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Hospira Reports Second-Quarter 2009 Results
Date:7/29/2009

LAKE FOREST, Ill., July 29 /PRNewswire-FirstCall/ -- Hospira, Inc. (NYSE: HSP), a leading global specialty pharmaceutical and medication delivery company, today reported results for the second quarter ended June 30, 2009. Net sales for the quarter were $957 million, and adjusted* diluted earnings per share were $0.73. (Adjusted* measures exclude certain specified items as described later in this press release and the attached schedules.)

"Hospira delivered a very good second quarter, marked by strong sales and earnings, and significant progress toward our Project Fuel initiatives," said Christopher B. Begley, chairman and chief executive officer. "Based on our results for the first half of the year and our expectations for the remainder of 2009, we have increased our full-year adjusted earnings guidance. We remain committed to improving shareholder value through sustainable top- and bottom-line growth."

Second-Quarter 2009 Results

The following table highlights selected financial results for the second quarter of 2009 compared to the same period in 2008:

    In $ millions,              GAAP                     Adjusted*
     except per          Three Months Ended         Three Months Ended
     share amounts            June 30,                   June 30,
                          ----------------     %     ----------------     %
                           2009      2008   Change    2009      2008   Change
                          ------    ------  ------   ------    ------  ------
    Net Sales             $956.9    $901.6    6.1%     n/a       n/a     n/a
    Gross Profit
     (Net Sales
     less Cost of
     Products Sold)       $346.2    $335.2    3.3%   $365.8    $357.1    2.4%
    Income from
     Operations            $91.1    $117.7  (22.6%)  $176.7    $152.2   16.1%
    Diluted EPS            $0.16     $0.43  (62.8%)   $0.73     $0.57   28.1%

    Statistics (as a % of Net Sales)
    -------------------------------
    Gross Profit
     (Net Sales
     less Cost of
     Products Sold)         36.2%     37.2%            38.2%     39.6%
    Income from
     Operations              9.5%     13.1%            18.5%     16.9%


Results under U.S. Generally Accepted Accounting Principles (GAAP) include items detailed in the schedules attached to this press release, including impairment and other asset charges of $0.33 to second-quarter 2009 GAAP diluted earnings per share related to the company's Project Fuel initiatives.

Net sales increased 6.1 percent to $957 million in the second quarter of 2009, compared to $902 million in the second quarter of 2008. Driving the growth were the results for Specialty Injectable Pharmaceuticals (SIP) and Other Pharma. SIP results benefited in part from a favorable comparison to the second quarter of 2008, which was impacted by lower-than-average wholesaler buying patterns. Partially offsetting the favorable SIP and Other Pharma results was a decline in Medication Management Systems (MMS), due to a difficult comparison to the second quarter of 2008, in which MMS generated record quarterly results.

Adjusted* income from operations increased 16.1 percent to $177 million in the second quarter of 2009, compared to $152 million in the second quarter of 2008. Driving the majority of the increase were higher sales volumes; improvements in selling, general and administrative (SG&A) expenses as a result of Project Fuel initiatives; and lower research and development (R&D) spending related to the timing of expenditures. Partially offsetting these factors was the impact of foreign exchange.

Cash Flow

Cash flow from operations for the first six months of 2009 was $236 million, compared to the $183 million generated for the same period in 2008.

Capital expenditures decreased to $78 million for the first six months of 2009, compared to $87 million for the same period in 2008, due to the continued impact of the company's tighter capital-spending controls implemented in the second half of 2008.

2009 Projections

Hospira continues to expect net sales for the year to increase approximately 4 to 6 percent on a constant-currency basis. Including the impact of foreign exchange, the company expects net sales to be flat to slightly up.

The company now expects full-year 2009 adjusted* diluted earnings per share to range between $2.70 and $2.75 per share. The reconciliation between the projected 2009 adjusted* diluted earnings per share and GAAP diluted earnings per share follows:

       Diluted earnings per share -- adjusted*                  $2.70 - $2.75
                                                                -------------
       Estimated charges related to Project Fuel
       initiatives (mid-point range of an estimated
       $0.38 to $0.42 per diluted share in 2009
       for non-impairment charges, plus
       incurred second-quarter impairment and
       other asset charges of $0.33 per diluted share)                 ($0.73)

       Estimated charges related to planned facilities
       optimization initiatives (mid-point of an estimated
       range of $0.10 to $0.12 per diluted share for 2009)             ($0.11)

       Estimated $53 million for the amortization of
       intangibles related to the Mayne Pharma acquisition             ($0.23)

       Impairment of marketable equity securities                      ($0.10)

       Benefit from the settlement of a U.S. income tax audit           $0.57
                                                                -------------
       Diluted earnings per share -- GAAP                       $2.10 - $2.15
                                                                =============

The company continues to project that cash flow from operations in 2009 will be in the $565 million to $615 million range. Depreciation and amortization is expected to be between $210 million and $220 million. Capital expenditures are projected to be between $155 million and $175 million.

