HOSPIRA, INC. LAKE FOREST, Ill., July 30, 2014 /PRNewswire/ -- Hospira, Inc. (NYSE: HSP), the world's leading provider of injectable drugs and infusion technologies, today reported results for the second quarter ended June 30, 2014. Net sales for the quarter were $1.1 billion and adjusted* diluted earnings per share were $0.72. (Adjusted* measures exclude specified items as described later in this press release and the attached schedules.) On a U.S. Generally Accepted Accounting Principles (GAAP) basis, second-quarter 2014 diluted earnings per share were $0.42.
"Hospira delivered another strong quarter, driven by continued positive performance in our Specialty Injectable Pharmaceuticals products," said F. Michael Ball, chief executive officer. "The investments we have been making to reinforce our foundation and drive growth are also contributing to our results, as are the diligent efforts of Hospira employees around the world. Given our favorable performance for the first half of 2014, we are raising our guidance for the full year, with a continued focus on serving our customers, driving profitable growth and delivering shareholder value."
Second-Quarter 2014 Results
The following table highlights selected financial results for the second quarter of 2014 compared to the same period in 2013:
In $ millions, GAAP Adjusted*
except per share
amounts Three Months Ended Three Months Ended
June 30, % June 30, %
Change Change
--- ------
2014 2013 2014 2013
---- ---- ---- ----
Net Sales $1,135.8 $1,026.2 10.7% $1,135.8 $1,026.2 10.7%
--------- -------- -------- ---- -------- -------- ----
Gross Profit (Net Sales less $400.0 $318.7 25.5% $464.3 $388.9 19.4%
Cost of Products Sold)
--------------------- ---
Income from Operations $99.5 $52.2 90.6% $179.3 $126.4 41.9%
---------------------- ----- ----- ---- ------ ------ ----
Diluted Earnings per Share $0.42 $0.20 110.0% $0.72 $0.55 30.9%
-------------------------- ----- ----- ----- ----- ----- ----
Statistics (as a % of Net Sales)
-------------------------------
Gross Profit (Net Sales less 35.2% 31.1% 40.9% 37.9%
Cost of Products Sold)
---------------------
Income from Operations 8.8% 5.1% 15.8% 12.3%
---------------------- --- --- ---- ----
Specified items are included in GAAP results and excluded from adjusted* non-GAAP measures; the specified items are detailed in the schedules attached to this press release.
Net sales were $1.1 billion in the second quarter of 2014, an increase of 10.7 percent compared to the second quarter of 2013. Net sales benefited from continued strong global sales of Specialty Injectable Pharmaceuticals (SIP) products, which were driven mainly by favorable pricing and our continued supply recovery in the United States.
Adjusted* income from operations increased 41.9 percent to $179 million in the second quarter of 2014, compared to $126 million in the second quarter of 2013. The increase primarily reflects the impact of improved pricing and increased volume in the company's SIP products, partially offset by higher Selling, general and administrative expenses. On a GAAP basis, income from operations was $100 million, compared to $52 million in the second quarter of 2013. In addition to the factors impacting the adjusted* income from operations results, in second-quarter 2014, manufacturing spending related to the company's quality- and product-related charges was lower, while capacity expansion-related charges were higher.
The effective tax rate on an adjusted basis* in the second quarter of 2014 was 28.2 percent, compared to 17.1 percent in the second quarter of 2013. The increase in the effective tax rate on an adjusted* basis reflects an increase and shift in the mix of earnings to higher tax-rate jurisdictions, as well as the revised earnings projections for full-year 2014. On a GAAP basis, the second-quarter 2014 effective tax rate was an expense of 23.3 percent, compared to a benefit of 27.9 percent for the same period in 2013.
Cash Flow
Cash flow from operations for the first six months of 2014 was $176 million, compared to $51 million in the first six months of 2013. The increase is primarily due to higher net income in the first six months of 2014.
Capital expenditures were $185 million for the first six months of 2014, compared to $153 million for the same period in 2013. The increase reflects capital spending primarily associated with the company s new facility in Vizag, India, as well as the company's modernization initiatives.
2014 Projections
The projection ranges for full-year 2014 net sales and adjusted* diluted earnings per share include, among several factors, assumptions related to the timing of genericization of Precedex(TM) (dexmedetomidine HCl), the company's proprietary pharmaceutical for sedation.
Based on favorable performance during the first half of 2014, Hospira now expects net sales growth for full-year 2014 to range between 6 to 9 percent on a constant-currency basis, with minimal impact from foreign currency.
