PART I. FINANCIAL INFORMATION

Abbott Laboratories and Subsidiaries

Condensed Consolidated Financial Statements

(Unaudited)

Abbott Laboratories and Subsidiaries

Condensed Consolidated Statement of Earnings

(Unaudited)

(dollars and shares in thousands except per share data)

The accompanying notes to condensed consolidated financial statements are an integral part of this statement.

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Abbott Laboratories and Subsidiaries

Condensed Consolidated Statement of Cash Flows

(Unaudited)

(dollars in thousands)

The accompanying notes to condensed consolidated financial statements are an integral part of this statement.

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Abbott Laboratories and Subsidiaries

Condensed Consolidated Balance Sheet

(Unaudited)

(dollars in thousands)

The accompanying notes to condensed consolidated financial statements are an integral part of this statement.

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Abbott Laboratories and Subsidiaries

Notes to Condensed Consolidated Financial Statements

March 31, 2006

(Unaudited)

Note 1 – Basis of Presentation

The accompanying unaudited, condensed consolidated financial statements have been prepared pursuant to rules and regulations of the Securities and Exchange Commission and, therefore, do not include all information and footnote disclosures normally included in audited financial statements. However, in the opinion of management, all adjustments necessary to present fairly the results of operations, financial position and cash flows have been made. It is suggested that these statements be read in conjunction with the financial statements included in Abbott’s Annual Report on Form 10-K for the year ended December 31, 2005.

Note 2 – Supplemental Financial Information

(dollars in thousands)

Supplemental Cash Flow Information – Other, net in Net Cash From Operating Activities for 2006 and 2005 includes the effects of contributions to the main domestic defined benefit plan of $200,000 and $641,000, respectively, and to the post-employment medical and dental plans of $40,000 and $140,000, respectively.

Note 3 – Taxes on Earnings

Taxes on earnings reflect the estimated annual effective rates and for the first quarter 2005 include additional income taxes of approximately $57 million for remittances of foreign earnings of approximately $600 million in connection with the American Jobs Creation Act of 2004. The effective tax rates, excluding the effect of the income taxes on the remittances of foreign earnings, are less than the statutory U.S. federal income tax rate principally due to the domestic dividend exclusion and the benefit of lower statutory tax rates and tax exemptions in several taxing jurisdictions.

Note 4 – Litigation and Environmental Matters

Abbott has been identified as a potentially responsible party for investigation and cleanup costs at a number of locations in the United States and Puerto Rico under federal and state remediation laws and is investigating potential contamination at a number of company-owned locations. Abbott has recorded an estimated cleanup cost for each site for which management believes Abbott has a probable loss exposure. No individual site cleanup exposure is expected to exceed $3 million, and the aggregate cleanup exposure is not expected to exceed $20 million.

Within the next year, legal proceedings may occur that may result in a change in the estimated reserves recorded by Abbott. For its legal proceedings and environmental exposures, Abbott estimates the range of possible loss to be from approximately $25 million to $135 million. The recorded reserve balance at March 31, 2006 for these proceedings and exposures was approximately $50 million. These reserves represent management’s best estimate of probable loss, except for one which is recorded at the minimum, as defined by Statement of Financial Accounting Standards No. 5, “Accounting for Contingencies.”

While it is not feasible to predict the outcome of all such proceedings and exposures with certainty, management believes that their ultimate disposition should not have a material adverse effect on Abbott’s financial position, cash flows, or results of operations.

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Note 5 – Post-Employment Benefits

(dollars in millions)

Retirement plans consist of defined benefit, defined contribution, and medical and dental plans. Net cost for the three months ended March 31 for Abbott’s major defined benefit plans and post-employment medical and dental benefit plans is as follows:

Abbott funds its domestic defined benefit plans according to IRS funding limitations. In the first quarters of 2006 and 2005, $200 and $641, respectively, was contributed to the main domestic defined benefit plan and $40 and $140, respectively, was contributed to the post-employment medical and dental benefit plans.

