Case: 1:16-cv-00651 Document #: 106-26 Filed: 05/08/18 Page 1 of 17 PageID #:3292
`Case: 1:16-cv-00651 Document #: 106-26 Filed: 05/08/18 Page 1 of 17 PageID #:3292
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`EXHIBIT Z
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`EXHIBIT Z
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`Case: 1:16-cv-00651 Document #: 106-26 Filed: 05/08/18 Page 2 of 17 PageID #:3293
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`EX-99.1 4 a2133117zex-99_1.htm EX-99.1
`QuickLinks -- Click here to rapidly navigate through this document
`
`EXHIBIT 99.1
`
` , 2004
`
`Dear Shareholder:
`
` I am pleased to report that the previously announced separation of Abbott Laboratories' core hospital products business from Abbott is
`expected to become effective on , 2004. Hospira, Inc. is a new company that will own and operate the core hospital products
`business presently conducted as part of Abbott. After the separation of Hospira's business from Abbott and the distribution of Hospira
`shares to Abbott shareholders, you will own shares of both companies.
`
` After the separation and distribution are completed, Abbott and Hospira will be better positioned to focus on their respective
`businesses and their unique opportunities for long-term growth and profitability. Abbott will compete primarily in the pharmaceutical,
`nutritional, diagnostic and high-tech medical devices industries while Hospira will build on Abbott's nearly 70-year history as one of the
`leading manufacturers and suppliers of hospital products. Hospira will be an independent public company that has been authorized to list its
`shares of common stock on the New York Stock Exchange under the symbol "HSP."
`
` Holders of record of Abbott common shares as of the close of business on , 2004, which will be the record date, will
`receive one share of Hospira common stock for every Abbott common shares held. No action is required on your part to receive
`your Hospira shares. You will not be required to pay anything for the new shares or to surrender any Abbott common shares. No fractional
`shares of Hospira common stock will be issued. If you would be entitled to a fractional share, you will instead receive a check for its cash
`value.
`
` Abbott has received a ruling from the Internal Revenue Service that, for U.S. federal income tax purposes, the distribution of Hospira
`common stock is tax-free to Abbott and to you to the extent that you receive Hospira common stock. Any cash you receive in lieu of
`fractional shares generally will be taxable to you. By , 2004, U.S. taxpayers will be provided with information to enable them
`to compute their tax bases in both Abbott and Hospira common stock and other information they will need to report their receipt of the
`Hospira common stock on their U.S. federal income tax return as a tax-free transaction.
`
` The enclosed information statement describes the distribution of shares of Hospira common stock and contains important information
`about Hospira, including financial statements. I suggest that you read it carefully. If you have any questions regarding the distribution,
`please contact the information agent, Georgeson Shareholder Communications Inc., 17 State Street, 10th Floor, New York,
`New York 10004, telephone 1-800-905-7286. I look forward to your continued support as a valued shareholder of Abbott Laboratories.
`
`
`
`
`
` , 2004
`
`Dear Stockholder:
`
`Sincerely,
`
`Miles D. White
`Chairman of the Board and
` Chief Executive Officer
`Abbott Laboratories
`
`Hospira, Inc.
`
`275 N. Field Drive
`Lake Forest, Illinois 60045
`
` It is my great pleasure to welcome you as a stockholder of Hospira, Inc., which will be publicly traded for the first time on or
`about , 2004.
`
`FK-DEXMED0197105
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`

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`Case: 1:16-cv-00651 Document #: 106-26 Filed: 05/08/18 Page 3 of 17 PageID #:3294
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` For nearly 70 years, the core hospital products business that will be contributed to us by Abbott Laboratories has served its customers,
`which currently include hospitals, home healthcare providers, long-term care facilities and alternate site clinics. From medication delivery
`systems to generic injectable pharmaceuticals to injectable pharmaceutical contract manufacturing, our business maintains a leading
`position in many segments of the hospital market. We believe that favorable demographics due to the aging of the U.S. population will drive
`demand for care in hospitals and hospital-like settings which, in turn, will drive demand for our products. We also believe that as an
`independent public company, we can expand on our leadership positions by delivering new technology solutions for our customers
`worldwide.