*Use of Non-GAAP Adjusted Financial Measures

Non-GAAP financial 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.

Webcast

Hospira will hold a conference call for investors and media at 8 a.m. Central time on Wednesday, July 29, 2009. A live webcast of the conference call will be available on Hospira's Web site 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 approximately 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, and other statements regarding Hospira's goals and strategy. Hospira cautions that these forward-looking statements are subject to risks, uncertainties and assumptions, many of which are beyond Hospira's control, 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 subsequent Form 10-Qs, 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
                                                     June 30,
                                                  --------------       %
                                                    2009    2008     Change
                                                  ------  ------     ------
    Net sales                                     $956.9  $901.6      6.1 %
                                                  ------  ------

    Cost of products sold                          610.7   566.4      7.8 %
    Restructuring and impairment                    55.9     6.3    787.3 %
    Research and development                        52.9    58.0     (8.8)%
    Acquired in-process research and development       -     0.5   (100.0)%
    Selling, general and administrative            146.3   152.7     (4.2)%
                                                  ------  ------
        Total operating expenses                   865.8   783.9     10.4 %
                                                  ------  ------
          Income From Operations                    91.1   117.7    (22.6)%

    Interest expense                                28.2    28.2        - %
    Other expense (income), net                     14.5       -       nm
                                                  ------  ------
          Income Before Income Taxes                48.4    89.5    (45.9)%

    Income tax expense (benefit)                    22.9    20.4     12.3 %
                                                  ------  ------
          Net Income                               $25.5   $69.1    (63.1)%
                                                  ======  ======

    Earnings Per Common Share:
        Basic                                      $0.16   $0.43    (62.8)%
                                                  ======  ======
        Diluted                                    $0.16   $0.43    (62.8)%
                                                  ======  ======

    Weighted Average Common Shares Outstanding:
        Basic                                      160.5   159.1      0.9 %
                                                  ======  ======
        Diluted                                    162.4   161.5      0.6 %
                                                  ======  ======


    Adjusted Gross Profit (1)(2)                  $365.8  $357.1      2.4 %
    Adjusted Income From Operations (1)           $176.7  $152.2     16.1 %
    Adjusted Net Income (1)                       $118.2   $92.4     27.9 %
    Adjusted Diluted Earnings Per Share (1)        $0.73   $0.57     28.1 %


    Statistics (as a % of net sales,
    except for income tax rate):

                                       GAAP             Adjusted (1)
                                Three Months Ended   Three Months Ended
                                     June 30,             June 30,
                                ------------------   ------------------
                                  2009      2008       2009      2008
                                --------  --------   --------  --------
    Gross Profit (2)             36.2 %    37.2 %     38.2 %    39.6 %
    Income From Operations        9.5 %    13.1 %     18.5 %    16.9 %
    Net Income                    2.7 %     7.7 %     12.4 %    10.2 %
    Income Tax Rate              47.3 %    22.8 %     21.5 %    25.5 %


    (1) Adjusted financial measures exclude certain specified items as
    described and reconciled to comparable GAAP financial measures in the
    Reconciliation of GAAP to Non-GAAP Financial Measures schedule.
    (2) Gross profit is defined as Net sales less Cost of products sold.
    Adjusted gross profit excludes certain specified items, as indicated
    in the previous footnote.



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

                                                 Six Months Ended
                                                     June 30,
                                                ------------------      %
                                                   2009      2008     Change
                                                --------  --------    ------
    Net sales                                   $1,816.6  $1,790.3      1.5 %
                                                --------  --------

    Cost of products sold                        1,150.8   1,138.1      1.1 %
    Restructuring and impairment                    65.3       9.3    602.2 %
    Research and development                       102.9     107.9     (4.6)%
    Acquired in-process research and development       -       0.5   (100.0)%
    Selling, general and administrative            291.8     305.1     (4.4)%
                                                --------  --------
        Total operating expenses                 1,610.8   1,560.9      3.2 %
                                                --------  --------
          Income From Operations                   205.8     229.4    (10.3)%

    Interest expense                                55.1      59.6     (7.6)%
    Other expense (income), net                     14.2      (4.1)  (446.3)%
                                                --------  --------
          Income Before Income Taxes               136.5     173.9    (21.5)%

