Hospira 8K Reports Second-quarter 2010 Results | SEC 28 Jul 10

Exhibit 99.1

For Immediate Release

HOSPIRA REPORTS SECOND-QUARTER 2010 RESULTS

— Maintains sales and adjusted* earnings projections for 2010 —

LAKE FOREST, Ill., July 28, 2010 — Hospira, Inc. (NYSE: HSP), a leading global specialty pharmaceutical and medication delivery company, today reported results for the second quarter ended June 30, 2010. Net sales for the quarter were $968 million, and adjusted* diluted earnings per share were $0.86. (Adjusted* measures exclude certain specified items as described later in this press release and the attached schedules.)

“Hospira delivered another solid quarter, driven by strong performance in our Specialty Injectable Pharmaceuticals business and by continued momentum of our Project Fuel optimization initiatives,” said Christopher B. Begley, chairman and chief executive officer.
“We made significant progress in advancing our business during the quarter, launching our first product from Hospira India, commercializing our second biosimilar product in Europe and strengthening our position in acute-care proprietary pharmaceuticals. We are highly focused on executing our strategy of investing for growth and improving margins and cash flow, as well as on driving quality improvements across our global manufacturing organization. We remain on track to achieve our full-year earnings projections.”

Second-Quarter 2010 Results

The following table highlights selected financial results for the second quarter of 2010 compared to the same period in 2009:

In $ millions, except per share	GAAP Three Months Ended June 30,						%		Adjusted* Three Months Ended June 30,						%
amounts	2010			2009			Change		2010			2009			Change
Net Sales	$	968.2		$	956.9		1.2	%	n/a			n/a			n/a
Gross Profit (Net Sales less Cost of Products Sold)	$	369.2		$	346.2		6.6	%	$	416.8		$	365.8		13.9	%
Income from Operations	$	116.3		$	91.1		27.7	%	$	213.1		$	176.7		20.6	%
Diluted EPS	$	0.49		$	0.16		206.3	%	$	0.86		$	0.73		17.8	%
Statistics (as a % of Net Sales)
Gross Profit (Net Sales less Cost of Products Sold)	38.1		%	36.2		%			43.0		%	38.2		%
Operating Income	12.0		%	9.5		%			22.0		%	18.5		%

Results under U.S. Generally Accepted Accounting Principles (GAAP) include items as detailed in the schedules attached to this press release.

Net sales increased 1.2 percent to $968 million in the second quarter of 2010, compared to $957 million in the second quarter of 2009. Strong sales in Specialty Injectable Pharmaceuticals, resulting from the U.S. sales of the generic oncolytic oxaliplatin and Precedex™, Hospira’s proprietary sedation agent, were primarily offset by a decline in Medication Management Systems as a result of the company’s voluntary hold on shipments of its Symbiq™ Infusion System to new customers.

Adjusted* income from operations increased 20.6 percent to $213 million in the second quarter of 2010, compared to $177 million in the second quarter of 2009. Driving the majority of the increase were more favorable product mix and improved manufacturing efficiency from the company’s Project Fuel optimization initiatives, offset by charges associated with certain quality and product-related matters.

The effective tax rate on an adjusted basis* in the quarter was 23.8 percent, up from the second-quarter 2009 rate of 21.5 percent. The increase is primarily related to the expiration of certain U.S. tax credits in 2010 as well as a shift in earnings mix to higher tax jurisdictions relative to the second quarter of 2009.

Cash Flow

Cash flow from operations for the first six months of 2010 was $144 million, compared to the $236 million generated for the same period in 2009. The decrease primarily reflects the timing of chargeback payments associated with the U.S. sales of oxaliplatin, increased inventory levels and higher U.S. income tax payments.

Capital expenditures were $79 million for the first six months of 2010, compared to $78 million for the first six months of 2009.

2010 Projections

Hospira is maintaining guidance for net sales growth of approximately 3 to 5 percent on a constant-currency basis. Including the impact of foreign exchange, the company currently expects net sales growth to also be 3 to 5 percent.

