Some statements made today may be forward-looking, including the planned separation of the research-based pharmaceutical company from the diversified medical products company and the expected financial results of the 2 companies after the separation. 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. Factors that may affect Abbott's operations are discussed in Item 1a Risk Factors to our Annual Report on Securities and Exchange Commission Form 10-K for the year ended December 31, 2011, and are incorporated by reference. We undertake no obligation to release publicly any revisions to forward-looking statements as a result of subsequent events or developments.In 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 measure in our earnings news release and regulatory filings from today, which will be available on our website at abbott.com. And with that, I'll turn the call over to Tom. Tom? Thomas C. Freyman Thanks, John. As you can see from our earnings news release this morning, we had a very strong first quarter, delivering double-digit ongoing earnings per share growth and beating our original forecast. We're very pleased with our start to the year and our outlook for the remainder of 2012. As a result, today, we are raising our ongoing EPS guidance range for the full year 2012 by $0.05 on both the bottom and the top of the range, reflecting another year of top-tier performance. For the first quarter, we reported ongoing diluted earnings per share of $1.03, an increase of 13.2% over the prior year. Sales increased 5.9% on an operational basis, that is excluding an unfavorable 1.3% impact from exchange rates, which was driven by strong performance across a number of our products and businesses. Reported sales increased 4.6%.
In emerging markets, broadly defined, sales increased more than 10%, excluding the negative impact of foreign exchange, with double-digit growth in key emerging markets across the businesses. We also saw meaningful improvement in the adjusted gross margin ratio, up 260 basis points from the prior year to more than 61% as a result of the many margin-improvement initiatives we're implementing company-wide.In the quarter, we drove better margin performance across our major businesses, including Proprietary Pharmaceuticals, Vascular, Nutritionals and Diagnostics. We delivered more than 13% ongoing EPS growth and a 150 basis point improvement in our adjusted operating margin while continuing to invest in the businesses. Ongoing R&D investment was 10% of sales, reflecting continued progress across our new product programs. We also accelerated SG&A investment behind many of our key products and businesses to drive future growth. In the non-operating section of the P&L in the quarter, the net foreign exchange (gain) loss line was unfavorable $58 million compared to 2011. Other income in the quarter included a $60 million favorable resolution on a contractual agreement. These 2 items, therefore, offset the quarter with neutral effect. Turning to our outlook for the full year 2012, we're raising both our ongoing earnings per share guidance range $0.05 on both ends of the range to $5 to $5.10. With our planned separation on track for completion by the end of the year, the guidance we've provided continues to reflect a full year outlook for the company in total. Regarding sales growth for 2012, we continue to forecast operational growth in the mid-single digits. Based on current exchange rates, we continue to expect a negative impact of exchange on sales of approximately 2.5% for the full year. As a result, reported sales growth is expected to be in the low single digits, in line with the forecast we've provided in January.
Also for 2012, we're forecasting continued improvement in our adjusted gross margin ratio, which we continue to expect to approach 62% for the full year. This reflects efficiency initiatives and favorable mix, partially offset by the expected decline in U.S. lipid sales and promised royalties.Read the rest of this transcript for free on seekingalpha.com