Business Context and Reporting Period
This Form 8-K was filed by Abbott Laboratories on January 27, 2015. The report addresses the company's strategic restructuring, specifically the planned disposition of its developed markets branded generics pharmaceuticals business (agreement with Mylan Inc. in July 2014) and its animal health business (agreement with Zoetis in November 2014). Consequently, the results of these businesses are being reported as discontinued operations.
Key Financial Metrics
The filing does not provide specific numerical values for revenue, profit, cash flow, margins, debt, or liquidity. Instead, it introduces unaudited non-GAAP financial information for the first three quarters of 2014 (provided in Exhibit 99.1) that reflects the presentation of the divested businesses as discontinued operations. This data is intended to establish a historical baseline for Abbott's standalone operating results from continuing operations.
Material Changes and Adjustments
The primary material change is the reclassification of the branded generics and animal health businesses to discontinued operations. The filing details the use of non-GAAP financial measures which adjust for:
- Cost reduction initiatives.
- Integration and separation-related costs.
- Transaction-related costs.
- A philanthropic contribution to the Abbott Fund.
- Benefits of U.S. tax law changes.
- Tax expense associated with a one-time repatriation of ex-U.S. earnings.
- Tax expense adjustments for the resolution of various tax positions from previous years.
- Intangible amortization expense.
Guidance, Outlook, and Management Commentary
Management states that Abbott plans to evaluate future results from continuing operations against the new historical baseline provided in the non-GAAP information. The filing explicitly states that the financial information is for informational purposes only and does not purport to project Abbott's financial performance or cost structure for any future period. Management cautions investors to consider these non-GAAP measures in addition to, and not as a substitute for, GAAP financial measures.
Investor Verification Checklist
- Review Exhibit 99.1 for the specific unaudited non-GAAP financial figures for the first three quarters of 2014.
- Verify the reconciliation of non-GAAP information to historical consolidated results in accordance with U.S. GAAP.
- Consult the audited consolidated financial statements and "Management's Discussion and Analysis" in the Form 10-K for the year ended December 31, 2013, for full context.
- Confirm the status and expected closing dates of the agreements with Mylan Inc. and Zoetis.