Abbott Laboratories (ABT) 10-Q 6 Nov 09 2009 Q3 Quarterly report Financial data

Condensed Consolidated Statemen

Condensed Consolidated Statement of Earnings (USD $)
In Thousands, except Per Share data	3 Months Ended Sep. 30, 2009	3 Months Ended Sep. 30, 2008	9 Months Ended Sep. 30, 2009	9 Months Ended Sep. 30, 2008
Statement of Earnings
Net Sales	$7,761,336	$7,497,660	$21,974,580	$21,577,284
Cost of products sold	3,360,187	3,352,869	9,425,106	9,433,641
Research and development	675,736	680,360	1,996,685	1,957,180
Acquired in-process research and development				97,256
Selling, general and administrative	2,085,660	2,067,914	6,180,857	6,138,264
Total Operating Cost and Expenses	6,121,583	6,101,143	17,602,648	17,626,341
Operating Earnings	1,639,753	1,396,517	4,371,932	3,950,943
Interest expense	134,612	125,014	395,771	405,317
Interest (income)	(38,413)	(55,313)	(108,334)	(159,117)
(Income) from the TAP Pharmaceutical Products Inc. joint venture				(118,997)
Net foreign exchange loss (gain)	6	17,156	28,834	37,849
Other (income) expense, net	(327,827)	(63,376)	(1,315,231)	(384,189)
Earnings Before Taxes	1,871,375	1,373,036	5,370,892	4,170,080
Taxes on Earnings	391,008	288,424	1,163,783	825,587
Net Earnings	$1,480,367	$1,084,612	$4,207,109	$3,344,493
Basic Earnings Per Common Share (in dollars per share)	0.95	0.7	2.71	2.17
Diluted Earnings Per Common Share (in dollars per share)	0.95	0.69	2.7	2.14
Cash Dividends Declared Per Common Share (in dollars per share)	0.4	0.36	1.2	1.08
Average Number of Common Shares Outstanding Used for Basic Earnings Per Common Share (in shares)	1,546,291	1,545,639	1,546,493	1,543,605
Dilutive Common Stock Options and Awards (in shares)	6,192	18,091	6,956	16,081
Average Number of Common Shares Outstanding Plus Dilutive Common Stock Options and Awards (in shares)	1,552,483	1,563,730	1,553,449	1,559,686
Outstanding Common Stock Options Having No Dilutive Effect (in shares)	83,576	3,720	67,391	3,720

1_Condensed Consolidated Statem

Condensed Consolidated Statement of Cash Flows (USD $)
In Thousands	9 Months Ended Sep. 30, 2009	9 Months Ended Sep. 30, 2008
Cash Flow From (Used in) Operating Activities:
Net earnings	$4,207,109	$3,344,493
Adjustments to reconcile earnings to net cash from operating activities --
Depreciation	886,364	830,844
Amortization of intangible assets	655,793	585,430
Share-based compensation	307,498	286,191
Derecognition of a contingent liability associated with the conclusion of the TAP Pharmaceutical Products Inc. joint venture	(797,130)
Gain on dissolution of the TAP Pharmaceutical Products Inc. joint venture		(94,248)
Acquired in-process research and development		97,256
Trade receivables	510,249	(3,396)
Inventories	(86,251)	(116,950)
Other, net	(241,089)	832,417
Net Cash From Operating Activities	5,442,543	5,762,037
Cash Flow From (Used in) Investing Activities:
Acquisitions of property and equipment	(843,601)	(1,023,132)
Acquisitions of businesses, net of cash acquired	(1,518,903)	(250,000)
Proceeds from sales of Boston Scientific common stock		318,645
Purchases of other investment securities, net	(2,895,691)	(755,450)
Other	(3,392)	(25,369)
Net Cash (Used in) Investing Activities	(5,261,587)	(1,735,306)
Cash Flow From (Used in) Financing Activities:
Proceeds from (repayments of) short-term debt and other	2,281,073	(1,379,968)
Proceeds from issuance of long-term debt	3,000,000
Repayments of long-term debt	(2,483,176)	(400,000)
Purchases of common shares	(825,386)	(1,073,127)
Proceeds from stock options exercised, including tax benefit	321,819	935,061
Dividends paid	(1,795,684)	(1,615,743)
Net Cash From (Used in) Financing Activities	498,646	(3,533,777)
Effect of exchange rate changes on cash and cash equivalents	84,291	(138,995)
Net Increase in Cash and Cash Equivalents	763,893	353,959
Cash and Cash Equivalents, Beginning of Year	4,112,022	2,456,384
Cash and Cash Equivalents, End of Period	$4,875,915	$2,810,343

