 9,800 8,300 29,800
Retired - Shares: 1994: 21,142,219;
1993: 17,679,121; 1992: 20,613,568........... (13,096) (10,481) (10,101)
---------- ---------- ----------
Issued at End of Year
Shares: 1994: 813,046,602; 1993: 830,941,614;
1992: 846,017,815............................ $ 505,170 $ 469,828 $ 442,390
========== ========== ==========
Earnings Employed in the Business:
Balance at Beginning of Year................... $3,364,952 $2,990,689 $2,867,857
Net earnings................................... 1,516,683 1,399,126 1,239,057
Cash dividends declared on common shares
(per share-1994: $.76; 1993: $.68; 1992: $.60) (615,271) (562,344) (507,416)
Cost of common shares and share rights
retired in excess of stated capital amount... (615,074) (465,724) (614,953)
Cost of treasury shares issued below market
value of restricted stock awards............. 1,144 3,205 6,144
---------- ---------- ----------
Balance at End of Year......................... $3,652,434 $3,364,952 $2,990,689
========== ========== ==========
Cumulative Translation Adjustments:
Balance at Beginning of Year................... $ (100,716) $ (23,131) $ 37,621
Translation adjustments........................ 49,592 (77,585) (60,752)
---------- ---------- ----------
Balance at End of Year......................... $ (51,124) $ (100,716) $ (23,131)
========== ========== ==========
</TABLE>
<PAGE>
Abbott Laboratories and Subsidiaries
CONSOLIDATED STATEMENT OF SHAREHOLDERS' INVESTMENT (CONTINUED)
(Dollars in Thousands Except Per Share Data)
<TABLE>
<CAPTION>
Year Ended December 31
------------------------------------
1994 1993 1992
---------- ---------- ----------
<S> <C> <C> <C>
Common Shares Held in Treasury:
Balance at Beginning of Year
Shares: 1994: 9,811,930; 1993: 9,965,386;
1992: 10,236,556........................... $ 51,783 $ 52,593 $ 54,024
Issued under incentive stock programs
Shares: 1994: 45,050; 1993: 153,456;
1992: 271,170................................ (238) (810) (1,431)
---------- ---------- ----------
Balance at End of Year
Shares: 1994: 9,766,880; 1993: 9,811,930;
1992: 9,965,386.............................. $ 51,545 $ 51,783 $ 52,593
========== ========== ==========
Unearned Compensation - Restricted Stock Awards:
Balance at Beginning of Year................... $ 7,352 $ 9,714 $ 9,475
Issued at market value - Shares: 1994: 35,000;
1993: 144,000; 1992: 254,000................. 1,094 3,771 7,079
Lapses - Shares: 1994: 21,600; 1993: 42,800;
1992: 38,000................................. (575) (887) (637)
Amortization................................... (2,336) (5,246) (6,203)
---------- ---------- ----------
Balance at End of Year........................... $ 5,535 $ 7,352 $ 9,714
========== ========== ==========
</TABLE>
The accompanying notes to consolidated financial statements are an integral part
of this statement.
<PAGE>
Abbott Laboratories and Subsidiaries
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
Note 1 - Summary of Significant Accounting Policies
BASIS OF CONSOLIDATION
The consolidated financial statements include the accounts of the parent
company and subsidiaries, after elimination of intercompany transactions. The
accounts of foreign subsidiaries are consolidated as of November 30.
CASH AND CASH EQUIVALENTS
Cash equivalents consist of time deposits and certificates of deposit with
original maturities of three months or less.
INVENTORIES
Inventories are stated at the lower of cost (first-in, first-out basis) or
market. Cost includes material and conversion costs.
PROPERTY AND EQUIPMENT
Depreciation and amortization are provided on the straight-line method over
the estimated useful lives of the assets.
PRODUCT LIABILITY
Provisions are made for the portions of probable losses that are not
covered by product liability insurance.
TRANSLATION ADJUSTMENTS
For foreign operations in highly inflationary economies, translation gains
and losses are included in other (income) expense, net. For remaining foreign
operations, translation adjustments are included as a component of shareholders'
investment.
EARNINGS PER COMMON SHARE
Earnings per common share amounts are computed using the weighted average
number of common shares outstanding.
REVENUE RECOGNITION
The Company recognizes revenue from product sales upon shipment to
customers. Provisions for discounts and rebates to customers, and returns and
other adjustments are provided for in the same period the related sales are
recorded.
<PAGE>
Abbott Laboratories and Subsidiaries
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
Note 2 - Taxes on Earnings
(dollars in thousands)
Deferred income taxes reflect the tax consequences on future years of
temporary differences between the tax bases of assets and liabilities and their
financial reporting amounts. Prior to 1993, provisions were made for the
estimated amount of income taxes on reported earnings which were payable
currently and in the future. The effect of this change on income before taxes
and net income was not significant, and prior years' financial statements have
not been restated.
U.S. income taxes are provided on those earnings of foreign subsidiaries
and subsidiaries operating in Puerto Rico under tax incentive grants, which are
intended to be remitted to the parent company. Undistributed earnings
reinvested indefinitely in foreign subsidiaries as working capital and plant and
equipment aggregated $820,000 at December 31, 1994. Deferred income taxes not
provided on these earnings are not significant.
Earnings before taxes, and the related provisions for taxes on earnings,
are as follows:
<TABLE>
<CAPTION>
Earnings Before Taxes 1994 1993 1992
---------- ---------- ----------
<S> <C> <C> <C>
Domestic................................. $1,595,279 $1,480,163 $1,418,335
Foreign.................................. 571,411 463,067 320,418
---------- ---------- ----------
Total...................................... $2,166,690 $1,943,230 $1,738,753
========== ========== ==========
<CAPTION>
Taxes on Earnings 1994 1993 1992
---------- ---------- ----------
<S> <C> <C> <C>
Current:
U.S. Federal and Possessions........... $487,977 $355,813 $347,711
State.................................. 56,548 49,222 63,838
Foreign................................ 192,509 175,455 133,065
---------- ---------- ----------
Total current............................ 737,034 580,490 544,614
---------- ---------- ----------
Deferred:
Domestic............................... (96,679) (29,461) (35,739)
Foreign................................ 9,801 2,066 (9,179)
Enacted tax rate changes............... (149) (8,991) -
---------- ---------- ----------
Total deferred........................... (87,027) (36,386) (44,918)
---------- ---------- ----------
Total...................................... $650,007 $544,104 $499,696
========== ========== ==========
</TABLE>
<PAGE>
Abbott Laboratories and Subsidiaries
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
Differences between the effective income tax rate and the U.S. statutory
tax rate were as follows:
<TABLE>
<CAPTION>
1994 1993 1992
------ ------ ------
<S> <C> <C> <C>
Statutory tax rate........................... 35.0% 35.0% 34.0%
Benefit of tax exemptions in
Puerto Rico, Italy, The Netherlands
and Ireland................................ (5.1) (6.7) (6.1)
State taxes, net of federal benefit.......... 1.7 1.7 2.1
All other, net............................... (1.6) (2.0) (1.3)
------ ------ ------
Effective tax rate........................... 30.0% 28.0% 28.7%
====== ====== ======
</TABLE>
As of December 31, 1994 and 1993, total deferred tax assets were $767,857
and $632,112, respectively, and total deferred tax liabilities were $263,734 and
$211,839, respectively. Valuation allowances for deferred tax assets are not
significant. The temporary differences that give rise to deferred tax assets
and liabilities are as follows:
<TABLE>
<CAPTION>
1994 1993
---------- ---------
<S> <C> <C>
Compensation and employee benefits........... $ 157,374 $ 113,927
Accounts receivable reserves................. 107,320 81,293
Inventory reserves........................... 77,787 81,201
Deferred intercompany profit................. 78,317 72,129
State income taxes........................... 37,394 30,715
Depreciation................................. (167,773) (145,767)
Other, primarily other accruals and
reserves not currently deductible.......... 203,075 173,145
---------- ---------
Total........................................ $ 493,494 $ 406,643
========== =========
</TABLE>
<PAGE>
Abbott Laboratories and Subsidiaries
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
Note 3 - Financial Instruments
The Company enters into foreign currency forward exchange contracts to
hedge intercompany loans and trade accounts payable where the functional
currency of the lending and borrowing entities are not the same. Such contracts
are also used to hedge foreign currency denominated third party trade payables
and receivables. For intercompany loans, the contracts require the Company to
sell foreign currencies, primarily Japanese yen and European currencies, in
exchange for primarily U.S. dollars. For intercompany and trade payables and
receivables, the currencies hedged are primarily the U.S. dollar, Japanese yen
and European currencies. At December 31, 1994, 1993, and 1992, the Company held
$717 million, $477 million and $400 million, respectively, of foreign currency
forward exchange contracts. The contracts outstanding at December 31, 1994
mature in 1995. These contracts are marked to market each month. The resulting
gains or losses are reflected in income and are generally offset by losses or
gains on the exposures being hedged.
