- Current report filing (8-K)
17 Fevereiro 2009 - 10:50AM
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
February 17, 2009
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 North 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))
Item
2.02 Results of Operations and Financial Condition
On February 17,
2009, we issued a press release announcing our 2008 fourth quarter and
full-year 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 Hospiras results of
operations, projections of certain charges and expenses, and other statements
regarding Hospiras 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 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 subsequent Forms 10-Q,
which are filed with the Securities and Exchange Commission, which is
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:
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adjusted cost of
products sold;
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adjusted gross profit;
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adjusted research and
development (R&D) expense;
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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 expense
(income), net;
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adjusted income tax
expense;
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adjusted net income;
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adjusted basic and
diluted earnings per share;
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net sales comparisons
at constant currency rates; and
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statistics using one or
more of such adjusted measures.
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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 a non-strategic device
product. 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 and normal operations. We expect to incur
expenses for these initiatives through 2011. As the product relocation
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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 $9.5 million and $4.1 million
in the three months ended December 31, 2008 and 2007 and in the amount of
$35.4 million and $36.0 million in the years ended December 31, 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 Limited (Mayne Pharma) and
in 2008 we acquired a medical device technology developer. In connection with
these acquisitions, for the years ended December 31, 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. During the
three months ended December 31, 2007 we purchased certain clinical studies
related to a compound that will be used to file for expanded medical
indications. The cost for these clinical studies was $3.2 million and was
recorded as acquired in-process research and development as the studies have no
alternative future uses. 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 December 31, 2008
and 2007 we incurred $7.0 million and $12.2 million, respectively, of expenses
relating to the integration of Mayne Pharma and other acquisitions into our
operations. During the years ended December 31, 2008 and 2007 we incurred
$30.6 million and $44.8 million, respectively, of expenses relating to the
integration of Mayne Pharma and other acquisitions into our operations. These
are recorded in cost of products sold, R&D and SG&A 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
three months ended December 31, 2007, we received a refund of $1.4 million
for fees incurred in connection with the bridge loan to finance the Mayne
Pharma acquisition (recorded as an offset to interest expense). During the
two-year period after the closing of the Mayne Pharma acquisition, we incurred
$70.9 million of aggregate cash expenses related to the integration and other
acquisition-related expenses. 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 December 31, 2008 and 2007, we recorded $16.0 million and
$12.6 million, respectively, of amortization expense resulting from the Mayne
Pharma acquisition in cost of products sold. During the years ended December 31,
2008 and 2007, we recorded $62.8 million and $47.6 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 excluded
amortization expense in calculating our adjusted measures prior to the Mayne
Pharma acquisition. Prior to the Mayne Pharma acquisition, amortization
has not been material to prior
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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.
Impairment
of Long-Lived Assets and Facility Closure Costs.
In the three months ended December 31,
2007, as a result of changes in sales projections, management made a decision
to limit future research and development investments related to a previous
acquisition of a non-strategic device product. As a result of this decision,
during the three months ended December 31, 2007, we recorded an impairment
charge of $7.5 million, which is reported in cost of products sold. Management
makes strategic decisions on the allocation of resources that may impair the
carrying value of long-lived assets. We believe that this charge is not
necessarily indicative of our ongoing normal operations as such decisions and
charges are infrequent and affect the comparability of our results. Excluding
this item has the effect of excluding a non-cash charge from the adjusted
financial measures.
Net Sales Comparisons at Constant
Currency Rates
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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, acquired
in-process research and development, SG&A, interest expense and other
expense (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.
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Exhibit No.
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Exhibit
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99.1
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Press Release, dated
February 17, 2009
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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: February 17,
2009
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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 Counsel and Secretary
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