Condensed Consolidated Balance

Condensed Consolidated Balance Sheet (USD $)
In Thousands	Sep. 30, 2009	Dec. 31, 2008
Current Assets:
Cash and cash equivalents	$4,875,915	$4,112,022
Investments, primarily time deposits and certificates of deposit	3,819,237	967,603
Trade receivables, less allowances of $302,984 in 2009 and $263,632 in 2008	5,474,987	5,465,660
Inventories:
Finished products	2,234,032	1,545,950
Work in process	600,333	698,140
Materials	587,315	531,759
Total inventories	3,421,680	2,775,849
Prepaid expenses, deferred income taxes, and other receivables	3,824,023	3,721,425
Total Current Assets	21,415,842	17,042,559
Investments	1,110,767	1,073,736
Property and Equipment, at Cost	16,134,523	15,188,673
Less: accumulated depreciation and amortization	8,612,124	7,969,507
Net Property and Equipment	7,522,399	7,219,166
Intangible Assets, net of amortization	5,913,066	5,151,106
Goodwill	12,538,941	9,987,361
Deferred Income Taxes and Other Assets	1,345,805	1,945,276
Total Assets	49,846,820	42,419,204
Current Liabilities:
Short-term borrowings	4,042,619	1,691,069
Trade accounts payable	1,394,952	1,351,436
Salaries, dividends payable, and other accruals	5,831,367	5,787,118
Income taxes payable	1,184,353	805,397
Obligation in connection with conclusion of the TAP Pharmaceutical Products Inc. joint venture	36,105	915,982
Current portion of long-term debt	35,111	1,040,906
Total Current Liabilities	12,524,507	11,591,908
Long-term Debt	11,576,556	8,713,327
Post-employment Obligations and Other Long-term Liabilities	4,371,007	4,595,278
Shareholders' Investment:
Preferred shares, one dollar par value Authorized - 1,000,000 shares, none issued	0	0
Common shares, without par value Authorized - 2,400,000,000 shares Issued at stated capital amount - Shares: 2009: 1,608,466,460; 2008: 1,601,580,899	8,005,560	7,444,411
Common shares held in treasury, at cost - Shares: 2009: 61,728,034; 2008: 49,147,968	(3,321,727)	(2,626,404)
Earnings employed in the business	16,152,254	13,825,383
Accumulated other comprehensive income (loss)	498,968	(1,163,839)
Total Abbott Shareholders' Investment	21,335,055	17,479,551
Noncontrolling Interests in Subsidiaries	39,695	39,140
Total Equity	21,374,750	17,518,691
Total Liabilities and Shareholders' Investment	$49,846,820	$42,419,204

2_Condensed Consolidated Balanc

Condensed Consolidated Balance Sheet Parenthetical (USD $)
In Thousands, except Share data	Sep. 30, 2009	Dec. 31, 2008
Balance Sheet
Trade receivables allowances (in dollars)	$302,984	$263,632
Preferred shares, one dollar par value (in dollars per share)	$1	$1
Preferred shares authorized (in shares)	1,000,000	1,000,000
Preferred shares issued (in shares)	0	0
Common shares authorized (in shares)	2,400,000,000	2,400,000,000
Common shares issued (in shares)	1,608,466,460	1,601,580,899
Common shares held in treasury (in shares)	61,728,034	49,147,968

