Perrigo Reports Record Quarterly Revenue and Earnings
ALLEGAN, Mich., Feb. 7, 2012 /PRNewswire/ -- Perrigo Company (Nasdaq: PRGO; TASE) today announced results for its second quarter and six months ended December 31, 2011.
Perrigo's Chairman and CEO Joseph C. Papa commented, "We are very pleased with our performance this quarter. We delivered all-time record quarterly revenue, earnings and second fiscal quarter operating cash flow. Our recent Paddock Labs acquisition is performing ahead of our expectations, and our Consumer Healthcare, API and legacy Rx operations all contributed to the year over year growth. New products contributed $55 million of sales in the period, and we expect this strong momentum to continue into the second half of fiscal 2012. Adjusted operating margin for the second quarter increased 120 basis points to 21.4%. Our Consumer Healthcare segment performed well and is on track to meet our expectations for the full year."
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. Note that fiscal second quarter 2012 includes an extra week of activity.
Perrigo Company
(from continuing operations, in thousands, except per share
amounts)
(see the attached Table I for reconciliation to GAAP numbers)
Second Quarter Six Months
-------------- ----------
2012 2011 2012 2011
---- ---- ---- ----
Net Sales $838,170 $717,515 $1,563,465 $1,358,837
Reported
Income $99,739 $89,779 $170,197 $163,457
Adjusted
Income $112,431 $98,382 $215,750 $179,732
Reported
Diluted
EPS $1.06 $0.96 $1.81 $1.75
Adjusted
Diluted
EPS $1.20 $1.05 $2.30 $1.93
Diluted
Shares 94,043 93,363 93,983 93,280
Second Quarter Results
Net sales for the second quarter of fiscal 2012 were $838 million, an increase of 17% over fiscal 2011. The increase was driven primarily by $69 million attributable to the Paddock Laboratories acquisition and new product sales of $55 million. Reported income from continuing operations was $100 million, or $1.06 per share, an increase of $10 million, up from $0.96 per share a year ago. Excluding charges as outlined in Table I at the end of this release, second quarter fiscal 2012 adjusted income from continuing operations was $112 million, or $1.20 per share, up 14% over 2011.
Six Months Results
Net sales for the first half of fiscal 2012 were $1,563 million, an increase of 15% over fiscal 2011. The increase was driven primarily by $107 million of net sales attributable to the Paddock Laboratories acquisition and consolidated new product sales of approximately $96 million. Reported gross profit was $522 million, an increase of 13% over fiscal 2011, while adjusted gross profit grew 21% to $578 million over the same period. Reported operating margin decreased 120 basis points to 16.8%, while the adjusted operating margin increased 160 basis points to 21.3%.
Consumer Healthcare
Consumer Healthcare segment net sales for the second quarter were $471 million compared with $430 million for the second quarter last year, an increase of 10%. The increase resulted from new product sales of $26 million, primarily Fexofenadine and the diabetes care category, along with an increase in sales of existing products of $20 million, across many product categories. These increases were offset by a decline of $4 million in sales of certain products within the analgesics category driven by fiscal 2011's increased sales due to a key competitor being absent from the market. Net sales were also negatively impacted by approximately $2 million of unfavorable changes in foreign currency exchange rates. Reported operating income was $77 million, compared with $75 million a year ago. The reported gross margin decreased 100 basis points, while the adjusted gross margin decreased 90 basis points due to increased competitive pressures on a key gastrointestinal product.
For the first six months of fiscal 2012, Consumer Healthcare net sales increased $57 million, or 7%, compared to fiscal 2011. The increase was due to new product sales of $41 million, primarily in the cough/cold and diabetes care categories, along with an increase in sales of existing products of approximately $24 million in the cough/cold and smoking cessation categories. These increases were partially offset by a decline of $10 million in sales of existing products within the gastrointestinal category driven by competitive pressures on a key product.
On November 28, 2011, the Company announced that it received final approval from the U.S. Food and Drug Administration (FDA) for its Abbreviated New Drug Application (ANDA) for Guaifenesin Extended-Release Tablets, 600 mg.
On December 27, 2011, the Company announced that it received final approval from the FDA for its ANDA for Desloratadine tablets (5 mg).
On January 9, 2012, the Company announced that it 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.
