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Hospira Reports Third-Quarter 2007 Results
Date:11/8/2007

-- Reaffirms Earnings Projections for 2007 --

LAKE FOREST, Ill., Nov. 8 /PRNewswire-FirstCall/ -- Hospira, Inc. (NYSE: HSP), a leading global hospital products company, today reported results for the third quarter ended Sept. 30, 2007.

-- Net sales increased 29.6 percent to $838.0 million in the third quarter

of 2007, compared to $646.6 million in the third quarter last year.

Net sales excluding Mayne Pharma sales grew 4.0 percent.

-- Adjusted* third-quarter 2007 diluted earnings per share were $0.49

versus $0.45 in 2006. GAAP third-quarter 2007 diluted earnings per

share were $0.37 versus $0.35 for the same period last year.

"The third quarter was one of solid growth for Hospira's core products and continued progress across the company, and we remain on track to achieve our 2007 earnings projections," said Christopher B. Begley, chairman and chief executive officer. "We're on schedule with our Mayne Pharma integration, and we recently achieved another milestone toward launching our first biogeneric next year in Europe. In advancing our strategies, we are positioning Hospira for sustained future growth."

Third-quarter Financial Highlights

The following table highlights net sales, net income and diluted earnings per share (EPS) results for the quarter ended Sept. 30:

In $ millions, GAAP Adjusted*

except per Three Months Ended Three Months Ended

share amounts Sept. 30, Sept. 30,

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

2007 2006 Change 2007 2006 Change

--45

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

Weighted Average

Common Shares

Outstanding:

Basic 157,091 157,091 157,091 156,359 156,359 156,359

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

Diluted 160,072 160,072 160,072 158,781 158,781 158,781

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

Statistics

(as a % of

Net Sales,

except for

income tax rate)

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

Gross Profit 35.1% 37.8% 33.9% 36.7%

R&D 6.1% 6.1% 5.6% 5.6%

S,G&A 16.3% 15.4% 16.0% 15.4%

Income From

Operations 12.7% 16.3% 12.2% 15.7%

Income Before

Income Taxes 9.3% 12.9% 11.6% 15.1%

Net Income 7.1% 9.4% 8.7% 11.3%

Income Tax Rate 24.0% 27.0% 25.5% 25.5%

% Change vs. Prior Year

GAAP Adjusted

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

Net sales 29.6 % 29.6 %

Cost of products sold 27.1 % 27.5 %

Gross Profit 34.5 % 33.2 %

Research and development 41.0 % 40.2 %

Selling, general and administrative 31.9 % 30.0 %

Income From Operations 34.9 % 33.9 %

Interest expense 330.3 % 330.3 %

Other income, net 49.7 % 49.7 %

Income Before Income Taxes 4.0 % 10.2 %

Income tax expense (2.3)% 16.7 %

Net Income 6.1 % 7.9 %

Earnings Per Common Share:

Basic 5.6 % 6.4 %

Diluted 5.7 % 8.9 %

Weighted Average Common Shares Outstanding:

Basic 0.5 % 0.5 %

Diluted 0.8 % 0.8 %

A -- Includes intangible assets amortization of $13,350 related to the

Mayne Pharma acquisition; charges of $7,991 related to the planned

closures of the Donegal, Ireland; Ashland, OH; Montreal, Canada; and

North Chicago, IL facilities as part of Hospira's manufacturing

optimization initiatives; and Mayne Pharma integration charges of

$642.

B -- Acquisition integration charges.

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

D -- Includes charges of $18,291 related to the planned closures of the

Donegal, Ireland; Ashland, OH; Montreal, Canada; and North Chicago,

IL facilities as part of Hospira's manufacturing optimization

initiatives; and non-recurring transition charges of $275.

E -- Non-recurring transition charges as a result of the spin-off.

nm = Percent change is not meaningful.

Hospira, Inc.