The Company purchases U.S. dollar call options as a hedge of anticipated
intercompany purchases by foreign subsidiaries whose functional currency is not
the U.S. dollar. These contracts give the Company the right, but not the
requirement, to purchase U.S. dollars in exchange for foreign currencies,
primarily Japanese yen and European currencies, at predetermined exchange rates.
At December 31, 1994, 1993, and 1992, the Company held $370 million, $59 million
and $28 million, respectively, of U.S. dollar call option contracts. The
contracts outstanding at December 31, 1994 mature in 1995. Realized and
unrealized gains and losses on contracts that qualify as hedges of anticipated
purchases by foreign subsidiaries are recognized in the same period that the
foreign currency exposure is recognized. Contracts that do not qualify for
hedge accounting are marked to market each month.
The Company purchases foreign currency put options as a hedge against the
effect of exchange rate fluctuations on income. These contracts give the
Company the right, but not the requirement, to sell foreign currencies,
primarily Japanese yen and European currencies, in exchange for U.S. dollars at
predetermined exchange rates. These contracts are marked to market each month.
The resulting gains or losses are reflected in income and are generally offset
by losses or gains on the exposures being hedged. There were no such contracts
outstanding at December 31, 1994, 1993, and 1992.
The Company manages its exposure to short-term interest rate changes by
entering into interest rate swap contracts which effectively convert the
floating interest rate on a portion of the Company's commercial paper borrowings
to fixed rates. At December 31, 1994 and 1993, the Company held a $200 million
contract which matures in August, 1995 and at December 31, 1992, held contracts
totaling $300 million. For 1994, the average floating rate received was 4.45%
and the fixed rate paid was 4.72%. Gains or losses are recognized in income in
the same period that the interest rate exposure is recognized.
The gross unrealized holding gains/(losses) on current investment
securities and those maturing after one year totalled $2.5 million and $(9.2)
million at December 31, 1994, respectively.
<PAGE>
Abbott Laboratories and Subsidiaries
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
The carrying values and fair values of certain of the Company's financial
instruments as of December 31 are shown in the table below. The carrying values
of all other financial instruments approximate their estimated fair values.
Fair value is the quoted market price of the instrument held or the quoted
market price of a similar instrument. The counterparties to financial
instruments consist of select major international financial institutions. The
Company does not expect any losses from nonperformance by these counterparties.
<TABLE>
<CAPTION>
(dollars in thousands)
1994 1993 1992
------------------ ------------------- --------------------
Carrying Fair Carrying Fair Carrying Fair
Value Value Value Value Value Value
-------- -------- ------- -------- -------- ---------
<S> <C> <C> <C> <C> <C> <C>
Current Investment
Securities................ $ 25,056 $ 25,160 $ 78,149 $ 78,319 $141,601 $142,887
Investment Securities
Maturing after One Year... 316,195 309,362 221,815 231,879 270,639 285,763
Long-Term Debt.............. (308,750) (276,134) (308,920) (304,038) (117,165) (115,568)
Foreign Currency Forward
Exchange Contracts:
In a (payable) position. (1,564) (1,564) - - - -
In a receivable position 6,528 6,528 - - - -
In a net receivable
position.............. - - 7,830 7,830 11,572 11,572
Foreign Currency
Option Contracts.......... 14,660 744 2,014 0 (20,886) (21,903)
Interest Rate Swaps:
In a receivable position.. 0 3,150 - - 0 1,700
In a (payable) position... - - 0 (2,280) 0 (1,190)
</TABLE>
<PAGE>
Abbott Laboratories and Subsidiaries
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
Note 4 - Benefit Plans
(dollars in thousands)
Retirement plans consist of defined benefit, defined contribution, and medical
and dental plans.
Pension benefits for the Company's defined benefit plans generally are
based on the employee's years of service and compensation near retirement.
Certain plan benefits would vest and certain restrictions on the use of plan
assets would take effect upon a change in control of the Company.
Net pension cost for the Company's significant defined benefit plans
includes the following components:
<TABLE>
<CAPTION>
1994 1993 1992
-------- -------- --------
<S> <C> <C> <C>
Service cost - benefits earned during the year... $ 67,768 $ 59,381 $ 52,128
Interest cost on projected benefit obligations... 85,414 84,864 76,355
Return on assets................................. 915 (128,221) (46,128)
Net amortization and deferral.................... (125,186) (729) (74,779)
-------- -------- --------
Net pension cost................................. $ 28,911 $ 15,295 $ 7,576
======== ======== ========
</TABLE>
The plans' funded status at December 31 was as follows:
<TABLE>
<CAPTION>
1994 1993 1992
-------- -------- --------
<S> <C> <C> <C>
Actuarial present value of benefit obligations -
Vested benefits................................ $799,425 $791,435 $620,537
Nonvested benefits............................. 104,120 97,985 82,557
-------- -------- --------
Accumulated benefit obligations.................. $903,545 $889,420 $703,094
======== ======== ========
Plans' assets at fair value, principally
listed securities.............................. $1,321,051 $1,342,541 $1,244,881
Actuarial present value of projected
benefit obligations............................ 1,147,024 1,198,768 951,603
---------- ---------- ----------
Projected benefit obligations less
than plans' assets............................. 174,027 143,773 293,278
Unrecognized net transitional asset.............. (63,866) (74,710) (85,563)
Unrecognized prior service cost.................. 15,274 30,951 32,455
Unrecognized net gain............................ (101,139) (57,724) (199,779)
---------- ---------- ----------
Net prepaid pension cost......................... $ 24,296 $ 42,290 $ 40,391
========== ========== ==========
</TABLE>
<PAGE>
Abbott Laboratories and Subsidiaries
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
Assumptions used for the Company's major defined benefit plan as of December 31
include:
<TABLE>
<CAPTION>
1994 1993 1992
------ ------ ------
<S> <C> <C> <C>
Discount rate for determining obligations
and interest cost............................. 8 1/2% 7 1/4% 9%
Expected aggregate average long-term change
in compensation............................... 4% 4% 6%
Expected long-term rate of return on assets..... 9% 9% 10%
</TABLE>
The Stock Retirement Plan is the principal defined contribution plan. Company
contributions to this plan were $45,124 in 1994, $41,225 in 1993, and $37,055 in
1992, equal to 7.33 percent of dividends, as provided under the plan.
