Hospira Reports Third-Quarter 2008 Results

-- Reaffirms 2008 adjusted* earnings projection --

LAKE FOREST, Ill., November 05, 2008 /PRNewswire-FirstCall/ -- Hospira, Inc. , a leading global specialty pharmaceutical and medication delivery company, today reported results for the third quarter of 2008.

 

    -- Net sales increased 10.4 percent to $925.5 million during the
       third quarter of 2008, compared to $838.0 million during the
       third quarter of 2007.
    -- Adjusted* diluted earnings per share increased 28.6 percent in the
       third quarter to $0.63 compared to $0.49 during the third quarter
       last year. GAAP third-quarter 2008 diluted earnings per share were
       $0.51 versus $0.37 for the same period last year. (Adjusted* measures
       exclude certain specified items as described later in this press
       release and attached schedules.)

"We are pleased by the strong growth we achieved during the quarter in our primary areas of strategic focus," said Christopher B. Begley, chairman and chief executive officer. "Both Specialty Injectable Pharmaceuticals and Medication Management Systems posted double-digit sales increases, and each area saw favorable developments that will drive future growth. We remain on track to achieve our 2008 earnings projections and continue to position Hospira for future success."

Third-quarter Financial Highlights

The following table summarizes selected financial results for the quarters ended September 30:

 


    In $ millions           GAAP                     Adjusted*
                      Three Months Ended         Three Months Ended
                          Sept. 30,                  Sept. 30,
                      ----------------    %      ----------------    %
                       2008      2007   Change    2008      2007   Change
                      ------    ------  ------   ------    ------  ------
    Net Sales         $925.5    $838.0   10.4%   $925.5    $838.0   10.4%
    Gross Profit      $330.0    $294.5   12.1%   $355.5    $316.5   12.3%
    R&D                $51.7     $51.4    0.6%    $50.8     $50.8    0.0%
    SG&A              $145.6    $136.5    6.7%   $143.2    $129.4   10.7%
    Income from
     Operations       $132.7    $106.6   24.5%   $161.5    $136.3   18.5%

    Statistics (as a % of Net Sales)
    --------------------------------
    Gross Profit        35.7%     35.1%            38.4%     37.8%
    R&D                  5.6%      6.1%             5.5%      6.1%
    SG&A                15.7%     16.3%            15.5%     15.4%
    Income from
     Operations         14.3%     12.7%            17.5%     16.3%


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

Net sales for the third quarter of 2008 increased 10.4 percent compared to the third quarter of 2007. The primary contributors were strong sales in Specialty Injectable Pharmaceuticals coupled with increased demand for the company's Medication Management Systems product lines. Net sales for the third quarter of 2008 increased in all segments compared to the third quarter of 2007: the Americas; Europe, Middle East and Africa (EMEA); and Asia Pacific (APAC) increased 9.5 percent, 9.6 percent and 23.0 percent, respectively.

Adjusted* income from operations for the third quarter of 2008 was $161.5 million, up 18.5 percent compared to the third quarter of 2007. The increase was driven by improved adjusted* gross profit performance, partially offset by an increase in adjusted* Selling, General and Administrative (SG&A) expenses. Adjusted* SG&A grew due to increased sales and marketing support within the Americas and new product launches outside of the Americas.

Cash Flow

Cash flow from operations for the first nine months of 2008 was $328.6 million compared to $354.5 million for the same period in 2007. The decrease reflects increased inventory levels for new product launches and new contract awards with group purchasing organizations, as well as higher trade receivables, which were primarily due to the increased level of sales in the third quarter of 2008 compared to the same period in 2007.

Capital expenditures were $126.9 million for the first nine months of 2008, compared with $128.7 million for the same period in 2007.

2008 Projections

The company has revised its net sales projections for the full year to reflect growth on a constant-currency basis. Full-year net sales are expected to increase in a range of 6 to 7 percent, excluding the impact of foreign exchange.

Projections for full-year 2008 adjusted* diluted earnings per share remain unchanged, and are expected to be between $2.50 and $2.55.

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

 

    Diluted earnings per share -- adjusted*                    $2.50 - $2.55
                                                               --------------
    Estimated charges related to planned facilities
     optimization initiatives (mid-point of an estimated
     range of $0.12 to $0.14 per diluted share for 2008)              ($0.13)
    Estimated integration and other acquisition-related
     expenses (high end of an estimated range of $0.10 to
     $0.12 per diluted share for 2008)                                ($0.12)
    Estimated $62 million for the amortization of intangibles
     related to the Mayne Pharma acquisition                          ($0.26)
                                                               --------------
    Diluted earnings per share -- GAAP                         $1.99 - $2.04
                                                               ==============


The company continues to project that cash flow from operations in 2008 will be in the $575 million to $625 million range. Depreciation and amortization, excluding amortization of intangibles related to the Mayne Pharma acquisition, are projected to be between $190 million and $200 million. Capital expenditures are now estimated to range between $170 million and $190 million in 2008.