`
` We had $2.6 billion in 2003 sales and have a strong financial profile. We believe that our product expertise, size, breadth of product
`offerings, customer relationships and financial profile will provide us with an excellent growth platform from which we can expand our
`business by developing and delivering new products and services that meet the needs of our customers. Our management team will draw
`upon its extensive experience in serving our customers as we seek to distinguish Hospira through continued strong leadership, financial
`performance and an unwavering commitment to our customers and the patients they serve.
`
` I encourage you to learn more about Hospira and the strategies we will pursue as an independent public company by reading the
`attached information statement. We are pleased that you, as a stockholder of Hospira, will participate in our mission. We value your support
`as our business begins a new and exciting chapter in its long and successful history.
`
`
`
`
`
`Sincerely,
`
`Christopher B. Begley
`Chief Executive Officer
`Hospira, Inc.
`
`Subject to Completion, Dated March 31, 2004
`
`INFORMATION STATEMENT
`
`Hospira, Inc.
`
`Distribution of Approximately Shares of Common Stock
`
` This information statement is being furnished in connection with the distribution by Abbott Laboratories to its shareholders of all of
`the outstanding shares of Hospira common stock. Abbott will transfer its core hospital products business to us, as described in this
`information statement.
`
` Shares of our common stock will be distributed to holders of record of Abbott common shares as of the close of business
`on , 2004, which will be the record date. We expect that the distribution will be effective at 11:59 p.m. Eastern Time
`on , 2004. We expect that each Abbott shareholder will receive one share of our common stock for every ten Abbott
`common shares held on the record date. The distribution of our common stock to Abbott shareholders will not be taxable for U.S. federal
`income tax purposes. In lieu of fractional shares, shareholders will receive cash, which generally will be taxable.
`
` Abbott shareholders will not be required to pay for the shares of our common stock they receive in the distribution, nor will they be
`required to surrender or exchange Abbott common shares or take any other action to receive Hospira common stock. After the distribution,
`you will own shares of Hospira common stock and also retain your Abbott common stock. Each share of our common stock will be
`accompanied by one preferred stock purchase right. We have been authorized to list our common stock on the New York Stock Exchange
`under the symbol "HSP."
`
` IN REVIEWING THIS INFORMATION STATEMENT, YOU SHOULD CAREFULLY CONSIDER THE MATTERS DESCRIBED
`UNDER THE CAPTION "RISK FACTORS" BEGINNING ON PAGE 4.
`
` NO SHAREHOLDER APPROVAL OF THE DISTRIBUTION IS REQUIRED OR SOUGHT. WE ARE NOT ASKING YOU FOR A
`PROXY AND YOU ARE REQUESTED NOT TO SEND US A PROXY.
`
` NEITHER THE SECURITIES AND EXCHANGE COMMISSION NOR ANY STATE SECURITIES COMMISSION HAS
`APPROVED OR DISAPPROVED THESE SECURITIES OR DETERMINED IF THIS INFORMATION STATEMENT IS TRUTHFUL
`OR COMPLETE. ANY REPRESENTATION TO THE CONTRARY IS A CRIMINAL OFFENSE.
`
`FK-DEXMED0197106
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`

`

`Case: 1:16-cv-00651 Document #: 106-26 Filed: 05/08/18 Page 4 of 17 PageID #:3295
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` THIS INFORMATION STATEMENT DOES NOT CONSTITUTE AN OFFER TO SELL OR THE SOLICITATION OF AN OFFER
`TO BUY ANY SECURITIES.
`
` Abbott shareholders with inquiries related to the distribution should contact the information agent, Georgeson Shareholder
`Communications Inc., 17 State Street, 10th Floor, New York, New York 10004, telephone 1-800-905-7286.
`
`The date of this information statement is , 2004.
