Perrigo Reports Record First Quarter Revenue And Adjusted Earnings And Raises Full Year Adjusted EPS Guidance
ALLEGAN, Mich., Nov. 7, 2012 /PRNewswire/ — Perrigo Company (Nasdaq: PRGO; TASE: PRGO) today announced results for its first quarter ended September 29, 2012.
(Logo: http://photos.prnewswire.com/prnh/20120301/DE62255LOGO )
Perrigo’s Chairman and CEO Joseph C. Papa commented, “We have started fiscal 2013 well, delivering record first quarter revenue and adjusted earnings. We also delivered all-time record adjusted gross and operating margins. Store brand OTC market share continues to grow. Our Consumer Healthcare segment’s revenue grew 9.4% from a record first quarter last year. Our Rx segment continued its excellent performance, which was driven by the acquisition of Paddock Labs, new product sales and strong organic Rx results, combined with our continued focus on quality and R&D. Clearly we are focused on the results from our Nutritionals segment and the team has an action plan in place for the rest of the year. We believe our value proposition continues to resonate well with consumers.”
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 Cash Flows.
Perrigo Company
(in thousands, except per share amounts)
(see the attached Table I for reconciliation to GAAP numbers)
Fiscal 2013 Fiscal 2012
First Quarter First Quarter
Ended Ended YoY
9/29/2012 9/24/2011 % Change
--------- --------- --------
Net
Sales $769,810 $725,295 6.1%
Reported
Net
Income $105,580 $70,458 49.8%
Adjusted
Net
Income $119,467 $103,320 15.6%
Reported
Diluted
EPS $1.12 $0.75 49.3%
Adjusted
Diluted
EPS $1.27 $1.10 15.5%
Diluted
Shares 94,335 93,953 0.4%
First Quarter Results
Net sales in the quarter were $770 million, an increase of 6% over the first quarter of fiscal 2012, driven primarily by $28 million attributable to the Paddock Laboratories, Inc. (“Paddock”) and CanAm Care, LLC (“CanAm”) acquisitions and new product sales of $26 million, partially offset by decreases in sales of certain existing products in the Nutritionals and API segments and $5 million due to unfavorable changes in foreign currency exchange rates. Excluding charges as outlined in Table I at the end of this release, first quarter fiscal 2013 adjusted net income increased 16% to $119 million, or $1.27 per share. Reported net income increased 50% to $106 million, or $1.12 per diluted share, due primarily to $0.21 per diluted share in acquisition-related costs in the first quarter of fiscal 2012.
Consumer Healthcare
Consumer Healthcare Segment
(in thousands)
(see the attached Table II for reconciliation to GAAP numbers)
Fiscal 2013 Fiscal 2012
First Quarter First Quarter
Ended Ended YoY
9/29/2012 9/24/2011 % Change
--------- --------- --------
Net
Sales $450,416 $411,681 9.4%
Reported
Gross
Profit $145,835 $129,358 12.7%
Adjusted
Gross
Profit $146,850 $130,380 12.6%
Reported
Operating
Income $79,288 $69,189 14.6%
Adjusted
Operating
Income $81,551 $71,433 14.2%
Reported
Gross
Margin 32.4% 31.4% +100 bps
Adjusted
Gross
Margin 32.6% 31.7% +90 bps
Reported
Operating
Margin 17.6% 16.8% +80 bps
Adjusted
Operating
Margin 18.1% 17.4% +70 bps
Consumer Healthcare segment net sales increased 9% to $450 million due to an increase in sales of existing products of $36 million (contract, cough/cold and smoking cessation categories), new product sales of $13 million (gastrointestinal, cough/cold and dermatological categories) and $9 million in incremental sales attributable to the acquisition of CanAm. These combined increases were partially offset by a decline of $17 million in sales of existing products (analgesics and feminine hygiene categories) and a decline of $4 million due to discontinued products.
Adjusted gross and operating margins expanded 90 and 70 basis points, respectively, due to new products, product mix and cost controls in the Company’s manufacturing plants.
