HOSPIRA INC (HSP) - 10-Q Quarterly SEC Filing for the Quarter En...
`
`http://www.stockpup.com/companies/HSP/10-Q.html
`
`UNITED STATES
`SECURITIES AND EXCHANGE COMMISSION
`WASHINGTON, D. C. 20549
`FORM 10-Q
`QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT
`OF 1934
`
`For the quarterly period ended June 30, 2015
`OR
`TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT
`OF 1934
`
`x
`
`¨
`
`For the transition period from to
`Commission File No. 1-31946
`HOSPIRA, INC.
`(Exact name of registrant as specified in its charter)
`
`Delaware
`(State or other jurisdiction
`of incorporation or organization)
`
`
`
`
`
`20-0504497
`(I.R.S. Employer
`Identification No.)
`
` 275 North Field Drive
`Lake Forest, Illinois 60045
`(Address of principal executive offices, including zip code)
`(224) 212-2000
`(Registrant's telephone number, including area code)
`Indicate by check mark whether the registrant: (l) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of l934
`during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing
`requirements for the past 90 days. Yes x No ¨
`Indicate by check mark whether the registrant has submitted electronically and posted on its corporate Web site, if any, every Interactive Data file
`required to be submitted and posted pursuant to Rule 405 of Regulation S-T (§ 232.405 of this chapter) during the preceding 12 months (or for such shorter
`period that the registrant was required to submit and post such files). Yes x No ¨
`Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, or a smaller reporting company.
`See definitions of "large accelerated filer," "accelerated filer," and "smaller reporting company" in Rule 12b-2 of the Exchange Act.
`
`Large accelerated filer x
`
`Non-accelerated filer o
`(Do not check if a smaller reporting company)
`Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes ¨ No x
`As of July 27, 2015, Registrant had outstanding 172,934,361 shares of common stock, par value $0.01 per share.
`
`Accelerated filer o
`
`Smaller reporting company o
`
`
`
`
`
`
`
`
`
`
`
`Petition for Inter Partes Review of US 8,338,470
`Amneal Pharmaceuticals LLC – Exhibit 1037 – Page i
`
`

`

`HOSPIRA INC (HSP) - 10-Q Quarterly SEC Filing for the Quarter En...
`
`http://www.stockpup.com/companies/HSP/10-Q.html
`
`Hospira, Inc.
`
`Quarterly Report on Form 10-Q
`
`Index
`
`Part I — Financial Information
`
`
`Financial Statements
`
`Condensed Consolidated Statements of Income and Comprehensive Income (Unaudited) — Three and Six Months Ended June 30,
`2015 and June 30, 2014
`
`Condensed Consolidated Statements of Cash Flows (Unaudited) — Six Months Ended June 30, 2015 and June 30, 2014
`
`Condensed Consolidated Balance Sheets (Unaudited) — June 30, 2015 and December 31, 2014
`
`Condensed Consolidated Statement of Changes in Shareholders' Equity (Unaudited) — Six Months Ended June 30, 2015
`
`Notes to Condensed Consolidated Financial Statements (Unaudited)
`
`Management's Discussion and Analysis of Financial Condition and Results of Operations
`
`Quantitative and Qualitative Disclosures About Market Risk
`
`Controls and Procedures
`
`
`Part II — Other Information
`
`
`Legal Proceedings
`
`Risk Factors
`
`Unregistered Sales of Equity Securities and Use of Proceeds
`
`Defaults Upon Senior Securities
`
`Mine Safety Disclosures
`
`Other Information
`
`Exhibits
`
`2
`
`
`
`
`
`
`
`
`
`
`
`
`
`
`
`
`
`
`
`
`
`
`
`
`
`
`
`
`
`
`
`
`
`
`
`
`6
`
`7
`
`8
`
`9
`
`10
`
`26
`
`42
`
`43
`
`44
`
`44
`
`44
`
`45
`
`45
`
`45
`
`45
`
`
`
`
`Item 1.
`
`
`
`
`
`
`
`
`
`
`
`
`
`
`
`
`
`
`
`
`Item 2.
`
`Item 3.
`
`Item 4.
`
`
`
`
`
`Item 1.
