Perrigo Company : Perrigo Reports Record Third Quarter Revenue And Earnings And Raises Full Year EPS Guidance
05/08/2012| 08:15am US/Eastern
Recommend:
ALLEGAN, Mich., May 8, 2012 /PRNewswire/ -- Perrigo Company (Nasdaq: PRGO; TASE) today announced results for its third quarter ended March 31, 2012.
(Logo: http://photos.prnewswire.com/prnh/20120301/DE62255LOGO)
Perrigo's Chairman and CEO Joseph C. Papa commented, "We are very pleased with our record fiscal third quarter revenue and earnings performance. These strong results were made possible by the continued operational excellence of the team. Headlining this execution were the $64 million in new product launches, mostly in OTC, which keep us on track to exceed our $190 million new product sales goal for fiscal 2012. Global Consumer Healthcare sales grew 6% in the quarter, driven mainly by U.S. OTC sales growth of 8% despite a historically mild cough/cold and flu season. In Nutritionals, we were able to improve adjusted margins from last quarter as measures put in place partially offset the volatility in raw materials pricing. Our Rx segment continues to exceed our expectations in both our existing and newly acquired business. We are continuing to make quality healthcare more affordable to consumers around the globe."
Refer to Table I at the end of this press release for adjustments in the current year and prior year periods and additional non-GAAP disclosure information.
The Company's reported results are summarized in the attached Condensed Consolidated Statements of Income, Balance Sheets and Statements of Cash Flows.
Perrigo Company
(from continuing operations, in thousands, except per share
amounts)
(see the attached Table I for reconciliation to GAAP numbers)
Third Quarter Nine Months
------------- -----------
2012 2011 2012 2011
Net Sales $778,017 $691,563 $2,341,482 $2,050,400
Reported
Income $115,727 $91,531 $285,924 $254,988
Adjusted
Income $132,679 $100,212 $348,430 $279,944
Reported
Diluted
EPS $1.23 $0.98 $3.04 $2.73
Adjusted
Diluted
EPS $1.41 $1.07 $3.71 $3.00
Diluted
Shares 94,124 93,549 94,028 93,371
Third Quarter Results
Net sales for the third quarter of fiscal 2012 were $778 million, an increase of 13% over fiscal 2011. The increase was driven primarily by $70 million of net sales attributable to the Paddock Laboratories, Inc. (Paddock) and CanAm Care, LLC acquisitions and new product sales of $64 million, partially offset by decreases in sales of certain existing products, primarily in the Consumer Healthcare and Nutritionals segments. Reported income from continuing operations was approximately $116 million, or $1.23 per diluted share, an increase over $92 million, or $0.98 per diluted share, a year ago. Excluding charges as outlined in Table I at the end of this release, third quarter fiscal 2012 adjusted income from continuing operations was $133 million, or $1.41 per diluted share, up 32% over fiscal 2011. In the quarter, there was a $0.20 per diluted share tax benefit as a result of the closing of various tax audits and statutory expirations. Reported gross margin increased 130 basis points to 35.9%, while adjusted gross margin increased 190 basis points to 37.6%. Reported operating margin increased 100 basis points to 18.8%, while adjusted operating margin increased by 250 basis points to 22.1%.
Nine Months Results
Net sales for the first nine months of fiscal 2012 were $2,341 million, an increase of 14% over fiscal 2011. The increase was driven primarily by $177 million of net sales attributable to the Paddock and CanAm Care acquisitions and new product sales of $160 million, partially offset by decreases in sales of certain existing products, primarily in the Consumer Healthcare and Nutritionals segments. Reported gross profit was $802 million, an increase of 14% over fiscal 2011, and reported gross margin was 34.2%, as compared to 34.3% last year. Adjusted gross profit was approximately $871 million, an increase of 20% over fiscal 2011, and adjusted gross margin increased 180 basis points to 37.2%. Reported operating income was $408 million, an increase of 11% over fiscal 2011, and reported operating margin was 17.4%, as compared to 17.9% last year. Adjusted operating income was $505 million, an increase of 25% over fiscal 2011, and adjusted operating margin increased 190 basis points to 21.6%.
Consumer Healthcare
Consumer Healthcare segment net sales for the third quarter rose to $449 million from $425 million in the third quarter last year, an increase of 6%, due to new product sales of $34 million (primarily in the cough/cold and dermatological categories), an increase in sales of existing products of $5 million (primarily in the smoking cessation category), and net sales attributable to the acquisition of CanAm Care of approximately $8 million. These increases were partially offset by a decline of approximately $25 million in existing product sales due primarily to a historically mild cough/cold and flu season. Reported operating income increased by $2 million to approximately $75 million, while adjusted operating income increased by $3 million to $77 million, driven by profit contribution on new product sales. Gross and operating margins were impacted year-over-year by increased competition on a key product in the gastrointestinal category and under absorption of fixed production costs relative to lower volume output caused by a historically mild cough/cold and flu season.