Note 6 – Comprehensive Income, net of tax

(dollars in thousands)

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Note 8 – Incentive Stock Programs

In the first quarter of 2006, Abbott granted 22,967,958 stock options, 1,545,630 replacement stock options, 987,600 (net of forfeitures of 100,000) restricted stock awards and 594,400 restricted stock units under the programs. The purchase price of shares under option must be at least equal to the fair market value of the common stock on the date of grant, and the maximum term of an option is 10 years. Options granted in 2006 vest equally over three years except for replacement options, which vest in six months. When an employee tenders mature shares to Abbott upon exercise of a stock option, a replacement stock option is granted equal to the amount of shares tendered. Replacement options are granted at the then current market price for a term that expires on the date of the underlying option grant. Except for replacement options, options granted after December 31, 2004 do not have a replacement option feature. Upon a change in control of Abbott, all outstanding stock options become fully exercisable, and all terms and conditions of all restricted stock awards are deemed satisfied. Restricted stock awards granted in 2006 have a 5 year term, with no more than one-third of the award vesting in any one year upon Abbott reaching a minimum return on equity target. Restricted stock units granted in 2006 vest over three years and upon vesting, the recipient receives one share of Abbott stock for each vested restricted stock unit. Restricted stock awards and settlement of vested restricted stock units are issued out of treasury shares. Abbott issues new shares for exercises of stock options. Abbott does not have a policy of purchasing its shares relating to its share-based programs. At March 31, 2006, approximately 24 million shares were reserved for future grants.

The number of restricted stock awards and units outstanding and their weighted-average grant-date fair value at January 1, 2006 and March 31, 2006 was 2,381,800 ($50.09) and 3,579,214 ($47.42), respectively. The number of restricted stock awards and units, and their weighted-average grant-date fair value, granted, vested and lapsed during the three months ended March 31, 2006 were 1,682,000 ($44.14), 384,586 ($50.46) and 100,000 ($44.16), respectively. The fair value of restricted stock awards and units vested in the three months ended March 31, 2006 and 2005 was $17,623,152 and $4,062,217, respectively.

The aggregate intrinsic value of options outstanding and exercisable at March 31, 2006 was $325 million and $314 million, respectively. The total unrecognized compensation cost related to all share-based compensation plans at March 31, 2006 amounted to approximately $350 million and is expected to be recognized over the next three years.

On January 1, 2006, Abbott adopted the provisions of Statement of Financial Accounting Standards No. 123 (revised 2004), “Share-Based Payment,” which requires that the fair value of share-based awards be recorded in the results of operations. Under the revised standard, awards issued prior to 2006 are charged to expense under the prior rules, and awards issued after 2005 are charged to expense under the revised rules. Total non-cash compensation expense charged against income in the first quarter of 2006 for share-based plans totaled approximately $146 million and the tax benefit recognized was approximately $35 million. Approximately 40 to 45 percent of the annual net cost of share-based awards will typically be recognized in the first quarter due to the timing of the granting of share-based awards. Compensation cost capitalized as part of inventory is not significant. Through December 31, 2005, Abbott measured compensation cost using the intrinsic value-based method of accounting for stock options and replacement options granted to employees. Abbott used the modified prospective method of adoption. Under this method, prior years’ financial results do not include the impact of recording stock options using fair value. Had compensation cost been determined using the fair value-based accounting method in 2005, pro forma net income (in millions) and earnings per share (EPS) amounts would have been as follows:

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The weighted average fair value of an option granted in 2006 and 2005 was $11.72 and $12.17, respectively. The fair value of an option grant was estimated using the Black-Scholes option-pricing model with the following assumptions:

The risk-free interest rate is based on the rates available at the time of the grant for zero-coupon U.S. government issues with a remaining term equal to the option’s expected life. The average life of an option granted in 2006 is based on both historical and projected exercise and lapsing data. Prior to 2006, the average life of an option granted was based on historical experience. Expected volatility for 2006 option grants is based on implied volatilities from traded options on Abbott’s stock and historical volatility of Abbott’s stock over the expected life of the option. Expected volatility for options granted prior to 2006 was based on historical volatility over a period prior to the option grant equal to the option’s expected life. Dividend yield is based on the option’s exercise price and annual dividend rate at the time of grant.

Note 9 – Equity Method Investment

(dollars in millions)

Abbott’s 50 percent-owned joint venture, TAP Pharmaceutical Products Inc. (TAP), is accounted for under the equity method of accounting. Summarized financial information for TAP is as follows:

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Note 10 – Goodwill and Intangible Assets

(dollars in millions)

Foreign currency translation adjustments and other adjustments increased (decreased) goodwill in the first quarter 2006 and 2005 by approximately $40 and $(43), respectively. There were no reductions of goodwill relating to impairments or disposal of all or a portion of a business.

