LAKE FOREST, Ill., Feb. 13, 2013 /PRNewswire/ -- Hospira, Inc.
(NYSE: HSP), the world's leading provider of injectable drugs and
infusion technologies, today reported results for the fourth
quarter and full year ended Dec. 31,
2012. For the fourth quarter of 2012, net sales were
$1.1 billion, and adjusted* diluted
earnings per share were $0.55.
(Adjusted* measures are adjusted for certain specified items as
described later in this press release and the attached schedules.)
On a U.S. Generally Accepted Accounting Principles (GAAP) basis,
fourth-quarter 2012 diluted earnings per share were $0.03. For full-year 2012, net sales were
$4.1 billion, and adjusted* diluted
earnings per share were $2.01. On a
GAAP basis, full-year 2012 diluted earnings per share were
$0.27.
"The fourth quarter concluded a year of significant effort and
advancement for Hospira," said F. Michael
Ball, chief executive officer. "We made considerable
progress on our quality transformation; we advanced our growth
initiatives; and we met our financial projections. As we head into
2013, we remain committed to reinforcing our foundation, an area of
key focus for the company. We will continue to advance our
remediation activities as well as work to increase supply of the
products our customers -- and their patients -- depend on. At the
same time, we are forging ahead with our growth expansion
initiatives. Our efforts on both of these fronts serve to position
Hospira for a stronger future of sustainable, long-term growth --
and to drive greater value for our customers and shareholders."
Fourth-Quarter 2012 Results
The following table highlights selected financial results for
the fourth quarter of 2012 compared to the same period in 2011:
In $
millions,
except per
share
amounts
|
GAAP
Three
Months Ended
Dec.
31,
|
%
Change
|
Adjusted*
Three
Months Ended
Dec.
31,
|
%
Change
|
|
2012
|
2011
|
2012
|
2011
|
Net
Sales
|
$1,098.9
|
$1,014.0
|
8.4%
|
n/a
|
n/a
|
n/a
|
Gross
Profit (Net Sales less
Cost of
Products Sold)
|
$314.7
|
$281.2
|
11.9%
|
$383.5
|
$344.5
|
11.3%
|
Income
(Loss) from
Operations
|
$30.8
|
$(212.3)
|
114.5%
|
$121.5
|
$110.8
|
9.7%
|
Diluted
Earnings (Loss) per
Share
|
$0.03
|
$(1.30)
|
102.3%
|
$0.55
|
$0.51
|
7.8%
|
Statistics (as a % of Net Sales)
|
Gross
Profit (Net Sales less
Cost of
Products Sold)
|
28.6%
|
27.7%
|
|
34.9%
|
34.0%
|
|
Income
(Loss) from
Operations
|
2.8%
|
(20.9)%
|
|
11.1%
|
10.9%
|
|
Results under U.S. GAAP include items as detailed in the
schedules attached to this press release.
Net sales increased 8.4 percent to $1.1
billion in the fourth quarter of 2012, compared to
$1.0 billion in the fourth quarter of
2011. Driving the majority of the increase were strong net sales of
Specialty Injectable Pharmaceutical (SIP) products, including
Precedex™ globally and the oncolytic oxaliplatin in the United States, as well as higher volumes
for certain SIP products in the company's Europe, Middle
East and Africa (EMEA)
region.
Adjusted* income from operations increased 9.7 percent to
$122 million in the fourth quarter of
2012, compared to $111 million in the
fourth quarter of 2011. The increase primarily relates to lower
inventory losses associated with quality-related actions compared
to the fourth quarter of 2011. Higher year-over-year manufacturing
expense and higher research and development (R&D) expense in
the fourth quarter of 2012 negatively impacted results. On a GAAP
basis, income from operations was $31
million compared to a loss from operations of $212 million in the fourth quarter of 2011. GAAP
loss from operations in the fourth quarter of 2011 included the
impact of goodwill impairment charges.
The effective tax rate on an adjusted basis* in the quarter was
an expense of 16.3 percent compared to an expense of 15.2 percent
in the fourth-quarter 2011. The increase is primarily related to a
shift in earnings mix to higher tax jurisdictions relative to the
fourth quarter of 2011. On a GAAP basis, the fourth-quarter 2012
effective tax rate was an expense of 137.5 percent compared to a
benefit of 4.4 percent in the fourth quarter of 2011. The
fourth-quarter 2012 effective tax rate on a GAAP basis includes an
expense related to the effective settlement of a U.S. federal tax
audit.
Full-Year 2012 Results
The following table highlights selected financial results for
the full-year 2012 compared to the same period in 2011:
In $
millions,
except per
share
amounts
|
GAAP
Year
Ended
Dec.
31,
|
%
Change
|
Adjusted*
Year
Ended
Dec.