Year-to-date net sales increased 6% or $81 million compared to fiscal 2011 driven by new product sales of $76 million (mainly in the cough/cold, diabetes and dermatological care categories), along with an increase in sales of existing products of approximately $29 million in the cough/cold and smoking cessation categories. These increases were partially offset by a decline of $32 million in sales of existing products within the gastrointestinal and analgesics product categories.
On January 6, 2012, the Company signed a definitive agreement to acquire substantially all of the assets of CanAm Care, a privately-held, Alpharetta, Georgia-based distributor of diabetes care products, for approximately $36 million in cash.
On January 12, 2012, the Company announced that the United States District Court for the Western District of Michigan granted summary judgment in its favor in patent litigation involving Guaifenesin Extended-Release Tablets, 600 mg, a generic version of Mucinex® tablets.
On February 14, 2012, the Company announced that it began shipping Loratadine-D 12 hour extended release tablets, the store brand equivalent to Schering-Plough's Claritin-D® 12 hour extended release tablets.
On March 1, 2012, the Company announced that it initiated market launch and made its first shipments of Minoxidil 5% Foam, comparable to Rogaine® 5% Foam Hair Regrowth Treatment, to its retail and wholesale customers.
Nutritionals
Nutritionals segment net sales for the third quarter decreased $6 million to $118 million compared to fiscal 2011 due to lower existing product sales of $27 million in the Vitamins, Minerals and Supplements (VMS) and infant formula categories. These decreases were largely offset by new product sales of $20 million, primarily in the infant formula category. The decrease in sales of existing infant formula products was primarily due to the transition to next generation formulas within the portfolio. Infant formula sales were also impacted by the absence of increased demand of approximately $8 million in net sales that the Company experienced last year as a result of a competitor's product recall, along with a decline in U.S. birth rates year-over-year, while the decrease in the VMS category was driven by increased competition. Reported operating margin decreased 1,140 basis points to 3.1%, impacted by restructuring at the Company's Florida facility disclosed last quarter. Adjusted operating margin decreased 430 basis points to 14.8% due to under absorption of fixed production costs relative to lower volume output year-over-year, increased costs of raw materials for infant formula and change in product mix.
For the first nine months of fiscal 2012, net sales decreased approximately $15 million or 4% to $366 million, compared to fiscal 2011, due to a decline in existing product sales of $72 million partially offset by new product sales of $57 million, primarily in the infant formula category.
Rx Pharmaceuticals
The Rx Pharmaceuticals segment third quarter net sales increased 84%, or $71 million, to approximately $156 million compared to fiscal 2011. This increase was due to net sales of $62 million from the Paddock acquisition as well as continued growth of $9 million in the base business. Reported operating margin increased 780 basis points to 44.7%, while adjusted operating margin increased 990 basis points to 50.2%. These increases were due to gross profit contribution from the Paddock acquisition and new product sales, along with favorable pricing on select products.
For the first nine months of fiscal 2012, net sales increased 83% or $209 million to $460 million, as compared to fiscal 2011. This increase was due to net sales of $169 million from the Paddock acquisition, new product sales of $18 million and favorable pricing on select products.
On January 23, 2012, the Company announced that it filed with the U.S. Food and Drug Administration (FDA) an Abbreviated New Drug Application (ANDA) for Azelastine Hydrochloride Nasal Spray (0.15%).
API
The API segment reported third quarter net sales of $37 million, a 10% decrease compared to fiscal 2011. The decrease was due to lower existing product sales of approximately $5 million driven by lower demand of certain products and pricing pressures on a key product. This decrease was partially offset by new product sales of $1 million. Reported operating margin increased 190 basis points to 29.4%, while adjusted operating margin increased 210 basis points to 30.8%.
For the first nine months of fiscal 2012, net sales increased 7% or $8 million to $127 million, compared to $119 million in fiscal 2011. This increase was due to new product sales of $6 million, increased sales of existing products of $1 million, and favorable changes in foreign currency exchange rates of $1 million.
On March 21, 2012, the Company announced that it received a final "Approval for Registration" letter from the Australian Therapeutic Goods Administration permitting the Company to sell generic temozolomide in Australia.
Other
Continuing operations for the Other category, consisting of the Israel Pharmaceutical and Diagnostic Products operating segment, reported third quarter net sales of $19 million, an increase of 12% compared to fiscal 2011. This increase was due to new product sales of $1 million, along with an increase in sales of existing products of $1 million. For the first nine months of fiscal year 2012, net sales were $56 million, an increase of 15% compared to fiscal 2011, driven by new product sales of $4 million and an increase in sales of existing products of approximately $4 million.
Guidance
Reported fiscal 2012 earnings from continuing operations are expected to be between $4.10 and $4.20 per diluted share. Excluding the charges outlined in Table III at the end of this release, expected fiscal 2012 adjusted earnings from continuing operations are expected to be between $4.90 and $5.00 per diluted share, up from previously announced guidance of $4.70 to $4.80 per diluted share, due to the inclusion of the $0.20 per diluted share tax benefit realized in the fiscal third quarter. This new range implies a year-over-year growth rate of adjusted earnings from continuing operations of 22% to 25% over fiscal 2011 adjusted earnings per share.
