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
|SOURCE Hospira, Inc.|
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