Hospira Reports Fourth-Quarter and Full-Year 2012 Results

          Hospira Reports Fourth-Quarter and Full-Year 2012 Results

-- Provides 2013 sales and earnings projections --

PR Newswire

LAKE FOREST, Ill., Feb. 13, 2013

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,             GAAP                      Adjusted*
                                              %                         %
except per share           Three Months Ended        Three Months Ended
                                              Change                    Change
amounts                    Dec. 31,                  Dec. 31,
                           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                       $314.7    $281.2   11.9%  $383.5    $344.5   11.3%

Cost of Products Sold)
Income (Loss) from
                           $30.8     $(212.3) 114.5% $121.5    $110.8   9.7%
Operations
Diluted Earnings (Loss)
per                        $0.03     $(1.30)  102.3% $0.55     $0.51    7.8%

Share
Statistics (as a % of Net Sales)
Gross Profit (Net Sales
less                       28.6%     27.7%           34.9%     34.0%

Cost of Products Sold)
Income (Loss) from
                           2.8%      (20.9)%         11.1%     10.9%
Operations

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,             GAAP                      Adjusted*
                                             %                         %
except per share           Year Ended                Year Ended
                                             Change                    Change
amounts                    Dec. 31,                  Dec. 31,
                           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                       $1,113.4 $1,397.6 (20.3)% $1,445.9 $1,563.5 (7.5)%

Cost of Products Sold)
Income from Operations     $58.8    $56.8    3.5%    $455.6   $668.6   (31.9)%
Diluted Earnings (Loss)
per                        $0.27    $(0.06)  550.0%  $2.01    $3.04    (33.9)%

Share
Statistics (as a % of Net Sales)
Gross Profit (Net Sales
less                       27.2%    34.4%            35.3%    38.5%

Cost of Products Sold)
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                                              $(0.01)
share)
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 andstreamlining
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, exceptfor per share amounts)
                                     Three Months Ended December   % Change
                                     31,
                                     2012           2011
Net sales                            $          $            8.4 %
                                     1,098.9        1,014.0
Cost of products sold                784.2          732.8            7.0 %
Restructuring, impairment and (gain) 20.9           14.6             43.2 %
on disposition of assets, net
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)                    $         $           102.5 %
                                       5.3       (214.0)
Earnings (Loss) Per Common Share:
 Basic                             $         $           102.3 %
                                      0.03         (1.30)
 Diluted                           $         $           102.3 %
                                      0.03         (1.30)
Weighted Average Common Shares
Outstanding:
 Basic                             165.1          164.5            0.4 %
 Diluted                           165.8          164.5            0.8 %
Adjusted Gross Profit ^(1)(2)        $         $           11.3 %
                                     383.5         344.5
Adjusted Income From Operations ^(1) $         $           9.7 %
                                     121.5         110.8
Adjusted Net Income ^(1)             $         $           7.5 %
                                      91.4         85.0
Adjusted Diluted Earnings Per Share  $         $           7.8 %
^(1)                                  0.55         0.51
Statistics (as a % of net sales,
except for income tax rate):
                      GAAP Three Months Ended       Adjusted^(1) Three Months
                      December 31,                  Ended December 31,
                      2012           2011           2012           2011
Gross Profit ^(2)     28.6 %         27.7 %         34.9 %           34.0 %
Income (Loss) From    2.8 %          (20.9)%        11.1 %           10.9 %
Operations
Net Income (Loss)     0.5 %          (21.1)%        8.3 %            8.4 %
Income Tax Rate      137.5 %        4.4 %          16.3 %           15.2 %