Chairman and CEO Joseph C. Papa concluded, "The strength of our diversified business model and the excellent execution by the team was clearly evident this quarter. With numerous exciting new product launches expected, we are looking forward to a strong end to the fiscal year."
Perrigo will host a conference call to discuss fiscal third quarter 2012 results at 10:00 a.m. (ET) on Tuesday, May 8, 2012. The conference call will be available live via webcast to interested parties on the Perrigo website http://www.perrigo.com or by phone 877-248-9413, International 973-582-2737, and reference ID# 69598952. A taped replay of the call will be available beginning at approximately 2:00 p.m. (ET) Tuesday, May 8, 2012, until midnight Friday, May 25, 2012. To listen to the replay, call 855-859-2056, International 404-537-3406, access code 69598952.
Perrigo Company is a leading global healthcare supplier that develops, manufactures and distributes OTC and generic prescription (Rx) pharmaceuticals, infant formulas, nutritional products, and active pharmaceutical ingredients (API). The Company is the world's largest manufacturer of OTC pharmaceutical products and infant formulas for the store brand market. The Company's primary markets and locations of manufacturing and logistics operations are the United States, Israel, Mexico, the United Kingdom and Australia. Visit Perrigo on the Internet (http://www.perrigo.com).
Note: Certain statements in this press release are forward-looking statements within the meaning of Section 21E of the Securities Exchange Act of 1934, as amended, and are subject to the safe harbor created thereby. These statements relate to future events or the Company's future financial performance and involve known and unknown risks, uncertainties and other factors that may cause the actual results, levels of activity, performance or achievements of the Company or its industry to be materially different from those expressed or implied by any forward-looking statements. In some cases, forward-looking statements can be identified by terminology such as "may," "will," "could," "would," "should," "expect," "plan," "anticipate," "intend," "believe," "estimate," "predict," "potential" or other comparable terminology. The Company has based these forward-looking statements on its current expectations, assumptions, estimates and projections. While the Company believes these expectations, assumptions, estimates and projections are reasonable, such forward-looking statements are only predictions and involve known and unknown risks and uncertainties, many of which are beyond the Company's control. These and other important factors, including those discussed under "Risk Factors" in the Company's Form 10-K for the year ended June 25, 2011, as well as the Company's subsequent filings with the Securities and Exchange Commission, may cause actual results, performance or achievements to differ materially from those expressed or implied by these forward-looking statements. The forward-looking statements in this press release are made only as of the date hereof, and unless otherwise required by applicable securities laws, the Company disclaims any intention or obligation to update or revise any forward-looking statements, whether as a result of new information, future events or otherwise.
PERRIGO COMPANY
CONDENSED CONSOLIDATED STATEMENTS OF INCOME
(in thousands, except per share amounts)
(unaudited)
Third Quarter Year-to-Date
------------- ------------
2012 2011 2012 2011
---- ---- ---- ----
Net sales $778,017 $691,563 $2,341,482 $2,050,400
Cost of sales 498,744 452,429 1,539,755 1,347,808
------- ------- --------- ---------
Gross profit 279,273 239,134 801,727 702,592
------- ------- ------- -------
Operating
expenses
Distribution 10,181 8,525 29,540 25,722
Research and
development 27,950 23,511 78,736 65,842
Selling and
administration 87,991 84,185 278,080 244,109
Restructuring 7,081 - 7,081 -
----- --- ---
Total operating
expenses 133,203 116,221 393,437 335,673
------- ------- ------- -------
Operating income 146,070 122,913 408,290 366,919
Interest, net 16,651 10,915 44,862 31,718
Other income, net (5,202) (753) (4,221) (1,945)
------ ---- ------ ------
Income from
continuing
operations
before
income taxes 134,621 112,751 367,649 337,146
Income tax
expense 18,894 21,220 81,725 82,158
------ ------ ------ ------
Income from
continuing
operations 115,727 91,531 285,924 254,988
Loss from
discontinued
operations,
net of tax - (2,446) - (1,361)
--- ------ --- ------
Net income $115,727 $89,085 $285,924 $253,627
======== ======= ======== ========
Earnings (loss)
per share (1)
Basic
Continuing
operations $1.24 $0.99 $3.07 $2.77
Discontinued
operations - (0.03) - (0.01)
--- ---
Basic earnings
per share $1.24 $0.96 $3.07 $2.75
===== ===== ===== =====
Diluted
Continuing
operations $1.23 $0.98 $3.04 $2.73
Discontinued
operations - (0.03) - (0.01)
--- ---
Diluted earnings
per share $1.23 $0.95 $3.04 $2.72
===== ===== ===== =====
Weighted average
shares
outstanding
Basic 93,330 92,459 93,152 92,175
Diluted 94,124 93,549 94,028 93,371
Dividends
declared per
share $0.0800 $0.0700 $0.2300 $0.2025
(1) The sum of individual per share amounts may not equal due to
rounding.
See accompanying notes to condensed consolidated financial statements.
