- Current report filing (8-K)
05 Novembro 2008 - 11:42AM
Edgar (US Regulatory)
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington,
D.C. 20549
FORM 8-K
CURRENT REPORT PURSUANT
TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
November 5,
2008
Date of Report (Date of Earliest Event
Reported)
HOSPIRA, INC.
(Exact Name of Registrant as Specified in Its
Charter)
Delaware
(State or Other Jurisdiction of
Incorporation)
1-31946
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20-0504497
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(Commission File Number)
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(I.R.S. Employer
Identification No.)
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275 N.
Field Drive
Lake
Forest, Illinois 60045
(Address Of Principal Executive Offices,
including Zip Code)
Registrants Telephone Number, Including Area
Code:
(224) 212-2000
Not
Applicable
(Former Name or Former Address, If Changed
Since Last Report)
Check
the appropriate box below if the Form 8-K filing is intended to
simultaneously satisfy the filing obligation of the registrant under any of the
following provisions:
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Written
communications pursuant to Rule 425 under the Securities Act (17 CFR
230.425)
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Soliciting
material pursuant to Rule 14a-12 under the Exchange Act (17 CFR
240.14a-12)
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Pre-commencement
communications pursuant to Rule 14d-2(b) under the Exchange Act (17
CFR 240.14d-2(b))
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Pre-commencement
communications pursuant to Rule 13e-4(c) under the Exchange Act (17
CFR 240.13e-4(c))
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Item 2.02 Results of Operations and Financial Condition
On
November 5, 2008, we issued a press release announcing our 2008 third
quarter results of operations. Such press release is furnished as Exhibit 99.1,
and incorporated by reference into this Item 2.02.
Forward-Looking Statements
This
Item 2.02, including the press release incorporated by reference herein,
contains forward-looking statements within the meaning of the Private
Securities Litigation Reform Act of 1995, including projections of certain
measures of our results of operations, projections of certain charges and
expenses, statements regarding the financial impact of the acquisition of Mayne
Pharma Limited (Mayne Pharma) and other statements regarding our goals, strategy,
expectations and commitments. 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 Hospiras 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 Managements Discussion and
Analysis of Financial Condition and Results of Operations in Hospiras latest Annual
Report on Form 10-K, and Hospiras subsequent Quarterly Reports on Form 10-Q,
which are 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.
Use of Non-GAAP Financial Measures
We
present non-GAAP financial measures in the press release, including:
·
adjusted cost of products sold;
·
adjusted gross profit;
·
adjusted research and development (R&D) expense;
·
adjusted selling, general and administrative (SG&A)
expense;
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adjusted income from operations;
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adjusted interest expense;
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adjusted other income, net;
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adjusted income tax expense;
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adjusted net income;
·
adjusted basic and diluted earnings per share;
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net sales comparisons at constant currency
rates; and
·
statistics using one or more of such adjusted
measures.
These
non-GAAP financial measures exclude certain items from the most comparable
financial measure calculated in accordance with generally accepted accounting
principles of the United States (GAAP). Each of these measures is
presented together with the most comparable measure calculated in accordance
with GAAP. The excluded items are:
Facilities Optimization Charges.
These charges and expenses relate to the sale,
closure, or pending closures, of our Ashland, Ohio; Donegal, Ireland; Montreal,
Canada; Morgan Hill, California; and Salt Lake City, Utah, facilities and our
departure from the North Chicago, Illinois leased manufacturing facility, which
were announced in 2005, 2006, and 2008. In addition, in 2007, as a result of
changes in sales projections, management made a decision to limit, and
transfer, R&D facility operations related to brain-function monitoring
devices. These charges and expenses include restructuring charges and expenses
relating to the relocation of production and R&D operations from the
affected facilities to other facilities. Partially offsetting these charges and
expenses is a gain of $2.5 million on the sale of the Montreal, Canada facility
recorded in the three months ended September 30, 2008.