`
`INFORMATION STATEMENT
`TABLE OF CONTENTS
`
`
`QUESTIONS AND ANSWERS ABOUT THE SEPARATION AND DISTRIBUTION
`
`SUMMARY
`
`RISK FACTORS
`
`FORWARD-LOOKING STATEMENTS
`
`DIVIDEND POLICY
`
`CAPITALIZATION
`
`SELECTED FINANCIAL INFORMATION
`
`UNAUDITED PRO FORMA COMBINED FINANCIAL STATEMENTS
`
`MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS
`
`BUSINESS
`
`INDEBTEDNESS
`
`ARRANGEMENTS BETWEEN ABBOTT AND HOSPIRA
`
`THE SEPARATION AND DISTRIBUTION
`
`MANAGEMENT
`
`OWNERSHIP OF OUR STOCK
`
`DESCRIPTION OF CAPITAL STOCK
`
`CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
`
`SHARES ELIGIBLE FOR FUTURE SALE
`
`INDEMNIFICATION OF DIRECTORS AND OFFICERS
`
`ADDITIONAL INFORMATION
`
`INDEX TO FINANCIAL STATEMENTS
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`PAGE
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`1
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`4
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`16
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`16
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`17
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`24
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`34
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`50
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`51
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`57
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`62
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`77
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`79
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`86
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`87
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`88
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`89
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`QUESTIONS AND ANSWERS ABOUT THE SEPARATION AND DISTRIBUTION
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`FK-DEXMED0197107
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`Q.
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`Case: 1:16-cv-00651 Document #: 106-26 Filed: 05/08/18 Page 5 of 17 PageID #:3296
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`What is Hospira and why is Abbott separating Hospira's business and distributing its stock?
`
`Hospira is a new company that will own the core hospital products business historically conducted by Abbott as part of its hospital
`products business as described in this information statement. The separation of Hospira and the distribution of its common stock is
`intended to provide you with equity investments in two separate companies that should then be able to focus exclusively on
`maximizing opportunities for their distinct businesses. This should result in enhanced performance of each business.
`
`For more information about Hospira's business and a further explanation of the reasons for the separation and distribution, see the
`discussions beginning on page 34 and page 57, respectively.
`
`How will the separation and distribution work?
`
`The separation and distribution will be accomplished through a series of transactions in which the assets and liabilities of Abbott's
`core hospital products business will be transferred to Hospira and certain of its subsidiaries and all of the common stock of Hospira
`will be distributed to the shareholders of Abbott on a pro rata basis.
`
`For more information about the separation and distribution, see the discussion beginning on page 57.
`
`What will be included in Hospira?
`
`Hospira will own the worldwide core hospital products business historically conducted by Abbott, which we sometimes refer to in
`this document as "the contributed business," the "Hospira business" or "our business." The contributed business will include:
`medication delivery systems, such as electronic drug delivery systems and infusion therapy, and critical care devices; specialty
`injectable pharmaceuticals, including generic and proprietary products; and injectable pharmaceutical contract manufacturing.
`Abbott is retaining all of its other pharmaceutical, diagnostic and nutritionals businesses. In addition, Abbott is retaining the
`following businesses that have historically been part of its hospital products business: hospital operating room pharmaceuticals,
`proprietary hospital pharmaceuticals, pain management products, vascular devices and the orthopedic devices business.
`
`For a further explanation of the contributed business, see the discussion beginning on page 34.
`
`What will the relationship be between Hospira and Abbott following the separation and distribution?
`
`After the separation and distribution, Abbott and Hospira will operate as separate, independent companies and Abbott will not own
`any shares of Hospira common stock. Hospira and Abbott will enter into several arrangements relating to the separation and
`distribution and Hospira's future relationship with Abbott. See the discussion beginning on page 51 for more information about these
`arrangements.
`
`What will I receive in the distribution?
`
`We expect that each holder of record of Abbott common shares as of the close of business on , 2004, will receive one share of
`Hospira common stock, and the associated preferred stock purchase rights, for every ten Abbott common shares held. Based on the
`number of Abbott shares issued and outstanding on December 31, 2003 and the expected distribution ratio, we expect that a total of
`approximately 156 million shares of Hospira common stock, together with the associated preferred stock purchase rights, will be
`distributed. These shares will constitute all of the outstanding shares of Hospira common stock immediately after the distribution.
`
`No fractional shares of Hospira common stock will be distributed. Fractional shares you would otherwise be entitled to receive
`
`i
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`will be aggregated and sold in the public market by the distribution agent. The aggregate net cash proceeds of these sales will be
`distributed ratably to those shareholders who would otherwise have received fractional shares of Hospira common stock.
`
`The distribution will not affect the number of outstanding Abbott shares or any rights of Abbott shareholders, although it may affect
`the market value of each outstanding Abbott common share.
`
`Will I have to pay U.S. federal income taxes on my receipt of Hospira shares?
`
`Abbott has received a ruling from the Internal Revenue Service that, for U.S. federal income tax purposes, the distribution of
`Hospira common stock is tax-free to Abbott and to you to the extent that you receive Hospira common stock. However, fractional
`shares will not be issued and any cash you receive in lieu of fractional shares generally will be taxable to you.