The company is now projecting adjusted* diluted earnings per share for 2014 to range between $2.30 and $2.50.
The reconciliation between the projected 2014 adjusted* diluted earnings per share and projected GAAP diluted earnings per share follows:
Diluted earnings per share -- adjusted* $2.30- $2.50
============
Estimated charges related to the
company's Device $(0.16)
Strategy (mid-point of an estimated
range of
$0.13 to $0.19 per diluted share)
Estimated amortization of intangible
assets related to $(0.26)
certain acquisitions (mid-point of an
estimated range
of $0.24 to $ 0.28 per diluted share)
Estimated charges for certain quality
and product-related $(0.28)
matters (mid-point of an estimated
range of
$0.25 to $0.31 per diluted share)
Estimated charges related to capacity
expansion $(0.34)
(mid-point of an estimated range of
$0.30 to $0.38
per diluted share)
Estimated net acquisition and
integration-related charges $(0.12)
associated with the recently completed
acquisition
of an API-related business from Orchid
Chemicals
& Pharmaceuticals (mid-point of an
estimated range
of $0.11 to $0.13 per diluted share)
Estimated charges related to facilities
optimization, $(0.05)
impairment of certain assets and other
restructuring
(mid-point of an estimated range of
$0.04 to $0.06
per diluted share)
Diluted earnings per share -- GAAP $1.09- $1.29
============
The adjusting items are shown net of tax in aggregate of $94 million, which is calculated for the specified adjustments stated above, based on the statutory tax rates in the various tax jurisdictions in which the items are expected to occur.
The company is updating its guidance for full-year 2014 cash flow from operations, which it now expects to range between $275 million and $375 million. Capital expenditure projections remain in a range between $375 million and $425 million. The company continues to expect depreciation and amortization to range between $225 million and $275 million.
*Use of Non-GAAP Financial Measures
Adjusted* 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 furnished to the Securities and Exchange Commission on the date of this press release.
Webcast/Complementary Material
Hospira will hold a conference call for investors and media at 8 a.m. Central time on Wednesday, July 30, 2014. A live webcast of the conference call will be available on Hospira's website at www.hospirainvestor.com. Listeners should log on approximately 10 minutes in advance to ensure proper setup for receiving the webcast. In addition, complementary information will be available on the presentations page of the Investor Relations website at the beginning of the conference call. A replay will be available on the Hospira website for 30 days following the call.
About Hospira
Hospira, Inc. is the world's leading provider of injectable drugs and infusion technologies, and a global leader in biosimilars. Through its broad, integrated portfolio, Hospira is uniquely positioned to Advance Wellness(TM) by improving patient and caregiver safety while reducing healthcare costs. The company is headquartered in Lake Forest, Ill., and has approximately 17,000 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, expenses, and cash flow; and other statements regarding Hospira's goals, plans and strategy. Hospira cautions that these forward-looking statements are subject to risks and uncertainties, including adequate and sustained progress on the company's quality initiatives, continuous improvement activities, and Device Strategy, that may cause actual results to differ materially from those indicated in the forward-looking statements. Economic, competitive, governmental, regulatory, legal, intellectual property, product development, technological, supply, quality, 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 "Forward-Looking Statements," "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 Forms 10-Q, filed with the Securities and Exchange Commission and incorporated by reference. Hospira undertakes no obligation to release publicly any revisions to forward-looking statements as the result of subsequent events or developments.
Hospira, Inc.
