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Hospira Reports First-Quarter 2012 Results

-- Maintains sales and adjusted* earnings projections for 2012 --

LAKE FOREST, Ill., May 1, 2012 /PRNewswire/ -- Hospira, Inc. (NYSE: HSP), the world's leading provider of injectable drugs and infusion technologies, today reported results for the first quarter ended March 31, 2012. Net sales for the quarter were $966 million and adjusted* diluted earnings per share were $0.47. (Adjusted* measures exclude certain specified items as described later in this press release and the attached schedules.)

"Hospira delivered first-quarter results in line with our expectations, which reflects a difficult year-over-year comparison and the impact of our quality improvement initiatives," said F. Michael Ball, chief executive officer. "Going forward, we remain firmly focused on advancing our remediation efforts and, at the same time, expanding our global footprint and capacity to capitalize on our growth opportunities. We believe these initiatives will position Hospira with an even stronger competitive advantage, creating sustainable, long-term shareholder value."

First-Quarter 2012 Results

The following table highlights selected financial results for the first quarter of 2012 compared to the same period in 2011:

In $ millions,

except per share

amounts

GAAP

Three Months Ended

March 31,


 

Adjusted*

Three Months Ended

March 31,


 

 


 

2012

2011

%

Change

2012

2011

%

Change

 

Net Sales

$965.9

$1,002.3

(3.6)%

n/a

n/a

n/a

 

Gross Profit (Net Sales less

Cost of Products Sold)

$300.0

$399.1

(24.8)%

$357.5

$424.3

(15.7)%

 

Income from Operations

$46.7

$163.8

(71.5)%

$104.2

$203.4

(48.8)%

 

Diluted Earnings per Share

$0.24

$0.88

(72.7)%

$0.47

$0.93

(49.5)%

 

Statistics (as a % of Net Sales)

 

Gross Profit (Net Sales less

Cost of Products Sold)

31.1%

39.8%


 

37.0%

42.3%


 

 

Income from Operations

4.8%

16.3%


 

10.8%

20.3%


 

 
               


 

Results under U.S. Generally Accepted Accounting Principles (GAAP) include items as detailed in the schedules attached to this press release.

Net sales were $966 million in the first quarter of 2012, a decrease of 4 percent compared to the first quarter of 2011. The decrease is due primarily to a difficult year-over-year comparison related to the first-quarter 2011 U.S. launch of the generic oncolytic docetaxel, as well as the adverse impact to supply of the company's quality-improvement and remediation initiatives.

Adjusted* income from operations decreased 49 percent to $104 million in the first quarter of 2012, compared to $203 million in the first quarter of 2011. The majority of the decline reflects the decrease in net sales as well as the impact of costs associated with certain quality actions and inventory losses. Operating costs also increased in the first quarter of 2012 due to expected higher research and development spending, as well as higher selling and promotional costs.

The effective tax rate on an adjusted basis* in the quarter was 19.0 percent compared to 23.0 percent in the first quarter of 2011. The decrease is primarily due to lower operating income in higher-tax-rate jurisdictions.

Cash Flow

Cash flow from operations for the first quarter of 2012 was $87 million compared to $6 million in the first quarter of 2011. The increase is a result of lower investments in working capital, offset by lower net income in the first quarter of 2012.

Capital expenditures were $67 million for the first quarter of 2012, compared to $62 million for the same period in 2011. The increase was mainly due to the company's manufacturing capacity expansion initiatives in Vizag, India.

2012 Projections

Hospira is maintaining guidance for net sales for full-year 2012, projecting a net sales change in a range of negative 1 percent to positive 2 percent on a constant-currency basis, with foreign exchange expected to detract from results by a negative 1 percent.

Adjusted* diluted earnings per share projections for full-year 2012 remain in a range of $2.00 to $2.30.

The reconciliation between the projected 2012 adjusted* diluted earnings per share and GAAP diluted earnings per share follows:

Diluted earnings per share -- adjusted*

$2.00 - $2.30

 


 


 

 

Estimated amortization of intangible assets
related to certain acquisitions (mid-point of an
estimated range of $0.28 to $0.32 per diluted share)

($0.30)

 


 


 

 

Estimated charges for certain quality and
product-related matters (mid-point of an
estimated range of $0.50 to $0.62 per diluted share)

($0.56)

 


 


 

 

Estimated charges related to capacity expansion
(mid-point of an estimated range of $0.09 to $0.11
per diluted share)

($0.10)

 


 


 

 

Diluted earnings per share -- GAAP

$1.04 - $1.34

 
     


 

The adjusting items are shown net of tax in aggregate of $86 million, which is calculated for the specified adjustments stated above, based on the statutory tax rates in the various tax jurisdictions in which the items are expected to occur.

The company continues to project that cash flow from operations in 2012 will be between $575 million and $625 million. Depreciation and amortization is expected to be between $240 million and $260 million, and capital expenditures are projected to range between $350 million and $400 million.