Nutritionals
Nutritionals segment net sales for the second quarter were $128 million, compared with $133 million in fiscal 2011, a decrease of $5 million. The decrease was due to a decline in existing product sales of $26 million in the infant formula and Vitamins, Minerals and Supplements (VMS) categories. The decrease in the infant formula category was due primarily to the absence of increased demand of $12 million in net sales that the Company experienced last year as a result of a competitor's product recall. The decrease in existing products of infant formula was also due to a decline in U.S. birth rates year-over-year, while the decrease in the VMS category was driven by increased competition. These decreases were partially offset by new product sales of $21 million primarily in the infant formula category. Reported operating margin decreased 1000 basis points to 5.1%, and adjusted operating margin decreased 920 basis points to 10.2% 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 product mix.
For the first six months of fiscal 2012, net sales decreased $8 million or 3% to $248 million, compared to fiscal 2011 due to a decline in existing product sales of $45 million partially offset by new product sales of $37 million, primarily in the infant formula category.
On October 19, 2011, the Company announced it entered into a supply agreement with Founder Pharma Co., Ltd. to supply infant formula manufactured in its U.S. facilities for sale and distribution by Founder Pharma in China.
On November 8, 2011, the Company announced it entered into Cooperation and License agreements with Brilite Nutritionals (Shanghai) Co., Ltd. to supply its Bright Beginnings(TM) infant formula brand for sale and distribution in China.
On November 15, 2011, the Company announced it received FDA clearance to market and distribute the store brand Comfort Care(TM) Infant Formula, a comparable version of Gerber® GOOD START® Gentle Infant Formula.
Rx Pharmaceuticals
The Rx Pharmaceuticals segment second quarter net sales increased 82% or $80 million compared to fiscal 2011 due to net sales of $69 million from the Paddock Laboratories acquisition, legacy new product sales of $5 million, market share gains and favorable pricing on select products. Reported operating income was $72 million, an increase of $39 million from last year, while adjusted operating income increased $45 million. The reported operating margin increased 690 basis points while the adjusted operating margin increased 880 basis points.
Year-to-date net sales for fiscal 2012 increased 83% or $138 million compared to fiscal 2011 due to net sales of $107 million from the Paddock Laboratories acquisition, legacy new product sales of $10 million, market share gains and favorable pricing on select products.
On October 6, 2011, the Company announced it received tentative approval from the FDA for its ANDA for Clobetasol Propionate Emulsion Foam, 0.05%.
On October 18, 2011, the Company announced it filed with the FDA an ANDA for olopatadine hydrochloride nasal spray and that it has notified Alcon Laboratories, the owner of the New Drug Application (NDA). The filing involved contributions from the Company's partner, Impax Laboratories, Inc.
On November 1, 2011, the Company announced that its partner, PharmaForce/Luitpold Pharmaceuticals, received final approval for Epinastine HCl ophthalmic solution, 0.05%, a generic version of Elestat®.
On November 2, 2011, the Company announced it filed with the FDA a NDA for testosterone gel 1.0% and that it notified Abbott Products Inc., the owner of the Reference Listed Drug of its filing.
On November 7, 2011, the Company and its partner Synthon Pharmaceuticals, Inc. announced that the Company began shipping Levocetirizine Solution, 2.5 mg/5ml, a generic version of UCB's Xyzal® Oral Solution.
API
The API segment reported second quarter net sales of $43 million compared with $40 million a year ago, an increase of 6%. The increase was due to $1 million in higher sales of existing products and $1 million in new product sales. Reported gross profit increased 16% or $3 million compared to fiscal 2011, while the reported gross margin increased 430 basis points to 47.8%. Reported operating margin increased 340 basis points to 28.3% and adjusted operating margin increased 330 basis points to 29.5%.
For the first six months of fiscal 2012, net sales increased 16% or $13 million to $90 million, compared to fiscal 2011 due to an increase in sales of existing products of approximately $7 million, new product sales of $4 million and favorable changes in foreign currency exchange rates of $2 million. Reported operating margin increased 330 basis points to 29.5% and adjusted operating margin increased 310 basis points to 30.6%.
Other
Second quarter net sales from continuing operations for the Other category, consisting of the Israel Pharmaceutical and Diagnostic Products operating segment, increased 16% or $3 million compared to fiscal 2011 due to higher sales of existing products of $2 million, along with a $1 million increase in new product sales.
Year-to-date net sales for fiscal 2012 increased 16% or $5 million compared to fiscal 2011 driven by new product sales of approximately $3 million, an increase in existing product sales of approximately $2 million and an increase of $1 million due to favorable changes in foreign currency exchange rates.