    Income tax (benefit) expense                   (54.5)     39.4   (238.3)%
                                                --------  --------
          Net Income                              $191.0    $134.5     42.0 %
                                                ========  ========

    Earnings Per Common Share:
        Basic                                      $1.19     $0.85     40.0 %
                                                ========  ========
        Diluted                                    $1.18     $0.83     42.2 %
                                                ========  ========

    Weighted Average Common Shares Outstanding:
        Basic                                      160.0     158.9      0.7 %
                                                ========  ========
        Diluted                                    161.5     161.2      0.2 %
                                                ========  ========


    Adjusted Gross Profit (1)(2)                  $705.4    $694.6      1.6 %
    Adjusted Income From Operations (1)           $326.6    $297.4      9.8 %
    Adjusted Net Income (1)                       $215.0    $180.3     19.2 %
    Adjusted Diluted Earnings Per Share (1)        $1.33     $1.12     18.8 %


    Statistics (as a % of net sales,
    except for income tax rate):


                                       GAAP             Adjusted (1)
                                 Six Months Ended     Six Months Ended
                                     June 30,             June 30,
                                ------------------   ------------------
                                  2009      2008       2009      2008
                                --------  --------   --------  --------
    Gross Profit (2)             36.7 %    36.4 %     38.8 %    38.8 %
    Income From Operations       11.3 %    12.8 %     18.0 %    16.6 %
    Net Income                   10.5 %     7.5 %     11.8 %    10.1 %
    Income Tax Rate             (39.9)%    22.7 %     21.5 %    25.5 %

    (1) Adjusted financial measures exclude certain specified items as
    described and reconciled to comparable GAAP financial measures in the
    Reconciliation of GAAP to Non-GAAP Financial Measures schedule.
    (2) Gross profit is defined as Net sales less Cost of products sold.
    Adjusted gross profit excludes certain specified items, as indicated
    in the previous footnote.



                                   Hospira, Inc.
               Reconciliation of GAAP to Non-GAAP Financial Measures
                                    (Unaudited)
          (dollars and shares in millions, except for per share amounts)

    The Non-GAAP financial measures contained in this press release (including
    adjusted gross profit, adjusted income from operations, adjusted net
    income, and adjusted diluted Earnings Per Share) adjust for certain
    specified items. Management believes that Non-GAAP financial measures can
    facilitate a more complete analysis and greater transparency into
    Hospira's ongoing results of operations, particularly in comparing
    underlying results from period to period.  Management uses these Non-GAAP
    financial measures internally in financial planning, to monitor business
    unit performance, and in evaluating management performance. All Non-GAAP
    financial measures are intended to supplement the applicable GAAP measures
    and should not be considered in isolation from, or a replacement for,
    financial measures prepared in accordance with GAAP. Hospira's Non-GAAP
    financial measures may be different from Non-GAAP financial measures used
    by other companies.

    Three months ended June 30, 2009 Reconciliation of GAAP to Non-GAAP
    Financial Measures:
    -------------------------------------------------------------------

                                                     Income
                                          Gross       From       Net   Diluted
                                       Profit (1)  Operations  Income    EPS
                                       ----------  ---------- -------  -------
    GAAP financial measures               $346.2      $91.1    $25.5    $0.16
    Specified items:
       Project Fuel charges (A)              4.8       67.6     64.0     0.40
       Facilities Optimization charges (B)   0.4        3.6      2.4     0.01
       Amortization of Mayne Pharma
        intangible assets (C)               14.4       14.4      9.7     0.06
       Impairment of marketable equity
        securities (D)                         -          -     16.6     0.10
                                       ----------  ---------- -------  -------
    Adjusted financial measures            $365.8    $176.7   $118.2    $0.73
                                       ==========  ========== =======  =======

    GAAP results for the three months ended June 30, 2009 include:
    A --  Project Fuel charges: $4.8 million reported in Cost of products
          sold, $52.7 million reported in Restructuring and impairment,
          $0.9 million reported in Research and development and $9.2 million
          reported in Selling, general and administrative. These charges
          relate to the Project Fuel initiatives and include costs for
          severance and other employee benefits, process optimization
          implementation, other asset charges, exit costs and charges
          associated with certain non-strategic businesses and underlying
          assets committed for disposal and the related inventory, property
          and equipment, allocated goodwill and intangible assets.
    B --  Facilities Optimization charges: $0.4 million reported in Cost of
          products sold and $3.2 million reported in Restructuring and
          impairment. These charges relate to facilities optimization from the
          closure or departure from certain manufacturing and research and
          development ("R&D") facilities and include costs for severance and
          other employee benefits, accelerated depreciation and relocation of
          production and R&D operations.
    C --  Amortization of Mayne Pharma Limited ("Mayne Pharma") intangible
          assets resulting from the Mayne Pharma acquisition is reported in
          Cost of products sold.
    D --  Impairment of marketable equity securities is reported in Other
          expense (income), net.

