Good morning and thank you for standing by. Welcome to Abbott's Fourth Quarter 2015 Earnings Conference Call. All participations will be able to listen only until the question-and-answer portion of this call. [Operator Instructions] This call is being recorded by Abbott. With the exception of any participants' questions asked during the question-and-answer session, the entire call, including the question-and-answer session, is material copyrighted by Abbott. It cannot be recorded or rebroadcast without Abbott's expressed written permission. I would now like to introduce Mr. Scott Leinenweber, Vice President, Investor Relations.

Good morning and thank you for joining us. With me today are Miles White, Chairman of the Board and Chief Executive Officer, Tom Freyman, Executive Vice President, Finance and Administration, and Brian Yoor, Senior Vice President, Finance and Chief Financial Officer. Miles will provide opening remarks, and Brian and I will discuss our performance in more detail. Following our comments, Miles, Tom, Brian, and I will take your questions. Before we get started, some statements made today may be forward looking for purposes of the Private Securities Litigation Reform Act of 1995 including the expected financial results for 2016. Abbott cautions that these forward-looking statements are subject to the risk 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 Item 1A, Risk Factors, to our annual reports on Securities and Exchange Commission Form 10-K for the year ended December 31, 2014. Abbott undertakes no obligation to release publicly any revisions to forward-looking statements as a result of subsequent events or developments except as required by law. Please note that fourth quarter financial results and guidance provided on today's call for sales, EPS and line items of the P&L will be for continuing operations only. On today's conference call, as in the past, non-GAAP financial measures will be used to help investors understand Abbott's ongoing business performance. These non-GAAP financial measures are reconciled with the comparable GAAP financial measures in our earnings release and regulatory filings from today, which will be available on our website at abbott.com. Our commentary on sales growth refers to operational growth, which excludes the impact of foreign exchange unless otherwise noted. With that, I will now turn the call over to Miles.

Thanks, Scott. Good morning. Today I’ll discuss our results for 2015, as well as our outlook for 2016. For 2015 we achieved our financial objectives for the year reflecting strong double digit EPS growth when excluding the impact foreign exchange and almost 9% growth on an absolute basis, excluding the same sales grew over 9% including strong double digit growth in emerging markets and we continued to expand our growth and operating margins. Overall, we made good progress against our strategic objectives. I would like to highlight few two key achievements from the past year. In established pharmaceuticals, we completed the sale of our developed markets business and successfully integrated CFR Pharmaceuticals in Latin America and Veropharm in Russia. The integration of CFR provides the scale, manufacturing and portfolio of breadth to establish Abbott as a top 10 branded generics company in Latin America and actually number one in many of the markets in Latin America. And Veropharm had a similar impact in Russia positioning Abbott among the top branded generics companies in this key market. We also made significant progress improving our commercial execution, expanding our local product portfolios and driving awareness of our Abbott brand with patients, physicians and pharmacies. In Nutrition, we achieved double digit growth and share expansion in China with the portfolio of Pediatric Nutrition products that are customized to meet local preferences. In the U.S. we expanded our product offering in the tolerance and up-age categories with the portfolio of non-GMO products providing parents with additional formula choices. Our international adult nutrition business achieved another year of strong growth as we continue to bold and shape this category globally. And we achieved another year of significant margin expansion. In Medical Devices, MitraClip achieved sales of more than $250 million and we further solidified our…

