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Hospira Reports Second-Quarter 2008 Results
Date:8/6/2008

-- Increases 2008 Net Sales Projections; Affirms Top End of Adjusted*

Earnings Guidance --

LAKE FOREST, Ill., Aug. 6 /PRNewswire-FirstCall/ -- Hospira, Inc. (NYSE: HSP), a leading global specialty pharmaceutical and medication delivery company, today reported results for the second quarter of 2008.

-- Net sales increased 3.7 percent to $901.6 million during the second

quarter of 2008, compared to $869.3 million during the second quarter

of 2007.

-- Adjusted* diluted earnings per share during the second quarter of 2008

were $0.57 compared to $0.49 during the second quarter last year. GAAP

second-quarter 2008 diluted earnings per share were $0.43 versus $0.20

for the same period last year. (Adjusted* measures exclude certain

specified items as described later in this press release and attached

schedules.)

"We made substantial progress advancing our business during the second quarter and remain on track to deliver another good year," said Christopher B. Begley, chairman and chief executive officer. "The market-share gains we are capturing in both Specialty Injectable Pharmaceuticals and Medication Management Systems point to the value of our focus on strategic execution. With our solid year-to-date results and expectations for the remainder of the year, we are increasing our full-year sales guidance and narrowing our adjusted* EPS guidance to the top end of our projected range."

Second-quarter Financial Highlights

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

In $ millions GAAP Adjusted*

Threemmon Share:

Basic 115.0 % 16.0 %

Diluted 115.0 % 16.3 %

Weighted Average Common Shares Outstanding:

Basic 1.5 % 1.5 %

Diluted 1.3 % 1.3 %

A -- Includes intangible assets amortization of $15.9 related to the Mayne

Pharma acquisition; charges of $9.2 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; and Mayne

Pharma and other acquisition integration charges of $2.6.

B -- Includes acquisition integration charges of $0.4 and facilities

optimization initiatives of $0.7.

C -- Acquired in-process research and development.

D -- Acquisition integration charges.

E -- Reflects the tax effect of the above adjustments.

F -- Includes inventory step-up charge of $31.7 and intangible assets

amortization of $13.2 related to the Mayne Pharma acquisition;

charges of $14.6 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 $4.1.

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)

Six Months Ended June 30,

---------------------------------------------------------

2008 2007

----------------------------- --------------------------

GAAP Adjustments Adjusted GAAP Adjustments Adjusted

-------- ------ ------- ------- ------ -------

Net sales $1,790.3 $ - $1,790.3 $1,652.1 $ - $1,652.1

Cost of

products

sold 1,146.9 (51.2)A 1,095.7 1,111.3 (104.1)F 1,007.2

-------- ------ ------- ------- ------ -------

Gross

Profit 643.4 51.2 694.6 540.8 104.1 644.9

Research and

development 108.4 (1.9)B 106.5 96.1 (0.7)D 95.4

Acquired

in-process

research and

development 0.5 (0.5)C - 84.8 (84.8)C -

Selling,

general and

administrative 305.1 (14.4)D 290.7 277.9 (18.0)D 259.9

-------- ------ ------- ------- ------ -------

Income

From

Operations 229.4 68.0 297.4 82.0 207.6 289.6

Interest

expense 59.6 - 59.6 67.8 (2.3)G 65.5

Other income,

net (4.1) - (4.1) (5.8) (5.7)H (11.5)

-------- ------ ------- ------- ------ -------

Income

Before

Income

Taxes 173.9 68.0 241.9 20.0 215.6 235.6

Income tax

expense 39.4 22.2 E 61.6 18.7 44.9 E 63.6

-------- ------ ------- ------- ------ -------

Net Income $134.5 $45.8 $180.3 $1.3 $170.7 $172.0

======== ====== ======= ======= ====== =======

Earnings Per

Common Share:

Basic $0.85 $0.28 $1.13 $0.01 $1.09 $1.10

======== ====== ======= ======= ====== =======

Diluted $0.83 $0.29 $1.12 $0.01 $1.07 $1.08

======== ====== ======= ======= ====== =======

Weighted Average

Common Shares

Outstanding:

Basic 158.9 158.9 158.9 156.4 156.4 156.4

======== ====== ======= ======= ====== =======

Diluted 161.2 161.2 161.2 159.0 159.0 159.0

======== ====== ======= ======= ====== =======

Statistics

(as a % of

Net Sales,

except for

income tax rate)

-----------------

Gross Profit 35.9% 38.8% 32.7% 39.0%

R&D 6.1% 5.9% 5.8% 5.8%

SG&A 17.0% 16.2% 16.8% 15.7%

Income From

Operations 12.8% 16.6% 5.0% 17.5%

Income Before

Income Taxes 9.7% 13.5% 1.2% 14.3%

Net Income 7.5% 10.1% 0.1% 10.4%

Income Tax Rate 22.7% 25.5% 93.4% 27.0%

% Change vs. Prior Year

-----------------------

GAAP Adjusted

------- --------

Net sales 8.4 % 8.4 %

Cost of products sold 3.2 % 8.8 %

Gross Profit 19.0 % 7.7 %

Research and development 12.8 % 11.6 %

Acquired in-process research and development (99.4)% nm

Selling, general and administrative 9.8 % 11.9 %

Income From Operations 179.8 % 2.7 %

Interest expense (12.1)% (9.0)%

Other income, net (29.3)% (64.3)%

Income Before Income Taxes 769.5 % 2.7 %

Income tax expense 110.7 % (3.2)%

Net Income 10,246.2 % 4.8 %

Earnings Per Common Share:

Basic 8,400.0 % 2.7 %

Diluted 8,200.0 % 3.7 %

Weighted Average Common Shares Outstanding:

Basic 1.6 % 1.6 %

Diluted 1.4 % 1.4 %

A -- Includes intangible assets amortization of $31.6 related to the Mayne

Pharma acquisition; charges of $16.6 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; and Mayne

Pharma and other acquisition integration charges of $3.0.

B -- Includes acquisition integration charges of $0.8 and facilities

optimization initiatives of $1.1.

C -- Acquired in-process research and development.

D -- Acquisition integration charges.

E -- Reflects the tax effect of the above adjustments.

F -- Includes inventory step-up charge of $53.1 and intangible assets

amortization of $21.6 related to the Mayne Pharma acquisition;

charges of $25.4 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 $5.6.

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 Six Months Ended

June 30, June 30,

------------------- --------------------

2008 2007 2008 2007

------ ------ ------ ------

Diluted Earnings Per

Share - GAAP $0.43 $0.20 $0.83 $0.01

Adjustments:

Mayne Pharma acquisition

related:

Acquired in-process

research and

development - - - 0.53

Inventory step-up

charge - 0.14 - 0.23

Integration and

other acquisition-

related charges 0.03 0.05 0.08 0.13

Intangible assets

amortization 0.07 0.05 0.14 0.09

Charges related to

facilities optimization

initiatives 0.04 0.06 0.07 0.10

Reduction of obligation

associated with the

sale of the Salt Lake

City, UT manufacturing

plant - (0.01) - (0.01)

------ ------ ------ ------

Subtotal of Adjustments 0.14 0.29 0.29 1.07

Diluted Earnings Per

Share - Adjusted $0.57 $0.49 $1.12 $1.08

====== ====== ====== ======

Hospira, Inc.

Condensed Consolidated Balance Sheets

(Unaudited)

(dollars in millions)

June 30, December 31,

Assets 2008 2007

-------- --------

Current Assets:

Cash and cash equivalents $201.4 $241.1

Trade receivables, less allowances of $12.3

in 2008 and $14.1 in 2007 620.1 559.0

Inventories 838.6 766.6

Deferred income taxes 128.3 176.7

Prepaid expenses 30.8 23.8

Other receivables 79.5 73.8

-------- --------

Total Current Assets 1,898.7 1,841.0

-------- --------

Property and equipment, net 1,282.9 1,276.9

Intangible assets, net 558.7 554.0

Goodwill 1,242.4 1,240.9

Deferred income taxes 139.7 79.4

Investments 46.4 23.7

Other assets 61.3 68.8

-------- --------

Total Assets $5,230.1 $5,084.7

======== ========

Liabilities and Shareholders' Equity

Current Liabilities:

Short-term borrowings $330.0 $58.5

Trade accounts payable 202.1 190.3

Salaries, wages and commissions 122.2 143.6

Deferred income taxes 9.8 8.4

Other accrued liabilities 341.1 393.5

-------- --------

Total Current Liabilities 1,005.2 794.3

-------- --------

Long-term debt 1,835.7 2,184.4

Deferred income taxes 30.9 50.7

Post-retirement obligations and other long-

term liabilities 326.4 310.1

Commitments and Contingencies -------- --------

Total Shareholders' Equity 2,031.9 1,745.2

-------- --------

Total Liabilities and Shareholders' Equity $5,230.1 $5,084.7

======== ========

Hospira, Inc.

Condensed Consolidated Statements of Cash Flows

(Unaudited)

(dollars in millions)

Six Months Ended June 30,

------------------------

2008 2007

-------- --------

Cash Flow From Operating Activities:

Net income $134.5 $1.3

Adjustments to reconcile net income to net

cash from operating activities --

Depreciation 93.9 90.1

Amortization of intangibles 34.4 22.9

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 24.5 23.5

Net gains on sales of assets (0.5) -

Changes in assets and liabilities --

Trade receivables (44.5) (55.4)

Inventories (51.2) 4.9

Prepaid expenses and other assets 13.5 (7.3)

Trade accounts payable 9.8 10.3

Other liabilities (41.5) (41.7)

Other, net 9.2 (14.9)

-------- --------

Net Cash Provided by Operating Activities 182.6 171.6

-------- --------

Cash Flow From Investing Activities:

Capital expenditures (including instruments

placed with or leased to customers) (86.7) (88.5)

Acquisitions, net of cash acquired, including

payments for deferred consideration (20.4) (1,961.3)

Purchases of intangibles and other investments (42.3) -

Purchases of marketable securities (24.5) -

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 (173.1) (2,091.7)

-------- --------

Cash Flow From Financing Activities:

Issuance of long-term debt, net of fees paid - 3,336.2

Repayment of long-term debt (85.1) (1,575.1)

Other borrowings, net 7.0 (0.3)

Excess tax benefit from stock-based

compensation arrangements 1.0 0.6

Proceeds from stock options exercised 22.5 27.5

-------- --------

Net Cash (Used in) Provided by Financing

Activities (54.6) 1,788.9

-------- --------

Effect of exchange rate changes on cash and

cash equivalents 5.4 12.2

-------- --------

Net change in cash and cash equivalents (39.7) (119.0)

Cash and cash equivalents at beginning of period 241.1 322.0

-------- --------

Cash and cash equivalents at end of period $201.4 $203.0

======== ========

Supplemental Cash Flow Information:

Cash paid during the period-

Interest $62.4 $45.8

Income taxes, net $27.7 $36.1

Hospira, Inc.

Net Sales by Product Line

(Unaudited)

(dollars in millions)

Three Months Ended June 30,

-------------------------------------------------

% Change at % Change at

Actual Constant

2008 2007 Rates Rates

------ ------ ------- --------

Americas --

Pharmaceuticals

Specialty

Injectables $299.9 $300.5 (0.2)% (1.2)%

Other Pharma 122.7 136.1 (9.8)% (10.4)%

------ ------

422.6 436.6 (3.2)% (4.1)%

Devices

Medication

Management Systems 161 Months Ended Three Months Ended

June 30, June 30,

---------------- % ---------------- %

2008 2007 Change 2008 2007 Change

------ ------ ------ ------ ------ ------

Net Sales $901.6 $869.3 3.7% $901.6 $869.3 3.7%

Gross Profit $329.4 $266.2 23.7% $357.1 $328.2 8.8%

R&D $58.5 $52.6 11.2% $57.4 $52.1 10.2%

Acquired In-

process R&D $0.5 -- nm -- -- nm

SG&A $152.7 $146.0 4.6% $147.5 $137.0 7.7%

Income from

Operations $117.7 $67.6 74.1% $152.2 $139.1 9.4%

Statistics (as a % of Net Sales)