Reconciliation of Condensed Consolidated Statements of Income

(Unaudited)

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

Nine Months Ended September 30,

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

2007 2006

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

GAAP Adjustments Adjusted GAAP Adjustments Adjusted

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

Net sales $2,490,173 $ - $2,490,173 $1,982,035 $ - $1,982,035

Cost of

products

sold 1,654,855 (126,081)A 1,528,774 1,293,125 (45,697)G 1,247,428

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

Gross

Profit 835,318 126,081 961,399 688,910 45,697 734,607

Research and

development 147,478 (1,277)B 146,201 106,526 (3,266)H 103,260

Acquired

in-process

research and

development 84,800 (84,800)C - - - -

Selling,

general and

administra-

tive 414,393 (25,153)B 389,240 316,373 (23,144)H 293,229

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

Income

From

Operations 188,647 237,311 425,958 266,011 72,107 338,118

Interest

expense 102,541 (2,265)D 100,276 22,999 - 22,999

Other income,

net (12,014) (5,653)E (17,667) (12,394) - (12,394)

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

Income Before

Income

Taxes 98,120 245,229 343,349 255,406 72,107 327,513

Income tax

expense 37,419 55,285 F 92,704 65,128 18,387 F 83,515

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

Net Income $60,701 $189,944 $250,645 $190,278 $53,720 $243,998

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

Earnings

Per Common

Share:

Basic $0.39 $1.21 $1.60 $1.21 $0.34 $1.55

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

Diluted $0.38 $1.19 $1.57 $1.18 $0.33 $1.51

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

Weighted Average

Common Shares

Outstanding:

Basic 156,628 156,628 156,628 157,897 157,897 157,897

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

Diluted 159,528 159,528 159,528 161,214 161,214 161,214

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

Statistics

(as a % of

Net Sales,

except for

income tax rate)

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

Gross Profit 33.5% 38.6% 34.8% 37.1%

R&D 5.9% 5.9% 5.4% 5.2%

S,G&A 16.6% 15.6% 16.0% 14.8%

Income From

Operations 7.6% 17.1% 13.4% 17.1%

Income Before

Income Taxes 3.9% 13.8% 12.9% 16.5%

Net Income 2.4% 10.1% 9.6% 12.3%

Income Tax Rate 38.1% 27.0% 25.5% 25.5%

% Change vs. Prior Year

GAAP Adjusted

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

Net sales 25.6 % 25.6 %

Cost of products sold 28.0 % 22.6 %

Gross Profit 21.3 % 30.9 %

Research and development 38.4 % 41.6 %

Acquired in-process research and development nm nm

Selling, general and administrative 31.0 % 32.7 %

Income From Operations (29.1)% 26.0 %

Interest expense 345.8 % 336.0 %

Other income, net (3.1)% 42.5 %

Income Before Income Taxes (61.6)% 4.8 %

Income tax expense (42.5)% 11.0 %

Net Income (68.1)% 2.7 %

Earnings Per Common Share:

Basic (67.8)% 3.2 %

Diluted (67.8)% 4.0 %

Weighted Average Common Shares Outstanding:

Basic (0.8)% (0.8)%

Diluted (1.0)% (1.0)%

A -- Includes inventory step-up charge of $53,113 and intangible assets

amortization of $34,940 related to the Mayne Pharma acquisition;

charges of $33,434 related to the planned closures of the Donegal,

Ireland; Ashland, OH; Montreal, Canada; and North Chicago, IL

facilities as part of Hospira's manufacturing optimization

initiatives; a reduction of the obligation associated with the 2005

sale of the Salt Lake City manufacturing plant to ICU Medical

($1,579); and Mayne Pharma integration charges of $6,173.

B -- Acquisition integration charges.

C -- Acquired in-process research and development related to the

acquisition of Mayne Pharma.

D -- Other acquisition-related charge: bridge loan fees incurred as a

result of the Mayne Pharma acquisition expensed upon refinancing of

loan during the first quarter.

E -- Other acquisition-related charge: foreign exchange losses related to

the Mayne Pharma acquisition.

F -- Reflects the tax effect of the above adjustments, except for the non-

tax deductible write-off of acquired in-process research and

development related to the Mayne Pharma acquisition in 2007.

G -- Includes charges of $50,242 related to the planned closures of the

Donegal, Ireland; Ashland, OH; Montreal, Canada; and North Chicago,

IL facilities as part of Hospira's manufacturing optimization

initiatives; a reduction of the obligation associated with the sale

of the Salt Lake City manufacturing plant to ICU Medical ($1,100); a

gain on the sale of the Donegal, Ireland facility ($7,851); and

non-recurring transition charges of $4,406.