    Three months ended June 30, 2008 Reconciliation of GAAP to Non-GAAP
    Financial Measures:
    -------------------------------------------------------------------

                                                     Income
                                          Gross       From       Net   Diluted
                                       Profit (1)  Operations  Income    EPS
                                       ----------  ---------- -------  -------
    GAAP financial measures               $335.2     $117.7    $69.1    $0.43
    Specified items:
       Facilities Optimization charges (A)   3.4        9.9      6.2     0.04
       Amortization of Mayne Pharma
        intangible assets (B)               15.9       15.9     10.7     0.07
       Integration-related charges (C)       2.6        8.2      5.9     0.03
       Acquired in-process research and
        development                            -        0.5      0.5        -
                                       ----------  ---------- -------  -------
    Adjusted financial measures           $357.1     $152.2    $92.4    $0.57
                                       ==========  ========== =======  =======

    GAAP results for the three months ended June 30, 2008 include:
    A --  Facilities Optimization charges: $3.4 million reported in Cost of
          products sold, $6.3 million reported in Restructuring and
          impairment and $0.2 million reported in Research and development.
    B --  Amortization of Mayne Pharma intangible assets is reported in Cost
          Of products sold.
    C --  Integration-related charges: $2.6 million reported in Cost of
          products sold, $0.4 million reported in Research and development
          and $5.2 million reported in Selling, general and administrative.
          These charges relate to the integration of Mayne Pharma and other
          acquisitions into our operations and include costs for closure of
          facilities, termination of lease agreements, severance and other
          employee benefit costs.

    (1) Gross profit is defined as Net sales less Cost of products sold.



                                   Hospira, Inc.
               Reconciliation of GAAP to Non-GAAP Financial Measures
                                    (Unaudited)
          (dollars and shares in millions, except for per share amounts)

    The Non-GAAP financial measures contained in this press release (including
    adjusted gross profit, adjusted income from operations, adjusted net
    income, and adjusted diluted Earnings Per Share) adjust for certain
    specified items. Management believes that Non-GAAP financial measures can
    facilitate a more complete analysis and greater transparency into
    Hospira's ongoing results of operations, particularly in comparing
    underlying results from period to period.  Management uses these Non-GAAP
    financial measures internally in financial planning, to monitor business
    unit performance, and in evaluating management performance. All Non-GAAP
    financial measures are intended to supplement the applicable GAAP measures
    and should not be considered in isolation from, or a replacement for,
    financial measures prepared in accordance with GAAP. Hospira's Non-GAAP
    financial measures may be different from Non-GAAP financial measures used
    by other companies.

    Six months ended June 30, 2009 Reconciliation of GAAP to Non-GAAP
    Financial Measures:
    -----------------------------------------------------------------

                                                     Income
                                          Gross       From       Net   Diluted
                                       Profit (1)  Operations  Income    EPS
                                       ----------  ---------- -------  -------
    GAAP financial measures               $665.8     $205.8   $191.0    $1.18
    Specified items:
       Project Fuel charges (A)              4.8       78.1     70.5     0.44
       Facilities Optimization charges (B)   7.4       15.3     10.1     0.06
       Amortization of Mayne Pharma
        intangible assets (C)               27.4       27.4     18.7     0.12
       Impairment of marketable equity
        securities (D)                         -          -     16.6     0.10
       Resolution of IRS tax audit
        benefit (E)                            -          -    (91.9)   (0.57)
                                       ----------  ---------- -------  -------
    Adjusted financial measures           $705.4     $326.6   $215.0    $1.33
                                       ==========  ========== =======  =======

    GAAP results for the six months ended June 30, 2009 include:
    A --  Project Fuel charges: $4.8 million reported in Cost of products
          sold, $57.4 million reported in Restructuring and impairment,
          $1.3 million reported in Research and development and $14.6 million
          reported in Selling, general and administrative. These charges
          relate to the Project Fuel initiatives and include costs for
          severance and other employee benefits, process optimization
          implementation, other asset charges, exit costs and charges
          associated with certain non-strategic businesses and underlying
          assets committed for disposal and the related inventory, property
          and equipment, allocated goodwill and intangible assets.
    B --  Facilities Optimization charges: $7.4 million reported in Cost of
          products sold and $7.9 million reported in Restructuring and
          impairment. These charges relate to facilities optimization from
          the closure or departure from certain manufacturing and research
          and development ("R&D") facilities and include costs for severance
          and other employee benefits, accelerated depreciation and relocation
          of production and R&D operations.
    C --  Amortization of Mayne Pharma Limited ("Mayne Pharma") intangible
          assets resulting from the Mayne Pharma acquisition is reported in
          Cost of products sold.
    D --  Impairment of marketable equity securities is reported in Other
          expense (income), net.
    E --  Resolution of IRS tax audit benefit of $91.9 million reported in
          Income tax expense (benefit). This discrete income tax benefit is
          related to the completion and effective settlement of U.S. tax
          return audits.

