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Hospira Reports Third-Quarter 2009 Results
Date:10/27/2009

LAKE FOREST, Ill., Oct. 27 /PRNewswire-FirstCall/ -- Hospira, Inc. (NYSE: HSP), a leading global specialty pharmaceutical and medication delivery company, today reported results for the third quarter ended Sept. 30, 2009. Net sales for the quarter were $1.0 billion, and adjusted* diluted earnings per share were $0.90. (Adjusted* measures exclude certain specified items as described later in this press release and the attached schedules.)

"Hospira delivered strong results in the third quarter, aided by the launch of the generic oncolytic oxaliplatin and additional progress toward our Project Fuel initiatives," said Christopher B. Begley, chairman and chief executive officer. "We continued to position Hospira for future success in this milestone quarter, during which we surpassed the billion dollar revenue mark for the first time and generated strong double-digit earnings per share growth. We remain confident in our projections for full-year sales and are increasing our earnings per share guidance."

Third-Quarter 2009 Results

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

    In $ millions,              GAAP                     Adjusted*
     except per          Three Months Ended         Three Months Ended
     share amounts          September 30,              September 30,
                          ----------------     %     ----------------     %
                           2009      2008   Change    2009      2008   Change
                        --------    ------  ------   ------    ------  ------
    Net Sales           $1,007.5    $925.5    8.9%     n/a       n/a     n/a
    Gross Profit
     (Net Sales
     less Cost of
     Products Sold)       $395.6    $333.8   18.5%   $418.4    $355.5   17.7%
    Income from
     Operations           $161.5    $132.7   21.7%   $207.2    $161.5   28.3%
    Diluted EPS            $0.71     $0.51   39.2%    $0.90     $0.63   42.9%

    Statistics (as a % of Net Sales)
    -------------------------------
    Gross Profit
     (Net Sales
     less Cost of
     Products Sold)         39.3%     36.1%            41.5%     38.4%
    Income from
     Operations             16.0%     14.3%            20.6%     17.5%


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

Net sales increased 8.9 percent to $1.0 billion in the third quarter of 2009, compared to $926 million in the third quarter of 2008. The growth was driven by an increase in Specialty Injectable Pharmaceuticals, primarily a result of the third-quarter launch of oxaliplatin in solution form in the United States.

Adjusted* income from operations increased 28.3 percent to $207 million in the third quarter of 2009, compared to $162 million in the third quarter of 2008. Driving the majority of the increase were higher sales volumes and increased manufacturing efficiency. Partially offsetting these factors was the impact of certain product recall-related costs as well as the impact of foreign exchange.

Cash Flow

Cash flow from operations for the first nine months of 2009 was $541 million, compared to $329 million generated for the same period in 2008.

Capital expenditures decreased to $119 million for the first nine months of 2009, compared to $127 million for the same period in 2008, due to the 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 5 to 7 percent on a constant-currency basis. Including the impact of foreign exchange, the company expects net sales to be slightly up.

During the third quarter, Hospira recognized an income tax benefit on the expiration of statutes of limitation on certain unrecognized tax benefits. The tax benefit was partially offset by the tax effect of the U.S. launch of oxaliplatin. Based on these factors, the company is adjusting the guidance for its 2009 effective tax rate to 20 to 21 percent from the prior guidance of 21 to 22 percent.

As a result, the company now expects full-year 2009 adjusted* diluted earnings per share to be between $2.85 and $2.90 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*                     $2.85 - $2.90
                                                                -------------
    Estimated charges related to Project Fuel
    initiatives (mid-point of an estimated range of
    $0.34 to $0.38 per diluted share for
    non-impairment charges, plus incurred
    year-to-date impairment and other asset
    charges of $0.37 per diluted share)                                ($0.73)

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

    Tax benefit from the settlement of a U.S. income tax audit          $0.57
                                                                -------------

    Diluted earnings per share -- GAAP                          $2.25 - $2.30
                                                                =============

The company now projects that cash flow from operations in 2009 will be in the $700 million to $750 million range. Depreciation and amortization is now expected to be between $225 million and $235 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 Tuesday, Oct. 27, 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 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
                                                    September 30,
                                                  ----------------        %
                                                      2009    2008      Change
                                                  --------  ------      ------
    Net sales                                     $1,007.5  $925.5       8.9 %
                                                  --------  ------