*Use of Non-GAAP Financial Measures

Non-GAAP financial measures used in this press release are referred to as "adjusted" and 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

A conference call for investors and media will be held at 8 a.m. Central time on Wednesday, Nov. 5, 2008. A live webcast of the conference call will be available at www.hospirainvestor.com. Listeners should log on approximately 10 minutes in advance to ensure proper computer setup for receiving the webcast. A replay will be available on the Hospira Web site for 30 days following the call.

About Hospira

Hospira, Inc. is a global specialty pharmaceutical and medication delivery company dedicated to Advancing Wellness(TM). As the world leader in specialty generic injectable pharmaceuticals, Hospira offers one of the broadest portfolios of generic acute-care and oncology injectables, as well as integrated infusion therapy and medication management solutions. Through its products, Hospira helps improve the safety, cost and productivity of patient care. The company is headquartered in Lake Forest, Ill., and has more than 14,000 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 and expenses, statements regarding the financial impact of the acquisition of Mayne Pharma, and other statements regarding Hospira's goals, strategy, expectations and commitments. Hospira 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. Economic, competitive, governmental, technological 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 Hospira's subsequent Quarterly Reports on Form 10-Q, which are filed with the Securities and Exchange Commission, and 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          Nine Months Ended
                         September 30,               September 30,
                        ---------------     %     ------------------     %
                         2008     2007    Change     2008      2007    Change
                        ------   ------   ------  --------  --------   ------
    Net sales           $925.5   $838.0   10.4 %  $2,715.8  $2,490.1    9.1 %
    Cost of products
     sold                595.5    543.5    9.6 %   1,742.4   1,654.8    5.3 %
                        ------   ------           --------  --------
      Gross Profit       330.0    294.5   12.1 %     973.4     835.3   16.5 %

    Research and
     development          51.7     51.4    0.6 %     160.1     147.5    8.5 %
    Acquired
     in-process
     research and
     development            -        -      nm         0.5      84.8  (99.4)%
    Selling,
     general and
     administrative      145.6    136.5    6.7 %     450.7     414.4    8.8 %
                        ------   ------           --------  --------
      Income From
       Operations        132.7    106.6   24.5 %     362.1     188.6   92.0 %

    Interest expense      27.6     34.7  (20.5)%      87.2     102.5  (14.9)%
    Other income, net     (2.4)    (6.2) (61.3)%      (6.5)    (12.0) (45.8)%
                        ------   ------           --------  --------
      Income Before
       Income Taxes      107.5     78.1   37.6 %     281.4      98.1  186.9 %

    Income tax expense    25.7     18.7   37.4 %      65.1      37.4   74.1 %
                        ------   ------           --------  --------
      Net Income         $81.8    $59.4   37.7 %    $216.3     $60.7  256.3 %
                        ======   ======           ========  ========

    Earnings Per
     Common Share:
      Basic              $0.51    $0.38   34.2 %     $1.36     $0.39  248.7 %
                        ======   ======           ========  ========
      Diluted            $0.51    $0.37   37.8 %     $1.34     $0.38  252.6 %
                        ======   ======           ========  ========

    Weighted Average
     Common Shares
     Outstanding:
      Basic              159.4    157.1    1.5 %     159.1     156.6    1.6 %
                        ======   ======           ========  ========
      Diluted            161.6    160.1    0.9 %     161.4     159.5    1.2 %
                        ======   ======           ========  ========

    nm = Percent change is not meaningful.



                                Hospira, Inc.
        Reconciliation of Condensed Consolidated Statements of Income
                                 (Unaudited)
          (dollars and shares in millions, except per share amounts)

                                 Three Months Ended September 30,
                      -------------------------------------------------------
                                2008                         2007
                      --------------------------   --------------------------
                       GAAP  Adjustments Adjusted   GAAP  Adjustments Adjusted
                      ------    ------    ------   ------    ------    ------

    Net sales         $925.5     $ -      $925.5   $838.0     $ -      $838.0
    Cost of
     products sold     595.5     (25.5)A   570.0    543.5     (22.0)E   521.5
                      ------    ------    ------   ------    ------    ------
       Gross Profit    330.0      25.5     355.5    294.5      22.0     316.5

    Research and
     development        51.7      (0.9)B    50.8     51.4      (0.6)C    50.8
    Acquired
     in-process
     research and
     development         -         -         -        -         -         -
    Selling,
     general and
     administrative    145.6      (2.4)C   143.2    136.5      (7.1)C   129.4
                      ------    ------    ------   ------    ------    ------
       Income From
        Operations     132.7      28.8     161.5    106.6      29.7     136.3

