HOSPIRA, INC. 
By
LAKE FOREST,
"Results for the second quarter were in line with our expectations," said F. Michael Ball, chief executive officer. "In addition, it was a quarter of several milestone achievements for Hospira, such as the positive opinion from the European Medicines Agency (EMA) on our biosimilar infliximab, Inflectra(TM), and the U.S. launch of the new premix versions of our branded sedation agent, Precedex(TM). While we continued to make progress in supply recovery and in advancing our quality-improvement initiatives, we still have work to do to reinforce our foundation. We are working through our commitments to the U.S. Food and Drug Administration (FDA), as well as seeking alignment with global regulatory bodies regarding our devices. We are driving forward to ensure we meet the expectations of our regulators and customers, and remain focused on the execution of our quality and growth initiatives. We believe these actions are positioning Hospira for a stronger, more competitive future with sustainable, long-term shareholder value."
Second-Quarter 2013 Results
The following table highlights selected financial results for the second quarter of 2013 compared to the same period in 2012:
In $ millions, GAAP % Change Adjusted* % Change
except per Three Months Ended June Three Months Ended June
share 30, 30,
amounts
---
2013 2012 2013 2012
---- ---- ---- ----
Net Sales $1,026.2 $1,033.3 (0.7)% n/a n/a n/a
--------- -------- -------- ----- --- ---------- ---
Gross Profit
(Net Sales
less Cost of
Products
Sold) $318.7 $283.5 12.4% $388.9 $370.8 4.9%
------------- ------ ------ ---- ------ ------ ---
Income (Loss)
from
Operations $52.2 $(2.2) nm $126.4 $117.3 7.8%
------------- ----- ----- --- ------ ------ ---
Diluted
Earnings
(Loss) per
Share $0.20 $(0.02) nm $0.55 $0.51 7.8%
----------- ----- ------ --- ----- ----- ---
Statistics (as a % of Net Sales)
-------------------------------
Gross Profit
(Net Sales
less Cost of
Products
Sold) 31.1% 27.4% 37.9% 35.9%
------------- ---- ---- ---- ----
Income (Loss)
from
Operations 5.1% (0.2)% 12.3% 11.4%
------------- --- ----- ---- ----
Results under GAAP include items as detailed in the schedules attached to this press release.
Net sales were $1.0 billion in the second quarter of 2013, a decrease of 0.7 percent compared to the second quarter of 2012. Continued strong global sales of Precedex and higher pricing on certain Specialty Injectable Pharmaceuticals (SIP) products in the U.S. were more than offset by the impact of pricing erosion of certain newer U.S. SIP products and lower device sales. The lower device sales were primarily a result of an expanded import alert announced in February 2013 by the FDA.
Adjusted* income from operations increased 7.8 percent to $126 million in the second quarter of 2013, compared to $117 million in the second quarter of 2012. The increase mainly reflects favorable product mix compared to the second quarter of 2012, which more than offset a year-over-year increase in Selling, General and Administration expense and higher manufacturing costs related to the company's quality initiatives. On a GAAP basis, income from operations was $52 million compared to a loss from operations of $2 million in the second quarter of 2012. The second quarter of 2012 included facilities optimization charges and higher restructuring charges.
The effective tax rate on an adjusted basis* in the quarter was a benefit of 17.1 percent compared to a benefit of 19.0 percent in the second quarter of 2012. The decrease is primarily due to a 2013 tax benefit related to the reinstatement of the U.S. federal Research & Development tax credit and other corporate provisions for 2013. On a GAAP basis, the second-quarter 2013 effective tax rate was a benefit of 27.9 percent compared to a benefit of 70.1 percent in the second quarter of 2012. The benefit during both periods primarily resulted from higher quality- and device-related charges incurred in higher tax-rate jurisdictions.
Cash Flow
Cash flow from operations for the first six months of 2013 was $51 million compared to $216 million for the same period of 2012. The decrease is mainly due to lower income from operations in the first six months of 2013 primarily related to the investments in the company's quality-improvement initiatives, as well as to higher working capital.
Capital expenditures were $153 million for the first six months of 2013, compared to $137 million for the same period in 2012. The increase reflects additional planned expenditures at several of the company's manufacturing facilities related to modernization initiatives, as well as Information Technology projects.
