Perrigo Company (Nasdaq: PRGO; TASE) today announced results for its fourth quarter and full year endedJune 30, 2012. Perrigo operates the PBM Nutritionals infant formula plant in Georgia.
- Full-year revenue from continuing operations increased $418 million, or 15%, to a record $3.2 billion.
- GAAP income from continuing operations for the full year increased 15% to $393 million, or $4.18 per diluted share.
- Adjusted income from continuing operations for the full year increased 25% to a record $469 million, or $4.99 per diluted share.
- Record full-year cash flow from operations of $513 million.
- Fiscal fourth quarter GAAP income from continuing operations increased 25% to $107 million, or $1.14 per diluted share, while adjusted income from continuing operations increased 27% to $121 million, or $1.28 per diluted share, as revenue increased $127 million, or 18%, to $832 million.
- Management expects full-year fiscal 2013 adjusted earnings per share to be in a range of $5.30 to $5.50 per diluted share, an increase of 6% to 10% from fiscal 2012's $4.99 per diluted share.
Perrigo's Chairman and CEOJoseph C. Papacommented, "For the sixth straight year, we delivered year-over-year record sales and earnings while continuing to make investments in our facilities and production processes which we believe will further enhance our own already high standards of excellent product quality. During this fiscal year, we also announced the acquisition of CanAm Care to broaden our diabetes category offerings, multiple supply agreements for infant formula inChinaand numerous new product launches. The penetration of store brand share in the U.S. market continues to gain momentum as retailers and patients continue to turn to high quality, affordable alternatives for their healthcare needs. We look forward to another great year, with many new products in the pipeline across all segments."
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 Consolidated Statements of Income, Balance Sheets and Cash Flows.
Perrigo Company
(from continuing operations, in thousands, except per share amounts)
(see the attached Table I for reconciliation to GAAP numbers)
Fourth Quarter
Fiscal Year
2012
2011
2012
2011
Net Sales
$831,767
$704,629
$3,173,249
$2,755,029
Reported Income
$107,050
$85,570
$392,974
$340,558
Adjusted Income
$120,946
$95,418
$469,375
$375,361
Reported Diluted EPS
$1.14
$0.91
$4.18
$3.64
Adjusted Diluted EPS
$1.28
$1.02
$4.99
$4.01
Diluted Shares
94,296
93,853
94,052
93,529
Fourth Quarter Results
Net sales for the fourth quarter of fiscal 2012 were approximately$832 million, an increase of 18% compared to last year. Excluding the charges outlined in Table I at the end of this release, fourth quarter fiscal 2012 adjusted income from continuing operations was$121 million, or$1.28per diluted share, up from$95 million, or$1.02per diluted share, a year ago.
Fiscal Year Results
Net sales from fiscal 2012 were$3.2 billion, an increase of 15% over fiscal 2011. The increase was driven primarily by$245 millionof net sales attributable to the Paddock Labs and CanAm Care acquisitions and new product sales of$211 million, which excludes$6 millionof new products launched by Paddock Labs. Reported gross profit was$1.1 billion, up 16%, and reported gross margin was 34.5%, slightly up from 34.3% last year. Adjusted gross profit was$1.2 billion, up 21%, and adjusted gross margin was 37.1%, up from 35.4% last year. The gross margin improvement was driven primarily by new products and the acquisition of Paddock Labs. Reported operating margin increased 10 basis points to 17.9%, and adjusted operating margin increased 200 basis points to 21.6%. Reported income from continuing operations was$393 million, an increase of 15%. Adjusted income from continuing operations was$469 million, or an increase of 25% from fiscal 2011.
Consumer Healthcare
Consumer Healthcare segment net sales in the fourth quarter were$484 million, compared with$434 millionin the fourth quarter last year, an increase of$50 millionor 12%. The increase resulted from increased sales of existing products of$30 million(primarily in the cough/cold, analgesics and smoking cessation categories),$26 millionof new product sales (primarily in the gastrointestinal and dermatological care categories) and$10 millionattributable to sales from the CanAm Care acquisition. These increases were partially offset by a decline in sales of existing products of$12 million, primarily in the gastrointestinal and contract categories, as well as a$4 milliondecline in sales due to unfavorable changes in foreign currency exchange rates. Reported gross profit was$150 million, compared to$133 milliona year ago. Adjusted gross profit was$151 millioncompared to$134 milliona year ago. Adjusted gross margin increased 20 basis points to 31.2%. Reported operating income was$79 million, compared with$74 milliona year ago, and adjusted operating income was$82 millioncompared to$77 milliona year ago. Adjusted operating margin decreased 100 basis points to 16.9% due to higher spending on sales and marketing promotions to support new product launches and the inclusion of expenses related to the CanAm Care acquisition.
For fiscal year 2012, Consumer Healthcare net sales increased$131 millionor 8%, compared to fiscal 2011. The increase was due to new product sales of$102 million(mainly in the cough/cold, gastrointestinal, diabetes and dermatological care categories), an increase in existing product sales of$48 million(mainly in the cough/cold, feminine hygiene and smoking cessation categories) and$18 millionin sales attributable to the CanAm Care acquisition. These increases were partially offset by a decline of$34 millionin sales of existing products (mainly in the gastrointestinal, analgesics and contract manufacturing categories). Sales were negatively affected by approximately$4 milliondue to unfavorable changes in foreign currency exchange rates.