    Interest expense    27.6       -        27.6     34.7       -        34.7
    Other income,
     net                (2.4)      -        (2.4)    (6.2)      -        (6.2)
                      ------    ------    ------   ------    ------    ------
       Income Before
        Income Taxes   107.5      28.8     136.3     78.1      29.7     107.8

    Income tax
     expense            25.7       9.1 D    34.8     18.7      10.4 D    29.1
                      ------    ------    ------   ------    ------    ------
       Net Income      $81.8     $19.7    $101.5    $59.4     $19.3     $78.7
                      ======    ======    ======   ======    ======    ======

    Earnings Per
     Common Share:
      Basic            $0.51     $0.13     $0.64    $0.38     $0.12     $0.50
                      ======    ======    ======   ======    ======    ======
      Diluted          $0.51     $0.12     $0.63    $0.37     $0.12     $0.49
                      ======    ======    ======   ======    ======    ======

    Weighted Average
     Common Shares
     Outstanding:
      Basic            159.4     159.4     159.4    157.1     157.1     157.1
                      ======    ======    ======   ======    ======    ======
      Diluted          161.6     161.6     161.6    160.1     160.1     160.1
                      ======    ======    ======   ======    ======    ======


    Statistics
     (as a % of
     Net Sales,
     except for
     income tax rate)
    -----------------

    Gross Profit        35.7%               38.4%    35.1%               37.8%
    R&D                  5.6%                5.5%     6.1%                6.1%
    SG&A                15.7%               15.5%    16.3%               15.4%
    Income From
     Operations         14.3%               17.5%    12.7%               16.3%
    Income Before
     Income Taxes       11.6%               14.7%     9.3%               12.9%
    Net Income           8.8%               11.0%     7.1%                9.4%
    Income Tax Rate     23.9%               25.5%    24.0%               27.0%


                                                    % Change vs. Prior Year
                                                    -----------------------
                                                      GAAP         Adjusted
                                                    -------        --------

    Net sales                                        10.4 %          10.4 %
    Cost of products sold                             9.6 %           9.3 %
         Gross Profit                                12.1 %          12.3 %

    Research and development                          0.6 %           0.0 %
    Acquired in-process research and
     development                                       nm              nm
    Selling, general and administrative               6.7 %          10.7 %
         Income From Operations                      24.5 %          18.5 %

    Interest expense                                (20.5)%         (20.5)%
    Other income, net                               (61.3)%         (61.3)%
         Income Before Income Taxes                  37.6 %          26.4 %

    Income tax expense                               37.4 %          19.6 %
         Net Income                                  37.7 %          29.0 %

    Earnings Per Common Share:
      Basic                                          34.2 %          28.0 %
      Diluted                                        37.8 %          28.6 %

    Weighted Average Common Shares Outstanding:
      Basic                                           1.5 %           1.5 %
      Diluted                                         0.9 %           0.9 %


    A -- Includes intangible assets amortization of $15.2 related to the Mayne
         Pharma acquisition; charges of $10.0 related to the planned closures
         of the Ashland, OH; Montreal, Canada; North Chicago, IL; and Morgan
         Hill, CA facilities as well as charges to limit, and transfer, R&D
         facility operations related to brain-function monitoring devices as
         part of Hospira's facilities optimization initiatives; a gain on the
         sale of the Montreal, Canada manufacturing plant ($2.5); and Mayne
         Pharma integration and other acquisition-related charges of $2.8.
    B -- Includes integration and other acquisition-related charges of $0.2
         and facilities optimization initiatives of $0.7.
    C -- Mayne Pharma Integration and other acquisition-related charges.
    D -- Reflects the tax effect of the above adjustments.
    E -- Includes intangible assets amortization of $13.4 related to the Mayne
         Pharma acquisition; charges of $8.0 related to the planned closures
         of the Donegal, Ireland; Ashland, OH; Montreal, Canada; and North
         Chicago, IL facilities as part of Hospira's facilities optimization
         initiatives; and Mayne Pharma integration charges of $0.6.

    nm = Percent change is not meaningful.