    Six months ended June 30, 2008 Reconciliation of GAAP to Non-GAAP
    Financial Measures:
    -----------------------------------------------------------------

                                                     Income
                                          Gross       From       Net   Diluted
                                       Profit (1)  Operations  Income    EPS
                                       ----------  ---------- -------  -------
    GAAP financial measures               $652.2     $229.4   $134.5    $0.83
    Specified items:
       Facilities Optimization charges (A)   7.8       17.7     10.9     0.07
       Amortization of Mayne Pharma
        intangible assets (B)               31.6       31.6     21.3     0.14
       Integration-related charges
        (C)                                  3.0       18.2     13.1     0.08
       Acquired in-process research
        and development                        -        0.5      0.5        -
                                       ----------  ---------- -------  -------Adjusted financial measures           $694.6     $297.4   $180.3    $1.12
                                       ==========  ========== =======  =======

    GAAP results for the six months ended June 30, 2008 include:
    A --  Facilities Optimization charges: $7.8 million reported in Cost of
          products sold, $9.3 million reported in Restructuring and
          impairments and $0.6 million reported in Research and development.
    B --  Amortization of Mayne Pharma intangible assets is reported in Cost
          of products sold.
    C --  Integration-related charges: $3.0 million reported in Cost of
          products sold, $0.8 million reported in Research and development
          and $14.4 million reported in Selling, general and administrative.
          These charges relate to the integration of Mayne Pharma and other
          acquisitions into our operations and include costs for closure of
          facilities, termination of lease agreements, severance and other
          employee benefit costs.

    (1) Gross profit is defined as Net sales less Cost of products sold.



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

                                                      June 30,   December 31,
             Assets                                     2009         2008
                                                      --------     --------

    Current Assets:
      Cash and cash equivalents                         $608.5       $483.8
      Trade receivables, less allowances of $7.7 in
       2009 and $6.7 in 2008                             594.4        583.4
      Inventories                                        864.7        830.5
      Deferred income taxes                              191.7        172.2
      Prepaid expenses and other current assets           48.5         35.7
      Other receivables                                   50.5         43.7
                                                      --------     --------
          Total Current Assets                         2,358.3      2,149.3
                                                      --------     --------
    Property and equipment, net                        1,183.2      1,192.1
    Intangible assets, net                               399.7        404.4
    Goodwill                                           1,189.5      1,167.4
    Deferred income taxes                                 62.1         70.1
    Investments                                           41.3         37.6
    Other assets                                          54.8         53.2
                                                      --------     --------
          Total Assets                                $5,288.9     $5,074.1
                                                      ========     ========

             Liabilities and Shareholders' Equity
    Current Liabilities:
      Short-term borrowings                             $402.0       $338.3
      Trade accounts payable                             200.4        231.5
      Salaries, wages and commissions                    121.2        144.7
      Deferred income taxes                                  -          1.5
      Other accrued liabilities                          340.7        331.5
                                                      --------     --------
          Total Current Liabilities                    1,064.3      1,047.5
                                                      --------     --------
    Long-term debt                                     1,705.8      1,834.0
    Deferred income taxes                                 29.9         25.2
    Post-retirement obligations                          200.3        195.5
    Other long-term liabilities                           94.3        195.5
    Commitments and Contingencies
                                                      --------     --------
    Total Shareholders' Equity                         2,194.3      1,776.4
                                                      --------     --------
    Total Liabilities and Shareholders' Equity        $5,288.9     $5,074.1
                                                      ========     ========



