Perrigo Reports Record Revenue, Earnings and Cash Flow From Operations for Fiscal 2011

-- Full-year revenue from continuing operations increased $487 million, or 21%, to a record $2.76 billion.

-- GAAP income from continuing operations for the full year increased 52% to $341 million, or $3.64 per share.

-- Adjusted income from continuing operations for the full year increased 34% to $375 million, or $4.01 per share.

-- Record full-year cash flow from operations of $374 million.

-- Management expects full-year fiscal 2012 GAAP diluted earnings per share from continuing operations to be in a range of $3.79 to $3.94 per share. This is an increase of 4% to 8% from fiscal 2011's $3.64 per share.

-- Management expects full-year fiscal 2012 adjusted diluted earnings from continuing operations to be in a range of $4.50 to $4.65 per share, an increase of 12% to 16% compared to fiscal 2011 adjusted diluted earnings per share.

Aug 16, 2011, 08:04 ET from Perrigo Company

ALLEGAN, Mich., Aug. 16, 2011 /PRNewswire/ -- Perrigo Company (Nasdaq: PRGO; TASE) today announced results for its fourth quarter and full year ended June 25, 2011.

Perrigo's Chairman and CEO Joseph C. Papa commented, "For the fifth straight year, we delivered year-over-year record sales, earnings and cash flow from operations, while at the same time making meaningful investments in the facilities, production and people necessary to further enhance our own already high standards of excellent product quality. In addition, we announced the acquisition of Paddock Laboratories and the entry into blood glucose monitoring category that broaden our product offering. We are continuing along our strategic path in these challenging economic times to make quality healthcare more affordable to consumers around the globe."

Refer to Table I at the end of this press release for adjustments in the current year and prior year periods and additional non-GAAP disclosure information.

The Company's reported results are summarized in the attached Consolidated Statements of Income, Balance Sheets and Cash Flows.

Perrigo Company

(from continuing operations, in thousands, except per share amounts)

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

Fourth Quarter

Fiscal Year

       2011

       2010

     2011

      2010

Net Sales

$704,629

$619,760

$2,755,029

$2,268,150

Reported Income

$85,570

$49,001

$340,558

$224,434

Adjusted Income

$95,418

$71,539

$375,361

$281,095

Reported Diluted EPS

$0.91

$0.53

$3.64

$2.42

Adjusted Diluted EPS

$1.02

$0.77

$4.01

$3.03

Diluted Shares

93,853

92,948

93,529

92,845

Fourth Quarter Results

Net sales from continuing operations for the fourth quarter of fiscal 2011 were approximately $705 million, an increase of 14% compared to last year. Reported income from continuing operations was approximately $86 million, or $0.91 per share, a strong increase over $49 million, or $0.53 per share, a year ago. Excluding the charges outlined in Table I at the end of this release, fourth quarter fiscal 2011 adjusted income from continuing operations was $95 million, or $1.02 per share.

Fiscal Year Results

Net sales from continuing operations for fiscal 2011 were $2.76 billion, an increase of 21% over fiscal 2010. The increase was driven primarily by the acquisitions of PBM Holdings, Inc. (PBM) and Orion Laboratories Pty Ltd. (Orion), as well as $192 million in new product sales. Reported gross profit was $945 million, up by 27%, and reported gross margin was 34.3%, up from 32.9% last year. The gross margin improvement was driven primarily by new products and the acquisition of PBM. Reported operating margin increased 300 basis points to 17.8% and adjusted operating margin increased 160 basis points to 19.6%. Reported income from continuing operations was $341 million, an increase of 52%. Adjusted income from continuing operations was $375 million, or an increase of 34% from fiscal 2010.

Consumer Healthcare

Consumer Healthcare segment net sales in the fourth quarter were $434 million, compared with $399 million in the fourth quarter last year, an increase of $35 million or 9%. The increase resulted from $18 million of new product sales, $12 million of higher sales volumes of existing products and approximately $5 million due to the impact of favorable changes in foreign currency exchange rates. Reported gross profit was $133 million, compared to $131 million a year ago. Adjusted gross profit was $134 million compared to $133 million a year ago. Adjusted gross margin decreased 220 basis points to 31.0%, largely driven increased investments in quality systems and lower manufacturing efficiencies year over year due to production process redesigns. Reported operating income was $74 million, compared with $69 million a year ago, and adjusted operating income was approximately $77 million compared to approximately $71 million a year ago. Adjusted operating margin remained constant at 17.9% compared to last year.      