2013 Projections
Hospira continues to project the year-over-year change to 2013 adjusted* net sales to be negative 1 percent to positive 1 percent, on a constant-currency basis. Adjusted* net sales exclude the first-quarter 2013 impact of customer sales allowances associated with the company's new device strategy announced in May 2013. On a GAAP basis, the year-over-year change to net sales is now expected to range between negative 5 percent and negative 3 percent. Foreign exchange is now expected to detract from net sales by a negative 1 percent.
The company continues to expect full-year 2013 adjusted* diluted earnings per share to range between $2.00 and $2.10, representing flat to 5 percent growth.
The reconciliation between the projected 2013 adjusted* diluted earnings per share and projected GAAP diluted earnings per share follows:
Diluted earnings per share -- adjusted* $2.00 - $2.10
=============
Estimated charges related to the company's device $(0.95)
strategy (mid-point of an estimated range of
$0.91 to $0.99 per diluted share)
Estimated amortization of intangible assets related to $(0.31)
certain acquisitions (mid-point of an estimated range
of $0.29 to $0.33 per diluted share)
Impairment of certain assets $(0.06)
Estimated charges for certain quality and product-related $(0.37)
matters (mid-point of an estimated range of
$0.33 to $0.41 per diluted share)
Estimated charges related to capacity expansion $(0.09)
(mid-point of an estimated range of $0.08 to $0.10
per diluted share)
Estimated acquisition and integration-related charges $(0.05)
associated with the pending acquisition of an API-related
business from Orchid Chemicals & Pharmaceuticals
(mid-point of an estimated range of $0.04 to $0.06
per diluted share)
Other restructuring charges $(0.02)
Estimated loss on consideration of early extinguishment $(0.14)
of debt (mid-point of an estimated range of $0.13 to $0.15
per diluted share)
Diluted earnings per share -- GAAP $0.01 - $0.11
=============
The adjusting items are shown net of tax in aggregate of $138 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 continues to project that cash flow from operations in 2013 will be between $200 million and $250 million. Depreciation and amortization guidance also remains unchanged at between $255 million and $275 million. The company now expects capital expenditures to range between $350 million and $400 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 31, 2013. 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. 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
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, technological, manufacturing 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 "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, 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 (Loss)
(Unaudited)
(dollars and shares in millions, except for per share amounts)
Three Months Ended June 30, % Change
--------------------------- --------
2013 2012
---- ----
Net sales $1,026.2 $1,033.3 (0.7)%
-------- --------
Cost of products sold 707.5 749.8 (5.6)%
Restructuring and impairment 2.9 32.2 (91.0)%
Research and development 74.4 83.6 (11.0)%
Selling, general and administrative 189.2 169.9 11.4 %
----- -----
Total operating costs and expenses 974.0 1,035.5 (5.9)%
----- -------
Income (Loss) From Operations 52.2 (2.2) nm
Interest expense 19.9 21.0 (5.2)%
Other expense, net 10.1 8.6 17.4 %
---- ---
Income (Loss) Before Income Taxes 22.2 (31.8) (169.8)%
Income tax benefit (6.2) (22.3) (72.2)%
Equity income from affiliates, net (4.5) (7.0) (35.7)%
---- ----
Net Income (Loss) $32.9 $(2.5) nm
===== =====
Earnings (Loss) Per Common Share:
Basic $0.20 $(0.02) nm
===== ======
Diluted $0.20 $(0.02) nm
===== ======
Weighted Average Common Shares Outstanding:
Basic 165.5 165.1 0.2 %
===== =====
Diluted 166.3 165.1 0.7 %
===== =====
Adjusted Gross Profit (1)(2) $388.9 $370.8 4.9 %
Adjusted Income From Operations (1) $126.4 $117.3 7.8 %
Adjusted Net Income (1) $92.1 $84.9 8.5 %
Adjusted Diluted Earnings Per Share (1) $0.55 $0.51 7.8 %
Statistics (as a % of net sales, except for income tax rate):
GAAP Three Months Ended June 30, Adjusted(1)Three Months Ended June
30,
-------------------------------- -----------------------------------
2013 2012 2013 2012
---- ---- ---- ----
Gross Profit (2) 31.1 % 27.4 % 37.9 % 35.9 %
Income (Loss) From Operations 5.1 % (0.2)% 12.3 % 11.4 %
Net Income (Loss) 3.2 % (0.2)% 9.0 % 8.2 %
Income Tax Rate 27.9 % 70.1 % 17.1 % 19.0 %
(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
contained in this press
release.