--------------------------------

Gross Profit 36.5% 30.6% 39.6% 37.8%

R&D 6.5% 6.0% 6.4% 6.0%

SG&A 16.9% 16.8% 16.4% 15.8%

Income from

Operations 13.1% 7.8% 16.9% 16.0%

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

Net sales for the second quarter of 2008 increased 3.7 percent. On a constant-currency basis, net sales were essentially even with the second quarter of 2007. Strong sales in Medication Management Systems were offset by softness in the U.S. Specialty Injectables and Other Pharmaceuticals product lines.

Net sales in the Americas segment totaled $677.2 million, an increase of 2.4 percent. Driving the increase was growth in Medication Management Systems, which was partially offset by wholesaler purchasing patterns in Specialty Injectables and decreased demand from some contract manufacturing customers. Net sales .7 132.8 21.8 % 20.4 %

Other Devices 92.9 91.8 1.2 % 0.1 %

------ ------

254.6 224.6 13.4 % 12.1 %

Total Americas 677.2 661.2 2.4 % 1.4 %

Europe, Middle East &

Africa --

Pharmaceuticals

Specialty

Injectables 78.4 70.4 11.4 % 0.2 %

Other Pharma 42.4 40.5 4.7 % (4.5)%

------ ------

120.8 110.9 8.9 % (1.6)%

Devices

Medication

Management Systems 19.3 17.2 12.2 % (2.3)%

Other Devices 16.5 18.6 (11.3)% (22.1)%

------ ------

35.8 35.8 0.0 % (12.6)%

Total Europe, Middle

East & Africa 156.6 146.7 6.7 % (4.3)%

Asia Pacific --

Pharmaceuticals

Specialty

Injectables 52.4 46.5 12.7 % 0.6 %

Other Pharma 3.5 4.5 (22.2)% (32.6)%

------ ------

55.9 51.0 9.6 % (2.3)%

Devices

Medication

Management Systems 5.0 4.0 25.0 % 12.9 %

Other Devices 6.9 6.4 7.8 % (4.3)%

------ ------

11.9 10.4 14.4 % 2.3 %

Total Asia Pacific 67.8 61.4 10.4 % (1.6)%

------ ------

Net Sales $901.6 $869.3 3.7 % 0.2 %

====== ======

Six Months Ended June 30,

---------------------------------------------------

% Change at % Change at

Actual Constant

2008 2007 Rates Rates

------- ------- ------- --------

Americas --

Pharmaceuticals

Specialty

Injectables $640.6 $591.3 8.3 % 7.1 %

Other Pharma 244.6 262.3 (6.7)% (7.5)%

------- -------

885.2 853.6 3.7 % 2.6 %

Devices

Medication

Management Systems 279.8 249.2 12.3 % 10.7 %

Other Devices 186.4 182.9 1.9 % 0.5 %

------- -------

466.2 432.1 7.9 % 6.4 %

Total Americas 1,351.4 1,285.7 5.1 % 3.9 %

Europe, Middle East &

Africa --

Pharmaceuticals

Specialty

Injectables 156.7 119.3 31.3 % 18.4 %

Other Pharma 79.0 73.5 7.5 % (2.7)%

------- -------

235.7 192.8 22.3 % 10.4 %

Devices

Medication

Management Systems 39.7 33.7 17.8 % 3.5 %

Other Devices 34.0 36.2 (6.1)% (17.3)%

------- -------

73.7 69.9 5.4 % (7.3)%

Total Europe, Middle

East & Africa 309.4 262.7 17.8 % 5.7 %

Asia Pacific --

Pharmaceuticals

Specialty

Injectables 98.0 75.9 29.1 % 14.5 %

Other Pharma 7.6 6.6 15.2 % (1.1)%

------- -------

105.6 82.5 28.0 % 13.3 %

Devices

Medication

Management Systems 10.7 8.3 28.9 % 17.5 %

Other Devices 13.2 12.9 2.3 % (9.0)%

------- -------

23.9 21.2 12.7 % 1.4 %

Total Asia Pacific 129.5 103.7 24.9 % 10.9 %

------- -------

Net Sales $1,790.3 $1,652.1 8.4 % 4.7 %

======= =======

Notes:

Specialty Injectable include generic injectables (including biogenerics) and proprietary specialty injectables (such as Precedex(R)). 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 six months ended June 30, 2008 and 2007, include six and five months, respectively, of Mayne Pharma net sales.