The Company also provides certain medical and dental benefits to qualifying
domestic retirees. Net post-retirement health care cost includes the following
components:
<TABLE>
<CAPTION>
1994 1993 1992
-------- -------- --------
<S> <C> <C> <C>
Service cost - benefits earned during the year... $27,605 $16,823 $14,681
Interest cost on accumulated post-retirement
benefit obligations............................ 35,578 29,266 25,355
Return on assets................................. 810 (9,239) (6,489)
Net amortization and deferral.................... (1,561) 2,393 (583)
------- ------- -------
Net post-retirement health care cost............. $62,432 $39,243 $32,964
======= ======= =======
</TABLE>
The plans' funded status at December 31 was as follows:
<TABLE>
<CAPTION>
1994 1993 1992
--------- --------- ---------
<S> <C> <C> <C>
Actuarial present value of benefit obligations -
Retirees....................................... $ 164,153 $ 171,231 $ 115,463
Fully eligible active participants............. 113,128 117,158 72,659
Other active participants...................... 186,778 162,219 127,688
--------- --------- ---------
Accumulated post-retirement benefit obligations.. 464,059 450,608 315,810
Plans' assets at fair value, principally
listed securities.............................. 94,297 100,920 91,778
--------- --------- ---------
Accumulated post-retirement benefit obligations
in excess of plans' assets..................... (369,762) (349,688) (224,032)
Unrecognized net loss ........................... 129,477 161,692 58,125
--------- --------- ---------
Accrued post-retirement health care cost......... $(240,285) $(187,996) $(165,907)
========= ========= =========
</TABLE>
<PAGE>
Abbott Laboratories and Subsidiaries
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
The discount rate and expected long-term rate of return on assets assumptions
are identical to those used for the Company's major defined benefit plan. A 9
percent annual rate of increase in the per capita cost of covered health care
benefits was assumed for 1995. This rate is assumed to decrease gradually to 5
percent in year 2000 and remain at that level thereafter. A one-percentage-
point increase in the assumed health care cost trend rates would increase the
accumulated post-retirement benefit obligations as of December 31, 1994 by
approximately $82,000 and the total of the service and interest cost components
of net post-retirement health care cost for the year then ended by approximately
$15,700.
The Company also provides certain other post-employment benefits, primarily
salary continuation plans, to qualifying domestic employees, and accrues for the
related cost over the service lives of the employees.
<PAGE>
Abbott Laboratories and Subsidiaries
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
Note 5 - Investment Securities
(dollars in thousands)
The following is a summary of investment securities at December 31:
<TABLE>
<CAPTION>
Current Investment Securities 1994 1993 1992
-------- -------- --------
<S> <C> <C> <C>
Time deposits and certificates of deposit........ $ 8,050 $ 32,350 $ 84,430
Corporate debt obligations....................... - 40,155 38,285
Debt obligations issued or guaranteed
by various governments or government agencies.. 17,006 5,644 18,886
-------- -------- --------
Total.............................................. $ 25,056 $ 78,149 $141,601
======== ======== ========
<CAPTION>
Investment Securities Maturing after One Year 1994 1993 1992
-------- -------- --------
<S> <C> <C> <C>
Time deposits and certificates of deposit,
maturing through 1999.......................... $ 66,500 $ 34,500 $ 54,500
Corporate debt obligations, maturing through 2008 104,696 44,703 50,000
Debt obligations issued or guaranteed
by various governments or government agencies,
maturing through 2006.......................... 144,999 142,612 166,139
-------- -------- --------
Total.............................................. $316,195 $221,815 $270,639
======== ======== ========
</TABLE>
The Company generally holds investment securities until maturity. All
investment securities classified as current as of December 31, 1994 mature
before January 1, 1996.
Of the investment securities listed above, $334,128, $293,888, and
$409,105, were held at December 31, 1994, 1993, and 1992, respectively, by
subsidiaries operating in Puerto Rico under tax incentive grants expiring from
2002 through 2007. In addition, these subsidiaries held cash equivalents of
$164,700, $197,200, and $33,800 at December 31, 1994, 1993, and 1992,
respectively.
<PAGE>
Abbott Laboratories and Subsidiaries
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
Note 6 - Incentive Stock Program
The 1991 Incentive Stock Program authorizes the granting of stock options,
stock appreciation rights, limited stock appreciation rights, restricted stock
awards, performance units, and foreign qualified benefits. Stock options,
limited stock appreciation rights, restricted stock awards, and foreign
qualified benefits have been granted and are currently outstanding under this
program and prior programs. The purchase price of the shares under option must
be at least 100 percent of the fair market value of the common stock on the date
of grant.
Limited stock appreciation rights have been granted to certain holders of
stock options and can be exercised, by surrendering related stock options, only
upon a change in control of the Company. At December 31, 1994, 4,388,359
options, with purchase prices from $6.31 to $32.69 per share, were subject to
limited stock appreciation rights. Upon a change in control of the Company, all
outstanding stock options become fully exercisable, and all terms and conditions
of all restricted stock awards are deemed satisfied.
At December 31, 1994, 12,116,674 shares were reserved for future grants
under the 1991 Program.
Data with respect to stock options under the 1991 Program and prior
programs are as follows:
<TABLE>
<CAPTION>
Options Outstanding
-----------------------------
Shares Price per Share
---------- ----------------
<S> <C> <C>
January 1, 1994.......................... 30,077,038 $ 5.27 to $33.82
Granted.................................. 1,894,815 27.32 to 32.26
Exercised................................ (3,247,207) 5.27 to 32.69
Lapsed................................... (436,488) 16.83 to 33.47
---------- ----------------
December 31, 1994........................ 28,288,158 $ 6.31 to $33.82
========== ================
Exercisable at December 31, 1994......... 21,819,935 $ 6.31 to $33.82
========== ================
</TABLE>
<PAGE>
Abbott Laboratories and Subsidiaries
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
Note 7 - Debt and Lines of Credit
(dollars in thousands)
The following is a summary of long-term debt at December 31:
<TABLE>
<CAPTION>
1994 1993 1992
-------- -------- --------
<S> <C> <C> <C>
5.6% debentures, due 2003................. $200,000 $200,000 $ -
Industrial revenue bonds at various
rates of interest, averaging 3.9%
at December 31, 1994, and due at
various dates through 2023.............. 82,600 82,600 82,600
Other, principally foreign affiliate
borrowings at various rates of
interest, averaging 3.7% at
December 31, 1994, and due at
various dates through 1998.............. 4,491 24,240 27,418
-------- -------- --------
Total, net of current maturities.......... $287,091 $306,840 $110,018
Current maturities of long-term debt...... 21,659 2,080 7,147
-------- -------- --------
Total..................................... $308,750 $308,920 $117,165
======== ======== ========
</TABLE>
Payments required on long-term debt outstanding at December 31, 1994, are $1,483
in 1996, $4,308 in 1997, $2,500 in 1998, and $800 in 1999.
At December 31, 1994, the Company had $300,000 of unused domestic lines of
credit which support domestic commercial paper borrowing arrangements. Related
compensating balances, which are subject to withdrawal by the Company at its
option, and commitment fees are not material. The Company's weighted average
interest rate on short-term borrowings was 6.1%, 4.1%, and 5.0% at December 31,
1994, 1993, and 1992, respectively.
The Company may issue up to $300,000 of senior debt securities in the
future under a registration statement filed with the Securities and Exchange
Commission in 1993.
<PAGE>
Abbott Laboratories and Subsidiaries
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
Note 8 - Quarterly Results (Unaudited)
(dollars in millions
except per share data)
<TABLE>
<CAPTION>
1994 1993 1992
-------- -------- --------
<S> <C> <C> <C>
FIRST QUARTER
Net Sales................................. $2,215.2 $2,045.6 $1,877.9
Gross Profit.............................. 1,251.0 1,112.4 1,033.2
Net Earnings.............................. 366.2 345.5 294.2
Earnings Per Common Share................. .45 .41 .35
SECOND QUARTER
Net Sales................................. $2,204.1 $2,073.8 $1,908.7
Gross Profit.............................. 1,257.2 1,186.8 1,045.7
Net Earnings.............................. 376.6 346.1 317.1
Earnings Per Common Share................. .46 .42 .37
THIRD QUARTER
Net Sales................................. $2,254.8 $2,060.4 $1,968.8
Gross Profit.............................. 1,239.0 1,143.4 1,076.1
Net Earnings.............................. 351.3 316.2 278.8
Earnings Per Common Share................. .43 .38 .33
FOURTH QUARTER
Net Sales................................. $2,481.9 $2,228.0 $2,096.5
Gross Profit.............................. 1,415.0 1,280.5 1,191.6
Net Earnings.............................. 422.6 391.3 349.0
Earnings Per Common Share................. .53 .48 .42
</TABLE>
<PAGE>
Abbott Laboratories and Subsidiaries
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
Note 9 - Litigation and Environmental Matters
The Company is involved in various claims and legal proceedings including
numerous antitrust suits and investigations in connection with the sale and
marketing of infant formula products and the pricing of prescription
pharmaceuticals.
