-- Reaffirms 2006 Adjusted* Earnings Per Share Guidance -- LAKE
FOREST, Ill., Nov. 8 /PRNewswire-FirstCall/ -- Hospira, Inc.
(NYSE:HSP), a leading global hospital products company, today
reported results for the third quarter ended Sept. 30, 2006. --
Against an unusually strong third quarter in 2005, net sales
decreased 1.5 percent to $646.6 million. -- Adjusted* third-quarter
diluted earnings per share were $0.45 versus $0.48 last year.
Third-quarter 2006 adjusted* diluted earnings per share include
$0.04 of stock option expense. -- Third-quarter GAAP diluted
earnings per share were $0.35 versus $0.37 for the same period in
2005. "The third quarter was one of continued progress for Hospira
in executing on our long-term growth strategies, with notable
advances such as the acquisition announcement of Mayne Pharma,"
said Christopher B. Begley, chief executive officer, Hospira. "And
despite challenging comparisons against an unusually strong third
quarter in 2005, we remain on track to achieve our 2006 adjusted*
earnings per share estimate. We continue to position Hospira for a
strong future by investing for growth and working steadily to
improve our operating margins and cash flow over the long term."
Third-quarter Financial Highlights The following table highlights
net sales, net income and diluted earnings per share results for
the quarter ended Sept. 30, 2006: In $ millions, except per share
amounts GAAP Adjusted* Three Months Ended Three Months Ended Sept.
30 Sept. 30 2006 2005 % Change 2006 2005 % Change Net Sales $646.6
$656.6 (1.5)% n/a n/a n/a Net Income $55.9 $59.9 (6.5)% $72.9 $78.0
(6.6)% Diluted EPS $0.35 $0.37 (5.4)% $0.45 $0.48 (6.3)% Affecting
year-over-year comparisons was third-quarter 2005's particularly
strong performance, which benefited from several factors, including
the launch of the generic injectable drug ceftriaxone and a
competitor's supply issues. A schedule detailing sales by product
line for the third quarter and first nine months of 2006 and 2005
is attached to this press release. The primary components of the
year-over-year change in net sales for the third quarter are as
follows: -- Unfavorable volume and mix -- (2.9) percentage points,
-- Favorable pricing in the U.S. -- 0.7 percentage point, and --
Favorable foreign currency translation -- 0.6 percentage point.
Core net sales*, which exclude sales to Abbott and foreign
exchange, declined 2.0 percent in the third quarter. Significant
Events in the Third Quarter -- Announced an agreement to acquire
Mayne Pharma, an Australia-based, publicly held specialty
injectable pharmaceuticals company, for approximately US$2 billion
in cash. The combination would result in the creation of a leading,
global, generic injectable pharmaceuticals company, more than
doubling Hospira's international presence and significantly
accelerating the expansion of the company's generic injectable
business. Assuming all necessary regulatory approvals are secured
and customary closing conditions met, the transaction is expected
to be completed around the end of the year. -- Launched the generic
anti-infective drug ciprofloxacin in a flip-top vial format
immediately following the patent expiration of the branded version.
-- Announced separate agreements with group purchasing
organizations (GPOs) Premier and HealthTrust Purchasing Group to
provide their member organizations access to Hospira's line of
industry-leading pain management pumps. Both agreements are new and
national in scope. -- Announced the appointment of Thomas E. Werner
to the position of senior vice president, Finance, and chief
financial officer. Additional Third-quarter Information In
conjunction with the previous table, the following summarizes the
financial results for the quarter ended Sept. 30, 2006: In $
millions GAAP Adjusted* Three Months Ended Three Months Ended Sept.