Condensed Consolidated Statements of Income
(Unaudited)
(dollars and shares in millions, except for per share amounts)
Three Months Ended June 30, % Change
--------------------------- --------
2014 2013
---- ----
Net sales $1,135.8 $1,026.2 10.7 %
-------- --------
Cost of products sold 735.8 707.5 4.0 %
Restructuring and impairment 13.5 2.9 365.5 %
Research and development 75.7 74.4 1.7 %
Selling, general and administrative 211.3 189.2 11.7 %
----- -----
Total operating costs and expenses 1,036.3 974.0 6.4 %
------- -----
Income From Operations 99.5 52.2 90.6 %
Interest expense 19.2 19.9 (3.5)%
Other (income) expense, net (0.8) 10.1 107.9 %
---- ----
Income Before Income Taxes 81.1 22.2 265.3 %
Income tax expense (benefit) 18.9 (6.2) (404.8)%
Equity income from affiliates, net (8.7) (4.5) 93.3 %
---- ----
Net Income $70.9 $32.9 115.5 %
===== =====
Earnings Per Common Share:
Basic $0.42 $0.20 110.0 %
===== =====
Diluted $0.42 $0.20 110.0 %
===== =====
Weighted Average Common Shares Outstanding:
Basic 167.7 165.5 1.3 %
===== =====
Diluted 170.0 166.3 2.2 %
===== =====
Adjusted Gross Profit (1)(2) $464.3 $388.9 19.4 %
Adjusted Income From Operations (1) $179.3 $126.4 41.9 %
Adjusted Net Income (1) $122.1 $92.1 32.6 %
Adjusted Diluted Earnings Per Share (1) $0.72 $0.55 30.9 %
Statistics (as a % of Net sales, except for income tax rate)
GAAP Three Months Ended Adjusted (1) Three Months Ended June
June 30, 30,
------------------------ -------------------------------------
2014 2013 2014 2013
---- ---- ---- ----
Gross Profit (2) 35.2 % 31.1 % 40.9 % 37.9 %
Income From Operations 8.8 % 5.1 % 15.8 % 12.3 %
Net Income 6.2 % 3.2 % 10.8 % 9.0 %
Income Tax Rate 23.3 % (27.9)% 28.2 % 17.1 %
(1) Adjusted financial measures are Non-GAAP measures and exclude specified
items as described and reconciled to comparable GAAP financial measures in
the Reconciliation of GAAP to Non-GAAP Financial Measures contained in
this press release.
(2) Gross profit is defined as Net sales less Cost of products sold. Adjusted
gross profit excludes specified items, as indicated in the previous
footnote.
Hospira, Inc.
Condensed Consolidated Statements of Income (Loss)
(Unaudited)
(dollars and shares in millions, except for per share amounts)
Six Months Ended June 30, % Change
------------------------- --------
2014 2013
---- ----
Net sales $2,186.6 $1,910.2 14.5 %
-------- --------
Cost of products sold 1,417.0 1,441.4 (1.7)%
Restructuring and impairment 14.2 11.7 21.4 %
Research and development 158.9 148.2 7.2 %
Selling, general and administrative 397.4 375.3 5.9 %
----- -----
Total operating costs and expenses 1,987.5 1,976.6 0.6 %
------- -------
Income (Loss) From Operations 199.1 (66.4) 399.8 %
Interest expense 39.7 39.5 0.5 %
Other (income) expense, net (2.8) 12.4 122.6 %
---- ----
Income (Loss) Before Income Taxes 162.2 (118.3) 237.1 %
Income tax expense (benefit) 35.4 (64.5) (154.9)%
Equity income from affiliates, net (12.0) (10.1) 18.8 %
----- -----
Net Income (Loss) $138.8 $(43.7) 417.6 %
====== ======
Earnings (Loss) Per Common Share:
Basic $0.83 $(0.26) 419.2 %
===== ======
Diluted $0.82 $(0.26) 415.4 %
===== ======
Weighted Average Common Shares Outstanding:
Basic 167.1 165.4 1.0 %
===== =====
Diluted 169.8 165.4 2.7 %
===== =====
Adjusted Net Sales (1)(2) $2,186.6 $2,014.5 8.5 %
Adjusted Gross Profit (1)(3) $884.2 $748.4 18.1 %
Adjusted Income From Operations (1) $330.8 $227.6 45.3 %
Adjusted Net Income (1) $223.8 $178.2 25.6 %
Adjusted Diluted Earnings Per Share (1) $1.32 $1.07 23.4 %
Statistics (as a % of Net sales, except for income tax rate)
GAAP Six Months Ended June Adjusted (1) Six Months Ended June
30, 30,
-------------------------- ----------------------------------
2014 2013 2014 2013
---- ---- ---- ----
Gross Profit (3) 35.2 % 24.5 % 40.4 % 37.2 %
Income (Loss) From
Operations 9.1 % (3.5)% 15.1 % 11.3 %
Net Income (Loss) 6.3 % (2.3)% 10.2 % 8.8 %
Income Tax Rate 21.8 % 54.5 % 26.5 % 10.1 %
(1) Adjusted financial measures
are Non-GAAP measures and
exclude specified items as
described and reconciled to
comparable GAAP financial
measures in the
Reconciliation of GAAP to
Non-GAAP Financial
Measures contained in this
press release.
(2) There were no Device
Strategy charges included
in GAAP Net sales for the
six months ended June 30,
2014.
(3) Gross profit is defined as
Net sales less Cost of
products sold. Adjusted
gross profit excludes
specified items, as
indicated in the previous
footnotes.
Hospira, Inc.