`
`FK-DEXMED0197108
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`

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`Case: 1:16-cv-00651 Document #: 106-26 Filed: 05/08/18 Page 6 of 17 PageID #:3297
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`For a further explanation of the U.S. federal income tax consequences of the distribution, see the discussion beginning on page 59.
`
`How will I determine the tax basis I will have in the Hospira shares I receive in the distribution?
`
`Shortly after the distribution is completed, Abbott will provide to U.S. taxpayers information to enable them to compute their tax
`bases in both Abbott and Hospira shares and other information they will need to report their receipt of Hospira common stock on
`their 2004 U.S. federal income tax return as a tax-free transaction.
`
`You should consult your tax advisor about the particular consequences of the distribution to you, including the application of state,
`local and foreign tax laws.
`
`When will the separation and distribution occur?
`
`We expect the separation and distribution to be effective at 11:59 p.m. Eastern Time on , 2004.
`
`How will Hospira shares be issued?
`
`Abbott shareholders will receive shares of Hospira common stock through the same channels that they currently use to hold or trade
`Abbott common shares, whether through a brokerage account, 401(k) plan or other channels. Receipt of shares of Hospira common
`stock will be documented in the same manner that Abbott common shareholders typically receive shareholder updates, including
`monthly broker statements and 401(k) statements.
`
`Registered Abbott shareholders who hold their Abbott common shares in certificate form (or who hold shares in the Abbott
`Laboratories dividend reinvestment plan) will receive a statement of account showing their shares from EquiServe Trust
`Company, N.A., the distribution agent, transfer agent and registrar for Hospira's common stock. This is commonly referred to as
`book-entry, a method of recording stock ownership in Hospira's records in which no physical certificates are issued. Following the
`distribution, Hospira stockholders whose shares are held in book-entry form may request the transfer of their shares to a brokerage
`or other account or the delivery of physical stock certificates for their shares at any time.
`
`What do I need to do to receive Hospira shares, and can I sell my Hospira shares after the distribution?
`
`No action is required on your part to receive your shares of Hospira common stock, although you must be an Abbott shareholder as
`of the close of business on , 2004. Do not send in your Abbott stock certificates. You will not be required to pay
`anything for the new shares or to surrender any Abbott common shares.
`
`You can request a certificate for all or a portion of your shares of Hospira common stock by contacting EquiServe by telephone at 1-
`800-821-1238, on the Internet at www.equiserve.com or by sending a written request to EquiServe, P.O. Box 43010, Providence,
`Rhode Island 02940-3010.
`
`ii
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`After the distribution date, record holders can request the sale of all or a portion of their book-entry shares through EquiServe by
`contacting EquiServe by telephone at 1-800-821-1238, on the Internet at www.equiserve.com or by sending a written request to
`EquiServe, P.O. Box 43010, Providence, Rhode Island 02940-3010. There will be a service fee to sell your shares directly through
`EquiServe. The service fee includes any applicable brokerage commissions EquiServe is required to pay. The fees will be deducted
`from the sale proceeds and a check for the net proceeds will be mailed to you.
`
`Where will shares of Hospira common stock trade?
`
`There is not currently a public market for Hospira common stock. Hospira common stock will be listed on the New York Stock
`Exchange under the symbol "HSP." Hospira anticipates that trading will commence on a when-issued basis two business days prior
`to the record date, and that regular-way trading will commence on the first trading day following the distribution. If trading does
`commence on a when-issued basis two business days prior to the record date, you may purchase or sell our common stock at that
`time, but your transaction will not settle until after the distribution date. Shares of our common stock will be freely tradeable
`following the distribution date. See the discussion on page 61 for a more complete description of the listing and trading of our
`common stock.
`
`Will I receive dividends on my Hospira shares?
`
`Hospira expects that it will pay a regular annual cash dividend, subject to the discretion of its board of directors. The amount of the
`cash dividend will be determined by Hospira's board of directors based upon a number of factors, including Hospira's profitability,
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`FK-DEXMED0197109
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`Case: 1:16-cv-00651 Document #: 106-26 Filed: 05/08/18 Page 7 of 17 PageID #:3298
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`cash flow and financial requirements.