Hospira is maintaining its adjusted* diluted earnings per share projection for full-year 2010, which is expected to range between $3.35 and $3.45 per share.

The reconciliation between the projected 2010 adjusted* diluted earnings per share and GAAP diluted earnings per share follows:

Diluted earnings per share — adjusted*	$3.35 - $3.45

Estimated charges related to Project Fuel initiatives (mid-point of an estimated range of $0.06 to $0.08 per diluted share)	($0.07	)

Estimated charges related to facilities optimization initiatives (mid-point of an estimated range of $0.04 to $0.06 per diluted share)	($0.05	)

Estimated $67 million for the amortization of intangibles related to the acquisitions of Mayne Pharma, the specialty injectable business of Orchid Chemicals & Pharmaceuticals and Javelin Pharmaceuticals	($0.25	)

Estimated acquisition and integration-related charges associated with the Orchid and Javelin acquisitions (mid-point of an estimated range of $0.06 to $0.08 per diluted share)	($0.07	)

Certain quality and product-related charges (mid-point of an estimated range of $0.18 to $0.24 per diluted share)	($0.21	)

Litigation settlement and related charges	($0.05	)

Initial research and development milestone charge associated with a partnered proprietary pharmaceutical product	($0.10	)

Diluted earnings per share — GAAP	$2.55 - $2.65

The adjusting items are shown net of tax in aggregate of $83 million, which is calculated for the specified adjustments stated above, based on the statutory tax rate in the various tax jurisdictions in which the items are expected to occur.

The company now expects cash flow from operations to range between $525 million and $575 million. The projected range for depreciation and amortization remains unchanged at $250 million to $260 million, as does the projected range for capital expenditures, at $195 million to $215 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, July 28, 2010. A live webcast of the conference call will be available on Hospira’s Web site 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 Web site at the beginning of the conference call. A replay will be available on the Hospira Web site for 30 days following the call.

About Hospira

Hospira, Inc. is a global specialty pharmaceutical and medication delivery company dedicated to Advancing Wellness™. As the world leader in specialty generic injectable pharmaceuticals, Hospira offers one of the broadest portfolios of generic acute-care and oncology injectables, as well as integrated infusion therapy and medication management solutions. Through its products, Hospira helps improve the safety, cost and productivity of patient care. The company is headquartered in Lake Forest, Ill., and has approximately 13,500 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 and expenses, and other statements regarding Hospira’s goals and strategy. Hospira cautions that these forward-looking statements are subject to risks and uncertainties that may cause actual results to differ materially from those indicated in the forward-looking statements. Economic, competitive, governmental, regulatory, legal, technological and other factors that may affect Hospira’s operations and may cause actual results to be materially different from expectations include the risks, uncertainties and factors discussed under the headings “Risk Factors” and “Management’s Discussion and Analysis of Financial Condition and Results of Operations” in Hospira’s 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.

Contacts:
Media		Financial Community
Stacey Eisen		Karen King
(224) 212-2276		(224) 212-2711

Media		Financial Community
Tareta Adams		Ruth Venning
(224) 212-2535		(224) 212-2774

###

Hospira, Inc.

Condensed Consolidated Statements of Income

(Unaudited)

(dollars and shares in millions, except for per share amounts)

	Three Months Ended June 30,
	2010			2009		% Change
Net sales	$	968.2		$	956.9	1.2	%

Cost of products sold	599.0			610.7		(1.9	)%
Restructuring, impairment and (gain) on disposition of assets, net	2.6			55.9		(95.3	)%
Research and development	80.4			52.9		52.0	%
Selling, general and administrative	169.9			146.3		16.1	%
Total operating costs and expenses	851.9			865.8		(1.6	)%
Income From Operations	116.3			91.1		27.7	%

Interest expense	24.2			28.2		(14.2	)%
Other (income) expense, net	(0.8		)	14.5		(105.5	)%
Income Before Income Taxes	92.9			48.4		91.9	%

Income tax expense	9.4			22.9		(59.0	)%
Net Income	$	83.5		$	25.5	227.5	%

Earnings Per Common Share:
Basic	$	0.50		$	0.16	212.5	%
Diluted	$	0.49		$	0.16	206.3	%