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

                                                            Six Months Ended
                                                                June 30,
                                                            ----------------
                                                             2009      2008
                                                            ------    ------
    Cash Flow From Operating Activities:
      Net income                                            $191.0    $134.5
      Adjustments to reconcile net income to net cash from
       operating activities-
        Depreciation                                          83.2      93.9
        Amortization of intangible assets                     30.7      34.4
        Impairment and other asset charges                    69.7         -
        Write-off of acquired in-process research and
         development                                             -       0.5
        Stock-based compensation expense                      22.7      24.5
        Deferred income tax and other tax adjustments        (98.3)     (4.6)
        Net gains on sales of assets                             -      (0.5)
      Changes in assets and liabilities-
        Trade receivables                                     (2.8)    (44.5)
        Inventories                                           (6.3)    (51.2)
        Prepaid expenses and other assets                    (11.4)     13.5
        Trade accounts payable                               (32.8)      9.8
        Other liabilities                                    (18.2)    (41.5)
      Other, net                                               8.5      13.8
                                                            ------    ------
          Net Cash Provided by Operating Activities          236.0     182.6
                                                            ------    ------

    Cash Flow From Investing Activities:
      Capital expenditures (including instruments placed
       with or leased to customers)                          (77.8)    (86.7)
      Acquisition, net of cash acquired, and payments for
       contingent consideration                              (14.2)    (20.4)
      Purchases of intangibles and other investments          (3.2)    (42.3)
      Purchases of marketable equity securities                  -     (24.5)
      Proceeds from sale of facilities                           -       0.8
                                                            ------    ------
        Net Cash Used in Investing Activities                (95.2)   (173.1)
                                                            ------    ------

    Cash Flow From Financing Activities:
      Issuance of long-term debt, net of fees paid           246.7         -
      Repayment of long-term debt                           (306.1)    (85.1)
      Other borrowings, net                                    0.7       7.0
      Excess tax benefit from stock-based compensation
       arrangements                                            0.2       1.0
      Proceeds from stock options exercised                   35.4      22.5
                                                            ------    ------
        Net Cash Used in Financing Activities                (23.1)    (54.6)
                                                            ------    ------

    Effect of exchange rate changes on cash and cash
     equivalents                                               7.0       5.4
                                                            ------    ------

    Net change in cash and cash equivalents                  124.7     (39.7)
    Cash and cash equivalents at beginning of period         483.8     241.1
                                                            ------    ------
    Cash and cash equivalents at end of period              $608.5    $201.4
                                                            ======    ======

    Supplemental Cash Flow Information:
    Cash paid during the period-
       Interest                                              $54.8     $62.4
       Income taxes, net of refunds                          $18.7     $27.7



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

                                           Three Months Ended June 30,
                                      ------------------------------------
                                                       % Change   % Change
                                                      at Actual  at Constant
                                       2009     2008     Rates    Rates (1)
                                      ------   ------    -----    ---------
    Americas--
    Pharmaceuticals
       Specialty Injectables          $368.5   $299.9    22.9 %      24.6 %
       Other Pharma                    139.4    122.7    13.6 %      15.8 %
                                      ------   ------
                                       507.9    422.6    20.2 %      22.0 %
    Devices
       Medication Management Systems   152.2    161.7    (5.9)%      (3.7)%
       Other Devices                    91.6     92.9    (1.4)%       0.5 %
                                      ------   ------
                                       243.8    254.6    (4.2)%      (2.1)%
    Total Americas                     751.7    677.2    11.0 %      12.9 %

    Europe, Middle East & Africa--
    Pharmaceuticals
       Specialty Injectables            68.1     78.4   (13.1)%       2.3 %
       Other Pharma                     35.4     42.4   (16.5)%      (2.0)%
                                      ------   ------
                                       103.5    120.8   (14.3)%       0.8 %
    Devices
       Medication Management Systems    17.5     19.3    (9.3)%       4.6 %
       Other Devices                    17.4     16.5     5.5 %      22.1 %
                                      ------   ------
                                        34.9     35.8    (2.5)%      12.7 %
    Total Europe, Middle East &
     Africa                            138.4    156.6   (11.6)%       3.5 %

    Asia Pacific--
    Pharmaceuticals
       Specialty Injectables            53.0     52.4     1.1 %      18.4 %
       Other Pharma                      2.7      3.5   (22.9)%      (2.6)%
                                      ------   ------
                                        55.7     55.9    (0.4)%      17.1 %
    Devices
       Medication Management Systems     4.9      5.0    (2.0)%      11.0 %
       Other Devices                     6.2      6.9   (10.1)%      (2.3)%
                                      ------   ------
                                        11.1     11.9    (6.7)%       3.3 %

    Total Asia Pacific                  66.8     67.8    (1.5)%      14.6 %
                                      ------   ------
    Net Sales                         $956.9   $901.6     6.1 %      11.4 %
                                      ======   ======

    Global--
    Pharmaceuticals
       Specialty Injectables          $489.6   $430.7    13.7 %      19.8 %
       Other Pharma                    177.5    168.6     5.3 %      10.9 %
                                      ------   ------
                                       667.1    599.3    11.3 %      17.3 %