H -- Non-recurring transition charges as a result of the spin-off.

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,

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

2007 2006 2007 2006

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

Diluted Earnings Per

Share - GAAP $0.37 $0.35 $0.38 $1.18

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 - 0.16 -

Intangible assets

amortization 0.06 - 0.15 -

Charges related to

manufacturing

optimization

initiatives 0.03 0.08 0.13 0.23

Non-recurring transition

charges as a result of

the spin-off - 0.02 - 0.14

Gain on the sale of the

Donegal, Ireland facility - - - (0.04)

Reduction of obligation

related to the 2005 sale

of the Salt Lake City, UT

manufacturing plant - - (0.01) (0.01)

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

Subtotal of Adjustments 0.12 0.10 1.19 0.33

Diluted Earnings per Share -

Adjusted $0.49 $0.45 $1.57 $1.51

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

Adjustment figures may not add due to rounding.

Hospira, Inc.

Condensed Consolidated Balance Sheets

(Unaudited)

(dollars in thousands)

September 30, December 31,

Assets 2007 2006

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

Current Assets:

Cash and cash equivalents $236,428 $322,045

Net trade receivables 565,988 335,334

Inventories 820,702 626,934

Prepaid expenses, deferred income

taxes and other receivables 245,721 238,577

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

Total Current Assets 1,868,839 1,522,890

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

Net property and equipment 1,245,456 1,039,431

Intangible assets, net of amortization 544,467 17,103

Goodwill 1,254,005 91,857

Deferred income taxes 68,182 76,367

Investments 29,399 31,341

Other assets 70,063 68,598

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

Total Assets $5,080,411 $2,847,587

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

Liabilities and Shareholders' Equity

Current Liabilities:

Short-term borrowings $96,557 $4,532

Trade accounts payable 188,204 130,968

Salaries, wages and commissions 132,709 102,037

Other accrued liabilities 397,829 368,689

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

Total Current Liabilities 815,299 606,226

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

Long-term debt 2,273,944 702,044

Post-retirement obligations, deferred income

taxes and other long-term liabilities 374,502 178,228

Commitments and Contingencies

Shareholders' Equity 1,616,666 1,361,089

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

Total Liabilities and Shareholders'

Equity $5,080,411 $2,847,587

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

Hospira, Inc.

Condensed Consolidated Statements of Cash Flows

(Unaudited)

(dollars in thousands)

Nine Months Ended

September 30,

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

2007 2006

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

Cash Flow From Operating Activities:

Net income $60,701 $190,278

Adjustments to reconcile net income to

net cash from operating activities--

Depreciation 136,191 114,731

Amortization of intangibles 37,081 1,446

Write-off of acquired in-process

research and development 84,800 -

Stock-based compensation expense 31,603 27,819

Changes in assets and liabilities--

Trade receivables (25,650) (23,979)

Inventories 49,701 (101,637)

Prepaid expenses and other assets 5,676 (13,648)

Trade accounts payable (8,115) 36,090

Other liabilities (47,392) 60,728

Other, net 29,889 40,037

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

Net Cash Provided by Operating Activities 354,485 331,865

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

Cash Flow From Investing Activities:

Capital expenditures (including instruments

placed with or leased to customers) (128,674) (183,632)

Acquisition of Mayne Pharma, net of

cash acquired (1,961,285) -

Settlements of foreign currency contracts (55,701) -

Proceeds from dispositions of product rights 13,771 -

Other, net (1,263) 1,845

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

Net Cash Used in Investing Activities (2,133,152) (181,787)

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

Cash Flow From Financing Activities:

Issuance of long-term debt, net of

fees paid 3,336,198 -

Repayment of long-term debt (1,700,124) (111)

Other borrowings, net (343) 1,955

Payment to Abbott Laboratories for

international assets - (124,251)

Common stock repurchased - (299,766)

Excess tax benefit from stock-based

compensation arrangements 865 3,373

Proceeds from stock options exercised 40,464 39,576

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

Net Cash Provided by (Used in)