Outlook
Chairman and CEO Joseph C. Papa concluded, "The strength across our businesses continued this quarter, driving record results. As we look forward to the second half of fiscal 2012, we expect this strength to continue. Our teams are executing on their plans, which are the foundation for sustaining our growth. New product launches including the generic versions of Mucinex®, Prevacid®, Delsym®, and Allegra® D12 are expected in the second half of our fiscal year. Our Rx Pharmaceuticals segment continues to outperform our expectations. Furthermore, we are raising the lower end of the Company's full-year adjusted earnings from continuing operations guidance by $0.05 to a range of $4.70-$4.80 per diluted share and full-year reported earnings from continuing operations to be in a range of $3.90-$4.00 per diluted share, despite expecting our full-year effective tax rate to be at the top end of the previously disclosed range. We are excited about our future."
Perrigo will host a conference call to discuss fiscal 2012 second quarter at 10:00 a.m. (ET) on Tuesday, February 7, 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# 44258931. A taped replay of the call will be available beginning at approximately 2:00 p.m. (ET) Tuesday, February 7, 2012, until midnight Friday, February 24, 2012. To listen to the replay, call 855-859-2056, International 404-537-3406, access code 44258931.
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, both 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)
Second Quarter Year-to-Date
-------------- ------------
2012 2011 2012 2011
---- ---- ---- ----
Net sales $838,170 $717,515 $1,563,465 $1,358,837
Cost of sales 543,295 468,015 1,041,011 895,383
------- ------- --------- -------
Gross profit 294,875 249,500 522,454 463,454
------- ------- ------- -------
Operating
expenses
Distribution 9,095 8,864 19,359 17,197
Research and
development 31,148 24,604 50,786 42,331
Selling and
administration 93,964 83,793 190,089 159,920
------ ------ -------
Total 134,207 117,261 260,234 219,448
------- ------- ------- -------
Operating income 160,668 132,239 262,220 244,006
Interest, net 15,641 10,716 28,211 20,803
Other expense
(income), net 752 (633) 981 (1,192)
--- ---- --- ------
Income from
continuing
operations
before
income taxes 144,275 122,156 233,028 224,395
Income tax
expense 44,536 32,377 62,831 60,938
------ ------ ------ ------
Income from
continuing
operations 99,739 89,779 170,197 163,457
Income from
discontinued
operations,
net of tax - 388 - 1,085
--- --- --- -----
Net income $99,739 $90,167 $170,197 $164,542
Earnings per
share (1)
Basic
Continuing
operations $1.07 $0.97 $1.83 $1.78
Discontinued
operations - 0.00 - 0.01
--- ---
Basic earnings
per share $1.07 $0.98 $1.83 $1.79
Diluted
Continuing
operations $1.06 $0.96 $1.81 $1.75
Discontinued
operations - 0.00 - 0.01
--- ---
Diluted
earnings per
share $1.06 $0.97 $1.81 $1.76
Weighted average
shares
outstanding
Basic 93,221 92,232 93,066 92,031
Diluted 94,043 93,363 93,983 93,280
Dividends
declared per
share $0.0800 $0.0700 $0.1500 $0.1325
(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)
December 31, June 25, December 25,
2011 2011 2010
------------- --------- -------------
Assets
Current
assets
Cash
and
cash
equivalents $531,410 $310,104 $134,779
Accounts
receivable,
net 530,178 477,851 465,257
Inventories 580,668 505,576 483,787
Current
deferred
income
taxes 47,216 30,474 28,979
Income
taxes
refundable 4,111 370 943
Prepaid
expenses
and
other
current
assets 40,509 50,350 43,253
Current
assets
of
discontinued
operations - 2,568 6,542
--- ----- -----
Total
current
assets 1,734,092 1,377,293 1,163,540
Property
and
equipment 1,066,307 1,005,798 929,232
Less
accumulated