Nutritionals
Nutritionals Segment
(in thousands)
(see the attached Table II for reconciliation to GAAP numbers)
Fiscal 2013 Fiscal 2012
First Quarter First Quarter
Ended Ended YoY
9/29/2012 9/24/2011 % Change
--------- --------- --------
Net
Sales $103,423 $119,861 -13.7%
Reported
Gross
Profit $25,835 $29,569 -12.6%
Adjusted
Gross
Profit $28,885 $35,418 -18.4%
Reported
Operating
Income $3,883 $7,241 -46.4%
Adjusted
Operating
Income $11,183 $16,705 -33.1%
Reported
Gross
Margin 25.0% 24.7% +30 bps
Adjusted
Gross
Margin 27.9% 29.5% -160 bps
Reported
Operating
Margin 3.8% 6.0% -220 bps
Adjusted
Operating
Margin 10.8% 13.9% -310 bps
The Nutritionals segment reported first quarter net sales of $103 million, compared with $120 million a year ago as existing product sales declined $20 million, partially offset by new product sales of $3 million (infant formula category). The decrease in sales was due primarily to a decline in existing product sales in the vitamin, minerals and dietary supplements (“VMS”) category driven by increased competition and increased retail shipments of infant formula placed in the fourth quarter of fiscal 2012 in advance of the planned July 1(st) shutdown of the Company’s Vermont Plant to perform an SAP conversion and prepare for the installation of a new packaging line. Reported and adjusted gross profit and margin were impacted by relatively lower volumes in infant formula and VMS, along with increased inventory costs.
Operating income and margin were impacted by higher combined research and development and distribution, selling, general and administration expenses as a percent to net sales, though they were lower on a dollar basis, year-over-year.
Rx Pharmaceuticals
Rx Pharmaceuticals Segment
(in thousands)
(see the attached Table II for reconciliation to GAAP numbers)
Fiscal 2013 Fiscal 2012
First Quarter First Quarter
Ended Ended YoY
9/29/2012 9/24/2011 % Change
--------- --------- --------
Net
Sales $162,942 $127,627 27.7%
Reported
Gross
Profit $86,684 $41,460 109.1%
Adjusted
Gross
Profit $95,086 $75,992 25.1%
Reported
Operating
Income $68,504 $24,485 179.8%
Adjusted
Operating
Income $76,906 $58,673 31.1%
Reported
Gross
Margin 53.2% 32.5% +2,070 bps
Adjusted
Gross
Margin 58.4% 59.5% -110 bps
Reported
Operating
Margin 42.0% 19.2% +2,280 bps
Adjusted
Operating
Margin 47.2% 46.0% +120 bps
The Rx Pharmaceuticals segment first quarter net sales increased 28% to $163 million due primarily to incremental net sales of $19 million from the July 26, 2011 Paddock acquisition, new product sales of $8 million and improved pricing on select products.
Year-over-year percent changes in reported gross profit and operating income were impacted by the absence of a one-time charge of $27 million to cost of sales as a result of the step-up of inventory value related to the Paddock acquisition in the first quarter of fiscal 2012.
API
API Segment
(in thousands)
(see the attached Table II for reconciliation to GAAP numbers)
Fiscal 2013 Fiscal 2012
First Quarter First Quarter
Ended Ended YoY
9/29/2012 9/24/2011 % Change
--------- --------- --------
Net
Sales $36,419 $47,644 -23.6%
Reported
Gross
Profit $21,360 $21,608 -1.1%
Adjusted
Gross
Profit $21,823 $22,129 -1.4%
Reported
Operating
Income $13,319 $14,215 -6.3%
Adjusted
Operating
Income $13,782 $14,736 -6.5%
Reported
Gross
Margin 58.7% 45.4% +1,330 bps
Adjusted
Gross
Margin 59.9% 46.4% +1,350 bps
Reported
Operating
Margin 36.6% 29.8% +680 bps
Adjusted
Operating
Margin 37.8% 30.9% +690 bps
The API segment’s net sales declined by 24% to $36 million due primarily to a decrease in existing product sales of approximately $17 million as a result of increased competition and pricing pressures on select products, along with a negative impact of $2 million due to changes in foreign currency, partially offset by $7 million related to the launch of a customer’s product with 180-day exclusivity status.
Gross and operating margins were positively impacted by the product launch referred to above.
Other
The Other category reported decreased first quarter net sales of approximately $17 million, compared with $18 million a year ago, due primarily to the impact of unfavorable changes in foreign currency exchange rates.