Weighted Average Common Shares Outstanding:
Basic	165.8			160.5		3.3	%
Diluted	169.1			162.4		4.1	%

Adjusted Gross Profit (1)(2)	$	416.8		$	365.8	13.9	%
Adjusted Income From Operations (1)	$	213.1		$	176.7	20.6	%
Adjusted Net Income (1)	$	144.7		$	118.2	22.4	%
Adjusted Diluted Earnings Per Share (1)	$	0.86		$	0.73	17.8	%

Statistics (as a % of net sales, except for income tax rate):

	GAAP Three Months Ended June 30,				Adjusted (1) Three Months Ended June 30,
	2010		2009		2010		2009
Gross Profit (2)	38.1	%	36.2	%	43.0	%	38.2	%
Income From Operations	12.0	%	9.5	%	22.0	%	18.5	%
Net Income	8.6	%	2.7	%	14.9	%	12.4	%
Income Tax Rate	10.1	%	47.3	%	23.8	%	21.5	%

(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.

Hospira, Inc.

Condensed Consolidated Statements of Income

(Unaudited)

(dollars and shares in millions, except for per share amounts)

	Six Months Ended June 30,
	2010			2009			% Change
Net sales	$	1,975.8		$	1,816.6		8.8	%

Cost of products sold	1,176.3			1,150.8			2.2	%
Restructuring, impairment and (gain) on disposition of assets, net	(5.0		)	65.3			(107.7	)%
Research and development	132.1			102.9			28.4	%
Selling, general and administrative	348.5			291.8			19.4	%
Total operating costs and expenses	1,651.9			1,610.8			2.6	%
Income From Operations	323.9			205.8			57.4	%

Interest expense	47.6			55.1			(13.6	)%
Other (income) expense, net	(2.5		)	14.2			(117.6	)%
Income Before Income Taxes	278.8			136.5			104.2	%

Income tax expense (benefit)	53.6			(54.5		)	(198.3	)%
Net Income	$	225.2		$	191.0		17.9	%

Earnings Per Common Share:
Basic	$	1.36		$	1.19		14.3	%
Diluted	$	1.34		$	1.18		13.6	%

Weighted Average Common Shares Outstanding:
Basic	165.0			160.0			3.1	%
Diluted	168.5			161.5			4.3	%

Adjusted Gross Profit (1)(2)	$	871.5		$	705.4		23.5	%
Adjusted Income From Operations (1)	$	453.0		$	326.6		38.7	%
Adjusted Net Income (1)	$	304.1		$	215.0		41.4	%
Adjusted Diluted Earnings Per Share (1)	$	1.80		$	1.33		35.3	%

Statistics (as a % of net sales, except for income tax rate):

	GAAP Six Months Ended June 30,				Adjusted (1) Six Months Ended June 30,
	2010		2009		2010		2009
Gross Profit (2)	40.5	%	36.7	%	44.1	%	38.8	%
Income From Operations	16.4	%	11.3	%	22.9	%	18.0	%
Net Income	11.4	%	10.5	%	15.4	%	11.8	%
Income Tax Rate	19.2	%	(39.9	)%	25.5	%	21.5	%

(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.

Hospira, Inc.

Reconciliation of GAAP to Non-GAAP Financial Measures

(Unaudited)

(dollars and shares in millions, except for per share amounts)

Three months ended June 30, 2010 Reconciliation of GAAP to Non-GAAP Financial Measures:

	Gross Profit (1)		Income From Operations		Net Income (2)		Diluted EPS
GAAP financial measures	$	369.2	$	116.3	$	83.5	$	0.49
Specified items:
Project Fuel and related charges (A)	4.0		11.1		7.4		0.05
Facilities Optimization charges (B)	2.1		2.5		1.8		0.01
Amortization of certain intangible assets (C)	15.7		15.7		9.6		0.06
Certain quality and product related charges (D)	25.8		25.8		16.6		0.10
Acquisition and integration-related charges (E)	—		0.2		0.1		—
Litigation settlement and related charges (F)	—		14.0		8.5		0.05
Research and development charge (G)	—		27.5		17.2		0.10
Adjusted financial measures (3)	$	416.8	$	213.1	$	144.7	$	0.86