                                Hospira, Inc.
        Reconciliation of Condensed Consolidated Statements of Income
                                 (Unaudited)
          (dollars and shares in millions, except per share amounts)

                                 Nine Months Ended September 30,
                    ---------------------------------------------------------
                                2008                         2007
                    -----------------------------  --------------------------
                      GAAP    Adjustments Adjusted  GAAP  Adjustments Adjusted
                    --------    ------    -------  -------  ------    -------

    Net sales       $2,715.8     $ -     $2,715.8 $2,490.1   $ -     $2,490.1
    Cost of
     products sold   1,742.4     (76.7)A  1,665.7  1,654.8  (126.1)F  1,528.7
                    --------    ------    -------  -------  ------    -------
       Gross Profit    973.4      76.7    1,050.1    835.3   126.1      961.4

    Research and
     development       160.1      (2.8)B    157.3    147.5    (1.3)D    146.2
    Acquired
     in-process
     research and
     development         0.5      (0.5)C      -       84.8   (84.8)C      -
    Selling,
     general and
     administrative    450.7     (16.8)D    433.9    414.4   (25.2)D    389.2
                    --------    ------    -------  -------  ------    -------
       Income From
        Operations     362.1      96.8      458.9    188.6   237.4      426.0

    Interest expense    87.2       -         87.2    102.5    (2.2)G    100.3
    Other income,
     net                (6.5)      -         (6.5)   (12.0)   (5.7)H    (17.7)
                    --------    ------    -------  -------  ------    -------
       Income Before
        Income Taxes   281.4      96.8      378.2     98.1   245.3      343.4

    Income tax
     expense            65.1      31.3 E     96.4     37.4    55.3 E     92.7
                    --------    ------    -------  -------  ------    -------
       Net Income     $216.3     $65.5     $281.8    $60.7  $190.0     $250.7
                    ========    ======    =======  =======  ======    =======

    Earnings Per
     Common Share:
      Basic            $1.36     $0.41      $1.77    $0.39   $1.21      $1.60
                    ========    ======    =======  =======  ======    =======
      Diluted          $1.34     $0.41      $1.75    $0.38   $1.19      $1.57
                    ========    ======    =======  =======  ======    =======

    Weighted Average
     Common Shares
     Outstanding:
      Basic            159.1     159.1      159.1    156.6   156.6      156.6
                    ========    ======    =======  =======  ======    =======
      Diluted          161.4     161.4      161.4    159.5   159.5      159.5
                    ========    ======    =======  =======  ======    =======


    Statistics
     (as a % of
     Net Sales,
     except for
     income tax rate)
    -----------------

    Gross Profit        35.8%                38.7%    33.5%              38.6%
    R&D                  5.9%                 5.8%     5.9%               5.9%
    SG&A                16.6%                16.0%    16.6%              15.6%
    Income From
     Operations         13.3%                16.9%     7.6%              17.1%
    Income Before
     Income Taxes       10.4%                13.9%     3.9%              13.8%
    Net Income           8.0%                10.4%     2.4%              10.1%
    Income Tax Rate     23.1%                25.5%    38.1%              27.0%


                                                    % Change vs. Prior Year
                                                    -----------------------
                                                      GAAP         Adjusted
                                                    -------        --------

    Net sales                                         9.1 %           9.1 %
    Cost of products sold                             5.3 %           9.0 %
        Gross Profit                                 16.5 %           9.2 %

    Research and development                          8.5 %           7.6 %
    Acquired in-process research and
     development                                    (99.4)%            nm
    Selling, general and administrative               8.8 %          11.5 %
        Income From Operations                       92.0 %           7.7 %

    Interest expense                                (14.9)%         (13.1)%
    Other income, net                               (45.8)%         (63.3)%
        Income Before Income Taxes                  186.9 %          10.1 %

    Income tax expense                               74.1 %           4.0 %
        Net Income                                  256.3 %          12.4 %

    Earnings Per Common Share:
      Basic                                         248.7 %          10.6 %
      Diluted                                       252.6 %          11.5 %

    Weighted Average Common Shares Outstanding:
      Basic                                           1.6 %           1.6 %
      Diluted                                         1.2 %           1.2 %


    A -- Includes intangible assets amortization of $46.8 related to the Mayne
         Pharma acquisition; charges of $26.6 related to the planned closures
         of the Ashland, OH; Montreal, Canada; North Chicago, IL; and Morgan
         Hill, CA facilities as well as charges to limit, and transfer, R&D
         facility operations related to brain-function monitoring devices as
         part of Hospira's facilities optimization initiatives; a gain on the
         sale of the Montreal, Canada manufacturing plant ($2.5); and Mayne
         Pharma integration and other acquisition-related charges of $5.8.
    B -- Includes Mayne Pharma integration and other acquisition-related
         charges of $1.0 and facilities optimization initiatives of $1.8.
    C -- Acquired in-process research and development.
    D -- Mayne Pharma integration and other acquisition-related charges.
    E -- Reflects the tax effect of the above adjustments.
    F -- Includes inventory step-up charge of $53.1 and intangible assets
         amortization of $35.0 related to the Mayne Pharma acquisition;
         charges of $33.4 related to the planned closures of the Donegal,
         Ireland; Ashland, OH; Montreal, Canada; and North Chicago, IL
         facilities as part of Hospira's facilities optimization initiatives;
         a reduction of the obligation associated with the sale of the Salt
         Lake City, UT manufacturing plant to ICU Medical ($1.6); and Mayne
         Pharma integration charges of $6.2.
    G -- Other acquisition-related cost: bridge loan fees incurred as a result
         of the Mayne Pharma acquisition expensed upon refinancing of loan
         during the first quarter of 2007.
    H -- Other acquisition-related cost: foreign exchange losses related to
         the Mayne Pharma acquisition.

    nm = Percent change is not meaningful.