The Company is also involved in numerous product liability cases, many of
which allege injuries to the offspring of women who ingested a synthetic
estrogen (DES) during pregnancy. In addition, the Company has been identified
as a potentially responsible party for investigation and cleanup costs at a
number of locations in the United States and Puerto Rico under federal
remediation laws and is voluntarily investigating potential contamination at a
number of Company-owned locations.
The matters above are discussed more fully in Item 1, Business -
Environmental Matters, and Item 3, Legal Proceedings, in the Annual Report on
Form 10-K, which is available upon request.
While it is not feasible to predict the outcome of such pending claims,
proceedings, investigations and remediation activities with certainty,
management is of the opinion that their ultimate disposition should not have a
material adverse effect on the Company's financial position, cash flows, or
results of operations.
<PAGE>
Abbott Laboratories and Subsidiaries
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
Note 10 - Other Significant Events
In June 1992, the Company voluntarily withdrew from the worldwide market its
quinolone anti-infective, temafloxacin, and recorded a charge of $215 million
for costs associated with this withdrawal. In the second quarter 1993, the
Company resolved various contingencies relative to the temafloxacin withdrawal
and recorded a credit of $70 million for these items.
In the first quarter 1993, the Company sold its peritoneal dialysis
product line. The gain on the sale is reported in other (income) expense, net.
In May 1992, the Company sold its 20 percent investment in Boston Scientific
Corporation for a pretax gain of $272 million.
In December, 1994 a United Kingdom subsidiary of the Company purchased the
operating assets of the nutritional business of Puleva Union Industrial y
Agroganadera, S.A. for $106 million. Had this acquisition taken place on
January 1, 1994, consolidated sales and net income would not have been
significantly different from reported amounts.
<PAGE>
Abbott Laboratories and Subsidiaries
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
Note 11 - Industry Segment and Geographic Area Information
(dollars in millions)
The Company's principal business is the discovery, development, manufacture, and
sale of a broad and diversified line of health care products and services.
These products have been classified into the following industry segments:
PHARMACEUTICAL AND NUTRITIONAL PRODUCTS - Included are a broad line of adult and
pediatric pharmaceuticals and nutritionals, which are sold primarily on the
prescription or recommendation of physicians or other health care professionals;
consumer products; agricultural and chemical products; and bulk pharmaceuticals.
HOSPITAL AND LABORATORY PRODUCTS - Included are diagnostic systems for blood
banks, hospitals, commercial laboratories and alternate-care testing sites;
intravenous and irrigation fluids and related administration equipment; drugs
and drug delivery systems; anesthetics; critical care products; and other
medical specialty products for hospitals and alternate-care sites.
In the following tables, net sales by industry segment and geographic area
include both sales to customers, as reported in the Consolidated Statement of
Earnings, and inter-area sales (for geographic areas) at sales prices which
approximate market. Operating profit excludes corporate expenses.
<PAGE>
Abbott Laboratories and Subsidiaries
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
<TABLE>
<CAPTION>
Industry Segments (a) 1994 1993 1992
------ ------ ------
<S> <C> <C> <C>
Net Sales
Pharmaceutical and nutritional.............. $4,951 $4,389 $4,025
Hospital and laboratory..................... 4,205 4,019 3,827
------ ------ ------
Total ........................................ $9,156 $8,408 $7,852
====== ====== ======
Operating Profit
Pharmaceutical and nutritional (b).......... $1,385 $1,211 $ 879
Hospital and laboratory (c)................. 818 794 703
------ ------ ------
Operating Profit............................ 2,203 2,005 1,582
Corporate expenses, net (d)................. 23 46 104
Interest (income) expense, net.............. 13 16 11
Gain on sale of investment.................. - - (272)
------ ------ ------
Earnings Before Taxes......................... $2,167 $1,943 $1,739
====== ====== ======
Identifiable Assets
Pharmaceutical and nutritional.............. $3,415 $3,046 $2,616
Hospital and laboratory..................... 3,596 3,296 3,108
General corporate (e)....................... 1,513 1,347 1,217
------ ------ ------
Total ........................................ $8,524 $7,689 $6,941
====== ====== ======
Capital Expenditures
Pharmaceutical and nutritional.............. $ 478 $ 475 $ 502
Hospital and laboratory..................... 447 474 500
General corporate........................... 4 4 5
------ ------ ------
Total ........................................ $ 929 $ 953 $1,007
====== ====== ======
Depreciation and Amortization
Pharmaceutical and nutritional.............. $ 213 $ 189 $ 161
Hospital and laboratory..................... 295 292 264
General corporate........................... 3 3 3
------ ------ ------
Total ........................................ $ 511 $ 484 $ 428
====== ====== ======
</TABLE>
<PAGE>
Abbott Laboratories and Subsidiaries
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
<TABLE>
<CAPTION>
Geographic Areas (a) 1994 1993 1992
------ ------ ------
<S> <C> <C> <C>
Net Sales
United States:
Domestic and export customers............. $5,758 $5,347 $4,918
Inter-area................................ 1,143 932 930
------ ------ ------
Total United States......................... 6,901 6,279 5,848
Latin America............................... 490 413 339
Europe, Mideast and Africa.................. 1,662 1,554 1,649
Pacific, Far East and Canada................ 1,246 1,094 946
Eliminations................................ (1,143) (932) (930)
------ ------ ------
Total......................................... $9,156 $8,408 $7,852
====== ====== ======
Operating Profit (b) and (c)
United States............................... $1,558 $1,390 $1,114
Latin America............................... 131 106 70
Europe, Mideast and Africa.................. 352 301 260
Pacific, Far East and Canada................ 182 189 143
Eliminations................................ (20) 19 (5)
------ ------ ------
Total......................................... $2,203 $2,005 $1,582
====== ====== ======
Identifiable Assets,
Excluding General Corporate Assets (e)
United States............................... $4,809 $4,492 $4,017
Latin America............................... 274 228 188
Europe, Mideast and Africa.................. 1,298 1,096 1,089
Pacific, Far East and Canada................ 827 703 627
Eliminations................................ (197) (177) (197)
------ ------ ------
Total......................................... $7,011 $6,342 $5,724
====== ====== ======
</TABLE>
<PAGE>
Abbott Laboratories and Subsidiaries
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
(a) Net sales and operating profit were not significantly impacted by the
fluctuations in the U.S. dollar in 1994. In 1993, net sales and operating
profit were unfavorably affected by the relatively stronger U.S. dollar,
while 1992 was favorably affected by the relatively weaker U.S. dollar.
(b) The 1992 operating profit was unfavorably impacted by the pretax charge
of $215 for costs associated with the voluntary withdrawal of temafloxacin
from the worldwide market. The 1993 operating profit was favorably
impacted by the $70 pretax credit resulting from resolution of various
contingencies related to the withdrawal. The operating profit for 1993
was unfavorably impacted by the $104 pretax charge reflecting the
settlement of certain claims and legal proceedings in connection with the
sale and marketing of infant formula products. In 1994, a similar pretax
amount was charged against earnings for other pending and settled
litigation.