Okay, thanks Miles. Today, we reported fourth quarter adjusted earnings per share from continuing operation of $0.62 in line with our previous guidance range. Sales for the quarter increased 4.9% on an operational basis, driven by strong performances in our branded generics, diagnostics and adult nutrition businesses. Reported sales declined 3.1% in the quarter including an unfavorable impact of 8% from foreign exchange. The negative impact from exchange was approximately 1.5 percentage points higher than previous expectations due to the continued strengthening of the U.S. dollar relative to several currencies in the quarter. The fourth quarter adjusted gross margin ratio was 58.2% of sales, up 130 basis points over 2014, driven by continued margin expansion in diagnostics and nutrition. In the quarter, adjusted SG&A was 29.6% of sales and adjusted R&D investment was 7% of sales, reflecting investments in development programs across the businesses including several next generation diagnostic system platforms. The fourth quarter adjusted tax rate was somewhat lower to previous forecast due to inclusion of the impact of U.S. tax legislation inactive in December. Overall, as we look at 2015, we achieved our financial objectives for the year despite difficult environment. And we delivered strong underlying growth, while continue to make significant progress on our margin initiatives. Turning to our 2016 outlook, today we issued guidance for adjusted earnings per share of $2.10 to $2.20. While this forecast reflects another year strong double-digit underlying earnings growth, foreign exchange in the Venezuela dynamics that Miles discussed are impacting our 2016 absolute growth outlook. Let me take a moment to provide more detail on each of these items. As you know in the third quarter of 2015, several emerging market currencies weakened rapidly relative to the U.S. dollar and have continued to steadily weaken since that time. Based on the…

Thanks, Brian. Today, I'll provide an overview of the fourth quarter sales performance in 2016 outlook by business. As I mentioned earlier, my comments will focus on operational sales growth. I'll start with diagnostics where sales increased 7% in the quarter. In core laboratory diagnostics, international sales increase nearly 8% driven by double digit growth in emerging market. And in the U.S., we continue to achieve above market performance with growth of more than 6%. The molecular diagnostic sales grew 3%, led by strong growth in our core focus area of infectious disease testing. As expected, U.S. sales were impacted by the planned scale down of our genetic business. And lastly, point of care diagnostics where sales increased nearly 9% in the quarter. U.S. and international growth were driven by continued market adoption of i-STAT, our hand-held device which provides critical information at the patient's side helping healthcare providers choose the best treatments in a variety of care setting when minutes matter the most. In 2016, we'll continue to leverage our best-in-class model and provide customers with a full offering of solutions to help them most efficiently operate their businesses while improving care. We expect global diagnostics sales to increase mid single-digits on an operational basis with both the full year and the first quarter of 2016. In Nutrition, global sales increased 5.5% sales in the quarter. Pediatric nutrition sales increased approximately 4% and were led by continued market uptake of Eleva in China and Similac Advance non-GMO in the U.S. As expected, international pediatric nutrition were all impacted by a difficult comparisons versus the prior year when sales increased more than 25% driven by market uptake of product launches in China and South East Asia. In adult nutrition, sales were led by 10% international growth, including double digits operational…

[Operator Instructions] Our first question comes from Mr. Mike Weinstein from JPMorgan. Sir, your line is open.

Let's start with Venezuela and maybe you could just give us a bit more in terms of what you're doing, one, with your operations there; and two, the change you're assuming it sounds like you're marking to market the business basically at different exchange rates. So can you just walk through financially what you're doing? And again, why that's blowing the business as much as it is in 2016?

Hi, Mike. This is Tom. I don't – I’ll talk about what's going on for us in the country, but I want to make it very clear that we're not changing our exchange rate assumptions for the country. This is really about what's happening to the market through economic activity of those markets, and really demand and ability to pay for products. The oil price was high at the beginning of the year, it declined throughout the year and the top markets became more challenging and we would talk as Scott talked about and Brian talked about significantly lower volume as we exited 2015. And as Miles indicated in his remarks with price controls, very high inflation. And when we look at the remainder of 2016 going forward, we see very challenging conditions and much lower volumes in the country. So we're focused on supplying the market, more focused on medically critical products. Our products are important to the market, but just the profitability of what we would expect for the year from that activity is a very low contribution compared to what we experienced largely in the first half of 2015. So that is a situation and I think it will basically take some volatility out of our forecast, but reflects the reality of the market we're dealing in.

