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Press release from PR Newswire

Perrigo Reports Record Revenue and Adjusted Earnings

Tuesday, May 07, 2013

Perrigo Reports Record Revenue and Adjusted Earnings

07:43 EDT Tuesday, May 07, 2013

- Fiscal third quarter net sales increased 18% year over year to a record $920 million.
- Fiscal third quarter adjusted operating income increased 21% to a record $208 million, a 50 basis point expansion as a percent to sales.
- Fiscal third quarter GAAP operating income increased 22% to $179 million.
- Fiscal third quarter cash flow from operations was $151 million.
- Inclusive of recent acquisitions, management confirms February 11th guidance of full-year fiscal 2013 adjusted earnings range of $5.53 to $5.73 per diluted share and reported earnings of between $4.67 and $4.87 per diluted share.

ALLEGAN, Mich., May 7, 2013 /PRNewswire/ -- Perrigo Company (Nasdaq: PRGO; TASE: PRGO) today announced results for its third quarter ended March 30, 2013.

(Logo: http://photos.prnewswire.com/prnh/20120301/DE62255LOGO )

Perrigo's Chairman and CEO Joseph C. Papa commented, "We are very pleased with our performance, as the team delivered all-time record quarterly revenue and adjusted diluted earnings per share. It was a very busy quarter for the team. We signed and closed the acquisition of Rosemont Pharmaceuticals, a specialty and generic prescription pharmaceutical company focused on the manufacturing and marketing of oral liquid formulations. We shipped Guaifenesin 600mg Extended-Release tablets with $135 million in branded sales. It is the first product that is generically equivalent to Mucinex® 600mg Extended-Release tablets. We launched the generic equivalents of Luxiq® Foam and Nicorette® mini lozenges and the authorized generic of Acetadote® injection. Finally, we filed an ANDA for the generic equivalent of Androgel® 1.62% and we believe we are the first to file. After the quarter ended, we closed our acquisition of Velcera, further expanding our recent entry into companion animal health and broadening our product offering. All of these great milestones were achieved while expanding margins in a record sales quarter." 

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 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 Tables I and IV for reconciliation to GAAP numbers)

 

Fiscal 2013

Fiscal 2012

Third

 QuarterEnded

Third

 QuarterEnded

 

 

YoY

3/30/2013

3/31/2012

% Change

Net Sales

$919,825

$778,017

+18.2%

Reported Net Income

$111,924

$115,727

-3.3%

Adjusted Net Income

$134,073

$132,679

+1.1%

Reported Diluted EPS

$1.18

$1.23

-4.1%

Adjusted Diluted EPS

$1.42

$1.41

+0.7%

Adjusted Diluted EPS excluding 3Q 2012 Tax Benefit

$1.42

$1.21

+17.4%

Diluted Shares

94,519

94,124

+0.4%

                                                                          

Third Quarter Results

Net sales in the quarter were a record $920 million, an increase of 18% over the third quarter of fiscal 2012, driven primarily by $61 million in strong base business growth, new product sales of $41 million and $40 million attributable to the Sergeant's and Rosemont acquisitions. Excluding charges as outlined in Table I at the end of this release, third quarter fiscal 2013 adjusted net income increased 1.1% to $134 million, or $1.42 per diluted share. Excluding a non-recurring tax benefit of $19 million in fiscal third quarter 2012; adjusted net income increased 18%. Reported net income decreased 3.3% to $112 million, or $1.18 per diluted share.

Consumer Healthcare

 

Consumer Healthcare Segment

(in thousands)

(see the attached Table II for reconciliation to GAAP numbers)

Fiscal 2013

Fiscal 2012

Third

Quarter Ended

Third

Quarter

Ended

YoY

3/30/2013

3/31/2012

% Change

Net Sales

$536,775

$448,848

+19.6%

Reported Gross Profit

$176,646

$140,417

+25.8%

Adjusted Gross Profit

$180,045

$141,427

+27.3%

Reported Operating Income

$95,921

$79,383

+20.8%

Adjusted Operating Income

$100,951

$81,804

+23.4%

Reported Gross Margin

32.9%

31.3%

+160 bps

Adjusted Gross Margin

33.5%

31.5%

+200 bps

Reported Operating Margin

17.9%

17.7%

+20 bps

Adjusted Operating Margin

18.8%

18.2%

+60 bps

Consumer Healthcare segment net sales increased 20% to $537 million, driven by an increase in sales of existing products of $54 million (contract, cough/cold and analgesics categories), $31 million attributable to the recent acquisition of Sergeant's and new product sales of approximately $17 million (cough/cold and smoking cessation categories). These combined increases were partially offset by a decline of $9 million in sales of existing products (other categories) and $4 million in discontinued products.