(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.
nm - Percentage change is not meaningful.
Hospira, Inc.
Condensed Consolidated Statements of (Loss) Income
(Unaudited)
(dollars and shares in millions, except for per share amounts)
Six Months Ended June 30, % Change
------------------------- --------
2013 2012
---- ----
Net sales $1,910.2 $1,999.2 (4.5)%
-------- --------
Cost of products sold 1,441.4 1,415.7 1.8 %
Restructuring and impairment 11.7 32.2 (63.7)%
Research and development 148.2 152.7 (2.9)%
Selling, general and administrative 375.3 354.1 6.0 %
----- -----
Total operating costs and expenses 1,976.6 1,954.7 1.1 %
------- -------
(Loss) income From Operations (66.4) 44.5 (249.2)%
Interest expense 39.5 43.3 (8.8)%
Other expense, net 12.4 9.9 25.3 %
---- ---
(Loss) Before Income Taxes (118.3) (8.7) nm
Income tax benefit (64.5) (26.4) 144.3 %
Equity income from affiliates, net (10.1) (20.1) (49.8)%
----- -----
Net (Loss) Income $(43.7) $37.8 (215.6)%
====== =====
(Loss) Earnings Per Common Share:
Basic $(0.26) $0.23 (213.0)%
====== =====
Diluted $(0.26) $0.23 (213.0)%
====== =====
Weighted Average Common Shares Outstanding:
Basic 165.4 164.9 0.3 %
===== =====
Diluted 165.4 165.9 (0.3)%
===== =====
Adjusted Net Sales (1)(2) $2,014.5 $1,999.2 0.8 %
Adjusted Gross Profit (1)(3) $748.4 $728.3 2.8 %
Adjusted Income From Operations (1) $227.6 $221.5 2.8 %
Adjusted Net Income (1) $178.2 $163.3 9.1 %
Adjusted Diluted Earnings Per Share (1) $1.07 $0.98 9.2 %
Statistics (as a % of net sales, except for income tax rate):
GAAP Six Months Ended June 30, Adjusted(1)Six Months Ended June
30,
------------------------------ ---------------------------------
2013 2012 2013 2012
---- ---- ---- ----
Gross Profit (3) 24.5 % 29.2 % 37.2 % 36.4 %
(Loss) Income From Operations (3.5)% 2.2 % 11.3 % 11.1 %
Net (Loss) Income (2.3)% 1.9 % 8.8 % 8.2 %
Income Tax Rate 54.5 % 303.4 % 10.1 % 19.0 %
(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
contained in this press
release.
(2) There were no adjustments
included in GAAP Net
sales for the six months
ended June 30, 2012.
(3) 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.
nm - Percentage change is not meaningful.
Hospira, Inc.
Reconciliation of GAAP to Non-GAAP Financial Measures
(Unaudited)
(dollars in millions, except for per share amounts)
Three months ended June 30, 2013 Reconciliation of GAAP to Non-GAAP Financial Measures:
---------------------------------------------------------------------------------------
Gross Profit(1) Income From Net Income(2) Diluted EPS
Operations
GAAP Financial Measures $318.7 $52.2 $32.9 $0.20
Specified Items:
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 Limited ("Mayne Pharma")
and a generic injectable business
by Hospira Healthcare India
Private Limited ("Hospira
India").
(C) Impairment of certain assets: $9.3
million reported in Other
expense, net, related to
impairments of certain
investments.
(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 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 reported in
Selling, general, and
administrative include costs for
the pending acquisition and
integration of an active
pharmaceutical ingredient
business.
(G) Other restructuring charges: $0.5
million reported in Restructuring
and impairment. These charges
include severance charges
associated with Hospira's
commercial reorganization.