Adjusted operating income was approximately $1 million, representing an increase in adjusted operating margin of 100 basis points from last year due to product mix.
Guidance
Chairman, President and CEO Joseph C. Papa concluded, “The strength of our diversified business model was evident this quarter. Margin expansion remains a top priority for the Company and we continue to make ROIC positive investments in operations and products. As we look forward to the rest of fiscal 2013, we continue to expect strong new product launches and further conversion of consumers to store brand.”
The Company expects fiscal 2013 reported earnings to be between $4.71 and $4.91 per diluted share as compared to $4.18 in 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 $5.45 and $5.65 per diluted share as compared to $4.99 in fiscal 2012 reflecting the acquisition of Sergeant’s Pet Care Products, Inc., the realization of tax benefits and continued execution of the core businesses. This new range implies a year-over-year growth rate in adjusted earnings of 9% to 13% over fiscal 2012′s adjusted earnings from continuing operations per diluted share.
The conference call will be available live via webcast to interested parties on the Perrigo website http://perrigo.investorroom.com/events-webcasts or by phone at 877-248-9413, International 973-582-2737, and reference ID# 46994711. A taped replay of the call will be available beginning at approximately 2:00 p.m. (ET) Wednesday, November 7, 2012 until midnight Friday, November 23, 2012. To listen to the replay, dial 855-859-2056, International 404-537-3406, and use access code 46994711.
From its beginnings as a packager of generic home remedies in 1887, Perrigo Company, based in Allegan, Michigan, has grown to become a leading global provider of quality, affordable healthcare products. The Company develops, manufactures and distributes over-the-counter (“OTC”) and generic prescription (“Rx”) pharmaceuticals, nutritional products and active pharmaceutical ingredients (“API”) and is the world’s largest manufacturer of OTC pharmaceutical products for the store brand market. Perrigo’s mission is to offer uncompromised “quality, affordable healthcare products”, and it does so across a wide variety of product categories primarily in the United States, United Kingdom, Mexico, Israel and Australia, as well as certain other markets throughout the world, including Canada, China and Latin America. 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 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
CONDENSED CONSOLIDATED STATEMENTS OF INCOME
(in thousands, except per share amounts)
(unaudited)
First Quarter
-------------
2013 2012
---- ----
Net sales $769,810 $725,295
Cost of sales 484,541 497,716
------- -------
Gross profit 285,269 227,579
------- -------
Operating expenses
Distribution 10,767 10,264
Research and development 27,395 19,638
Selling and administration 90,534 96,125
Total operating expenses 128,696 126,027
------- -------
Operating income 156,573 101,552
Interest, net 15,853 12,570
Other (income) expense, net (62) 229
--- ---
Income before income taxes 140,782 88,753
Income tax expense 35,202 18,295
------ ------
Net income $105,580 $70,458
======== =======
Earnings per share
Basic earnings per share $1.13 $0.76
Diluted earnings per share $1.12 $0.75
Weighted average shares outstanding
Basic 93,607 92,900
Diluted 94,335 93,953
Dividends declared per share $0.08 $0.07
See accompanying notes to condensed consolidated financial statements.
PERRIGO COMPANY
CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME
(in thousands)
(unaudited)
First Quarter
-------------
2013 2012
---- ----
Net Income $105,580 $70,458
Other comprehensive income (loss):
Change in fair value of derivative financial instruments, net of tax 1,462 (7,796)
Foreign currency translation adjustments 5,424 (52,960)
Post-retirement liability adjustments, net of tax (41) (17)
Other comprehensive income (loss), net of tax 6,845 (60,773)
Comprehensive income $112,425 $9,685
======== ======
See accompanying notes to condensed consolidated financial statements.