30 Sept. 30 2006 2005 % Change 2006 2005 % Change Gross Profit
$219.0 $227.6 (3.8)% $237.6 $232.6 2.1% R&D Expense $36.5 $35.5
2.7% $36.2 $35.4 2.4% S,G&A Expense $103.5 $91.5 13.1% $99.6
$84.3 18.1% Income from Operations $79.1 $100.6 (21.4)% $101.8
$113.0 (9.9)% Statistics Gross Margin 33.9% 34.7% 36.7% 35.4%
R&D as % of Sales 5.6% 5.4% 5.6% 5.4% S,G&A as % of Sales
16.0% 13.9% 15.4% 12.8% Operating Margin 12.2% 15.3% 15.7% 17.2%
U.S. Generally Accepted Accounting Principles (GAAP) results
include the effects of non-recurring transition expenses,
manufacturing optimization expenses, and other items as detailed in
the schedules attached to this press release. The improvement in
adjusted* gross margin was attributable primarily to lower
manufacturing costs, improvement in manufacturing volumes and
product mix, and favorable pricing in the U.S. These factors were
partially offset by incremental freight and distribution
infrastructure costs, primarily in the International segment. The
increase in adjusted* Research & Development (R&D) expense
was primarily due to the inclusion of stock option expense in 2006.
The increase in adjusted* Selling, General and Administrative
(S,G&A) expense was driven mainly by higher, ongoing,
incremental costs associated with being a stand-alone public
company, particularly related to operating the company's
independent information technology (IT) system and its
international business. The inclusion of stock option expense in
2006 results was also a factor. The decrease in adjusted* operating
margin was attributable to higher S,G&A and R&D expense,
which more than offset the improvement to the adjusted* gross
margin. Cash Flow Cash flow from operations for the first nine
months of 2006 was $331.9 million, down from $471.3 million in the
same period last year. The decrease in cash flow relates primarily
to higher inventory levels. Capital expenditures were $183.6
million for the first nine months of 2006, compared with $189.5
million for the same period in 2005. The decline in spending to
build out the company's independent infrastructure more than offset
the capital spending related to its manufacturing optimization
initiatives. 2006 Projections Due to delays in purchasing decisions
by customers in Medication Management Systems as well as the
expectation of lower-than-previously- projected sales growth in
International, the company now projects that core net sales* will
grow at a mid-single-digit rate. On a GAAP basis, net sales are
expected to grow approximately 1 to 2 percent. Hospira continues to
project that the adjusted* earnings per share for full-year 2006
will be between $1.97 and $2.02, despite the lower growth rate in
sales. These projections do not include any charges or other
impacts resulting from the company's pending acquisition of Mayne
Pharma or other pending transactions. The charges or other impacts
could include purchase- accounting charges and integration expenses
relating to the transactions, and could include approximately $21
million in additional pre-tax expenses relating to a potential
biogenerics collaboration opportunity that could be closed during
the fourth quarter. The reconciliation between the projected
adjusted* diluted earnings per share and GAAP-basis earnings per
share is: Diluted earnings per share -- adjusted* (includes $0.17
of stock option expense) $1.97 - $2.02 Estimated non-recurring
transition expenses related to becoming an independent, stand-alone
company (estimated $0.16 to $0.17 per diluted share for 2006)
($0.16) Estimated charges related to previously announced
manufacturing optimization initiatives (mid-point of an estimated
$0.24 to $0.28 per diluted share range for 2006) ($0.26) Diluted
earnings per share -- GAAP basis $1.55 - $1.60 Cash flow from
operations in 2006 is now projected to range between $400 million
and $425 million, with capital expenditures estimated in the $220
million to $240 million range. The company expects depreciation and
amortization to range between $150 million and $160 million. *Use
of Non-GAAP Financial Measures As used in this press release, the
term "adjusted" refers to operating performance measures that
exclude the non-recurring transition expenses in 2006 and 2005
related to becoming an independent, stand-alone company; charges
related to the company's manufacturing optimization initiatives;
and other items as detailed in the schedules attached to this press
release. Reconciliations of these non-GAAP measures to the most
comparable GAAP measure are contained in the schedules attached to
this press release. Management believes that the items excluded in
the adjusted, non-GAAP financial measures are not necessarily
indicative of the company's base business results. Management
believes that these non-GAAP financial measures provide useful
information to both management and investors in their analysis of
the company's ongoing business and operating performance.