Nutritionals
The Nutritionals segment fourth quarter net sales were$135 million, compared to$123 millionlast year, an increase of 10%. This increase was due primarily to new product sales of$13 million(primarily in the infant formula category) attributable to retail shipments in advance of a plannedJuly 1stshutdown of the Company's Vermont Plant to do an SAP conversion and to prepare for the installation of a new packaging line. Reported gross profit was$38 million, compared to$37 milliona year ago. Reported operating income was$14 million, up from$12 milliona year ago while the reported operating margin increased 60 basis points. Adjusted operating income increased to approximately$22 million, up from$18 milliona year ago, as the adjusted operating margin increased 200 basis points to 16.3% due to the decision to restructure operations at the Company'sFloridafacility.
Net sales for fiscal 2012 decreased$2 millionto$501 millioncompared to fiscal 2011. Existing product sales within the infant formula category were lower due to the absence of increased demand when a competitor's product returned to the market following a prior recall. In addition, the VMS product category net sales decreased by approximately$14 milliondue primarily to SKU rationalization as a result of increased competition. These decreases were partially offset by increased sales in the infant and toddler foods product category of$13 million.
Rx Pharmaceuticals
The Rx Pharmaceuticals segment fourth quarter net sales were$157 million, compared with$92 milliona year ago, an increase of 70%. This increase was due to net sales of$58 millionfrom the Paddock Labs acquisition and new product sales of$11 million. Reported gross profit was$74 million, compared to$50 milliona year ago, while adjusted gross profit was$82 million, compared to$53 milliona year ago. Reported gross margin decreased 730 basis points to 47.1%, while the adjusted gross margin decreased 510 basis points to 52.5%, due primarily to certain pre-launch production costs, relative product mix and production variances. Reported operating income was$54 million, an increase of$16 millionfrom last year, and adjusted operating income was$64 million, compared to$41 milliona year ago. Adjusted operating margin decreased 410 basis points from last year to 40.5%.
Net sales for fiscal 2012 increased 80%, or$274 million, compared to fiscal 2011 due to net sales of$228 millionfrom the Paddock Labs acquisition, new product sales of$29 millionand growth in the base business. Reported gross margin increased 20 basis points to 47.7%, and reported operating margin increased 120 basis points to 36.2% from a year ago. Adjusted gross margin increased 660 basis points to 57.3%, and adjusted operating margin increased 780 basis points to 46.0% from a year ago.
API
The API segment reported fourth quarter net sales of$38 million, compared with$37 milliona year ago. Reported operating income increased$12 millionto$18 millioncompared to last year, while adjusted operating income increased$11 millioncompared to$7 millionlast year. Reported operating margin increased 3,010 basis points to 46.8%, while the adjusted operating margin increased 2,870 basis points to 48.0%. The performance of the API segment was favorably impacted due to a commercial agreement with a customer to supply a generic product that was launched in the fourth quarter of fiscal 2012, which unexpectedly received 180-day exclusivity status.
Net sales for fiscal 2012 increased 6%, or$10 million, compared to fiscal 2011 due to$12 millionof increased demand in the U.S. for fluticasone and$7 millionof new product sales. The Company also recognized$4 millionin sales due to the commercial agreement mentioned above. These increases were partially offset by pricing pressures on a key product of$8 million, along with a$2 millionnegative impact due to unfavorable changes in foreign currency exchange rates.
Other
Continuing operations for the Other category, consisting of the Israel Pharmaceutical and Diagnostic Products operating segment, reported fourth quarter net sales of$17 millioncompared with$18 milliona year ago. The segment reported adjusted operating income of$0.6 million, flat to last year. Net sales for fiscal 2012 increased 9% to$73 million, up from$67 milliona year ago. Adjusted operating income was$4 millioncompared to$3 millionfor fiscal 2011.
Guidance
Chairman and CEOJoseph C. Papaconcluded, "We had strong performance and execution across our businesses during fiscal 2012. With macroeconomic tailwinds blowing in our favor, we look to build on that success in fiscal 2013."
The Company expects fiscal 2013 reported earnings from continuing operations to be between$4.77 and $4.97per diluted share as compared to$4.18in fiscal 2012. Excluding the charges outlined in Table III at the end of this release, the Company expects fiscal 2013 adjusted earnings to be between$5.30 and $5.50per diluted share as compared to$4.99in fiscal 2012. This new range implies a year-over-year growth rate in adjusted earnings of 6% to 10% over fiscal 2012's adjusted earnings from continuing operations per diluted share.
Perrigo will host a conference call to discuss fiscal fourth quarter and fiscal year 2012 results at10:00 a.m. (ET)onThursday, August 16, 2012. The conference call will be available live via webcast to interested parties on the Perrigo websitehttp://www.perrigo.comor by phone 877-248-9413, International 973-582-2737, and reference ID# 10926008.A taped replay of the call will be available beginning at approximately2:00 p.m. (ET) Thursday, August 16, 2012, until midnightFriday, September 7, 2012.To listen to the replay, call 855-859-2056, International 404-537-3406, access code 10926008.