31,
|
%
Change
|
|
2012
|
2011
|
2012
|
2011
|
Net
Sales
|
$4,092.1
|
$4,057.1
|
0.9%
|
n/a
|
n/a
|
n/a
|
Gross
Profit (Net Sales less
Cost of
Products Sold)
|
$1,113.4
|
$1,397.6
|
(20.3)%
|
$1,445.9
|
$1,563.5
|
(7.5)%
|
Income
from Operations
|
$58.8
|
$56.8
|
3.5%
|
$455.6
|
$668.6
|
(31.9)%
|
Diluted
Earnings (Loss) per
Share
|
$0.27
|
$(0.06)
|
550.0%
|
$2.01
|
$3.04
|
(33.9)%
|
Statistics (as a % of Net Sales)
|
Gross
Profit (Net Sales less
Cost of
Products Sold)
|
27.2%
|
34.4%
|
|
35.3%
|
38.5%
|
|
Income
from Operations
|
1.4%
|
1.4%
|
|
11.1%
|
16.5%
|
|
Net sales increased 0.9 percent to $4.1
billion for the year ended Dec. 31,
2012. Strong net sales of certain SIP products, including
Precedex, were mostly offset by the impact to supply of the
company's quality-related actions and the impact of foreign
exchange.
Adjusted* income from operations decreased 31.9 percent to
$456 million for the full year of
2012, compared to $669 million for
the full year of 2011. The decrease primarily reflects the
full-year impact of higher manufacturing expense associated with
the company's quality-related actions, which were accelerated
beginning in the third quarter of 2011. In addition, in 2012 the
company incurred higher biosimilar clinical spending, as well as
higher selling and promotional costs, primarily related to
supporting Precedex. On a GAAP basis, full-year 2012 income from
operations was $59 million compared
to $57 million; affecting the
year-over-year comparison was the impact in 2011 of goodwill
impairment charges, as well as the impact in 2012 of higher
continuous improvement charges and quality-and product-related
charges.
The full-year 2012 effective tax rate on an adjusted basis* was
an expense of 18.3 percent compared to an expense of 20.5 percent
in 2011. On a GAAP basis, the 2012 effective tax rate was a benefit
of 121.7 percent compared to an expense of 103.0 percent in 2011.
The 2012 effective tax rate on a GAAP basis was impacted by certain
quality, impairment and restructuring charges incurred in
higher-tax-rate jurisdictions, partially offset by an expense
related to the effective settlement of a U.S. federal tax
audit.
Cash Flow
Cash flow from operations for full-year 2012 was $478 million, compared to $434 million in 2011. The majority of the
increase reflects lower working capital investments in 2012, which
more than offset higher operating expenses.
Capital expenditures were $290
million for full-year 2012 compared to $291 million in 2011.
2013 Projections
Hospira expects net sales growth for full-year 2013 to be in a
range of 1 to 3 percent on both a constant-currency and reported
basis.
Adjusted* diluted earnings per share for 2013 are expected to be
in a range of $2.05 to $2.20,
representing growth of 2 to 9 percent.
The reconciliation between the projected 2013 adjusted* diluted
earnings per share and projected GAAP diluted earnings per share
follows:
Diluted
earnings per share --
adjusted*
|
$2.05 - $2.20
|
|
|
Estimated
amortization of intangible assets related to
|
|
certain
acquisitions (mid-point of an estimated range
|
|
of $0.29
to $0.33 per diluted
share)
|
$(0.31)
|
|
|
Estimated
charges for certain quality and product-related
|
|
matters
(mid-point of an estimated range of
|
|
$0.15 to
$0.23 per diluted
share)
|
$(0.19)
|
|
|
Estimated
charges related to capacity expansion
|
|
(mid-point
of an estimated range of $0.15 to $0.19
|
|
per
diluted
share)
|
$(0.17)
|
|
|
Estimated
acquisition and integration-related charges
|
|
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)
|
$(0.05)
|
|
|
Estimated
charges related to facilities optimization
|
|
(mid-point
of an estimated range of $0.00 to $0.02
|
|
per
diluted
share)
|
$(0.01)
|
|
|
Diluted
earnings per share --
GAAP
|
$1.32 - $1.47
|
The adjusting items are shown net of tax in aggregate of
$57 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 projects that cash flow from operations in 2013 will
range between $350 million and $400
million. Depreciation and amortization is expected to be
$255 million to $275 million. Capital
expenditures are projected to range between $425 million and $475 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, Feb. 13, 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™ by
improving patient and caregiver safety while reducing healthcare
costs. The company is headquartered in Lake Forest, Ill., and has approximately
16,000 employees. Learn more at www.hospira.com.