Reconciliation of GAAP to Non-GAAP Financial Measures
(Unaudited)
(dollars in millions, except for per share amounts)
Three Months Ended June 30, 2014 Reconciliation of GAAP to Non-GAAP Financial Measures:
---------------------------------------------------------------------------------------
Gross Profit(1) Income From Net Income Diluted EPS
Operations
----------
GAAP Financial Measures $400.0 $99.5 $70.9 $0.42
Specified Items (2)
Device Strategy charges (A) 6.1 7.0 5.9 0.03
Amortization of certain intangible assets (B) 17.9 17.9 12.3 0.07
Impairment of certain assets (C) - 6.1 3.8 0.02
Certain quality and product related charges (D) 26.2 26.2 16.6 0.10
Capacity expansion related charges (E) 14.1 14.1 9.2 0.05
Acquisition and integration related charges (gains)(F) - 1.9 (0.7) -
Facilities optimization charges (G) - 5.0 3.1 0.02
Other restructuring charges (H) - 1.6 1.0 0.01
---
Adjusted financial measures (3) $464.3 $179.3 $122.1 0.72
====== ====== ====== ====
GAAP results for the
three months ended
June 30, 2014
include:
(A) Device Strategy
charges: $6.1
million in Cost
of products
sold and $0.9
million
reported in
Restructuring
and impairment.
These charges
include
consulting,
customer
accommodations,
other asset
impairments,
accelerated
depreciation,
and other costs
associated with
Hospira's
Device
Strategy.
(B) Amortization of
certain
intangible
assets reported
in Cost of
products sold
resulting from
acquisitions
including Mayne
Pharma Limited
("Mayne
Pharma") and a
generic
injectable
business by
Hospira
Healthcare
India Private
Limited
("Hospira
India").
(C) Impairment of
certain
property and
equipment
assets reported
in
Restructuring
and impairment.
(D) Certain quality
and product
related charges
reported in
Cost of
products sold
primarily
include third
party oversight
and consulting
costs, extended
production
downtime
related costs,
and device
product review
and remediation
costs to
address
identified
issues. These
charges are
primarily
associated with
Hospira's
response to the
United States
Food and Drug
Administration
("FDA") warning
letters and
charges related
to certain
device related
remediation
activities.
(E) Capacity
expansion
related charges
reported in
Cost of
products sold
include start-
up charges
related to
manufacturing
capacity
expansion in
India.
(F) Acquisition and
integration
related charges
(gains): $1.9
million
reported in
Selling,
general, and
administrative
and ($3.1)
million
reported in
Other (income)
expense, net.
These amounts
include costs
for the
acquisition and
integration and
foreign
exchange hedge
gains of an
active
pharmaceutical
ingredient
business.
(G) Facilities
optimization
charges
reported in
Restructuring
and impairment
related to the
sale of the
Buffalo, NY,
manufacturing
facility.
(H) Other
restructuring
charges
reported in
Restructuring
and impairment.
These charges
include
severance
charges
associated with
Hospira's
commercial
reorganization.
Three Months Ended June 30, 2013 Reconciliation of GAAP to Non-GAAP Financial Measures:
---------------------------------------------------------------------------------------
Gross Profit(1) Income From Net Income Diluted EPS
Operations
----------
GAAP Financial Measures $318.7 $52.2 $32.9 $0.20
Specified Items (2)
Device Strategy charges (A) 14.6 17.0 11.6 0.07
Amortization of certain intangible assets (B) 17.6 17.6 12.2 0.07
Impairment of certain assets (C) - - 9.1 0.05
Certain quality and product related charges (D) 34.0 34.0 22.6 0.14
Capacity expansion related charges (E) 4.0 4.0 2.6 0.02
Acquisition and integration related charges (F) - 1.1 0.7 -
Other restructuring charges (G) - 0.5 0.4 -
--- ---
Adjusted financial measures (3) $388.9 $126.4 $92.1 $0.55
====== ====== ===== =====
GAAP results for the three months ended June 30, 2013 include:
(A) Device Strategy
charges: $14.6
million in Cost
of products
sold, and $2.4
million
reported in
Restructuring
and impairment.
These charges
include device
related
customer
accommodations,
other asset
impairments,
accelerated
depreciation,
consulting and
other costs
associated with
Hospira's
Device
Strategy.
(B) Amortization of
certain
intangible
assets reported
in Cost of
products sold
resulting from
acquisitions
including Mayne
Pharma and a
generic
injectable
business by
Hospira India.
(C) Impairment of
certain
investment
assets: $9.3
million
reported in
Other (income)
expense, net.