Hospira, Inc.

Segment Information

(Unaudited)

(dollars in millions)

Three Months Ended June 30,

----------------------------------------------------------

Net Sales Income from Operations

----------------- ------------------

% %

2008 2007 Change 2008 2007 Change

------ ------ ------ ------ ------ ------

Americas $677.2 $661.2 2.4% $140.1 A $111.5 A 25.7 %

Europe,

Middle East

& Africa 156.6 146.7 6.7% 5.7 B 1.8 B 216.7 %

Asia Pacific 67.8 61.4 10.4% (0.3)C (11.0)C 97.3 %

------ ------ ------ ------

Total

reportable

segments $901.6 $869.3 3.7% 145.5 102.3 42.2 %

====== ======

Corporate

functions (17.7)D (18.4)D (3.8)%

Stock-based

compensation (10.1) (16.3) (38.0)%

------ ------

Income from

operations 117.7 67.6 74.1 %

Interest

expense and

other income,

net (28.2)E (32.1)E (12.1)%

------ ------

Income before

income taxes $89.5 $35.5 152.1 %

====== ======

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 - 6.0

Integration and other acquisition-

related charges 0.7 7.6

Intangible assets amortization 3.5 2.0

Charges related to facilities

optimization initiatives 9.9 14.6

Integration and other acquisition-

related charges 0.2 -

Acquired in-process research and

development 0.5 -

Reduction of obligation associated with

the sale of the Salt Lake City, UT

manufacturing plant - (1.6)

------ -------

Total Americas 14.8 28.6

B -- Europe, Middle East & Africa

Mayne Pharma acquisition related:

Acquired in-process research and

development - -

Inventories step-up charge - 11.0

Integration and other acquisition-

related charges 4.0 0.8

Intangible assets amortization 2.2 2.2

Charges related to facilities

optimization initiatives - -

------ -------

Total Europe, Middle East & Africa 6.2 14.0

C -- Asia Pacific

Mayne Pharma acquisition related:

Inventories step-up charge - 14.7

Integration and other acquisition-

related charges 2.0 0.8

Intangible assets amortization 10.2 9.0

Integration and other acquisition-

related charges 0.2 -

------ -------

Total Asia Pacific 12.4 24.5

D -- Corporate functions

Integration and other acquisition-

related charges 1.1 4.4

------ -------

Total Corporate functions 1.1 4.4

E -- Interest expense and other

income, net

Integration and other acquisition-

related charges - -

------ -------

Total Interest expense and other

income, net - -

------ -------

Total $34.5 $71.5

====== =======

Hospira, Inc.

Segment Information

(Unaudited)

(dollars in millions)

Six Months Ended June 30,

----------------------------------------------------------

Net Sales Income from Operations

------------------- -------------------

% %

2008 2007 Change 2008 2007 Change

-------- -------- ------ ------ ------ ------

Americas $1,351.4 $1,285.7 5.1% $278.1 A $176.3 A 57.7 %

Europe, Middle

East & Africa 309.4 262.7 17.8% 13.8 B (11.5)B 220.0 %

Asia Pacific 129.5 103.7 24.9% (3.5)C (21.8)C 83.9 %

-------- -------- ------ ------

Total

reportable

segments $1,790.3 $1,652.1 8.4% 288.4 143.0 101.7 %

======== ========

Corporate

functions (34.5)D (37.5)D (8.0)%

Stock-based

compensation (24.5) (23.5) 4.3 %

------ ------

Income from

operations 229.4 82.0 179.8 %

Interest expense

and other income,

net (55.5)E (62.0)E (10.5)%

------ ------

Income before

income taxes $173.9 $20.0 769.5 %

====== ======

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 1.1 12.1

Intangible assets amortization 7.0 3.3

Charges related to facilities

optimization initiatives 17.7 24.5

Integration and other acquisition-

related charges 0.2 -

Acquired in-process research and

development 0.5 -

Reduction of obligation associated with

the sale of the Salt Lake City, UT

manufacturing plant - (1.6)