*Use of Non-GAAP Financial Measures

Adjusted measures used in this press release are reconciled to the most comparable measures calculated in accordance with GAAP in the schedules attached to this release. For more information regarding these non-GAAP financial measures, please see Hospira's Current Report on Form 8-K furnished to the Securities and Exchange Commission on the date of this press release.

Webcast/Complementary Material

Hospira will hold a conference call for investors and media at 8 a.m. Central time on Tuesday, May 1, 2012. A live webcast of the conference call will be available on Hospira's website at www.hospirainvestor.com. Listeners should log on approximately 10 minutes in advance to ensure proper setup for receiving the webcast. In addition, complementary information will be available on the presentations page of the Investor Relations website at the beginning of the conference call. A replay will be available on the Hospira website for 30 days following the call.

About Hospira

Hospira, Inc. is the world's leading provider of injectable drugs and infusion technologies. Through its broad, integrated portfolio, Hospira is uniquely positioned to Advance Wellnessâ„¢ by improving patient and caregiver safety while reducing healthcare costs. The company is headquartered in Lake Forest, Ill., and has approximately 15,000 employees. Learn more at www.hospira.com.

Private Securities Litigation Reform Act of 1995 --

 

A Caution Concerning Forward-Looking Statements

 
   


 

This press release contains forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995, including projections of certain measures of Hospira's results of operations; projections of certain charges, expenses, and cash flow; and other statements regarding Hospira's goals, plans and strategy. Hospira cautions that these forward-looking statements are subject to risks and uncertainties, including adequate and sustained progress on the company's quality initiatives, that may cause actual results to differ materially from those indicated in the forward-looking statements. Economic, competitive, governmental, regulatory, legal, technological, manufacturing supply, quality and other factors that may affect Hospira's operations and may cause actual results to be materially different from expectations include the risks, uncertainties and factors discussed under the headings "Risk Factors" and "Management's Discussion and Analysis of Financial Condition and Results of Operations" in Hospira's latest Annual Report on Form 10-K and subsequent Forms 10-Q, filed with the Securities and Exchange Commission, which are incorporated by reference. Hospira undertakes no obligation to release publicly any revisions to forward-looking statements as the result of subsequent events or developments.

 

Hospira, Inc.

 

Condensed Consolidated Statements of Income

 

(Unaudited)

 

(dollars and shares in millions, except for per share amounts)

 


 


 


 


 


 


 


 


 


 


 


 


 


 


 

 


 


 


 


 


 


 


 


 


 


 


 


 


 


 

 


 


 


 


 


 


 

Three Months Ended March 31,


 


 

% Change


 

 


 


 


 


 


 


 

2012


 


 

2011


 


 


 


 

 

Net sales


 


 


 


 

$ 965.9


 


 

$ 1,002.3


 


 

(3.6)%


 

 


 


 


 


 


 


 


 


 


 


 


 


 


 


 

 

Cost of products sold


 


 


 

665.9


 


 

603.2


 


 

10.4%


 

 

Restructuring, impairment and (gain) on disposition of assets, net


 


 

-


 


 

13.2


 


 

(100.0)%


 

 

Research and development


 


 


 

69.1


 


 

56.9


 


 

21.4%


 

 

Selling, general and administrative


 


 


 

184.2


 


 

165.2


 


 

11.5%


 

 

Total operating costs and expenses


 


 


 

919.2


 


 

838.5


 


 

9.6%


 

 

Income From Operations


 


 


 

46.7


 


 

163.8


 


 

(71.5)%


 

 


 


 


 


 


 


 


 


 


 


 


 


 


 


 

 

Interest expense


 


 


 

22.2


 


 

23.4


 


 

(5.1)%


 

 

Other expense (income), net


 


 


 

1.4


 


 

(2.2)


 


 

(163.6)%


 

 

Income Before Income Taxes


 


 


 

23.1


 


 

142.6


 


 

(83.8)%


 

 


 


 


 


 


 


 


 


 


 


 


 


 


 


 

 

Income tax (benefit) expense


 


 


 

(4.0)


 


 

9.9


 


 

(140.4)%


 

 

Equity income from affiliates, net


 


 


 

(13.1)


 


 

(17.2)


 


 

(23.8)%


 

 

Net Income


 


 


 

$ 40.2


 


 

$ 149.9


 


 

(73.2)%


 

 


 


 


 


 


 


 


 


 


 


 


 


 


 


 

 

Earnings Per Common Share:


 


 


 


 


 


 


 


 


 


 


 

 

Basic


 


 


 


 

$ 0.24


 


 

$ 0.90


 


 

(73.3)%


 

 

Diluted


 


 


 


 

$ 0.24


 


 

$ 0.88


 


 

(72.7)%


 

 


 


 


 


 


 


 


 


 


 


 


 


 


 


 

 

Weighted Average Common Shares Outstanding:


 


 


 


 


 


 


 


 


 


 


 

 

Basic


 


 


 


 

164.6


 


 

166.8


 


 

(1.3)%


 

 

Diluted


 


 


 


 

165.8

Posted: May 2012


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