The adjusted gross margin expanded 200 basis points due to the inclusion of Sergeant's, new products, increased manufacturing efficiencies and a favorable product mix. Third quarter operating expenses increased due primarily to approximately $12 million of incremental operating expenses from the acquisition of Sergeant's.

Nutritionals

 

 

Nutritionals Segment

(in thousands)

(see the attached Table II for reconciliation to GAAP numbers)

 

Fiscal 2013

Fiscal 2012

Third

 Quarter Ended

Third

 Quarter

Ended

 

 

YoY

3/30/2013

3/31/2012

% Change

Net Sales

$133,344

$117,683

+13.3%

Reported Gross Profit

$30,976

$30,350

+2.1%

Adjusted Gross Profit

$34,026

$33,371

+2.0%

Reported Operating Income

$6,965

$1,845

+277.5%

Adjusted Operating Income

$14,275

$15,563

-8.3%

Reported Gross Margin

23.2%

25.8%

-260 bps

Adjusted Gross Margin

25.5%

28.4%

-290 bps

Reported Operating Margin

5.2%

1.6%

+360 bps

Adjusted Operating Margin

10.7%

13.2%

-250 bps

The Nutritionals segment reported third quarter net sales of $133 million, compared with $118 million a year ago. All product categories within the segment grew year-over-year and new product sales were $5 million. The disparities between the reported and adjusted operating income and margin are due to the absence of restructuring charges incurred in the third quarter of fiscal 2012 related to the Company's Florida location, which was closed in the fourth quarter of fiscal 2012.

Third quarter adjusted gross margin decreased due primarily to a larger proportion of sales from the lower margin VMS category and higher production inefficiencies in the infant formula category, while the adjusted operating margin was favorably impacted by lower employee-related expenses.

Rx Pharmaceuticals

 

 

Rx Pharmaceuticals Segment

(in thousands)

(see the attached Table II for reconciliation to GAAP numbers)

 

Fiscal 2013

Fiscal 2012

Third

 Quarter

Ended

Third

 Quarter

Ended

 

 

YoY

3/30/2013

3/31/2012

% Change

Net Sales

$189,410

$155,591

+21.7%

Reported Gross Profit

$96,516

$83,333

+15.8%

Adjusted Gross Profit

$109,661

$91,907

+19.3%

Reported Operating Income

$73,419

$67,257

+9.2%

Adjusted Operating Income

$86,627

$75,831

+14.2%

Reported Gross Margin

51.0%

53.6%

-260 bps

Adjusted Gross Margin

57.9%

59.1%

-120 bps

Reported Operating Margin

38.8%

43.2%

-440 bps

Adjusted Operating Margin

45.7%

48.7%

-300 bps

 

The Rx Pharmaceuticals segment third quarter net sales increased 22% to $189 million due primarily to new product sales of $18 million, $8 million in sales related to the February 11th 2013 acquisition of Rosemont, and strong prescription volumes evidenced by an increase in existing product sales of $7 million.

The adjusted gross margin decreased due primarily to less favorable product mix. The adjusted operating margin was impacted by higher distribution, selling, general and administrative costs and the inclusion of Rosemont.

API

 

 

API Segment

(in thousands)

(see the attached Table II for reconciliation to GAAP numbers)

Fiscal 2013

Fiscal 2012

Third

 Quarter Ended

Third

 Quarter

Ended

 

 

YoY

3/30/2013

3/31/2012

% Change

Net Sales

$41,114

$36,951

+11.3%

Reported Gross Profit

$20,915

$18,675

+12.0%

Adjusted Gross Profit

$21,413

$19,165

+11.7%

Reported Operating Income

$11,728

$10,462

+12.1%

Adjusted Operating Income

$12,226

$10,952

+11.6%

Reported Gross Margin

50.9%

50.5%

+40 bps

Adjusted Gross Margin

52.1%

51.9%

+20 bps

Reported Operating Margin

28.5%

28.3%

+20 bps

Adjusted Operating Margin

29.7%

29.6%

+10 bps

The API segment's net sales increased by 11% to $41 million due to an increase in existing product sales of $4 million primarily related to the continued successful launch of a customer's product.

Operating margins expanded on favorable mix of existing product sales offset slightly by higher distribution selling, general and administrative expenses.

Closing

Chairman, President and CEO Joseph C. Papa concluded, "While we've celebrated a record quarter, we are back to executing our plans for the final quarter of fiscal 2013. We're well positioned to save pet owners money as we enter this summer's flea and tick season and are anxiously awaiting additional new product approvals and launches. As always, we stand committed to bringing more forms of quality, affordable healthcare to more consumers."