PERRIGO COMPANY
CONDENSED CONSOLIDATED BALANCE SHEETS
(in thousands)
(unaudited)
September 29, June 30, September 24,
2012 2012 2011
---- ---- ----
Assets
Current assets
Cash and cash equivalents $631,993 $602,489 $116,615
Accounts receivable, net 584,008 572,582 521,263
Inventories 598,825 547,455 563,257
Current deferred income taxes 45,781 45,738 50,276
Income taxes refundable 4,252 1,047 8,891
Prepaid expenses and other current assets 35,872 26,610 38,789
Total current assets 1,900,731 1,795,921 1,299,091
Property and equipment 1,135,502 1,118,837 1,037,270
Less accumulated depreciation (555,241) (540,487) (504,389)
-------- -------- --------
580,261 578,350 532,881
Goodwill and other indefinite-lived intangible assets 822,359 820,122 812,924
Other intangible assets, net 711,104 729,253 771,677
Non-current deferred income taxes 14,627 13,444 13,479
Other non-current assets 88,348 86,957 84,035
$4,117,430 $4,024,047 $3,514,087
========== ========== ==========
Liabilities and Shareholders' Equity
Current liabilities
Accounts payable $306,972 $317,341 $303,549
Short-term debt 1,609 90 3,750
Payroll and related taxes 57,864 89,934 72,106
Accrued customer programs 122,495 116,055 112,592
Accrued liabilities 79,756 76,406 83,374
Accrued income taxes 21,228 12,905 6,677
Current portion of long-term debt 40,000 40,000 40,000
Total current liabilities 629,924 652,731 622,048
Non-current liabilities
Long-term debt, less current portion 1,329,827 1,329,235 1,155,787
Non-current deferred income taxes 26,297 24,126 9,604
Other non-current liabilities 166,064 165,310 182,207
Total non-current liabilities 1,522,188 1,518,671 1,347,598
Shareholders' Equity
Controlling interest:
Preferred stock, without par value, 10,000 shares authorized - - -
Common stock, without par value, 200,000 shares authorized 512,658 504,708 478,035
Accumulated other comprehensive income 46,249 39,404 66,277
Retained earnings 1,404,977 1,306,925 998,256
1,963,884 1,851,037 1,542,568
Noncontrolling interest 1,434 1,608 1,873
Total shareholders' equity 1,965,318 1,852,645 1,544,441
$4,117,430 $4,024,047 $3,514,087
========== ========== ==========
Supplemental Disclosures of Balance Sheet Information
Allowance for doubtful accounts $2,224 $2,556 $9,617
Working capital $1,270,807 $1,143,190 $677,043
Preferred stock, shares issued and outstanding - - -
Common stock, shares issued and outstanding 93,840 93,484 93,189
See accompanying notes to condensed consolidated financial statements.
PERRIGO COMPANY
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(in thousands)
(unaudited)
First Quarter
-------------
2013 2012
---- ----
Cash Flows (For) From Operating Activities
Net income $105,580 $70,458
Adjustments to derive cash flows
Gain on sale of pipeline development projects - (3,500)
Depreciation and amortization 33,424 34,720
Share-based compensation 4,772 3,935
Income tax benefit from exercise of stock options 2,068 2,125
Excess tax benefit of stock transactions (13,342) (10,578)
Deferred income taxes (3,483) (3,084)
Subtotal 129,019 94,076
------- ------
Changes in operating assets and liabilities, net of business acquisition
Accounts receivable (6,682) 8,581
Inventories (48,110) (7,156)
Accounts payable (12,574) (47,249)
Payroll and related taxes (32,298) (10,681)
Accrued customer programs 6,440 (5,708)
Accrued liabilities 2,713 17,678
Accrued income taxes 15,674 (878)
Other (9,327) 5,484
Subtotal (84,164) (39,929)
Net cash from operating activities 44,855 54,147
------ ------
Cash Flows (For) From Investing Activities