PERRIGO COMPANY
CONDENSED CONSOLIDATED BALANCE SHEETS
(in thousands)
(unaudited)
March 31, 2012 June 25, 2011 March 26, 2011
-------------- ------------- --------------
Assets
Current assets
Cash and cash equivalents $554,280 $310,104 $223,237
Accounts receivable, net 560,740 477,851 464,190
Inventories 589,947 505,576 494,278
Current deferred income
taxes 51,269 30,474 22,930
Income taxes refundable 766 370 2,103
Prepaid expenses and other
current assets 33,886 50,350 50,112
Current assets of
discontinued operations - 2,568 2,797
--- ----- -----
Total current assets 1,790,888 1,377,293 1,259,647
Property and equipment 1,096,749 1,005,798 950,478
Less accumulated
depreciation (532,335) (498,490) (484,575)
-------- -------- --------
564,414 507,308 465,903
Goodwill and other
indefinite-lived
intangible assets 830,689 644,902 640,107
Other intangible assets,
net 752,600 567,573 576,436
Non-current deferred
income taxes 12,390 10,531 13,786
Other non-current assets 89,073 81,614 81,612
------ ------ ------
$4,040,054 $3,189,221 $3,037,491
========== ========== ==========
Liabilities and
Shareholders' Equity
Current liabilities
Accounts payable $307,017 $343,278 $286,795
Short-term debt - 2,770 1,180
Payroll and related taxes 74,450 81,455 71,521
Accrued customer programs 103,868 91,374 91,704
Accrued liabilities 83,886 57,514 79,485
Accrued income taxes 20,530 10,551 17,351
Current portion of long-
term debt 40,000 15,000 15,000
Current liabilities of
discontinued operations - 4,093 3,570
--- ----- -----
Total current liabilities 629,751 606,035 566,606
Non-current liabilities
Long-term debt, less
current portion 1,454,620 875,000 875,442
Non-current deferred
income taxes 19,543 10,601 11,900
Other non-current
liabilities 163,466 166,598 158,444
------- ------- -------
Total non-current
liabilities 1,637,629 1,052,199 1,045,786
Shareholders' equity
Controlling interest
shareholders' equity:
Preferred stock, without
par value, 10,000 shares
authorized - - -
Common stock, without par
value, 200,000 shares
authorized 496,320 467,661 458,811
Accumulated other
comprehensive income 75,800 127,050 109,080
Retained earnings 1,198,740 934,333 855,287
--------- ------- -------
1,770,860 1,529,044 1,423,178
Noncontrolling interest 1,814 1,943 1,921
----- ----- -----
Total shareholders' equity 1,772,674 1,530,987 1,425,099
--------- --------- ---------
$4,040,054 $3,189,221 $3,037,491
========== ========== ==========
Supplemental Disclosures
of Balance Sheet
Information
Related to Continuing
Operations
Allowance for doubtful
accounts $2,483 $7,837 $7,618
Working capital $1,161,137 $772,783 $693,814
Preferred stock, shares
issued and outstanding - - -
Common stock, shares
issued and outstanding 93,405 92,778 92,682
See accompanying notes to condensed consolidated financial statements.
PERRIGO COMPANY
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(in thousands)
(unaudited)
Year-to-Date
------------
2012 2011
---- ----
Cash Flows (For) From
Operating Activities
Net income $285,924 $253,627
Adjustments to derive cash
flows
Gain on sale of pipeline
development projects (3,500) -
Restructuring 7,081 -
Depreciation and
amortization 101,712 76,257
Share-based compensation 13,924 11,526
Loss on sale of business - 2,151
Income tax benefit from
exercise of stock options (447) 1,621
Excess tax benefit of
stock transactions (12,202) (16,256)
Deferred income taxes
(credit) 12,021 (60,845)
Subtotal 404,513 268,081
------- -------
Changes in operating
assets and liabilities,
net of business
acquisitions
Accounts receivable (28,723) (104,197)
Inventories (27,523) (31,304)
Accounts payable (43,867) 15,521
Payroll and related taxes (9,707) (9,072)
Accrued customer programs (13,755) 31,770
Accrued liabilities 17,584 (10,739)
Accrued income taxes 19,077 59,546
Other (5,979) 9,428
------ -----
Subtotal (92,893) (39,047)
------- -------
Net cash from operating
activities 311,620 229,034
------- -------
Cash Flows (For) From
Investing Activities
Proceeds from sales of
securities - 560
Return of proceeds from
sale of business - (3,558)
Acquisitions of
businesses, net of cash
acquired (582,329) 2,624
Proceeds from sale of
intangible assets and
pipeline development
projects 10,500 -
Acquisitions of assets (750) (10,000)
Additions to property and
equipment (85,715) (46,542)
Net cash for investing
activities (658,294) (56,916)
-------- -------
Cash Flows (For) From
Financing Activities
Repayments of short-term
debt, net (2,770) (7,820)
Borrowings of long-term
debt 1,089,620 150,442
Repayments of long-term
debt (485,000) (195,000)
Deferred financing fees (5,108) (5,158)
Excess tax benefit of
stock transactions 12,202 16,256
Issuance of common stock 10,040 12,476
Repurchase of common stock (7,954) (8,285)
Cash dividends (21,516) (18,779)
------- -------
Net cash from (for)
financing activities 589,514 (55,868)
------- -------
Effect of exchange rate
changes on cash 1,336 (2,778)
----- ------
Net increase in cash and
cash equivalents 244,176 113,472
Cash and cash equivalents,
beginning of period 310,104 109,765
Cash and cash equivalents,
end of period $554,280 $223,237
======== ========
Supplemental Disclosures
of Cash Flow Information
Cash paid/received during
the period for:
Interest paid $29,234 $27,759
Interest received $2,222 $2,594
Income taxes paid $53,216 $83,494
Income taxes refunded $830 $1,303
See accompanying notes to condensed consolidated financial
statements.