Private Securities Litigation Reform Act of 1995 --
A Caution Concerning Forward-Looking Statements
This press release contains forward-looking statements within
the meaning of the Private Securities Litigation Reform Act of
1995, including projections of certain measures of Hospira's
results of operations; projections of certain charges, expenses,
and cash flow; and other statements regarding Hospira's goals,
plans and strategy. Hospira cautions that these forward-looking
statements are subject to risks and uncertainties, including
adequate and sustained progress on the company's quality
initiatives, 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, modernizing and streamlining
activities, 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 December 31,
|
|
%
Change
|
|
|
|
|
|
|
2012
|
|
|
2011
|
|
|
|
Net
sales
|
$
1,098.9
|
|
|
$
1,014.0
|
|
|
8.4
%
|
|
|
|
|
|
|
|
|
Cost of
products sold
|
784.2
|
|
|
732.8
|
|
|
7.0
%
|
Restructuring, impairment and (gain) on disposition
of assets, net
|
20.9
|
|
|
14.6
|
|
|
43.2
%
|
Goodwill
impairment
|
—
|
|
|
245.2
|
|
|
nm
|
Research
and development
|
84.7
|
|
|
66.8
|
|
|
26.8
%
|
Selling,
general and administrative
|
178.3
|
|
|
166.9
|
|
|
6.8
%
|
Total operating costs and
expenses
|
1,068.1
|
|
|
1,226.3
|
|
|
(12.9)%
|
Income
(Loss) From Operations
|
30.8
|
|
|
(212.3)
|
|
|
114.5
%
|
|
|
|
|
|
|
|
|
Interest
expense
|
21.9
|
|
|
22.4
|
|
|
(2.2)%
|
Other
expense (income), net
|
1.7
|
|
|
(3.2)
|
|
|
153.1
%
|
Income
(Loss) Before Income Taxes
|
7.2
|
|
|
(231.5)
|
|
|
103.1
%
|
|
|
|
|
|
|
|
|
Income
tax expense (benefit)
|
9.9
|
|
|
(10.1)
|
|
|
198.0
%
|
Equity
income from affiliates, net
|
(8.0)
|
|
|
(7.4)
|
|
|
8.1
%
|
Net Income
(Loss)
|
$
5.3
|
|
|
$
(214.0)
|
|
|
102.5
%
|
|
|
|
|
|
|
|
|
Earnings
(Loss) Per Common Share:
|
|
|
|
|
|
|
|
Basic
|
$
0.03
|
|
|
$
(1.30)
|
|
|
102.3
%
|
Diluted
|
$
0.03
|
|
|
$
(1.30)
|
|
|
102.3
%
|
|
|
|
|
|
|
|
|
Weighted
Average Common Shares Outstanding:
|
|
|
|
|
|
|
|
Basic
|
165.1
|
|
|
164.5
|
|
|
0.4
%
|
Diluted
|
165.8
|
|
|
164.5
|
|
|
0.8
%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Adjusted
Gross Profit (1)(2)
|
$
383.5
|
|
|
$
344.5
|
|
|
11.3
%
|
Adjusted
Income From Operations (1)
|
$
121.5
|
|
|
$
110.8
|
|
|
9.7
%
|
Adjusted
Net Income (1)
|
$
91.4
|
|
|
$
85.0
|
|
|
7.5
%
|
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 December 31,
|
|
|
Adjusted(1) Three Months Ended
December 31,
|
|
|
|
2012
|
|
2011
|
|
|
2012
|
|
2011
|
Gross
Profit (2)
|
|
28.6
%
|
|
27.7
%
|
|
|
34.9
%
|
|
|
34.0
%
|
Income
(Loss) From Operations
|
2.8
%
|
|
(20.9)%
|
|
|
11.1
%
|
|
|
10.9
%
|
Net Income
(Loss)
|
|
0.5
%
|
|
(21.1)%
|
|
|
8.3
%
|
|
|
8.4
%
|
Income Tax
Rate
|
|
137.5
%
|
|
4.4
%
|
|
|
16.3
%
|
|
|
15.2
%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(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 Income
(Loss)
|
(Unaudited)
|
(dollars and shares in millions, except for per
share amounts)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Years
Ended December 31,
|
|
%
Change
|
|
|
|
|
|
|
2012
|
|
|
2011
|
|
|
|
Net
sales
|
$
4,092.1
|
|
|
$
4,057.1
|
|
|
0.9
%
|
|
|
|
|
|
|
|
|
Cost of
products sold
|
2,978.7
|
|
|
2,659.5
|
|
|
12.0
%
|
Restructuring, impairment and (gain) on disposition
of assets, net
|
63.3
|
|
|
44.5
|
|
|
42.2
%
|
Goodwill
impairment
|
—
|
|
|
400.2
|
|
|
nm
|
Research
and development
|
303.6
|
|
|
258.8
|
|
|
17.3
%
|
Selling,
general and administrative
|
687.7
|
|
|
637.3
|
|
|
7.9
%
|
Total operating costs and
expenses
|
4,033.3
|
|
|
4,000.3
|
|
|
0.8
%
|
Income
From Operations
|
58.8
|
|
|
56.8
|
|
|
3.5
%
|
|
|
|
|
|
|
|
|
Interest
expense
|
86.3
|
|
|
93.1
|
|
|
(7.3)%
|
Other
expense (income), net
|
14.4
|
|
|
(9.2)
|
|
|
256.5
%
|
(Loss)
Before Income Taxes
|
(41.9)
|
|
|
(27.1)
|
|
|
54.6
%
|
|
|
|
|
|
|
|
|
Income tax