Acquisition of business, net of cash acquired - (547,052)
Proceeds from sale of intangible assets and pipeline development projects - 10,500
Additions to property and equipment (14,804) (18,953)
Other - (250)
--- ----
Net cash for investing activities (14,804) (555,755)
------- --------
Cash Flows (For) From Financing Activities
Borrowings of short-term debt, net 1,519 980
Net borrowings under accounts receivable securitization program - 55,000
Borrowings of long-term debt 592 250,787
Deferred financing fees - (2,468)
Excess tax benefit of stock transactions 13,342 10,578
Issuance of common stock 4,063 5,884
Repurchase of common stock (12,159) (7,899)
Cash dividends (7,528) (6,535)
Net cash (for) from financing activities (171) 306,327
---- -------
Effect of exchange rate changes on cash (376) 1,792
Net increase (decrease) in cash and cash equivalents 29,504 (193,489)
Cash and cash equivalents, beginning of period 602,489 310,104
Cash and cash equivalents, end of period $631,993 $116,615
======== ========
Supplemental Disclosures of Cash Flow Information
Cash paid/received during the period for:
Interest paid $2,096 $3,240
Interest received $1,276 $1,127
Income taxes paid $20,514 $9,151
Income taxes refunded $526 $768
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 September 29, 2012 September 24, 2011 % Change
------------------ ------------------ --------
GAAP Non-GAAP Adjustments As Adjusted GAAP Non-GAAP Adjustments As Adjusted GAAP As Adjusted
---- -------------------- ----------- ---- -------------------- ----------- ---- -----------
Net sales $769,810 $ - $769,810 $725,295 $ - $725,295 6 % 6 %
Cost of sales 484,541 13,323 (a) 471,218 497,716 42,362 (a,d) 455,354 -3 % 3 %
------- ------ ------- ------- ------ -------
Gross profit 285,269 13,323 298,592 227,579 42,362 269,941 25 % 11 %
Operating expenses
Distribution 10,767 - 10,767 10,264 - 10,264 5 % 5 %
Research and development 27,395 - 27,395 19,638 (3,500) (e) 23,138 39 % 18 %
Selling and administration 90,534 7,375 (a,b) 83,159 96,125 13,620 (a,f) 82,505 -6 % 1 %
------ ----- ------ ------ ------ ------
Total operating expenses 128,696 7,375 121,321 126,027 10,120 115,907 2 % 5 %
Operating income 156,573 20,698 177,271 101,552 52,482 154,034 54 % 15 %
Interest, net 15,853 - 15,853 12,570 - 12,570 26 % 26 %
Other (income) expense, net (62) - (62) 229 - 229 - -
--- --- --- --- --- ---
Income before income taxes 140,782 20,698 161,480 88,753 52,482 141,235 59 % 14 %
Income tax expense 35,202 6,811 (c) 42,013 18,295 19,620 (c) 37,915 92 % 11 %
------ ----- ------ ------ ------ ------
Net income $105,580 $13,887 $119,467 $70,458 $32,862 $103,320 50 % 16 %
======== ======= ======== ======= ======= ========
Diluted earnings per share $1.12 $1.27 $0.75 $1.10 49 % 15 %
Diluted weighted average shares outstanding 94,335 94,335 93,953 93,953
Selected ratios as a percentage of net sales
Gross profit 37.1 % 38.8 % 31.4 % 37.2 %
Operating expenses 16.7 % 15.8 % 17.4 % 16.0 %
Operating income 20.3 % 23.0 % 14.0 % 21.2 %
(a) Deal-related amortization
(b) Acquisition costs of $1,877
(c) Total tax effect for non-GAAP pre-tax adjustments
(d) Inventory step-up of $27,179
(e) Proceeds from sale of pipeline development projects
(f) Acquisition-related and severance costs of $8,782
Table II
PERRIGO COMPANY
REPORTABLE SEGMENTS
RECONCILIATION OF NON-GAAP MEASURES
(in thousands)
(unaudited)
Three Months Ended
------------------
Consumer Healthcare September 29, 2012 September 24, 2011 % Change
------------------ ------------------ --------