Table I
PERRIGO COMPANY
RECONCILIATION OF NON-GAAP MEASURES
(in thousands, except per share amounts)
(unaudited)
Three Months Ended
------------------
Consolidated March 31, 2012 March 26, 2011 % Change
-------------- -------------- --------
Non-GAAP Non-GAAP
GAAP Adjustments As Adjusted GAAP Adjustments As Adjusted GAAP As Adjusted
---- ------------ ----------- ---- ------------ ----------- ---- -----------
Net sales $778,017 $- $778,017 $691,563 $- $691,563 13 % 13 %
Cost of sales 498,744 13,505 (a) 485,239 452,429 7,703 (a) 444,726 10 % 9 %
------- ------ ------- ------- ----- -------
Gross profit 279,273 13,505 292,778 239,134 7,703 246,837 17 % 19 %
Operating expenses
Distribution 10,181 - 10,181 8,525 - 8,525 19 % 19 %
Research and development 27,950 - 27,950 23,511 - 23,511 19 % 19 %
Selling and administration 87,991 5,027 (a) 82,964 84,185 5,095 (a,d) 79,090 5 % 5 %
Restructuring 7,081 7,081 (b) - - - - - -
----- ----- --- --- --- ---
Total operating expenses 133,203 12,108 121,095 116,221 5,095 111,126 15 % 9 %
Operating income 146,070 25,613 171,683 122,913 12,798 135,711 19 % 27 %
Interest, net 16,651 - 16,651 10,915 - 10,915 53 % 53 %
Other income, net (5,202) - (5,202) (753) - (753) 591 % 591 %
------ --- ------ ---- --- ----
Income from continuing operations
before income taxes 134,621 25,613 160,234 112,751 12,798 125,549 19 % 28 %
Income tax expense 18,894 8,661 (c) 27,555 21,220 4,117 (c) 25,337 (11)% 9 %
------ ------
Income from continuing operations $115,727 $16,952 $132,679 $91,531 $8,681 $100,212 26 % 32 %
======== ======= ======== ======= ====== ========
Diluted earnings per share from
continuing operations $1.23 $1.41 $0.98 $1.07 26 % 32 %
Diluted weighted average shares
outstanding 94,124 94,124 93,549 93,549
Selected ratios as a percentage of net sales
Gross profit 35.9 % 37.6 % 34.6 % 35.7 %
Operating expenses 17.1 % 15.6 % 16.8 % 16.1 %
Operating income 18.8 % 22.1 % 17.8 % 19.6 %
Nine Months Ended
-----------------
Consolidated March 31, 2012 March 26, 2011 % Change
-------------- -------------- --------
Non-GAAP Non-GAAP
GAAP Adjustments As Adjusted GAAP Adjustments As Adjusted GAAP As Adjusted
---- ------------ ----------- ---- ------------ ----------- ---- -----------
Net sales $2,341,482 $- $2,341,482 $2,050,400 $- $2,050,400 14 % 14 %
Cost of sales 1,539,755 68,797 (a,e) 1,470,958 1,347,808 22,271 (a) 1,325,537 14 % 11 %
--------- ------ --------- --------- ------ ---------
Gross profit 801,727 68,797 870,524 702,592 22,271 724,863 14 % 20 %
Operating expenses
Distribution 29,540 - 29,540 25,722 - 25,722 15 % 15 %
Research and development 78,736 (3,500) (f) 82,236 65,842 - 65,842 20 % 25 %
Selling and administration 278,080 24,076 (a,g) 254,004 244,109 14,504 (a,h) 229,605 14 % 11 %
Restructuring 7,081 7,081 (b) - - - - - -
----- ----- --- --- --- ---
Total operating expenses 393,437 27,657 365,780 335,673 14,504 321,169 17 % 14 %
Operating income 408,290 96,454 504,744 366,919 36,775 403,694 11 % 25 %
Interest, net 44,862 - 44,862 31,718 - 31,718 41 % 41 %
Other income, net (4,221) - (4,221) (1,945) - (1,945) 117 % 117 %
------ --- ------ ------ --- ------
Income from continuing operations
before income taxes 367,649 96,454 464,103 337,146 36,775 373,921 9 % 24 %
Income tax expense 81,725 33,948 (c) 115,673 82,158 11,819 (c) 93,977 (1)% 23 %
------ ------
Income from continuing operations $285,924 $62,506 $348,430 $254,988 $24,956 $279,944 12 % 24 %
======== ======= ======== ======== ======= ========
Diluted earnings per share from
continuing operations $3.04 $3.71 $2.73 $3.00 11 % 24 %
Diluted weighted average shares
outstanding 94,028 94,028 93,371 93,371
Selected ratios as a percentage of net sales
Gross profit 34.2 % 37.2 % 34.3 % 35.4 %
Operating expenses 16.8 % 15.6 % 16.4 % 15.7 %