Guidance

The Company is confirming the guidance which was provided on February 11, 2013, the closing date of the Rosemont acquisition, and continues to expect fiscal 2013 reported earnings to be between $4.67 and $4.87 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 continues to expect fiscal 2013 adjusted earnings to be between $5.53 and $5.73 per diluted share as compared to $4.99 in fiscal 2012. This range implies a year-over-year growth rate in adjusted earnings of 11% to 15% over fiscal 2012's adjusted earnings from continuing operations per diluted share.               

The conference call will be available live via webcast to interested parties in the investor relations section of the Perrigo website at http://perrigo.investorroom.com/events-webcasts or by phone at 877-248-9413, International 973-582-2737, and reference ID# 31768198. A taped replay of the call will be available beginning at approximately 1:00 p.m. (ET) Tuesday, May 7, 2013 until midnight Friday, May 17, 2013. To listen to the replay, dial 855-859-2056, International 404-537-3406, and use access code 31768198.

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, animal health, 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 include the United States, Israel, Mexico, the United Kingdom, India, China 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 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)

Three Months Ended

Nine Months Ended

March 30, 2013

March 31, 2012

March 30, 2013

March 31, 2012

Net sales

$         919,825

$         778,017

$      2,572,594

$      2,341,482

Cost of sales

588,464

498,744

1,648,799

1,539,755

Gross profit

331,361

279,273

923,795

801,727

Operating expenses

Distribution

12,569

10,181

35,035

29,540

Research and development

28,526

27,950

84,244

78,736

Selling and administration

111,660

87,991

305,480

278,080

Restructuring

?

7,081

?

7,081

Total operating expenses

152,755

133,203

424,759

393,437

Operating income

178,606

146,070

499,036

408,290

Interest, net

16,070

16,651

47,237

44,862

Other expense (income), net

841

(5,202)

855

(4,221)

Losses on sales of investments

1,608

?

4,657

?

Income before income taxes

160,087

134,621

446,287

367,649

Income tax expense

48,163

18,894

122,828

81,725

Net income

$         111,924

$         115,727

$         323,459

$         285,924

Earnings per share

Basic earnings per share

$               1.19

$               1.24

$               3.45

$               3.07

Diluted earnings per share

$               1.18

$               1.23

$               3.42

$               3.04

Weighted average shares outstanding

Basic

93,989

93,330

93,833

93,152

Diluted

94,519

94,124

94,443

94,028

Dividends declared per share

$               0.09

$               0.08

$               0.26

$               0.23

PERRIGO COMPANY

CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME

(in thousands)

(unaudited)

Three Months Ended

Nine Months Ended

March 30, 2013

March 31, 2012

March 30, 2013

March 31, 2012

Net income

$         111,924

$         115,727

$         323,459

$         285,924

Other comprehensive income (loss):

Change in fair value of derivative financial instruments, net of tax

1,638

2,642

8,344

(6,650)

Foreign currency translation adjustments

4,784

22,214

38,234

(43,598)

Change in fair value of investment securities, net of tax

295

?

1,332

(933)

Post-retirement liability adjustments, net of tax

?

(28)

(41)

(69)

Other comprehensive income (loss), net of tax

6,717

24,828

47,869

(51,250)

Comprehensive income

$         118,641

$         140,555

$         371,328

$         234,674

PERRIGO COMPANY

CONDENSED CONSOLIDATED BALANCE SHEETS

(in thousands)

(unaudited)

March 30, 2013

June 30, 2012

March 31, 2012

Assets

Current assets

Cash and cash equivalents

$               300,827

$               602,489

$               554,280

Accounts receivable, net

618,666

572,582

560,740

Inventories

684,741

547,455

589,947

Current deferred income taxes

43,068

45,738

51,269

Income taxes refundable

5,479

1,047

766

Prepaid expenses and other current assets

44,847

26,610

33,886

Total current assets

1,697,628

1,795,921

1,790,888

Property and equipment

1,236,444

1,118,837

1,096,749

Less accumulated depreciation

(593,186)

(540,487)

(532,335)

643,258

578,350

564,414

Goodwill and other indefinite-lived intangible assets

1,127,954

820,122

830,689

Other intangible assets, net

938,544

729,253

752,600

Non-current deferred income taxes

17,223

13,444

12,390

Other non-current assets

71,281

86,957

89,073

$            4,495,888

$            4,024,047

$            4,040,054

Liabilities and Shareholders' Equity

Current liabilities

Accounts payable

$               325,415

$               317,341

$               307,017

Short-term debt

4,513

90

?