`
`Item 1A.
`
`Item 2.
`
`Item 3.
`
`Item 4.
`
`Item 5.
`
`Item 6.
`
`Petition for Inter Partes Review of US 8,338,470
`Amneal Pharmaceuticals LLC – Exhibit 1037 – Page ii
`
`

`

`HOSPlRA INC (HSP) - lO—Q Quarterly SEC Filing for the Quarter
`
`hnp2/Mww.stockpup.com/companies/HSP/l0-Q.htrnl
`
`Table of Contents
`
`Pufannance Sham Awards
`
`NoperfiormanceshareawardsweregrantedindresixmondrsendedJuneSO,2015.Forpriorgiants,theweightedaveragegrantdatefiirvahreusingflre
`Monte Carlo simulation model and the corresponding weighted average assumptions were as follows:
`Six Months Ended JIle
`30.
`2014
`
`Expected volatility
`Risk-free interest me
`
`Expected dividend yield
`Fair value per performance share
`
`3
`
`30.8%
`0.6%
`
`0.0%
`54.55
`
`Rmtrietnd Stock and Unit:
`
`Duringthesixmonthsendedlune 30,2015,0.8millionrestrictedstockandunitsweregrantedtocertainernployeesandnon—ernployeedirectorsprimarily
`aspartoftheZOlS annualgiant Hoqiiraissuesmshicfldshckmdfltsthflgenufllywstmapproxnnatelyeqinlmoumsmthefirst,secondmde
`anniversariesofthegrantdate. Theweightedaveragegrantdatefairvalueofresnictedstockmdmitsglantedforthesixmnthsuidedlmew,2015 and
`2014 was $87.51 and $42.96perrestricted award, respectively.
`
`Note 24 — Commitments and Contingencies
`
`Hospira is involved in various claims and legal proceedings, as well as product liability daims, regulatory matters and proceedings relatedto Hospira's
`business, including in some instances when Howira operated as part ofAbbott Laboratories.
`
`Picador" Matters
`
`Hospira is currently involved in two lawsuits relating to the ability of Eurohealth International Sarl and West-Ward Pharmacartical Corp. (collectively
`'Eurohealth") to market generic forms ofHospira's Precedex‘n‘ (dexmedetomidine hydrochloride), a proprietary sedation agent. The two cases, No.
`l4-cv-00487 (filed April 18, 2014) and No. l4—cv-01008 (filed August 1, 2014), are both pending in US. District Court for the District ofDelaware and are
`based on Eurohealth's ANDAs filed with the FDA for generic versions ofPrecedexT", one ofwhich is apremix product. Hospira seeks ajudgment of
`infringement based on the claims ofUS. Patent No. 6,716,867, injunctive reliefand costs. Eurohealth International Sarl purchmd the assets of Ben Venue
`Laboratories, Inc. d/b/a Redford laboratories. West-Ward Pharmaceutical Corp. is Eurohealth's agent in the Us.
`
`On August 18, 2014, the FDA allowed a carved—out label for generic competitors of Precedexn‘. Immediately following tint decision, Mylan Institutional,
`LLC and Par Sterile Producs, LLC launched generic versions of Precedexm concentrate. On August 19, 2014, Hospira initiated litigation over the FDA's
`actiom which was settled on October 28, 2014.
`
`haddifimwmemefiouslyrepmudseulmms,flowiramtaddrmngmexcondmof2015 intoconfidentialsettlementagreementsregarding
`Precedex‘" patent-related litigation with Sun Pharmaceutical Industries, Inc. and Glandth Ltd., in April 2015, Akorrn Inc, in May 2015, and Actavis
`US Holding LLC mdAcmvis LLC, in May 2015.
`
`Hospiraalsohasreeeiveda'TaragiaphIV" noticefiomAnmealPharmaceuticalsrelatedtopatents associatedwith Hospira'spremixPrecedexmproduct.
`Hospirahas45 days fromthedatethenoticewasreeeivedtoinitiatealawsuit alleging infiingementofthe variouspatentsincludedinthenotice. Sucha
`lawsuit would resultin a 30 month stay of approval Earn the FDA ofAmneal's proposed generic product.