Operating income 17.4 % 21.6 % 17.9 % 19.7 %
(a) Deal-related amortization
(b) Restructuring charges related to Florida
(c) Total tax effect for non-GAAP pre-tax adjustments
(d) Acquisition-related costs of $1,095
(e) Inventory step-up of $27,179
(f) Proceeds from sale of pipeline development projects
(g) Acquisition-related and severance costs of $9,381
(h) Acquisition-related costs of $2,410
Table II
PERRIGO COMPANY
REPORTABLE SEGMENTS
RECONCILIATION OF NON-GAAP MEASURES
(in thousands)
(unaudited)
Three Months Ended
------------------
Consumer
Healthcare March 31, 2012 March 26, 2011 % Change
-------------- -------------- --------
Non-GAAP Non-GAAP
GAAP Adjustments As Adjusted GAAP Adjustments As Adjusted GAAP As Adjusted
---- ------------ ----------- ---- ------------ ----------- ---- -----------
Net sales $448,848 $- $448,848 $425,025 $- $425,025 6 % 6 %
Cost of sales 311,121 1,010 (a) 310,111 289,825 918 (a) 288,907 7 % 7 %
------- ----- ------- ------- --- -------
Gross profit 137,727 1,010 138,737 135,200 918 136,118 2 % 2 %
Operating expenses 63,105 1,411 (a) 61,694 62,996 1,210 (a) 61,786 0 % (0)%
------ ----- ------ ------ ------
Operating income $74,622 $2,421 $77,043 $72,204 $2,128 $74,332 3 % 4 %
======= ====== ======= ======= ====== =======
Selected ratios as a percentage
of net sales
Gross profit 30.7 % 30.9 % 31.8 % 32.0 %
Operating expenses 14.1 % 13.7 % 14.8 % 14.5 %
Operating income 16.6 % 17.2 % 17.0 % 17.5 %
Nine Months Ended
-----------------
Consumer
Healthcare March 31, 2012 March 26, 2011 % Change
-------------- -------------- --------
Non-GAAP Non-GAAP
GAAP Adjustments As Adjusted GAAP Adjustments As Adjusted GAAP As Adjusted
---- ------------ ----------- ---- ------------ ----------- ---- -----------
Net sales $1,331,806 $- $1,331,806 $1,251,125 $- $1,251,125 6 % 6 %
Cost of sales 921,670 3,038 (a) 918,632 853,119 2,414 (a) 850,705 8 % 8 %
------- ----- ------- ------- ----- -------
Gross profit 410,136 3,038 413,174 398,006 2,414 400,420 3 % 3 %
Operating expenses 193,794 3,848 (a) 189,946 179,089 3,710 (a) 175,379 8 % 8 %
Operating income 216,342 6,886 223,228 218,917 6,124 225,041 (1)% (1)%
======= ===== ======= ======= ===== =======
Selected ratios as a percentage
of net sales
Gross profit 30.8 % 31.0 % 31.8 % 32.0 %
Operating expenses 14.6 % 14.3 % 14.3 % 14.0 %
Operating income 16.2 % 16.8 % 17.5 % 18.0 %
Three Months Ended
------------------
Nutritionals March 31, 2012 March 26, 2011 % Change
-------------- -------------- --------
Non-GAAP Non-GAAP
GAAP Adjustments As Adjusted GAAP Adjustments As Adjusted GAAP As Adjusted
---- ------------ ----------- ---- ------------ ----------- ---- -----------
Net sales $117,683 $- $117,683 $124,077 $- $124,077 (5)% (5)%
Cost of sales 86,312 3,021 (a) 83,291 86,047 3,000 (a) 83,047 0 % 0 %
------ ----- ------ ------ ----- ------
Gross profit 31,371 3,021 34,392 38,030 3,000 41,030 (18)% (16)%
Operating expenses 27,697 10,697 (a,b) 17,000 20,098 2,790 (a) 17,308 38 % (2)%
------ ------ ------ ------
Operating income $3,674 $13,718 $17,392 $17,932 $5,790 $23,722 (80)% (27)%
====== ======= ======= ======= ====== =======
Selected ratios as a percentage
of net sales
Gross profit 26.7 % 29.2 % 30.7 % 33.1 %
Operating expenses 23.5 % 14.4 % 16.2 % 13.9 %
Operating income 3.1 % 14.8 % 14.5 % 19.1 %
Nine Months Ended
-----------------
Nutritionals March 31, 2012 March 26, 2011 % Change
-------------- -------------- --------
Non-GAAP Non-GAAP
GAAP Adjustments As Adjusted GAAP Adjustments As Adjusted GAAP As Adjusted
---- ------------ ----------- ---- ------------ ----------- ---- -----------
Net sales $365,691 $- $365,691 $380,219 $- $380,219 (4)% (4)%
Cost of sales 274,329 11,892 (a) 262,437 258,273 8,999 (a) 249,274 6 % 5 %