So two more fundamental follow-up. So one, the Pediatric Nutritional business had a tougher comp in the fourth quarter internationally on optimum product launches and particularly in China. Can you just separate out for us the tough comp versus the underlying growth and degree to what you think you're seeing maybe slowdown in any of your markets?

Sure Mike. I would say in international, as particularly and the slow down we’re seeing on the surface, nothing has changed about our underlying momentum here. If you go back to fourth quarter of 2014, that was the period where we were launching our innovations particularly, Eleva and QINTI into the market. And as you know, Eleva has had great success in the portion of the market that it's playing in. So there is a little bit of a tougher comparison, fourth quarter '15 over '14. If you blend it out in China there on the average, Nutrition business grew over the mid teens for the full year. And so that's more reflective of the performance for this business for a year and it's still ongoing. We still have the momentum there. We still have plans for further opportunities of how we compete and how we've been priced to the various channels. So nothing has changed about the momentum and it continues in the 2016.

So Miles bringing you in here. So all this discussion, the underlying business if we can pull out Venezuela and we can pull out may be one or two other smaller items. The underlying business hasn't changed, but the environment has changed in some places and the price update for prices for assets has changed. Have your priorities on the capital allocation and the M&A question, have your priorities changed at all in the last six months?

No. Let me go back, Michael and paraphrase that for you. The frustrating thing and I think it's frustrating for a lot of multinational companies that are U.S. based is the underlying market dynamics remain strong in a lot of places. Every morning we get up, we see CNBC. Everybody brings their hands about China, but whether China is 7% growth or 6% growth, 6% is way bigger than the rest of the world. It's a fundamentally strong market for us as our practically all of these emerging markets. Now, the oil-based economy, the ones we were extremely dependent on oil, take Venezuela – okay, there are different stories. And the volatility, unreliability and sustainable market there is different than just about anywhere in the world. So okay, there was an outlier. And every year there is going to be some outliers somewhere. And I think if you're in a broad mix of currencies and a broad mix of countries and geographies as a multinational, somewhere something is not going to be great. But the fundamentals of the markets particularly for us in healthcare are good. And yes, translating that back during this period it's unusual, it's frustrating. I mean none of this have seen this kind of oil price in couple of decades, none of us have seen this kind of currency pile on in a long time. So okay, that said, we all know that every multinational CEO has said in the last two weeks in his earnings calls and we all see it, we all experience it. Now, going back to your next question, has my expectation of our underlying momentum changed? No. Has my priority changed in terms of M&A activity? I'll tell you one thing about it that's changed a little bit. We've been looking…

Listen, I have follow-ups, but I'm going to let some others jump in. Thanks, Miles.

Our next question comes from Ms. Kristen Stewart from Deutsche Bank.

Good morning. Thanks for taking my questions. Just to kind of follow up, I guess, along Mike's line of thinking, I know you talked a lot about more from a geographic point of view. I was just wondering if you could talk more about the balance of Abbott from more of a business mix point of view. Has the way that you've looked at the mix of Abbott from that perspective changed over the last kind of year or so, really since the spin of AbbVie? And if I look at the growth rates for this year, medical devices, the growth operationally was 1.5. If that division were to be separated out, I just look at Abbott as - it would be even stronger as a company and how do you think about that franchise and strengthening it, or just kind of the composition of Abbott today and the future.

Well I think I’d start with that would be all about strengthening rather than separating out, but we're committed to all four major segments that we have in the company. One of the important things about those segments is they are in relative balance in terms of size, sales, profitability et cetera. They have all got you now somewhat different dynamics and they have also got a lot in common, because the EPD and nutrition globally, they share a lot of channel dynamics and so forth devices, diagnostics, I mean there is a lot of different things going on with these businesses. But I’d say first is balance matters in the mix with the investment identity of the company for a investor because we want to be reliable performer steadily over time. And as you know our proprietary pharma business avaricely grew to a terrific size and based on one product in particular. And so we were out of balance as a company and so we split into two companies. But we got balance in these businesses. That said, you know I’d say from an M&A perspective and the places where we are looking to be perfectly fair, we are not looking to do anything with regard to M&A in our nutrition business today. I mean if something came along opportunistically we would look at everything but the fact is that business is - that’s an organic business for us and all of our performance objectives and things we want to do in the nutrition business globally are organically driven and we think we’re in a good position for all of that. So the kind of investments that we make in those businesses and we’re a capital plant et cetera in the right market for the world and managing supply…