The gross amount of amortizable intangible assets, primarily product rights and technology was $6,820 as of March 31, 2006 and $6,776 as of December 31, 2005, and accumulated amortization was $2,182 as of March 31, 2006 and $2,053 as of December 31, 2005. Intangible assets with indefinite lives are not significant. The estimated annual amortization expense for intangible assets is $487 in 2006, $474 in 2007, $465 in 2008, $464 in 2009, and $467 in 2010. Intangible assets are amortized primarily on a straight-line basis over 4 to 25 years (average 13 years).

Note 11 – Restructuring Plans

In 2005, Abbott management approved plans to realign its global manufacturing operations and selected international commercial operations. An additional $7 million was subsequently recorded in the first quarter 2006 relating to these restructurings, primarily for accelerated depreciation.

The following summarizes the activity for restructurings (dollars in millions):

Note 12 – Subsequent Event

On April 21, 2006, Abbott acquired Guidant’s vascular intervention and endovascular solutions businesses for $4.1 billion, in cash, in connection with Boston Scientific’s acquisition of Guidant. Abbott will also pay $250 million each upon government approvals to market Guidant’s drug-eluting stent in the U.S. and in Japan. Abbott also acquired $1.4 billion of Boston Scientific common stock directly from Boston Scientific, and loaned $900 million to a wholly-owned subsidiary of Boston Scientific. The loan is guaranteed by Boston Scientific, bears interest at 4 percent and is due in April 2011. The acquisition of Guidant’s vascular intervention and endovascular solutions businesses and the Boston Scientific common stock and the loan to Boston Scientific were financed with commercial paper borrowings of approximately $4.1 billion and approximately $2.3 billion of cash.

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A comparison of the product group sales by segment for the three months ended March 31 is as follows: (dollars in millions)

a) Percentage changes are versus the prior year and are based on unrounded numbers.

Increased sales volume of Humira and Tricor in 2006 favorably impacted U.S Pharmaceutical Operations. These increases were partially offset by lower U.S. sales of Biaxin due to generic competition for the immediate-release formulation as well as a weaker flu season. U.S. sales of Biaxin were $51 million and $114 million in the first quarter of 2006 and 2005, respectively. U.S. Specialty Operations were favorably impacted by increased sales of Kaletraand Depakote and decreased sales volume of clarithromycinunfavorably impacted International Anti-Infectives. Diabetes Care product sales in 2005 were favorably impacted by the acquisition of TheraSense in the second quarter of 2004. The decrease in sales of U.S. pediatric nutritionals in the Nutritional Products segment in 2006 and 2005 was primarily due to overall infant nutritionals non-WIC category decline and competitive share loss.

On January 1, 2006, Abbott adopted the provisions of Statement of Financial Accounting Standards No. 123 (revised 2004), “Share-Based Payment,” which requires that the fair value of share-based awards be recorded in the results of operations. Abbott used the modified prospective method of adoption. Under this method, prior years’ financial results do not include the impact of recording stock options using fair value. Total non-cash compensation expense charged against income in the first quarter of 2006 for share-based plans totaled approximately $146 million. Approximately 40 to 45 percent of the annual net cost of share-based awards will typically be recognized in the first quarter due to the timing of the grants of share-based awards.

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The gross profit margin was 58.1 percent for the first quarter 2006, compared to 53.1 percent for the first quarter 2005. The increase in the gross profit margin was due to favorable product mix, primarily as a result of decreased sales of Boehringer Ingelheim products that have lower margins than for other products in the Pharmaceutical Products segment.

Research and development expenses increased 11.1 percent in the first quarter 2006 over the first quarter 2005. Included in research and development expenses in 2006 is approximately $32 million of compensation expense relating to share-based awards. This increased research and development expenses by 7.2 percentage points over 2005. The remaining increase was due, in part, to increased spending to support pipeline programs, including follow-on indications for Humira, and other late-stage clinical programs in pharmaceuticals, diabetes care and vascular devices. The majority of research and development expenditures are concentrated on pharmaceutical products.

Selling, general and administrative expenses for the first quarter 2006 increased 13.7 percent over the first quarter 2005. Included in selling, general and administrative expenses in 2006 is approximately $95 million of incremental compensation expense relating to share-based awards. This increased selling, general and administrative expenses by 7.5 percentage points over 2005. The remaining increase was due primarily to increased selling and marketing support for new and existing products, including continued spending for Humira, as well as spending on other marketed pharmaceutical products.