depreciation (515,600) (498,490) (469,068)
-------- -------- --------
550,707 507,308 460,164
Goodwill
and
other
indefinite-
lived
intangible
assets 808,531 644,902 639,581
Other
intangible
assets,
net 752,595 567,573 578,766
Non-
current
deferred
income
taxes 12,330 10,531 13,314
Other
non-
current
assets 84,299 81,614 79,655
------ ------ ------
$3,942,554 $3,189,221 $2,935,020
========== ========== ==========
Liabilities
and
Shareholders'
Equity
Current
liabilities
Accounts
payable $324,349 $343,278 $289,844
Short-
term
debt - 2,770 971
Payroll
and
related
taxes 71,059 81,455 74,348
Accrued
customer
programs 116,888 91,374 90,366
Accrued
liabilities 85,661 57,514 70,424
Accrued
income
taxes 28,684 10,551 32,992
Current
portion
of
long-
term
debt 40,000 15,000 15,000
Current
liabilities
of
discontinued
operations - 4,093 14,244
--- ----- ------
Total
current
liabilities 666,641 606,035 588,189
Non-
current
liabilities
Long-
term
debt,
less
current
portion 1,452,546 875,000 875,000
Non-
current
deferred
income
taxes 9,163 10,601 16,652
Other
non-
current
liabilities 183,393 166,598 147,139
------- ------- -------
Total
non-
current
liabilities 1,645,102 1,052,199 1,038,791
Shareholders'
equity
Controlling
interest
shareholders'
equity:
Preferred
stock,
without
par
value,
10,000
shares
authorized - - -
Common
stock,
without
par
value,
200,000
shares
authorized 486,665 467,661 440,208
Accumulated
other
comprehensive
income 50,972 127,050 93,219
Retained
earnings 1,090,509 934,333 772,713
--------- ------- -------
1,628,146 1,529,044 1,306,140
Noncontrolling
interest 2,665 1,943 1,900
----- ----- -----
Total
shareholders'
equity 1,630,811 1,530,987 1,308,040
--------- --------- ---------
$3,942,554 $3,189,221 $2,935,020
========== ========== ==========
Supplemental
Disclosures
of
Balance
Sheet
Information
Related
to
Continuing
Operations
Allowance
for
doubtful
accounts $8,993 $7,837 $8,896
Working
capital $1,067,451 $772,783 $583,053
Preferred
stock,
shares
issued
and
outstanding - - -
Common
stock,
shares
issued
and
outstanding 93,287 92,778 92,297
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 $170,197 $164,542
Adjustments to derive cash
flows
Gain on sale of pipeline
development projects (3,500) -
Depreciation and amortization 67,105 50,370
Share-based compensation 8,977 7,212
Income tax benefit from
exercise of stock options 934 2,123
Excess tax benefit of stock
transactions (11,215) (9,607)
Deferred income taxes (credit) 3,669 (59,379)
Subtotal 236,167 155,261
------- -------
Changes in operating assets
and liabilities, net of
business
acquisition
Accounts receivable (10,657) (103,947)
Inventories (34,150) (24,151)
Accounts payable (14,319) 19,006
Payroll and related taxes (12,012) (6,100)
Accrued customer programs (1,412) 30,495
Accrued liabilities 16,300 (14,010)
Accrued income taxes 46,409 51,225
Other (6,204) 14,960
------ ------
Subtotal (16,045) (32,522)
------- -------
Net cash from operating
activities 220,122 122,739
------- -------
Cash Flows (For) From
Investing Activities
Proceeds from sales of
securities - 560
Acquisitions of businesses,
net of cash acquired (547,052) 1,998
Proceeds from sale of
intangible assets and
pipeline
development projects 10,500 -
Acquisitions of assets (750) (4,000)
Additions to property and
equipment (55,659) (30,555)
Net cash for investing
activities (592,961) (31,997)
-------- -------
Cash Flows (For) From
Financing Activities
Repayments of short-term
debt, net (2,770) (8,029)
Borrowings of long-term debt 1,087,546 150,000
Repayments of long-term debt (485,000) (195,000)
Deferred financing fees (5,097) (3,703)
Excess tax benefit of stock
transactions 11,215 9,607
Issuance of common stock 7,699 5,267