Basis of Presentation

Basis of Presentation
	9 Months Ended Sep. 30, 2009 USD / shares
Notes to Financial Statements
Basis of Presentation	Note 1 Basis of Presentation The accompanying unaudited, condensed consolidated financial statements have been prepared pursuant to rulesand regulations of the Securities and Exchange Commission and, therefore, do not include all information and footnote disclosures normally included in audited financial statements. However, in the opinion of management, all adjustments (which include only normal adjustments) necessary to present fairly the results of operations, financial position and cash flows have been made. It is suggested that these statements be read in conjunction with the financial statements included in Abbotts Annual Report on Form10-K for the year ended December31, 2008. Events that occurred after September30, 2009 through the date that these financial statements have been filed with the Securities and Exchange Commission were considered in the preparation of these financial statements. On January1, 2009, Abbott adopted SFAS No.160 Noncontrolling Interests in Consolidated Financial Statementsan amendment of ARB No.51 and, accordingly, noncontrolling interests in subsidiaries are presented as a component of total equity as of September30, 2009 and December31, 2008.

Supplemental Financial Informat

Supplemental Financial Information
	9 Months Ended Sep. 30, 2009 USD / shares
Notes to Financial Statements
Supplemental Financial Information	Note 2 Supplemental Financial Information Effective January1, 2009, Abbott adopted FSP EITF 03-6-1, Determining Whether Instruments Granted in Share-Based Payment Transactions Are Participating Securities, which requires that unvested restricted stock units that contain non-forfeitable rights to dividends be treated as participating securities and be included in the computation of earnings per share under the two-class method. Under the two-class method, net earnings are allocated between common shares and participating securities. Net earnings allocated to common shares for the three months and nine months ended September30, 2009 were $1.476 billion and $4.196 billion, respectively. Net earnings allocated to common shares in 2008 were not significantly different than net earnings. Other (income) expense, net, for the third quarter and first nine months of 2009 includes a $287 million gain from the settlement reached between Abbott and Medtronic,Inc. resolving all outstanding intellectual property litigation between the two parties. Other (income) expense, net, for the first nine months of 2009 includes the derecognition of a contingent liability of $797 million associated with the conclusion of the TAP joint venture as discussed in Note 9 and income from the recording of certain investments at fair value in connection with business acquisitions. Other (income) expense, net, for the third quarter and first nine months of 2009 and 2008 also includes ongoing contractual payments from Takeda associated with the conclusion of the TAP joint venture. In connection with the dissolution of the TAP joint venture, Abbott recorded a gain of approximately $95 million in the first nine months of 2008, which is included in Other (income) expense, net. Other (income) expense, net for the nine months ended September30, 2008 also includes a gain of approximately $52 million on the sale of an equity investment accounted for as an available-for-sale investment. Supplemental Cash Flow Information Other, net in Net cash from operating activities for 2009 and 2008 includes the effects of contributions to the main domestic defined benefit plan of $700 million and $200 million, respectively. Other, net in Net cash from operating activities for 2008 also reflects increased accruals for cost improvement initiatives and payroll related obligations. Purchases of other investment securities, net in 2009 and 2008 reflects the acquisition of short-term investments with original maturities of over three months. The components of long-term investments as of September30, 2009 and December31, 2008 are as follows: September30 December31 (dollars in millions) 2009 2008 Equity securities $ 171 $ 147 Note receivable from Boston Scientific, 4% interest, due in 2011 876 865 Other 64 62 Total $ 1,111 $ 1,074

Taxes on Earnings

Taxes on Earnings
	9 Months Ended Sep. 30, 2009 USD / shares
Notes to Financial Statements
Taxes on Earnings	Note 3 Taxes on Earnings Taxes on earnings reflect the estimated annual effective rates and include charges for interest and penalties. The effective tax rates are less than the statutory U.S. federal income tax rate principally due to the benefit of lower statutory tax rates and tax exemptions in several foreign taxing jurisdictions. In the second quarter of 2008, Abbotts federal income tax returns for 2004 and 2005 were settled, resulting in a net reduction of income taxes of approximately $30 million.

