Exhibit 99.1
ABBOTT ENTERS INTO CONSENT DECREE WITH THE U.S. FOOD AND DRUG ADMINISTRATION
Abbott announced today that it has reached agreement with the U.S. Food and
Drug Administration to have a consent decree entered which will settle issues
involving Abbott's diagnostic manufacturing operations in Lake County,
Illinois. The decree is subject to court approval.
The decree requires the company to ensure its diagnostic manufacturing
processes in Lake County, Illinois, conform with the FDA's current Quality
System Regulation. The consent decree does not represent an admission by
Abbott of any violation of the Federal Food, Drug and Cosmetic Act or its
regulations. The products on the market continue to provide accurate results.
Abbott will not need to recall any diagnostic products as a result of this
decree.
The decree allows for the continued manufacture and distribution of medically
necessary diagnostic products made in Lake County, Illinois, such as assays
for hepatitis, retrovirus, cardiovascular disease, cancer, thyroid disorders,
fertility, drug monitoring, and congenital and respiratory conditions.
However, Abbott is prohibited from manufacturing or distributing certain
diagnostic products until Abbott ensures the processes in its Lake County,
Illinois, diagnostics manufacturing operations conform with the current
Quality System Regulation.
"This decree allows us to resolve these issues comprehensively and
systematically without disruption to patient care worldwide," said Miles
White, chairman and chief executive officer. "We will work closely and
cooperatively with the FDA to ensure our Lake County, Illinois, diagnostic
manufacturing operations are in full and complete conformance as rapidly as
possible."
Under the terms of the consent decree, among other actions, Abbott has agreed
to submit to the FDA a proposed master compliance and validation plan to
ensure its processes conform with the current Quality System Regulation. The
decree requires Abbott to ensure its facilities are in conformance with the
current Quality System Regulation within one year.
The consent decree will result in a one-time pretax charge of $168 million,
which includes charges associated with actions required by the FDA and a $100
million payment to the U.S. Government. This one-time charge will cause an
adjustment to previously announced third quarter results, as reflected in the
attached table. Fourth quarter earnings in 1999 may be negatively impacted by
as much as two cents per share and full-year 2000 earnings per share may be
negatively impacted up to 10 cents per share.
The consent decree does not affect Abbott's MediSense, i-STAT, hematology or
Murex products; the clinical chemistry products Abbott SPECTRUM, AEROSET and
ALCYON; or any other Abbott divisions or products. The consent decree allows
Abbott to export diagnostic products and components for sale and distribution
outside the United States if they meet the export requirements of the Federal
Food, Drug and Cosmetic Act.
Abbott Laboratories is a global, diversified health care company devoted to
the discovery, development, manufacture and marketing of pharmaceutical,
diagnostic, nutritional and hospital products. The company employs 56,000
people and markets its products in more than 130 countries. In 1998, the
company's sales and net earnings were $12.5 billion and $2.3 billion,
respectively, with diluted earnings per share of $1.51. Abbott's news
releases and other information are available on the company's Web site at
http://www.abbott.com.
ANY STATEMENTS MADE IN THIS RELEASE THAT DEAL WITH INFORMATION THAT IS NOT
HISTORICAL, SUCH AS STATEMENTS CONCERNING ABBOTT'S ANTICIPATED FINANCIAL
RESULTS, ARE FORWARD-LOOKING STATEMENTS. AS SUCH, THEY ARE SUBJECT TO THE
OCCURRENCE OF MANY EVENTS OUTSIDE ABBOTT'S CONTROL AND TO VARIOUS RISK
FACTORS THAT COULD CAUSE RESULTS TO DIFFER MATERIALLY FROM THOSE EXPRESSED IN
SUCH FORWARD-LOOKING STATEMENTS. THE RISK FACTORS ARE DESCRIBED IN ABBOTT'S
REPORTS FILED WITH THE SECURITIES AND EXCHANGE COMMISSION INCLUDING FORM 10-K
AND INCLUDE, WITHOUT LIMITATION, THE RISK FACTORS ASSOCIATED WITH COMPLYING
WITH THE CONSENT DECREE AND RETURNING PRODUCTS TO MARKET SUCCESSFULLY.
Abbott Laboratories and Subsidiaries
Consolidated Statement of Earnings
Third Quarter Ended September 30, 1999
Third Quarter
As Previously As
Reported Charge Adjusted
Net Sales $3,120,662,000 $3,120,662,000
Cost of products sold 1,416,543,000 $ 168,100,000 1,584,643,000
Research & development 276,240,000 276,240,000
Selling, general
& administrative 683,631,000 683,631,000
Total Operating Cost
& Expenses 2,376,414,000 168,100,000 2,544,514,000
Operating Earnings 744,248,000 (168,100,000) 576,148,000
Net interest expense 19,545,000 19,545,000
Net foreign exchange
(gain) loss 3,441,000 3,441,000
(Income) from
TAP Holdings Inc.
joint venture (109,925,000) (109,925,000)
Other (income)/
expense, net 15,689,000 15,689,000
Earnings Before Taxes 815,498,000 (168,100,000) 647,398,000
Taxes on earnings 228,339,000 (47,068,000) 181,271,000
Net Earnings $ 587,159,000 $(121,032,000) $ 466,127,000
Basic Earnings
Per Common Share $ 0.39 $ (0.08) $ .31
Diluted Earnings
Per Common Share $ 0.38 $ (0.08) $ .30
Average Number of
Common Shares
Outstanding Used
for Basic Earnings
Per Common Share 1,521,521,000 1,521,521,000
Average Number of
Common Shares
Outstanding Plus
Dilutive Common
Stock Options 1,539,633,000 1,539,633,000
Tax Rate 28.0% 28.0%
Abbott Laboratories and Subsidiaries
Consolidated Statement of Earnings
Nine Months Ended September 30, 1999
Nine Months Ended September 30
As Previously As
Reported Charge Adjusted
Net Sales $9,662,859,000 $9,662,859,000
Cost of products sold 4,276,316,000 $ 168,100,000 4,444,416,000
Research & development 858,361,000 858,361,000
Selling, general
& administrative 2,051,631,000 2,051,631,000
Total Operating Cost
& Expenses 7,186,308,000 168,100,000 7,354,408,000
Operating Earnings 2,476,551,000 (168,100,000) 2,308,451,000
Net interest expense 67,812,000 67,812,000
Net foreign exchange
(gain) loss 21,922,000 21,922,000
(Income) from
TAP Holdings Inc.
joint venture (277,830,000) (277,830,000)
Other (income)/
expense, net 30,775,000 30,775,000
Earnings Before Taxes 2,633,872,000 (168,100,000) 2,465,772,000
Taxes on earnings 737,484,000 (47,068,000) 690,416,000
Net Earnings $1,896,388,000 $(121,032,000) $1,775,356,000
Basic Earnings
Per Common Share $ 1.25 $ (0.08) $ 1.17
Diluted Earnings
Per Common Share $ 1.23 $ (0.08) $ 1.15
Average Number of
Common Shares
Outstanding Used
for Basic Earnings
Per Common Share 1,519,765,000 1,519,765,000
Average Number of
Common Shares
Outstanding Plus
Dilutive Common
Stock Options 1,541,008,000 1,541,008,000
Tax Rate 28.0% 28.0%