Restructurings

In 2005, Abbott management approved plans to realign its global manufacturing operations and selected international commercial operations. An additional $7 million was subsequently recorded in the first quarter 2006 relating to these restructurings, primarily for accelerated depreciation.

The following summarizes the activity for restructurings (dollars in millions):

Interest Expense

Net interest expense decreased in the first quarter 2006 due to higher interest income as a result of higher investment balances and interest rates, partially offset by higher interest expense due to higher interest rates.

(Income) from TAP Pharmaceutical Products Inc. Joint Venture

Abbott’s income from the TAP Pharmaceutical Products Inc. joint venture is higher in 2006 compared to 2005 due primarily to higher sales.

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Taxes on Earnings

Taxes on earnings reflect the estimated annual effective rates and for the first quarter 2005 include additional income taxes of approximately $57 million for remittances of foreign earnings of approximately $600 million in connection with the American Jobs Creation Act of 2004. The effect of the increased income taxes on the remittance of foreign earnings was to increase the first quarter 2005 effective tax rate by approximately 4.9 percentage points. The effective tax rates, excluding the effect of the income taxes on the remittances of foreign earnings, are less than the statutory U.S. federal income tax rate principally due to the domestic dividend exclusion and the benefit of lower statutory tax rates and tax exemptions in several taxing jurisdictions.

Business Acquisition Subsequent to March 31, 2006

On April 21, 2006, Abbott acquired Guidant’s vascular intervention and endovascular solutions businesses for $4.1 billion, in cash, in connection with Boston Scientific’s acquisition of Guidant. Abbott will also pay $250 million each upon government approvals to market Guidant’s drug-eluting stent in the U.S. and in Japan. Abbott also acquired $1.4 billion of Boston Scientific common stock directly from Boston Scientific, and loaned $900 million to a wholly-owned subsidiary of Boston Scientific. The loan is guaranteed by Boston Scientific, bears interest at 4 percent and is due in April 2011.

Liquidity and Capital Resources at March 31, 2006 Compared with December 31, 2005

Net cash from operating activities for the first three months 2006 totaled approximately $1.2 billion. The increase in cash from operating activities compared to the first quarter 2005 was primarily due to lower contributions to retirement benefit plans in 2006 compared to 2005 and lower inventory levels and trade accounts receivable. The retirement plan payments are included in Other, net in the Condensed Consolidated Statement of Cash Flows. Abbott expects annual cash flow from operating activities to continue to exceed Abbott’s capital expenditures and cash dividends.

The acquisition of Guidant’s vascular intervention and endovascular solutions businesses in April 2006 and the Boston Scientific common stock and the loan to Boston Scientific were financed with commercial paper borrowings of approximately $4.1 billion and approximately $2.3 billion of cash.

At March 31, 2006, Abbott had working capital of approximately $3.4 billion compared to working capital of approximately $4.0 billion at December 31, 2005. The decrease in working capital was primarily due to the repayments of long-term debt.

At March 31, 2006, Abbott’s long-term debt rating was AA by Standard & Poor’s Corporation and A1 by Moody’s Investors Service. Abbott has readily available financial resources, including unused lines of credit of $7.0 billion, including a $4 billion short-term facility, which supports commercial paper borrowing arrangements. Subsequent to the announced potential acquisition of Guidant’s vascular intervention and endovascular solutions businesses, Standard and Poor’s affirmed its current debt ratings for Abbott and maintained its current “stable” outlook. On April 21, 2006, Moody’s Investors Service affirmed its current debt ratings for Abbott and changed its current outlook from “stable” to “negative.”

In October 2004, the board of directors authorized the purchase of 50 million shares of Abbott’s common stock from time to time. During the three months ended March 31, 2006 and 2005, Abbott purchased approximately 17.3 million and 13.2 million, respectively, of its common shares under this authorization at a cost of approximately $755 million and $602 million, respectively.

Under a registration statement filed with the Securities and Exchange Commission in February 2006, Abbott may offer and sell from time to time debt securities in one or more offerings through February 2009. In the first quarter of 2006, Abbott entered into forward interest rate swaps to hedge potential changes in the amount of future interest payments of $1.5 billion on debt that is anticipated to be issued under this registration statement in 2006. The effect of this cash flow hedge is to fix a portion of the effective interest rate on this debt at the market rate of interest at the date the swaps were entered into.