Repurchase of common stock (7,954) (8,214)
Cash dividends (14,021) (12,268)
------- -------
Net cash from (for) financing
activities 591,618 (62,340)
------- -------
Effect of exchange rate
changes on cash 2,527 (3,388)
----- ------
Net increase in cash and cash
equivalents 221,306 25,014
Cash and cash equivalents,
beginning of period 310,104 109,765
Cash and cash equivalents, end
of period $531,410 $134,779
======== ========
Supplemental Disclosures of
Cash Flow Information
Cash paid/received during the
period for:
Interest paid $22,861 $25,298
Interest received $1,301 $2,266
Income taxes paid $15,973 $55,264
Income taxes refunded $802 $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 December 31, 2011 December 25, 2010 % Change
----------------- ----------------- --------
Non-GAAP Non-GAAP As
GAAP Adjustments As Adjusted GAAP Adjustments As Adjusted GAAP Adjusted
---- ------------ ----------- ---- ------------ ----------- ---- ---------
Net sales $838,170 $- $838,170 $717,515 $- $717,515 17 % 17 %
Cost of
sales 543,295 12,931 (a) 530,364 468,015 7,394 (a) 460,621 16 % 15 %
------- ------ ------- ------- ----- -------
Gross
profit 294,875 12,931 307,806 249,500 7,394 256,894 18 % 20 %
Operating
expenses
Distribution 9,095 - 9,095 8,864 - 8,864 3 % 3 %
Research
and
development 31,148 - 31,148 24,604 - 24,604 27 % 27 %
Selling and
administration 93,964 5,428 (a,b) 88,536 83,793 5,296 (a,d) 78,497 12 % 13 %
------ ----- ------ ------ ----- ------
Total 134,207 5,428 128,779 117,261 5,296 111,965
Operating
income 160,668 18,359 179,027 132,239 12,690 144,929 21 % 24 %
Interest,
net 15,641 - 15,641 10,716 - 10,716 46 % 46 %
Other
expense
(income),
net 752 - 752 (633) - (633) - -
--- --- --- ---- --- ----
Income from
continuing
operations
before
income
taxes 144,275 18,359 162,634 122,156 12,690 134,846 18 % 21 %
Income tax
expense 44,536 5,667 (c) 50,203 32,377 4,087 (c) 36,464 38 % 38 %
------ ------
Income from
continuing
operations $99,739 $12,692 $112,431 $89,779 $8,603 $98,382 11 % 14 %
======= ======= ======== ======= ====== =======
Diluted
earnings
per share
from
continuing
operations $1.06 $1.20 $0.96 $1.05 10 % 14 %
Diluted
weighted
average
shares
outstanding 94,043 94,043 93,363 93,363
Selected
ratios
as a
percentage
of net
sales
Gross
profit 35.2 % 36.7 % 34.8 % 35.8 %
Operating
expenses 16.0 % 15.4 % 16.3 % 15.6 %
Operating
income 19.2 % 21.4 % 18.4 % 20.2 %
Six Months Ended
----------------
Consolidated December 31, 2011 December 25, 2010 % Change
----------------- ----------------- --------
Non-GAAP Non-GAAP As
GAAP Adjustments As Adjusted GAAP Adjustments As Adjusted GAAP Adjusted
---- ------------ ----------- ---- ------------ ----------- ---- ---------
Net sales $1,563,465 $- $1,563,465 $1,358,837 $- $1,358,837 15 % 15 %
Cost of
sales 1,041,011 55,292 (a,e) 985,719 895,383 14,568 (a) 880,815 16 % 12 %
--------- ------ ------- ------- ------ -------
Gross
profit 522,454 55,292 577,746 463,454 14,568 478,022 13 % 21 %
Operating
expenses
Distribution 19,359 - 19,359 17,197 - 17,197 13 % 13 %
Research
and
development 50,786 (3,500) (f) 54,286 42,331 - 42,331 20 % 28 %
Selling and
administration 190,089 19,049 (a,g) 171,040 159,920 9,409 (a,d) 150,511 19 % 14 %
------- ------ ------- ------- ----- -------
Total 260,234 15,549 244,685 219,448 9,409 210,039
Operating
income 262,220 70,841 333,061 244,006 23,977 267,983 7 % 24 %
Interest,
net 28,211 - 28,211 20,803 - 20,803 36 % 36 %
Other
expense
(income),
net 981 - 981 (1,192) - (1,192) - -
--- --- --- ------ --- ------
Income from
continuing
operations
before
income
taxes 233,028 70,841 303,869 224,395 23,977 248,372 4 % 22 %
Income tax
expense 62,831 25,288 (c) 88,119 60,938 7,702 (c) 68,640 3 % 28 %
------ ------