(c) The 1993 operating profit was favorably impacted by the gain on the sale
of the peritoneal dialysis product line.
(d) Corporate expenses not allocated to segments include results from joint
ventures, minority interest expenses, net foreign exchange losses, and
other general corporate income and expense. Net foreign exchange losses
were $30.8 in 1994, $41.3 in 1993, and $93.2 in 1992.
(e) General corporate assets are principally prepaid income taxes, cash and
cash equivalents, investment securities, and investments in joint
ventures.
<PAGE>
Abbott Laboratories and Subsidiaries
REPORT OF INDEPENDENT PUBLIC ACCOUNTANTS
To the Shareholders of Abbott Laboratories:
We have audited the accompanying consolidated balance sheet of Abbott
Laboratories (an Illinois corporation) and Subsidiaries as of December 31, 1994,
1993, and 1992, and the related consolidated statements of earnings,
shareholders' investment, and cash flows for the years then ended. These
financial statements are the responsibility of the Company's management. Our
responsibility is to express an opinion on these financial statements based on
our audits.
We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to obtain
reasonable assurance about whether the financial statements are free of material
misstatement. An audit includes examining, on a test basis, evidence supporting
the amounts and disclosures in the financial statements. An audit also includes
assessing the accounting principles used and significant estimates made by
management, as well as evaluating the overall financial statement presentation.
We believe that our audits provide a reasonable basis for our opinion.
In our opinion, the financial statements referred to above present fairly,
in all material respects, the financial position of Abbott Laboratories and
Subsidiaries as of December 31, 1994, 1993, and 1992, and the results of their
operations and their cash flows for the years then ended in conformity with
generally accepted accounting principles.
Chicago, Illinois,
January 13, 1995 Arthur Andersen LLP
<PAGE>
Abbott Laboratories and Subsidiaries
AUDIT COMMITTEE CHAIRMAN'S REPORT
The Audit Committee of the Board of Directors is composed of six non-
employee directors. The Audit Committee oversees the Company's financial
reporting process on behalf of the Board of Directors. The Committee held two
meetings during 1994. In fulfilling its responsibility, the Committee
recommended to the Board of Directors, subject to shareholder approval, the
selection of the Company's independent public accountants. The Audit Committee
discussed with the internal auditors and the independent public accountants the
overall scope and specific plans for their respective audits. The Committee
also discussed the Company's consolidated financial statements and the adequacy
of the Company's internal controls. During the Audit Committee meetings the
Committee met with the internal auditors and independent public accountants,
without management present, to discuss the results of their audits, their
evaluations of the Company's internal controls, and the overall quality of the
Company's financial reporting. The meetings also were designed to facilitate
any private communication with the Committee desired by the internal auditors or
independent public accountants.
John R. Walter
Chairman, Audit Committee
<PAGE>
Abbott Laboratories and Subsidiaries
MANAGEMENT REPORT ON FINANCIAL STATEMENTS
Management has prepared and is responsible for the Company's consolidated
financial statements and related notes. They have been prepared in accordance
with generally accepted accounting principles and necessarily include amounts
based on judgments and estimates by management. All financial information in
this annual report is consistent with the consolidated financial statements.
The Company maintains internal accounting control systems and related
policies and procedures designed to provide reasonable assurance that assets are
safeguarded, that transactions are executed in accordance with management's
authorization and properly recorded, and that accounting records may be relied
upon for the preparation of consolidated financial statements and other
financial information. The design, monitoring, and revision of internal
accounting control systems involve, among other things, management's judgment
with respect to the relative cost and expected benefits of specific control
measures. The Company also maintains an internal auditing function which
evaluates and formally reports on the adequacy and effectiveness of internal
accounting controls, policies, and procedures.
The Company's consolidated financial statements have been audited by
independent public accountants who have expressed their opinion with respect to
the fairness of these statements.
Duane L. Burnham
Chairman and Chief Executive Officer
Gary P. Coughlan
Senior Vice President, Finance and Chief Financial Officer
Theodore A. Olson
Vice President and Controller
<PAGE>
Abbott Laboratories and Subsidiaries
FINANCIAL REVIEW
RESULTS OF OPERATIONS
SALES
The following table details the components of sales growth by industry segment
and geographic area for the last three years:
<TABLE>
<CAPTION>
Total % Components of Change (%)
Worldwide Sales Change Price Volume Exchange
--------------- ------- ----- ------ --------
<S> <C> <C> <C> <C>
Total Worldwide
1994 vs. 1993.......... 8.9 0.8 8.0 0.1
1993 vs. 1992.......... 7.1 0.9 8.6 (2.4)
1992 vs. 1991.......... 14.2 2.9 10.6 0.7
Domestic
1994 vs. 1993.......... 7.6 1.0 6.6 -
1993 vs. 1992.......... 8.7 0.6 8.1 -
1992 vs. 1991.......... 13.1 3.5 9.6 -
International
1994 vs. 1993.......... 11.1 0.5 10.4 0.2
1993 vs. 1992.......... 4.5 1.4 9.5 (6.4)
1992 vs. 1991.......... 16.0 1.8 12.5 1.7
Pharmaceutical and
Nutritional Products
- ----------------------
Total Worldwide
1994 vs. 1993.......... 12.8 1.8 11.1 (0.1)
1993 vs. 1992.......... 9.0 1.7 9.2 (1.9)
1992 vs. 1991.......... 14.6 5.3 9.2 0.1
Domestic
1994 vs. 1993.......... 10.8 1.8 9.0 -
1993 vs. 1992.......... 10.2 1.0 9.2 -
1992 vs. 1991.......... 14.5 5.6 8.9 -
International
1994 vs. 1993.......... 17.2 1.9 15.6 (0.3)
1993 vs. 1992.......... 6.5 3.4 9.2 (6.1)
1992 vs. 1991.......... 14.7 3.3 11.0 0.4
</TABLE>
<PAGE>
Abbott Laboratories and Subsidiaries
FINANCIAL REVIEW (CONTINUED)
<TABLE>
<CAPTION>
Hospital and Total % Components of Change (%)
Laboratory Products Change Price Volume Exchange
- --------------------- ------- ----- ------ --------
<S> <C> <C> <C> <C>
Total Worldwide
1994 vs. 1993.......... 4.6 (0.4) 4.7 0.3
1993 vs. 1992.......... 5.0 - 8.0 (3.0)
1992 vs. 1991.......... 13.7 1.0 11.5 1.2
Domestic
1994 vs. 1993.......... 3.1 (0.2) 3.3 -
1993 vs. 1992.......... 6.6 0.1 6.5 -
1992 vs. 1991.......... 11.2 1.1 10.1 -
International
1994 vs. 1993.......... 6.5 (0.6) 6.5 0.6
1993 vs. 1992.......... 3.0 (0.1) 9.8 (6.7)
1992 vs. 1991.......... 17.0 0.8 13.5 2.7
</TABLE>
Sales of new products in the pharmaceutical and nutritional segment and the
hospital and laboratory segment in 1994 are estimated to be $190 million and
$305 million, respectively. Sales in international markets represented
approximately 38 percent of worldwide sales.
<PAGE>
Abbott Laboratories and Subsidiaries
FINANCIAL REVIEW
The classes of products which contributed at least 10 percent to
consolidated net sales in at least one of the last three years were:
<TABLE>
<CAPTION>
(dollars in millions) 1994 1993 1992
------ ------ ------
<S> <C> <C> <C>
Infant Formula................................... $1,180 $1,147 $1,075
Fluids and Equipment............................. 853 836 924
Medical Nutritionals............................. 1,011 864 760
Anti-Infectives.................................. 994 784 685
</TABLE>
Worldwide sales of infant formula increased in 1994 primarily due to net price
increases, and in 1993 primarily due to unit growth. Fluids and equipment sales
increased in 1994 primarily due to unit growth, and decreased in 1993 due to the
sale of a product line. Increases in medical nutritionals and anti-infectives
were primarily due to unit increases.