Management also believes that such presentation, when taken
together with results presented on a GAAP basis, enables investors
to have more complete information with which to assess the
company's results of operations and prospects. The information also
allows management and investors to better compare the company's
performance on both year-over-year and competitive bases. In
addition, management uses this information for operational planning
and decision-making purposes, including establishing employee
incentive targets. Non-GAAP financial measures should not be
considered a substitute for any GAAP measure. Additionally,
non-GAAP financial measures as presented by Hospira may not be
comparable to similarly titled measures reported by other
companies. Webcast A conference call for investors and media will
be held at 8 a.m. Central Time on Wednesday, Nov. 8, 2006. A live
webcast of the conference call will be available at
http://www.hospirainvestor.com/. Listeners should log on
approximately 10 minutes in advance to ensure proper computer setup
for receiving the webcast. A replay will be available on the
Hospira Web site for 30 days following the call. About Hospira
Hospira, Inc. is a global specialty pharmaceutical and medication
delivery company dedicated to Advancing Wellness(TM) by developing,
manufacturing and marketing products that help improve the
productivity, safety and efficacy of patient care. With 70 years of
service to the hospital industry, Hospira's portfolio includes one
of the industry's broadest lines of generic acute-care injectables,
which help address the high cost of proprietary pharmaceuticals;
integrated solutions for medication management and infusion
therapy; and the leading U.S. injectable contract manufacturing
business. Headquartered north of Chicago in Lake Forest, Ill.,
Hospira has approximately 13,000 employees and 14 manufacturing
facilities worldwide. Hospira's news releases and other information
can be found at http://www.hospira.com/. Private Securities
Litigation Reform Act of 1995 -- A Caution Concerning
Forward-Looking Statements This press release contains
forward-looking statements within the meaning of the Private
Securities Litigation Reform Act of 1995, including projections of
certain measures of Hospira's results of operations and other
statements regarding Hospira's goals and strategy. Hospira cautions
that these forward- looking statements are subject to risks and
uncertainties that may cause actual results to differ materially
from those indicated in the forward- looking statements. Economic,
competitive, governmental, technological and other factors that may
affect Hospira's operations and may cause actual results to be
materially different from expectations include the risks,
uncertainties and factors discussed under the headings "Risk
Factors" and "Management's Discussion and Analysis of Financial
Condition and Results of Operations" in Hospira's Annual Report on
Form 10-K for the year ended Dec. 31, 2005, and subsequent
Quarterly Reports on Form 10-Q, filed with the Securities and
Exchange Commission. Hospira undertakes no obligation to release
publicly any revisions to forward-looking statements as the result