Income from
continuing
operations $170,197 $45,553 $215,750 $163,457 $16,275 $179,732 4 % 20 %
======== ======= ======== ======== ======= ========
Diluted
earnings
per share
from
continuing
operations $1.81 $2.30 $1.75 $1.93 3 % 19 %
Diluted
weighted
average
shares
outstanding 93,983 93,983 93,280 93,280
Selected
ratios
as a
percentage
of net
sales
Gross
profit 33.4 % 37.0 % 34.1 % 35.2 %
Operating
expenses 16.6 % 15.7 % 16.1 % 15.5 %
Operating
income 16.8 % 21.3 % 18.0 % 19.7 %
(a) Deal-related amortization
(b) Severance costs of $599
(c) Total tax effect for non-GAAP pre-tax adjustments
(d) Acquisition-related costs of $1,315
(e) Inventory step-up of $27,179
(f) Proceeds from sale of pipeline development projects
(g) Acquisition-related and severance costs of $9,381
Table II
PERRIGO COMPANY
REPORTABLE SEGMENTS
RECONCILIATION OF NON-GAAP MEASURES
(in thousands)
(unaudited)
Three Months Ended
------------------
Consumer
Healthcare December 31, 2011 December 25, 2010 % Change
----------------- ----------------- --------
Non-GAAP As Non-GAAP As As
GAAP Adjustments Adjusted GAAP Adjustments Adjusted GAAP Adjusted
---- ------------ --------- ---- ------------ --------- ---- ---------
Net sales $471,277 $- $471,277 $429,996 $- $429,996 10 % 10 %
Cost of sales 325,442 1,006 (a) 324,436 292,782 694 (a) 292,088 11 % 11 %
------- ----- ------- ------- --- -------
Gross profit 145,835 1,006 146,841 137,214 694 137,908 6 % 6 %
Operating
expenses 68,598 1,214 (a) 67,384 61,820 1,188 (a) 60,632 11 % 11 %
------ ----- ------ ------ ------
Operating
income $77,237 $2,220 $79,457 $75,394 $1,882 $77,276 2 % 3 %
======= ====== ======= ======= ====== =======
Selected
ratios
as a
percentage
of net
sales
Gross profit 30.9 % 31.2 % 31.9 % 32.1 %
Operating
expenses 14.6 % 14.3 % 14.4 % 14.1 %
Operating
income 16.4 % 16.9 % 17.5 % 18.0 %
Six Months Ended
----------------
Consumer
Healthcare December 31, 2011 December 25, 2010 % Change
----------------- ----------------- --------
Non-GAAP As Non-GAAP As As
GAAP Adjustments Adjusted GAAP Adjustments Adjusted GAAP Adjusted
---- ------------ --------- ---- ------------ --------- ---- ---------
Net sales $882,958 $- $882,958 $826,100 $- $826,100 7 % 7 %
Cost of sales 610,549 2,028 (a) 608,521 563,294 1,496 (a) 561,798 8 % 8 %
------- ----- ------- ------- ----- -------
Gross profit 272,409 2,028 274,437 262,806 1,496 264,302 4 % 4 %
Operating
expenses 130,689 2,437 (a) 128,252 116,093 2,500 (a) 113,593 13 % 13 %
Operating
income 141,720 4,465 146,185 146,713 3,996 150,709 -3 % -3 %
======= ===== ======= ======= ===== =======
Selected
ratios
as a
percentage
of net
sales
Gross profit 30.9 % 31.1 % 31.8 % 32.0 %
Operating
expenses 14.8 % 14.5 % 14.1 % 13.8 %
Operating
income 16.1 % 16.6 % 17.8 % 18.2 %
Three Months Ended
------------------
Nutritionals December 31, 2011 December 25, 2010 % Change
----------------- ----------------- --------
Non-GAAP As Non-GAAP As As
GAAP Adjustments Adjusted GAAP Adjustments Adjusted GAAP Adjusted
---- ------------ --------- ---- ------------ --------- ---- ---------
Net sales $128,147 $- $128,147 $133,458 $- $133,458 -4 % -4 %
Cost of sales 98,779 3,022 (a) 95,757 87,936 2,999 (a) 84,937 12 % 13 %
------ ----- ------ ------ ----- ------
Gross profit 29,368 3,022 32,390 45,522 2,999 48,521 -35 % -33 %
Operating
expenses 22,873 3,615 (a) 19,258 25,359 2,793 (a) 22,566 -10 % -15 %
------ ------ ------ ------
Operating
income $6,495 $6,637 $13,132 $20,163 $5,792 $25,955 -68 % -49 %
====== ====== ======= ======= ====== =======
Selected
ratios
as a
percentage
of net
sales
Gross profit 22.9 % 25.3 % 34.1 % 36.4 %
Operating
expenses 17.8 % 15.0 % 19.0 % 16.9 %
Operating
income 5.1 % 10.2 % 15.1 % 19.4 %
Six Months Ended
