Case: 1:16-cv-00651 Document #: 106-16 Filed: 05/08/18 Page 1 of 7 PageID #:3238
`Case: 1:16-cv—00651 Document #: 106-16 Filed: 05/08/18 Page 1 of 7 PageID #:3238
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`Case: 1:16-cv-00651 Document #: 106-16 Filed: 05/08/18 Page 2 of 7 PageID #:3239
` Abbott Laboratories to Create Global Public
`Hospital Products Company With $2.5 Billion in
`Sales
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`Publication info: PR Newswire ; New York [New York]22 Aug 2003: 1.
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`ProQuest document link
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`ABSTRACT (ABSTRACT)
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`Christopher B. Begley, the current president of [Abbott]'s U.S. hospital business, will become chief executive officer
`of the new company. Begley has spent the majority of his 30-year career in the hospital products business, is a 17-
`year veteran of Abbott, and has served in numerous management positions in Abbott's hospital and health
`systems businesses. David A. Jones, co-founder and chairman of Humana Inc., and a retired Abbott board
`member, will serve as the new company's chairman of the board.
`Abbott will retain the following proprietary pharmaceuticals, including related portions of the international hospital
`business: hospital operating room pharmaceuticals, such as Ultane(R)/ Sevorane(R) (sevoflurane), Anzemet(R)
`(dolasetron mesylate injection) and proprietary neuromuscular blockers; proprietary hospital pharmaceuticals
`such as Calcijex(R) (calcitriol injection), Zemplar(R) (paricalcitol injection), Simdax(R) (levosimendan); pain
`management products; and portions of the international hospital business, all of which will become part of
`Abbott's global pharmaceuticals business. Abbott will also retain Abbott Vascular Devices, including the Perclose,
`Biocompatibles and JOMED assets, and the recently acquired Spinal Concepts, which will continue to be operated
`through Abbott's Medical Products Group.
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`FULL TEXT
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` New Company Will Be a Leading Manufacturer of Hospital Products in United
`States; Abbott to Focus on Proprietary Technologies and Higher- Growth
`Platforms -
`ABBOTT PARK, Ill., Aug. 22 /PRNewswire-FirstCall/ -- Abbott Laboratories (NYSE: ABT) plans to create one of the
`largest manufacturers of hospital products in the United States by spinning off much of Abbott's core global
`hospital products business.
`The new, independent hospital products company will have approximately 14,000 employees worldwide, more than
`5,000 customers and a large portion of Abbott's core hospital products business, including the related
`international hospital business. The new company's business will include: medication delivery systems, such as
`electronic drug-delivery systems, infusion therapy and critical care products; generic pharmaceuticals, including
`acute-care injectables and other generic anesthetics; and other businesses, including intensive care
`pharmaceuticals such as Precedex(R) (dexmedetomidine HCl), Abbokinase(R) (urokinase), and Corlopam(R)
`(fenoldopam mesylate), as well as contract manufacturing. The new company, to be named later, will be
`headquartered in Lake Forest, Ill., north of Chicago.
`"The creation of the new hospital products company will provide greater value for Abbott shareholders in the
`coming years because it will enable Abbott to increase its focus and investment on higher- growth segments in our
`medical products business and sustain a technologically advanced, higher- growth medical and pharmaceutical
`products portfolio," said Miles D. White, chairman and chief executive officer, Abbott Laboratories.
`"At the same time, the new company will be able to focus on using its leading positions in the manufacture and
`supply of hospital products to provide technology solutions for the hospital customer and drive business
`performance. With enhanced strategic, financial and operational flexibility, the new company will have freedom to
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`pursue alliances and other expansion opportunities," said Mr. White.
`Christopher B. Begley, the current president of Abbott's U.S. hospital business, will become chief executive officer
`of the new company. Begley has spent the majority of his 30-year career in the hospital products business, is a 17-
`year veteran of Abbott, and has served in numerous management positions in Abbott's hospital and health
`systems businesses. David A. Jones, co-founder and chairman of Humana Inc., and a retired Abbott board
`member, will serve as the new company's chairman of the board.
`"I am pleased to head the new company, which brings proven leadership in the hospital products business," said
`Begley. "With $2.5 billion in global sales, we will have a nearly 70-year track record of delivering high-quality
`hospital products to our customers, and we will be the only company of our size focused solely on the hospital
`customer. We also have a committed team of talented, dynamic employees who will propel the new company
`forward, continuing to offer technology solutions for the hospital all while investing in future opportunities that will
`best serve our patients and customers and deliver greater value for shareholders."