`
`Are there risks to owning Hospira common stock?
`
`Yes. As with any investment, there are risks associated with owning our stock. See the discussion of these risks beginning on page 4.
`
`Who do I contact if I have questions or need additional information?
`
`Georgeson Shareholder Communications Inc. is the information agent for the distribution. Please contact Georgeson with any
`questions about the distribution or if you need any additional information. Georgeson can be reached at 17 State Street, 10th Floor,
`New York, New York 10004, telephone 1-800-905-7286.
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`iii
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`SUMMARY
`
` The following is a summary of some of the information contained in this information statement. In addition to this summary, we urge
`you to read the entire information statement carefully, especially the risks discussed under "Risk Factors" and our financial statements.
`Unless the context requires otherwise, references in this information statement to "we," "us" or "our" are to Hospira, Inc. and its
`subsidiaries, and not to Abbott Laboratories or its subsidiaries.
`
` We describe in this information statement the core hospital products business to be contributed to us by Abbott in the separation as if it
`were our business for all historical periods described. However, we are a newly formed entity that has not independently conducted any
`operations prior to the separation. References in this document to the historical assets, liabilities, products, businesses or activities of us or
`our business are generally intended to refer to the historical assets, liabilities, products, businesses or activities of the contributed business
`as it was conducted as part of Abbott and its subsidiaries prior to the separation. Following the distribution, we will be an independent
`public company and Abbott will have no continuing stock ownership interest in us. Our historical financial results as part of Abbott
`contained herein may not reflect our financial results in the future as an independent company or what our financial results would have been
`had we been an independent company during the periods presented.
`
`Our Company
`
` We are a medication delivery and specialty pharmaceutical company that is focused on developing, manufacturing and marketing
`products that improve the safety and efficacy of patient care in the acute care setting. Our portfolio of products and services is organized
`into three major business groups: medication delivery systems and critical care devices; specialty injectable pharmaceuticals; and injectable
`pharmaceutical contract manufacturing services. Our products are used by hospitals, alternate site clinics, home healthcare providers and
`long-term care facilities, which we refer to collectively as the continuum of care. We supply our products and services to customers in
`nearly 70 countries through direct sales and distribution relationships. Annual sales for our business in 2003 were approximately
`$2.6 billion.
`
` We are one of the top three companies in terms of sales in each of the subgroups we serve in the U.S. market for medication delivery
`systems and critical care devices. The medication delivery systems market consists of electronic drug delivery pumps, administration sets
`and accessories, and infusion therapy products that are used to deliver intravenous fluids and medications to patients who are being treated
`in a hospital or hospital-like setting. Our critical care devices are used to monitor cardiac functions in critically ill patients.
`
` Specialty injectable pharmaceuticals include generic injectable pharmaceutical products as well as proprietary injectable
`pharmaceuticals that are used in a specific patient population or therapeutic area. Novel drug delivery formulations and formats are key
`points of product differentiation for generic injectable pharmaceuticals. We are an industry leader in the United States for the manufacture
`and sale of generic injectable pharmaceuticals other than blood products. We believe we provide more drug delivery options than any of our
`direct competitors. Our products enhance safety, increase productivity and reduce waste for our customers.
`
` We are a leading provider of injectable pharmaceutical contract manufacturing services for formulation development, filling and
`finishing of injectable drugs in North America. Our injectable pharmaceutical contract manufacturing services group provides its services to
`numerous companies, including many of the largest global pharmaceutical and biotechnology companies.
`
` We believe that our product expertise, size, breadth of product offerings, customer relationships and financial profile provide us with an
`excellent growth platform from which we can expand our business. Our strategy is to develop, manufacture and market products that
`
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`FK-DEXMED0197110
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`

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`Case: 1:16-cv-00651 Document #: 106-26 Filed: 05/08/18 Page 8 of 17 PageID #:3299
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`improve the safety, efficacy and overall cost of patient care. We are focused on meeting our customers' increasing needs for advanced
`medication management systems, innovative device technology and specialty injectable pharmaceutical products. To accomplish our
`strategy, we intend to invest in new product development, increase our operational efficiencies, expand our global sales and pursue strategic
`opportunities.
`
` We employ approximately 14,000 people worldwide. Our products are manufactured around the world, including Canada, Costa Rica,
`Dominican Republic, Ireland, Italy, and the United States. Our headquarters are located at 275 N. Field Drive, Lake Forest, Illinois 60045
`and our telephone number is (847) 937-6100. We were incorporated in Delaware in 2003.