GAAP results for the three months ended June 30, 2010 include:

(A) Project Fuel and related charges: $4.0 million reported in Cost of products sold, $2.2 million reported in Restructuring, impairment and (gain) on disposition of assets, net, $0.1 million reported in Research and development and $4.8 million reported in Selling, general and administrative. Project Fuel initiatives include costs for process optimization implementation, severance and other employee benefits, exit costs and other asset charges.

(B) Facilities Optimization charges: $2.1 million reported in Cost of products sold and $0.4 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 research and development (“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 Limited (“Mayne Pharma”) and a generic injectable business by Hospira Healthcare India Private Limited (“Hospira India”).

(D) Certain quality and product related charges reported in Cost of products sold primarily include third party oversight and consulting costs and penalties for failure to supply certain product to customers. These charges are directly associated with Hospira’s response to the United States Food and Drug Administration (“FDA”) Warning Letter received in April 2010.

(E) Acquisition and integration-related charges: $1.2 million reported in Research and development and $(1.0) million reported in Selling, general and administrative. These charges include acquisition and integration costs resulting from acquisitions including Javelin Pharmaceuticals, Inc. (“Javelin Pharma”) and a generic injectable business by Hospira India.

(F) Retractable Technologies, Inc. (“RTI”) litigation settlement and related charges reported in Selling, general and administrative.

(G) Research and development charge resulting from an initial payment related to an agreement with DURECT and corresponding milestone reached for development of a long-acting local anesthetic product that has not yet achieved regulatory approval.

Three months ended June 30, 2009 Reconciliation of GAAP to Non-GAAP Financial Measures:

	Gross Profit (1)		Income From Operations		Net Income (2)		Diluted EPS
GAAP financial measures	$	346.2	$	91.1	$	25.5	$	0.16
Specified items:
Project Fuel and related charges (A)	4.8		67.6		64.0		0.40
Facilities Optimization charges (B)	0.4		3.6		2.4		0.01
Amortization of certain intangible assets (C)	14.4		14.4		9.7		0.06
Impairment of marketable equity securities (D)	—		—		16.6		0.10
Adjusted financial measures (3)	$	365.8	$	176.7	$	118.2	$	0.73

GAAP results for the three months ended June 30, 2009 include:

(A) Project Fuel and related charges: $4.8 million reported in Cost of products sold, $52.7 million reported in Restructuring, impairment and (gain) on disposition of assets, net, $0.9 million reported in Research and development and $9.2 million reported in Selling, general and administrative. Project Fuel initiatives include costs for severance and other employee benefits, process optimization implementation, other asset charges, exit costs and charges associated with certain non-strategic businesses and underlying assets committed for disposal and the related inventory, property and equipment, allocated goodwill and intangible assets.

(B) Facilities Optimization charges: $0.4 million reported in Cost of products sold and $3.2 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 resulting from the acquisition of Mayne Pharma reported in Cost of products sold.

(D) Impairment of marketable equity securities is reported in Other (income) expense, net.

(1) Gross profit is defined as Net sales less Cost of products sold.

(2) Specified items are shown net of tax of $35.7 million and $9.5 million for the three months ended June 30, 2010 and 2009, respectively, based on the statutory tax rate 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 filing on Form 8-K filed on July 28, 2010 for additional information.

Hospira, Inc.