Okay. And then just thinking about -- I know one of the areas that you've highlighted earlier was building out the capacity for FreeStyle Libre. What about the U.S. timing for that and is that going to be a consumer product, or is that just going to be more of the physician product?

Well, I think it depends on what timeframe you're asking. And it's going to be both, eventually. I mean, right now, I want the fastest regulatory path possible. This product has been exceptionally well received in Europe. Spectacularly well received I should say. Consumers and users and diabetics and so forth have just given us an over whelming positive response. So that's good and we're just in the process now to releasing all the new capacity we invested in, in the last year. And we got the next way to capacity expansion underway. So it's kind of one of those great challenges where I want to play from my own perspective. The diabetic community in United States wants this product. And it's a regulatory pacing issue here. It wasn't so in Europe. And I would say no more about that, but I'm in a hurry because we know the value of the product. We know the reception of the product. We know what the physician community reception of the product is. We know all of that and the value proposition of this product on top of the medical proposition is just fabulous. I have great expectations for it. I'm excited about it. And there is sort of two dimensions to that. One is enough capacity, which for a while we'll have and then we'll have another tranche coming on. And the regulatory process for how fast we can go.

Any sense on when the first product could hit market in the U.S.?

I'm one of those superstitious people that no matter what I tell, I'm going to be wrong. And so I don't want to jinx anything. So I'll say, I would optimistically hope towards this year, but I don't know.

Okay, fair enough. Thank you very much for question.

Our next question comes from Glenn Novarro of RBC Capital Markets. Your line is open.

Hi, good morning, guys. Miles, first question is on the Mylan stake. I'm wondering if you'll give us an update on this stake. What you're thinking is -- in the past you've said you're not going to be a long-term holder. Are you any closer to selling that stake? And will the sale be associated with some M&A? Thanks.

Well, good news. You're right. We're not going to be a long term shareholder of Mylan. But the good news is, we don't have to sell it right away. We have the freedom to sell it. We just don't have an immediate reason to have to. So I'd say we can leave it in Mylan shares or we can leave it in cash, either way. And you ask if it had something to do with M&A. Well, obviously that might trigger it. I think it depends on what the price of Mylan is in the market and the manner in which we might market our shares and so forth. There is a couple of dynamics there, but I would confirm. No. We don't intend to be long-term Mylan holders. And well, we don't think holding this back is probably trigger of M&A activity. Maybe a little evaluation, but we're not particularly hung up on value right now. We did watch the entire Perrigo process and hoped for a path and we though until that stabilize and was finished, there was no point in being in the way of that. So that happened, that stabilized, that's finished. There is a stable market now for Mylan shares. And we'll just wait and see what triggers it. But we otherwise have no reason to move one way or other until there is some trigger like M&A, I would guess.

Okay. Let me just follow up --

If the price were to rocket north, we'd probably view that as a trigger too, to be obvious.

Let me ask a specific question on your vascular business because, if you strip out currency, I think over the last 12 months, even going forward, most of the businesses are on track, at least performing in line with our expectations. But the vascular business continues to come -- at least relative to our expectations, continues to come in below. And I know you highlighted Absorb, but a lot of our channel checks are not very positive on Absorb. So I guess my question is what's the commitment to this vascular business? Is this a business that you need to build up through M&A and the reason why we haven't seen a lot of M&A, is it because the targets have still unrealistic valuations? Thanks.