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Legislative Issues

Abbott’s primary markets are highly competitive and subject to substantial government regulation. Abbott expects debate to continue at both the federal and the state levels over the availability, method of delivery, and payment for health care products and services. Abbott believes that if legislation is enacted, it could have the effect of reducing access to health care products and services, or reducing prices or the rate of price increases for health care products and services. International operations are also subject to a significant degree of government regulation. It is not possible to predict the extent to which Abbott or the health care industry in general might be adversely affected by these factors in the future. A more complete discussion of these factors is contained in Item 1, Business and Item 1A, Risk Factors in the Annual Report on Form 10-K for the year ended December 31, 2005 and to this Quarterly Report on Form 10-Q.

Private Securities Litigation Reform Act of 1995 — A Caution Concerning Forward-Looking Statements

Under the safe harbor provisions of the Private Securities Litigation Reform Act of 1995, Abbott cautions investors that any forward-looking statements or projections made by Abbott, including those made in this document, are subject to risks and uncertainties that may cause actual results to differ materially from those projected. Economic, competitive, governmental, technological and other factors that may affect Abbott’s operations are discussed in Item 1A, Risk Factors and Exhibit 99.1 to the Annual Report on Form 10-K for the year ended December 31, 2005 and Item 1A, Risk Factors to this Quarterly Report on Form 10-Q.

FINANCIAL INSTRUMENTS AND RISK MANAGEMENT

In connection with the acquisition of Guidant’s vascular intervention and endovascular solutions businesses on April 21, 2006, Abbott purchased 64.6 million shares, or $1.4 billion of Boston Scientific common stock and loaned $900 million to a wholly-owned subsidiary of Boston Scientific. Abbott is required to dispose of the shares by October 2008. Unless the shares trade above $30 per share for twenty consecutive days, Abbott cannot dispose of any shares until October 2006. Finally, sales of Boston’s shares are limited to approximately 5.4 million shares per month until October 2007. A hypothetical 20 percent decrease in Boston Scientific’s share price would decrease the fair value of the Boston Scientific shares by approximately $280 million. In addition, Abbott is a creditor of Boston Scientific for the $900 million loan that is due in 2011 and, as such, is subject to credit risk.

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PART I. FINANCIAL INFORMATION

Item 4.    Controls and Procedures

(a)          Evaluation of disclosure controls and procedures. The Chief Executive Officer, Miles D. White, and Chief Financial Officer, Thomas C. Freyman, evaluated the effectiveness of Abbott Laboratories’ disclosure controls and procedures as of the end of the period covered by this report, and concluded that Abbott Laboratories’ disclosure controls and procedures were effective to ensure that information Abbott is required to disclose in the reports that it files or submits with the Securities and Exchange Commission under the Securities Exchange Act of 1934 (the “Exchange Act”) is recorded, processed, summarized and reported, within the time periods specified in the Commission’s rules and forms, and to ensure that information required to be disclosed by Abbott in the reports that it files or submits under the Exchange Act is accumulated and communicated to Abbott’s management, including its principal executive officer and principal financial officer, as appropriate to allow timely decisions regarding required disclosure.

(b)         Changes in internal control over financial reporting. During the quarter ended March 31, 2006, there were no changes in Abbott’s internal control over financial reporting (as defined in Rule 13a-15(f) under the Exchange Act) that have materially affected, or are reasonably likely to materially affect, Abbott’s internal control over financial reporting.

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In its 2005 Form 10-K, Abbott reported that a case against Takeda Pharmaceutical Company Limited and Takeda America Holdings, Inc. (“Takeda”) is pending in the United States District Court for the Northern District of Illinois. In February 2006, the trial court granted Takeda’s motion to dismiss, ruling that Abbott must pursue its claim against Takeda in Japan. Abbott filed an appeal with the Seventh Circuit.

While it is not feasible to predict the outcome of such pending claims, proceedings and investigations with certainty, management is of the opinion that their ultimate dispositions should not have a material adverse effect on Abbott’s financial position, cash flows, or results of operations.

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EXHIBIT INDEX

Exhibits 32.1 and 32.2 are furnished herewith and should not be deemed to be “filed” under the Securities Exchange Act of 1934.