Three months ended June 30, 2012 Reconciliation of GAAP to Non-GAAP Financial Measures:
---------------------------------------------------------------------------------------
Gross Profit(1) (Loss) Income From Net (Loss) Income(2) Diluted EPS
Operations
----------
GAAP Financial Measures $283.5 $(2.2) $(2.5) $(0.02)
Specified Items:
Facilities Optimization charges (A) - 17.4 10.7 0.06
Amortization of certain intangible assets(B) 17.8 17.8 12.4 0.08
Impairment of certain assets(C) - 2.7 7.1 0.04
Certain quality and product related charges (D) 58.4 58.4 35.7 0.22
Capacity expansion related charges (E) 5.3 5.3 3.6 0.02
Other restructuring charges (F) 5.8 17.9 17.9 0.11
Adjusted financial measures (3) $370.8 $117.3 $84.9 $0.51
====== ====== ===== =====
GAAP results for the three months ended June
30, 2012 include:
(A) Facilities Optimization charges: $17.4
million reported in Restructuring and
impairment. The equipment and facility
impairment charges are associated with
Hospira's plans to exit a specialty
injectable drug finishing operation.
(B) Amortization of certain intangible
assets reported in Cost of products
sold resulting from acquisitions
including Mayne Pharma, Javelin
Pharmaceuticals, Inc. ("Javelin
Pharma") and a generic injectable
business by Hospira India.
(C) Impairment of certain assets: $2.7
million reported in Restructuring and
impairment, and $8.4 million reported
in Other expense, net. These charges
relate to impairments of an intangible
asset and a certain investment,
respectively.
(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, failure to supply penalties,
device product review and remediation
costs to address identified issues, and
costs for corrective actions including
product recalls. These charges are
directly associated with Hospira's
response to the FDA 2010 warning letter
and subsequent Form 483 observations
and charges related to Hospira's
comprehensive device product review and
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) Other restructuring charges: $12.1
million reported in Restructuring and
impairment, and $5.8 million reported
in Cost of products sold. These
charges include equipment impairments,
inventory charges, and contract
termination charges associated with
Hospira's plans to exit a non-
strategic product line.
(1) Gross profit is defined as Net sales less
Cost of products sold.
(2) Adjusted net income is shown net of tax of
$24.3 million and $40.5 million for the
three months ended June 30, 2013 and 2012,
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 certain
specified items. 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. Refer to Hospira's
Form 8-K furnished on July 31, 2013.
Hospira, Inc.
Reconciliation of GAAP to Non-GAAP Financial Measures
(Unaudited)
(dollars in millions, except for per share amounts)
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(2) Diluted EPS
Operations
GAAP Financial Measures $1,910.2 $468.8 $(66.4) $(43.7) $(0.26)
Specified Items:
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 & 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 assets:
$11.3 million reported in Other
expense, net, related to
impairments of certain
investments.
(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 pending acquisition and
integration of an active
pharmaceutical ingredient
business.
(G) Other restructuring charges: $4.5
million reported in Restructuring
and impairment. These charges
include severance charges
associated with Hospira's
commercial reorganization.
Six months ended June 30, 2012 Reconciliation of GAAP to Non-GAAP Financial Measures:
-------------------------------------------------------------------------------------
Gross Profit(1) Income From Net Income(2) Diluted EPS
Operations
----------
GAAP Financial Measures $583.5 $44.5 $37.8 $0.23
Specified Items:
Facilities Optimization charges (A) - 17.4 10.7 0.06
Amortization of certain intangible assets (B) 36.5 36.5 25.4 0.15
Impairment of certain assets(C) - 2.7 7.1 0.04
Certain quality and product related charges (D) 95.3 95.3 59.6 0.36
Capacity expansion related charges (E) 7.2 7.2 4.8 0.03
Other restructuring charges(F) 5.8 17.9 17.9 0.11
Adjusted financial measures (3) $728.3 $221.5 $163.3 $0.98
====== ====== ====== =====
GAAP results for the six months ended June
30, 2012 include:
(A) Facilities Optimization charges: $17.4
million reported in Restructuring and
impairment. The equipment and facility
impairment charges relate to Hospira's
plans to exit a specialty injectable
drug finishing operation.
(B) Amortization of certain intangible
assets reported in Cost of products
sold resulting from acquisitions
including Mayne Pharma, Javelin Pharma
and a generic injectable business by
Hospira India.
(C) Impairment of certain assets: $2.7
million reported in Restructuring and
impairment, and $8.4 million reported
in Other expense, net. These charges
relate to impairments of an intangible
asset and a certain investment,
respectively.
(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, failure to supply penalties,
device product review and remediation
costs to address identified issues, and
costs for corrective actions including
product recalls. These charges are
directly associated with Hospira's
response to the FDA 2010 warning letter
and subsequent Form 483 observations
and charges related to Hospira's
comprehensive device product review and
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) Other restructuring charges: $12.1
million reported in Restructuring and
impairment, and $5.8 million reported
in Cost of products sold. These
charges include equipment impairments,
inventory charges, and contract
termination charges associated with
Hospira's plans to exit a non-
strategic product line.