------- ------ ------- ------- ----- -------
Gross profit 91,362 11,892 103,254 121,946 8,999 130,945 (25)% (21)%
Operating expenses 72,128 17,928 (a,b) 54,200 65,772 8,384 (a) 57,388 10 % (6)%
------ ------
Operating income $19,234 $29,820 $49,054 $56,174 $17,383 $73,557 (66)% (33)%
======= ======= ======= ======= ======= =======
Selected ratios as a percentage
of net sales
Gross profit 25.0 % 28.2 % 32.1 % 34.4 %
Operating expenses 19.7 % 14.8 % 17.3 % 15.1 %
Operating income 5.3 % 13.4 % 14.8 % 19.3 %
Three Months Ended
------------------
Rx Pharmaceuticals March 31, 2012 March 26, 2011 % Change
-------------- -------------- --------
Non-GAAP Non-GAAP
GAAP Adjustments As Adjusted GAAP Adjustments As Adjusted GAAP As Adjusted
---- ------------ ----------- ---- ------------ ----------- ---- -----------
Net sales $155,591 $- $155,591 $84,383 $- $84,383 84 % 84 %
Cost of sales 70,946 8,574 (a) 62,372 43,351 2,827 (a) 40,524 64 % 54 %
------ ----- ------ ------ ----- ------
Gross profit 84,645 8,574 93,219 41,032 2,827 43,859 106 % 113 %
Operating expenses 15,051 - 15,051 9,891 - 9,891 52 % 52 %
------ ------ ----- -----
Operating income $69,594 $8,574 $78,168 $31,141 $2,827 $33,968 123 % 130 %
======= ====== ======= ======= ====== =======
Selected ratios as a percentage
of net sales
Gross profit 54.4 % 59.9 % 48.6 % 52.0 %
Operating expenses 9.7 % 9.7 % 11.7 % 11.7 %
Operating income 44.7 % 50.2 % 36.9 % 40.3 %
Nine Months Ended
-----------------
Rx Pharmaceuticals March 31, 2012 March 26, 2011 % Change
-------------- -------------- --------
Non-GAAP Non-GAAP
GAAP Adjustments As Adjusted GAAP Adjustments As Adjusted GAAP As Adjusted
---- ------------ ----------- ---- ------------ ----------- ---- -----------
Net sales $460,414 $- $460,414 $251,250 $- $251,250 83 % 83 %
Cost of sales 240,096 51,075 (a,c) 189,021 138,190 8,035 (a) 130,155 74 % 45 %
------- ------ ------- ------- ----- -------
Gross profit 220,318 51,075 271,393 113,060 8,035 121,095 95 % 124 %
Operating expenses 51,426 255 (d,e) 51,171 30,969 - 30,969 66 % 65 %
------ ------
Operating income $168,892 $51,330 $220,222 $82,091 $8,035 $90,126 106 % 144 %
======== ======= ======== ======= ====== =======
Selected ratios as a percentage
of net sales
Gross profit 47.9 % 58.9 % 45.0 % 48.2 %
Operating expenses 11.2 % 11.1 % 12.3 % 12.3 %
Operating income 36.7 % 47.8 % 32.7 % 35.9 %
(a) Deal-related amortization
(b) Restructuring charges of $7,081 related to Florida
(c) Inventory step-up of $27,179
(d) Proceeds of $3,500 from sale of pipeline development projects
(e) Severance costs of $3,755
Table II (Continued)
PERRIGO COMPANY
REPORTABLE SEGMENTS
RECONCILIATION OF NON-GAAP MEASURES
(in thousands)
(unaudited)
Three Months Ended
------------------
API March 31, 2012 March 26, 2011 % Change
-------------- -------------- --------
Non-GAAP Non-GAAP
GAAP Adjustments As Adjusted GAAP Adjustments As Adjusted GAAP As Adjusted
---- ------------ ----------- ---- ------------ ----------- ---- -----------
Net sales $36,951 $- $36,951 $41,206 $- $41,206 (10)% (10)%
Cost of sales 18,029 490 (a) 17,539 22,070 519 (a) 21,551 (18)% (19)%
------ --- ------ ------ --- ------
Gross profit 18,922 490 19,412 19,136 519 19,655 (1)% (1)%
Operating expenses 8,048 - 8,048 7,818 - 7,818 3 % 3 %
----- ----- ----- -----
Operating income $10,874 $490 $11,364 $11,318 $519 $11,837 (4)% (4)%
======= ==== ======= ======= ==== =======
Selected ratios as a percentage
of net sales
Gross profit 51.2 % 52.5 % 46.4 % 47.7 %
Operating expenses 21.8 % 21.8 % 19.0 % 19.0 %
Operating income 29.4 % 30.8 % 27.5 % 28.7 %
Nine Months Ended
-----------------
API March 31, 2012 March 26, 2011 % Change
-------------- -------------- --------
Non-GAAP Non-GAAP