Litigation and Environmental Ma

Litigation and Environmental Matters
	9 Months Ended Sep. 30, 2009 USD / shares
Notes to Financial Statements
Litigation and Environmental Matters	Note 4 Litigation and Environmental Matters Abbott 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 and state remediation laws and is investigating potential contamination at a number of company-owned locations. Abbott has recorded an estimated cleanup cost for each site for which management believes Abbott has a probable loss exposure. No individual site cleanup exposure is expected to exceed $3million, and the aggregate cleanup exposure is not expected to exceed $15million. There are a number of patent disputes with third parties who claim Abbotts products infringe their patents. In April2007, New York University (NYU) and Centocor,Inc. filed a lawsuit in the Eastern District of Texas asserting that HUMIRA infringes a patent co-owned by NYU and Centocor and exclusively licensed to Centocor. In June2009, a jury found that Abbott had willfully infringed the patent and awarded NYU and Centocor approximately $1.67 billion in past compensatory damages. In October2009, the district court overturned the jurys finding that Abbotts infringement was willful, but denied Abbotts request to overturn the jurys verdict on validity, infringement, and damages. Abbott will appeal the jurys verdict. Abbott is confident in the merits of its case and believes that it will prevail on appeal. As a result, no reserves have been recorded in this case. Abbotts acquisition of Kos Pharmaceuticals Inc. resulted in the assumption of various cases and investigations and Abbott has recorded a reserve. There are several civil actions pending brought by individuals or entities that allege generally that Abbott and numerous pharmaceutical companies reported false or misleading pricing information relating to the average wholesale price of certain pharmaceutical products in connection with federal, state and private reimbursement. Civil actions have also been brought against Abbott, and in some cases other members of the pharmaceutical industry, by state attorneys general seeking to recover alleged damages on behalf of state Medicaid programs. In May2006, Abbott was notified that the U.S. Department of Justice intervened in a civil whistle-blower lawsuit alleging that Abbott inflated prices for Medicaid and Medicare reimbursable drugs. Abbott has settled a few of the cases and recorded reserves for its estimated losses in a few other cases, however, Abbott is unable to estimate the range or amount of possible loss for the remaining cases, and no loss reserves have been recorded for them. Many of the products involved in these cases are Hospira products. Hospira, Abbotts former hospital products business, was spun off to Abbotts shareholders in 2004. Abbott retained liability for losses that result from these cases and investigations to the extent any such losses both relate to the sale of Hospiras products prior to the spin-off of Hospira and relate to allegations that were made in such pending and future cases and investigations that were the same as allegations existing at the date of the spin-off. Within the next year, legal proceeding

Post-Employment Benefits

Post-Employment Benefits
	9 Months Ended Sep. 30, 2009 USD / shares
Notes to Financial Statements
Post-Employment Benefits	Note 5 Post-Employment Benefits Retirement plans consist of defined benefit, defined contribution, and medical and dental plans. Net cost for the three and nine months ended September30 for Abbotts major defined benefit plans and post-employment medical and dental benefit plans is as follows: DefinedBenefitPlans MedicalandDentalPlans ThreeMonths NineMonths ThreeMonths NineMonths Ended Ended Ended Ended September30 September30 September30 September30 (dollars in millions) 2009 2008 2009 2008 2009 2008 2009 2008 Service cost benefits earned during the period $ 61 $ 55 $ 181 $ 170 $ 10 $ 10 $ 33 $ 33 Interest cost on projected benefit obligations 89 86 277 256 19 21 71 69 Expected return on plans assets (128 ) (120 ) (383 ) (359 ) (6 ) (9 ) (18 ) (25 ) Net amortization 12 7 49 25 (2 ) (1 ) 7 5 Net Cost $ 34 $ 28 $ 124 $ 92 $ 21 $ 21 $ 93 $ 82 Abbott funds its domestic defined benefit plans according to IRS funding limitations. In the first quarters of 2009 and 2008, $700 million and $200 million, respectively, was contributed to the main domestic defined benefit plan and $13 million and $65 million, respectively, was contributed to the post-employment medical and dental benefit plans.