For fiscal year 2011, Consumer Healthcare net sales increased $111 million or 7%, compared to fiscal 2010. The increase resulted from $51 million of higher sales volumes of existing products, primarily in the analgesics and cough/cold categories, $54 million of new product sales, and $22 million of sales attributable to the acquisition of Orion, as well as an approximate $7 million favorable impact from changes in foreign currency exchange rates. These increases were partially offset by a decline of $22 million in sales of existing products, primarily in the contract manufacturing and gastrointestinal categories. Reported gross profit was $531 million, compared to $523 million a year ago. Adjusted gross profit was $535 million, compared to $526 million a year ago. Adjusted gross margin decreased 180 basis points to 31.7%, driven by increased manufacturing and inventory costs related to quality improvement initiatives at our Michigan facilities. Reported operating income was $293 million, compared with $304 million a year ago, and adjusted operating income was approximately $303 million, compared to $310 million a year ago. Adjusted operating margin decreased 170 basis points to 18.0%.  

On April 13, 2011, the Company announced that its partner, Teva Pharmaceutical Industries, Ltd. (Nasdaq: TEVA), received final over-the-counter (OTC) approval to sell and distribute fexofenadine HCl 60 mg and 180 mg tablets.

On May 2, 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 OTC Minoxidil Foam.

On May 16, 2011, the Company announced that it received final approval from the FDA for its ANDA for OTC Ranitidine 150 (regular and cool mint) and expects to launch early in its fiscal 2012.

Nutritionals

The Nutritionals segment fourth quarter net sales were $123 million, compared to $84 million last year, an increase of 47%. This increase was due to the inclusion of a full quarter of sales from the PBM acquisition. Reported gross profit was $37 million, compared to $15 million a year ago, while adjusted gross margin increased 190 basis points to 32.9%. This increase was also due to the PBM acquisition. Reported operating income was $12 million, up from a loss of $1 million a year ago. Adjusted operating income increased to approximately $18 million, up from $12 million a year ago, as the adjusted operating margin percentage remained flat at 14.3%.

For fiscal year 2011, Nutritionals net sales increased 94% to $503 million compared to $259 million in fiscal 2010 due to the PBM acquisition, which added incremental revenues of $283 million, including approximately $9 million in new product sales. New product sales within VMS (Vitamins, Minerals and Supplements) were approximately $8 million. The increase was offset by a decline of $46 million due primarily to SKU rationalization within VMS. Reported gross profit was $159 million, compared to approximately $39 million a year ago, while adjusted gross profit was $171 million, compared to $50 million a year ago. Adjusted gross margin increased 1,480 basis points to 34.0%, due largely to the acquisition of PBM, along with operational improvements within VMS. Reported operating income was $68 million, compared with $2 million a year ago, and adjusted operating income was $91 million, compared to $17 million a year ago. Adjusted operating margin increased 1,140 basis points to 18.1%.

Rx Pharmaceuticals

The Rx Pharmaceuticals segment fourth quarter net sales were $92 million, compared with $83 million a year ago, an increase of 12%. This increase was due primarily to new product sales of $10 million. Reported gross profit was $50 million, compared to approximately $31 million a year ago. Gross margin increased 1,760 basis points to 54.4% as a result of the Company switching from selling the authorized generic of imiquimod cream to its own product. Reported operating income was $38 million, an increase of $25 million from last year, and adjusted operating income was $41 million, compared to $21 million a year ago. Adjusted operating margin increased 1,910 basis points from last year to 44.6%.  

For fiscal year 2011, net sales for the Rx Pharmaceuticals segment increased 45% over fiscal 2010 to $344 million from $238 million. The increase was due primarily to new product sales of $81 million, due largely to sales of the generic version of Aldara®, along with favorable pricing on select products. Reported gross profit was $163 million, compared to $108 million a year ago. Adjusted gross profit was $174 million, compared to $119 million a year ago. Adjusted gross margin increased 60 basis points to 50.7% due to new product sales, favorable pricing on select products, and gross profit from higher sales volumes of existing products. Reported operating income was $120 million, compared with approximately $49 million a year ago, and adjusted operating income was $131 million, compared to $78 million a year ago. Adjusted operating margin increased 520 basis points to 38.2%.  

On May 18, 2011 the Company and its partner Synthon Pharmaceuticals, Inc. received tentative approval from the FDA for its ANDA for Levocetirizine Solution, 2.5 mg/5ml.

On June 15, 2011 the Company and its partner Teva announced that they began shipping Triamcinolone Acetonide Nasal Spray.

API

The API segment reported fourth quarter net sales of $37 million, compared with $39 million a year ago. Reported operating income decreased approximately $1 million to $6 million, while adjusted operating income decreased $2 million compared to last year. Adjusted operating margin decreased 500 basis points to 19.3%.  