    Cost of products sold                            611.9   591.7       3.4 %
    Restructuring and impairment                      13.8     4.5     206.7 %
    Research and development                          57.9    51.0      13.5 %
    Selling, general and administrative              162.4   145.6      11.5 %
                                                  --------  ------
        Total operating cost and expenses            846.0   792.8       6.7 %
                                                  --------  ------
          Income From Operations                     161.5   132.7      21.7 %

    Interest expense                                  25.1    27.6      (9.1)%
    Other expense (income), net                        0.1    (2.4)   (104.2)%
                                                  --------  ------
          Income Before Income Taxes                 136.3   107.5      26.8 %

    Income tax expense                                20.1    25.7     (21.8)%
                                                  --------  ------
          Net Income                                $116.2   $81.8      42.1 %
                                                  ========  ======

    Earnings Per Common Share:
        Basic                                        $0.72   $0.51      41.2 %
                                                  ========  ======
        Diluted                                      $0.71   $0.51      39.2 %
                                                  ========  ======

    Weighted Average Common Shares Outstanding:
        Basic                                        161.1   159.4       1.1 %
                                                  ========  ======
        Diluted                                      163.7   161.6       1.3 %
                                                  ========  ======

    Adjusted Gross Profit (1)(2)                    $418.4  $355.5      17.7 %
    Adjusted Income From Operations (1)             $207.2  $161.5      28.3 %
    Adjusted Net Income (1)                         $147.4  $101.5      45.2 %
    Adjusted Diluted Earnings Per Share (1)          $0.90   $0.63      42.9 %


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

                                       GAAP             Adjusted (1)
                                Three Months Ended   Three Months Ended
                                   September 30,        September 30,
                                ------------------   ------------------
                                  2009      2008       2009      2008
                                --------  --------   --------  --------
    Gross Profit (2)             39.3 %    36.1 %     41.5 %    38.4 %
    Income From Operations       16.0 %    14.3 %     20.6 %    17.5 %
    Net Income                   11.5 %     8.8 %     14.6 %    11.0 %
    Income Tax Rate              14.7 %    23.9 %     19.0 %    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)

                                                 Nine Months Ended
                                                   September 30,
                                                ------------------       %
                                                   2009      2008      Change
                                                --------  --------     ------
    Net sales                                   $2,824.1  $2,715.8       4.0 %
                                                --------  --------

    Cost of products sold                        1,762.7   1,729.8       1.9 %
    Restructuring and impairment                    79.1      13.8     473.2 %
    Research and development                       160.8     158.9       1.2 %
    Acquired in-process research and
     development                                       -       0.5    (100.0)%
    Selling, general and administrative            454.2     450.7       0.8 %
                                                --------  --------
        Total operating cost and expenses        2,456.8   2,353.7       4.4 %
                                                --------  --------
          Income From Operations                   367.3     362.1       1.4 %

    Interest expense                                80.2      87.2      (8.0)%
    Other expense (income), net                     14.3      (6.5)   (320.0)%
                                                --------  --------
          Income Before Income Taxes               272.8     281.4      (3.1)%

    Income tax (benefit) expense                   (34.4)     65.1    (152.8)%
                                                --------  --------
          Net Income                              $307.2    $216.3      42.0 %
                                                ========  ========

    Earnings Per Common Share:
        Basic                                      $1.92     $1.36      40.2 %
                                                ========  ========
        Diluted                                    $1.89     $1.34      41.3 %
                                                ========  ========

    Weighted Average Common Shares Outstanding:
        Basic                                      160.4     159.1       1.3 %
                                                ========  ========
        Diluted                                    162.3     161.4       0.6 %
                                                ========  ========


    Adjusted Gross Profit (1)(2)                $1,123.8  $1,050.1       7.0 %
    Adjusted Income From Operations (1)           $533.8    $458.9      16.3 %
    Adjusted Net Income (1)                       $362.4    $281.8      28.6 %
    Adjusted Diluted Earnings Per Share (1)        $2.23     $1.75      27.4 %