Comprehensive Income, net of ta

Comprehensive Income, net of tax
	9 Months Ended Sep. 30, 2009 USD / shares
Notes to Financial Statements
Comprehensive Income, net of tax	Note 6 Comprehensive Income, net of tax ThreeMonthsEnded NineMonthsEnded September30 September30 (dollarsinmillions) 2009 2008 2009 2008 Foreign currency translation gain (loss) adjustments $ 485 $ (690 ) $ 1,649 $ (257 ) Unrealized gains (losses) on marketable equity securities 8 1 11 (26 ) Amortization of net actuarial losses and prior service cost and credits 8 6 38 22 Net adjustments for derivative instruments designated as cash flow hedges 5 6 (35 ) 2 Other comprehensive income (loss), net of tax 506 (677 ) 1,663 (259 ) Net Earnings 1,480 1,085 4,207 3,344 Comprehensive Income $ 1,986 $ 408 $ 5,870 $ 3,085 Sept.30 Dec.31 2009 2008 Supplemental Comprehensive Income Information, net of tax: Cumulative foreign currency translation (gain) adjustments $ (2,389 ) $ (740 ) Cumulative unrealized (gains) on marketable equity securities (28 ) (17 ) Net actuarial losses and prior service cost and credits 1,863 1,901 Cumulative losses on derivative instruments designated as cash flow hedges 55 20

Segment Information

Segment Information
	9 Months Ended Sep. 30, 2009 USD / shares
Notes to Financial Statements
Segment Information	Note 7 Segment Information Abbotts principal business is the discovery, development, manufacture and sale of a broad line of health care products. Abbotts products are generally sold directly to retailers, wholesalers, hospitals, health care facilities, laboratories, physicians offices and government agencies throughout the world. Abbotts reportable segments are as follows: Pharmaceutical Products Worldwide sales of a broad line of pharmaceuticals. For segment reporting purposes, two pharmaceutical divisions are aggregated and reported as the Pharmaceutical Products segment. Nutritional Products Worldwide sales of a broad line of adult and pediatric nutritional products. Diagnostic Products Worldwide sales of diagnostic systems and tests for blood banks, hospitals, commercial laboratories and alternate-care testing sites. For segment reporting purposes, three diagnostic divisions are aggregated and reported as the Diagnostic Products segment. Vascular Products Worldwide sales of coronary, endovascular, vessel closure and other products. Abbotts underlying accounting records are maintained on a legal entity basis for government and public reporting requirements. Segment disclosures are on a performance basis consistent with internal management reporting. Intersegment transfers of inventory are recorded at standard cost and are not a measure of segment operating earnings. The cost of some corporate functions and the cost of certain employee benefits are charged to segments at predetermined rates that approximate cost. Remaining costs, if any, are not allocated to segments. For acquisitions prior to 2006, substantially all intangible assets and related amortization are not allocated to segments. The following segment information has been prepared in accordance with the internal accounting policies of Abbott, as described above, and are not presented in accordance with generally accepted accounting principles applied to the consolidated financial statements. NetSalestoExternalCustomers OperatingEarnings ThreeMonths NineMonths ThreeMonths NineMonths Ended Ended Ended Ended September30 September30 September30 September30 (dollarsinmillions) 2009 2008 2009 2008 2009 2008 2009 2008 Pharmaceutical Products $ 4,055 $ 4,121 $ 11,637 $ 12,098 $ 1,547 $ 1,513 $ 4,406 $ 4,400 Nutritional Products 1,386 1,262 3,851 3,606 241 200 636 576 Diagnostic Products 909 911 2,603 2,679 116 99 306 253 Vascular Products 666 636 1,968 1,578 147 91 445 107 Total Reportable Segments 7,016 6,930 20,059 19,961 2,051 1,903 5,793 5,336 Other 745 568 1,916 1,616 Net Sales $ 7,761 $ 7,498 $ 21,975 $ 21,577 Corporate functions and benefit plans costs (63 ) (70 ) (264 ) (280 ) Non-reportabl