Well, I'll say couple of things. First of all, we're committed to the business. And I think these are the bigger market conditions here. If you look at the markets around the world, not just the U.S. but literally every major country in the world, the markets have stabilized among competitors. Share doesn't move a lot. It does moves a little. The provisions in these spaces -- they take a new product and they experiment with it a little bit and that's about it. The innovation here is at a point where I'd say, the incremental value recognized by the healthcare system is limited. If you think about what drug code it stands for and so forth have done in the vascular space, it's been a tremendous boon in the treatment of patients. But I think now what we see is this market is far more driven by cost and prices in either countries or hospital groups and others, trying to manage the overall cost of healthcare. So I think all of us see the same dynamics where we're increasingly challenged on more value proposition than just innovation. And I think increasingly the payer, whether it's government or purchasing people or insurer, whatever it is are increasingly more influential here than preference of physicians. You say, well, those aren't very good dynamics. Well, they are not bad dynamics either. We have to compete in this business just like we compete in a lot of other businesses. And I think we and our competitors in this business are all broadening our product lines or innovating in other surrounding spaces and broadening those offerings in the space. And there is still a lot of room to innovation, but it may not be specifically just on the stents. So that - what behooves…

You had mentioned priorities. Is vascular higher up on your priority list now?

Well, that implies it wasn't before. I would say the device space has always been high on my priority list. And whether its -- the vascular space or the optic space or whatever, this has been high on priority list for a while.

Okay. Great. Thank you, Miles.

Our next question comes from Mr. Larry Biegelsen of Wells Fargo. Your line is open.

Good morning. Thanks for taking the question. It's just a one clarification question and then two real questions. On the emerging market growth in Q4, can you give us the trend of the organic constant currency growth for this quarter, please?

Yes. Larry, if you look at the quarter and you take out the impact of what we talked about a little bit slow in Venezuela throughout the year, we are in the double-digit range for emerging markets across Abbott's businesses. The emerging market momentum --

Sorry, Brian, that was for Q4 2015?

Q4 2015. And for the four years as well, double-digit growth to the underlying momentum continues in the '16 as well.

Okay. Thanks for that. And then so for my two real questions, one is on deal size. Miles, you've talked about in the past a sweet spot of $5 billion to $7 billion. That's one thing you haven't touched upon this morning. Any color on that? Is that still the case? And then I had one follow-up. Thanks.

In reality, we've got a lot of capacity and it just depends. We've obviously done a lot of small things and small can be measured in a lot of ways. I can remember when I thought a $1 billion dollars was huge. Now people seem to think of that as dinky. We've done a lot of things smaller than that and also mid size -- I don't feel constrained at $7 billion. I don't feel constrained at $8 billion or $10 billion. I don't feel constrained. So I'd say look if the opportunity is right, the strategic fit is right and the valuation is right, I don't feel constrained by size right now.

That's very helpful. And then I hope you understand the spirit of this question, because it's kind of a question that we'll probably get today. But I was struck by your comment earlier, Miles, when you said every year there is some outlier somewhere when you were talking about Venezuela. And I think, in the past, Abbott would absorb those outliers. So I guess why not now and what can you do to kind of mitigate that in the future? Thanks.

Well, I think that's a good question. And I'd say what we always do everything we can to mitigate. Here is what's different this time. Last year exchange was a strong headwind for any U.S.-based multinational across the board. And I recall at this very time last year from December to now, you'll recall both oil and exchange kind of hit, kind of sudden hit accepted the oil price drop at that point was a very high level -- much higher level than where we are today. But there was this sudden hit in sort of late fourth quarter '14 and then in early '15, and everybody scrambled to readjust their ETF guidance for the year to try to deal with what they saw coming as currency and was already happening. And a lot of companies dialed back to single digit or whatever and laid it on exchange and so forth, which was valid. In our case, we said -- we think we can navigate through it and we did. And we had extremely strong underlying growth in our market as we still do. And it wasn't just double digits. It's been healthy double digits all year long. And so in our case, we were able to mitigate and off of lot of that exchange all year long and still deliver what was frankly very differentiated higher growth than many, many of our peers, even multinational peers not in healthcare. And what we got now is another year on top of that, okay, same sort of thing. And if you look at the exchange rate graphs, who would have thought these exchange rate could in a lot of cases, be even bigger. Even bigger exchange rates -- how we want to translate it to have stronger philosophy on the other…

Very helpful, thanks Miles.