    Adjusted financial measures exclude certain specified items as described
(1) and reconciled to comparable GAAP financial measures in the Reconciliation
    of GAAP to Non-GAAP Financial Measures contained in this press release.
    Gross profit is defined as Net sales less Cost of products sold. Adjusted
(2) 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                         $        $              0.9 %
                                  4,092.1      4,057.1
Cost of products sold             2,978.7       2,659.5              12.0 %
Restructuring, impairment and
(gain) on disposition of assets,  63.3          44.5                 42.2 %
net
Goodwill impairment               —             400.2                nm
Research and development          303.6         258.8                17.3 %
Selling, general and              687.7         637.3                7.9 %
administrative
 Total operating costs and      4,033.3       4,000.3              0.8 %
expenses
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,    (35.1)        (45.6)               (23.0)%
net
Net Income (Loss)                 $        $             570.2 %
                                     44.2      (9.4)
Earnings (Loss) Per Common Share:
 Basic                          $        $             550.0 %
                                     0.27     (0.06)
 Diluted                        $        $             550.0 %
                                     0.27     (0.06)
Weighted Average Common Shares
Outstanding:
 Basic                          165.0         165.5                (0.3)%
 Diluted                        166.0         165.5                0.3 %
Adjusted Gross Profit ^(1)(2)     $        $              (7.5)%
                                  1,445.9      1,563.5
Adjusted Income From Operations   $        $             (31.9)%
^(1)                                455.6      668.6
Adjusted Net Income ^(1)          $        $             (34.7)%
                                    333.3      510.3
Adjusted Diluted Earnings Per     $        $             (33.9)%
Share ^(1)                           2.01      3.04
Statistics (as a % of net sales,
except for income tax rate):
                        GAAP Years Ended        Adjusted^(1) Years Ended
                        December 31,            December 31,
                        2012      2011          2012               2011
Gross Profit ^(2)       27.2 %    34.4 %        35.3 %               38.5 %
Income From             1.4 %     1.4 %         11.1 %               16.5 %
Operations
Net Income (Loss)       1.1 %     (0.2)%        8.1 %                12.6 %
Income Tax Rate         121.7 %   (103.0)%      18.3 %               20.5 %

    Adjusted financial measures exclude certain specified items as described
(1) and reconciled to comparable GAAP financial measures in the Reconciliation
    of GAAP to Non-GAAP Financial Measures contained in this press release.
    Gross profit is defined as Net sales less Cost of products sold. Adjusted
(2) 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       Income From                   Diluted
                           Profit^(1)               Net Income^(2)   EPS
                                       Operations
GAAP Financial Measures    $       $       $          $    
                           314.7      30.8        5.3              0.03
Specified Items:
 Facilities             —           1.2          0.9              0.01
Optimization charges ^(A)
 Amortization of
certain intangible assets  17.6        17.6         12.8             0.08
^(B)
 Impairment of certain  —           —            1.7              0.01
assets ^(C)
 Certain quality and
product related charges    44.1        44.1         33.3             0.20
^(D)
 Capacity expansion     6.6         6.6          4.4              0.03
related charges ^(E)
 Other restructuring    0.5         20.2         13.6             0.08
charges ^(F)
 Acquisition and
integration related        —           1.0          0.6              —
charges ^(G)
 Effective settlement
of IRS tax audit expense   —           —            18.8             0.11
^(H)
Adjusted financial         $       $        $           $    
measures ^(3)              383.5      121.5       91.4             0.55

  GAAP results for the three months ended December 31, 2012 include:
      Facilities Optimization charges: $1.2 million reported in
  (A) 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.
      Amortization of certain intangible assets reported in Cost of products
      sold resulting from acquisitions including Mayne Pharma Limited ("Mayne
  (B) 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.
      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
  (D) 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.
      Capacity expansion related charges reported in Cost of products sold
  (E) include start-up charges related to manufacturing capacity expansion in
      India.
      Other Restructuring Charges: $0.5 million reported in Cost of products
      sold and $19.7 million reported in Restructuring, impairment, and
  (F) (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.
      Acquisition and integration related charges reported in Selling,
  (G) general, and administrative ("SG&A") include cost related to the
      pending acquisition and integration of an activepharmaceutical
      ingredient business.
      Settlement of IRS tax audit expense of $18.8 million reported in Income
  (H) tax expense (benefit). This discrete income tax expense is related to
      the completion and effectivesettlement of U.S. tax return audits.

Three months ended December 31, 2011 Reconciliation of GAAP to Non-GAAP
Financial Measures:
                                         (Loss)
                                         Income        Net (Loss)
                          Gross                                      Diluted
                          Profit^(1)     From          Income^(2)    EPS

                                         Operations
GAAP Financial Measures   $          $          $          $    
                          281.2         (212.3)      (214.0)      (1.30)
Specified Items:
 Amortization of
certain intangible        21.7           21.7          15.3          0.09
assets ^(A)
 Impairment of         —              14.6          13.6          0.08
certain assets ^(B)
 Certain quality and
product related charges   39.3           39.3          24.6          0.15
^(C)
 Capacity expansion    2.3            2.3           1.5           0.01
related charges ^(D)
 Goodwill impairment   —              245.2         244.0         1.48
^(E)
Adjusted financial        $          $         $        $    
measures ^(3)             344.5         110.8        85.0          0.51