(benefit) expense
|
(51.0)
|
|
|
27.9
|
|
|
(282.8)%
|
Equity
income from affiliates, net
|
(35.1)
|
|
|
(45.6)
|
|
|
(23.0)%
|
Net Income
(Loss)
|
$
44.2
|
|
|
$
(9.4)
|
|
|
570.2
%
|
|
|
|
|
|
|
|
|
Earnings
(Loss) Per Common Share:
|
|
|
|
|
|
|
|
Basic
|
$
0.27
|
|
|
$
(0.06)
|
|
|
550.0
%
|
Diluted
|
$
0.27
|
|
|
$
(0.06)
|
|
|
550.0
%
|
|
|
|
|
|
|
|
|
Weighted
Average Common Shares Outstanding:
|
|
|
|
|
|
|
|
Basic
|
165.0
|
|
|
165.5
|
|
|
(0.3)%
|
Diluted
|
166.0
|
|
|
165.5
|
|
|
0.3
%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Adjusted
Gross Profit (1)(2)
|
$
1,445.9
|
|
|
$
1,563.5
|
|
|
(7.5)%
|
Adjusted
Income From Operations (1)
|
$
455.6
|
|
|
$
668.6
|
|
|
(31.9)%
|
Adjusted
Net Income (1)
|
$
333.3
|
|
|
$
510.3
|
|
|
(34.7)%
|
Adjusted
Diluted Earnings Per Share (1)
|
$
2.01
|
|
|
$
3.04
|
|
|
(33.9)%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Statistics
(as a % of net sales, except for income tax rate):
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
GAAP Years
Ended December 31,
|
|
|
Adjusted(1)
Years Ended December 31,
|
|
|
|
|
2012
|
|
2011
|
|
|
2012
|
|
2011
|
Gross
Profit (2)
|
|
27.2
%
|
|
34.4
%
|
|
|
35.3
%
|
|
|
38.5
%
|
Income
From Operations
|
|
1.4
%
|
|
1.4
%
|
|
|
11.1
%
|
|
|
16.5
%
|
Net Income
(Loss)
|
|
1.1
%
|
|
(0.2)%
|
|
|
8.1
%
|
|
|
12.6
%
|
Income Tax
Rate
|
|
121.7
%
|
|
(103.0)%
|
|
|
18.3
%
|
|
|
20.5
%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(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.
|
Reconciliation of GAAP to Non-GAAP Financial
Measures
|
(Unaudited)
|
(dollars in millions, except for per share
amounts)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Three
months ended December 31, 2012 Reconciliation of GAAP to Non-GAAP
Financial Measures:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Gross
Profit(1)
|
|
Income
From
Operations
|
|
Net
Income(2)
|
|
Diluted
EPS
|
GAAP
Financial Measures
|
|
$
314.7
|
|
$
30.8
|
|
$
5.3
|
|
$
0.03
|
Specified
Items:
|
|
|
|
|
|
|
|
|
Facilities Optimization charges
(A)
|
|
—
|
|
1.2
|
|
0.9
|
|
0.01
|
Amortization of certain intangible
assets (B)
|
|
17.6
|
|
17.6
|
|
12.8
|
|
0.08
|
Impairment of certain assets
(C)
|
|
—
|
|
—
|
|
1.7
|
|
0.01
|
Certain quality and product
related charges (D)
|
|
44.1
|
|
44.1
|
|
33.3
|
|
0.20
|
Capacity expansion related charges
(E)
|
|
6.6
|
|
6.6
|
|
4.4
|
|
0.03
|
Other restructuring charges
(F)
|
|
0.5
|
|
20.2
|
|
13.6
|
|
0.08
|
Acquisition and integration
related charges (G)
|
|
—
|
|
1.0
|
|
0.6
|
|
—
|
Effective settlement of IRS tax
audit expense (H)
|
|
—
|
|
—
|
|
18.8
|
|
0.11
|
Adjusted
financial measures (3)
|
|
$
383.5
|
|
$
121.5
|
|
$
91.4
|
|
$
0.55
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
GAAP
results for the three months ended December 31, 2012
include:
|
|
(A)
|
Facilities
Optimization charges: $1.2 million reported in Restructuring,
impairment, and (gain) disposition of assets, net. 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 Limited ("Mayne Pharma"), Javelin Pharmaceuticals, Inc. ("Javelin Pharma") and a
generic injectable business by Hospira Healthcare India Private
Limited ("Hospira India").
|
|
(C)
|
Impairment
of certain assets: $1.7 million reported in Other expense (income),
net, related to a marketable equity investment.
|
|
(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 and life-cycle management programs. 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)
|
Other
Restructuring Charges: $0.5 million reported in Cost of products
sold and $19.7 million reported in Restructuring, impairment, and
(gain) on disposition of assets, net. These
charges include inventory charges, equipment impairments, contract
termination charges and severance charges associated with Hospira's
exit of non-strategic product
lines and commercial reorganization.