`
`Reasons for the Separation and Distribution
`
` Abbott's board of directors has determined that separating our business from Abbott's other businesses and distributing our common
`stock to Abbott shareholders is appropriate and advisable. Abbott's board of directors believes that our separation from Abbott will provide
`both companies with the opportunity to focus exclusively on their respective businesses and their unique opportunities for long-term growth
`and profitability. In addition, the separation will enable each company to enhance its strategic, financial and operational flexibility. Among
`other things, the separation will:
`
`•
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`•
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`•
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`•
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`allow both companies to focus exclusively on their respective businesses, and use their respective resources to invest in
`opportunities targeted to their distinct strategies and markets;
`
`provide us greater flexibility to expand on our leadership positions in many segments of the hospital market by delivering
`new technology solutions to our customers;
`
`provide us the opportunity to reward employees using equity-based compensation plans that align the incentives of
`management and our employees with the overall financial performance of our business; and
`
`allow us direct access to capital markets.
`
` Abbott's board of directors also considered a number of potentially adverse factors in evaluating the separation, but concluded that the
`potential benefits of the separation outweigh these potentially adverse factors. Abbott believes that separating our business from Abbott's
`other businesses in the form of a tax-free distribution is the most economical means of separating our business for Abbott and its
`shareholders. For a more complete discussion of the reasons for the separation and distribution, see "The Separation and Distribution—
`Reasons for the Separation and Distribution."
`
`2
`
`Summary Historical and Pro Forma Financial Information
`
` The following table sets forth summary historical financial information derived from the combined financial statements of the
`contributed business for the years ended and as of December 31, 2003, 2002 and 2001, unaudited pro forma combined financial statements
`of the contributed business as of December 31, 2003 and for the year ended December 31, 2003. The summary financial information may
`not be indicative of our future performance as an independent company. It should be read in conjunction with the discussion in
`"Management's Discussion and Analysis of Financial Condition and Results of Operations," the unaudited pro forma combined financial
`statements and corresponding notes and the combined financial statements and corresponding notes included elsewhere in this information
`statement.
`
` The pro forma data for the year ended December 31, 2003 assumes that the separation occurred as of January 1, 2003. The pro forma
`balance sheet assumes that the separation occurred as of December 31, 2003. The pro forma adjustments are based upon available
`information and assumptions that we believe are reasonable. The average number of common shares outstanding and earnings per common
`share reflect our expectation that the distribution ratio will be one share of Hospira common stock for every ten Abbott common shares
`held. Please see the notes to the unaudited pro forma combined financial statements included elsewhere in this information statement for a
`discussion of how these adjustments are presented in the pro forma combined financial statements.
`
`
`
`
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`For the Years Ended December 31,
`
`
`
`
`
`Pro Forma
`2003
`
`2003
`
`2002
`
`2001
`
`
`
`
`(dollars and shares in millions; except earnings per share amounts)
`
`FK-DEXMED0197111
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`

`

`Case: 1:16-cv-00651 Document #: 106-26 Filed: 05/08/18 Page 9 of 17 PageID #:3300
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`
`Combined Statement of Earnings Data:
`Net Sales
`Net Sales to Abbott Laboratories
`
`
`Total Net Sales
`
`Costs and Expenses:
` Cost of products sold
` Research and development