Reconciliation of GAAP to Non-GAAP Financial Measures

(Unaudited)

(dollars and shares in millions, except for per share amounts)

Six months ended June 30, 2010 Reconciliation of GAAP to Non-GAAP Financial Measures:

	Gross Profit (1)		Income From Operations		Net Income (2)		Diluted EPS
GAAP financial measures	$	799.5	$	323.9	$	225.2	$	1.34
Specified items:
Project Fuel and related charges (A)	7.7		9.7		2.8		0.02
Facilities Optimization charges (B)	4.1		5.5		3.9		0.02
Amortization of certain intangible assets (C)	34.4		34.4		22.2		0.13
Certain quality and product related charges (D)	25.8		25.8		16.6		0.10
Acquisition and integration-related charges (E)	—		12.2		7.7		0.04
Litigation settlement and related charges (F)	—		14.0		8.5		0.05
Research and development charge (G)	—		27.5		17.2		0.10
Adjusted financial measures (3)	$	871.5	$	453.0	$	304.1	$	1.80

GAAP results for the six months ended June 30, 2010 include:

(A) Project Fuel and related charges: $7.7 million reported in Cost of products sold, $5.0 million reported in Restructuring, impairment and (gain) on disposition of assets, net, $0.3 million reported in Research and development and $8.1 million reported in Selling, general and administrative. Project Fuel initiatives include costs for process optimization implementation, severance and other employee benefits, exit costs and other asset charges. These charges are offset by a $11.4 million gain reported in Restructuring, impairment and (gain) on disposition of assets, net related to the disposal of the non-strategic net assets associated with the Wasserburg, Germany, facility.

(B) Facilities Optimization charges: $4.1 million reported in Cost of products sold and $1.4 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 and a generic injectable business by Hospira India.

(E) Acquisition and integration-related charges: $2.2 million reported in Research and development and $10.0 million reported in Selling, general and administrative. These charges include acquisition and integration costs resulting from acquisitions including Javelin Pharma and a generic injectable business by Hospira India.

(F) RTI litigation settlement and related charges reported in Selling, general and administrative.

Six months ended June 30, 2009 Reconciliation of GAAP to Non-GAAP Financial Measures:

	Gross Profit (1)		Income From Operations		Net Income (2)			Diluted EPS
GAAP financial measures	$	665.8	$	205.8	$	191.0		$	1.18
Specified items:
Project Fuel and related charges (A)	4.8		78.1		70.5			0.44
Facilities Optimization charges (B)	7.4		15.3		10.1			0.06
Amortization of certain intangible assets (C)	27.4		27.4		18.7			0.12
Impairment of marketable equity securities (D)	—		—		16.6			0.10
Resolution of IRS tax audit benefit (E)	—		—		(91.9		)	(0.57		)
Adjusted financial measures (3)	$	705.4	$	326.6	$	215.0		$	1.33

GAAP results for the six months ended June 30, 2009 include:

(A) Project Fuel and related charges: $4.8 million reported in Cost of products sold, $57.4 million reported in Restructuring, impairment and (gain) on disposition of assets, $1.3 million reported in Research and development and $14.6 million reported in Selling, general and administrative. Project Fuel initiatives include costs for severance and other employee benefits, process optimization implementation, other asset charges, exit costs and charges associated with certain non-strategic businesses and underlying assets committed for disposal and the related inventory, property and equipment, allocated goodwill and intangible assets.

(B) Facilities Optimization charges: $7.4 million reported in Cost of products sold and $7.9 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 resulting from the acquisition of Mayne Pharma reported in Cost of products sold.

(D) Impairment of marketable equity securities is reported in Other (income) expense, net.

(E) Resolution of IRS tax audit benefit of $91.9 million reported in Income tax expense (benefit). This discrete income tax benefit is related to the completion and effective settlement of U.S. tax return audits.

(1) Gross profit is defined as Net sales less Cost of products sold.

(2) Specified items are shown net of tax of $50.5 million and $113.4 million for the six months ended June 30, 2010 and 2009, respectively, based on the statutory tax rate 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 filing on Form 8-K filed on July 28, 2010 for additional information.

Hospira, Inc.