Financing Activities 1,677,060 (379,224)

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

Net Sales $838.0 $646.6 29.6% n/a n/a n/a

Net Income $59.4 $55.9 6.1% $78.7 $72.9 7.9%

Diluted EPS $0.37 $0.35 5.7% $0.49 $0.45 8.9%

The primary components of the year-over-year increase in net sales for the third quarter are as follows:

-- Mayne Pharma acquisition -- 25.6 percentage points;

-- Favorable volume/mix in the legacy Hospira business -- 2.1 percentage

points;

-- Favorable pricing in the U.S. -- 0.9 percentage point; and

-- Favorable foreign currency translation -- 0.9 percentage point.

A schedule detailing sales by product line for the three-month and nine-month periods ended Sept. 30, 2007 and 2006 is attached to this press release.

In conjunction with the previous table, the following summarizes the financial results for the third quarter of 2007 compared to the same period in 2006:

In $ millions GAAP Adjusted*

Three Months Ended Three Months Ended

Sept. 30, Sept. 30,

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

2007 2006 Change 2007 2006 Change

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

Gross Profit $294.5 $219.0 34.5% $316.5 $237.6 33.2%

R&D $51.4 $36.5 41.0% $50.8 $36.2 40.2%

S,G&A $136.5 $103.5 31.9% $129.4 $99.6 30.0%

Income from

Operations $106.6 $79.1 34.9% $136.4 $101.8 33.9%

Statistics (as a % of Net Sales)

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

Gross Profit 35.1% 33.9% 37.8% 36.7%

R&D 6.1% 5.6% 6.1% 5.6%

S,G&A 16.3%---

Effect of exchange rate changes on cash

and cash equivalents 15,990 2,128

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

Net change in cash and cash equivalents (85,617) (227,018)

Cash and cash equivalents at beginning

of period 322,045 520,610

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

Cash and cash equivalents at end of period $236,428 $293,592

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

Supplemental Cash Flow Information:

Cash paid during the period-

Interest $57,663 $23,434

Income taxes, net $57,623 $21,224

Hospira, Inc.

Net Sales by Product Line

(Unaudited)

(dollars in thousands)

Three Months Ended Nine Months Ended

September 30, September 30,

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

2007 2006 % Change 2007 2006 % Change

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

U.S. --

Specialty

Injectable

Pharmaceuticals $208,363 $198,362 5.0 % $619,761 $590,915 4.9 %

Medication

Delivery

Systems 216,245 199,029 8.6 % 660,049 626,498 5.4 %

Injectable

Pharmaceutical

Contract

Manufacturing 33,518 38,090 (12.0)% 111,632 139,879 (20.2)%

Sales to Abbott

Laboratories 18,604 25,038 (25.7)% 55,791 70,860 (21.3)%

Mayne Pharma 26,262 - nm 75,862 - nm

Other 71,175 72,506 (1.8)% 213,029 211,749 0.6 %

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

Total U.S. 574,167 533,025 7.7 % 1,736,124 1,639,901 5.9 %

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

International --

Sales to Third

Parties 112,637 97,277 15.8 % 334,470 290,232 15.2 %

Sales to Abbott

Laboratories 11,972 16,338 (26.7)% 37,882 51,902 (27.0)%

Mayne Pharma 139,243 - nm 381,697 - nm

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

Total

International 263,852 113,615 132.2 % 754,049 342,134 120.4 %

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

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

Net Sales $838,019 $646,640 29.6 % $2,490,173 $1,982,035 25.6 %

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

Net Sales

excluding

Mayne Pharma $672,514 $646,640 4.0 % $2,032,614 $1,982,035 2.6 %

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

nm = Percent change is not meaningful.

Hospira, Inc.

Segment Information

(Unaudited)

(dollars in thousands)

Three Months Ended September 30,

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

Net Sales Income from Operations

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

% %

2007 2006 Change 2007 2006 Change

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

U.S. $574,167 $533,025 7.7 % $104,384 A $80,623 A 29.5 %

International 263,852 113,615 132.2 % 22,127 B 10,831 B 104.3 %

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

Total

reportable

segments $838,019 $646,640 29.6 % 126,511 91,454 38.3 %

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

Corporate

functions (19,884)C (12,402)C 60.3 %

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

Income from

operations 106,627 79,052 34.9 %

Other, net (28,537)D (3,960) nm

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

Income before

income taxes $78,090 $75,092 4.0 %

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

Included in the reported Income before

income taxes above, are the following charges:

A -- U.S.