    Devices
       Medication Management Systems   174.6    186.0    (6.1)%      (2.4)%
       Other Devices                   115.2    116.3    (0.9)%       3.4 %
                                      ------   ------
                                       289.8    302.3    (4.1)%      (0.1)%
                                      ------   ------
    Net Sales                         $956.9   $901.6     6.1 %      11.4 %
                                      ======   ======


                                           Six Months Ended June 30,
                                    --------------------------------------
                                                       % Change   % Change
                                                      at Actual  at Constant
                                      2009     2008      Rates    Rates (1)
                                    -------- --------    -----    ---------
    Americas--
    Pharmaceuticals
       Specialty Injectables          $701.6   $640.6     9.5 %      11.2 %
       Other Pharma                    277.2    244.6    13.3 %      15.7 %
                                    -------- --------
                                       978.8    885.2    10.6 %      12.5 %
    Devices
       Medication Management Systems   273.6    279.8    (2.2)%       0.4 %
       Other Devices                   184.0    186.4    (1.3)%       0.8 %
                                    -------- --------
                                       457.6    466.2    (1.8)%       0.6 %
    Total Americas                   1,436.4  1,351.4     6.3 %       8.4 %

    Europe, Middle East & Africa--
    Pharmaceuticals
       Specialty Injectables           125.7    156.7   (19.8)%      (5.0)%
       Other Pharma                     63.1     79.0   (20.1)%      (5.0)%
                                    -------- --------
                                       188.8    235.7   (19.9)%      (5.0)%
    Devices
       Medication Management Systems    36.6     39.7    (7.8)%       6.9 %
       Other Devices                    34.2     34.0     0.6 %      16.8 %
                                    -------- --------
                                        70.8     73.7    (3.9)%      11.5 %
    Total Europe, Middle East &
     Africa                            259.6    309.4   (16.1)%      (1.1)%

    Asia Pacific--
    Pharmaceuticals
       Specialty Injectables            92.0     98.0    (6.1)%      13.4 %
       Other Pharma                      6.3      7.6   (17.1)%       8.3 %
                                    -------- --------
                                        98.3    105.6    (6.9)%      13.1 %
    Devices
       Medication Management Systems     9.6     10.7   (10.3)%       3.0 %
       Other Devices                    12.7     13.2    (3.8)%       5.3 %
                                    -------- --------
                                        22.3     23.9    (6.7)%       4.3 %

    Total Asia Pacific                 120.6    129.5    (6.9)%      11.4 %
                                    -------- --------
    Net Sales                       $1,816.6 $1,790.3     1.5 %       7.0 %
                                    ======== ========

    Global--
    Pharmaceuticals
       Specialty Injectables          $919.3   $895.3     2.7 %       8.7 %
       Other Pharma                    346.6    331.2     4.6 %      10.6 %
                                    -------- --------
                                     1,265.9  1,226.5     3.2 %       9.2 %

    Devices
       Medication Management Systems   319.8    330.2    (3.1)%       1.3 %
       Other Devices                   230.9    233.6    (1.2)%       3.3 %
                                    -------- --------
                                       550.7    563.8    (2.3)%       2.2 %
                                    -------- --------
    Net Sales                       $1,816.6 $1,790.3     1.5 %       7.0 %
                                    ======== ========


    (1) The Non-GAAP financial measures contained in this press release
    include comparisons at constant currency rates (reflecting comparative
    local currency balances at prior period foreign exchange rates), which we
    define as current period net sales excluding the impact of the change in foreign exchange rates less prior period reported net sales divided by
    prior period reported net sales. This financial measure provides
    information on the change in net sales assuming that foreign currency
    exchange rates have not changed between the prior and the current period.
    Management believes the use of this financial measure aids in the
    understanding of our change in net sales without the impact of foreign
    currency. All Non-GAAP financial measures are intended to supplement the
    applicable GAAP measures and should not be considered in isolation from,
    or a replacement for, financial measures prepared in accordance with GAAP.