|
|
(G)
|
Acquisition and integration related charges reported
in Selling, general, and administrative ("SG&A") include cost
related to the pending acquisition and integration of an
active pharmaceutical ingredient business.
|
|
(H)
|
Settlement
of IRS tax audit expense of $18.8 million reported in Income tax
expense (benefit). This discrete income tax expense is
related to the completion and effective settlement of U.S. tax
return audits.
|
|
|
|
|
|
|
|
Three
months ended December 31, 2011 Reconciliation of GAAP to Non-GAAP
Financial Measures:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Gross
Profit(1)
|
|
(Loss)
Income
From
Operations
|
|
Net
(Loss)
Income(2)
|
|
Diluted
EPS
|
GAAP
Financial Measures
|
|
$
281.2
|
|
$
(212.3)
|
|
$
(214.0)
|
|
$
(1.30)
|
Specified
Items:
|
|
|
|
|
|
|
|
|
Amortization of certain intangible
assets (A)
|
|
21.7
|
|
21.7
|
|
15.3
|
|
0.09
|
Impairment of certain assets
(B)
|
|
—
|
|
14.6
|
|
13.6
|
|
0.08
|
Certain quality and product
related charges (C)
|
|
39.3
|
|
39.3
|
|
24.6
|
|
0.15
|
Capacity expansion related charges
(D)
|
|
2.3
|
|
2.3
|
|
1.5
|
|
0.01
|
Goodwill impairment
(E)
|
|
—
|
|
245.2
|
|
244.0
|
|
1.48
|
Adjusted
financial measures (3)
|
|
$
344.5
|
|
$
110.8
|
|
$
85.0
|
|
$
0.51
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
GAAP
results for the three months ended December 31, 2011
include:
|
|
(A)
|
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.
|
|
(B)
|
Impairment
of certain assets reported in Restructuring, impairment and (gain)
on disposition of assets, net resulting from intangible asset
impairments of $7.5 million and
equipment impairment of $7.1 million.
|
|
(C)
|
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. These charges are primarily associated with
Hospira's response to the FDA warning letter and charges related to
certain device related remediation activities.
|
|
(D)
|
Capacity
expansion related charges reported in Cost of products sold include
start-up charges related to manufacturing capacity expansion in
India.
|
|
(E)
|
Goodwill
impairment related to the Europe, Middle East & Africa ("EMEA")
reporting unit of $74.1 million and the Asia Pacific ("APAC")
reporting unit of $171.1 million.
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(1)
|
Gross
profit is defined as Net sales less Cost of products
sold.
|
(2)
|
Adjusted
Net income is shown net of tax of $25.1 million, exclusive of the
tax audit settlement, and $24.1 million for the three months ended
2012 and 2011, 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
February 13, 2013.
|
|
|
|
|
Hospira, Inc.
|
Reconciliation of GAAP to Non-GAAP Financial
Measures
|
(Unaudited)
|
(dollars in millions, except for per share
amounts)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Year ended
December 31, 2012 Reconciliation of GAAP to Non-GAAP Financial
Measures:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Gross
Profit(1)
|
|
Income
From
Operations
|
|
Net
Income(2)
|
|
Diluted
EPS
|
GAAP
Financial Measures
|
|
$
1,113.4
|
|
$
58.8
|
|
$
44.2
|
|
$
0.27
|
Specified
Items:
|
|
|
|
|
|
|
|
|
Facilities Optimization charges
(A)
|
|
—
|
|
18.6
|
|
11.6
|
|
0.07
|
Amortization of certain intangible
assets (B)
|
|
72.4
|
|
72.4
|
|
50.5
|
|
0.31
|
Impairment of certain assets
(C)
|
|
—
|
|
14.0
|
|
17.0
|
|
0.10
|
Certain quality and product
related charges (D)
|
|
236.8
|
|
236.8
|
|
153.9
|
|
0.93
|
Capacity expansion related charges
(E)
|
|
17.9
|
|
17.9
|
|
11.9
|
|
0.07
|
Other restructuring charges
(F)
|
|
5.4
|
|
36.1
|
|
24.8
|
|
0.15
|
Acquisition and integration
related charges (G)
|
|
—
|
|
1.0
|
|
0.6
|
|
—
|
Effective settlement of IRS tax
audit expense (H)
|
|
—
|
|
—
|
|
18.8
|
|
0.11
|
Adjusted
financial measures (3)
|
|
$
1,445.9
|
|
$
455.6
|
|
$
333.3
|
|
$
2.01
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
GAAP
results for the year ended December 31, 2012 include:
|
|
(A)
|
Facilities
Optimization charges: $18.6 million reported in Restructuring,
impairment, and (gain) disposition of assets, net. 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: $14.0 million reported in Restructuring,
impairment, and (gain) on disposition of assets, net, and $10.1
million reported in Other expense (income),
net. These charges relate to impairments of certain intangible
assets and various investments, 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 and life-cycle management programs. 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)
|
Other
Restructuring Charges: $5.4 million reported in Cost of products
sold and $30.7 million reported in Restructuring, impairment, and
(gain) on disposition of assets, net. These
charges include inventory charges, equipment impairments, contract
termination charges, severance charges and gain on disposition
associated with Hospira's exit of non-strategic product lines
and commercial reorganization.
|
|
(G)
|
Acquisition and integration related charges reported
in SG&A include cost related to the pending acquisition and
integration of an active pharmaceutical ingredient
business.
|
|
(H)
|
Settlement
of IRS tax audit expense of $18.8 million reported in Income tax
(benefit) expense. This discrete income tax expense is
related to the completion and effective settlement
of U.S. tax return audits.