From its beginnings as a packager of generic home remedies in 1887,Allegan, Michigan-based Perrigo Company has grown to become a leading global provider of quality, affordable healthcare products. Perrigo develops, manufactures and distributes over-the-counter (OTC) and generic prescription (Rx) pharmaceuticals, infant formulas, nutritional products, dietary supplements and active pharmaceutical ingredients (API). The Company is the world's largest manufacturer of OTC pharmaceutical products for the store brand market. The Company's primary markets and locations of logistics operations have evolved over the years to includethe United States,Israel,Mexico, theUnited Kingdom,India,ChinaandAustralia. 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 endedJune 30, 2012, 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
CONSOLIDATED STATEMENTS OF INCOME
(in thousands, except per share amounts)
Fiscal Year
2012
2011
2010
Net sales
$
3,173,249
$
2,755,029
$
2,268,150
Cost of sales
2,077,651
1,810,159
1,521,917
Gross profit
1,095,598
944,870
746,233
Operating expenses
Distribution
39,122
34,684
28,322
Research and development
105,774
89,250
83,515
Selling and administration
372,721
329,698
269,974
Subtotal
517,617
453,632
381,811
Write-off of in-process research and
development
-
-
19,000
Restructuring
8,755
1,033
9,523
Total
526,372
454,665
410,334
Operating income
569,226
490,205
335,899
Interest, net
60,736
42,312
28,415
Other income, net
(3,499)
(2,661)
(1,165)
Income from continuing operations before income taxes
511,989
450,554
308,649
Income tax expense
119,015
109,996
84,215
Income from continuing operations
392,974
340,558
224,434
Income (loss) from discontinued operations,
net of tax
8,639
(1,361)
(635)
Net income
$
401,613
$
339,197
$
223,799
Earnings (loss) per share(1)
Basic
Continuing operations
$
4.22
$
3.69
$
2.46
Discontinued operations
0.09
(0.01)
(0.01)
Basic earnings per share
$
4.31
$
3.67
$
2.45
Diluted
Continuing operations
$
4.18
$
3.64
$
2.42
Discontinued operations
0.09
(0.01)
(0.01)
Diluted earnings per share
$
4.27
$
3.63
$
2.41
Weighted average shares outstanding
Basic
93,219
92,313
91,399
Diluted
94,052
93,529
92,845
Dividends declared per share
$
0.3100
$
0.2725
$
0.2425
(1)The sum of individual per share amounts may not equal due to rounding.
See accompanying notes to consolidated financial statements.
PERRIGO COMPANY
CONSOLIDATED BALANCE SHEETS
(in thousands)
June 30, 2012
June 25, 2011
Assets
Current assets
Cash and cash equivalents
$
602,489
$
310,104
Accounts receivable, net
572,582
477,851
Inventories
547,455
505,576
Current deferred income taxes
45,738
30,474
Income taxes refundable
1,047
370
Prepaid expenses and other current assets
26,610
50,350
Current assets of discontinued operations
-
2,568
Total current assets
1,795,921
1,377,293
Property and equipment
Land
40,376
39,868
Buildings
343,279
324,773
Machinery and equipment
735,182
641,157
1,118,837
1,005,798
Less accumulated depreciation
(540,487)
(498,490)
578,350
507,308
Goodwill and other indefinite-lived intangible assets
820,122
644,902
Other intangible assets, net
729,253
567,573
Non-current deferred income taxes
13,444
10,531
Other non-current assets
86,957
81,614
$
4,024,047
$
3,189,221
Liabilities and Shareholders' Equity
Current liabilities
Accounts payable
$
317,341
$
343,278
Short-term debt
90
2,770
Payroll and related taxes
89,934
81,455
Accrued customer programs
116,055
91,374
Accrued liabilities
76,406
57,514
Accrued income taxes
12,905
10,551
Current portion of long-term debt
40,000
15,000
Current liabilities of discontinued operations
-
4,093
Total current liabilities
652,731
606,035
Non-current liabilities
Long-term debt, less current portion
1,329,235
875,000
Non-current deferred income taxes
24,126
10,601
Other non-current liabilities
165,310
166,598
Total non-current liabilities
1,518,671
1,052,199
Shareholders' Equity
Controlling interest:
Preferred stock, without par value, 10,000 shares
authorized
-
-
Common stock, without par value, 200,000 shares
authorized
504,708
467,661
Accumulated other comprehensive income
39,404
127,050
Retained earnings
1,306,925
934,333
1,851,037
1,529,044
Noncontrolling interest
1,608
1,943
Total shareholders' equity
1,852,645
1,530,987
$
4,024,047
$
3,189,221
Supplemental Disclosures of Balance Sheet Information
Related to Continuing Operations
Allowance for doubtful accounts
$
2,556
$
7,837
Working capital
$
1,143,190
$
772,783
Preferred stock, shares issued and outstanding
-
-
Common stock, shares issued and outstanding
93,484
92,778
See accompanying notes to consolidated financial statements.