    GAAP results for the three months ended December 31, 2011 include:
         Amortization of certain intangible assets reported in Cost of
    (A)  products sold resulting from acquisitions including Mayne Pharma,
         Javelin Pharma, and a genericinjectable business by Hospira India.
         Impairment of certain assets reported in Restructuring, impairment
    (B)  and (gain) on disposition of assets, net resulting from intangible
         asset impairments of $7.5 millionand equipment impairment of $7.1
         million.
         Certain quality and product related charges reported in Cost of
         products sold primarily include third party oversight and consulting
         costs, extended productiondowntime related costs, failure to supply
    (C)  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.
         Capacity expansion related charges reported in Cost of products sold
    (D)  include start-up charges related to manufacturing capacity expansion
         in India.
         Goodwill impairment related to the Europe, Middle East & Africa
    (E)  ("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.
    Adjusted Net income is shown net of tax of $25.1 million, exclusive of the
(2) 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.
    The Non-GAAP financial measures contained in this press release (including
    adjusted gross profit, adjusted income from operations, adjusted net
    income and adjusted dilutedEarnings Per Share) adjust for certain
(3) 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       Income From  Net
                           Profit^(1)               Income^(2)   Diluted EPS
                                       Operations
GAAP Financial Measures    $         $       $       $     
                           1,113.4    58.8         44.2         0.27
Specified Items:
 Facilities             —           18.6         11.6         0.07
Optimization charges ^(A)
 Amortization of
certain intangible assets  72.4        72.4         50.5         0.31
^(B)
 Impairment of certain  —           14.0         17.0         0.10
assets ^(C)
 Certain quality and
product related charges    236.8       236.8        153.9        0.93
^(D)
 Capacity expansion     17.9        17.9         11.9         0.07
related charges ^(E)
 Other restructuring    5.4         36.1         24.8         0.15
charges ^(F)
 Acquisition and
integration related        —           1.0          0.6          —
charges ^(G)
 Effective settlement
of IRS tax audit expense   —           —            18.8         0.11
^(H)
Adjusted financial         $         $        $        $     
measures ^(3)              1,445.9    455.6        333.3        2.01

 GAAP results for the year ended December 31, 2012 include:
     Facilities Optimization charges: $18.6 million reported in Restructuring,
 (A) impairment, and (gain) disposition of assets, net. The equipment and
     facility impairment chargesrelate to Hospira's plans to exit a specialty
     injectable drug finishing operation.
     Amortization of certain intangible assets reported in Cost of products
 (B) sold resulting from acquisitions including Mayne Pharma, Javelin Pharma
     and a generic injectablebusiness by Hospira India.
     Impairment of certain assets: $14.0 million reported in Restructuring,
     impairment, and (gain) on disposition of assets, net, and $10.1 million
 (C) reported in Other expense(income), net. These charges relate to
     impairments of certain intangible assets and various investments,
     respectively.
     Certain quality and product related charges reported in Cost of products
     sold primarily include third party oversight and consulting costs,
     extended productiondowntime related costs, failure to supply penalties,
 (D) 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.
     Capacity expansion related charges reported in Cost of products sold
 (E) include start-up charges related to manufacturing capacity expansion in
     India.
     Other Restructuring Charges: $5.4 million reported in Cost of products
     sold and $30.7 million reported in Restructuring, impairment, and (gain)
 (F) 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.
     Acquisition and integration related charges reported in SG&A include cost
 (G) related to the pending acquisition and integration of an active
     pharmaceutical ingredient business.
     Settlement of IRS tax audit expense of $18.8 million reported in Income
 (H) tax (benefit) expense. This discrete income tax expense is related to
     the completion and effectivesettlement of U.S. tax return audits.

Year ended December 31, 2011 Reconciliation of GAAP to Non-GAAP Financial
Measures:
                           Gross       Income From  Net (Loss)       Diluted
                           Profit^(1)                                EPS
                                       Operations   Income^(2)
GAAP Financial Measures    $         $       $           $    
                           1,397.6    56.8         (9.4)           (0.06)
Specified Items:
 Project Fuel and       5.0         9.6          6.3              0.04
related charges ^(A)
 Facilities             0.8         1.1          0.7              0.01
Optimization charges ^(B)
 Amortization of
certain intangible assets  80.3        80.3         55.4             0.33
^(C)
 Impairment of certain  —           33.0         26.0             0.16
assets ^(D)
 Certain quality and
product related charges    76.0        76.0         47.4             0.29
^(E)
 Capacity expansion     3.8         3.8          2.5              0.02
related charges ^(F)
 Other restructuring    —           7.8          5.8              0.04
charges ^(G)
 Effective settlement
of IRS tax audit benefit   —           —            (19.7)           (0.12)
^(H)
Goodwill Impairment    —           400.2        395.3            2.39
^(I)
 Diluted Shares Impact                                            (0.06)
Adjusted financial         $         $        $     510.3  $    
measures ^(3)              1,563.5    668.6                          3.04