`The spin-off is intended to take the form of a tax-free distribution to Abbott shareholders of a new publicly traded
`stock for the new company. Abbott has already submitted a letter ruling request to the Internal Revenue Service to
`confirm the tax-free nature of this transaction and will file an application to list the new company on the New York
`Stock Exchange. The expected stock distribution ratio will be determined at a future date. The transaction will not
`impact Abbott's dividend. The transaction is expected to be completed in the first half of 2004.
`Abbott will retain the following proprietary pharmaceuticals, including related portions of the international hospital
`business: hospital operating room pharmaceuticals, such as Ultane(R)/ Sevorane(R) (sevoflurane), Anzemet(R)
`(dolasetron mesylate injection) and proprietary neuromuscular blockers; proprietary hospital pharmaceuticals
`such as Calcijex(R) (calcitriol injection), Zemplar(R) (paricalcitol injection), Simdax(R) (levosimendan); pain
`management products; and portions of the international hospital business, all of which will become part of
`Abbott's global pharmaceuticals business. Abbott will also retain Abbott Vascular Devices, including the Perclose,
`Biocompatibles and JOMED assets, and the recently acquired Spinal Concepts, which will continue to be operated
`through Abbott's Medical Products Group.
`Abbott Laboratories is a global, broad-based health care company devoted to the discovery, development,
`manufacture and marketing of pharmaceuticals, nutritionals, and medical products, including devices and
`diagnostics. The company employs more than 70,000 people and markets its products in more than 130 countries.
`In 2002, the company's sales were $17.7 billion.
`Abbott's news releases and other information are available on the company's Web site at www.abbott.com .
`Abbott will webcast a live conference call regarding this announcement through its Investor Relations Web site at
`www.abbottinvestor.com at 7:45 a.m. Central time today, August 22, 2003. Slides are also posted on the site that
`provide an overview of the transaction.
`Anzemet(R) is a registered trademark of Aventis.
`Simdax(R) is a registered trademark of Orion. Private Securities Litigation Reform Act of 1995 -- A Caution
`Concerning
`Forward-Looking Statements
`Some statements in this news release may be forward-looking statements for purposes of the Private Securities
`Litigation Reform Act of 1995. Abbott cautions that these forward-looking statements are subject to risks and
`uncertainties that may cause actual results to differ materially from those indicated in the forward-looking
`statements. Economic, competitive, governmental, technological and other factors that may affect Abbott's
`operations are discussed in Exhibit 99.1 of our Securities and Exchange Commission Form 10-Q for the period
`ended June 30, 2003, and are incorporated by reference. Abbott undertakes no obligation to release publicly any
`revisions to forward-looking statements as the result of subsequent events or developments.
`QUESTIONS AND ANSWERS
`Q1) What is the strategic rationale for the spin-off?
`A1) The spin-off will provide Abbott shareholders with equity
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`investments in two separate companies that will now be able to focus
`exclusively on maximizing opportunities in their distinct markets.
`This is expected to ultimately generate stronger growth for both
`companies, delivering enhanced shareholder value.
`The new company will focus on providing technology solutions for the
`hospital market through its leading positions in the manufacture and
`supply of a broad range of hospital products. Through enhanced
`strategic, financial and operational flexibility, this company is
`well positioned to seize new opportunities to expand its businesses
`globally.
`Abbott will continue to build on a broad-based business model that
`provides a balance of leading pharmaceuticals and advanced
`technology medical products and nutritionals. This spin-off will
`allow Abbott to focus its investment on expanding these highly
`innovative, technologically advanced businesses.
`Q2) What will be included in the new company?
`A2) The new, independent hospital products company will represent a
`large portion of Abbott's core hospital products business, including
`the related international hospital business. The new company's
`business will include: medication delivery systems, such as
`electronic drug-delivery systems, infusion therapy and critical care
`products; generic pharmaceuticals, including acute-care injectables
`and other generic anesthetics; and other businesses, including
`intensive care pharmaceuticals such as Precedex, Abbokinase and
`Corlopam, as well as contract manufacturing.
`Abbott will retain: hospital operating room pharmaceuticals,
`proprietary hospital pharmaceuticals and pain management products,
`and portions of the international hospital business, all of which
`will become part of Abbott's global pharmaceuticals business.
`Abbott will also retain Abbott Vascular Devices, including the
`Perclose, Biocompatibles and JOMED assets, and the recently acquired
`Spinal Concepts, which will continue to be operated through Abbott's
`Medical Products Group.
`Q3) What are some of the key financial attributes of the new company?
`A3) The new company will consist of portions of the domestic and
`international hospital businesses, which have not previously been
`segregated for financial reporting purposes. We have therefore
`estimated historical combined financial results, which will be fully
`compiled and audited over the next several weeks. This information
`will be part of the SEC Form 10 filing which is targeted for the
`October-November 2003 timeframe.