of subsequent events or developments. Hospira, Inc. Condensed
Consolidated Statements of Income (Unaudited) (dollars and shares
in thousands, except for per share amounts) Three Months Ended
September 30 2006 2005 % Change Net sales $605,264 $613,898 (1.4)
Net sales to Abbott Laboratories 41,376 42,672 (3.0) Total Net
Sales 646,640 656,570 (1.5) Cost of products sold 427,612 429,008
(0.3) Gross Profit 219,028 227,562 (3.8) Research and development
36,470 35,525 2.7 Selling, general and administrative 103,506
91,483 13.1 Income From Operations 79,052 100,554 (21.4) Interest
expense 8,059 6,916 16.5 Other (income), net (4,099) (3,409) nm
Income Before Income Taxes 75,092 97,047 (22.6) Income tax expense
19,147 37,192 (48.5) Net Income $55,945 $59,855 (6.5) Earnings Per
Common Share: Basic $0.36 $0.38 (5.3) Diluted $0.35 $0.37 (5.4)
Weighted Average Common Shares Outstanding: Basic 156,359 160,103
(2.3) Diluted 158,781 162,842 (2.5) Nine Months Ended September 30
2006 2005 % Change Net sales $1,859,273 $1,849,103 0.5 Net sales to
Abbott Laboratories 122,762 131,443 (6.6) Total Net Sales 1,982,035
1,980,546 0.1 Cost of products sold 1,293,125 1,316,790 (1.8) Gross
Profit 688,910 663,756 3.8 Research and development 106,526 96,767
10.1 Selling, general and administrative 316,373 260,767 21.3
Income From Operations 266,011 306,222 (13.1) Interest expense
22,999 20,942 9.8 Other (income), net (12,394) (8,090) nm Income
Before Income Taxes 255,406 293,370 (12.9) Income tax expense
65,128 84,309 (22.8) Net Income $190,278 $209,061 (9.0) Earnings
Per Common Share: Basic $1.21 $1.32 (8.3) Diluted $1.18 $1.30 (9.2)
Weighted Average Common Shares Outstanding: Basic 157,897 158,643
(0.5) Diluted 161,214 160,797 0.3 Hospira, Inc. Reconciliation of
Condensed Consolidated Statements of Income (Unaudited) (dollars
and shares in thousands, except per share amounts) Three Months
Ended September 30 2006 2005 GAAP Adjustments Adjusted GAAP
Adjustments Adjusted Net sales $605,264 $ - $605,264 $613,898 $ -
$613,898 Net sales to Abbott Laboratories 41,376 - 41,376 42,672 -
42,672 Total Net Sales 646,640 - 646,640 656,570 - 656,570 Cost of
products sold 427,612 (18,566)A 409,046 429,008 (5,070)C 423,938
Gross Profit 219,028 18,566 237,594 227,562 5,070 232,632 Research
and development 36,470 (262)B 36,208 35,525 (155)B 35,370 Selling,
general and administrative 103,506 (3,943)B 99,563 91,483 (7,178)B
84,305 Income From Operations 79,052 22,771 101,823 100,554 12,403
112,957 Interest expense 8,059 - 8,059 6,916 - 6,916 Other
(income), net (4,099) - (4,099) (3,409) - (3,409) Income Before
Income Taxes 75,092 22,771 97,863 97,047 12,403 109,450 Income tax
expense 19,147 5,807 24,954 37,192 (5,787)D 31,405 Net Income
$55,945 $16,964 $72,909 $59,855 $18,190 $78,045 Earnings Per Common
Share: Basic $0.36 $0.11 $0.47 $0.38 $0.11 $0.49 Diluted $0.35
$0.10 $0.45 $0.37 $0.11 $0.48 Weighted Average Common Shares
Outstanding: Basic 156,359 156,359 156,359 160,103 160,103 160,103
Diluted 158,781 158,781 158,781 162,842 162,842 162,842 Statistics
(as a % of Total Net Sales, except for income tax rate) Gross
Profit 33.9% 36.7% 34.7% 35.4% R&D 5.6% 5.6% 5.4% 5.4% SG&A
16.0% 15.4% 13.9% 12.8% Income From Operations 12.2% 15.7% 15.3%