Payroll and related taxes

72,832

89,934

74,450

Accrued customer programs

128,676

116,055

103,868

Accrued liabilities

83,260

76,406

83,886

Accrued income taxes

17,639

12,905

20,530

Current portion of long-term debt

41,285

40,000

40,000

Total current liabilities

673,620

652,731

629,751

Non-current liabilities

Long-term debt, less current portion

1,331,684

1,329,235

1,454,620

Non-current deferred income taxes

80,474

24,126

19,543

Other non-current liabilities

184,782

165,310

163,466

Total non-current liabilities

1,596,940

1,518,671

1,637,629

Shareholders' Equity

Controlling interest:

Preferred stock, without par value, 10,000 shares authorized

?

?

?

Common stock, without par value, 200,000 shares authorized

530,780

504,708

496,320

Accumulated other comprehensive income

87,273

39,404

75,800

Retained earnings

1,605,894

1,306,925

1,198,740

2,223,947

1,851,037

1,770,860

Noncontrolling interest

1,381

1,608

1,814

Total shareholders' equity

2,225,328

1,852,645

1,772,674

$            4,495,888

$            4,024,047

$            4,040,054

Supplemental Disclosures of Balance Sheet Information

Allowance for doubtful accounts

$                   2,219

$                   2,556

$                   2,483

Working capital

$            1,024,008

$            1,143,190

$            1,161,137

Preferred stock, shares issued and outstanding

?

?

?

Common stock, shares issued and outstanding

94,022

93,484

93,405

 

PERRIGO COMPANY

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS

(in thousands)

(unaudited)

Nine Months Ended

March 30, 2013

March 31, 2012

Cash Flows From (For) Operating Activities

Net income

$          323,459

$          285,924

Adjustments to derive cash flows

Gain on sale of pipeline development projects

?

(3,500)

Restructuring

?

7,081

Losses on sales of investments

4,657

?

Depreciation and amortization

112,817

101,712

Share-based compensation

14,037

13,924

Income tax benefit from exercise of stock options

(271)

(447)

Excess tax benefit of stock transactions

(15,365)

(12,202)

Deferred income taxes

(3,069)

12,021

Subtotal

436,265

404,513

Changes in operating assets and liabilities, net of business acquisitions

Accounts receivable

(5,919)

(28,723)

Inventories

(81,269)

(27,523)

Accounts payable

(17,424)

(43,867)

Payroll and related taxes

(21,430)

(9,707)

Accrued customer programs

10,008

(13,755)

Accrued liabilities

10,113

17,584

Accrued income taxes

31,161

19,077

Other

18,607

(5,979)

Subtotal

(56,153)

(92,893)

Net cash from operating activities

380,112

311,620

Cash Flows (For) From Investing Activities

Acquisitions of businesses, net of cash acquired

(607,776)

(582,329)

Proceeds from sale of securities

8,630

?

Proceeds from sale of intangible assets and pipeline development projects

?

10,500

Additions to property and equipment

(63,480)

(85,715)

Acquisitions of intangible assets

?

(750)

Net cash for investing activities

(662,626)

(658,294)

Cash Flows (For) From Financing Activities

Borrowings (repayments) of short-term debt, net

4,423

(2,770)

Borrowings of long-term debt

40,786

1,089,620

Repayments of long-term debt

(40,000)

(485,000)

Deferred financing fees

(643)

(5,108)

Excess tax benefit of stock transactions

15,365

12,202

Issuance of common stock

8,706

10,040

Repurchase of common stock

(12,321)

(7,954)

Cash dividends

(24,490)

(21,516)

Net cash (for) from financing activities

(8,174)

589,514

Effect of exchange rate changes on cash

(10,974)

1,336

Net (decrease) increase in cash and cash equivalents

(301,662)

244,176

Cash and cash equivalents, beginning of period

602,489

310,104

Cash and cash equivalents, end of period

$          300,827

$          554,280

Supplemental Disclosures of Cash Flow Information

Cash paid/received during the period for:

Interest paid

$            31,234

$            29,234

Interest received

$              2,473

$              2,222

Income taxes paid

$            93,518

$            53,216

Income taxes refunded

$              1,312

$                 830

 

Table I

PERRIGO COMPANY

RECONCILIATION OF NON-GAAP MEASURES

(in thousands, except per share amounts)

(unaudited)

Three Months Ended

Consolidated

March 30, 2013

March 31, 2012

% Change

GAAP

Non-GAAP Adjustments

As Adjusted

GAAP

Non-GAAP Adjustments

As Adjusted

GAAP

As Adjusted

Net sales

$       919,825

$               -

$       919,825

$      778,017

$               -

$       778,017

18 %

18 %

Cost of sales

588,464

20,515

(a,b)

