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Hospira Management Discusses Q4 2011 Results - Earnings Call Transcript

Our adjusted effective tax rate in the quarter was 15.2%. This was due to a lower amount of taxable income in higher tax rate jurisdictions, and this brought our year-to-date effective tax rate to 20.5%, which was consistent with the effective tax rate last year.

Finally, adjusted diluted earnings per share for the fourth quarter was $0.51 compared to $0.77 last year. And full year 2011 adjusted EPS on a diluted basis was $3.04.

Turning to cash flow. Cash flow from operations for the full year was $434 million compared to $315 million generated in 2010. The increase this year is a result of lower comparative investments in working capital, which primarily reflect the timing of receivables collections and charge-back payments related to U.S. sales of oxaliplatin, as well as a discretionary pension contribution that we made in 2010.

Capital spending was $291 million compared to $209 million in 2010. The increase reflects investments we are making relative to capacity expansion efforts, primarily at our pharmaceutical plant under construction in Visag, India.

Our cash balance at December 31 was $598 million, up from $527 million at September 30, but down slightly from $604 million at the end of last year.

Finally, on goodwill impairment. Although we perform our goodwill impairment test annually, as of September 30, the decrease in our stock price in the fourth quarter and updated projections for 2012, triggered an interim goodwill impairment test during the fourth quarter of 2011. As a result, we recognized additional goodwill impairment charges for the EMEA and APAC reporting segments.

Now before moving to guidance, Sumant will provide a brief update to our drug pipeline as we traditionally do at this time of the year. Sumant?

Sumant Ramachandra

Thanks, Tom. Good morning, everyone. You may recall that on Investor Day in September of 2011, we revised how we present the pipeline to better reflect our strategy of globally expanding Hospira's portfolio. Instead of counting only the launches in limited major markets, as we previously did, we are now including all countries where the compounds in our pipeline are expected to launch. So for today's update, which is based on our pipeline as of December 31, 2011, is relative to the pipeline we discussed with you on Investor Day which was as of June 30, 2011.

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