Management
determined that these facilities would not be used in our operations in future
periods to reduce our future ongoing operating costs and improve the efficiency
of our manufacturing operations. Further, management makes strategic decisions
on the allocation of resources to improve the efficiency of our R&D
facility operations. We do not believe that the charges and expenses relating
to the closure or disposal of these facilities, and the transfer of production and
R&D operations to other facilities, are necessarily indicative of our
ongoing business performance
2
and
normal operations. We expect to incur expenses for these initiatives through
2011. As the product relocation expenses and certain restructuring
charges are incurred in cash, excluding these items has the effect of excluding
significant cash expenditures from the adjusted financial measures.
We
incurred these charges and expenses, on a pre-tax basis in the amount of $8.2
million and $8.0 million in the three months ended September 30, 2008 and 2007
and in the amount of $25.9 million and $31.8 million in the nine months ended September 30,
2008 and 2007, which are recorded in cost of products sold and R&D as
detailed in the schedules to the press release.
Purchase Accounting Charges.
On February 2, 2007, we
acquired Mayne Pharma and in 2008 we acquired a medical device technology
developer. In connection with these acquisitions, for the nine months ended September 30,
2007, we recorded a $53.1 million non-cash inventories step-up charge in cost
of products sold. During the three
months ended March 31, 2007, and the three months ended June 30,
2008, we also incurred non-cash charges of acquired in-process research and
development of $84.8 million and $0.5 million, respectively. As these types of charges are incurred in
connection with, and in the period of, the completion of acquisitions, and the
amount of these charges depends upon the allocation of the purchase price in
accordance with applicable accounting rules, the timing and amount of these
charges are unpredictable. These charges have materially affected our
reported financial results, but are not necessarily reflective of our ongoing
business performance. Exclusion of these charges from the adjusted financial
measures results in economic costs to us not being reflected in our adjusted
net income and earnings per share.
Acquisition and Integration-Related Expenses.
During the three months ended September 30,
2008 and 2007 we incurred $5.4 million and $8.3 million, respectively, of
expenses relating to the integration of Mayne Pharma and other acquisitions into
our operations. During the nine months ended September 30, 2008 and 2007
we incurred $23.6 million and $32.7 million, respectively, of expenses relating
to the integration of Mayne Pharma and other acquisitions into our operations. These
are recorded as cost of products sold, R&D expense and SG&A expense as
detailed in the schedules to the press release. During the three months
ended March 31, 2007, we also incurred $7.9 million of other
acquisition-related charges, including foreign exchange losses relating to the
Mayne Pharma acquisition (recorded in other income, net) and fees incurred in
connection with the bridge loan to finance the acquisition (recorded in
interest expense). During the two-year period after the closing of the Mayne
Pharma acquisition, we estimate that we will incur approximately $60 million to
$75 million of aggregate cash expenses related to the integration and other
acquisition-related expenses. To date, $66.6 million of expenses have been
incurred. We do not believe that these expenses are necessarily indicative of
our ongoing business operations, as they were necessitated by acquisitions and
will be incurred over a finite period. Exclusion of these charges from the
adjusted financial measures results in economic costs to us not being reflected
in our adjusted net income and earnings per share.
Amortization of Mayne Pharma Intangible Assets.
Based on our purchase price allocation
relating to the Mayne Pharma acquisition, we recorded $518.2 million of
intangible assets on our balance sheet, which will be amortized over their estimated
useful lives, resulting in significant non-cash expenses. During the three
months ended September 30, 2008 and 2007, we recorded $15.2 million and $13.4
million, respectively, of amortization expense resulting from the Mayne Pharma
acquisition in cost of products sold. During the nine months ended September 30,
2008 and 2007, we recorded $46.8 million and $35.0 million, respectively, of
amortization expense resulting from the Mayne Pharma acquisition in cost of
products sold.