                                Hospira, Inc.
                 Reconciliation of Diluted Earnings Per Share
                                 (Unaudited)

                               Three Months Ended         Nine Months Ended
                                  September 30,             September 30,
                              -------------------       --------------------
                               2008         2007         2008          2007
                              ------       ------       ------        ------
    Diluted Earnings Per
     Share - GAAP              $0.51        $0.37        $1.34         $0.38

    Adjustments:

       Mayne Pharma acquisition
        related:

         Acquired in-process
          research and
          development            -            -            -            0.53

         Inventory step-up
          charge                 -            -            -            0.23

         Integration and
          other acquisition-
          related charges       0.03         0.03         0.11          0.16

         Intangible assets
          amortization          0.06         0.06         0.20          0.15

       Charges related to
        facilities optimization
        initiatives             0.04         0.03         0.11          0.13

       Gain on the sale of the
        Montreal, Canada
        manufacturing plant    (0.01)         -          (0.01)          -

       Reduction of obligation
        associated with the
        sale of the Salt Lake
        City, UT manufacturing
        plant                    -            -            -           (0.01)
                              ------       ------       ------        ------

       Subtotal of Adjustments  0.12         0.12         0.41          1.19

    Diluted Earnings Per
     Share - Adjusted          $0.63        $0.49        $1.75         $1.57
                              ======       ======       ======        ======



                                Hospira, Inc.
                    Condensed Consolidated Balance Sheets
                                 (Unaudited)
                            (dollars in millions)

                                                 September 30,    December 31,
                               Assets                 2008            2007
                                                    --------        --------
    Current Assets:
      Cash and cash equivalents                       $287.4          $241.1
      Trade receivables, less allowances of
       $12.6 in 2008 and $14.1 in 2007                 618.7           559.0
      Inventories                                      854.8           766.6
      Deferred income taxes                            156.7           176.7
      Prepaid expenses                                  29.0            23.8
      Other receivables                                 71.7            73.8
                                                    --------        --------
         Total Current Assets                        2,018.3         1,841.0
                                                    --------        --------
    Property and equipment, net                      1,226.4         1,276.9
    Intangible assets, net                             473.3           554.0
    Goodwill                                         1,181.4         1,240.9
    Deferred income taxes                               65.9            79.4
    Investments                                         47.6            23.7
    Other assets                                        54.3            68.8
                                                    --------        --------
         Total Assets                               $5,067.2        $5,084.7
                                                    ========        ========

           Liabilities and Shareholders' Equity

    Current Liabilities:
      Short-term borrowings                           $328.8           $58.5
      Trade accounts payable                           193.3           190.3
      Salaries, wages and commissions                  141.6           143.6
      Deferred income taxes                              -               8.4
      Other accrued liabilities                        305.6           393.5
                                                    --------        --------
         Total Current Liabilities                     969.3           794.3
                                                    --------        --------
    Long-term debt                                   1,832.6         2,184.4
    Deferred income taxes                               32.7            50.7
    Post-retirement obligations and other long-
     term liabilities                                  335.0           310.1
    Commitments and Contingencies                   --------        --------
    Total Shareholders' Equity                       1,897.6         1,745.2
                                                    --------        --------
    Total Liabilities and Shareholders' Equity      $5,067.2        $5,084.7
                                                    ========        ========



                                Hospira, Inc.
               Condensed Consolidated Statements of Cash Flows
                                 (Unaudited)
                            (dollars in millions)

                                               Nine Months Ended September 30,
                                               -------------------------------
                                                       2008            2007
                                                     -------         -------
    Cash Flow From Operating Activities:

      Net income                                      $216.3           $60.7
      Adjustments to reconcile net income to net
       cash from operating activities --
        Depreciation                                   141.2           136.2
        Amortization of intangibles                     51.1            37.1
        Write-off of acquired in-process research
         and development                                 0.5            84.8
        Step-up value of acquired inventories sold       -              53.1
        Stock-based compensation expense                33.2            31.6
        Net gains on sales of assets                    (3.0)           (2.9)
      Changes in assets and liabilities --
        Trade receivables                              (75.8)          (42.3)
        Inventories                                   (107.6)           (3.4)
        Prepaid expenses and other assets                4.1             5.4
        Trade accounts payable                           7.3             4.8
        Other liabilities                               37.1           (31.0)
      Other, net                                        24.2            20.4
                                                     -------         -------
        Net Cash Provided by Operating Activities      328.6           354.5
                                                     -------         -------