17.2% Income Before Income Taxes 11.6% 15.1% 14.8% 16.7% Net Income
8.7% 11.3% 9.1% 11.9% Income tax rate 25.5% 25.5% 38.3% 28.7% %
Change vs. Prior Year GAAP Adjusted Net sales (1.4) (1.4) Net sales
to Abbott Laboratories (3.0) (3.0) Total Net Sales (1.5) (1.5) Cost
of products sold (0.3) (3.5) Gross Profit (3.8) 2.1 Research and
development 2.7 2.4 Selling, general and administrative 13.1 18.1
Income From Operations (21.4) (9.9) Interest expense 16.5 16.5
Other (income), net nm nm Income Before Income Taxes (22.6) (10.6)
Income tax expense (48.5) (20.5) Net Income (6.5) (6.6) Earnings
Per Common Share: Basic (5.3) (4.1) Diluted (5.4) (6.3) Weighted
Average Common Shares Outstanding: Basic (2.3) (2.3) Diluted (2.5)
(2.5) A -- Includes costs of $18,291 related to the planned closure
of the Donegal, Ireland; Ashland, OH; Montreal, Canada; and North
Chicago, IL, facilities as part of Hospira's manufacturing
optimization initiatives; and non-recurring transition costs of
$275. B -- Non-recurring transition costs. C -- Includes
non-recurring charges of $2,278 related to the closure of the
Donegal, Ireland, facility as part of Hospira's manufacturing
optimization initiatives; and non-recurring transition costs of
$2,792. D -- Includes $9,500 one-time tax impact of earnings
repatriation related to The American Jobs Creations Act, and the
impact of increasing the overall effective tax rate from 24% to
25.5%. Hospira, Inc. Reconciliation of Condensed Consolidated
Statements of Income (Unaudited) (dollars and shares in thousands,
except per share amounts) Nine Months Ended September 30 2006 2005
GAAP Adjustments Adjusted GAAP Adjustments Adjusted Net sales
$1,859,273 $ - $1,859,273 $1,849,103 $ - $1,849,103 Net sales to
Abbott Laboratories 122,762 - 122,762 131,443 - 131,443 Total Net
Sales 1,982,035 - 1,982,035 1,980,546 - 1,980,546 Cost of products
sold 1,293,125 (45,697)A 1,247,428 1,316,790 (23,441)C 1,293,349
Gross Profit 688,910 45,697 734,607 663,756 23,441 687,197 Research
and development 106,526 (3,266)B 103,260 96,767 (375)B 96,392
Selling, general and adminis- trative 316,373 (23,144)B 293,229
260,767 (25,315)B 235,452 Income From Operations 266,011 72,107
338,118 306,222 49,131 355,353 Interest expense 22,999 - 22,999
20,942 - 20,942 Other (income), net (12,394) - (12,394) (8,090) -
(8,090) Income Before Income Taxes 255,406 72,107 327,513 293,370
49,131 342,501 Income tax expense 65,128 18,387 83,515 84,309 3,028
D 87,337 Net Income $190,278 $53,720 $243,998 $209,061 $46,103
$255,164 Earnings Per Common Share: Basic $1.21 $0.34 $1.55 $1.32
$0.29 $1.61 Diluted $1.18 $0.33 $1.51 $1.30 $0.29 $1.59 Weighted
Average Common Shares Outstanding: Basic 157,897 157,897 157,897
158,643 158,643 158,643 Diluted 161,214 161,214 161,214 160,797
160,797 160,797 Statistics (as a % of Total Net Sales, except for
income tax rate) Gross Profit 34.8% 37.1% 33.5% 34.7% R&D 5.4%
5.2% 4.9% 4.9% SG&A 16.0% 14.8% 13.2% 11.9% Income From
Operations 13.4% 17.1% 15.5% 17.9% Income Before Income Taxes 12.9%
16.5% 14.8% 17.3% Net Income 9.6% 12.3% 10.6% 12.9% Income tax rate
25.5% 25.5% 28.7% 25.5% % Change vs. Prior Year GAAP Adjusted Net
sales 0.5 0.5 Net sales to Abbott Laboratories (6.6) (6.6) Total