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Year ended
December 31, 2011 Reconciliation of GAAP to Non-GAAP Financial
Measures:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Gross
Profit(1)
|
|
Income
From
Operations
|
|
Net
(Loss)
Income(2)
|
|
Diluted
EPS
|
GAAP
Financial Measures
|
|
$
1,397.6
|
|
$
56.8
|
|
$
(9.4)
|
|
$
(0.06)
|
Specified
Items:
|
|
|
|
|
|
|
|
|
Project Fuel and related charges
(A)
|
|
5.0
|
|
9.6
|
|
6.3
|
|
0.04
|
Facilities Optimization charges
(B)
|
|
0.8
|
|
1.1
|
|
0.7
|
|
0.01
|
Amortization of certain intangible
assets (C)
|
|
80.3
|
|
80.3
|
|
55.4
|
|
0.33
|
Impairment of certain assets
(D)
|
|
—
|
|
33.0
|
|
26.0
|
|
0.16
|
Certain quality and product
related charges (E)
|
|
76.0
|
|
76.0
|
|
47.4
|
|
0.29
|
Capacity expansion related charges
(F)
|
|
3.8
|
|
3.8
|
|
2.5
|
|
0.02
|
Other restructuring charges
(G)
|
|
—
|
|
7.8
|
|
5.8
|
|
0.04
|
Effective settlement of IRS tax
audit benefit (H)
|
|
—
|
|
—
|
|
(19.7)
|
|
(0.12)
|
Goodwill Impairment
(I)
|
|
—
|
|
400.2
|
|
395.3
|
|
2.39
|
Diluted Shares Impact
|
|
|
|
|
|
|
|
(0.06)
|
Adjusted
financial measures (3)
|
|
$
1,563.5
|
|
$
668.6
|
|
$
510.3
|
|
$
3.04
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
GAAP
results for the year ended December 31, 2011 include:
|
|
(A)
|
Project
Fuel and related charges: $5.0 million reported in Cost of products
sold, $3.4 million reported in Restructuring, impairment and (gain)
on disposition of assets, net and $1.2
million reported in SG&A. Project Fuel initiatives include
costs for process optimization implementation, severance and other
employee benefits, exit costs, and other asset
charges.
|
|
(B)
|
Facilities
Optimization charges: $0.8 million reported in Cost of products
sold and $0.3 million reported in Restructuring, impairment and
(gain) on disposition of assets, net. These
charges relate to facilities optimization from the closure or
departure from certain manufacturing and R&D facilities and
include costs for severance and other
employee benefits, accelerated depreciation and relocation of
production and R&D operations.
|
|
(C)
|
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.
|
|
(D)
|
Impairment
of certain assets reported in Restructuring, impairment and (gain)
on disposition of assets, net, resulting from intangible asset
impairments of $25.9 million and equipment impairment of $7.1
million.
|
|
(E)
|
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. These
charges are primarily associated with Hospira's response to the FDA
warning letter and charges related to certain device related
remediation activities.
|
|
(F)
|
Capacity
expansion related charges reported in Cost of products sold include
start-up charges related to manufacturing capacity expansion in
India.
|
|
(G)
|
Other
Restructuring Charges: $7.8 million reported in Restructuring,
impairment, and (gain) on disposition of assets, net for
distribution contract termination charges related
to certain Latin America operations.
|
|
(H)
|
Settlement
of IRS tax audit benefit reported in Income tax (benefit) expense.
This discrete income tax benefit is related to the completion and
effective settlement of U.S. tax
return audits.
|
|
(I)
|
Goodwill
impairment related to the EMEA reporting unit of $229.1 million and
the APAC reporting unit of $171.1 million.