    Cash Flow From Investing Activities:

      Capital expenditures (including instruments
       placed with or leased to customers)            (126.9)         (128.7)
      Acquisitions, net of cash acquired, including
       payments for deferred consideration             (22.2)       (1,963.2)
      Purchases of intangibles and other investments   (49.6)            -
       (Purchases) Sales of marketable securities      (24.5)            0.6
      Settlements of foreign currency contracts          -             (55.7)
      Proceeds from dispositions of product rights       -              13.8
      Proceeds from disposal of facilities               0.8             -
                                                     -------         -------
        Net Cash Used in Investing Activities         (222.4)       (2,133.2)
                                                     -------         -------

    Cash Flow From Financing Activities:

      Issuance of long-term debt, net of fees paid       -           3,336.2
      Repayment of long-term debt                      (90.1)       (1,700.1)
      Other borrowings, net                              8.5            (0.3)
      Excess tax benefit from stock-based
       compensation arrangements                         1.0             0.9
      Proceeds from stock options exercised             27.4            40.4
                                                     -------         -------
        Net Cash (Used in) Provided by Financing
         Activities                                    (53.2)        1,677.1
                                                     -------         -------

    Effect of exchange rate changes on cash
     and cash equivalents                               (6.7)           16.0
                                                     -------         -------

    Net change in cash and cash equivalents             46.3           (85.6)
    Cash and cash equivalents at beginning of period   241.1           322.0
                                                     -------         -------
    Cash and cash equivalents at end of period        $287.4          $236.4
                                                     =======         =======

    Supplemental Cash Flow Information:

    Cash paid during the period --
       Interest                                        $96.6           $57.7
       Income taxes, net                                $8.6           $57.6



                                Hospira, Inc.
                          Net Sales by Product Line
                                 (Unaudited)
                            (dollars in millions)

                                    Three Months Ended September 30,
                            -------------------------------------------------
                                                     % Change at  % Change at
                                                        Actual       Constant
                             2008         2007           Rates        Rates
                            ------       ------         -------      -------
    Americas --
     Pharmaceuticals
      Specialty
       Injectables          $341.1       $299.9           13.7 %       13.5 %
      Other Pharma           129.8        131.3           (1.1)%       (1.4)%
                            ------       ------
                             470.9        431.2            9.2 %        9.0 %
    Devices
      Medication
       Management Systems    138.5        123.0           12.6 %       11.9 %
      Other Devices           96.3         90.5            6.4 %        6.2 %
                            ------       ------
                             234.8        213.5           10.0 %        9.5 %
    Total Americas           705.7        644.7            9.5 %        9.2 %

    Europe, Middle East &
     Africa --
     Pharmaceuticals
      Specialty
       Injectables            67.5         65.0            3.8 %       (2.3)%
      Other Pharma            41.3         37.8            9.3 %        5.4 %
                            ------       ------
                             108.8        102.8            5.8 %        0.5 %
    Devices
      Medication
       Management Systems     19.6         16.1           21.7 %       12.5 %
      Other Devices           18.2         14.9           22.1 %       13.1 %
                            ------       ------
                              37.8         31.0           21.9 %       12.8 %
    Total Europe, Middle
     East & Africa           146.6        133.8            9.6 %        3.4 %

    Asia Pacific --
     Pharmaceuticals
      Specialty
       Injectables            57.3         45.7           25.4 %       19.8 %
      Other Pharma             4.5          4.2            7.1 %        1.2 %
                            ------       ------
                              61.8         49.9           23.8 %       18.2 %
    Devices
      Medication
       Management Systems      4.8          4.0           20.0 %       14.7 %
      Other Devices            6.6          5.6           17.9 %       10.5 %
                            ------       ------
                              11.4          9.6           18.8 %       12.3 %
    Total Asia Pacific        73.2         59.5           23.0 %       17.3 %
                            ------       ------
    Net Sales               $925.5       $838.0           10.4 %        8.8 %
                            ======       ======



                                     Nine Months Ended September 30,
                          --------------------------------------------------
                                                     % Change at  % Change at
                                                        Actual       Constant
                             2008         2007           Rates        Rates
                          --------     --------         -------      -------
    Americas --
     Pharmaceuticals
      Specialty
       Injectables          $981.7       $891.2           10.2 %        9.4 %
      Other Pharma           374.4        393.6           (4.9)%       (5.5)%
                          --------     --------
                           1,356.1      1,284.8            5.5 %        4.7 %
    Devices
      Medication
       Management Systems    418.3        372.2           12.4 %       11.1 %
      Other Devices          282.7        273.4            3.4 %        2.4 %
                          --------     --------
                             701.0        645.6            8.6 %        7.4 %
    Total Americas         2,057.1      1,930.4            6.6 %        5.7 %