Condensed Consolidated Balance Sheets

(Unaudited)

(dollars in millions)

	June 30,		December 31,
	2010		2009
Assets
Current Assets:
Cash and cash equivalents	$	783.3	$	946.0
Trade receivables, less allowances of $9.1 in 2010 and $6.2 in 2009	613.0		498.1
Inventories	794.2		755.4
Deferred income taxes	171.2		185.9
Prepaid expenses	44.4		34.3
Other receivables	105.0		41.5
Assets held for sale	—		65.0
Total Current Assets	2,511.1		2,526.2
Property and equipment, net	1,211.5		1,147.8
Intangible assets, net	469.8		406.5
Goodwill	1,366.1		1,243.4
Deferred income taxes	56.2		54.5
Investments	50.5		49.3
Other assets	65.9		75.2
Total Assets	$	5,731.1	$	5,502.9

Liabilities and Shareholders’ Equity
Current Liabilities:
Short-term borrowings	$	23.8	$	23.6
Trade accounts payable	253.0		229.5
Salaries, wages and commissions	115.6		176.5
Other accrued liabilities	447.2		438.4
Liabilities related to assets held for sale	—		13.9
Total Current Liabilities	839.6		881.9
Long-term debt	1,717.4		1,707.3
Deferred income taxes	16.3		18.6
Post-retirement obligations and other long-term liabilities	277.2		271.4
Commitments and Contingencies
Total Shareholders’ Equity	2,880.6		2,623.7
Total Liabilities and Shareholders’ Equity	$	5,731.1	$	5,502.9

Hospira, Inc.

Condensed Consolidated Statements of Cash Flows

(Unaudited)

(dollars in millions)

	Six Months Ended June 30,
	2010			2009

Cash Flow From Operating Activities:
Net income	$	225.2		$	191.0
Adjustments to reconcile net income to net cash from operating activities-
Depreciation	79.9			83.2
Amortization of intangible assets	40.2			30.7
Stock-based compensation expense	27.8			22.7
Deferred income tax and other tax adjustments	12.1			(98.3		)
Impairment and other asset (benefits) charges	(5.9		)	69.7
Gain on disposition of assets	(11.4		)	—
Changes in assets and liabilities-
Trade receivables	(126.7		)	(2.8		)
Inventories	(41.9		)	(6.3		)
Prepaid expenses and other assets	(12.6		)	(11.4		)
Trade accounts payable	34.0			(32.8		)
Other liabilities	(94.7		)	(18.2		)
Other, net	17.8			8.5
Net Cash Provided by Operating Activities	143.8			236.0

Cash Flow From Investing Activities:
Capital expenditures (including instruments placed with or leased to customers)	(79.4		)	(77.8		)
Acquisitions, net of cash acquired, and payments for contingent consideration	(397.7		)	(14.2		)
Purchases of intangibles and other investments	(11.2		)	(3.2		)
Proceeds on disposition of assets	62.6			—
Net Cash Used in Investing Activities	(425.7		)	(95.2		)

Cash Flow From Financing Activities:
Issuance of long-term debt, net of fees paid	—			246.7
Repayment of long-term debt	—			(306.1		)
Other borrowings, net	(3.5		)	0.7
Excess tax benefit from stock-based compensation arrangements	16.3			0.2
Proceeds from stock options exercised	112.4			35.4
Net Cash Provided by (Used in) Financing Activities	125.2			(23.1		)

Effect of exchange rate changes on cash and cash equivalents	(6.0		)	7.0

Net change in cash and cash equivalents	(162.7		)	124.7
Cash and cash equivalents at beginning of period	946.0			483.8
Cash and cash equivalents at end of period	$	783.3		$	608.5

Supplemental Cash Flow Information:
Cash paid during the period-
Interest	$	50.3		$	54.8
Income taxes, net of refunds	$	70.9		$	18.7

Hospira, Inc.

Net Sales by Product Line

(Unaudited)

(dollars in millions)

