Notes to Consolidated Financial Statements 14-16

Note 14 — Restructuring Plans

(dollars in millions)

In 2006 and 2005, Abbott management approved plans to realign its worldwide pharmaceutical manufacturing operations and selected domestic and international commercial and research and development operations in order to reduce costs. In 2006 and 2005, Abbott recorded pretax charges against earnings of approximately $210 and $256, respectively, reflecting the impairment of manufacturing facilities and other assets, employee severance and other related charges. Approximately $181 and $174, respectively, is classified as cost of products sold, $29 and $10, respectively, as research and development and $72, in 2005, as selling, general and administrative. Fair value for the determination of the amount of asset impairment was primarily determined based on a discounted cash flow method. An additional $70 and $14 were subsequently recorded in 2006 and 2005, respectively, relating to these restructurings, primarily for accelerated depreciation. As a result of product re-registration timelines required under manufacturing regulations in a number of countries, manufacturing related realignments are expected to continue into 2007.

The following summarizes the activity for restructurings:

		Employee- Related and Other			Asset Impairments			Total
2005 restructuring charges	$	191.7		$	63.8		$	255.5
Payments and impairments		(36.9	)		(63.8	)		(100.7	)
Accrued balance at December 31, 2005		154.8			—			154.8
2006 restructuring charges		117.7			92.6			210.3
Payments, impairments and other adjustments		(79.2	)		(92.6	)		(171.8	)
Accrued balance at December 31, 2006	$	193.3		$	—		$	193.3

Abbott expects to incur up to an additional $128 in future periods for restructuring plans, primarily for accelerated depreciation.

Note 15 — Subsequent Event

On January 18, 2007, Abbott announced that it had agreed to sell Its core laboratory diagnostics business, including Abbott Point of Care, to GE for $8.13 billion in cash. In the last decade, the laboratory diagnostics market has changed considerably. Innovation in this business will be increasingly driven by automation, system integration and a host of skills that Abbott believes GE can better offer. The sale is expected to close in the first half of 2007 and is subject to customary closing conditions, including regulatory approvals. Net sales for these businesses were approximately $2.7 billion in 2006. The carrying amount of the assets and liabilities included in the sale is estimated to be approximately $2.6 billion, comprised of trade receivables of approximately $750 million, inventories of approximately $650 million, other current assets of approximately $100 million, net property, plant and equipment of approximately $1.3 billion, intangible assets and goodwill of approximately $500 million, current liabilities of approximately $550 million and long-term liabilities of approximately $150 million. Abbott estimates tax expense of approximately $2.0 billion will be recorded on the gain.

Note 16 — Quarterly Results (Unaudited)

(dollars in millions except per share data)

		2006			2005			2004
First Quarter Net Sales	$	5,183.5		$	5,382.7		$	4,640.9
Gross Profit		3,013.8			2,860.1			2,567.4
Net Earnings		865.0			837.9			822.9
Basic Earnings Per Common Share (a)		.57			.54			.53
Diluted Earnings Per Common Share (a)		.56			.53			.52
Market Price Per Share — High		45.58			48.16			47.25
Market Price Per Share — Low		39.18			43.34			39.28
Second Quarter Net Sales	$	5,501.1		$	5,523.8		$	4,703.0
Gross Profit		3,112.5			2,892.0			2,634.3
Net Earnings (b)		612.2			877.1			634.3
Basic Earnings Per Common Share (a) (b)		.40			.56			.41
Diluted Earnings Per Common Share (a) (b)		.40			.56			.40
Market Price Per Share — High		43.61			49.98			44.67
Market Price Per Share — Low		40.55			45.98			39.43
Third Quarter Net Sales	$	5,573.8		$	5,384.0		$	4,681.7
Gross Profit		3,182.5			2,706.8			2,566.8
Net Earnings (c)		715.8			680.7			804.1
Basic Earnings Per Common Share (a) (c)		.47			.44			.52
Diluted Earnings Per Common Share (a) (c)		.46			.44			.51
Market Price Per Share — High		49.87			50.00			43.20
Market Price Per Share — Low		43.25			41.57			38.26
Fourth Quarter Net Sales	$	6,218.0		$	6,047.3		$	5,654.4
Gross Profit		3,352.4			3,237.8			3,027.3
Net (Loss) Earnings (d)		(476.2	)		976.4			974.6
Basic (Loss) Earnings Per Common Share (a) (d)		(.31	)		.63			.62
Diluted (Loss) Earnings Per Common Share (a) (d)		(.31	)		.63			.62
Market Price Per Share — High		49.10			44.36			47.63
Market Price Per Share — Low		45.41			37.50			40.25
(a) The sum of the quarters’ basic and diluted earnings per share for 2006 and 2004 do not add to the full year earnings per share amounts due to rounding. (b) Second quarter 2006 includes a pretax charge of $493 for acquired in-process and collaborations research and development. (c) Third quarter 2006 includes a pretax charge of $214 for acquired in-process research and development and 2005 includes pretax restructuring charges of $201. (d) Fourth quarter 2006 includes a pretax charge of $1,307 for acquired in-process and collaborations research and development.

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