Incentive Stock Programs

Incentive Stock Programs
	9 Months Ended Sep. 30, 2009 USD / shares
Notes to Financial Statements
Incentive Stock Programs	Note 8 Incentive Stock Programs In the first nine months of 2009, Abbott granted 1,726,900 stock options, 896,353 replacement stock options, 1,277,400 restricted stock awards and 5,468,672 restricted stock units under these programs. In addition, 2,899,411 options were issued in connection with the conversion of Advanced Medical Optics,Inc. options to Abbott options. At September30, 2009, approximately 220million shares were reserved for future grants, including 175 million shares authorized by Abbotts shareholders in April2009. Information regarding the number of options outstanding and exercisable at September30, 2009 is as follows: Outstanding Exercisable Number of shares 123,747,202 103,461,364 Weighted average remaining life (years) 6.1 5.6 Weighted average exercise price $ 49.77 $ 48.84 Aggregate intrinsic value (in millions) $ 354 $ 353 The total unrecognized share-based compensation cost at September30, 2009 amounted to approximately $285 million which is expected to be recognized over the next three years.

Conclusion of TAP Pharmaceutica

Conclusion of TAP Pharmaceutical Products Inc. Joint Venture
	9 Months Ended Sep. 30, 2009 USD / shares
Notes to Financial Statements
Conclusion of TAP Pharmaceutical Products Inc. Joint Venture	Note 9 Conclusion of TAP Pharmaceutical Products Inc. Joint Venture On April30, 2008, Abbott and Takeda concluded their TAP Pharmaceutical Products Inc. (TAP) joint venture, evenly splitting the value and assets of the joint venture. Abbott exchanged its 50 percent equity interest in TAP for the assets, liabilities and employees related to TAPs Lupron business. Beginning on May1, 2008, Abbott began recording U.S. Lupron net sales and costs in its operating results and no longer records income from the TAP joint venture. Abbott receives payments based on specified development, approval and commercial events being achieved with respect to products retained by Takeda and payments from Takeda based on sales of products retained by Takeda, which are recorded by Abbott as Other (income) expense, net as earned. Abbott also agreed to remit cash to Takeda if certain research and development events are not achieved on the development assets retained by Takeda. These amounts were recorded as a liability at closing in the amount of approximately $1.1 billion. Of the $1.1 billion, Abbott made tax-deductible payments of $83 million in 2009 and $200 million in 2008 and Abbott will make a tax-deductible payment of approximately $36 million in 2010. In the first quarter of 2009, events occurred resulting in the remaining payments not being required and the remaining liability in the amount of $797 million was derecognized and recorded as income in Other (income) expense, net. The 50 percent-owned joint venture was accounted for under the equity method of accounting. Summarized financial information for TAP for the nine months ended September30, 2008 are as follows: (dollars in millions) Net sales $ 853 Cost of sales 229 Income before taxes 356 Net earnings 238

Business Acquisitions

Business Acquisitions
	9 Months Ended Sep. 30, 2009 USD / shares
Notes to Financial Statements
Business Acquisitions	Note 10 Business Acquisitions In February2009, Abbott acquired the outstanding shares of Advanced Medical Optics,Inc. (AMO), a marketer of ophthalmic surgical technology and devices, as well as eye care solutions for approximately $1.4 billion in cash, net of cash held by AMO. Prior to the acquisition, Abbott held a small investment in AMO. Abbott acquired AMO to take advantage of increasing demand for vision care technologies due to population growth and demographic shifts and AMOs premier position in its field. Abbott acquired control of this business on February25, 2009 and the financial results of the acquired operations are included in these financial statements beginning on that date. The acquisition was financed with long-term debt. The preliminary allocation of the fair value of the acquisition is shown in the table below (dollars in billions). These allocations will be finalized when valuations are completed. Goodwill, non-deductible $ 1.7 Acquired intangible assets, non-deductible 0.9 Acquired in-process research and development 0.2 Acquired net tangible assets 0.4 Acquired debt (1.5 ) Deferred income taxes recorded at acquisition (0.3 ) Total preliminary allocation of fair value $ 1.4 Acquired intangible assets consist of established customer relationships, developed technology and trade names and will be amortized over 2 to 30 years (average of 15 years). Acquired in-process research and development will be accounted for as an indefinite lived intangible asset until regulatory approval or discontinuation. The net tangible assets acquired consist primarily of trade accounts receivable, inventory, property and equipment and other assets, net of assumed liabilities, primarily trade accounts payable, accrued compensation and other liabilities. Abbott incurred approximately $73 million of acquisition-related expenses in the first nine months of 2009 which are classified as Selling, general and administrative expense. In addition, subsequent to the acquisition, Abbott repaid substantially all of the acquired debt of AMO. In January2009, Abbott acquired Ibis Biosciences,Inc. (Ibis) for $175 million, in cash, to expand Abbotts position in molecular diagnostics for infectious disease. Including a $40 million investment in Ibis in 2008, Abbott has acquired 100 percent of the outstanding shares of Ibis. A substantial portion of the fair value of the acquisition has been allocated to goodwill and amortizable intangible assets, and acquired in-process research and development which will be accounted for as an indefinite lived intangible asset until regulatory approval or discontinuation. The investment in Ibis in 2008 resulted in a charge to acquired in-process research and development in the first nine months of 2008. In connection with the acquisition, the carrying amount of this investment was revalued to fair value in the first quarter of 2009 resulting in recording $33 million of income, which is reported as Other (income) expense, net. On October20, 2009, Abbott acquired 100 percent of Visiogen,Inc. for $400 million in cash, providing