(1) Gross profit is defined as Net sales less
Cost of products sold.
(2) Adjusted net income is shown net of tax of
$83.4 million and $59.9 million for the six
months ended June 30, 2013 and 2012,
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 certain specified items. 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. Refer to
Hospira's Form 8-K furnished on July 31,
2013.
Hospira, Inc.
Condensed Consolidated Balance Sheets
(Unaudited)
(dollars in millions)
June 30, December 31,
2013 2012
---- ----
Assets
Current Assets:
Cash and cash equivalents $683.2 $772.1
Trade receivables, less allowances of $12.9 in 2013 and $12.7 in 2012 667.5 646.9
Inventories, net 1,032.8 997.8
Deferred income taxes 199.8 214.4
Prepaid expenses 83.5 53.9
Other receivables 91.2 75.3
---- ----
Total Current Assets 2,758.0 2,760.4
------- -------
Property and equipment, net 1,452.8 1,445.1
Intangible assets, net 218.6 266.8
Goodwill 1,063.1 1,079.1
Deferred income taxes 327.4 296.8
Investments 37.3 71.8
Other assets 157.7 168.6
----- -----
Total Assets $6,014.9 $6,088.6
======== ========
Liabilities and Shareholders' Equity
Current Liabilities:
Short-term borrowings $459.2 $28.9
Trade accounts payable 273.0 276.0
Salaries, wages and commissions 156.0 144.0
Other accrued liabilities 581.8 580.3
----- -----
Total Current Liabilities 1,470.0 1,029.2
------- -------
Long-term debt 1,301.9 1,706.8
Deferred income taxes 3.1 4.4
Post-retirement obligations and other long-term liabilities 342.8 306.5
Commitments and Contingencies
Total Shareholders' Equity 2,897.1 3,041.7
------- -------
Total Liabilities and Shareholders' Equity $6,014.9 $6,088.6
======== ========
Hospira, Inc.
Condensed Consolidated Statements of Cash Flows
(Unaudited)
(dollars in millions)
Six Months Ended June 30,
-------------------------
Cash Flow From Operating Activities: 2013 2012
---- ----
Net (loss) income $(43.7) $37.8
Adjustments to reconcile net (loss) income to net cash from operating activities-
Depreciation 84.7 82.3
Amortization of intangible assets 43.5 41.8
Stock-based compensation expense 20.7 20.1
Undistributed equity income from affiliates (10.1) (20.1)
Distributions received from equity affiliates 30.1 -
Deferred income taxes (59.2) (25.3)
Impairment and other asset charges 64.8 47.0
Gains on disposition of assets - (0.9)
Changes in assets and liabilities-
Trade receivables (34.6) 3.0
Inventories (110.0) 5.6
Prepaid expenses and other assets (49.7) (44.9)
Trade accounts payable 3.4 (8.5)
Other liabilities 101.7 76.4
Other, net 9.0 1.8
---
Net Cash Provided by Operating Activities 50.6 216.1
---- -----
Cash Flow From Investing Activities:
Capital expenditures (including instruments placed with or leased to customers) (152.7) (137.4)
Purchases of intangibles and other investments (9.9) (7.8)
Proceeds from disposition of businesses and assets 1.4 8.3
Net Cash Used in Investing Activities (161.2) (136.9)
------ ------
Cash Flow From Financing Activities:
Other borrowings, net 32.4 42.3
Excess tax benefit from stock-based compensation arrangements 0.5 1.8
Proceeds from stock options exercised 6.1 4.8
Net Cash Provided by Financing Activities 39.0 48.9
---- ----
Effect of exchange rate changes on cash and cash equivalents (17.3) (5.3)
----- ----
Net change in cash and cash equivalents (88.9) 122.8
Cash and cash equivalents at beginning of period 772.1 597.5
-----
Cash and cash equivalents at end of period $683.2 $720.3
====== ======
Supplemental Cash Flow Information:
Cash paid during the period-
Interest $51.4 $51.3
Income taxes, net of refunds $19.4 $0.7
Accrued capital expenditures $18.4 $8.9
Hospira, Inc.