PERRIGO COMPANY
CONSOLIDATED STATEMENTS OF CASH FLOWS
(in thousands)
Fiscal Year
2012
2011
2010
Cash Flows (For) From Operating Activities
Net income
$
401,613
$
339,197
$
223,799
Adjustments to derive cash flows
Write-off of in-process research and
development
-
-
19,000
Gain on sale of pipeline development
projects
(3,500)
-
-
(Gain) loss on sale of business
(8,639)
2,151
(750)
Restructuring and asset impairment
8,668
1,033
9,523
Depreciation and amortization
135,323
102,941
74,104
Share-based compensation
18,973
15,355
14,696
Income tax benefit from exercise of stock
options
(1,796)
(623)
(1,302)
Excess tax benefit of stock transactions
(12,893)
(17,193)
(9,860)
Deferred income taxes
27,476
(56,140)
(16,073)
Subtotal
565,225
386,721
313,137
Changes in operating assets and liabilities,
net of asset andbusiness acquisitions
and disposition
Accounts receivable
(49,349)
(107,235)
(21,766)
Inventories
5,353
(30,416)
(32,217)
Accounts payable
(23,555)
57,804
(1,558)
Payroll and related taxes
4,988
616
30,917
Accrued customer programs
(1,568)
31,440
5,142
Accrued liabilities
4,203
(32,335)
7,451
Accrued income taxes
13,746
56,216
26,310
Other
(5,667)
11,150
4,947
Subtotal
(51,849)
(12,760)
19,226
Net cash from operating activities
513,376
373,961
332,363
Cash Flows (For) From Investing Activities
Acquired research and development
-
-
(19,000)
Acquisitions of businesses, net of cash
acquired
(582,329)
2,624
(868,802)
Additions to property and equipment
(120,192)
(99,443)
(57,816)
Proceeds from sale of intangible assets and
pipeline development projects
10,500
-
-
Proceeds (return of consideration) from
sale of business
8,639
(3,558)
35,980
Acquisitions of assets
(750)
(10,750)
(10,262)
Proceeds from sales of securities
-
560
-
Net cash for investing activities
(684,132)
(110,567)
(919,900)
Cash Flows (For) From Financing Activities
Repayments of short-term debt, net
(2,680)
(6,230)
(8,771)
Borrowings of long-term debt
1,089,235
150,000
625,000
Repayments of long-term debt
(610,000)
(195,000)
(165,000)
Deferred financing fees
(5,097)
(5,483)
(5,813)
Excess tax benefit of stock transactions
12,893
17,193
9,860
Issuance of common stock
11,621
14,341
21,444
Repurchase of common stock
(8,236)
(8,308)
(71,088)
Cash dividends
(29,021)
(25,303)
(22,329)
Net cash from (for) financing activities
458,715
(58,790)
383,303
Effect of exchange rate changes on cash
4,426
(4,265)
(3,643)
Net increase (decrease) in cash and
cash equivalents
292,385
200,339
(207,877)
Cash and cash equivalents of continuing
operations, beginning of period
310,104
109,765
317,638
Cash balance of discontinued operations,
beginning of period
-
-
4
Cash and cash equivalents, end of period
$
602,489
$
310,104
$
109,765
Supplemental Disclosures of Cash Flow
Information
Cash paid/received during the year for:
Interest paid
$
53,694
$
47,455
$
53,557
Interest received
$
3,989
$
3,726
$
21,392
Income taxes paid
$
82,338
$
115,627
$
77,420
Income taxes refunded
$
910
$
1,440
$
1,433
See accompanying notes to consolidated financial statements.
