Fitch Rates Abbott's $4B Senior Notes 'AA-'

CHICAGO--(BUSINESS WIRE)--May 9, 2006--Fitch has assigned an 'AA-' rating to Abbott Laboratories' (Abbott) proposed public issuance of $4 billion of senior notes. The notes will be offered in three tranches with three-year, five-year, and 10-year terms. The Rating Outlook is Stable.

Abbott's ratings are:

-- Issuer Default Rating (IDR) 'AA-';

-- Bank loan debt 'AA-';

-- Senior unsecured debt 'AA-';

-- Commercial paper rating 'F1+'.

Proceeds from the proposed senior unsecured debt are expected to be used to pay down short-term debt used to finance the purchase of Guidant Corporation's (Guidant) vascular intervention and endovascular solutions businesses. Abbott's credit profile is supported by attractive growth of its well-diversified product portfolio with offerings in human pharmaceuticals, medical technology, adult and pediatric nutritionals, and clinical laboratory diagnostics. Revenues grew 11.6% for the latest 12-month period (LTM) ending March 31, 2006, supported by strong growth of Humira offset by generic competition for Synthroid and the immediate-release formulation of Biaxin and restructuring of the distribution agreement with Boehringer Ingleheim. The rating also reflects the company's solid liquidity and a history of successful acquisitions.

Abbott's liquidity is derived from a total of $2.4 billion of cash and marketable securities (mainly located domestically after the repatriation of $4.3 billion of foreign earnings at a reduced tax rate under the Jobs Creation Act of 2004 during 2005), a $3 billion commercial paper program, and approximately $2.82 billion of free cash flow generation ($5.69 billion of cash flow from operating activities less $1.17 billion of capital spending less $1.7 billion of dividend payments) for the LTM period at the end of the first quarter of 2006. Leverage (total debt to LTM EBITDA) was 1.1 times (x) and interest coverage (LTM EBITDA to interest incurred) was 17.5x at the end of the first quarter of 2006.

Fitch's rating definitions and the terms of use of such ratings are available on the agency's public site, www.fitchratings.com. Published ratings, criteria and methodologies are available from this site, at all times. Fitch's code of conduct, confidentiality, conflicts of interest, affiliate firewall, compliance and other relevant policies and procedures are also available from the 'Code of Conduct' section of this site. The issuer did not participate in the rating process other than through the medium of its public disclosure.