Net Sales by Product Line
(Unaudited)
(dollars in millions)
Three Months Ended June 30,
---------------------------
2013 2012 % Change at Actual % Change at Constant
Currency Rates Currency Rates(1)
-------------- ----------------
Americas-
Specialty Injectable Pharmaceuticals $539.3 $491.7 9.7 % 9.9 %
Medication Management 176.5 213.4 (17.3)% (17.0)%
Other Pharma 100.4 105.2 (4.6)% (4.5)%
----- -----
Total Americas 816.2 810.3 0.7 % 1.0 %
Europe, Middle East & Africa ("EMEA")-
Specialty Injectable Pharmaceuticals 82.0 82.3 (0.4)% (1.9)%
Medication Management 27.0 30.2 (10.6)% (11.9)%
Other Pharma 20.3 22.8 (11.0)% (10.1)%
---- ----
Total EMEA 129.3 135.3 (4.4)% (5.5)%
Asia Pacific ("APAC")-
Specialty Injectable Pharmaceuticals 68.5 70.2 (2.4)% 1.0 %
Medication Management 10.5 11.5 (8.7)% (7.8)%
Other Pharma 1.7 6.0 (71.7)% (71.7)%
--- ---
Total APAC 80.7 87.7 (8.0)% (5.1)%
Net Sales $1,026.2 $1,033.3 (0.7)% (0.4)%
======== ========
Global-
Specialty Injectable Pharmaceuticals $689.8 $644.2 7.1 % 7.4 %
Medication Management 214.0 255.1 (16.1)% (16.0)%
Other Pharma 122.4 134.0 (8.7)% (8.4)%
----- -----
Net Sales $1,026.2 $1,033.3 (0.7)% (0.4)%
======== ========
(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 2013 Adjusted Net Sales GAAP Net % Change at Actual % Change at Constant % Change at Actual % Change at Constant
Sales 2012
2013(1)(3) Currency Rates Currency Rates(2) Currency Rates Currency Rates(2)
--------- -------------- ---------------- -------------- ----------------
Americas-
Specialty Injectable Pharmaceuticals $1,050.4 $1,050.4 $949.4 10.6 % 10.9 % 10.6 % 10.9 %
Medication Management 275.2 363.6 426.6 (35.5)% (35.2)% (14.8)% (14.5)%
Other Pharma 189.0 189.0 204.6 (7.6)% (7.5)% (7.6)% (7.5)%
----- ----- -----
Total Americas 1,514.6 1,603.0 1,580.6 (4.2)% (3.9)% 1.4 % 1.7 %
EMEA-
Specialty Injectable Pharmaceuticals 164.4 164.4 158.5 3.7 % 2.4 % 3.7 % 2.4 %
Medication Management 45.3 58.5 61.0 (25.7)% (26.7)% (4.1)% (5.1)%
Other Pharma 36.8 36.8 43.7 (15.8)% (15.1)% (15.8)% (15.1)%
---- ---- ----
Total EMEA 246.5 259.7 263.2 (6.3)% (7.3)% (1.3)% (2.2)%
APAC-
Specialty Injectable Pharmaceuticals 126.8 126.8 122.7 3.3 % 6.0 % 3.3 % 6.0 %
Medication Management 17.8 20.5 23.7 (24.9)% (24.5)% (13.5)% (13.1)%
Other Pharma 4.5 4.5 9.0 (50.0)% (50.0)% (50.0)% (50.0)%
--- --- ---
Total APAC 149.1 151.8 155.4 (4.1)% (1.9)% (2.3)% (0.1)%
Net Sales $1,910.2 $2,014.5 $1,999.2 (4.5)% (4.2)% 0.8 % 1.0 %
======== ======== ========
Global-
Specialty Injectable Pharmaceuticals $1,341.6 $1,341.6 $1,230.6 9.0 % 9.3 % 9.0 % 9.3 %
Medication Management 338.3 442.6 511.3 (33.8)% (33.7)% (13.4)% (13.3)%
Other Pharma 230.3 230.3 257.3 (10.5)% (10.3)% (10.5)% (10.3)%
----- ----- -----
Net Sales $1,910.2 $2,014.5 $1,999.2 (4.5)% (4.2)% 0.8 % 1.0 %
======== ======== ========
(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
adjustments included in GAAP Net sales for the six
months ended June 30, 2012.
(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 certain
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.