Financial Instruments, Derivati

Financial Instruments, Derivatives and Fair Value Measures
	9 Months Ended Sep. 30, 2009 USD / shares
Notes to Financial Statements
Financial Instruments, Derivatives and Fair Value Measures	Note 11 Financial Instruments, Derivatives and Fair Value Measures Certain Abbott foreign subsidiaries enter into foreign currency forward exchange contracts to manage exposures to changes in foreign exchange rates for anticipated intercompany purchases by those subsidiaries whose functional currencies are not the U.S. dollar. These contracts, totaling $79 million and $129 million at September30, 2009 and December31, 2008, respectively, are designated as cash flow hedges of the variability of the cash flows due to changes in foreign exchange rates and are recorded at fair value. Accumulated gains and losses as of September30, 2009 will be included in Cost of products sold at the time the products are sold, generally through the next twelve months. Abbott enters into foreign currency forward exchange contracts to manage currency exposures for foreign currency denominated third-party trade payables and receivables, and for intercompany loans and trade accounts payable where the receivable or payable is denominated in a currency other than the functional currency of the entity. For intercompany loans, the contracts require Abbott to sell or buy foreign currencies, primarily European currencies and Japanese yen, in exchange for primarily U.S. dollars and other European currencies. For intercompany and trade payables and receivables, the currency exposures are primarily the U.S. dollar, European currencies and Japanese yen. At September30, 2009 and December31, 2008, Abbott held $7.0 billion and $8.3 billion, respectively, of such foreign currency forward exchange contracts. Abbott has designated foreign denominated short-term debt as a hedge of the net investment in certain foreign subsidiaries of approximately $587 million and approximately $585 million as of September30, 2009 and December31, 2008, respectively. Accordingly, changes in the fair value of this debt due to changes in exchange rates are recorded in Accumulated other comprehensive income (loss), net of tax. Abbott is a party to interest rate swap contracts totaling $5.5 billion and $2.5 billion at September30, 2009 and December31, 2008, respectively, to manage its exposure to changes in the fair value of fixed-rate debt due 2011 through 2019. These contracts are designated as fair value hedges of the variability of the fair value of fixed-rate debt due to changes in the long-term benchmark interest rates. The effect of the hedge is to change a fixed-rate interest obligation to a variable rate for that portion of the debt. Abbott records the contracts at fair value and adjusts the carrying amount of the fixed-rate debt by an offsetting amount. No hedge ineffectiveness was recorded in income in 2009 or 2008 for these hedges. The following table summarizes the amounts and location of certain derivative financial instruments as of September30, 2009 and December31, 2008: FairValue-Assets FairValue-Liabilities Sept.30 Dec.31 Sept.30 Dec.31 (dollarsinmillions) 2009 2008 BalanceSheetCaption 2009 2008 BalanceSheetCaption Interest rate swaps designated as fair value hedges $ 115 $ 170