567,949

498,744

13,505

(a)

485,239

18 %

17 %

Gross profit

331,361

20,515

351,876

279,273

13,505

292,778

19 %

20 %

Operating expenses

Distribution

12,569

-

12,569

10,181

-

10,181

23 %

23 %

Research and development

28,526

-

28,526

27,950

-

27,950

2 %

2 %

Selling and administration

111,660

9,078

(a,c)

102,582

87,991

5,027

(a)

82,964

27 %

24 %

Restructuring

-

-

-

7,081

7,081

(e)

-

-

-

Total operating expenses

152,755

9,078

143,677

133,203

12,108

121,095

15 %

19 %

Operating income

178,606

29,593

208,199

146,070

25,613

171,683

22 %

21 %

Interest, net

16,070

-

16,070

16,651

-

16,651

-3 %

-3 %

Other expense (income), net

841

-

841

(5,202)

-

(5,202)

-

-

Loss on sale of investment

1,608

1,608

-

-

-

-

-

-

Income before income taxes

160,087

31,201

191,288

134,621

25,613

160,234

19 %

19 %

Income tax expense

48,163

9,052

(l)

57,215

18,894

8,661

(l)

27,555

155 %

108 %

Net income

$       111,924

$         22,149

$       134,073

$      115,727

$        16,952

$       132,679

-3 %

1 %

Diluted earnings per share

$           1.18

$           1.42

$           1.23

$           1.41

-4 %

1 %

Diluted weighted average shares outstanding

94,519

94,519

94,124

94,124

Selected ratios as a percentage of net sales

Gross profit

36.0 %

38.3 %

35.9 %

37.6 %

Operating expenses

16.6 %

15.6 %

17.1 %

15.6 %

Operating income

19.4 %

22.6 %

18.8 %

22.1 %

Nine Months Ended

Consolidated

March 30, 2013

March 31, 2012

% Change

GAAP

Non-GAAP Adjustments

As Adjusted

GAAP

Non-GAAP Adjustments

As Adjusted

GAAP

As Adjusted

Net sales

$    2,572,594

$               -

$    2,572,594

$    2,341,482

$               -

$    2,341,482

10 %

10 %

Cost of sales

1,648,799

57,146

(a,f)

1,591,653

1,539,755

68,797

(a,h)

1,470,958

7 %

8 %

Gross profit

923,795

57,146

980,941

801,727

68,797

870,524

15 %

13 %

Operating expenses

Distribution

35,035

-

35,035

29,540

-

29,540

19 %

19 %

Research and development

84,244

-

84,244

78,736

(3,500)

 (i) 

82,236

7 %

2 %

Selling and administration

305,480

23,929

(a,d,g)

281,551

278,080

24,076

(a,j)

254,004

10 %

11 %

Restructuring

-

-

-

7,081

7,081

(e)

-

-

-

Total operating expenses

424,759

23,929

400,830

393,437

27,657

365,780

8 %

10 %

Operating income

499,036

81,075

580,111

408,290

96,454

504,744

22 %

15 %

Interest, net

47,237

-

47,237

44,862

-

44,862

5 %

5 %

Other expense (income), net

855

-

855

(4,221)

-

(4,221)

-

-

Losses on sales of investments

4,657

4,657

 (k) 

-

-

-

-

-

-

Income before income taxes

446,287

85,732

532,019

367,649

96,454

464,103

21 %

15 %

Income tax expense

122,828

27,567

(l)

150,395

81,725

33,948

(l)

115,673

50 %

30 %

Net income

$       323,459

$         58,165

$       381,624

$      285,924

$        62,506

$       348,430

13 %

10 %

Diluted earnings per share

$           3.42

$           4.04

$           3.04

$           3.71

13 %

9 %

Diluted weighted average shares outstanding

94,443

94,443

94,028

94,028

Selected ratios as a percentage of net sales

Gross profit

35.9 %

38.1 %

34.2 %

37.2 %

Operating expenses

16.5 %

15.6 %

16.8 %

15.6 %

Operating income

19.4 %

22.5 %

17.4 %

21.6 %

(a) Deal-related amortization

(b) Inventory step-up of $1,857

(c) Acquisition costs of $3,124

(d) Severance costs of $1,526

(e) Restructuring charges related to Florida

(f) Inventory step-ups of $9,550

(g) Acquisition costs of $5,041

(h) Inventory step-up of $27,179

(i) Proceeds from sale of pipeline development projects

(j) Acquisition-related and severance costs of $9,381

(k) Losses on sale of investment in Cobrek of $3,049 and sale of auction rate securities of $1,608