OPERATING EARNINGS
Gross profit margins (sales less cost of products sold, including freight and
distribution expenses) were 56.4 percent of sales in 1994, 56.2 percent in 1993,
and 55.4 percent in 1992. Productivity improvements, favorable product mix and
net price increases in some product lines offset the impacts of inflation and
competitive pricing pressures in other product lines. Fluctuations in the U.S.
dollar had an insignificant impact on gross profit margins in 1994. In 1993,
gross profit margins were unfavorably impacted by the relatively stronger U.S.
dollar while 1992 was favorably affected by the relatively weaker U.S. dollar.
In the U.S., states receive price rebates from manufacturers of infant formula
under the federally subsidized Special Supplemental Food Program for Women,
Infants, and Children (WIC). The WIC rebate programs continue to have a
negative effect on the gross profit margins of this portion of the infant
formula business.
Research and development expense increased to $964 million in 1994, and
represented 10.5 percent of net sales in 1994 and 1993, and 9.8 percent of net
sales in 1992. Research and development expenditures continue to be
concentrated on diagnostic and pharmaceutical products.
<PAGE>
Abbott Laboratories and Subsidiaries
FINANCIAL REVIEW (CONTINUED)
Selling, general and administrative expenses increased 3.3 percent in 1994,
compared to increases of 8.5 percent in 1993, and 21.1 percent in 1992. The
1994 increase reflects a higher level of selling and marketing to support
pharmaceutical and nutritional new product launches. The 1993 increase reflects
a pretax charge to earnings of approximately $104 million for the settlement of
certain claims and legal proceedings in connection with the sale and marketing
of infant formula products. A similar amount was charged against earnings in
1994 for other pending and settled litigation. The 1992 increase resulted from
higher levels of selling and marketing expenditures for support of
pharmaceutical and diagnostic new product launches.
In June 1992, the Company voluntarily withdrew from the worldwide market
its quinolone anti-infective, temafloxacin, and recorded a pretax charge of
$215 million for costs associated with this withdrawal. In 1993, the Company
resolved various contingencies relative to the temafloxacin withdrawal and
recorded a pretax credit to earnings of $70 million for these items.
NON-OPERATING (INCOME) EXPENSE
Other (income) expense, net, includes net foreign exchange losses of $30.8
million in 1994, $41.3 million in 1993, and $93.2 million in 1992, including net
exchange (gains) losses on foreign currency contracts. These contracts were
purchased to manage the Company's exposure to foreign currency rate changes.
Other (income) expense, net, also includes the Company's share of the income
from joint ventures, primarily TAP Pharmaceuticals Inc., and, in 1993, the gain
on the sale of the Company's peritoneal dialysis product line.
In May 1992, the Company sold its 20 percent investment in Boston Scientific
Corporation for a pretax gain of $272 million. Net proceeds from the sale were
used toward the purchase of eight million shares of the Company's common stock.
<PAGE>
Abbott Laboratories and Subsidiaries
FINANCIAL REVIEW (CONTINUED)
TAXES ON EARNINGS
The Company's effective income tax rate for 1994 was 30.0 percent, compared to
28.0 percent for 1993 and 28.7 percent for 1992. The 1994 tax rate was impacted
by the reduction in tax incentive grants for Puerto Rico operations. The 1993
tax rate was impacted by the increase in the statutory U.S. Federal income tax
rate.
FINANCIAL CONDITION
CASH FLOW
The Company expects positive cash flow from operating activities to continue to
approximate or exceed the Company's capital expenditures and cash dividends.
DEBT AND CAPITAL
The Company has maintained its favorable bond ratings (AAA by Standard & Poor's
Corporation and Aa1 by Moody's Investors Service) and continues to have readily
available financial resources, including unused domestic lines of credit of
$300 million at December 31, 1994. These lines of credit support domestic
commercial paper borrowing arrangements.
<PAGE>
Abbott Laboratories and Subsidiaries
FINANCIAL REVIEW (CONTINUED)
In 1993, the Company filed a registration statement with the Securities and
Exchange Commission for the issuance of $500 million of senior debt securities
and issued $200 million of 5.6% notes due 2003. Net proceeds were used to
retire short-term borrowings and for the purchase of the Company's common
shares. The Company may issue up to an additional $300 million of debt
securities in the future under this registration statement.
During the last three years, the Company purchased 58,080,000 of its common
shares at a cost of $1.689 billion, including 6,630,000 shares of the 20,000,000
shares authorized for purchase by the Board of Directors in September 1994.
CAPITAL EXPENDITURES
Capital expenditures of $929 million in 1994, $953 million in 1993, and $1.0
billion in 1992, were principally for upgrading and expanding manufacturing and
research and development facilities in both segments and for administrative
support facilities. This level of capital expenditures is expected to continue
over the next few years, with a relatively equal proportion dedicated to each
segment.
BUSINESS ACQUISITION
In December, 1994 a United Kingdom subsidiary of the Company purchased the
operating assets of the nutritional business of Puleva Union Industrial y
Agroganadera, S.A. for $106 million. This acquisition will allow the Company to
strengthen its market position in Spain and in other countries in southern
Europe. Had this acquisition taken place on January 1, 1994, consolidated sales
and income would not have been significantly different from reported amounts.
<PAGE>
Abbott Laboratories and Subsidiaries
FINANCIAL REVIEW (CONTINUED)
LEGISLATIVE ISSUES
The Company's primary markets are highly competitive and subject to substantial
government regulation and the trend is toward more stringent regulation. The
Company expects debate to continue during 1995 at both the federal and the state
level over the availability, method of delivery, and payment for health care
products and services. The Company believes that if legislation is enacted, it
could have the effect of reducing prices, or reducing the rate of price
increases, for health and medical insurance and medical products and services.
International operations are also subject to a significant degree of government
regulation. It is not possible to predict the extent to which the Company or
the health care industry in general might be adversely affected by these factors
in the future. A more complete discussion of these factors is contained in
Item 1, Business, in the Annual Report on Form 10-K, which is available upon
request.