	Three Months Ended June 30,								Six Months Ended June 30,
	2010		2009		% Change at Actual Currency Rates		% Change at Constant Currency Rates (1)		2010		2009		% Change at Actual Currency Rates		% Change at Constant Currency Rates (1)
Americas–
Pharmaceuticals
Specialty Injectables	$	453.0	$	368.5	22.9	%	21.6	%	$	936.9	$	701.6	33.5	%	31.8	%
Other Pharma	122.9		139.4		(11.8	)%	(12.3	)%	248.3		277.2		(10.4	)%	(10.9	)%
	575.9		507.9		13.4	%	12.3	%	1,185.2		978.8		21.1	%	19.7	%
Devices
Medication Management Systems	120.4		152.2		(20.9	)%	(21.9	)%	246.8		273.6		(9.8	)%	(11.5	)%
Other Devices	84.8		91.6		(7.4	)%	(8.8	)%	164.9		184.0		(10.4	)%	(11.8	)%
	205.2		243.8		(15.8	)%	(17.0	)%	411.7		457.6		(10.0	)%	(11.6	)%
Total Americas	781.1		751.7		3.9	%	2.8	%	1,596.9		1,436.4		11.2	%	9.7	%

Europe, Middle East & Africa–
Pharmaceuticals
Specialty Injectables	67.3		68.1		(1.2	)%	4.3	%	137.2		125.7		9.1	%	8.3	%
Other Pharma	24.9		35.4		(29.7	)%	(27.1	)%	43.5		63.1		(31.1	)%	(31.4	)%
	92.2		103.5		(10.9	)%	(6.5	)%	180.7		188.8		(4.3	)%	(5.0	)%
Devices
Medication Management Systems	16.5		17.5		(5.7	)%	0.6	%	35.6		36.6		(2.7	)%	(2.5	)%
Other Devices	12.1		17.4		(30.5	)%	(24.7	)%	27.0		34.2		(21.1	)%	(21.3	)%
	28.6		34.9		(18.1	)%	(12.0	)%	62.6		70.8		(11.6	)%	(11.6	)%
Total Europe, Middle East & Africa	120.8		138.4		(12.7	)%	(7.9	)%	243.3		259.6		(6.3	)%	(6.8	)%

Asia Pacific–
Pharmaceuticals
Specialty Injectables	54.1		53.0		2.1	%	(7.9	)%	111.7		92.0		21.4	%	3.5	%
Other Pharma	1.8		2.7		(33.3	)%	(44.4	)%	3.9		6.3		(38.1	)%	(49.2	)%
	55.9		55.7		0.4	%	(9.7	)%	115.6		98.3		17.6	%	0.1	%
Devices
Medication Management Systems	5.5		4.9		12.2	%	4.1	%	10.8		9.6		12.5	%	2.1	%
Other Devices	4.9		6.2		(21.0	)%	(27.4	)%	9.2		12.7		(27.6	)%	(36.2	)%
	10.4		11.1		(6.3	)%	(13.5	)%	20.0		22.3		(10.3	)%	(19.7	)%
Total Asia Pacific	66.3		66.8		(0.7	)%	(10.3	)%	135.6		120.6		12.4	%	(3.6	)%

Net Sales	$	968.2	$	956.9	1.2	%	0.3	%	$	1,975.8	$	1,816.6	8.8	%	6.5	%

Global–
Pharmaceuticals
Specialty Injectables	$	574.4	$	489.6	17.3	%	16.0	%	$	1,185.8	$	919.3	29.0	%	25.8	%
Other Pharma	149.6		177.5		(15.7	)%	(15.8	)%	295.7		346.6		(14.7	)%	(15.3	)%
	724.0		667.1		8.5	%	7.5	%	1,481.5		1,265.9		17.0	%	14.5	%
Devices
Medication Management Systems	142.4		174.6		(18.4	)%	(19.0	)%	293.2		319.8		(8.3	)%	(10.0	)%
Other Devices	101.8		115.2		(11.6	)%	(12.2	)%	201.1		230.9		(12.9	)%	(14.6	)%
	244.2		289.8		(15.7	)%	(16.3	)%	494.3		550.7		(10.2	)%	(11.9	)%

Net Sales	$	968.2	$	956.9	1.2	%	0.3	%	$	1,975.8	$	1,816.6	8.8	%	6.5	%

(1) The Non-GAAP financial measures contained in this press release include comparisons at constant currency rates (reflecting comparative local currency balances at prior period foreign exchnage 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 financial 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 financial measure aids in the understanding of our change in net sales without the impact of foreign currency. 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.

Hospira Inactive 8-KHospira Reports Second-quarter 2010 Results