`
`StaclederLitigation
`
`HospiraandrnembersofitsBoardofDirectorsarenamedasdefendmtsmfivechssacfimhwsmsfiledintheDdawamCMofChancuyalkging
`breachesoffiduciarydutyinconnectionwiththeMergerAgreanenLPfizerandMagerSubarealsonamedasdefmdants.Thehwsuits,whichseekto
`enjointheproposedtransaction, allegegmaaflyfliatflieMaguAgemmtresulndfiommmfiirproeessandfaflswmaxinuuvaluforHospira
`stockholders. Thelawsuitswerefiledbythefoflowmgnamedplainfifis,mbehalfofflremsehesmdaflotherssnnflm1ysihute¢RobertJ.CaseyI[,
`Samuel Montini, CharlesZimmerman, Jason Chenand Patricia Takach.
`
`24
`
`Petition for Inter Partes Review of US 8,338,470
`Amneal Pharmaceuticals LLc — Exhibit 1037 - Page 24
`
`

`

`HOSPIRA INC (HSP) - lO—Q Quarterly SEC Filing for the Quarter
`
`http://www.stockpup.com/cornpanies/HSP/10-Q.ht1nl
`
`Table of Contents
`
`Regulatory Matters
`
`Hospira'sbusinessesaresubjecttoregulatory inspectionsbyregulatoryauthoritiesacrosstheglobe. Suchregulatory inspections mayleadtoobservations
`(commonly referred to as Form 483 observations in the US), lmtitled letters, warning letters or similar correspondence, wllmtary or involuntary product
`recalls, consent decrees, injunctions to halt manufacture and distribution ofproducts, seizures ofviolative products, import and export bans or restrictions,
`monetary sanctions, delays inproduct approvalsorclearances, civilpenaltios, criminalprosecution and otherrestrictions onoperations.
`
`HospirahasreoeivedwarninglettersfiomtheFDA relatedtomattersafi'ectingits pharmaceuticalmanufacturing l'acilityinMulgrave, Victoria, Australia,
`pharmaceutical anddevice manufacunmg ficilities inClaytzonandRockyMount, North Carolina, it device manufacturing facility inLaAurorade
`Heredia,CostaRica,itphxmxeuficdmamrficnuingficflflymlnmgamrkomhdiaitdevieequdflysystunsandgovernanceinLakeForesLIllinois
`anditspharmaceuticalmanufictmingfidlityinLiscateJtaly.TheCompmyhasrespondedfirflxandmanmdymmnecmfliesewmleflas.Byletkr
`datedApril16,2015,theFDAadvisedHospirathatithadeompleteditsevahiationoftheCompanY'soorrediveactionsinresponsetotheAprilZOlO
`warning letter relatingtoI-Iospira'sRockyMountandClayton, North Carolina, pharmaceutical mamrficturing facilities.
`
`TheremediationplansinresponsetothewarninglettersinvolvecmmimtbyHospnammhmitquahtysysmmodrwt,facififies,unployee
`training, qualityproeessesandproeedures,andtechnology. WhileHospira continues implementing it remediationphnstheplansaresubjecttoupdateand
`revisionbasedonissuesencoimteredduringtheremediationprooess,monfinfliermteracnonwiflrflieFDAoroflierregidatorybodies.HospnacannoL
`however, giveanyassmancesastotheexpecteddateofresolutionofthemattersidentifiedinthewamingletters.
`
`Environmental Mattm
`
`India’s National Green Tribunal ("NGT") and the Maharashtra Pollution Control Board ("MPCB') are actively reviewing various industrial facilities in the
`vieinityofAurangabad, India to determinewhetherthose facilities have contributedtoalleged groundwaterand soil contamination inthe area OnJuly 15,
`2015, theNGT issuedan orderdirecting Hospiralndia, asthe ownerofamanui'acturing facilityinAurangabad, andthe unrelatedowners ofother ficilities,
`todepositinescrowanamountuptoapproximatelySZD million each. Adepositbyacompanywouldbeapphedtoanyreqlnredcostofremediationif
`that company is determined to have responsibility for the alleged contamination. Subsequent to the NGT order, MPCB ordered the immediate closure of
`Hospira India’s Aurangabad facility; however, based on Hospira India's application, the NGT stayed the closure order until at least August 24, 2015, when
`afurtherhearingisscheduled TheNGTalsoredimedflieesaowdepositmeosrnnIndiatoapproximatelyms
`Hospiracontinuestoevaluate its
`response with local counsel, local environmental consultant and local governmental consultants. A prolonged closure ofthe Aurangabad facility would
`afl'ect production at that facility, as well as production at Hospira India's IrungattukottaL India facility, and could have a material adverse effect on
`Hospira’s result of operations.