(l) Total tax effect for non-GAAP pre-tax adjustments

 

Table II

PERRIGO COMPANY

REPORTABLE SEGMENTS

RECONCILIATION OF NON-GAAP MEASURES

(in thousands)

(unaudited)

Three Months Ended

Consumer Healthcare

March 30, 2013

March 31, 2012

% Change

GAAP

Non-GAAP Adjustments

As Adjusted

GAAP

Non-GAAP Adjustments

As Adjusted

GAAP

As Adjusted

Net sales

$      536,775

$             -

$      536,775

$      448,848

$               -

$        448,848

20 %

20 %

Cost of sales

360,129

3,399

(a)

356,730

308,431

1,010

(a)

307,421

17 %

16 %

Gross profit

176,646

3,399

180,045

140,417

1,010

141,427

26 %

27 %

Operating expenses

80,725

1,631

(a)

79,094

61,034

1,411

(a)

59,623

32 %

33 %

Operating income

$        95,921

$        5,030

$      100,951

$        79,383

$          2,421

$         81,804

21 %

23 %

Selected ratios as a percentage of net sales

Gross profit

32.9 %

33.5 %

31.3 %

31.5 %

Operating expenses

15.0 %

14.7 %

13.6 %

13.3 %

Operating income

17.9 %

18.8 %

17.7 %

18.2 %

Nine Months Ended

Consumer Healthcare

March 30, 2013

March 31, 2012

% Change

GAAP

Non-GAAP Adjustments

As Adjusted

GAAP

Non-GAAP Adjustments

As Adjusted

GAAP

As Adjusted

Net sales

$   1,526,479

$             -

$   1,526,479

$   1,331,806

$               -

$     1,331,806

15 %

15 %

Cost of sales

1,041,744

15,328

(a,b)

1,026,416

913,218

3,038

(a)

910,180

14 %

13 %

Gross profit

484,735

15,328

500,063

418,588

3,038

421,626

16 %

19 %

Operating expenses

223,448

4,528

(a)

218,920

187,766

3,848

(a)

183,918

19 %

19 %

Operating income

$      261,287

$      19,856

$      281,143

$      230,822

$          6,886

$        237,708

13 %

18 %

Selected ratios as a percentage of net sales

Gross profit

31.8 %

32.8 %

31.4 %

31.7 %

Operating expenses

14.6 %

14.3 %

14.1 %

13.8 %

Operating income

17.1 %

18.4 %

17.3 %

17.8 %

Three Months Ended

Nutritionals

March 30, 2013

March 31, 2012

% Change

GAAP

Non-GAAP Adjustments

As Adjusted

GAAP

Non-GAAP Adjustments

As Adjusted

GAAP

As Adjusted

Net sales

$      133,344

$             -

$      133,344

$      117,683

$               -

$        117,683

13 %

13 %

Cost of sales

102,368

3,050

(a)

99,318

87,333

3,021

(a)

84,312

17 %

18 %

Gross profit

30,976

3,050

34,026

30,350

3,021

33,371

2 %

2 %

Operating expenses

24,011

4,260

(a)

19,751

28,505

10,697

(a,c)

17,808

-16 %

11 %

Operating income

$          6,965

$        7,310

$        14,275

$          1,845

$        13,718

$         15,563

278 %

-8 %

Selected ratios as a percentage of net sales

Gross profit

23.2 %

25.5 %

25.8 %

28.4 %

Operating expenses

18.0 %

14.8 %

24.2 %

15.1 %

Operating income

5.2 %

10.7 %

1.6 %

13.2 %

Nine Months Ended

Nutritionals

March 30, 2013

March 31, 2012

% Change

GAAP

Non-GAAP Adjustments

As Adjusted

GAAP

Non-GAAP Adjustments

As Adjusted

GAAP

As Adjusted

Net sales

$      358,705

$             -

$      358,705

$      365,691

$               -

$        365,691

-2 %

-2 %

Cost of sales

271,749

9,149

(a)

262,600

277,542

11,892

(a)

265,650

-2 %

-1 %

Gross profit

86,956

9,149

96,105

88,149

11,892

100,041

-1 %

-4 %

Operating expenses

68,948

12,771

(a)

56,177

74,511

17,928

(a,c)