Mayne Pharma acquisition related:

Acquired in-process research and

development $ - $ -

Inventory step-up charge - -

Integration and other acquisition-related

charges 1,285 -

Intangible assets amortization 3,270 -

Charges related to manufacturing

optimization initiatives 4,804 9,749

Non-recurring transition charges as a

result of the spin-off, integration and

other acquisition-related charges 454 3,605

Reduction of obligation related to the

2005 sale of the Salt Lake City, UT

manufacturing plant - -

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

Total U.S. 9,813 13,354

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

B -- International

Mayne Pharma acquisition related:

Acquired in-process research and

development - -

Inventory step-up charge - -

Integration and other acquisition-related

charges 1,643 -

Intangible assets amortization 10,080 -

Charges related to manufacturing

optimization initiatives 3,187 8,542

Non-recurring transition charges as a

result of the spin-off - 663

Gain on the sale of the Donegal, Ireland

facility - -

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

Total International 14,910 9,205

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

C -- Corporate

Integration and other acquisition-related

charges 5,000 -

Non-recurring transition charges as a

result of the spin-off - 212

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

Total Corporate 5,000 212

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

D -- Other, net

Integration and other acquisition-related

charges - -

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

Total Other, net - -

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

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

Total $29,723 $22,771

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

nm = Percent change is not meaningful.

Hospira, Inc.

Segment Information

(Unaudited)

(dollars in thousands)

Nine Months Ended September 30,

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

Net Sales Income from Operations

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

% %

2007 2006 Change 2007 2006 Change

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

U.S. $1,736,124 $1,639,901 5.9 % $211,600 A $277,738 E (23.8)%

International 754,049 342,134 120.4 % 34,378 B 29,445 F 16.8 %

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

Total

reportable

segments $2,490,173 $1,982,035 25.6 % 245,978 307,183 (19.9)%

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

Corporate

functions (57,331)C (41,172)G 39.2 %

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

Income from

operations 188,647 266,011 (29.1)%

Other, net (90,527)D (10,605) nm

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

Income before income

taxes $98,120 $255,406 (61.6)%

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

Included in the reported Income before

income taxes above, are the following charges:

A -- U.S.

Mayne Pharma acquisition related:

Acquired in-process research and

development $66,300 $ -

Inventory step-up charge 11,171 -

Integration and other acquisition-

related charges 13,638 -

Intangible assets amortization 8,720 -

Charges related to manufacturing

optimization initiatives 24,162 25,506

Non-recurring transition charges as a

result of the spin-off, integration and

other acquisition-related charges 566 19,890

Reduction of obligation related to the

2005 sale of the Salt Lake City, UT

manufacturing plant (1,579) (1,100)

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

Total U.S. 122,978 44,296

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

B -- International

Mayne Pharma acquisition related:

Acquired in-process research and

development 18,500 -

Inventory step-up charge 41,942 -

Integration and other acquisition-

related charges 3,085 -

Intangible assets amortization 26,220 -

Charges related to manufacturing

optimization initiatives 9,272 24,736

Non-recurring transition charges as a

result of the spin-off - 8,326

Gain on the sale of the Donegal, Ireland

facility - (7,851)

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

Total International 99,019 25,211

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

C -- Corporate

Integration and other acquisition-

related charges 15,314 -

Non-recurring transition charges as a

result of the spin-off - 2,600

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

Total Corporate 15,314 2,600

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

D -- Other, net

Integration and other acquisition-

related charges 7,918 -

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

Total Other, net 7,918 -

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

Total $245,229 $72,107

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

nm = Percent change is not meaningful.