PERRIGO COMPANY
CONSOLIDATED STATEMENTS OF SHAREHOLDERS' EQUITY AND COMPREHENSIVE INCOME
(in thousands, except per share amounts)
Accumulated
Common Stock
Other
Issued
Comprehensive
Comprehensive
Retained
Shares
Amount
Income (Loss)
Income (Loss)
Earnings
Balance at June 27, 2009
92,209
$
452,243
$
44,894
$
52,992
$
418,969
Net income
-
-
-
223,799
223,799
Accumulated other comprehensive income (loss):
Change in fair value of derivative financial
instruments, net of $898 tax
-
-
1,668
1,668
-
Foreign currency translation adjustments
-
-
(2,362)
(2,362)
-
Change in fair value of investment securities
-
-
(568)
(568)
-
Post-retirement liability adjustments, net of $233 tax
-
-
(432)
(432)
-
Issuance of common stock under:
Stock options
1,347
21,444
-
-
-
Restricted stock plan
200
-
-
-
-
Compensation for stock options
-
3,854
-
-
-
Compensation for restricted stock
-
10,842
-
-
-
Cash dividends, $0.2425 per share
-
-
-
-
(22,329)
Tax effectfrom stock transactions
-
11,162
-
-
-
Repurchases of common stock
(2,062)
(71,088)
-
-
-
Balance at June 26, 2010
91,694
428,457
43,200
222,105
620,439
Net income
-
-
-
339,197
339,197
Accumulated other comprehensive income (loss):
Change in fair value of derivative financial
instruments, net of $425 tax
-
-
(790)
(790)
-
Foreign currency translation adjustments
-
-
81,691
81,691
-
Change in fair value of investment securities
-
-
3,110
3,110
-
Post-retirement liability adjustments, net of $87 tax
-
-
(161)
(161)
-
Issuance of common stock under:
Stock options
781
14,341
-
-
-
Restricted stock plan
445
-
-
-
-
Compensation for stock options
-
3,794
-
-
-
Compensation for restricted stock
-
11,561
-
-
-
Cash dividends, $0.2725 per share
-
-
-
-
(25,303)
Tax effectfrom stock transactions
-
17,816
-
-
-
Repurchases of common stock
(142)
(8,308)
-
-
-
Balance at June 25, 2011
92,778
467,661
127,050
423,047
934,333
Net income
-
-
-
401,613
401,613
Accumulated other comprehensive income (loss):
Change in fair value of derivative financial
instruments, net of $5,065 tax
-
-
(9,406)
(9,406)
-
Foreign currency translation adjustments
-
-
(76,656)
(76,656)
-
Change in fair value of investment securities
-
-
(1,033)
(1,033)
-
Post-retirement liability adjustments, net of $297 tax
-
-
(551)
(551)
-
Issuance of common stock under:
Stock options
519
11,621
-
-
-
Restricted stock plan
277
-
-
-
-
Compensation for stock options
-
5,009
-
-
-
Compensation for restricted stock
-
13,964
-
-
-
Cash dividends, $0.3100 per share
-
-
-
-
(29,021)
Tax effectfrom stock transactions
-
14,689
-
-
-
Repurchases of common stock
(90)
(8,236)
-
-
-
Balance at June 30, 2012
93,484
$
504,708
$
39,404
$
313,967
$
1,306,925
See accompanying notes to consolidated financial statements.
Table I
PERRIGO COMPANY
RECONCILIATION OF NON-GAAP MEASURES
(in thousands, except per share amounts)
(unaudited)
Three Months Ended
Consolidated
June 30, 2012
June 25, 2011
% Change
GAAP
Non-GAAP Adjustments
As Adjusted
GAAP
Non-GAAP Adjustments
As Adjusted
GAAP
As Adjusted
Net sales
$ 831,767
$ -
$ 831,767
$ 704,629
$ -
$ 704,629
18 %
18 %
Cost of sales
537,896
13,446
(a)
524,450
462,295
8,392
(a)
453,903
16 %
16 %
Gross profit
293,871
13,446
307,317
242,334
8,392
250,726
21 %
23 %
Operating expenses
Distribution
9,582
-
9,582
8,962
-
8,962
7 %
7 %
Research and development
27,038
750
(b)
26,288
23,408
-
23,408
16 %
12 %
Selling and administration
94,641
5,034
(a)
89,607
85,645
4,854
(a,e)
80,791
11 %
11 %
Restructuring
1,674
1,674
(c)
-
1,033
1,033
(c)
-
62 %
-
Total
132,935
7,458
125,477
119,048
5,887
113,161
12 %
11 %
Operating income
160,936
20,904
181,840
123,286
14,279
137,565
31 %
32 %
Interest, net
15,874
-
15,874
10,594
-
10,594
50 %
50 %
Other expense (income), net
722
-
722
(716)
-
(716)
-
-
Income from continuing operations before income taxes
144,340
20,904