The
amount of amortization expense can vary significantly among companies in our
industry depending on the frequency, size and nature of acquisitions. While
recording amortization is intended to represent the decrease in value of these
intangible assets over time, the amount of recorded amortization may not
necessarily represent our operating performance during the periods recorded
because of the uncertainties inherent in estimating the fair value and useful
lives of intangible assets at the time of the acquisition. In order to
assist comparability to our prior results and to the results of other companies
in our industry with different acquisition histories, we have excluded the
amortization of acquired intangible assets in connection with the Mayne Pharma
acquisition from our adjusted financial measures. We have not previously
excluded amortization expense in calculating our adjusted measures. Prior
to the Mayne Pharma acquisition, amortization has not been material to prior
periods. Exclusion of amortization relating to the Mayne Pharma
acquisition effectively results in the recording of acquired intangible assets
without recording any expense relating to the use of these assets in our
business.
3
Net
Sales Comparisons at Constant Currency Rates
.
Our presentation of net sales by segment and product
line includes comparisons at constant currency rates (reflecting comparative
local currency balances and prior period foreign exchange rates), which we
define as current period net sales excluding the impact of the change in foreign
exchange rates less prior period reported net sales divided by prior period
reported net sales. This 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. We believe use of this measure aids in the
understanding of our change in net sales without the impact of foreign
currency.
The
schedules included in the press release that reconcile the adjusted financial
measures to the financial measures calculated in accordance with GAAP indicate
the amount of such net expenses excluded from cost of products sold, R&D
expense, acquired in-process research and development, SG&A expense, interest
expense and other income, net to arrive at the corresponding adjusted financial
measure.
Adjustments
have been made to income tax expense in the appropriate period to take into
account any tax effect of each excluded item.
All
adjusted measures in the press release are reconciled to the most comparable
measure calculated in accordance with GAAP in the schedules. We believe
that presenting measures excluding the items described above, along with
measures calculated in accordance with GAAP, provide investors with more
information to assess our operating performance and prospects. We also
believe that excluding these items assists comparability with past
performance. Our management uses these adjusted measures as supplemental
measures in assessing its own performancefor example, these measures are used
in establishing our annual and long-term operating plans, presented to our
board of directors in its review of our financial performance and considered in
establishing targets under employee incentive plans. Since these measures allow
investors to assess our performance on a similar basis as our management
assesses our performance, we believe that investors have more information to
assess the performance of management in executing its goals and strategies.
Non-GAAP
financial measures are not presented in accordance with a body of comprehensive
accounting principles and should not be considered a substitute for any GAAP
measure. The measures we use result largely from our managements determination
as to whether the facts and circumstances surrounding certain transactions and
events are indicative of the ordinary course of the ongoing operation of our
business. As a result, non-GAAP financial measures as presented by us may
not be comparable to similarly titled measures reported by other companies.
Our
management uses non-GAAP financial measures as a supplement to, and not a
substitute for, measures prepared in accordance with GAAP. Accordingly,
these measures should be considered together with the corresponding financial
measures prepared in accordance with GAAP. In addition, our management
reviews, and encourages investors to review, our balance sheets and statements
of cash flows in order to make a complete evaluation and assessment of our
financial performance.
Item 9.01
Financial Statements and Exhibits
(d)
Exhibits.
This
exhibit is furnished pursuant to Item 2.02 hereof and should not be deemed to
be filed under the Securities Exchange Act of 1934.
Exhibit No.
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Exhibit
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99.1
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Press
Release, dated November 5, 2008
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SIGNATURE
Pursuant
to the requirements of the Securities Exchange Act of 1934, the registrant has
duly caused this report to be signed on its behalf by the undersigned hereunto
duly authorized.
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HOSPIRA,
INC.
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Dated: November 5,
2008
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By:
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/s/ Brian J. Smith
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Brian
J. Smith
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Its:
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Senior
Vice President, General
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Counsel
and Secretary
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4
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