56,583

-7 %

-1 %

Operating income

$        18,008

$      21,920

$        39,928

$        13,638

$        29,820

$         43,458

32 %

-8 %

Selected ratios as a percentage of net sales

Gross profit

24.2 %

26.8 %

24.1 %

27.4 %

Operating expenses

19.2 %

15.7 %

20.4 %

15.5 %

Operating income

5.0 %

11.1 %

3.7 %

11.9 %

Three Months Ended

Rx Pharmaceuticals

March 30, 2013

March 31, 2012

% Change

GAAP

Non-GAAP Adjustments

As Adjusted

GAAP

Non-GAAP Adjustments

As Adjusted

GAAP

As Adjusted

Net sales

$      189,410

$             -

$      189,410

$      155,591

$               -

$        155,591

22 %

22 %

Cost of sales

92,894

13,145

(a,d)

79,749

72,258

8,574

(a)

63,684

29 %

25 %

Gross profit

96,516

13,145

109,661

83,333

8,574

91,907

16 %

19 %

Operating expenses

23,097

63

(a)

23,034

16,076

-

16,076

44 %

43 %

Operating income

$        73,419

$      13,208

$        86,627

$        67,257

$          8,574

$         75,831

9 %

14 %

Selected ratios as a percentage of net sales

Gross profit

51.0 %

57.9 %

53.6 %

59.1 %

Operating expenses

12.2 %

12.2 %

10.3 %

10.3 %

Operating income

38.8 %

45.7 %

43.2 %

48.7 %

(a) Deal-related amortization

(b) Inventory step-up of $7,693

(c) Restructuring charges of $7,081 related to Florida

(d) Inventory step-up of $1,857

(e) Severance costs of $1,526

(f) Inventory step-up of $27,179

(g) Proceeds of $3,500 from sale of pipeline development projects

(h) Severance costs of $3,755

 

Table II (Continued)

PERRIGO COMPANY

REPORTABLE SEGMENTS

RECONCILIATION OF NON-GAAP MEASURES

(in thousands)

(unaudited)

Nine Months Ended

Rx Pharmaceuticals

March 30, 2013

March 31, 2012

% Change

GAAP

Non-GAAP Adjustments

As Adjusted

GAAP

Non-GAAP Adjustments

As Adjusted

GAAP

As Adjusted

Net sales

$    514,893

$            -

$      514,893

$     460,414

$            -

$      460,414

12 %

12 %

Cost of sales

245,657

30,004

(a,d)

215,653

244,243

51,075

(a,f)

193,168

1 %

12 %

Gross profit

269,236

30,004

299,240

216,171

51,075

267,246

25 %

12 %

Operating expenses

63,254

1,589

(a,e)

61,665

54,455

255

(g,h)

54,200

16 %

14 %

Operating income

$    205,982

$      31,593

$      237,575

$     161,716

$     51,330

$      213,046

27 %

12 %

Selected ratios as a percentage of net sales

Gross profit

52.3 %

58.1 %

47.0 %

58.0 %

Operating expenses

12.3 %

12.0 %

11.8 %

11.8 %

Operating income

40.0 %

46.1 %

35.1 %

46.3 %

Three Months Ended

API

March 30, 2013

March 31, 2012

% Change

GAAP

Non-GAAP Adjustments

As Adjusted

GAAP

Non-GAAP Adjustments

As Adjusted

GAAP

As Adjusted

Net sales

$      41,114

$            -

$       41,114

$       36,951

$            -

$       36,951

11 %

11 %

Cost of sales

20,199

498

(a)

19,701

18,276

490

(a)

17,786

11 %

11 %

Gross profit

20,915

498

21,413

18,675

490

19,165

12 %

12 %

Operating expenses

9,187

-

9,187

8,213

-

8,213

12 %

12 %

Operating income

$      11,728

$          498

$       12,226

$       10,462

$          490

$       10,952

12 %

12 %

Selected ratios as a percentage of net sales

Gross profit

50.9 %

52.1 %

50.5 %

51.9 %

Operating expenses

22.3 %

22.3 %

22.2 %

22.2 %

Operating income

28.5 %

29.7 %

28.3 %

29.6 %

Nine Months Ended

API

March 30, 2013

March 31, 2012

% Change

GAAP

Non-GAAP Adjustments

As Adjusted

GAAP

Non-GAAP Adjustments

As Adjusted

GAAP

As Adjusted

Net sales

$    118,387

$            -

$      118,387

$     127,347

$            -

$      127,347

-7 %

-7 %

Cost of sales

53,229

1,442

(a)

51,787

66,913

1,507

(a)