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(1)
|
Gross
profit is defined as Net sales less Cost of products
sold.
|
(2)
|
Adjusted
Net income is shown net of tax of $136.6 million, exclusive of the
tax audit settlement, and $72.4 million for the years ended 2012
and 2011, 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
February 13, 2013.
|
|
|
|
|
Hospira, Inc.
|
Condensed Consolidated Balance
Sheets
|
(Unaudited)
|
(dollars in millions)
|
|
|
|
|
|
|
|
|
|
|
|
|
December
31,
|
|
December
31,
|
|
|
2012
|
|
2011
|
Assets
|
|
|
|
|
|
|
|
|
|
Current
Assets:
|
|
|
|
|
Cash and cash
equivalents
|
|
$
772.1
|
|
$
597.5
|
Trade receivables, less allowances
of $12.7 in 2012 and $15.7 in 2011
|
|
646.9
|
|
639.9
|
Inventories, net
|
|
997.8
|
|
1,027.0
|
Deferred income taxes
|
|
214.4
|
|
174.4
|
Prepaid expenses
|
|
53.9
|
|
45.9
|
Other receivables
|
|
75.3
|
|
86.0
|
Total Current Assets
|
|
2,760.4
|
|
2,570.7
|
Property
and equipment, net
|
|
1,445.1
|
|
1,355.0
|
Intangible
assets, net
|
|
266.8
|
|
355.8
|
Goodwill
|
|
1,079.1
|
|
1,082.9
|
Deferred
income taxes
|
|
296.8
|
|
232.2
|
Investments
|
|
71.8
|
|
48.7
|
Other
assets
|
|
168.6
|
|
133.8
|
Total
Assets
|
|
$
6,088.6
|
|
$
5,779.1
|
Liabilities and Shareholders'
Equity
|
|
|
|
|
|
|
|
|
|
Current
Liabilities:
|
|
|
|
|
Short-term borrowings
|
|
$
28.9
|
|
$
36.6
|
Trade accounts payable
|
|
276.0
|
|
241.3
|
Salaries, wages and
commissions
|
|
144.0
|
|
113.0
|
Other accrued
liabilities
|
|
580.3
|
|
456.9
|
Total Current
Liabilities
|
|
1,029.2
|
|
847.8
|
Long-term
debt
|
|
1,706.8
|
|
1,711.9
|
Deferred
income taxes
|
|
4.4
|
|
5.7
|
Post-retirement obligations and other long-term
liabilities
|
|
306.5
|
|
275.7
|
Commitments and Contingencies
|
|
|
|
|
Total
Shareholders' Equity
|
|
3,041.7
|
|
2,938.0
|
Total
Liabilities and Shareholders' Equity
|
|
$
6,088.6
|
|
$
5,779.1
|
|
|
Hospira, Inc.
|
Condensed Consolidated Statements of Cash
Flows
|
(Unaudited)
|
(dollars in millions)
|
|
|
|
|
Years
Ended December 31,
|
Cash Flow
From Operating Activities:
|
|
2012
|
|
2011
|
Net income
(loss)
|
|
$
44.2
|
|
$
(9.4)
|
Adjustments to reconcile net income (loss) to net
cash from operating activities-
|
|
|
|
|
Depreciation
|
|
164.0
|
|
164.6
|
Amortization of intangible assets
|
|
83.6
|
|
91.5
|
Stock-based compensation expense
|
|
40.0
|
|
41.2
|
Undistributed equity income from
affiliates
|
|
(35.1)
|
|
(45.6)
|
Distributions received from equity
affiliates
|
|
—
|
|
40.0
|
Deferred
income taxes and other tax adjustments
|
|
(90.3)
|
|
(47.1)
|
Impairment
and other asset charges
|
|
72.8
|
|
441.1
|
Gains on
disposition of assets
|
|
(5.9)
|
|
(1.7)
|
Changes in
assets and liabilities-
|
|
|
|
|
Trade
receivables
|
|
(4.1)
|
|
(43.6)
|
Inventories
|
|
27.5
|
|
(61.3)
|
Prepaid
expenses and other assets
|
|
(37.4)
|
|
(80.5)
|
Trade
accounts payable
|
|
26.5
|
|
(80.4)
|
Other
liabilities
|
|
183.8
|
|
16.4
|
Other,
net
|
|
8.4
|
|
9.2
|
Net Cash
Provided by Operating Activities
|
|
478.0
|
|
434.4
|
|
|
|
|
|
Cash Flow
From Investing Activities:
|
|
|
|
|
Capital expenditures (including
instruments placed with or leased to customers)
|
|
(290.1)
|
|
(290.5)
|
Other payments to acquire
business
|
|
(15.0)
|
|
—
|
Purchases of intangibles and other
investments
|
|
(11.6)
|
|
(6.9)
|
Proceeds from disposition of
businesses and assets
|
|
12.7
|
|
15.1
|
Net Cash
Used in Investing Activities
|
|
(304.0)
|
|
(282.3)
|
|
|
|
|
|
Cash Flow
From Financing Activities:
|
|
|
|
|
Other borrowings, net
|
|
(10.7)
|
|
(2.2)
|
Common stock
repurchased
|
|
—
|
|
(200.0)
|
Excess tax benefit from
stock-based compensation arrangements
|
|
2.2
|
|
7.5
|
Proceeds from stock options
exercised
|
|
7.9
|
|
47.7
|
Net Cash
Used in Financing Activities
|
|
(0.6)
|
|
(147.0)
|
|
|
|
|
|
Effect of
exchange rate changes on cash and cash equivalents
|
|
1.2
|
|
(11.9)
|
|
|
|
|
|
Net change
in cash and cash equivalents
|
|
174.6
|
|
(6.8)
|
Cash and
cash equivalents at beginning of year
|
|
597.5
|
|
604.3
|
Cash and
cash equivalents at end of year
|
|
$
772.1
|
|
$
597.5
|
|
|
|
|
|
Supplemental Cash Flow Information:
|
|
|
|
|
Cash paid
during the year-
|
|
|
|
|
Interest
|
|
$
102.2
|
|
$
102.2
|
Income
taxes, net of refunds
|
|
$
10.7
|
|
$
42.7
|
|
|
Hospira, Inc.