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

                                       GAAP             Adjusted (1)
                                 Nine Months Ended    Nine Months Ended
                                   September 30,        September 30,
                                ------------------   ------------------
                                  2009      2008       2009      2008
                                --------  --------   --------  --------
    Gross Profit (2)             37.6 %    36.3 %     39.8 %    38.7 %
    Income From Operations       13.0 %    13.3 %     18.9 %    16.9 %
    Net Income                   10.9 %     8.0 %     12.8 %    10.4 %
    Income Tax Rate             (12.6)%    23.1 %     20.5 %    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 September 30, 2009 Reconciliation of GAAP to Non-GAAP
    Financial Measures:
    ------------------------------------------------------------------------

                                                     Income
                                          Gross       From       Net   Diluted
                                       Profit (1)  Operations  Income    EPS
                                       ---------   ----------  ------  -------
    GAAP financial measures               $395.6       $161.5  $116.2    $0.71
    Specified items:
       Project Fuel charges (A)              7.8         27.4    20.9     0.13
       Facilities Optimization
        charges (B)                          1.5          4.8     3.1     0.02
       Amortization of Mayne Pharma
        intangible assets (C)               13.5         13.5     7.2     0.04
                                       ---------   ----------  ------  -------
    Adjusted financial measures           $418.4       $207.2  $147.4    $0.90
                                       =========   ==========  ======  =======

    GAAP results for the three months ended September 30, 2009 include:
    A --  Project Fuel charges: $7.8 million reported in Cost of products
          sold, $10.5 million reported in Restructuring and impairment,
          $1.3 million reported in Research and development and $7.8 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: $1.5 million reported in Cost of
          products sold and $3.3 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.

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

                                                     Income
                                          Gross       From       Net   Diluted
                                       Profit (1)  Operations  Income    EPS
                                       ---------   ----------  ------  -------
    GAAP financial measures               $333.8       $132.7   $81.8    $0.51
    Specified items:
       Facilities Optimization
        charges (A)                          3.7          8.2     5.1     0.03
       Amortization of Mayne Pharma
        intangible assets (B)               15.2         15.2    10.1     0.06
       Integration-related charges (C)       2.8          5.4     4.5     0.03
                                       ---------   ----------  ------  -------
    Adjusted financial measures           $355.5       $161.5  $101.5    $0.63
                                       =========   ==========  ======  =======

    GAAP results for the three months ended September 30, 2008 include:
    A --  Facilities Optimization charges: $3.7 million reported in Cost of
          products sold and $4.5 million reported in Restructuring and
          impairment.  These charges relate to facilities optimization from
          the closure or departure from certain manufacturing and R&D
          facilities and include costs for severance and other employee
          benefits, accelerated depreciation and relocation of production and
          R&D operations.
    B --  Amortization of Mayne Pharma intangible assets is reported in Cost
          of products sold.
    C --  Integration-related charges: $2.8 million reported in Cost of
          products sold, $0.2 million reported in Research and development and
          $2.4 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.
              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.

    Nine months ended September 30, 2009 Reconciliation of GAAP to Non-GAAP
    Financial Measures:
    -----------------------------------------------------------------------

                                                     Income
                                          Gross       From       Net   Diluted
                                       Profit (1)  Operations  Income    EPS
                                       ---------   ----------  ------  -------
    GAAP financial measures             $1,061.4       $367.3  $307.2   $1.89
    Specified items:
       Project Fuel charges (A)             12.6        105.5    91.4    0.57
       Facilities Optimization
        charges (B)                          8.9         20.1    13.2    0.08
       Amortization of Mayne Pharma
        intangible assets (C)               40.9         40.9    25.9    0.16
       Impairment of marketable
        equity securities (D)                  -            -    16.6    0.10
       Resolution of IRS tax audit
        benefit (E)                            -            -   (91.9)  (0.57)
                                       ---------   ----------  ------  -------
    Adjusted financial measures         $1,123.8       $533.8  $362.4   $2.23
                                       =========   ==========  ======  =======

    GAAP results for the nine months ended September 30, 2009 include:
    A --  Project Fuel charges: $12.6 million reported in Cost of products
          sold, $67.9 million reported in Restructuring and impairment,
          $2.6 million reported in Research and development and $22.4 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: $8.9 million reported in Cost of
          products sold and $11.2 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.
    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 Hospira's 2004
          and 2005 U.S. tax return audits.