Net Sales 0.1 0.1 Cost of products sold (1.8) (3.6) Gross Profit
3.8 6.9 Research and development 10.1 7.1 Selling, general and
administrative 21.3 24.5 Income From Operations (13.1) (4.9)
Interest expense 9.8 9.8 Other (income), net nm nm Income Before
Income Taxes (12.9) (4.4) Income tax expense (22.8) (4.4) Net
Income (9.0) (4.4) Earnings Per Common Share: Basic (8.3) (3.7)
Diluted (9.2) (5.0) Weighted Average Common Shares Outstanding:
Basic (0.5) (0.5) Diluted 0.3 0.3 A -- Includes costs of $50,242
related to the planned closure of the Donegal, Ireland; Ashland,
OH; Montreal, Canada; and North Chicago, IL, facilities as part of
Hospira's manufacturing optimization initiatives; a reduction of
the obligation associated with the sale of the Salt Lake City, UT,
manufacturing plant to ICU Medical ($1,100); a gain on the sale of
the Donegal, Ireland, facility ($7,851); and non-recurring
transition costs of $4,406. B -- Non-recurring transition costs. C
-- Includes an impairment charge of $2,429 and other charges of
$13,404 related to the sale of the Salt Lake City, UT,
manufacturing plant to ICU Medical; $2,278 related to the closure
of the Donegal, Ireland, facility as part of Hospira's
manufacturing optimization initiatives; and non-recurring
transition costs of $5,330. D -- Includes $9,500 one-time tax
impact of earnings repatriation related to The American Jobs
Creations Act. Hospira, Inc. Reconciliation of Earnings Per Share
(Unaudited) Three Months Ended Nine Months Ended September 30
September 30 2006 2005 2006 2005 Diluted Earnings Per Common Share
- GAAP $0.35 $0.37 $1.18 $1.30 Adjustments: Non-recurring
transition costs 0.02 0.04 0.14 0.14 Charges related to
manufacturing optimization initiatives 0.08 0.01 0.23 0.01 Gain on
sale of Donegal, Ireland facility - - (0.04) - Tax Impact of
earnings repatriation related to The American Jobs Creations Act -
0.06 - 0.06 Reduction of obligation related to the 2005 sale of
Salt Lake City, UT manufacturing plant - - (0.01) - Obligation
related to the sale of Salt Lake City, UT manufacturing plant - - -
0.06 Asset impairment charge related to the sale of Salt Lake City,
UT manufacturing plant - - - 0.01 Subtotal of Adjustments 0.10 0.11
0.33 0.29 Diluted Earnings per Common Share - Adjusted $0.45 $0.48
$1.51 $1.59 Adjustment figures may not add to subtotal amounts due
to rounding. Reconciliation of Stock Options Expense Impact on
Diluted Adjusted Earnings Per Share (Unaudited) Had the Company
recorded stock option expense during 2005, adjusted diluted EPS
would have remained steady for the quarter ended September 30,
2005, and decreased 0.7 percent for the nine months ended September
30, 2005. A reconciliation follows: Three Months Ended Nine Months
Ended September 30 September 30 2006 2005 % Change 2006 2005 %
Change Diluted Earnings Per Common Share - Adjusted $0.45 $0.48
(6.3) $1.51 $1.59 (5.0) (2005 Stock Option Expense not included)
Pro-forma Options Expense n/a (0.03) n/a (0.07) Diluted Earnings
Per Common Share - Adjusted* (2005 Stock Option Expense included)
$0.45 $0.45 0.0 $1.51 $1.52 (0.7) * Management believes that the
presentation of 2005 results including pro-forma stock option
expense assists period-to-period comparability. Hospira, Inc.