165,244
113,408
14,279
127,687
27 %
29 %
Income tax expense
37,290
7,008
(d)
44,298
27,838
4,431
(d)
32,269
34 %
37 %
Income from continuing operations
$ 107,050
$ 13,896
$ 120,946
$ 85,570
$ 9,848
$ 95,418
25 %
27 %
Diluted earnings per share from continuing operations
$ 1.14
$ 1.28
$ 0.91
$ 1.02
25 %
25 %
Diluted weighted average shares outstanding
94,296
94,296
93,853
93,853
Selected ratios as a percentage of net sales
Gross profit
35.3 %
36.9 %
34.4 %
35.6 %
Operating expenses
16.0 %
15.1 %
16.9 %
16.1 %
Operating income
19.3 %
21.9 %
17.5 %
19.5 %
Fiscal Year Ended
Consolidated
June 30, 2012
June 25, 2011
% Change
GAAP
Non-GAAP Adjustments
As Adjusted
GAAP
Non-GAAP Adjustments
As Adjusted
GAAP
As Adjusted
Net sales
$ 3,173,249
$ -
$ 3,173,249
$ 2,755,029
$ -
$ 2,755,029
15 %
15 %
Cost of sales
2,077,651
82,243
(a,f)
1,995,408
1,810,159
30,663
(a)
1,779,496
15 %
12 %
Gross profit
1,095,598
82,243
1,177,841
944,870
30,663
975,533
16 %
21 %
Operating expenses
Distribution
39,122
-
39,122
34,684
-
34,684
13 %
13 %
Research and development
105,774
(2,750)
(b,g)
108,524
89,250
-
89,250
19 %
22 %
Selling and administration
372,721
29,110
(a,h)
343,611
329,698
19,358
(a,i)
310,340
13 %
11 %
Restructuring
8,755
8,755
(c)
-
1,033
1,033
(c)
-
748 %
-
Total
526,372
35,115
491,257
454,665
20,391
434,274
16 %
13 %
Operating income
569,226
117,358
686,584
490,205
51,054
541,259
16 %
27 %
Interest, net
60,736
-
60,736
42,312
-
42,312
44 %
44 %
Other income, net
(3,499)
-
(3,499)
(2,661)
-
(2,661)
31 %
31 %
Income from continuing operations before income taxes
511,989
117,358
629,347
450,554
51,054
501,608
14 %
25 %
Income tax expense
119,015
40,957
(d)
159,972
109,996
16,251
(d)
126,247
8 %
27 %
Income from continuing operations
$ 392,974
$ 76,401
$ 469,375
$ 340,558
$ 34,803
$ 375,361
15 %
25 %
Diluted earnings per share from continuing operations
$ 4.18
$ 4.99
$ 3.64
$ 4.01
15 %
24 %
Diluted weighted average shares outstanding
94,052
94,052
93,529
93,529
Selected ratios as a percentage of net sales
Gross profit
34.5 %
37.1 %
34.3 %
35.4 %
Operating expenses
16.6 %
15.5 %
16.5 %
15.8 %
Operating income
17.9 %
21.6 %
17.8 %
19.6 %
(a) Deal-related amortization
(b) Net charge related to acquired R&D and proceeds from sale of IPR&D projects
(c) Restructuring charges related to Florida
(d) Total tax effect for non-GAAP pre-tax adjustments
(e) Acquisition costs of $832
(f) Inventory step-up of $27,179
(g) Proceeds from sale of pipeline development projects of $3,500
(h) Acquisition-related and severance costs of $9,381
(i) Acquisition costs of $3,243
Table II
PERRIGO COMPANY
REPORTABLE SEGMENTS
RECONCILIATION OF NON-GAAP MEASURES
(in thousands)
(unaudited)
Three Months Ended
Consumer Healthcare
June 30, 2012
June 25, 2011
% Change
GAAP
Non-GAAP Adjustments
As Adjusted
GAAP
Non-GAAP Adjustments
As Adjusted
GAAP
As Adjusted
Net sales
$ 483,982
$ -
$ 483,982
$ 433,813
$ -
$ 433,813
12 %
12 %
Cost of sales
333,925
1,008
(a)
332,917
300,429
1,031
(a)
299,398
11 %
11 %
Gross profit
150,057
1,008
151,065
133,384
1,031
134,415
13 %
12 %
Operating expenses
70,746
1,419
(a)
69,327
59,204
2,265
(a,b)
56,939
19 %
22 %
Operating income
$ 79,311
$ 2,427
$ 81,738
$ 74,180
$ 3,296
$ 77,476
7 %
6 %
Selected ratios as a percentage of net sales
Gross profit
31.0 %
31.2 %
30.7 %
31.0 %
Operating expenses
14.6 %
14.3 %
13.6 %
13.1 %
Operating income
16.4 %
16.9 %
17.1 %
17.9 %
Fiscal Year Ended
Consumer Healthcare
June 30, 2012
June 25, 2011
% Change
GAAP
Non-GAAP Adjustments
As Adjusted
GAAP
Non-GAAP Adjustments
As Adjusted
GAAP
As Adjusted
Net sales
$ 1,815,788
$ -
$ 1,815,788
$ 1,684,938
$ -
$ 1,684,938
8 %
8 %
Cost of sales
1,255,595
4,046
(a)
1,251,549
1,153,548
3,445
(a)
1,150,103
9 %
9 %
Gross profit
560,193
4,046
564,239
531,390
3,445
534,835
5 %
5 %
Operating expenses
264,540
5,267