16.0% 15.4% 15.4%

Income from

Operations 12.7% 12.2% 16.3% 15.7%

Results under U.S. Generally Accepted Accounting Principles (GAAP) include amortization of intangibles resulting from the Mayne Pharma acquisition and the Mayne Pharma integration charges in 2007; charges related to Hospira's manufacturing optimization initiatives in 2007 and 2006; and other items as detailed in the schedules attached to this press release.

The year-over-year improvement in adjusted* gross profit as a percentage of net sales, or gross margin, was driven by the inclusion of Mayne Pharma in the consolidated results and a better mix of Hospira legacy products.

The inclusion of the results of Mayne Pharma accounted for most of the increase in adjusted* Research and Development (R&D) and the adjusted* Selling, General and Administrative (S,G&A). The increase in R&D was also driven by higher spending related to the clinical trials for Precedex(R), a proprietary drug for conscious sedation. Broad-based inflation also affected the adjusted* S,G&A results.

The increase in adjusted* income from operations as a percentage of net sales, or operating margin, was driven by the higher gross margin, which was partially offset by higher adjusted* R&D as a percentage of sales.

Nine-month Financial Highlights

The following table highlights the key financial metrics for the first nine months of 2007 compared to the same period in 2006:

In $ millions, GAAP Adjusted*

except per Nine Months Ended Nine Months Ended

share amounts Sept. 30, Sept. 30,

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

2007 2006 Change 2007 2006 Change

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

Net Sales $2,490.2 $1,982.0 25.6% n/a n/a n/a

Net Income $60.7 $190.3 (68.1%) $250.6 $244.0 2.7%

Diluted EPS $0.38 $1.18 (67.8%) $1.57 $1.51 4.0%

Results under GAAP include the effects of the write-off of acquired in-process R&D relating to the Mayne Pharma acquisition, purchase accounting charges and amortization of intangibles resulting from the Mayne Pharma acquisition, and the Mayne Pharma integration charges in 2007; charges related to Hospira's manufacturing optimization initiatives in 2007 and 2006; and other items as detailed in the schedules attached to this press release.

Cash Flow

Cash flow from operations for the first nine months of 2007 was $354.5 million, up from $331.9 million in 2006.

Capital expenditures were $128.7 million for the first nine months of 2007, compared to $183.6 million for the same period in 2006. The decline is due to lower expenditures in 2007 related to the company's manufacturing optimization initiatives and to information technology as the company completed the build-out of its independent system in 2006.

2007 Projections

Hospira continues to project that adjusted* diluted earnings per share for 2007 will be in the range of $2.11 to $2.16. The reconciliation between the projected adjusted* diluted earnings per share and GAAP earnings per share is:

Diluted earnings per share -- adjusted* $2.11 - $2.16

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

Estimated charges related to previously announced

manufacturing optimization initiatives (mid-point

of an estimated range of $0.13 to $0.17 per diluted

share for 2007) ($0.15)

Estimated integration and other acquisition-related

expenses (mid-point of an estimated range of $0.18

to $0.22 per diluted share for 2007) ($0.20)

Estimated purchase accounting charges, which include

acquired in-process R&D and inventory step-up charges

resulting from the Mayne Pharma acquisition (mid-point

of an estimated range of $0.74 to $0.76 per diluted

share for 2007) ($0.75)

Estimated $49 million for the amortization of

intangibles related to the Mayne Pharma acquisition

(11 months of 2007) ($0.21)

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

Diluted earnings per share -- GAAP $0.80 - $0.85

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

The company continues to expect net sales growth for 2007 to be approximately 26 to 28 percent. Excluding Mayne Pharma sales, the company expects net sales growth to be in its previously projected range of 3 to 4 percent.

The company continues to project that cash flow from operations in 2007 will be in the $450 million to $500 million range. The company also continues to expect that depreciation and amortization, excluding amortization of intangibles related to the Mayne Pharma acquisition, will be between $185 million and $195 million. Capital expenditures are now projected to be between $220 million and $240 million.

*Use of Non-GAAP 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. For more information regarding these non- GAAP financial measures, please see Hospira's Current Report on Form 8-K filed with the Securities and Exchange Commission on the date of this press release.