    GAAP results for the year ended December 31, 2011 include:
         Project Fuel and related charges: $5.0 million reported in Cost of
         products sold, $3.4 million reported in Restructuring, impairment and
    (A)  (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.
         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
    (B)  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.
         Amortization of certain intangible assets reported in Cost of
    (C)  products sold resulting from acquisitions including Mayne Pharma,
         Javelin Pharma and a generic injectable business by Hospira India.
         Impairment of certain assets reported in Restructuring, impairment
    (D)  and (gain) on disposition of assets, net, resulting from intangible
         asset impairments of $25.9 million and equipment impairment of $7.1
         million.
         Certain quality and product related charges reported in Cost of
         products sold primarily include third party oversight and consulting
         costs, extended productiondowntime related costs, failure to supply
    (E)  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.
         Capacity expansion related charges reported in Cost of products sold
    (F)  include start-up charges related to manufacturing capacity expansion
         in India.
         Other Restructuring Charges: $7.8 million reported in Restructuring,
    (G)  impairment, and (gain) on disposition of assets, net for distribution
         contract termination charges related tocertain Latin America
         operations.
         Settlement of IRS tax audit benefit reported in Income tax (benefit)
    (H)  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.
    Adjusted Net income is shown net of tax of $136.6 million, exclusive of
(2) 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.
    The Non-GAAP financial measures contained in this press release (including
    adjusted gross profit, adjusted income from operations, adjusted net
    income and adjusted dilutedEarnings Per Share) adjust for certain
(3) 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     646.9            639.9
$12.7 in 2012 and $15.7 in 2011
 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         306.5            275.7
long-term liabilities
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        (35.1)             (45.6)
affiliates
Distributions received from equity      —                  40.0
affiliates
Deferred income taxes and other tax     (90.3)             (47.1)
adjustments
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          478.0              434.4
Activities
Cash Flow From Investing Activities:
 Capital expenditures (including
instruments placed with or leased to    (290.1)            (290.5)
customers)
 Other payments to acquire business  (15.0)             —
 Purchases of intangibles and other  (11.6)             (6.9)
investments
 Proceeds from disposition of        12.7               15.1
businesses and assets
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             2.2                7.5
stock-based compensation arrangements
 Proceeds from stock options         7.9                47.7
exercised
Net Cash Used in Financing Activities   (0.6)              (147.0)
Effect of exchange rate changes on      1.2                (11.9)
cash and cash equivalents
Net change in cash and cash             174.6              (6.8)
equivalents
Cash and cash equivalents at beginning  597.5              604.3
of year
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,
                                  %Change  %Change                     %Change  %Change
                                  at        at                           at        at

                2012     2011     Actual    Constant   2012     2011     Actual    Constant
                                  Currency  Currency                     Currency  Currency

                                  Rates     Rates^(1)                    Rates     Rates^(1)
Americas--
Specialty       $     $                          $     $   
Injectable                  13.4 %    13.2 %                   (0.5)%    0.1 %
Pharmaceuticals 539.6   475.7                        1,991.0  2,000.9
Medication      222.6    213.0    4.5 %     4.0 %      846.8    809.4    4.6 %     5.0 %
Management
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      83.3     72.8     14.4 %    17.0 %     318.4    292.6    8.8 %     16.6 %
Pharmaceuticals
Medication      31.8     31.4     1.3 %     4.8 %      119.9    128.7    (6.8)%    0.2 %
Management
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      73.3     73.4     (0.1)%    (0.5)%     260.6    269.0    (3.1)%    (2.0)%
Pharmaceuticals
Medication      14.2     15.6     (9.0)%    (10.3)%    49.8     49.2     1.2 %     1.2 %
Management
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                     8.4 %     8.4 %                    0.9 %     2.2 %
                1,098.9  1,014.0                       4,092.1  4,057.1
Global--
Specialty       $     $                          $     $   
Injectable                  11.9 %    12.1 %                   0.3 %     1.8 %
Pharmaceuticals 696.2   621.9                        2,570.0  2,562.5
Medication      268.6    260.0    3.3 %     3.2 %      1,016.5  987.3    3.0 %     4.2 %
Management
Other Pharma    134.1    132.1    1.5 %     1.5 %      505.6    507.3    (0.3)%    0.3 %
                $     $                          $     $   
Net Sales                     8.4 %     8.4 %                    0.9 %     2.2 %
                1,098.9  1,014.0                       4,092.1  4,057.1

    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
(1) 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.

Website: http://www.hospira.com
Contact: Media, Stacey Eisen, (224) 212-2276, Tareta Adams, (224) 212-2535, or
Financial Community, Karen King, (224) 212-2711, Ruth Venning, (224) 212-2774
 
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