    Europe, Middle East &
     Africa --
     Pharmaceuticals
      Specialty
       Injectables           224.2        184.3           21.6 %       11.0 %
      Other Pharma           120.3        111.3            8.1 %        0.1 %
                          --------     --------
                             344.5        295.6           16.5 %        6.9 %
    Devices
      Medication
       Management Systems     59.3         49.8           19.1 %        6.4 %
      Other Devices           52.2         51.1            2.2 %       (8.4)%
                          --------     --------
                             111.5        100.9           10.5 %       (1.1)%
    Total Europe, Middle
     East & Africa           456.0        396.5           15.0 %        4.9 %

    Asia Pacific --
     Pharmaceuticals
      Specialty
       Injectables           155.3        121.6           27.7 %       16.5 %
      Other Pharma            12.1         10.8           12.0 %       (0.2)%
                          --------     --------
                             167.4        132.4           26.4 %       15.1 %
    Devices
      Medication
       Management Systems     15.5         12.3           26.0 %       16.6 %
      Other Devices           19.8         18.5            7.0 %       (3.1)%
                          --------     --------
                              35.3         30.8           14.6 %        4.8 %
    Total Asia Pacific       202.7        163.2           24.2 %       13.2 %
                          --------     --------
    Net Sales             $2,715.8     $2,490.1            9.1 %        6.1 %
                          ========     ========

    Notes:
    Specialty Injectables include generic injectables and proprietary
    specialty injectables. Other Pharmaceuticals include large volume IV
    solutions, nutritionals and contract manufacturing services (including
    former "Sales to Abbott"). Medication Management Systems include infusion
    pumps, related software, services and administration sets. Other Devices
    include gravity administration sets, critical care products, and other
    device products.

    Net sales for the nine months ended September 30, 2008 and 2007,
    include nine and eight months, respectively, of Mayne Pharma net sales.



                                Hospira, Inc.
                             Segment Information
                                 (Unaudited)
                            (dollars in millions)

                              Three Months Ended September 30,
                   ----------------------------------------------------------
                        Net Sales             Income from Operations
                   -----------------            ------------------
                                         %                               %
                    2008       2007    Change    2008        2007      Change
                   ------     ------   ------   ------      ------     ------

    Americas       $705.7     $644.7    9.5 %   $151.1 A    $127.2 A   18.8 %
    Europe,
     Middle East
     & Africa       146.6      133.8    9.6 %      4.4 B       1.8 B  144.4 %
    Asia Pacific     73.2       59.5   23.0 %      6.4 C       5.6 C   14.3 %
                   ------     ------            ------      ------

    Total
     reportable
     segments      $925.5     $838.0   10.4 %    161.9       134.6     20.3 %
                   ======     ======

    Corporate
     functions                                   (20.5)D     (19.9)D    3.0 %
    Stock-based
     compensation                                 (8.7)       (8.1)     7.4 %
                                                ------      ------
    Income from
     operations                                  132.7       106.6     24.5 %
    Interest
     expense and
     other income,
     net                                         (25.2)E     (28.5)E  (11.6)%
                                                ------      ------
    Income before
     income taxes                               $107.5       $78.1     37.6 %
                                                ======      ======


    Included in the reported Income before
    income taxes above, are the following charges:

    A -- Americas
      Mayne Pharma acquisition related:
        Acquired in-process research and
         development                             $ -         $ -
        Inventories step-up charge                 -           -
        Integration and other acquisition-
         related charges                           1.0         0.9
        Intangible assets amortization             4.8         3.4
      Charges related to facilities
       optimization initiatives                   10.7         7.6
      Integration and other acquisition-
       related charges                            (0.2)        -
      Acquired in-process research and
       development                                 -           -
      Gain on the sale of the Montreal,
       Canada manufacturing plant                 (2.5)        -
      Reduction of obligation associated with
       the sale of the Salt Lake City, UT
       manufacturing plant                         -           -
                                                ------      ------
    Total Americas                                13.8        11.9

    B -- Europe, Middle East & Africa
      Mayne Pharma acquisition related:
        Acquired in-process research and
         development                               -           -
        Inventories step-up charge                 -           -
        Integration and other acquisition-
         related charges                           0.7         1.1
        Intangible assets amortization             5.8         5.7
      Charges related to facilities
       optimization initiatives                    -           0.4
                                                ------      ------
    Total Europe, Middle East & Africa             6.5         7.2