The next question comes from Mr. Rick Wise of Stifel Nicolaus. Sir your line is open.

Thanks for the question. Miles, hard to resist just asking one more question on Venezuela, and I totally understand the point you were making there. But you sort of said in your last comment that maybe a quarter or two of headwind. Wouldn't it be more prudent to think this might be a couple of year issue and might be structural? And then just as part of that, maybe for Brian, is the simple monkey math on this - you're really growing mid-teens, some of that 15%. If Venezuela is a 5% hit to EPS growth and FX is 10%, that's what you're really growing on a sustained basis.

Yes let me deal with your Venezuela question first and then I'll let Brian wrap up with, close on what he just said about our growth rate. You know you could be dead right about Venezuela, I don’t know but here is the difference for us. We’re healthcare company and among our businesses there are products that are medically necessary and we have to pay attention to medically necessary. We don’t have to lose money all the time, we don’t have to be irrational, for whatever reason but we’re mindful that we’re a healthcare company. We’re mindful that we have medically necessary products. We’re mindful that we’ve been in Latin America and in Venezuela for decades and a lot of times in the past in decades, foreign companies have exited those countries immediately when the economics turned sour. And the long term commitment to that continent, the governments of those countries and the healthcare systems of those countries, they know that and they recognize that. Abbott has never done that in 90 years in Latin America and we are a fundamentally large healthcare provider in Latin America. So our judgment was to make these decisions one step at a time as we see how circumstances develop. It’s a pretty big decision that we’ve taken just to say we’re going to take the sales and profit expectations out of our expectations for the year so that our investors, frankly you’re getting news today that we’re taking it out of our expectations right, and yet all I’m trying to do here is de-risk your expectations, de-risk your riding the roller coaster volatility here with that particular country, because that one’s unique. And so we just chose to take it out of the estimates because we know we’re going to continue to have medically necessary products there but that’s going to be in our view at a much lower promotional level even in the past. So for right now I think that’s the right prudent place to be for that change I suppose anything to change. I hope the change is more favorably frankly but I’m not listening through the graveyard, I just know that they are in a very tough circumstance as a country and they are volatile, they are unpredictable and it’s not a very reliable market as markets go. So I think this is the right step, you could say we shouldn’t just go a lot further and I’d say you know you could say that if you were just in some common industrial consumer or whatever good but I don’t think as an healthcare company you can quite do the same things. So, I think we have to be a little prudent here about the medically necessary part, that’s why we’re where we are. And Brain you can address Rick’s final comment about underlying growth rate.

Sure. Rick, when you think about Venezuela and a decision to derisk this and just assume for a second if that’s your reality, your growth rate it doesn’t change. Your growth rate will actually become better as you move through time, so nothing’s changed about Abbott’s growth perspective, they may even become better. When you think about what I’ve said and what you’ve modeled in '15, you know that we had mid-teens underlying growth not for the impact of foreign exchange and we take these things that we talked about into account be about the de-risking of Venezuela on what it means to our earnings, as well as the FX, you are going to get right back to the mid teens.

Rick, I think you did a better job summarizing than Brian did

Thank you, operator, and thank you for all of your questions. And that concludes Abbott’s conference call. A replay of this call will be available after 11:00 a.m. Central Time today on Abbott's Investor website at abbottinvestor.com, and after 11:00 a.m. Central Time via telephone at 203-369-3630, passcode 6422. The audio replay will be available until 4:00 p.m. Central Time on Thursday, February 11. Thank you for joining us today.

That concludes today's conference. Thank you for participating. You may now disconnect.