(D) Certain quality
and product
related charges
reported in
Cost of
products sold
primarily
include third
party oversight
and consulting
costs, and
device product
review and
remediation
costs to
address
identified
issues. These
charges are
primarily
associated with
Hospira's
response to the
FDA warning
letters and
charges related
to certain
device related
remediation
activities.
(E) Capacity
expansion
related charges
reported in
Cost of
products sold
include start-
up charges
related to
manufacturing
capacity
expansion in
India.
(F) Acquisition and
integration
related charges
reported in
Selling,
general, and
administrative
include costs
for the then
pending
acquisition and
integration of
an active
pharmaceutical
ingredient
business.
(G) Other
restructuring
charges
reported in
Restructuring
and impairment.
These charges
include
severance
charges
associated with
Hospira's
commercial
reorganization.
(1) Gross profit is
defined as Net sales
less Cost of
products sold.
(2) Specified items are
shown net of tax in
aggregate of $25.5
million and $24.3
million for the
three months ended
June 30, 2014 and
2013, respectively,
based on the
statutory tax rates
in the various tax
jurisdictions in
which the items
occurred.
(3) 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 specified
items. Management
believes the Non-
GAAP financial
measures represent
the amounts directly
related to the
ongoing operations
of the business and
uses these measures
in evaluating
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
and may not be
comparable to, or
calculated in the
same manner as, Non-
GAAP financial
measures published
by other companies.
Refer to Hospira's
Form 8-K furnished
on July 30, 2014.
Hospira, Inc.
Reconciliation of GAAP to Non-GAAP Financial Measures
(Unaudited)
(dollars in millions, except for per share amounts)
Six Months Ended June 30, 2014 Reconciliation of GAAP to Non-GAAP Financial Measures:
-------------------------------------------------------------------------------------
Gross Profit(1) Income From Net Income Diluted EPS
Operations
----------
GAAP Financial Measures $769.6 $199.1 $138.8 $0.82
Specified Items (2)
Device Strategy charges (A) 12.0 13.3 10.5 $0.06
Amortization of certain intangible assets (B) 35.4 35.4 24.6 $0.14
Impairment of certain assets (C) - 6.1 3.8 $0.02
Certain quality and product related charges (D) 39.1 39.1 25.1 $0.15
Capacity expansion related charges (E) 28.1 28.1 18.5 $0.11
Acquisition and integration related charges (gains) (F) - 2.8 (1.8) $(0.01)
Facilities optimization charges (G) - 5.0 3.1 $0.02
Other restructuring charges (H) - 1.9 1.2 $0.01
--- --- --- -----
Adjusted financial measures (3) $884.2 $330.8 $223.8 $1.32
====== ====== ====== =====
GAAP results for the
six months ended
June 30, 2014
include:
(A) Device Strategy
charges: $12.0
million in Cost
of products
sold and $1.3
million in
Restructuring
and impairment.
These charges
include
consulting,
customer
accommodations,
collection and
destruction
costs,
accelerated
depreciation,
and other costs
associated with
Hospira's
Device
Strategy.
(B) Amortization of
certain
intangible
assets reported
in Cost of
products sold
resulting from
acquisitions
including Mayne
Pharma and a
generic
injectable
business by
Hospira India.
(C) Impairments of
certain
property and
equipment
assets reported
in
Restructuring
and impairment.
(D) Certain quality
and product
related charges
reported in
Cost of
products sold
primarily
include third
party oversight
and consulting
costs, extended
production
downtime
related costs,
and device
product review
and remediation
costs to
address
identified
issues. These
charges are
primarily
associated with
Hospira's
response to the
FDA warning
letters and
charges related
to certain
device related
remediation
activities.
(E) Capacity
expansion
related charges
reported in
Cost of
products sold
include start-
up charges
related to
manufacturing
capacity
expansion in
India.
(F) Acquisition and
integration
related charges
(gains): $2.8
million
reported in
Selling,
general, and
administrative
and $(5.8)
million
reported in
Other (income)
expense, net.
These amounts
include costs
for the
acquisition and
integration and
foreign
exchange hedge
gains of an
active
pharmaceutical
ingredient
business.
(G) Facilities
optimization
charges
reported in
Restructuring
and impairment
related to the
sale of the
Buffalo, NY,
manufacturing
facility.
(H) Other
restructuring
charges
reported in
Restructuring
and impairment.
These charges
include
severance costs
associated with
Hospira's
commercial
reorganization.