------ ------

Total Americas 26.5 114.5

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 9.4 1.0

Intangible assets amortization 4.4 3.5

Charges related to facilities

optimization initiatives - 0.9

------ ------

Total Europe, Middle East & Africa 13.8 42.0

C -- Asia Pacific

Mayne Pharma acquisition related:

Inventories step-up charge - 25.1

Integration and other acquisition-

related charges 3.4 1.0

Intangible assets amortization 20.2 14.8

Integration and other acquisition-

related charges 0.4 -

------ ------

Total Asia Pacific 24.0 40.9

D -- Corporate functions

Integration and other acquisition-

related charges 3.7 10.3

------ ------

Total Corporate functions 3.7 10.3

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 $68.0 $215.6

====== ======

in the Europe, Middle East and Africa (EMEA) and the Asia-Pacific (APAC) segments increased 6.7 percent and 10.4 percent respectively, driven by the impact of foreign exchange.

A schedule detailing net sales by segment and product line for the three- and six-month periods ended June 30, 2008 and 2007 is attached to this press release.

Adjusted* income from operations for the second quarter of 2008 was $152.2 million, up 9.4 percent. The growth was driven by improved adjusted* gross profit performance, partially offset by increases in adjusted* Research and Development (R&D) and adjusted* Selling, General and Administrative (SG&A) expenses. The increase in adjusted* R&D was driven by investments in drug development activities as well as the impact of foreign exchange. Adjusted* SG&A spending grew due to increased support for sales and marketing of new products, primarily in the EMEA and APAC segments, as well as the impact of foreign exchange.

Cash Flow

Cash flow from operations for the first six months of 2008 was $182.6 million, up from $171.6 million for the same period in 2007. Capital expenditures were $86.7 million for the first six months of 2008, compared with $88.5 million for the same period in 2007.

2008 Projections

Hospira has increased the projected range for net sales growth for 2008. Net sales for the full year are now expected to increase 8 to 10 percent, including the impact of foreign currency.

The company has narrowed the projected range for full-year 2008 adjusted* diluted earnings per share 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 $0.09 to $0.11 per diluted share for 2008) ($0.10)

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 $2.02 - $2.07

==============

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 now projected to be between $190 million and $200 million. Capital expenditures are estimated to be between $190 million and $210 million for 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, Aug. 6, 2008. A live webcast of the conference call will be available at http://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 http://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 Six Months Ended

June 30, June 30,

---------------- % ------------------ %

2008 2007 Change 2008 2007 Change

------ ------ ------ -------- -------- ------

Net sales $901.6 $869.3 3.7 % $1,790.3 $1,652.1 8.4 %

Cost of

products sold 572.2 603.1 (5.1)% 1,146.9 1,111.3 3.2 %

------ ------ -------- --------

Gross Profit 329.4 266.2 23.7 % 643.4 540.8 19.0 %

Research and

development 58.5 52.6 11.2 % 108.4 96.1 12.8 %

Acquired

in-process

research and

development 0.5 - nm 0.5 84.8 (99.4)%

Selling,

general and

administrative 152.7 146.0 4.6 % 305.1 277.9 9.8 %

------ ------ -------- --------

Income From

Operations 117.7 67.6 74.1 % 229.4 82.0 179.8 %

Interest expense 28.2 37.3 (24.4)% 59.6 67.8 (12.1)%

Other income, net - (5.2) (100.0)% (4.1) (5.8) (29.3)%

------ ------ -------- --------

Income Before

Income Taxes 89.5 35.5 152.1 % 173.9 20.0 769.5 %

Income tax expense 20.4 4.8 325.0 % 39.4 18.7 110.7 %

------ ------ -------- --------

Net Income $69.1 $30.7 125.1 % $134.5 $1.3 10,246.2 %

====== ====== ======== ========

Earnings Per

Common Share:

Basic $0.43 $0.20 115.0 % $0.85 $0.01 8,400.0 %

====== ====== ======== ========

Diluted $0.43 $0.20 115.0 % $0.83 $0.01 8,200.0 %

====== ====== ======== ========

Weighted Average

Common Shares

Outstanding:

Basic 159.1 156.7 1.5 % 158.9 156.4 1.6 %

====== ====== ======== ========

Diluted 161.5 159.5 1.3 % 161.2 159.0 1.4 %

====== ====== ======== ========

Hospira, Inc.

Reconciliation of Condensed Consolidated Statements of Income

(Unaudited)

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

Three Months Ended June 30,

-------------------------------------------------------

2008 2007

-------------------------- --------------------------

GAAP Adjustments Adjusted GAAP Adjustments Adjusted

------ ------ ------ ------ ------ ------

Net sales $901.6 $ - $901.6 $869.3 $ - $869.3

Cost of

products sold 572.2 (27.7)A 544.5 603.1 (62.0)F 541.1

------ ------ ------ ------ ------ ------

Gross Profit 329.4 27.7 357.1 266.2 62.0 328.2

Research and

development 58.5 (1.1)B 57.4 52.6 (0.5)D 52.1

Acquired

in-process

research and

development 0.5 (0.5)C - - - -

Selling,

general and

administrative 152.7 (5.2)D 147.5 146.0 (9.0)D 137.0

------ ------ ------ ------ ------ ------

Income From

Operations 117.7 34.5 152.2 67.6 71.5 139.1

Interest expense 28.2 - 28.2 37.3 - 37.3

Other income,

net - - - (5.2) - (5.2)

------ ------ ------ ------ ------ ------

Income Before

Income Taxes 89.5 34.5 124.0 35.5 71.5 107.0

Income tax

expense 20.4 11.2 E 31.6 4.8 24.1 E 28.9

------ ------ ------ ------ ------ ------

Net Income $69.1 $23.3 $92.4 $30.7 $47.4 $78.1

====== ====== ====== ====== ====== ======

Earnings Per

Common Share:

Basic $0.43 $0.15 $0.58 $0.20 $0.30 $0.50

====== ====== ====== ====== ====== ======

Diluted $0.43 $0.14 $0.57 $0.20 $0.29 $0.49

====== ====== ====== ====== ====== ======

Weighted Average

Common Shares

Outstanding:

Basic 159.1 159.1 159.1 156.7 156.7 156.7

====== ====== ====== ====== ====== ======

Diluted 161.5 161.5 161.5 159.5 159.5 159.5

====== ====== ====== ====== ====== ======

Statistics

(as a % of

Net Sales,

except for

income tax rate)

-----------------

Gross Profit 36.5% 39.6% 30.6% 37.8%

R&D 6.5% 6.4% 6.0% 6.0%

SG&A 16.9% 16.4% 16.8% 15.8%

Income From

Operations 13.1% 16.9% 7.8% 16.0%

Income Before

Income Taxes 9.9% 13.8% 4.1% 12.3%

Net Income 7.7% 10.2% 3.5% 9.0%

Income Tax Rate 22.8% 25.5% 13.5% 27.0%

% Change vs. Prior Year

----------------------

GAAP Adjusted

------ --------

Net sales 3.7 % 3.7 %

Cost of products sold (5.1)% 0.6 %

Gross Profit 23.7 % 8.8 %

Research and development 11.2 % 10.2 %

Acquired in-process research and

development nm nm

Selling, general and administrative 4.6 % 7.7 %

Income From Operations 74.1 % 9.4 %

Interest expense (24.4)% (24.4)%

Other income, net (100.0)% (100.0)%

Income Before Income Taxes 152.1 % 15.9 %

Income tax expense 325.0 % 9.3 %

Net Income 125.1 % 18.3 %

Earnings Per Co
'/>"/>

SOURCE Hospira, Inc.
Copyright©2008 PR Newswire.
All rights reserved

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