GAAP Non-GAAP Adjustments As Adjusted GAAP Non-GAAP Adjustments As Adjusted GAAP As Adjusted
---- -------------------- ----------- ---- -------------------- ----------- ---- -----------
Net sales $450,416 $ - $450,416 $411,681 $ - $411,681 9 % 9 %
Cost of sales 304,581 1,015 (a) 303,566 282,323 1,022 (a) 281,301 8 % 8 %
------- ----- ------- ------- ----- -------
Gross profit 145,835 1,015 146,850 129,358 1,022 130,380 13 % 13 %
Operating expenses 66,547 1,248 (a) 65,299 60,169 1,222 (a) 58,947 11 % 11 %
------ ----- ------ ------ ----- ------
Operating income $79,288 $2,263 $81,551 $69,189 $2,244 $71,433 15 % 14 %
======= ====== ======= ======= ====== =======
Selected ratios as a percentage of net sales
Gross profit 32.4 % 32.6 % 31.4 % 31.7 %
Operating expenses 14.8 % 14.5 % 14.6 % 14.3 %
Operating income 17.6 % 18.1 % 16.8 % 17.4 %
Three Months Ended
------------------
Nutritionals September 29, 2012 September 24, 2011 % Change
------------------ ------------------ --------
GAAP Non-GAAP Adjustments As Adjusted GAAP Non-GAAP Adjustments As Adjusted GAAP As Adjusted
---- -------------------- ----------- ---- -------------------- ----------- ---- -----------
Net sales $103,423 $ - $103,423 $119,861 $ - $119,861 -14 % -14 %
Cost of sales 77,588 3,050 (a) 74,538 90,292 5,849 (a) 84,443 -14 % -12 %
------ ----- ------ ------ ----- ------
Gross profit 25,835 3,050 28,885 29,569 5,849 35,418 -13 % -18 %
Operating expenses 21,952 4,250 (a) 17,702 22,328 3,615 (a) 18,713 -2 % -5 %
------ ----- ------ ------ ----- ------
Operating income $3,883 $7,300 $11,183 $7,241 $9,464 $16,705 -46 % -33 %
====== ====== ======= ====== ====== =======
Selected ratios as a percentage of net sales
Gross profit 25.0 % 27.9 % 24.7 % 29.5 %
Operating expenses 21.2 % 17.1 % 18.6 % 15.6 %
Operating income 3.8 % 10.8 % 6.0 % 13.9 %
Three Months Ended
------------------
Rx Pharmaceuticals September 29, 2012 September 24, 2011 % Change
------------------ ------------------ --------
GAAP Non-GAAP Adjustments As Adjusted GAAP Non-GAAP Adjustments As Adjusted GAAP As Adjusted
---- -------------------- ----------- ---- -------------------- ----------- ---- -----------
Net sales $162,942 $ - $162,942 $127,627 $ - $127,627 28 % 28 %
Cost of sales 76,258 8,402 (a) 67,856 86,167 34,532 (a,b) 51,635 -11 % 31 %
------ ----- ------ ------ ------ ------
Gross profit 86,684 8,402 95,086 41,460 34,532 75,992 109 % 25 %
Operating expenses 18,180 - 18,180 16,975 (344) (c,d) 17,319 7 % 5 %
------ --- ------ ------ ---- ------
Operating income $68,504 $8,402 $76,906 $24,485 $34,188 $58,673 180 % 31 %
======= ====== ======= ======= ======= =======
Selected ratios as a percentage of net sales
Gross profit 53.2 % 58.4 % 32.5 % 59.5 %
Operating expenses 11.2 % 11.2 % 13.3 % 13.6 %
Operating income 42.0 % 47.2 % 19.2 % 46.0 %
(a) Deal-related amortization
(b) Inventory step-up of $27,179
(c) Proceeds of $3,500 from sale of pipeline development projects
(d) Severance costs of $3,156
Table II (Continued)
PERRIGO COMPANY
REPORTABLE SEGMENTS
RECONCILIATION OF NON-GAAP MEASURES
(in thousands)
(unaudited)
Three Months Ended
------------------
API September 29, 2012 September 24, 2011 % Change
------------------ ------------------ --------
GAAP Non-GAAP Adjustments As Adjusted GAAP Non-GAAP Adjustments As Adjusted GAAP As Adjusted
---- -------------------- ----------- ---- -------------------- ----------- ---- -----------
Net sales $36,419 $ - $36,419 $47,644 $ - $47,644 -24 % -24 %
Cost of sales 15,059 463 (a) 14,596 26,036 521 (a) 25,515 -42 % -43 %
------ --- ------ ------ --- ------