    Nine months ended September 30, 2008 Reconciliation of GAAP to Non-GAAP
    Financial Measures:
    -----------------------------------------------------------------------

                                                     Income
                                          Gross       From       Net   Diluted
                                       Profit (1)  Operations  Income    EPS
                                       ---------   ----------  ------  -------
    GAAP financial measures               $986.0       $362.1  $216.3    $1.34
    Specified items:
       Facilities Optimization
        charges (A)                         11.5         25.9    16.0     0.10
       Amortization of Mayne Pharma
        intangible assets (B)               46.8         46.8    31.4     0.20
       Integration-related charges (C)       5.8         23.6    17.6     0.11
       Acquired in-process research
        and development                        -          0.5     0.5        -
                                       ---------   ----------  ------  -------
    Adjusted financial measures         $1,050.1       $458.9  $281.8    $1.75
                                       =========   ==========  ======  =======

    GAAP results for the nine months ended September 30, 2008 include:
    A --  Facilities Optimization charges: $11.5 million reported in Cost of
          products sold, $13.8 million reported in Restructuring and
          impairment and $0.6 million reported in Research and development.
          These charges relate to facilities optimization from the closure or
          departure from certain manufacturing and R&D facilities and include
          costs for severance and other employee benefits, accelerated
          depreciation and relocation of production and R&D operations.
    B --  Amortization of Mayne Pharma intangible assets is reported in Cost
          of products sold.
    C --  Integration-related charges: $5.8 million reported in Cost of
          products sold, $1.0 million reported in Research and development and
          $16.8 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)

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

    Current Assets:
      Cash and cash equivalents                         $920.6       $483.8
      Trade receivables, less allowances of
       $6.9 in 2009 and $6.7 in 2008                     594.1        583.4
      Inventories                                        849.5        830.5
      Deferred income taxes                              214.9        172.2
      Prepaid expenses and other current assets           38.5         35.7
      Other receivables                                   54.6         43.7
                                                      --------     --------
          Total Current Assets                         2,672.2      2,149.3
                                                      --------     --------
    Property and equipment, net                        1,182.8      1,192.1
    Intangible assets, net                               404.3        404.4
    Goodwill                                           1,213.5      1,167.4
    Deferred income taxes                                 24.3         70.1
    Investments                                           50.1         37.6
    Other assets                                          67.0         53.2
                                                      --------     --------
          Total Assets                                $5,614.2     $5,074.1
                                                      ========     ========

             Liabilities and Shareholders' Equity
    Current Liabilities:
      Short-term borrowings                             $399.5       $338.3
      Trade accounts payable                             200.1        231.5
      Salaries, wages and commissions                    163.5        144.7
      Deferred income taxes                                0.1          1.5
      Other accrued liabilities                          412.8        331.5
                                                      --------     --------
          Total Current Liabilities                    1,176.0      1,047.5
                                                      --------     --------
    Long-term debt                                     1,710.9      1,834.0
    Deferred income taxes                                 23.1         25.2
    Post-retirement obligations                          167.1        195.5
    Other long-term liabilities                           92.0        195.5
    Commitments and Contingencies
                                                      --------     --------
    Total Shareholders' Equity                         2,445.1      1,776.4
                                                      --------     --------
    Total Liabilities and Shareholders' Equity        $5,614.2     $5,074.1
                                                      ========     ========



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

                                                            Nine Months Ended
                                                               September 30,
                                                             ---------------
                                                               2009    2008
                                                             -------  ------

    Cash Flow From Operating Activities:
      Net income                                              $307.2  $216.3
      Adjustments to reconcile net income to net cash from
       operating activities-
        Depreciation                                           126.4   141.2
        Amortization of intangible assets                       45.9    51.1
        Write-off of acquired in-process research and
         development                                               -     0.5
        Stock-based compensation expense                        31.5    33.2
        Deferred income tax and other tax adjustments          (84.3)    1.9
        Impairment and other asset charges                      83.4       -
        Net gains on sales of assets                               -    (3.0)
      Changes in assets and liabilities-
        Trade receivables                                       10.9   (75.8)
        Inventories                                            (17.7) (107.6)
        Prepaid expenses and other assets                        2.6     4.1
        Trade accounts payable                                 (34.2)    7.3
        Other liabilities                                       90.6    37.1
      Other, net                                               (21.1)   22.3
                                                             -------  ------
          Net Cash Provided by Operating Activities            541.2   328.6
                                                             -------  ------