Goodwill and Intangible Assets

Goodwill and Intangible Assets
	9 Months Ended Sep. 30, 2009 USD / shares
Notes to Financial Statements
Goodwill and Intangible Assets	Note12 Goodwill and Intangible Assets Abbott recorded goodwill of approximately $1.8 billion in 2009 related to the acquisitions of Advanced Medical Optics,Inc. and Ibis Biosciences,Inc. In connection with the dissolution of the TAP Pharmaceutical Products Inc. (TAP) joint venture in 2008, Abbott recorded approximately $350 million of goodwill. In the third quarter of 2008, Abbott paid $250 million to Boston Scientific as a result of the FDAs approval to market the Xience V drug-eluting stent in the U.S., resulting in an increase in goodwill. Goodwill related to the Ibis acquisition was allocated to the Diagnostic Products segment, goodwill related to the Boston Scientific payment was allocated to the Vascular Products segment and goodwill related to TAP was allocated to the Pharmaceutical Products segment. Foreign currency translation adjustments and other adjustments increased goodwill in the first nine months of 2009 and 2008 by approximately $725 million and $2 million, respectively. The amount of goodwill related to reportable segments at September30, 2009 was $6.5 billion for the Pharmaceutical Products segment, $206 million for the Nutritional Products segment, $385 million for the Diagnostic Products segment and $2.4 billion for the Vascular Products segment. There were no reductions of goodwill relating to impairments or disposal of all or a portion of a business. The gross amount of amortizable intangible assets, primarily product rights and technology was $10.7 billion as of September30, 2009 and $9.4 billion as of December31, 2008, and accumulated amortization was $4.8 billion as of September30, 2009 and $4.2 billion as of December31, 2008. The estimated annual amortization expense for intangible assets is approximately $851 million in 2009, $864 million in 2010, $850 million in 2011, $836 million in 2012 and $681 million in 2013. Amortizable intangible assets are amortized over 2 to 30years (average 11 years).

Restructuring Plans

Restructuring Plans
	9 Months Ended Sep. 30, 2009 USD / shares
Notes to Financial Statements
Restructuring Plans	Note 13 Restructuring Plans In 2008, Abbott management approved a plan to streamline global manufacturing operations, reduce overall costs, and improve efficiencies in Abbotts core diagnostic business. Additional charges of approximately $38 million were recorded in the first nine months of 2009 relating to this restructuring, primarily for accelerated depreciation and product transfer costs. Additional charges will occur through 2011 as a result of product re-registration timelines required under manufacturing regulations in a number of countries and product transition timelines. The following summarizes the activity for this restructuring: (dollars in millions) 2009 Accrued balance at January1 $ 110 Restructuring charges 1 Payments and other adjustments (10 ) Accrued balance at September30 $ 101 In 2009 and prior years, Abbott management approved plans to realign its worldwide pharmaceutical and vascular manufacturing operations and selected domestic and international commercial and research and development operations in order to reduce costs. Additional charges of $26 million and $61 million were subsequently recorded in the first nine months of 2009 and 2008, respectively, relating to these restructurings, primarily for accelerated depreciation and product transfer costs. The following summarizes the activity for these restructurings: (dollars in millions) 2009 2008 Accrued balance at January1 $ 105 $ 194 Restructuring charges 114 36 Payments and other adjustments (52 ) (85 ) Accrued balance at September30 $ 167 $ 145

Document and Entity Information

Document and Entity Information (USD $)
	9 Months Ended Sep. 30, 2009	Jun. 30, 2008
Document and Entity Information
Entity Registrant Name	ABBOTT LABORATORIES
Entity Central Index Key	0000001800
Document Type	10-Q
Document Period End Date	2009-09-30
Amendment Flag	false
Current Fiscal Year End Date	--12-31
Entity Well-known Seasoned Issuer	Yes
Entity Voluntary Filers	No
Entity Current Reporting Status	Yes
Entity Filer Category	Large Accelerated Filer
Entity Public Float		$78,771,016,188
Entity Common Stock, Shares Outstanding	1,546,738,426