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

                                     Three Months Ended June 30,
                      --------------------------------------------------------
                         Net Sales             Income from Operations
                      --------------       %     -----------------        %
                       2009     2008     Change   2009       2008       Change
                      ------   ------    ------  ------     ------      ------
    Americas          $751.7   $677.2    11.0 %  $123.2  A  $138.6  A  (11.1)%
    Europe, Middle
     East & Africa     138.4    156.6   (11.6)%     1.2  B     1.8  B  (33.3)%
    Asia Pacific        66.8     67.8    (1.5)%    (2.8) C     5.1  C (154.9)%
                      ------   ------            ------     ------

    Total reportable
     segments         $956.9   $901.6     6.1 %   121.6      145.5     (16.4)%
                      ======   ======

    Corporate
     functions                                    (20.9) D   (17.7) D   18.1 %
    Stock-based
     compensation                                  (9.6)     (10.1)     (5.0)%
                                                 ------     ------
    Income from
     operations                                    91.1      117.7     (22.6)%
    Interest expense
     and other expense
     (income), net                                (42.7) E   (28.2) E   51.4 %
                                                 ------     ------

    Income before
     income taxes                                 $48.4      $89.5     (45.9)%
                                                 ======     ======

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

    A -- Americas
      Project Fuel                                $52.2       $  -
      Facilities Optimization                       3.6        9.9
      Amortization of Mayne Pharma
       intangible assets                            4.8        5.0
      Integration-related                             -        0.9
      Acquired in-process research
       and development                                -        0.5
                                                 ------     ------
    Total Americas                                 60.6       16.3

    B -- Europe, Middle East & Africa
      Project Fuel                                  3.1          -
      Amortization of Mayne Pharma
       intangible assets                            5.6        6.1
      Integration-related                             -        4.0
                                                 ------     ------
    Total Europe, Middle East & Africa              8.7       10.1

    C -- Asia Pacific
      Project Fuel                                  8.2          -
      Amortization of Mayne Pharma
       intangible assets                            4.0        4.8
      Integration-related                             -        2.2
                                                 ------     ------
    Total Asia Pacific                             12.2        7.0

    D -- Corporate functions
      Project Fuel                                  4.1          -
      Integration-related                             -        1.1
                                                 ------     ------
    Total Corporate functions                       4.1        1.1

    E -- Interest expense and other expense
      (income), net
      Impairment of marketable equity securities   16.6          -
                                                 ------     ------
    Total Interest expense and other expense
     (income), net                                 16.6          -
                                                 ------     ------
    Total                                        $102.2      $34.5
                                                 ======     ======



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

                                     Six Months Ended June 30,
                    ----------------------------------------------------------
                        Net Sales              Income from Operations
                    ----------------       %     -----------------        %
                      2009     2008      Change   2009       2008       Change
                    -------- --------    ------  ------     ------      ------
    Americas        $1,436.4 $1,351.4     6.3 %  $258.2  A  $274.9  A   (6.1)%
    Europe, Middle
     East & Africa     259.6    309.4   (16.1)%    11.3  B     6.3  B   79.4 %
    Asia Pacific       120.6    129.5    (6.9)%     0.4  C     7.2  C  (94.4)%
                    -------- --------            ------     ------

    Total reportable
     segments       $1,816.6 $1,790.3     1.5 %   269.9      288.4      (6.4)%
                    ======== ========

    Corporate
     functions                                    (41.4) D   (34.5) D   20.0 %
    Stock-based
     compensation                                 (22.7)     (24.5)     (7.3)%
                                                 ------     ------
    Income from
     operations                                   205.8      229.4     (10.3)%
    Interest expense
     and other expense
     (income), net                                (69.3) E   (55.5) E   24.9 %
                                                 ------     ------
    Income before
     income taxes                                $136.5     $173.9     (21.5)%
                                                 ======     ======



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

    A -- Americas
      Project Fuel                                $59.8       $  -
      Facilities Optimization                      15.3       17.7
      Amortization of Mayne Pharma
       intangible assets                            9.3       10.2
      Integration-related                             -        1.3
      Acquired in-process research
       and development                                -        0.5
                                                 ------     ------
    Total Americas                                 84.4       29.7

    B -- Europe, Middle East & Africa
      Project Fuel                                  3.3          -
      Amortization of Mayne Pharma
       intangible assets                           10.6       11.9
      Integration-related                             -        9.4
                                                 ------     ------
    Total Europe, Middle East & Africa             13.9       21.3

    C -- Asia Pacific
      Project Fuel                                  8.7          -
      Amortization of Mayne Pharma
       intangible assets                            7.5        9.5
      Integration-related                             -        3.8
                                                 ------     ------
    Total Asia Pacific                             16.2       13.3

    D -- Corporate functions
      Project Fuel                                  6.3          -
      Integration-related                             -        3.7
                                                 ------     ------
    Total Corporate functions                       6.3        3.7

    E -- Interest expense and other expense
      (income), net
      Impairment of marketable equity securities   16.6          -
                                                 ------     ------
    Total Interest expense and other expense
     (income), net                                 16.6          -
                                                 ------     ------
    Total                                        $137.4      $68.0
                                                 ======     ======



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SOURCE Hospira, Inc.
Copyright©2009 PR Newswire.
All rights reserved


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