Hospira to Close its Clayton Manufacturing Facility

Hospira Inc. has approved and announced a plan for the closure of its Clayton, North Carolina manufacturing facility, in the second half of 2015. The closure will include the discontinuation or transfer of the products manufactured at the site to other Hospira locations or third parties. This action results from extensive analysis of the plant, careful assessment of market needs for the products manufactured there, and available capacity within our operations network, and is part of the company’s ongoing optimization and modernization efforts.

The company estimates that this activity will result in total pre-tax charges of approximately $45 million. This includes a non-cash charge for the impairment of assets of approximately $22 million recognized in the fourth quarter of 2014, which is based on Hospira’s analysis of expected future production volume at the Clayton facility. The remaining charges are expected to be recognized through 2015 and are estimated to include: (i) approximately $15 million for cash employee-related costs, including costs for severance, retention, and other employee related assistance and other exit costs associated with the plan; and (ii) approximately $8 million in other non-cash costs, including accelerated depreciation of plant assets. The cash related charges do not include capital expenditures or product transfer costs related to establishing manufacturing operations in any other locations or offset by any potential proceeds from the sale of the existing facility and related assets.