65,406

-20 %

-21 %

Gross profit

65,158

1,442

66,600

60,434

1,507

61,941

8 %

8 %

Operating expenses

26,291

-

26,291

24,064

-

24,064

9 %

9 %

Operating income

$      38,867

$       1,442

$       40,309

$       36,370

$       1,507

$       37,877

7 %

6 %

Selected ratios as a percentage of net sales

Gross profit

55.0 %

56.3 %

47.5 %

48.6 %

Operating expenses

22.2 %

22.2 %

18.9 %

18.9 %

Operating income

32.8 %

34.0 %

28.6 %

29.7 %

Three Months Ended

Other

March 30, 2013

March 31, 2012

% Change

GAAP

Non-GAAP Adjustments

As Adjusted

GAAP

Non-GAAP Adjustments

As Adjusted

GAAP

As Adjusted

Net sales

$      19,182

$            -

$       19,182

$       18,944

$            -

$       18,944

1 %

1 %

Cost of sales

12,874

423

(a)

12,451

12,446

410

(a)

12,036

3 %

3 %

Gross profit

6,308

423

6,731

6,498

410

6,908

-3 %

-3 %

Operating expenses

4,666

-

4,666

5,652

-

5,652

-17 %

-17 %

Operating income

$       1,642

$          423

$         2,065

$           846

$          410

$         1,256

94 %

64 %

Selected ratios as a percentage of net sales

Gross profit

32.9 %

35.1 %

34.3 %

36.5 %

Operating expenses

24.3 %

24.3 %

29.8 %

29.8 %

Operating income

8.6 %

10.8 %

4.5 %

6.6 %

Nine Months Ended

Other

March 30, 2013

March 31, 2012

% Change

GAAP

Non-GAAP Adjustments

As Adjusted

GAAP

Non-GAAP Adjustments

As Adjusted

GAAP

As Adjusted

Net sales

$      54,130

$            -

$       54,130

$       56,224

$            -

$       56,224

-4 %

-4 %

Cost of sales

36,420

1,223

(a)

35,197

37,839

1,285

(a)

36,554

-4 %

-4 %

Gross profit

17,710

1,223

18,933

18,385

1,285

19,670

-4 %

-4 %

Operating expenses

14,980

-

14,980

16,330

-

16,330

-8 %

-8 %

Operating income

$       2,730

$       1,223

$         3,953

$        2,055

$       1,285

$         3,340

33 %

18 %

Selected ratios as a percentage of net sales

Gross profit

32.7 %

35.0 %

32.7 %

35.0 %

Operating expenses

27.7 %

27.7 %

29.0 %

29.0 %

Operating income

5.0 %

7.3 %

3.7 %

5.9 %

(a) Deal-related amortization

(b) Inventory step-up of $7,693

(c) Restructuring charges of $7,081 related to Florida

(d) Inventory step-up of $1,857

(e) Severance costs of $1,526

(f) Inventory step-up of $27,179

(g) Proceeds of $3,500 from sale of pipeline development projects

(h) Severance costs of $3,755

 

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 (1)

$4.67 - $4.87

    Deal-related amortization (1,2)

0.68

    Charges associated with inventory step-ups (1)

0.08

    Charges associated with acquisition and severance costs (1)

0.05

    Losses on sales of investments

0.05

FY13 adjusted diluted EPS range

$5.53 - $5.73

Fiscal 2012*

FY12 reported diluted EPS from continuing operations

$4.18

    Deal-related amortization (2)

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) Does not include any estimate related to the Velcera, Inc. acquisition

(2) Amortization of acquired intangible assets related to business combinations and asset acquisitions

*All information based on continuing operations.

 

Table IV

PERRIGO COMPANY

RECONCILIATION OF NON-GAAP MEASURES

(in thousands, except per share amounts)

(unaudited)

Q3 FY13

Q3 FY12

% Change

Reported net income

$        111,924

$     115,727

-3%

    Total non-GAAP pre-tax adjustments

31,201

25,613

22%

    Total tax effect for non-GAAP pre-tax adjustments

(9,052)

(8,661)

5%

Adjusted net income

134,073

132,679

1%

    Discrete tax item

-

(18,825)

-

Adjusted net income excluding discrete tax item

$        134,073

$     113,854

18%

Diluted weighted average shares outstanding

94,519

94,124

Reported diluted EPS

$             1.18

$          1.23

-4%

Adjusted diluted EPS

$             1.42

$          1.41

1%

Adjusted diluted EPS excluding discrete tax item

$             1.42

$          1.21

17%

 

SOURCE Perrigo Company

For further information: Arthur J. Shannon, Vice President, Investor Relations and Communication, (269) 686-1709, E-mail: ajshannon@perrigo.com, Bradley Joseph, Senior Manager, Investor Relations and Communication, (269) 686-3373, E-mail: bradley.joseph@perrigo.com

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