Hospira to record up to $35 million charge for plant closure

NEW YORK—Drug maker Hospira Inc. said Monday it expects to record pretax charges of up to $35 million over the next three years as a result of its planned exit from manufacturing operations at a plant in California.

The company said last week it will stop operations at its Morgan Hill, Calif.-based plant because of higher manufacturing costs and transfer most of the operations to other locations or third parties over the next few years. As a result, the company said it expects charges of between $29 million and $35 million over the next three years, beginning in the second quarter. Of these charges, about $24 million to $30 million will be cash-related, Hospira said.

Charges do not include expenditures related to moving operations or eventual proceeds from a sale of the plant.

The Lake Forest, Ill.-based company subsequently expects annual cost savings of about $15 million beginning in 2011.

Hospira shares rose 17 cents to $41.91 in afternoon trading.