----------------
Nutritionals December 31, 2011 December 25, 2010 % Change
----------------- ----------------- --------
Non-GAAP As Non-GAAP As As
GAAP Adjustments Adjusted GAAP Adjustments Adjusted GAAP Adjusted
---- ------------ --------- ---- ------------ --------- ---- ---------
Net sales $248,008 $- $248,008 $256,142 $- $256,142 -3 % -3 %
Cost of sales 188,017 8,871 (a) 179,146 172,230 5,999 (a) 166,231 9 % 8 %
------- ----- ------- ------- ----- -------
Gross profit 59,991 8,871 68,862 83,912 5,999 89,911 -29 % -23 %
Operating
expenses 44,431 7,231 (a) 37,200 45,670 5,594 (a) 40,076 -3 % -7 %
------ ------
Operating
income $15,560 $16,102 $31,662 $38,242 $11,593 $49,835 -59 % -36 %
======= ======= ======= ======= ======= =======
Selected
ratios
as a
percentage
of net
sales
Gross profit 24.2 % 27.8 % 32.8 % 35.1 %
Operating
expenses 17.9 % 15.0 % 17.8 % 15.6 %
Operating
income 6.3 % 12.8 % 14.9 % 19.5 %
Three Months Ended
------------------
Rx
Pharmaceuticals December 31, 2011 December 25, 2010 % Change
----------------- ----------------- --------
Non-GAAP As Non-GAAP As As
GAAP Adjustments Adjusted GAAP Adjustments Adjusted GAAP Adjusted
---- ------------ --------- ---- ------------ --------- ---- ---------
Net sales $177,196 $- $177,196 $97,534 $- $97,534 82 % 82 %
Cost of sales 84,359 7,969 (a) 76,390 53,278 2,749 (a) 50,529 58 % 51 %
------ ----- ------ ------ ----- ------
Gross profit 92,837 7,969 100,806 44,256 2,749 47,005 110 % 114 %
Operating
expenses 20,382 599 (b) 19,783 11,061 - 11,061 84 % 79 %
------ ------ ------ ------
Operating
income $72,455 $8,568 $81,023 $33,195 $2,749 $35,944 118 % 125 %
======= ====== ======= ======= ====== =======
Selected
ratios
as a
percentage
of net
sales
Gross profit 52.4 % 56.9 % 45.4 % 48.2 %
Operating
expenses 11.5 % 11.2 % 11.3 % 11.3 %
Operating
income 40.9 % 45.7 % 34.0 % 36.9 %
Six Months Ended
----------------
Rx
Pharmaceuticals December 31, 2011 December 25, 2010 % Change
----------------- ----------------- --------
Non-GAAP As Non-GAAP As As
GAAP Adjustments Adjusted GAAP Adjustments Adjusted GAAP Adjusted
---- ------------ --------- ---- ------------ --------- ---- ---------
Net sales $304,823 $- $304,823 $166,867 $- $166,867 83 % 83 %
Cost of sales 169,150 42,501 (a,c) 126,649 94,839 5,208 (a) 89,631 78 % 41 %
------- ------ ------- ------ ----- ------
Gross profit 135,673 42,501 178,174 72,028 5,208 77,236 88 % 131 %
Operating
expenses 36,375 255 (d,e) 36,120 21,078 - 21,078 73 % 71 %
------ ------
Operating
income $99,298 $42,756 $142,054 $50,950 $5,208 $56,158 95 % 153 %
======= ======= ======== ======= ====== =======
Selected
ratios
as a
percentage
of net
sales
Gross profit 44.5 % 58.5 % 43.2 % 46.3 %
Operating
expenses 11.9 % 11.8 % 12.6 % 12.6 %
Operating
income 32.6 % 46.6 % 30.5 % 33.7 %
(a) Deal-related amortization
(b) Severance costs of $599
(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 December 31, 2011 December 25, 2010 % Change
----------------- ----------------- --------
Non-GAAP As Non-GAAP As As
GAAP Adjustments Adjusted GAAP Adjustments Adjusted GAAP Adjusted
---- ------------ --------- ---- ------------ --------- ---- ---------
Net sales $42,752 $- $42,752 $40,333 $- $40,333 6 % 6 %
Cost of
sales 22,336 496 (a) 21,840 22,780 516 (a) 22,264 -2 % -2 %
------ --- ------ ------ --- ------
Gross profit 20,416 496 20,912 17,553 516 18,069 16 % 16 %
Operating
expenses 8,314 - 8,314 7,521 - 7,521 11 % 11 %
----- ----- ----- -----
Operating
income $12,102 $496 $12,598 $10,032 $516 $10,548 21 % 19 %
======= ==== ======= ======= ==== =======
Selected
ratios
as a
percentage
of
net
sales
Gross profit 47.8 % 48.9 % 43.5 % 44.8 %
Operating
expenses 19.4 % 19.4 % 18.6 % 18.6 %
Operating