|
Net
Sales by Product Line
|
(Unaudited)
|
(dollars in millions)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Three
Months Ended December 31,
|
|
Years
Ended December 31,
|
|
|
2012
|
|
2011
|
|
% Change at
Actual
Currency
Rates
|
|
% Change at
Constant
Currency
Rates(1)
|
|
2012
|
|
2011
|
|
% Change at
Actual
Currency
Rates
|
|
% Change at
Constant
Currency
Rates(1)
|
Americas--
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Specialty
Injectable Pharmaceuticals
|
$
539.6
|
|
$
475.7
|
|
13.4
%
|
|
13.2
%
|
|
$
1,991.0
|
|
$
2,000.9
|
|
(0.5)%
|
|
0.1
%
|
Medication
Management
|
222.6
|
|
213.0
|
|
4.5
%
|
|
4.0
%
|
|
846.8
|
|
809.4
|
|
4.6
%
|
|
5.0
%
|
Other
Pharma
|
107.5
|
|
97.9
|
|
9.8
%
|
|
9.6
%
|
|
401.6
|
|
396.2
|
|
1.4
%
|
|
1.4
%
|
Total
Americas
|
869.7
|
|
786.6
|
|
10.6
%
|
|
10.3
%
|
|
3,239.4
|
|
3,206.5
|
|
1.0
%
|
|
1.5
%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
EMEA--
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Specialty
Injectable Pharmaceuticals
|
83.3
|
|
72.8
|
|
14.4
%
|
|
17.0
%
|
|
318.4
|
|
292.6
|
|
8.8
%
|
|
16.6
%
|
Medication
Management
|
31.8
|
|
31.4
|
|
1.3
%
|
|
4.8
%
|
|
119.9
|
|
128.7
|
|
(6.8)%
|
|
0.2
%
|
Other
Pharma
|
24.6
|
|
29.3
|
|
(16.0)%
|
|
(15.4)%
|
|
87.5
|
|
96.1
|
|
(8.9)%
|
|
(5.7)%
|
Total
EMEA
|
139.7
|
|
133.5
|
|
4.6
%
|
|
7.0
%
|
|
525.8
|
|
517.4
|
|
1.6
%
|
|
8.4
%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
APAC--
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Specialty
Injectable Pharmaceuticals
|
73.3
|
|
73.4
|
|
(0.1)%
|
|
(0.5)%
|
|
260.6
|
|
269.0
|
|
(3.1)%
|
|
(2.0)%
|
Medication
Management
|
14.2
|
|
15.6
|
|
(9.0)%
|
|
(10.3)%
|
|
49.8
|
|
49.2
|
|
1.2
%
|
|
1.2
%
|
Other
Pharma
|
2.0
|
|
4.9
|
|
(59.2)%
|
|
(59.2)%
|
|
16.5
|
|
15.0
|
|
10.0
%
|
|
10.0
%
|
Total
APAC
|
89.5
|
|
93.9
|
|
(4.7)%
|
|
(5.2)%
|
|
326.9
|
|
333.2
|
|
(1.9)%
|
|
(1.0)%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net
Sales
|
$
1,098.9
|
|
$
1,014.0
|
|
8.4
%
|
|
8.4
%
|
|
$
4,092.1
|
|
$
4,057.1
|
|
0.9
%
|
|
2.2
%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Global--
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Specialty
Injectable Pharmaceuticals
|
$
696.2
|
|
$
621.9
|
|
11.9
%
|
|
12.1
%
|
|
$
2,570.0
|
|
$
2,562.5
|
|
0.3
%
|
|
1.8
%
|
Medication
Management
|
268.6
|
|
260.0
|
|
3.3
%
|
|
3.2
%
|
|
1,016.5
|
|
987.3
|
|
3.0
%
|
|
4.2
%
|
Other
Pharma
|
134.1
|
|
132.1
|
|
1.5
%
|
|
1.5
%
|
|
505.6
|
|
507.3
|
|
(0.3)%
|
|
0.3
%
|
Net
Sales
|
$
1,098.9
|
|
$
1,014.0
|
|
8.4
%
|
|
8.4
%
|
|
$
4,092.1
|
|
$
4,057.1
|
|
0.9
%
|
|
2.2
%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(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. Management
uses these
measures internally to monitor business unit performance and in
evaluating management performance. These 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.
|
|
|
|
|
SOURCE Hospira, Inc.