Webcast

Hospira will hold a conference call for investors and media at 8 a.m. Central Time on Thursday, Nov. 8, 2007. 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) by developing, manufacturing and marketing products that help improve the productivity, safety and efficacy of patient care. In February 2007, Hospira acquired Mayne Pharma Limited to become the world leader in specialty generic injectable pharmaceuticals. With 70 years of service to the hospital industry, Hospira's portfolio includes one of the industry's broadest lines of generic acute-care and oncology injectables, which help address the high cost of proprietary pharmaceuticals; and integrated solutions for medication management and infusion therapy. Headquartered north of Chicago in Lake Forest, Ill., Hospira has approximately 15,000 employees worldwide. Hospira's news releases and other information can be found 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 and strategy. 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 Annual Report on Form 10-K for the year ended Dec. 31, 2006, and subsequent Quarterly Reports on Form 10-Q, filed with the Securities and Exchange Commission, which are incorporated by reference. Hospira undertakes no obligation to release publicly any revisions to forward-looking statements as the result of subsequent events or developments.

Hospira, Inc.

Condensed Consolidated Statements of Income

(Unaudited)

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

Three Months Ended Nine Months Ended

September 30, September 30,

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

2007 2006 Change 2007 2006 Change

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

Net sales $838,019 $646,640 29.6 % $2,490,173 $1,982,035 25.6 %

Cost of

products sold 543,488 427,612 27.1 % 1,654,855 1,293,125 28.0 %

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

Gross Profit 294,531 219,028 34.5 % 835,318 688,910 21.3 %

Research and

development 51,409 36,470 41.0 % 147,478 106,526 38.4 %

Acquired

in-process

research and

development - - nm 84,800 - nm

Selling,

general and

administrative 136,495 103,506 31.9 % 414,393 316,373 31.0 %

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

Income From

Operations 106,627 79,052 34.9 % 188,647 266,011 (29.1)%

Interest expense 34,675 8,059 330.3 % 102,541 22,999 345.8 %

Other income,

net (6,138) (4,099) 49.7 % (12,014) (12,394) (3.1)%

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

Income Before

Income Taxes 78,090 75,092 4.0 % 98,120 255,406 (61.6)%

Income tax

expense 18,711 19,147 (2.3)% 37,419 65,128 (42.5)%

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

Net Income $59,379 $55,945 6.1 % $60,701 $190,278 (68.1)%

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

Earnings Per

Common Share:

Basic $0.38 $0.36 5.6 % $0.39 $1.21 (67.8)%

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

Diluted $0.37 $0.35 5.7 % $0.38 $1.18 (67.8)%

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

Weighted Average

Common Shares

Outstanding:

Basic 157,091 156,359 0.5 % 156,628 157,897 (0.8)%

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

Diluted 160,072 158,781 0.8 % 159,528 161,214 (1.0)%

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

nm = Percent change is not meaningful.

Hospira, Inc.

Reconciliation of Condensed Consolidated Statements of Income

(Unaudited)

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

Three Months Ended September 30,

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

2007 2006

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

GAAP Adjustments Adjusted GAAP Adjustments Adjusted

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

Net sales $838,019 $ - $838,019 $646,640 $ - $646,640

Cost of

products sold 543,488 (21,983)A 521,505 427,612 (18,566)D 409,046

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

Gross Profit 294,531 21,983 316,514 219,028 18,566 237,594

Research and

development 51,409 (635)B 50,774 36,470 (262)E 36,208

Selling,

general and

administrative 136,495 (7,105)B 129,390 103,506 (3,943)E 99,563

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

Income From

Operations 106,627 29,723 136,350 79,052 22,771 101,823

Interest expense 34,675 - 34,675 8,059 - 8,059

Other income,

net (6,138) - (6,138) (4,099) - (4,099)

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

Income Before

Income Taxes 78,090 29,723 107,813 75,092 22,771 97,863

Income tax

expense 18,711 10,399 C 29,110 19,147 5,807 C 24,954

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

Net Income $59,379 $19,324 $78,703 $55,945 $16,964 $72,909

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

Earnings Per

Common Share:

Basic $0.38 $0.12 $0.50 $0.36 $0.11 $0.47

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

Diluted $0.37 $0.12 $0.49 $0.35 $0.10 $0.
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SOURCE Hospira, Inc.
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