Condensed Consolidated Balance Sheets (Unaudited) (dollars in
thousands) September 30 December 31 2006 2005 Assets Current
Assets: Cash and cash equivalents $293,592 $520,610 Net trade
receivables 355,679 327,146 Inventories 618,394 510,268 Prepaid
expenses, deferred income taxes and other receivables 224,038
203,141 Total Current Assets 1,491,703 1,561,165 Net property and
equipment 1,020,938 990,813 Intangible assets, net of amortization
13,480 14,926 Goodwill 89,197 89,197 Deferred income taxes 31,534
17,692 Other assets 122,924 115,389 Total Assets $2,769,776
$2,789,182 Liabilities and Shareholders' Equity Current
Liabilities: Short-term borrowings $7,817 $2,579 Trade accounts
payable 157,329 129,865 Salaries payable and other accruals 441,182
384,713 Due to Abbott, net - 79,079 Total Current Liabilities
606,328 596,236 Long-term debt 690,401 695,285 Post-retirement
obligations, deferred income taxes and other long-term liabilities
155,889 169,794 Commitments and Contingencies - - Total Liabilities
1,452,618 1,461,315 Total Shareholders' Equity 1,317,158 1,327,867
Total Liabilities and Shareholders' Equity $2,769,776 $2,789,182
Hospira, Inc. Condensed Consolidated Statements of Cash Flows
(Unaudited) (dollars in thousands) Nine Months Ended September 30
2006 2005 Cash Flow From (Used in) Operating Activities: Net income
$190,278 $209,061 Adjustments to reconcile net income to net cash
from operating activities -- Depreciation 114,731 116,647
Amortization of intangibles 1,446 1,349 Stock-based compensation
expense 27,819 - Gain on asset dispositions (7,851) - Changes in
assets and liabilities -- Trade receivables (23,979) 398
Inventories (101,637) (7,788) Prepaid expenses and other assets
(13,648) (13,527) Trade accounts payable and other liabilities
96,818 165,703 Other, net 47,888 (538) Net Cash From Operating
Activities 331,865 471,305 Cash Flow From (Used in) Investing
Activities: Acquisitions of property and equipment (183,632)
(189,525) Proceeds from asset dispositions 19,283 31,818 Purchase
of investments and intangibles (17,438) (30,790) Sales of
marketable securities - 72,438 Net Cash (Used in) Investing
Activities (181,787) (116,059) Cash Flow From (Used in) Financing
Activities: Payment to Abbott for international net assets
(124,251) (106,521) Common stock repurchased (299,766) - Issuance
of long-term debt, net of fees paid - 1,750 Repayment of long-term
debt (111) (84) Other borrowings, net 1,955 3,843 Excess tax
benefit from stock-based compensation arrangements 3,373 - Proceeds
from stock options exercised 39,576 97,612 Net Cash (Used in)
Financing Activities (379,224) (3,400) Effect of exchange rate
changes on cash and cash equivalents 2,128 (2,032) Net change in
cash and cash equivalents (227,018) 349,814 Cash and cash
equivalents at beginning of period 520,610 127,695 Cash and cash
equivalents at end of period $293,592 $477,509 Hospira, Inc.
(Unaudited) (dollars in thousands) Sales by Product Line Three
Months Ended Nine Months Ended September 30 September 30 % % 2006
2005 Change 2006 2005 Change U.S. -- Specialty Injectable
Pharmaceuticals $198,362 $205,230 (3.3) $590,915 $630,994 (6.4)
Medication Delivery Systems 199,029 206,119 (3.4) 626,498 598,726
4.6 Injectable Pharmaceutical Contract Manufacturing 38,090 43,843
(13.1) 139,879 145,989 (4.2) Sales to Abbott Laboratories 25,038
25,553 (2.0) 70,860 80,537 (12.0) Other 72,506 70,584 2.7 211,749
194,853 8.7 Total U.S. 533,025 551,329 (3.3) 1,639,901 1,651,099
(0.7) International -- Sales to Third Parties 97,277 88,122 10.4
290,232 278,541 4.2 Sales to Abbott Laboratories 16,338 17,119
(4.6) 51,902 50,906 2.0 Total International Sales 113,615 105,241