Six Months Ended June 30, 2013 Reconciliation of GAAP to Non-GAAP Financial Measures:
-------------------------------------------------------------------------------------
Net Sales Gross Profit(1) (Loss) Income From Net (Loss) Income Diluted EPS
Operations
----------
GAAP Financial Measures $1,910.2 $468.8 $(66.4) $(43.7) $(0.26)
Specified Items (2)
Device Strategy charges (A) 104.3 191.4 198.5 145.9 0.88
Amortization of certain intangible assets (B) - 35.8 35.8 24.9 0.15
Impairment of certain assets (C) - - - 11.1 0.06
Certain quality and product related charges (D) - 44.7 44.7 30.0 0.18
Capacity expansion related charges (E) - 7.7 7.7 5.0 0.03
Acquisition and integration related charges (F) - - 2.8 1.8 0.01
Other restructuring charges (G) - - 4.5 3.2 0.02
Adjusted financial measures (3) $2,014.5 $748.4 $227.6 $178.2 $1.07
======== ====== ====== ====== =====
GAAP results for the six months ended June 30, 2013 include:
(A) Device Strategy
charges: $104.3
million
reported in Net
sales, $87.1
million in Cost
of products
sold and $7.1
million in
Restructuring
and impairment.
These charges
include device
related
customer sales
allowances,
customer
accommodations,
contract
termination,
collection and
destruction
costs,
inventory
charges, other
asset
impairments,
accelerated
depreciation,
consulting and
other costs
associated with
Hospira's
Device
Strategy.
(B) Amortization of
certain
intangible
assets reported
in Cost of
products sold
resulting from
acquisitions
including Mayne
Pharma and a
generic
injectable
business by
Hospira India.
(C) Impairment of
certain
investment
assets: $11.3
million
reported in
Other (income)
expense, net.
(D) Certain quality
and product
related charges
reported in
Cost of
products sold
primarily
include third
party oversight
and consulting
costs, and
device product
review and
remediation
costs to
address
identified
issues. These
charges are
primarily
associated with
Hospira's
response to the
FDA warning
letters and
charges related
to certain
device related
remediation
activities.
(E) Capacity
expansion
related charges
reported in
Cost of
products sold
include start-
up charges
related to
manufacturing
capacity
expansion in
India.
(F) Acquisition and
integration
related charges
reported in
Selling,
general, and
administrative
include costs
for the then
pending
acquisition and
integration of
an active
pharmaceutical
ingredient
business.
(G) Other
restructuring
charges
reported in
Restructuring
and impairment.
These charges
include
severance
charges
associated with
Hospira's
commercial
reorganization.
(1) Gross profit is
defined as Net sales
less Cost of
products sold.
(2) Specified items are
shown net of tax in
aggregate of $40.9
million and $83.4
million for the six
months ended June
30, 2014 and 2013,
respectively, based
on the statutory tax
rates in the various
tax jurisdictions in
which the items
occurred.
(3) The Non-GAAP
financial measures
contained in this
press release
(including adjusted
net sales, adjusted
gross profit,
adjusted income from
operations, adjusted
net income and
adjusted diluted
Earnings Per Share)
adjust for specified
items. Management
believes the Non-
GAAP financial
measures represent
the amounts directly
related to the
ongoing operations
of the business and
uses these measures
in evaluating
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, and may not be
comparable to, or
calculated in the
same manner as, Non-
GAAP financial
measures published
by other companies.
Refer to Hospira's
Form 8-K furnished
on July 30, 2014.
Hospira, Inc.
Condensed Consolidated Balance Sheets
(Unaudited)
(dollars in millions)
June 30, December 31,
2014 2013
---- ----
Assets
Current Assets:
Cash and cash equivalents $796.5 $798.1
Trade receivables, less allowances of
$12.3 and $11.2, respectively 649.5 574.3
Inventories, net 1,167.8 1,066.2
Deferred income taxes and other 222.0 208.6
Prepaid expenses 81.8 90.0
Other receivables 143.1 101.3
----- -----
Total Current Assets 3,060.7 2,838.5
------- -------
Property and equipment, net 1,655.6 1,574.2
Intangible assets, net 139.3 172.2
Goodwill 1,070.9 1,057.7
Deferred income taxes 296.7 358.9
Investments 44.3 33.1
Other assets 134.3 144.3
----- -----
Total Assets $6,401.8 $6,178.9
======== ========
Liabilities and Shareholders' Equity
Current Liabilities:
Short-term borrowings $19.9 $93.7
Trade accounts payable 349.2 329.2
Salaries, wages and commissions 183.1 185.4
Other accrued liabilities 639.3 556.8
----- -----
Total Current Liabilities 1,191.5 1,165.1
------- -------
Long-term debt 1,748.9 1,747.0
Deferred income taxes 6.8 3.2
Post-retirement obligations and other
long-term liabilities 204.0 301.7
Commitments and Contingencies
Total Shareholders' Equity 3,250.6 2,961.9
------- -------
Total Liabilities and Shareholders' Equity $6,401.8 $6,178.9
======== ========
Hospira, Inc.