(a)
259,273
238,293
5,975
(a,b)
232,318
11 %
12 %
Operating income
$ 295,653
$ 9,313
$ 304,966
$ 293,097
$ 9,420
$ 302,517
1 %
1 %
Selected ratios as a percentage of net sales
Gross profit
30.9 %
31.1 %
31.5 %
31.7 %
Operating expenses
14.6 %
14.3 %
14.1 %
13.8 %
Operating income
16.3 %
16.8 %
17.4 %
18.0 %
Three Months Ended
Nutritionals
June 30, 2012
June 25, 2011
% Change
GAAP
Non-GAAP Adjustments
As Adjusted
GAAP
Non-GAAP Adjustments
As Adjusted
GAAP
As Adjusted
Net sales
$ 135,335
$ -
$ 135,335
$ 123,130
$ -
$ 123,130
10 %
10 %
Cost of sales
96,963
3,021
(a)
93,942
85,668
3,000
(a)
82,668
13 %
14 %
Gross profit
38,372
3,021
41,393
37,462
3,000
40,462
2 %
2 %
Operating expenses
24,583
5,289
(a,c)
19,294
25,596
2,789
(a)
22,807
(4)%
(15)%
Operating income
$ 13,789
$ 8,310
$ 22,099
$ 11,866
$ 5,789
$ 17,655
16 %
25 %
Selected ratios as a percentage of net sales
Gross profit
28.4 %
30.6 %
30.4 %
32.9 %
Operating expenses
18.2 %
14.3 %
20.8 %
18.5 %
Operating income
10.2 %
16.3 %
9.6 %
14.3 %
Fiscal Year Ended
Nutritionals
June 30, 2012
June 25, 2011
% Change
GAAP
Non-GAAP Adjustments
As Adjusted
GAAP
Non-GAAP Adjustments
As Adjusted
GAAP
As Adjusted
Net sales
$ 501,026
$ -
$ 501,026
$ 503,349
$ -
$ 503,349
(0)%
(0)%
Cost of sales
371,292
14,913
(a)
356,379
343,997
11,999
(a)
331,998
8 %
7 %
Gross profit
129,734
14,913
144,647
159,352
11,999
171,351
(19)%
(16)%
Operating expenses
96,711
23,217
(a,d)
73,494
91,312
11,173
(a)
80,139
6 %
(8)%
Operating income
$ 33,023
$ 38,130
$ 71,153
$ 68,040
$ 23,172
$ 91,212
(51)%
(22)%
Selected ratios as a percentage of net sales
Gross profit
25.9 %
28.9 %
31.7 %
34.0 %
Operating expenses
19.3 %
14.7 %
18.1 %
15.9 %
Operating income
6.6 %
14.2 %
13.5 %
18.1 %
Three Months Ended
Rx Pharmaceuticals
June 30, 2012
June 25, 2011
% Change
GAAP
Non-GAAP Adjustments
As Adjusted
GAAP
Non-GAAP Adjustments
As Adjusted
GAAP
As Adjusted
Net sales
$ 156,975
$ -
$ 156,975
$ 92,467
$ -
$ 92,467
70 %
70 %
Cost of sales
83,019
8,532
(a)
74,487
42,155
2,923
(a)
39,232
97 %
90 %
Gross profit
73,956
8,532
82,488
50,312
2,923
53,235
47 %
55 %
Operating expenses
19,650
750
(e)
18,900
12,039
-
12,039
63 %
57 %
Operating income
$ 54,306
$ 9,282
$ 63,588
$ 38,273
$ 2,923
$ 41,196
42 %
54 %
Selected ratios as a percentage of net sales
Gross profit
47.1 %
52.5 %
54.4 %
57.6 %
Operating expenses
12.5 %
12.0 %
13.0 %
13.0 %
Operating income
34.6 %
40.5 %
41.4 %
44.6 %
(a) Deal-related amortization
(b) Restructuring charges of $1,033 related to Florida
(c) Restructuring charges of $1,674 related to Florida
(d) Restructuring charges of $8,755 related to Florida
(e) Net charge related to acquired R&D and proceeds from sale of IPR&D projects
(f) Inventory step-up of $27,179
(g) Proceeds from sale of pipeline development projects of $3,500
(h) Severance costs of $3,755
Table II (Continued)
PERRIGO COMPANY
REPORTABLE SEGMENTS
RECONCILIATION OF NON-GAAP MEASURES
(in thousands)
(unaudited)
Fiscal Year Ended
Rx Pharmaceuticals
June 30, 2012
June 25, 2011
% Change
GAAP
Non-GAAP Adjustments
As Adjusted
GAAP
Non-GAAP Adjustments
As Adjusted
GAAP
As Adjusted
Net sales
$ 617,389
$ -
$ 617,389
$ 343,717
$ -
$ 343,717
80 %
80 %
Cost of sales
323,115
59,607
(a,f)
263,508
180,345
10,958
(a)
169,387
79 %
56 %
Gross profit
294,274
59,607
353,881
163,372
10,958
174,330
80 %
103 %
Operating expenses
71,076
1,005
(e,g,h)
70,071
43,008
-
43,008
65 %
63 %
Operating income
$ 223,198
$ 60,612
$ 283,810
$ 120,364
$ 10,958
$ 131,322
85 %
116 %
Selected ratios as a percentage of net sales
Gross profit
47.7 %
57.3 %
47.5 %
50.7 %
Operating expenses
11.5 %
11.3 %
12.5 %
12.5 %
Operating income
36.2 %
46.0 %
35.0 %
38.2 %
Three Months Ended
API
June 30, 2012
June 25, 2011
% Change
GAAP
Non-GAAP Adjustments
As Adjusted
GAAP
Non-GAAP Adjustments
As Adjusted
GAAP
As Adjusted
Net sales