    Cash Flow From Investing Activities:
      Capital expenditures (including instruments placed with
       or leased to customers)                                (118.7) (126.9)
      Acquisitions, net of cash acquired, and payments for
       contingent consideration                                (20.7)  (22.2)
      Purchases of intangibles and other investments            (9.3)  (49.6)
      Proceeds from disposition of businesses                   30.5       -
      Proceeds from disposition of assets                          -     0.8
      Purchases of marketable equity securities                    -   (24.5)
                                                             -------  ------
        Net Cash Used in Investing Activities                 (118.2) (222.4)
                                                             -------  ------

    Cash Flow From Financing Activities:
      Issuance of long-term debt, net of fees paid             246.7       -
      Repayment of long-term debt                             (306.1)  (90.1)
      Other borrowings, net                                      2.7     8.5
      Excess tax benefit from stock-based compensation
       arrangements                                              0.8     1.0
      Proceeds from stock options exercised                     59.3    27.4
                                                             -------  ------
        Net Cash Provided by (Used in) Financing Activities      3.4   (53.2)
                                                             -------  ------

    Effect of exchange rate changes on cash and cash
     equivalents                                                10.4    (6.7)
                                                             -------  ------

    Net change in cash and cash equivalents                    436.8    46.3
    Cash and cash equivalents at beginning of period           483.8   241.1
                                                             -------  ------
    Cash and cash equivalents at end of period                $920.6  $287.4
                                                             =======  ======

    Supplemental Cash Flow Information:
    Cash paid during the period-
       Interest                                                $87.1   $96.6
       Income taxes, net of refunds                            $25.7    $8.6



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

                                            Three Months Ended September 30,
                                          -----------------------------------
                                                          % Change  % Change
                                                              at       at
                                                            Actual  Constant
                                             2009     2008   Rates  Rates (1)
                                          --------   ------  -----  ---------
    Americas--
    Pharmaceuticals
       Specialty Injectables                $449.1   $341.1  31.7 %  32.3 %
       Other Pharma                          126.0    129.8  (2.9)%  (2.0)%
                                          --------   ------
                                             575.1    470.9  22.1 %  22.8 %
    Devices
       Medication Management Systems         138.1    138.5  (0.3)%   0.9 %
       Other Devices                          90.2     96.3  (6.3)%  (5.7)%
                                          --------   ------
                                             228.3    234.8  (2.8)%  (1.8)%
    Total Americas                           803.4    705.7  13.8 %  14.6 %

    Europe, Middle East & Africa--
    Pharmaceuticals
       Specialty Injectables                  69.6     67.5   3.1 %  11.3 %
       Other Pharma                           25.6     41.3 (38.0)% (33.2)%
                                          --------   ------
                                              95.2    108.8 (12.5)%  (5.6)%
    Devices
       Medication Management Systems          19.1     19.6  (2.6)%   3.6 %
       Other Devices                          15.3     18.2 (15.9)% (10.4)%
                                          --------   ------
                                              34.4     37.8  (9.0)%  (3.2)%
    Total Europe, Middle East & Africa       129.6    146.6 (11.6)%  (5.0)%

    Asia Pacific--
    Pharmaceuticals
       Specialty Injectables                  57.0     57.3  (0.5)%   2.8 %
       Other Pharma                            5.8      4.5  28.9 %  35.6 %
                                          --------   ------
                                              62.8     61.8   1.6 %   5.2 %
    Devices
       Medication Management Systems           5.4      4.8  12.5 %  18.8 %
       Other Devices                           6.3      6.6  (4.5)%  (4.5)%
                                          --------   ------
                                              11.7     11.4   2.6 %   5.3 %
    Total Asia Pacific                        74.5     73.2   1.8 %   5.2 %
                                          --------   ------
    Net Sales                             $1,007.5   $925.5   8.9 %  10.8 %
                                          ========   ======