Condensed Consolidated Statements of Cash Flows
(Unaudited)
(dollars in millions)
Six Months Ended June 30,
-------------------------
Cash Flow From Operating Activities: 2014 2013
---- ----
Net Income (Loss) $138.8 $(43.7)
Adjustments to reconcile Net Income (Loss) to net cash from operating activities-
Depreciation 87.1 84.7
Amortization of intangible assets 43.9 43.5
Stock-based compensation expense 28.7 20.7
Undistributed equity income from affiliates (12.0) (10.1)
Distributions received from equity affiliates - 30.1
Deferred income taxes and other tax adjustments 32.7 (59.2)
Impairments and other asset charges 7.3 64.8
Loss on disposal of assets 5.0 -
Changes in assets and liabilities-
Trade receivables (71.9) (34.6)
Inventories (96.1) (110.0)
Prepaid expenses and other assets (22.0) (49.7)
Trade accounts payable 27.1 3.4
Other liabilities (2.3) 101.7
Other, net 9.2 9.0
---
Net Cash Provided by Operating Activities 175.5 50.6
----- ----
Cash Flow From Investing Activities:
Capital expenditures (including instruments placed with or leased to customers) (184.8) (152.7)
Acquisition, net of cash acquired (9.0) -
Purchases of intangibles and other investments (4.3) (9.9)
Proceeds from disposal of businesses and assets 16.9 1.4
Net Cash Used in Investing Activities (181.2) (161.2)
------ ------
Cash Flow From Financing Activities:
Other borrowings, net (77.2) 32.4
Excess tax benefit from stock-based compensation arrangements 2.6 0.5
Proceeds from stock options exercised 78.0 6.1
Net Cash Provided by Financing Activities 3.4 39.0
--- ----
Effect of exchange rate changes on cash and cash equivalents 0.7 (17.3)
--- -----
Net change in cash and cash equivalents (1.6) (88.9)
Cash and cash equivalents at beginning of period 798.1 772.1
-----
Cash and cash equivalents at end of period $796.5 $683.2
====== ======
Supplemental Cash Flow Information:
Cash paid during the period-
Interest $51.1 $51.4
Income taxes, net of refunds $8.8 $19.4
Accrued capital expenditures $25.7 $18.4
Hospira, Inc.
Net Sales by Product Line
(Unaudited)
(dollars in millions)
Three Months Ended June 30,
---------------------------
2014 2013 % Change at % Change at
Actual Currency Constant Currency
Rates Rates(1)
----- -------
Americas-
Specialty Injectable Pharmaceuticals $625.5 $539.3 16.0 % 16.7 %
Medication Management 176.2 176.5 (0.2)% 1.4 %
Other Pharma 111.5 100.4 11.1 % 11.4 %
----- -----
Total Americas 913.2 816.2 11.9 % 12.7 %
Europe, Middle East & Africa ("EMEA")-
Specialty Injectable Pharmaceuticals 84.6 82.0 3.2 % (1.6)%
Medication Management 27.9 27.0 3.3 % (1.9)%
Other Pharma 20.2 20.3 (0.5)% (7.9)%
---- ----
Total EMEA 132.7 129.3 2.6 % (2.6)%
Asia Pacific ("APAC")-
Specialty Injectable Pharmaceuticals 75.2 68.5 9.8 % 13.3 %
Medication Management 11.4 10.5 8.6 % 11.4 %
Other Pharma 3.3 1.7 94.1 % 94.1 %
--- ---
Total APAC 89.9 80.7 11.4 % 14.7 %
Net Sales $1,135.8 $1,026.2 10.7 % 11.0 %
======== ========
Global-
Specialty Injectable Pharmaceuticals $785.3 $689.8 13.8 % 14.2 %
Medication Management 215.5 214.0 0.7 % 1.4 %
Other Pharma 135.0 122.4 10.3 % 9.3 %
----- -----
Net Sales $1,135.8 $1,026.2 10.7 % 11.0 %
======== ========
(1) The Non-GAAP
financial
measures
contained in
this press
release
include
comparisons
at constant
currency
rates, which
reflect
comparative
local
currency
balances at
prior period
foreign
exchange
rates.