income 28.3 % 29.5 % 24.9 % 26.2 %
Six Months Ended
----------------
API December 31, 2011 December 25, 2010 % Change
----------------- ----------------- --------
Non-GAAP As Non-GAAP As As
GAAP Adjustments Adjusted GAAP Adjustments Adjusted GAAP Adjusted
---- ------------ --------- ---- ------------ --------- ---- ---------
Net sales $90,396 $- $90,396 $77,694 $- $77,694 16 % 16 %
Cost of
sales 48,127 1,017 (a) 47,110 43,360 1,008 (a) 42,352 11 % 11 %
------ ----- ------ ------ ----- ------
Gross profit 42,269 1,017 43,286 34,334 1,008 35,342 23 % 22 %
Operating
expenses 15,589 - 15,589 13,979 - 13,979 12 % 12 %
------ ------
Operating
income $26,680 $1,017 $27,697 $20,355 $1,008 $21,363 31 % 30 %
======= ====== ======= ======= ====== =======
Selected
ratios
as a
percentage
of
net
sales
Gross profit 46.8 % 47.9 % 44.2 % 45.5 %
Operating
expenses 17.2 % 17.2 % 18.0 % 18.0 %
Operating
income 29.5 % 30.6 % 26.2 % 27.5 %
Three Months Ended
------------------
Other December 31, 2011 December 25, 2010 % Change
----------------- ----------------- --------
Non-GAAP As Non-GAAP As As
GAAP Adjustments Adjusted GAAP Adjustments Adjusted GAAP Adjusted
---- ------------ --------- ---- ------------ --------- ---- ---------
Net sales $18,798 $- $18,798 $16,194 $- $16,194 16 % 16 %
Cost of
sales 12,379 438 (a) 11,941 11,239 436 (a) 10,803 10 % 11 %
------ --- ------ ------ --- ------
Gross profit 6,419 438 6,857 4,955 436 5,391 30 % 27 %
Operating
expenses 5,315 - 5,315 4,963 - 4,963 7 % 7 %
----- ----- ----- -----
Operating
income
(loss) $1,104 $438 $1,542 $(8) $436 $428 - % 260 %
====== ==== ====== === ==== ====
Selected
ratios
as a
percentage
of
net
sales
Gross profit 34.1 % 36.5 % 30.6 % 33.3 %
Operating
expenses 28.3 % 28.3 % 30.6 % 30.6 %
Operating
income
(loss) 5.9 % 8.2 % (0.0)% 2.6 %
Six Months Ended
----------------
Other December 31, 2011 December 25, 2010 % Change
----------------- ----------------- --------
Non-GAAP As Non-GAAP As As
GAAP Adjustments Adjusted GAAP Adjustments Adjusted GAAP Adjusted
---- ------------ --------- ---- ------------ --------- ---- ---------
Net sales $37,280 $- $37,280 $32,034 $- $32,034 16 % 16 %
Cost of
sales 25,168 875 (a) 24,293 21,660 857 (a) 20,803 16 % 17 %
------ --- ------ ------ --- ------
Gross profit 12,112 875 12,987 10,374 857 11,231 17 % 16 %
Operating
expenses 10,562 - 10,562 9,577 - 9,577 10 % 10 %
------ -----
Operating
income $1,550 $875 $2,425 $797 $857 $1,654 94 % 47 %
====== ==== ====== ==== ==== ======
Selected
ratios
as a
percentage
of
net
sales
Gross profit 32.5 % 34.8 % 32.4 % 35.1 %
Operating
expenses 28.3 % 28.3 % 29.9 % 29.9 %
Operating
income 4.2 % 6.5 % 2.5 % 5.2 %
(a) Deal-related amortization
(b) Severance costs of $599
(c) Inventory step-up of $27,179
(d) Proceeds of $3,500 from sale of pipeline development projects
(e) Severance costs of $3,755
Full Year
Fiscal 2012
Guidance*
-----------
FY12 reported diluted EPS from continuing
operations range $3.90 - $4.00
Deal-related amortization (1,2) 0.53
Charge associated with inventory step-up
(2) 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 $4.70 - $4.80
=============
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
(2) Does not include any estimate related to the CanAm Care
acquisition
*All information based on continuing operations.
Table IV
PERRIGO COMPANY
RECONCILIATION OF NON-GAAP MEASURES
(in thousands)
(unaudited)
Three Months Ended Change
------------------ ------
December 31, December 31,
Consolidated 2011 2010 $ %
------------- ------------- --- ---
Net sales, as
reported $838,170 $717,515 $120,655 17 %
Less: Paddock
acquisition (68,552) - (68,552) -
------- --- ------- ---
Net sales,
organic $769,618 $717,515 $52,103 7 %
SOURCE Perrigo Company