    Global--
    Pharmaceuticals
       Specialty Injectables                $575.7   $465.9  23.6 %  25.6 %
       Other Pharma                          157.4    175.6 (10.4)%  (8.4)%
                                          --------   ------
                                             733.1    641.5  14.3 %  16.3%

    Devices
       Medication Management Systems         162.6    162.9  (0.2)%   1.7 %
       Other Devices                         111.8    121.1  (7.7)%  (6.4)%
                                          --------   ------
                                             274.4    284.0  (3.4)%  (1.7)%
                                          --------   ------
    Net Sales                             $1,007.5   $925.5   8.9 %  10.8 %
                                          ========   ======


                                            Nine Months Ended September 30,
                                          -----------------------------------
                                                          % Change  % Change
                                                              at       at
                                                            Actual  Constant
                                             2009     2008   Rates  Rates (1)
                                          -------- --------  -----  ---------
    Americas--
    Pharmaceuticals
       Specialty Injectables              $1,150.7   $981.7  17.2 %  18.6 %
       Other Pharma                          403.2    374.4   7.7 %   9.7 %
                                          -------- --------
                                           1,553.9  1,356.1  14.6 %  16.1 %
    Devices
       Medication Management Systems         411.7    418.3  (1.6)%   0.5 %
       Other Devices                         274.2    282.7  (3.0)%  (1.4)%
                                          -------- --------
                                             685.9    701.0  (2.2)%  (0.3)%
    Total Americas                         2,239.8  2,057.1   8.9 %  10.5 %

    Europe, Middle East & Africa--
    Pharmaceuticals
       Specialty Injectables                 195.3    224.2 (12.9)%  (0.1)%
       Other Pharma                           88.7    120.3 (26.3)% (14.5)%
                                          -------- --------
                                             284.0    344.5 (17.6)%  (5.1)%
    Devices
       Medication Management Systems          55.7     59.3  (6.1)%   5.7 %
       Other Devices                          49.5     52.2  (5.2)%   7.1 %
                                          -------- --------
                                             105.2    111.5  (5.7)%   6.4 %
    Total Europe, Middle East & Africa       389.2    456.0 (14.6)%  (2.3)%

    Asia Pacific--
    Pharmaceuticals
       Specialty Injectables                 149.0    155.3  (4.1)%   9.3 %
       Other Pharma                           12.1     12.1   0.0 %  19.8 %
                                          -------- --------
                                             161.1    167.4  (3.8)%  10.1 %
    Devices
       Medication Management Systems          15.0     15.5  (3.2)%   7.7 %
       Other Devices                          19.0     19.8  (4.0)%   2.0 %
                                          -------- --------
                                              34.0     35.3  (3.7)%   4.5 %
    Total Asia Pacific                       195.1    202.7  (3.7)%   9.1 %
                                          -------- --------
    Net Sales                             $2,824.1 $2,715.8   4.0 %   8.3 %
                                          ======== ========

    Global--
    Pharmaceuticals
       Specialty Injectables              $1,495.0 $1,361.2   9.8 %  14.4 %
       Other Pharma                          504.0    506.8  (0.6)%   4.2 %
                                          -------- --------
                                           1,999.0  1,868.0   7.0 %  11.7 %

    Devices
       Medication Management Systems         482.4    493.1  (2.2)%   1.4 %
       Other Devices                         342.7    354.7  (3.4)%   0.0 %
                                          -------- --------
                                             825.1    847.8  (2.7)%   0.8 %
                                          -------- --------
    Net Sales                             $2,824.1 $2,715.8   4.0 %   8.3 %
                                          ======== ========