8.0 342,134 329,447 3.9 Consolidated Net Sales $646,640 $656,570
(1.5) $1,982,035 $1,980,546 0.1 Reconciliation of Consolidated Net
Sales to Core Net Sales* Three Months Ended Nine Months Ended
September 30 September 30 % % 2006 2005 Change 2006 2005 Change
Consolidated Net Sales $646,640 $656,570 (1.5) $1,982,035
$1,980,546 0.1 Less: Sales to Abbott Laboratories (41,376) (42,672)
(122,762) (131,443) Berlex imaging agents - 94 - (67,080) Impact of
foreign currency (3,800) - (5,000) - Core Net Sales* $601,464
$613,992 (2.0) $1,854,273 $1,782,023 4.1 * Management believes that
presentation of the change in core net sales, which excludes Sales
to Abbott Laboratories, Berlex imaging agents, and the Impact of
foreign currency, is useful to investors in that it provides an
additional measure to assess the underlying sales trend of
Hospira's ongoing business. Hospira, Inc. Segment Information
(Unaudited) (dollars in thousands) Three Months Ended September 30
Net Sales Income from Operations 2006 2005 % Change 2006 2005 %
Change U.S. $533,025 $551,329 (3.3) $80,623 A $98,905 A (18.5)
International 113,615 105,241 8.0 10,831 B 15,805 B (31.5) Total
reportable segments $646,640 $656,570 (1.5) 91,454 114,710 (20.3)
Corporate functions (12,402)C (14,156)C (12.4) Income from
operations 79,052 100,554 (21.4) Other, net (3,960) (3,507) nm
Income before income taxes $75,092 $97,047 (22.6) Included in the
reported Income before income taxes above, are the following costs:
A -- U.S. Non-recurring transition costs $3,605 $7,493
Costs/(Income) associated with the sale of the Salt Lake City, UT
manufacturing plant - - Costs related to the planned closure of the
Ashland, OH and North Chicago, IL facilities 9,749 - Total U.S.
$13,354 $7,493 B -- International Non-recurring transition costs
663 1,844 Costs related to the planned closure of the Donegal,
Ireland and Montreal, Canada facilities 8,542 2,278 Gain on the
sale of the Donegal, Ireland facility - - Total International
$9,205 $4,122 C -- Corporate Non-recurring transition costs 212 788
Total Corporate $212 $788 Total $22,771 $12,403 Hospira, Inc.
Segment Information (Unaudited) (dollars in thousands) Nine Months
Ended September 30 Net Sales Income from Operations 2006 2005 %
Change 2006 2005 % Change U.S. $1,639,901 $1,651,099 (0.7) $277,738
A $289,731 A (4.1) International 342,134 329,447 3.9 29,445 B
57,997 B (49.2) Total reportable segments $1,982,035 $1,980,546 0.1
307,183 347,728 (11.7) Corporate functions (41,172)C (41,506)C
(0.8) Income from operations 266,011 306,222 (13.1) Other, net
(10,605) (12,852) nm Income before income taxes $255,406 $293,370
(12.9) Included in the reported Income before income taxes above,
are the following costs: A -- U.S. Non-recurring transition costs
$19,890 $24,777 Costs/(Income) associated with the sale of the Salt
Lake City, UT manufacturing plant (1,100) 15,833 Costs related to
the planned closure of the Ashland, OH and North Chicago, IL
facilities 25,506 - Total U.S. $44,296 $40,610 B -- International
Non-recurring transition costs 8,326 4,247 Costs related to the
planned closure of the Donegal, Ireland and Montreal, Canada
facilities 24,736 2,278 Gain on the sale of the Donegal, Ireland
facility (7,851) - Total International $25,211 $6,525 C --
Corporate Non-recurring transition costs 2,600 1,996 Total
Corporate $2,600 $1,996 Total $72,107 $49,131
http://www.newscom.com/cgi-bin/prnh/20040503/HSPLOGO
http://photoarchive.ap.org/ DATASOURCE: Hospira, Inc. CONTACT:
Media, Stacey Eisen, +1-224-212-2276, Tareta Adams,
+1-224-212-2535, or Financial Community, Lynn McHugh,
+1-224-212-2363, all of Hospira, Inc. Web site:
http://www.hospira.com/
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