Gross profit 21,360 463 21,823 21,608 521 22,129 -1 % -1 %
Operating expenses 8,041 - 8,041 7,393 - 7,393 9 % 9 %
----- --- ----- ----- --- -----
Operating income $13,319 $463 $13,782 $14,215 $521 $14,736 -6 % -6 %
======= ==== ======= ======= ==== =======
Selected ratios as a percentage of net sales
Gross profit 58.7 % 59.9 % 45.4 % 46.4 %
Operating expenses 22.1 % 22.1 % 15.5 % 15.5 %
Operating income 36.6 % 37.8 % 29.8 % 30.9 %
Three Months Ended
------------------
Other September 29, 2012 September 24, 2011 % Change
------------------ ------------------ --------
GAAP Non-GAAP Adjustments As Adjusted GAAP Non-GAAP Adjustments As Adjusted GAAP As Adjusted
---- -------------------- ----------- ---- -------------------- ----------- ---- -----------
Net sales $16,610 $ - $16,610 $18,482 $ - $18,482 -10 % -10 %
Cost of sales 11,055 393 (a) 10,662 12,898 437 (a) 12,461 -14 % -14 %
------ --- ------ ------ --- ------
Gross profit 5,555 393 5,948 5,584 437 6,021 -1 % -1 %
Operating expenses 5,130 - 5,130 5,299 - 5,299 -3 % -3 %
----- --- ----- ----- --- -----
Operating income $425 $393 $818 $285 $437 $722 49 % 13 %
==== ==== ==== ==== ==== ====
Selected ratios as a percentage of net sales
Gross profit 33.4 % 35.8 % 30.2 % 32.6 %
Operating expenses 30.9 % 30.9 % 28.7 % 28.7 %
Operating income 2.6 % 4.9 % 1.5 % 3.9 %
(a) Deal-related amortization
(b) Inventory step-up of $27,179
(c) Proceeds of $3,500 from sale of pipeline development projects
(d) Severance costs of $3,156
Table III
PERRIGO COMPANY
FY 2013 GUIDANCE AND FY 2012 EPS
RECONCILIATION OF NON-GAAP MEASURES
(unaudited)
Full Year
Fiscal 2013 Guidance
--------------------
FY13 reported diluted EPS range $4.71 - $4.91
Deal-related amortization (1) 0.62
Charge associated with inventory step-up 0.11
Charges associated with acquisition costs 0.01
FY13 adjusted diluted EPS range $5.45 - $5.65
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.
Table IV
PERRIGO COMPANY
REPORTABLE SEGMENTS
RECONCILIATION OF NON-GAAP MEASURES
(in thousands)
(unaudited)
Q1 FY12* Q2 FY12* Q3 FY12* Q4 FY12* FY 2012*
------- ------- ------- ------- -------
Consumer Healthcare
Net sales $411,681 $471,277 $448,848 $483,982 $1,815,788
Reported gross profit $129,358 $148,813 $140,417 $153,169 $571,757
Deal-related amortization(1) 1,022 1,006 1,010 1,008 4,046
Adjusted gross profit $130,380 $149,819 $141,427 $154,177 $575,803
======== ======== ======== ======== ========
Adjusted gross profit % 31.7% 31.8% 31.5% 31.9% 31.7%
Reported operating expenses $60,169 $66,563 $61,034 $68,689 $256,455
Deal-related amortization(1) (1,222) (1,214) (1,411) (1,419) (5,266)
Adjusted operating expenses $58,947 $65,349 $59,623 $67,270 $251,189
======= ======= ======= ======= ========
Adjusted operating expenses % 14.3% 13.9% 13.3% 13.9% 13.8%
Reported operating income $69,189 $82,250 $79,383 $84,480 $315,302
Deal-related amortization(1) 2,244 2,220 2,421 2,427 9,312
Adjusted operating income $71,433 $84,470 $81,804 $86,907 $324,614
======= ======= ======= ======= ========
Adjusted operating income % 17.4% 17.9% 18.2% 18.0% 17.9%
Nutritionals
Net sales $119,861 $128,147 $117,683 $135,335 $501,026
Reported gross profit $29,569 $28,230 $30,350 $37,196 $125,345
Deal-related amortization(1) 5,849 3,022 3,021 3,021 14,913
Adjusted gross profit $35,418 $31,252 $33,371 $40,217 $140,258
======= ======= ======= ======= ========
Adjusted gross profit % 29.5% 24.4% 28.4% 29.7% 28.0%
Reported operating expenses $22,328 $23,677 $28,505 $25,387 $99,897
Deal-related amortization(1) (3,615) (3,615) (3,616) (3,615) (14,461)