$ 38,435
$ -
$ 38,435
$ 36,817
$ -
$ 36,817
4 %
4 %
Cost of sales
12,462
482
(a)
11,980
21,887
976
(a)
20,911
(43)%
(43)%
Gross profit
25,973
482
26,455
14,930
976
15,906
74 %
66 %
Operating expenses
8,002
-
8,002
8,784
-
8,784
(9)%
(9)%
Operating income
$ 17,971
$ 482
$ 18,453
$ 6,146
$ 976
$ 7,122
192 %
159 %
Selected ratios as a percentage of net sales
Gross profit
67.6 %
68.8 %
40.6 %
43.2 %
Operating expenses
20.8 %
20.8 %
23.9 %
23.9 %
Operating income
46.8 %
48.0 %
16.7 %
19.3 %
Fiscal Year Ended
API
June 30, 2012
June 25, 2011
% Change
GAAP
Non-GAAP Adjustments
As Adjusted
GAAP
Non-GAAP Adjustments
As Adjusted
GAAP
As Adjusted
Net sales
$ 165,782
$ -
$ 165,782
$ 155,717
$ -
$ 155,717
6 %
6 %
Cost of sales
78,618
1,989
(a)
76,629
87,317
2,503
(a)
84,814
(10)%
(10)%
Gross profit
87,164
1,989
89,153
68,400
2,503
70,903
27 %
26 %
Operating expenses
31,639
-
31,639
30,581
-
30,581
3 %
3 %
Operating income
$ 55,525
$ 1,989
$ 57,514
$ 37,819
$ 2,503
$ 40,322
47 %
43 %
Selected ratios as a percentage of net sales
Gross profit
52.6 %
53.8 %
43.9 %
45.5 %
Operating expenses
19.1 %
19.1 %
19.6 %
19.6 %
Operating income
33.5 %
34.7 %
24.3 %
25.9 %
Three Months Ended
Other
June 30, 2012
June 25, 2011
% Change
GAAP
Non-GAAP Adjustments
As Adjusted
GAAP
Non-GAAP Adjustments
As Adjusted
GAAP
As Adjusted
Net sales
$ 17,040
$ -
$ 17,040
$ 18,402
$ -
$ 18,402
(7)%
(7)%
Cost of sales
11,527
403
(a)
11,124
12,156
462
(a)
11,694
(5)%
(5)%
Gross profit
5,513
403
5,916
6,246
462
6,708
(12)%
(12)%
Operating expenses
5,348
-
5,348
6,078
-
6,078
(12)%
(12)%
Operating income
$ 165
$ 403
$ 568
$ 168
$ 462
$ 630
(2)%
(10)%
Selected ratios as a percentage of net sales
Gross profit
32.4 %
34.7 %
33.9 %
36.5 %
Operating expenses
31.4 %
31.4 %
33.0 %
33.0 %
Operating income
1.0 %
3.3 %
0.9 %
3.4 %
Fiscal Year Ended
Other
June 30, 2012
June 25, 2011
% Change
GAAP
Non-GAAP Adjustments
As Adjusted
GAAP
Non-GAAP Adjustments
As Adjusted
GAAP
As Adjusted
Net sales
$ 73,264
$ -
$ 73,264
$ 67,308
$ -
$ 67,308
9 %
9 %
Cost of sales
49,031
1,688
(a)
47,343
44,952
1,758
(a)
43,194
9 %
10 %
Gross profit
24,233
1,688
25,921
22,356
1,758
24,114
8 %
7 %
Operating expenses
21,489
-
21,489
21,090
-
21,090
2 %
2 %
Operating income
$ 2,744
$ 1,688
$ 4,432
$ 1,266
$ 1,758
$ 3,024
117 %
47 %
Selected ratios as a percentage of net sales
Gross profit
33.1 %
35.4 %
33.2 %
35.8 %
Operating expenses
29.3 %
29.3 %
31.3 %
31.3 %
Operating income
3.7 %
6.0 %
1.9 %
4.5 %
(a) Deal-related amortization
(b) Restructuring charges of $1,033 related to Florida
(c) Restructuring charges of $1,674 related to Florida
(d) Restructuring charges of $8,755 related to Florida
(e) Net charge related to acquired R&D and proceeds from sale of IPR&D projects
(f) Inventory step-up of $27,179
(g) Proceeds from sale of pipeline development projects of $3,500
(h) Severance costs of $3,755
Table III
PERRIGO COMPANY
FY 2013 GUIDANCE AND FY 2012 EPS
RECONCILIATION OF NON-GAAP MEASURES
(unaudited)
Fiscal 2013 Guidance
FY13 reported diluted EPS range
$4.77 - $4.97
Deal-related amortization(1)
0.53
FY13 adjusted diluted EPS range
$5.30 - $5.50
Fiscal 2012*
FY12 reported diluted EPS from continuing operations
$4.18
Deal-related amortization(1)
0.523
Charge associated with inventory step-up
0.181
Charges associated with acquisition-related and severance costs
0.062
Charges associated with restructuring
0.061
Net charge associated with acquired R&D and proceeds from sale of IPR&D projects
0.012
Earnings associated with sale of pipeline development projects
(0.026)
FY12 adjusted diluted EPS from continuing operations
$4.99
(1) Amortization of acquired intangible assets related to business combinations and asset acquisitions
*All information based on continuing operations.
SOURCE:ALLEGAN, Mich.,Aug. 16, 2012/PRNewswire/ --Perrigo Company