GAAP Adjustments As Adjusted GAAP Adjustments As Adjusted GAAP As Adjusted
---- ------------ ----------- ---- ------------ ----------- ---- -----------
Net sales $127,347 $- $127,347 $118,900 $- $118,900 7 % 7 %
Cost of sales 66,156 1,507 (a) 64,649 65,430 1,527 (a) 63,903 1 % 1 %
------ ----- ------ ------ ----- ------
Gross profit 61,191 1,507 62,698 53,470 1,527 54,997 14 % 14 %
Operating expenses 23,637 - 23,637 21,797 - 21,797 8 % 8 %
------ ------
Operating income $37,554 $1,507 $39,061 $31,673 $1,527 $33,200 19 % 18 %
======= ====== ======= ======= ====== =======
Selected ratios as a percentage
of net sales
Gross profit 48.1 % 49.2 % 45.0 % 46.3 %
Operating expenses 18.6 % 18.6 % 18.3 % 18.3 %
Operating income 29.5 % 30.7 % 26.6 % 27.9 %
Three Months Ended
------------------
Other March 31, 2012 March 26, 2011 % Change
-------------- -------------- --------
Non-GAAP Non-GAAP
GAAP Adjustments As Adjusted GAAP Adjustments As Adjusted GAAP As Adjusted
---- ------------ ----------- ---- ------------ ----------- ---- -----------
Net sales $18,944 $- $18,944 $16,872 $- $16,872 12 % 12 %
Cost of sales 12,336 410 (a) 11,926 11,136 439 (a) 10,697 11 % 11 %
------ --- ------ ------ --- ------
Gross profit 6,608 410 7,018 5,736 439 6,175 15 % 14 %
Operating expenses 5,579 - 5,579 5,435 - 5,435 3 % 3 %
----- ----- ----- -----
Operating income $1,029 $410 $1,439 $301 $439 $740 242 % 94 %
====== ==== ====== ==== ==== ====
Selected ratios as a percentage
of net sales
Gross profit 34.9 % 37.0 % 34.0 % 36.6 %
Operating expenses 29.4 % 29.4 % 32.2 % 32.2 %
Operating income 5.4 % 7.6 % 1.8 % 4.4 %
Nine Months Ended
-----------------
Other March 31, 2012 March 26, 2011 % Change
-------------- -------------- --------
Non-GAAP Non-GAAP
GAAP Adjustments As Adjusted GAAP Adjustments As Adjusted GAAP As Adjusted
---- ------------ ----------- ---- ------------ ----------- ---- -----------
Net sales $56,224 $- $56,224 $48,906 $- $48,906 15 % 15 %
Cost of sales 37,504 1,285 (a) 36,219 32,796 1,296 (a) 31,500 14 % 15 %
------ ----- ------ ------ ----- ------
Gross profit 18,720 1,285 20,005 16,110 1,296 17,406 16 % 15 %
Operating expenses 16,141 - 16,141 15,012 - 15,012 8 % 8 %
------ ------
Operating income $2,579 $1,285 $3,864 $1,098 $1,296 $2,394 135 % 61 %
====== ====== ====== ====== ====== ======
Selected ratios as a percentage
of net sales
Gross profit 33.3 % 35.6 % 32.9 % 35.6 %
Operating expenses 28.7 % 28.7 % 30.7 % 30.7 %
Operating income 4.6 % 6.9 % 2.2 % 4.9 %
(a) Deal-related amortization
(b) Restructuring charges of $7,081 related to Florida
(c) Inventory step-up of $27,179
(d) Proceeds of $3,500 from sale of pipeline development projects
(e) Severance costs of $3,755
Table III
PERRIGO COMPANY
FY 2012 GUIDANCE AND FY 2011 EPS
RECONCILIATION OF NON-GAAP MEASURES
(unaudited)
Full Year
Fiscal 2012
Guidance*
------------
FY12 reported diluted EPS from continuing
operations range $4.10 - $4.20
Deal-related amortization (1) 0.53
Charge associated with inventory step-up 0.18
Charges associated with acquisition-related
and severance costs 0.06
Charges associated with restructuring 0.06
Earnings associated with sale of pipeline
development projects (0.03)
FY12 adjusted diluted EPS from continuing
operations range $4.90 - $5.00
=============
Fiscal 2011*
------------
FY11 reported diluted EPS from continuing
operations $3.64
Deal-related amortization (1) 0.34
Charges associated with acquisition-related
costs 0.02
Charges associated with restructuring 0.01
FY11 adjusted diluted EPS from continuing
operations $4.01
=====
(1) Amortization of acquired intangible assets related to business
combinations and asset acquisitions
*All information based on continuing
operations.
SOURCE Perrigo Company
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