Restructuring charges - - (7,081) (1,674) (8,755)
--- --- ------
Adjusted operating expenses $18,713 $20,062 $17,808 $20,098 $76,681
======= ======= ======= ======= =======
Adjusted operating expenses % 15.6% 15.7% 15.1% 14.9% 15.3%
Reported operating income $7,241 $4,553 $1,845 $11,809 $25,448
Deal-related amortization(1) 9,464 6,637 6,637 6,636 29,374
Restructuring charges - - 7,081 1,674 8,755
Adjusted operating income $16,705 $11,190 $15,563 $20,119 $63,577
======= ======= ======= ======= =======
Adjusted operating income % 13.9% 8.7% 13.2% 14.9% 12.7%
Rx Pharmaceuticals
Net sales $127,627 $177,196 $155,591 $156,975 $617,389
Reported gross profit $41,460 $91,380 $83,331 $72,450 $288,621
Deal-related amortization(1) 7,353 7,969 8,574 8,532 32,428
Inventory step-up 27,179 - - - 27,179
------ --- --- ---
Adjusted gross profit $75,992 $99,349 $91,905 $80,982 $348,228
======= ======= ======= ======= ========
Adjusted gross profit % 59.5% 56.1% 59.1% 51.6% 56.4%
Reported operating expenses $16,975 $21,404 $16,076 $20,671 $75,126
Acquisition-related costs (3,156) (599) - - (3,755)
Earnings associated with sale of IPR&D projects 3,500 - - - 3,500
Write-off of in-process R&D - - - (750) (750)
Adjusted operating expenses $17,319 $20,805 $16,076 $19,921 $74,121
======= ======= ======= ======= =======
Adjusted operating expenses % 13.6% 11.7% 10.3% 12.7% 12.0%
Reported operating income $24,485 $69,976 $67,255 $51,779 $213,495
Deal-related amortization(1) 7,353 7,969 8,574 8,532 32,428
Inventory step-up 27,179 - - - 27,179
Acquisition-related costs 3,156 599 - - 3,755
Earnings associated with sale of IPR&D projects (3,500) - - - (3,500)
Write-off of in-process R&D - - - 750 750
Adjusted operating income $58,673 $78,544 $75,829 $61,061 $274,107
======= ======= ======= ======= ========
Adjusted operating income % 46.0% 44.3% 48.7% 38.9% 44.4%
(1) Amortization of acquired intangible assets related to business combinations and asset acquisitions
*All information based on continuing operations.
Table IV (Continued)
PERRIGO COMPANY
REPORTABLE SEGMENTS
RECONCILIATION OF NON-GAAP MEASURES
(in thousands)
(unaudited)
Q1 FY12* Q2 FY12* Q3 FY12* Q4 FY12* FY 2012*
------- ------- ------- ------- -------
API
Net sales $47,644 $42,751 $36,952 $38,434 $165,781
Reported gross profit $21,608 $20,150 $18,676 $25,674 $86,108
Deal-related amortization (1) 521 496 490 482 1,989
--- --- ---
Adjusted gross profit $22,129 $20,646 $19,166 $26,156 $88,097
======= ======= ======= ======= =======
Adjusted gross profit % 46.4% 48.3% 51.9% 68.1% 53.1%
Reported operating income $14,215 $11,692 $10,462 $17,512 $53,881
Deal-related amortization (1) 521 496 490 482 1,989
Adjusted operating income $14,736 $12,188 $10,952 $17,994 $55,870
======= ======= ======= ======= =======
Adjusted operating income % 30.9% 28.5% 29.6% 46.8% 33.7%
Other
Net sales $18,482 $18,798 $18,943 $17,041 $73,264
Reported gross profit $5,584 $6,303 $6,498 $5,382 $23,767
Deal-related amortization (1) 437 438 410 403 1,688
Adjusted gross profit $6,021 $6,741 $6,908 $5,785 $25,455
====== ====== ====== ====== =======
Adjusted gross profit % 32.6% 35.9% 36.5% 33.9% 34.7%
Reported operating income (loss) $285 $924 $846 $(37) $2,018
Deal-related amortization (1) 437 438 410 403 1,688
Adjusted operating income $722 $1,362 $1,256 $366 $3,706
==== ====== ====== ==== ======
Adjusted operating income % 3.9% 7.2% 6.6% 2.1% 5.1%
(1) Amortization of acquired intangible assets related to business combinations and asset acquisitions
*All information based on continuing operations.
SOURCE Perrigo Company