`Based on current estimates, we can provide a general financial
`overview at this time. These estimates are before consideration of
`any costs required to run the new company as an independent entity.
`Annual sales for the new company as it exists within Abbott today
`are approximately $2.5 billion, with around 15 percent of those
`sales coming from outside the United States. As a percentage of
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`sales, the gross margin ratio has been in the mid-30s, R&D expense
`in the low single digits and SG&A expense of around 10 percent. Net
`income is more than $300 million with operating cash flow (after
`capital expenditures) of approximately $300 million. Net assets
`associated with this business are estimated at $2 billion. The new
`company will employ approximately 14,000 people worldwide, with
`nearly 4,800 of those employed outside the United States.
`As part of the separation, we are planning for the new company to
`raise debt, the proceeds of which will be paid to Abbott. The level
`of debt will be established with the objective of the new company
`carrying an investment-grade debt rating. The payment and level of
`cash dividends by the new company after the separation will be based
`upon a number of factors, including the results of operations, cash
`flow, and financial requirements of the new company. The
`declaration and payment of any dividends will be at the discretion
`of the new company's board of directors.
`Q4) What has been the growth rate for the product offering of the new
`company?
`A4) Sales growth for the new company's business components has been in
`the low- to mid-single digits. Going forward, based upon Abbott's
`current forecast, we would expect the new company to experience
`similar sales growth with margin growth somewhat higher before
`consideration of any costs required to run the new company as an
`independent entity. The new company's management team will be
`evaluating opportunities to increase profitability and growth, with
`an objective of increasing long-term value to shareholders.
`Q5) What is the expected impact of the spin-off on Abbott's key
`financial metrics?
`A5) The spin-off is expected to positively impact the growth and income
`statement profile of Abbott. The sales growth rate for Abbott
`should be enhanced with the exclusion of these products. We have
`estimated an improvement in Abbott's gross margin ratio of almost
`300 basis points above levels previously reported. And, on a
`percent of sales basis, we would expect SG&A and R&D to be higher
`and operating margin to be roughly equivalent to current levels.
`The Abbott dividend will not change as a result of this transaction.
`Q6) Does Abbott anticipate any one-time charges related to the spin-off?
`A6) Abbott expects to incur one-time charges during the periods
`preceding the spin-off, to be quantified at a later date.
`Q7) What is the estimated value of the spin-off company and what is the
`distribution ratio?
`A7) The new company's operations represent approximately 10 percent of
`Abbott's ongoing after-tax net income. We would expect the value of
`the new company's portion of Abbott stock to be reflective of this,
`as well as its growth prospects. The distribution ratio will be
`determined later in the process. We believe that improved
`management focus on both businesses will result in improved growth
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`and profitability.
`Q8) What is the timeline for the spin-off completion?
`A8) We are targeting an SEC Form 10 filing in the October- November 2003
`timeframe. We have filed a letter ruling request with the IRS and
`would expect a response from both the IRS and the SEC in the first
`quarter of 2004, with the distribution to be completed in the first
`half of 2004.
`Q9) Does the spin-off impact Abbott's ongoing earnings per share
`guidance for 2003?
`A9) No. SOURCE Abbott Laboratories
`References
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`Message No: Industry: HEALTH CARE/HOSPITALS; MEDICAL/PHARMACEUTICALS;
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`DETAILS
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`Company / organization:
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`Name: Abbott Laboratories; Ticker: ABT; NAICS: 325412, 325620, 334516, 339112,
`325413, 325411; DUNS: 00-130-7602
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`Publication title:
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`PR Newswire; New York
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`Pages:
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`Number of pages:
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`1
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`0
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`Publication year:
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`2003
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`Publication date:
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`Aug 22, 2003
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`Dateline:
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`Publisher:
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`Illinois
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`PR Newswire Association LLC
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`Place of publication:
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`New York
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`Country of publication:
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`United States, New York
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`Publication subject:
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`Business And Economics
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`Source type:
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`Wire Feeds
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`Language of publication:
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`English
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`Document type:
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`WIRE FEED
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`ProQuest document ID:
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`447696723
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`Document URL:
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`http://gatekeeper.chipublib.org/login?url=https://search.proquest.com/docview/447
`696723?accountid=303
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`Case: 1:16-cv-00651 Document #: 106-16 Filed: 05/08/18 Page 7 of 7 PageID #:3244
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`Copyright:
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`Copyright PR Newswire - NY Aug 22, 2003
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`Last updated:
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`2012-02-17
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`Database:
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`ABI/INFORM Collection,Global Newsstream
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