`
`Litigation Exposure Evaluation
`
`Hospira's litigation exposure, including product liability claims, is evaluated each reporting period. Hospira's accruals, which are not significant at June 30,
`2015 andDecember 31, 2014, arethebestestimateofloss. Baseduponinformationthatiscuirently available, managementbelieves thatthe likelihoodofa
`matuial loss in excess ofrecognized amounts is remote.
`
`Additionallegalproceedingsmayoocurthatmayresfltinachangeintheestimatedaccnralsrecogiizedbyflospira. Itisnot feasibletopredictmeoutcome
`ofsuchproceedingswhhcathtyanddierecanbenoassmaneedntflieniflfimate dispositionwillnothaveamaterialadverseefl'ectonfloana'sfinaucial
`position, cash flows orresults of operations.
`
`Note 25 — Segment Information
`
`Hospira conducts operations worldwide and is managed in three reportable segments: Americas, EMEA and APAC. The America reportable segment
`includes three operating segment, die U.S., Canada and Latin America; the Em reportable segment includes one operating segment, Europe, the Middle
`EastandAfiica; andthe APACreportable segmentinchrdestwo operating segment, Asia andJapan andAustraIiaandNewZealand Inallsegments,
`Hospira sells a broad line ofproduct, including Specialty Injectable Pharmaceuticals, Medication Managemmt and ME Pharmaceuticals. Specialty
`Injectable Pharmaceuticals include generic injectables, proprietary specialty injectables and, in certain market, biosimilars. Medication Management
`includes infusion pumps, related sofiware and services, dedicated
`set, gravity
`set and other device product Other
`Pharmaceuticals include large volume I.V. solutions, nutritionals and contract mamrfacturing.
`
`Hospira's Imderlying accounting records are maintained on a legal-entity basis for government and public reporting requirement. Segment disclosures are
`on a performance basis consistent with internal managemmt reporting. For intanal management reporting, intersegment transfers of inventory are
`recognized at standard cost and are not a measure of segment income from operations. The cost ofcertain corporate fimctions, stock-based compensation
`Interestexpenseandoflierincomemetthatbenefitthemtire organinfionarenotallocated'l‘hefollowing segment informationhasbeenpreparedin
`accordance with the internal accounting policies ofI-Iospira as described in "PartII, Item 8. Financial Statement and Supplementary Data,Note1" in
`Hospira's 2014 Form lO-K.
`
`Reportable segment information:
`
`The table below presents information about Hospira's reportable segments for the three months ended June 30:
`
`3
`
`3
`
`(dolhl's ll milrols)
`Americas
`
`EMEA
`APAC
`
`Total reportable segment
`Corporate functions
`Stock—based compensation
`Income From Operations
`Intuest omense and Other income, net
`
`I'm“ M” I'm“ Tu“
`
`Net Sales
`
`2015
`
`201-1
`
`Income From Operations
`2015
`201-1
`
`964 4
`
`3
`
`913.2
`
`s
`
`273 0
`
`3
`
`129.1
`90.1
`
`132.7
`89 9
`
`1,183.6
`
`3
`
`1,135.8
`
`(19 7)
`6 9
`
`260.2
`(26.6)
`(15.0)
`218.6
`(12.6)
`
`136 6
`
`(11 7)
`12 2
`
`137.1
`(19.9)
`(17.7)
`99.5
`(18.4)
`
`8” 'ew of us 8,338,470
`W‘' ' mo 3
`
`Amneal Pharmaceuticals LLc — Exhibit 1037 - Page 25
`
`