Hospira
calculated
these
percentages
by taking
current
period
reported net
sales less
the
respective
prior period
reported net
sales,
divided by
the prior
period
reported net
sales, all at
the
respective
prior
period's
foreign
exchange
rates. This
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
measure aids
in the
understanding
of our change
in net sales
without the
impact of
foreign
currency and
provides
greater
transparency
into
Hospira's
results of
operations.
Hospira, Inc.
Net Sales by Product Line
(Unaudited)
(dollars in millions)
Six Months Ended June 30,
-------------------------
Reported Adjusted(1)(3)
-------- -------------
GAAP Net Sales GAAP Net Sales Adjusted Net % Change at % Change at % Change at % Change at
2014 2013 Sales 2013(1)(3) Actual Currency Constant Currency Actual Currency Constant Currency
Rates Rates(2) Rates Rates(2)
----- ------- ----- -------
Americas-
Specialty Injectable Pharmaceuticals $1,196.1 $1,050.4 $1,050.4 13.9 % 14.8 % 13.9 % 14.8 %
Medication Management 346.8 275.2 363.6 26.0 % 28.3 % (4.6)% (2.9)%
Other Pharma 212.1 189.0 189.0 12.2 % 12.7 % 12.2 % 12.7 %
----- ----- -----
Total Americas 1,755.0 1,514.6 1,603.0 15.9 % 17.0 % 9.5 % 10.6 %
EMEA-
Specialty Injectable Pharmaceuticals 170.5 164.4 164.4 3.7 % (0.6)% 3.7 % (0.6)%
Medication Management 53.6 45.3 58.5 18.3 % 13.2 % (8.4)% (12.3)%
Other Pharma 41.4 36.8 36.8 12.5 % 6.3 % 12.5 % 6.3 %
---- ---- ----
Total EMEA 265.5 246.5 259.7 7.7 % 3.0 % 2.2 % (2.3)%
APAC-
Specialty Injectable Pharmaceuticals 135.0 126.8 126.8 6.5 % 12.1 % 6.5 % 12.1 %
Medication Management 21.4 17.8 20.5 20.2 % 26.4 % 4.4 % 9.8 %
Other Pharma 9.7 4.5 4.5 115.6 % 115.6 % 115.6 % 115.6 %
--- --- ---
Total APAC 166.1 149.1 151.8 11.4 % 17.0 % 9.4 % 15.0 %
Net Sales $2,186.6 $1,910.2 $2,014.5 14.5 % 15.2 % 8.5 % 9.2 %
======== ======== ========
Global-
Specialty Injectable Pharmaceuticals $1,501.6 $1,341.6 $1,341.6 11.9 % 12.7 % 11.9 % 12.7 %
Medication Management 421.8 338.3 442.6 24.7 % 26.2 % (4.7)% (3.5)%
Other Pharma 263.2 230.3 230.3 14.3 % 13.7 % 14.3 % 13.7 %
----- ----- -----
Net Sales $2,186.6 $1,910.2 $2,014.5 14.5 % 15.2 % 8.5 % 9.2 %
======== ======== ========
(1) Adjusted Net
sales for the
six months
ended June
30, 2013
excludes
charges of
$104.3
million
related to
the Device
Strategy. The
Device
Strategy
charges are
reported in
the
respective
Medication
Management
Net sales by
product line
as follows:
Americas-
$88.4
million,
EMEA-$13.2
million and
APAC-$2.7
million.
There were no
Device
Strategy
charges
included in
GAAP Net
sales for the
six months
ended June
30, 2014.
(2) The Non-GAAP
financial
measures
contained in
this press
release
include
comparisons
at constant
currency
rates, which
reflect
comparative
local
currency
balances at
prior period
foreign
exchange
rates.
Hospira
calculated
these
percentages
by taking
current
period
reported net
sales less
the
respective
prior period
reported net
sales,
divided by
the prior
period
reported net
sales, all at
the
respective
prior
period's
foreign
exchange
rates. This
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
measure aids
in the
understanding
of our change
in net sales
without the
impact of
foreign
currency and
provides
greater
transparency
into
Hospira's
results of
operations.
(3) Adjusted
financial
measures
exclude
specified
items as
described and
reconciled to
comparable
GAAP
financial
measures in
the
Reconciliation
of GAAP to
Non-GAAP
Financial
Measures
contained in
this press
release.
SOURCE Hospira, Inc.
