Get Started for Free Contexxia identifies hard-to-find pieces of information in SEC filings. No more highlighters, no more redlining, no more poring over huge documents. HOSPIRA INC (1274057) 10-Q published on Jul 29, 2015 at 7:51 am
Reporting Period: Jun 29, 2015
In July 2015, Hospira terminated interest rate swap contracts originally entered into in December 2014 with a total notional amount of $350.0 million, which had effectively converted the interest rate on the $350.0 million principal amount of 5.20% note due in August 2020 from a fixed rate to a floating rate. At termination, these swaps were in a gain position of $2.7 million which will be recorded in earnings as a reduction of interest expense over the remaining life of the underlying debt. The cash proceeds from the termination of the swaps totaled $5.0 million in cash, including accrued interest.
Hospira is currently involved in two lawsuits relating to the ability of Eurohealth International Sarl and West-Ward Pharmaceutical Corp. (collectively "Eurohealth") to market generic forms of Hospira's Precedex™ (dexmedetomidine hydrochloride), a proprietary sedation agent. The two cases, No. 14-cv-00487 (filed April 18, 2014) and No. 14-cv-01008 (filed August 1, 2014), are both pending in U.S. District Court for the District of Delaware and are based on Eurohealth's ANDAs filed with the FDA for generic versions of Precedex™, one of which is a premix product. Hospira seeks a judgment of infringement based on the claims of U.S. Patent No. 6,716,867, injunctive relief and costs. Eurohealth International Sarl purchased the assets of Ben Venue Laboratories, Inc. d/b/a Bedford Laboratories. West-Ward Pharmaceutical Corp. is Eurohealth's agent in the U.S.
India’s National Green Tribunal ("NGT") and the Maharashtra Pollution Control Board ("MPCB") are actively reviewing various industrial facilities in the vicinity of Aurangabad, India, to determine whether those facilities have contributed to alleged groundwater and soil contamination in the area. On July 15, 2015, the NGT issued an order directing Hospira India, as the owner of a manufacturing facility in Aurangabad, and the unrelated owners of other facilities, to deposit in escrow an amount up to approximately $2.0 million each. A deposit by a company would be applied to any required costs of remediation if 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 a further hearing is scheduled. The NGT also reduced the escrow deposit for Hospira India to approximately $0.9 million. Hospira continues to evaluate its response with local counsel, local environmental consultants and local governmental consultants. A prolonged closure of the Aurangabad facility would affect production at that facility, as well as production at Hospira India’s Irungattukottai, India facility, and could have a material adverse effect on Hospira’s results of operations.
The Merger Agreement was approved by Hospira's stockholders on May 13, 2015. Consummation of the Merger is subject to the receipt of several regulatory approvals, including the expiration or termination of the applicable waiting periods under the antitrust laws of several other jurisdictions, including the U.S. and the E.U., and the absence of a company material adverse effect on Hospira, as defined in the Merger Agreement.
The Merger Agreement contains specified termination rights for Pfizer and Hospira, including a mutual termination right in the event that the Merger is not consummated by December 31, 2015, subject to extension to June 30, 2016 under certain circumstances. Hospira must pay Pfizer a $500 million termination fee (the "Termination Fee") in the event the Merger Agreement is terminated by Pfizer in certain specified circumstances. The Merger Agreement further provides that, upon termination of the Merger Agreement under certain specified circumstances, Hospira will be required to pay to Pfizer $20 million for expenses incurred or paid by or on behalf of Pfizer (with such expenses paid credited to any Termination Fee subsequently paid by Hospira).
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