    C -- Asia Pacific
      Mayne Pharma acquisition related:
        Inventories step-up charge                 -           -
        Integration and other acquisition-
         related charges                           2.1         0.9
        Intangible assets amortization             4.6         4.3
      Charges related to facilities
       optimization initiatives                    -           -
      Integration and other acquisition-
       related charges                             0.8         0.4
                                                ------      ------
    Total Asia Pacific                             7.5         5.6

    D -- Corporate functions
      Integration and other acquisition-
       related charges                             1.0         5.0
                                                ------      ------
    Total Corporate functions                      1.0         5.0

    E -- Interest expense and other
      income, net
      Integration and other acquisition-
       related charges                             -           -
                                                ------      ------
    Total Interest expense and other
     income, net                                   -           -
                                                ------      ------
    Total                                        $28.8       $29.7
                                                ======      ======



                                Hospira, Inc.
                             Segment Information
                                 (Unaudited)
                            (dollars in millions)

                               Nine Months Ended September 30,
                   ----------------------------------------------------------
                        Net Sales             Income from Operations
                   -------------------          -------------------
                                          %                              %
                     2008       2007    Change   2008        2007      Change
                   --------   --------  ------  ------      ------     ------

    Americas       $2,057.1   $1,930.4   6.6 %  $426.0 A    $301.4 A    41.3 %
    Europe,
     Middle East
     & Africa         456.0      396.5  15.0 %    10.7 B     (15.4)B   169.5 %
    Asia Pacific      202.7      163.2  24.2 %    13.6 C      (8.4)C   261.9 %
                   --------   --------          ------      ------

    Total
     reportable
     segments      $2,715.8   $2,490.1   9.1 %   450.3       277.6      62.2 %
                   ========   ========

    Corporate
     functions                                   (55.0)D     (57.4)D    (4.2)%
    Stock-based
     compensation                                (33.2)      (31.6)      5.1 %
                                                ------      ------
    Income from
     operations                                  362.1       188.6      92.0 %
    Interest
     expense and
     other income,
     net                                         (80.7)E     (90.5)E   (10.8)%
                                                ------      ------

    Income before
     income taxes                               $281.4       $98.1     186.9 %
                                                ======      ======

    Included in the reported Income before
    income taxes above, are the following charges:

    A -- Americas
      Mayne Pharma acquisition related:
        Acquired in-process research and
         development                             $ -         $66.2
        Inventories step-up charge                 -          10.0
        Integration and other acquisition-
         related charges                           2.1        13.0
        Intangible assets amortization            15.0         8.8
      Charges related to facilities
       optimization initiatives                   28.4        32.1
      Integration and other acquisition-
       related charges                             -           -
      Acquired in-process research and
       development                                 0.5         -
      Gain on the sale of the Montreal,
       Canada manufacturing plant                 (2.5)        -
      Reduction of obligation associated with
       the sale of the Salt Lake City, UT
       manufacturing plant                         -          (1.6)
                                                ------      ------
    Total Americas                                43.5       128.5

    B -- Europe, Middle East & Africa
      Mayne Pharma acquisition related:
        Acquired in-process research and
         development                               -          18.6
        Inventories step-up charge                 -          18.0
        Integration and other acquisition-
         related charges                          10.1         2.1
        Intangible assets amortization            17.7        14.9
      Charges related to facilities
       optimization initiatives                    -           1.3
                                                ------      ------
    Total Europe, Middle East & Africa            27.8        54.9

    C -- Asia Pacific
      Mayne Pharma acquisition related:
        Inventories step-up charge                 -          25.1
        Integration and other acquisition-
         related charges                           5.5         1.9
        Intangible assets amortization            14.1        11.3
      Charges related to facilities
       optimization initiatives                    -           -
      Integration and other acquisition-
       related charges                             1.2         0.4
                                                ------      ------
    Total Asia Pacific                            20.8        38.7

    D -- Corporate functions
      Integration and other acquisition-
       related charges                             4.7        15.3
                                                ------      ------
    Total Corporate functions                      4.7        15.3

    E -- Interest expense and other
      income, net
      Integration and other acquisition-
       related charges                             -           7.9
                                                ------      ------
    Total Interest expense and other
     income, net                                   -           7.9
                                                ------      ------
    Total                                        $96.8      $245.3
                                                ======      ======

CONTACT: Media, Stacey Eisen, +1-224-212-2276, or Tareta Adams,+1-224-212-2535, or Financial Community, Karen King, +1-224-212-2711, allof Hospira, Inc.

Web site: http://www.hospira.com/

Ticker Symbol: (NYSE:HSP)

Terms and conditions of use apply
Copyright © 2008 PR Newswire Association LLC. All rights reserved.
A United Business Media Company

Posted: November 2008


View comments

Hide
(web2)