    (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 September 30,
                     ---------------------------------------------------------
                         Net Sales             Income (Loss) from Operations
                     ---------------       %     ----------------------   %
                       2009     2008     Change   2009       2008       Change
                    --------   ------    ------  ------     ------      ------
    Americas          $803.4   $705.7    13.8 %  $193.4  A  $151.1  A   28.0 %
    Europe, Middle
     East & Africa     129.6    146.6   (11.6)%    (1.7) B     4.4  B (138.6)%
    Asia Pacific        74.5     73.2     1.8 %     3.5  C     6.4  C  (45.3)%
                    --------   ------            ------     ------
    Total reportable
     segments       $1,007.5   $925.5     8.9 %   195.2      161.9      20.6 %
                    ========   ======
    Corporate
     functions                                    (24.9) D   (20.5) D   21.5 %
    Stock-based
     compensation                                  (8.8)      (8.7)      1.1 %
                                                   ----       ----
    Income from
     operations                                   161.5      132.7      21.7 %
    Interest expense
     and other expense
     (income), net                                (25.2)     (25.2)      0.0 %
                                                 ------     ------
    Income before
     income taxes                                $136.3     $107.5      26.8 %
                                                 ======     ======

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

      A -- Americas
        Project Fuel                              $22.2      $   -
        Facilities Optimization                     4.8        8.2
        Amortization of Mayne Pharma
         intangible assets                          3.8        4.8
        Integration-related                          -         0.8
                                                 ------     ------
      Total Americas                               30.8       13.8

      B -- Europe, Middle East & Africa
        Project Fuel                                0.7          -
        Amortization of Mayne Pharma
         intangible assets                          5.5        5.8
        Integration-related                           -        0.7
                                                 ------     ------
      Total Europe, Middle East & Africa            6.2        6.5

      C -- Asia Pacific
        Project Fuel                                0.6          -
        Amortization of Mayne Pharma
         intangible assets                          4.2        4.6
        Integration-related                           -        2.9
                                                 ------     ------
      Total Asia Pacific                            4.8        7.5

      D -- Corporate functions
        Project Fuel                                3.9          -
        Integration-related                           -        1.0
                                                 ------     ------
      Total Corporate functions                     3.9        1.0
                                                 ------     ------
      Total                                       $45.7      $28.8
                                                 ======     ======



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


                                 Nine Months Ended September 30,
                    ----------------------------------------------------------
                        Net Sales              Income from Operations
                    ----------------       %     -----------------        %
                      2009     2008      Change   2009       2008       Change
                    -------- --------    ------  ------     ------      ------
    Americas        $2,239.8 $2,057.1     8.9 %  $451.6  A  $426.0  A    6.0 %
    Europe, Middle
     East & Africa     389.2    456.0   (14.6)%     9.6  B    10.7  B  (10.3)%
    Asia Pacific       195.1    202.7    (3.7)%     3.9  C    13.6  C  (71.3)%
                    -------- --------            ------     ------
    Total reportable
     segments       $2,824.1 $2,715.8     4.0 %   465.1      450.3       3.3 %
                    ======== ========
    Corporate
     functions                                    (66.3) D   (55.0) D   20.5 %
    Stock-based
     compensation                                 (31.5)     (33.2)     (5.1)%
                                                 ------     ------
    Income from
     operations                                   367.3      362.1       1.4 %
    Interest expense
     and other expense
     (income), net                                (94.5) E   (80.7) E   17.1 %
                                                 ------     ------
    Income before
     income taxes                                $272.8     $281.4      (3.1)%
                                                 ======     ======



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

      A -- Americas
        Project Fuel                              $82.0      $   -
        Facilities Optimization                    20.1       25.9
        Amortization of Mayne Pharma
         intangible assets                         13.1       15.0
        Integration-related                           -        2.1
        Acquired in-process research
         and development                              -        0.5
                                                 ------     ------
      Total Americas                              115.2       43.5

      B -- Europe, Middle East & Africa
        Project Fuel                                4.0          -
        Amortization of Mayne Pharma
         intangible assets                         16.1       17.7
        Integration-related                           -       10.1
                                                 ------     ------
      Total Europe, Middle East & Africa           20.1       27.8

      C -- Asia Pacific
        Project Fuel                                9.3          -
        Amortization of Mayne Pharma
         intangible assets                         11.7       14.1
        Integration-related                           -        6.7
                                                 ------     ------
      Total Asia Pacific                           21.0       20.8

      D -- Corporate functions
        Project Fuel                               10.2          -
        Integration-related                           -        4.7
                                                 ------     ------
      Total Corporate functions                    10.2        4.7

      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                                      $183.1      $96.8
                                                 ======     ======

SOURCE Hospira, Inc.


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SOURCE Hospira, Inc.
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