<PAGE>
Exhibit 13
Abbott Laboratories and Subsidiaries
SUMMARY OF SELECTED FINANCIAL DATA
Year Ended December 31
(Dollars in Millions Except Per Share Data)
<TABLE>
<CAPTION>
1994 1993 1992 1991 1990
-------- -------- -------- -------- --------
<S> <C> <C> <C> <C> <C>
Summary of Operations:
Net sales................................ $9,156.0 8,407.8 7,851.9 6,876.6 6,158.7
Cost of products sold.................... $3,993.8 3,684.7 3,505.3 3,140.0 2,910.1
Research and development................. $ 963.5 881.0 772.4 666.3 567.0
Selling, general and administrative...... $2,054.5 1,988.2 1,833.2 1,513.3 1,275.6
Operating earnings (1)................... $2,144.2 1,924.0 1,526.0 1,557.0 1,406.0
Interest expense......................... $ 49.7 54.3 53.0 63.8 91.4
Interest and dividend income............. $ (36.9) (37.8) (42.3) (45.1) (51.6)
Other (income) expense, net.............. $ (35.3) (35.7) 48.5 (5.9) 15.5
Earnings before taxes (2)................ $2,166.7 1,943.2 1,738.8 1,544.2 1,350.7
Taxes on earnings........................ $ 650.0 544.1 499.7 455.5 384.9
Earnings before extraordinary gain and
accounting change (3).................. $1,516.7 1,399.1 1,239.1 1,088.7 965.8
Earnings per common share before extra-
ordinary gain and accounting change (3) $ 1.87 1.69 1.47 1.27 1.11
Financial Position:
Working capital.......................... $ 400.5 490.6 449.2 661.7 460.0
Investment securities maturing
after one year......................... $ 316.2 221.8 270.6 340.2 314.0
Net property and equipment............... $3,920.9 3,511.0 3,099.2 2,662.1 2,375.8
Total assets............................. $8,523.7 7,688.6 6,941.2 6,255.3 5,563.2
Long-term debt........................... $ 287.1 306.8 110.0 125.1 134.8
Shareholders' investment................. $4,049.4 3,674.9 3,347.6 3,203.0 2,833.6
Return on shareholders' investment....... % 39.3 39.8 37.8 36.1 34.7
Book value per share..................... $ 5.04 4.48 4.00 3.77 3.30
Other Statistics:
Gross profit margin...................... % 56.4 56.2 55.4 54.3 52.7
Research and development to net sales.... % 10.5 10.5 9.8 9.7 9.2
Capital expenditures..................... $ 929.5 952.7 1,007.2 732.8 629.5
Cash dividends declared per common share. $ .76 .68 .60 .50 .42
Common shares outstanding (in thousands). 803,280 821,130 836,052 850,530 858,282
Number of common shareholders............ 86,324 82,947 75,703 56,541 49,827
Number of employees...................... 49,464 49,659 48,118 45,694 43,770
Sales per employee (in dollars).......... $185,105 169,312 163,180 150,492 140,706
Market price per share-high.............. $ 34 30 7/8 34 1/8 34 3/4 23 1/8
Market price per share-low............... $ 25 3/8 22 5/8 26 1/8 19 5/8 15 5/8
Market price per share-close............. $ 32 5/8 29 5/8 30 3/8 34 3/8 22 1/2
</TABLE>
<PAGE>
Abbott Laboratories and Subsidiaries
SUMMARY OF SELECTED FINANCIAL DATA (CONTINUED)
Year Ended December 31
(Dollars in Millions Except Per Share Data)
<TABLE>
<CAPTION>
1989 1988 1987 1986 1985
-------- -------- -------- -------- --------
<S> <C> <C> <C> <C> <C>
Summary of Operations:
Net sales................................ $5,379.8 4,937.0 4,387.9 3,807.6 3,360.3
Cost of products sold.................... $2,556.7 2,353.2 2,101.9 1,868.4 1,694.9
Research and development................. $ 501.8 454.6 361.3 284.9 240.6
Selling, general and administrative...... $1,100.2 1,027.2 919.0 775.7 687.7
Operating earnings....................... $1,221.1 1,102.0 1,005.7 878.6 737.1
Interest expense......................... $ 74.4 85.0 77.6 86.3 98.1
Interest and dividend income............. $ (73.8) (69.4) (56.7) (63.1) (76.0)
Other (income) expense, net.............. $ 26.3 30.9 47.7 36.7 20.5
Earnings before taxes.................... $1,194.2 1,055.5 937.1 818.7 694.5
Taxes on earnings........................ $ 334.4 303.5 304.5 278.2 229.2
Earnings before extraordinary gain and
accounting change...................... $ 859.8 752.0 632.6 540.5 465.3
Earnings per common share before extra-
ordinary gain and accounting change.... $ .96 .83 .69 .58 .48
Financial Position:
Working capital.......................... $ 719.2 913.3 668.7 585.4 891.9
Investment securities maturing
after one year......................... $ 300.0 285.7 292.9 254.2 281.1
Net property and equipment............... $2,090.2 1,952.6 1,741.6 1,543.3 1,368.5
Total assets............................. $4,851.6 4,825.1 4,385.7 3,865.6 3,468.4
Long-term debt........................... $ 146.7 349.3 271.0 297.4 443.0
Shareholders' investment................. $2,726.4 2,464.6 2,093.5 1,778.9 1,870.7
Return on shareholders' investment....... % 33.1 33.0 32.7 29.6 26.8
Book value per share..................... $ 3.08 2.74 2.31 1.94 1.96
Other Statistics:
Gross profit margin...................... % 52.5 52.3 52.1 50.9 49.6
Research and development to net sales.... % 9.3 9.2 8.2 7.5 7.2
Capital expenditures..................... $ 501.5 521.2 432.7 383.4 292.9
Cash dividends declared per common share. $ .35 .30 .25 .21 .175
Common shares outstanding (in thousands). 884,958 899,384 906,924 915,356 956,764
Number of common shareholders............ 45,361 46,324 45,822 40,387 34,923
Number of employees...................... 40,929 38,751 37,828 35,754 34,742
Sales per employee (in dollars).......... $131,441 127,403 115,995 106,495 96,721
Market price per share-high.............. $ 17 5/8 13 1/8 16 3/4 13 3/4 9
Market price per share-low............... $ 11 1/2 10 3/4 10 7 7/8 5
Market price per share-close............. $ 17 12 12 11 3/8 8 1/2
</TABLE>
<PAGE>
Abbott Laboratories and Subsidiaries
SUMMARY OF SELECTED FINANCIAL DATA (CONTINUED)
Year Ended December 31
(Dollars in Millions Except Per Share Data)
<TABLE>
<CAPTION>
1984
--------
<S> <C>
Summary of Operations:
Net sales................................ $3,104.0
Cost of products sold.................... $1,565.4
Research and development................. $ 218.7
Selling, general and administrative...... $ 643.4
Operating earnings ...................... $ 676.5
Interest expense......................... $ 94.2
Interest and dividend income............. $ (70.5)
Other (income) expense, net.............. $ 6.6
Earnings before taxes ................... $ 646.2
Taxes on earnings........................ $ 243.6
Earnings before extraordinary gain and
accounting change ..................... $ 402.6
Earnings per common share before extra-
ordinary gain and accounting change ... $ .42
Financial Position:
Working capital.......................... $ 743.3
Investment securities maturing
after one year......................... $ 327.4
Net property and equipment............... $1,236.6
Total assets............................. $3,170.4
Long-term debt........................... $ 470.2
Shareholders' investment................. $1,602.7
Return on shareholders' investment....... % 26.7
Book value per share..................... $ 1.67
OTHER STATISTICS:
Gross profit margin...................... % 49.6
Research and development to net sales.... % 7.0
Capital expenditures..................... $ 334.8
Cash dividends declared per common share. $ .15
Common shares outstanding (in thousands). 961,876
Number of common shareholders............ 34,963
Number of employees...................... 33,668
Sales per employee (in dollars).......... $ 92,193
Market price per share-high.............. $ 6 1/8
Market price per share-low............... $ 4 5/8
Market price per share-close............. $ 5 1/8
</TABLE>
<PAGE>
Abbott Laboratories and Subsidiaries
SUMMARY OF SELECTED FINANCIAL DATA (CONTINUED)
Year Ended December 31
(Dollars in Millions Except Per Share Data)
(1) In 1992, the Company recorded a pretax charge of $215 for costs associated
with the voluntary withdrawal of temafloxacin from the worldwide market.
In 1993, the Company resolved various contingencies related to the
withdrawal and recorded a pretax credit of $70.
(2) In 1992, the Company recorded a pretax gain of $272 on the sale of its
investment in Boston Scientific Corporation.
(3) In 1991, the Company realized an after-tax gain of $128, or $.15 per share,
on the sale of an investment. The Company also adopted Statement of
Financial Accounting Standards No. 106, which resulted in an after-tax
transition expense of $128, or $.15 per share.
<PAGE>
EXHIBIT 21
SUBSIDIARIES OF ABBOTT LABORATORIES
The following is a list of subsidiaries of the Company. Abbott
Laboratories is not a subsidiary of any other corporation.
State of
Domestic Subsidiaries Incorporation
- --------------------- -------------
Abbott Biotech, Inc. Delaware
Abbott Chemicals, Inc. Delaware
Abbott Health Products, Inc. Delaware
Abbott Home Infusion Services New York
of New York, Inc.