` Selling, general and administrative
`
`Interest expense
` Other (income)/expense, net
`
`
`
`
`
`
`
`
`
`$
`
`
`
`
`
`
`
`
`
`
`
`
`
`
`
`
`
`
`
`
`
`
`
`
`
`
`
`
`
`
`
`
`
`
`
`
`
`
`
`
`
`
`
`
`
`
`
`$
`
`
`
`
`
`
`
`
`
`
`
`
`
`
`
`
`
`
`
`2,386
`159
`
`
`2,545
`
`
`1,819
`
`108
`
`225
`
`34
`
`1
`
`
`
`358
`99
`
`
`
`
`
`
`
`$
`
`
`
`
`
`
`
`
`
`
`
`
`
`
`
`
`
`
`
`2,400
`224
`
`
`2,624
`
`
`1,923
`
`110
`
`231
`
`—
`
`1
`
`
`
`359
`99
`
`
`
`2,405
`198
`
`
`2,603
`
`
`1,883
`
`88
`
`254
`
`—
`
`25
`
`
`
`353
`106
`
`
`
`
`
`
`
`$
`
`
`
`
`
`
`
`
`
`
`
`
`
`
`
`
`
`
`2,367
`147
`
`2,514
`
`1,789
`
`86
`
`243
`
`—
`
`6
`
`390
`117
`
`Earnings before taxes
`Taxes on earnings
`
`
`Net earnings
`
`
`Earnings per common share:
` Basic
` Diluted
`Average Number of Common Shares Outstanding:
` Basic
` Diluted
`
`
`
`
`
`
`Combined Balance Sheet Data:
`Total assets
`Long-term debt
`
`$
`
`259
`
`
`$
`
`260
`
`
`
`
`
`
`
`1.66
`
`1.65
`
`
`156.3
`
`157.2
`
`
`
`
`
`
`
`
`
`
`
`
`
`
`
`
`N/A
`
`N/A
`
`
`N/A
`
`N/A
`
`
`
`
`
`
`
`
`
`
`
`As of December 31,
`
`247
`
`
`
`N/A
`
`N/A
`
`
`N/A
`
`N/A
`
`$
`
`273
`
`
`
`
`
`
`
`
`
`
`
`
`
`
`
`N/A
`
`N/A
`
`N/A
`
`N/A
`
`Pro Forma
`2003
`
`2003
`
`2002
`
`2001
`
`
`
`
`(dollars in millions)
`
`
`
`$
`
`
`$
`
`$
`
`
`
`
`
`
`
`
`
`
`
`
`
`
`
`
`
`
`
`
`
`
`
`
`
`
`
`
`
`
`
`
`
`
`
`
`$
`$
`
`
`2,122
`109
`
`
`
`
`$
`
`
`
`2,250
`—
`
`
`
`
`$
`
`
`
`2,154
`—
`
`
`
`
`$
`
`
`2,133
`—
`
`3
`
`RISK FACTORS
`
`You should carefully consider the following risk factors and all the other information contained in this Information Statement in evaluating
`us and our common stock.
`
`Risks Relating to our Industry
`
`We face significant competition and we may not be able to compete effectively.
`
` The healthcare industry is highly competitive. We compete with many companies ranging from small start-up enterprises to
`multinational companies that are larger than we are and have access to greater financial, marketing, technical and other resources. Our
`present or future products could be rendered obsolete or uneconomical by technological advances by competitors or by the introduction of
`competing products by one or more of our competitors. For example, in recent years our electronic drug delivery systems business has
`experienced increased competition as a result of competitors' product innovations, requiring us to invest additional resources to improve our
`competitiveness. Also, most of our products are not protected by patents or other proprietary rights and are therefore subject to generic
`competition. In the absence of patent protection, the introduction of competing products is limited primarily by market considerations and
`the need to obtain necessary regulatory approvals. For example, our Corlopam® product is no longer protected by any patent and a generic
`version of this drug was approved by the U.S. Food and Drug Administration, or the FDA, on December 1, 2003.
`
`FK-DEXMED0197112
`
`

`

`Case: 1:16-cv-00651 Document #: 106-26 Filed: 05/08/18 Page 10 of 17 PageID #:3301
`
` Our failure to compete effectively could cause us to lose market share to our competitors and/or have a material adverse effect on our
`sales and profitability.
`
`We are subject to the cost-containment efforts of hospital buying groups, third party payors and government organizations.
`
` Many existing and potential customers for our products have combined to form group purchasing organizations, or GPOs, and
`integrated delivery networks, or IDNs, in an effort to lower costs. GPOs and IDNs negotiate pricing arrangements with medical supply
`manufacturers and distributors, and these negotiated prices are made available to a GPO's or IDN's affiliated hospitals and other members.
`Wholesalers of our products have also recently begun seeking to negotiate prices in an effort to lower costs. Failure to negotiate
`advantageous pricing and purchasing arrangements could cause us to lose market share to our competitors and/or have a material adverse
`effect on our sales and profitability.
`
` Our products and services are sold to hospitals, alternate site clinics, home healthcare providers and long-term care facilities, all of
`which receive reimbursement for the healthcare services provided to their patients from third-party payors, such as government programs,
`private insurance plans and ma