Abbott International Ltd. Delaware
Abbott International Ltd. of Puerto Rico Puerto Rico
Abbott Laboratories International Co. Illinois
Abbott Laboratories Pacific Ltd. Illinois
Abbott Laboratories (Puerto Rico)
Incorporated Puerto Rico
Abbott Laboratories Residential
Development Fund, Inc. Illinois
Abbott Laboratories Services Corp. Illinois
Abbott Manufacturing, Inc. Delaware
<PAGE>
- 2 -
Abbott Trading Company, Inc. Virgin Islands
Abbott Universal Ltd. Delaware
CMM Transportation, Inc. Delaware
Corporate Alliance, Inc. Delaware
Fuller Research Corporation Delaware
Laser Surgery Partnership Illinois
Medlase Holding Corporation Delaware
North Shore Properties, Inc. Delaware
Oximetrix de Puerto Rico, Inc. Delaware
Oximetrix, Inc. Delaware
Sequoia Turner Corporation California
Sequoia Turner Export Corporation California
Solartek Products, Inc. Delaware
Sorenson Research Co., Inc. Utah
Swan-Myers, Incorporated Indiana
TAP Pharmaceuticals Inc. Delaware
Tobal Products Incorporated Illinois
<PAGE>
- 3 -
Country
in Which
Foreign Subsidiaries Organized
- -------------------- ---------
Abbott Laboratories Argentina, S.A. Argentina
Abbott Australian Holdings Pty.
Limited Australia
Abbott Australasia Pty. Limited Australia
Abbott Gesellschaft m.b.H. Austria
Abbott Hospitals Limited Bahamas
Abbott Laboratories (Bangladesh) Ltd. Bangladesh
Abbott, S.A. Belgium
Abbott Ireland (formerly Abbott Ireland Limited) Bermuda
Abbott Laboratorios do Brasil Ltda. Brazil
Abbott Laboratories Limited Canada
Abbott Laboratories de Chile
Limitada Chile
Ningbo Asia-Pacific Biotechnology Ltd. China, People's
Republic of
Abbott Laboratories de Colombia, S.A. Colombia
Abbott Laboratories A/S Denmark
Abbott Laboratorios del Ecuador, S.A. Ecuador
<PAGE>
- 4 -
Abbott, S.A. de C.V. El Salvador
Abbott Investments Limited England
Abbott Laboratories Limited England
Abbott Laboratories Trustee
Company Limited England
Abbott France S.A. France
Abbott G.m.b.H. Germany
Abbott Laboratories (Hellas) S.A. Greece
FAMAR Panos A. Marinopoulos S.A. Greece
FAMAR Anonymous Industrial Co. of Greece
Pharmaceuticals and Cosmetics
Abbott Grenada Limited Grenada
Abbott Laboratorios, S.A. Guatemala
Abbott Laboratories Limited Hong Kong
Abbott Laboratories (India) Limited India
Abind Healthcare Private Limited India
P. T. Abbott Indonesia Indonesia
Abbott Laboratories, Ireland,
Limited Ireland
Abbott Ireland Ltd. Ireland
Abbott S.p.A. Italy
<PAGE>
- 5 -
Laboratori Abbott S.p.A. Italy
Abbott West Indies Limited Jamaica
Consolidated Laboratories Limited Jamaica
Abbott Japan K.K. Japan
Dainabot K.K. Japan
Abbott Korea Limited Korea
Abbott Middle East S.A.R.L. Lebanon
Abbott Laboratories (Malaysia) Sdn. Bhd. Malaysia
Abbott Laboratories de Mexico, S.A. de C.V. Mexico
Abbott Laboratories (Mozambique)
Limitada Mozambique
Abbott B.V. The Netherlands
Abbott Finance B.V. The Netherlands
Edisco B.V. The Netherlands
M & R Laboratoria B.V. The Netherlands
Abbott Laboratories (N.Z.) Limited New Zealand
Abbott Laboratories Nigeria Limited Nigeria
Abbott Laboratories (Pakistan) Limited Pakistan
Abbott Laboratories, C.A. Panama
<PAGE>
- 6 -
Abbott Overseas, S.A. Panama
Abbott Laboratorios S.A. Peru
Abbott Laboratories Philippines
l02 E. de los Santos Realty Co., Inc. Philippines
Union-Madison Realty Company, Inc. Philippines
Abbott Laboratorios, Limitada Portugal
Abbott Laboratories (Singapore)
Private Limited Singapore
Abbott Laboratories South Africa
(Pty.) Limited South Africa
Abbott Laboratories, S.A. Spain
Abbott Cientifica, S.A. Spain
Abbott Scandinavia A.B. Sweden
Abbott A.G. Switzerland
Abbott Laboratories S.A. Switzerland
Abbott Finance Company S.a r.l. Switzerland
Investment Services A.G. Switzerland
Overseas Services S.A. Switzerland
Abbott Laboratories Taiwan Limited Taiwan
Abbott Laboratories Limited Thailand
<PAGE>
- 7 -
Abbott Laboratuarlari Ithalat Ihracat
Ve Tecaret Anonim Sirketi Turkey
Abbott Laboratories Uruguay Limitada Uruguay
Abbott Laboratories, C.A. Venezuela
Medicamentos M & R, S.A. Venezuela
<PAGE>
EXHIBIT 23
CONSENT OF INDEPENDENT PUBLIC ACCOUNTANTS
As independent public accountants, we hereby consent to the incorporation by
reference of the following into the Company's previously filed S-8 Registration
Statements Numbers 2-79691 for the Abbott Laboratories 1981 Incentive Stock
Program, 33-4368 for the Abbott Laboratories 1986 Incentive Stock Program,
33-39798 for the Abbott Laboratories 1991 Incentive Stock Program, and 33-26685,
33-51585 and 33-56897 for the Abbott Laboratories Stock Retirement Plan and
Trust and into the Company's previously filed S-3 Registration Statement Number
33-50253:
1. Our supplemental report dated January 13, 1995 included in this
Annual Report on Form 10-K for the year ended December 31, 1994; and
2. Our report dated January 13, 1995 incorporated by reference in this
Annual Report on Form 10-K for the year ended December 31, 1994.
ARTHUR ANDERSEN LLP
Chicago, Illinois,
March 8, 1995
<TABLE> <S> <C>
<PAGE>
<ARTICLE> 5
<LEGEND>
THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM ABBOTT
LABORATORIES 1994 FORM 10-K AND IS QUALIFIED IN ITS ENTIRETY BY REFERENCE TO
SUCH FORM 10-K FILING.
</LEGEND>
<MULTIPLIER> 1,000
<S> <C>
<PERIOD-TYPE> 12-MOS
<FISCAL-YEAR-END> DEC-31-1994
<PERIOD-START> JAN-01-1994
<PERIOD-END> DEC-31-1994
<CASH> 290,272
<SECURITIES> 25,056
<RECEIVABLES> 1,597,448
<ALLOWANCES> 128,929
<INVENTORY> 1,018,191
<CURRENT-ASSETS> 3,876,328
<PP&E> 7,053,604
<DEPRECIATION> 3,132,754
<TOTAL-ASSETS> 8,523,724
<CURRENT-LIABILITIES> 3,475,866
<BONDS> 287,091
<COMMON> 505,170
0
0
<OTHER-SE> 3,544,230
<TOTAL-LIABILITY-AND-EQUITY> 8,523,724
<SALES> 9,156,009
<TOTAL-REVENUES> 9,156,009
<CGS> 3,993,831
<TOTAL-COSTS> 3,993,831
<OTHER-EXPENSES> 963,516<F1>
<LOSS-PROVISION> 18,123
<INTEREST-EXPENSE> 49,722
<INCOME-PRETAX> 2,166,690
<INCOME-TAX> 650,007
<INCOME-CONTINUING> 1,516,683
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 1,516,683
<EPS-PRIMARY> 1.87
<EPS-DILUTED> 1.85
<FN>
<F1>OTHER EXPENSES CONSIST OF RESEARCH AND DEVELOPMENT EXPENSES.
</FN>
</TABLE>