For fiscal year 2011, net sales increased 11% or $16 million over fiscal 2010, to $156 million. Reported operating income increased approximately $23 million over last year, and adjusted operating income increased $14 million over last year to $40 million. The increases were due largely to new product sales of $32 million, driven primarily by temozolomide sales in Europe. Sales were offset by decreased sales volumes of existing products, a decrease in revenues related to the sale of dossier agreements and unfavorable changes in foreign currency exchange rates. Adjusted operating margin increased 730 basis points to 25.9%.  

Other

Continuing operations for the Other category, consisting of the Israel Pharmaceutical and Diagnostic Products operating segment, reported fourth quarter net sales of $18 million compared with $15 million a year ago. The segment reported adjusted operating income of $0.6 million, compared to $1 million a year ago. Net sales for fiscal 2011 increased 17% to $67 million, up from approximately $58 million a year ago. Adjusted operating income for the segment was $3 million compared to approximately $5 million for fiscal 2010.  

Guidance

Chairman and CEO Joseph C. Papa concluded, "We had strong performance and execution across our businesses during fiscal 2011 and in fiscal 2012 we look to build on that success. We expect fiscal 2012 reported diluted earnings from continuing operations to be between $3.79 and $3.94 per share as compared to $3.64 in fiscal 2011. Excluding the charges outlined in Table III at the end of this release, we expect fiscal 2012 adjusted diluted earnings from continuing operations to be between $4.50 and $4.65 per share as compared to $4.01 in fiscal 2011. This new range implies a year-over-year growth rate of adjusted earnings from continuing operations of 12% to 16% over fiscal 2011 adjusted diluted earnings per share."

Perrigo will host a conference call to discuss fiscal 2011 fourth quarter and year end results at 10:00 a.m. (ET) on Tuesday, August 16. 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# 84462142. A taped replay of the call will be available beginning at approximately 2:00 p.m. (ET) Tuesday, August 16, 2011, until midnight Friday, September 2, 2011. To listen to the replay, call 800-642-1687, International 706-645-9291, access code 84462142.

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

CONSOLIDATED STATEMENTS OF INCOME

(in thousands, except per share amounts)

Fiscal Year

2010

2009

As Adjusted

As Adjusted

2011

(Note 1)

(Note 1)

Net sales

$

2,755,029

$

2,268,150

$

2,005,590

Cost of sales

1,810,159

1,521,917

1,408,490

Gross profit

944,870

746,233

597,100

Operating expenses

  Distribution

34,684

28,322

24,090

  Research and development

89,250

83,515

76,783

  Selling and administration

329,698

269,974

231,813

     Subtotal

453,632

381,811

332,686

  Write-off of in-process research and development

-

19,000

279

  Restructuring

1,033

9,523

14,647

     Total

454,665

410,334

347,612

Operating income

490,205

335,899

249,488

Interest, net

42,312

28,415

26,995

Other (income) expense, net

(2,661)

(1,165)

1,108

Investment impairment

-

-

15,104

Income from continuing operations before income taxes

450,554

308,649

206,281

Income tax expense

109,996

84,215

63,452

Income from continuing operations

340,558

224,434

142,829

Income (loss) from discontinued operations, net of tax

(1,361)

(635)

2,704

Net income

$

339,197

$

223,799

$

145,533

Earnings (loss) per share (1)

  Basic

     Continuing operations

$

3.69

$

2.46

$

1.55

     Discontinued operations

(0.01)

(0.01)

0.03

     Basic earnings per share

$

3.67

$

2.45

$

1.58

  Diluted

     Continuing operations

$

3.64

$

2.42

$

1.53

     Discontinued operations

(0.01)

(0.01)

0.03

     Diluted earnings per share

$

3.63

$

2.41

$

1.55

Weighted average shares outstanding

  Basic

92,313

91,399

92,183

  Diluted

93,529

92,845

93,629

Dividends declared per share

$

0.2725

$

0.2425

$

0.2150

(1) The sum of individual per share amounts may not equal due to rounding.

See accompanying notes to consolidated financial statements.

PERRIGO COMPANY

CONSOLIDATED BALANCE SHEETS

(in thousands)

June 26, 2010

As Adjusted

Assets

June 25, 2011

(Note 1)

Current assets

  Cash and cash equivalents

$

310,104

$

109,765

  Restricted cash

-

400,000

  Investment securities

-

559

  Accounts receivable, net

477,851

359,809

  Inventories

505,576

452,980

  Current deferred income taxes

30,474

27,225

  Income taxes refundable

370

14,439

  Prepaid expenses and other current assets

50,350

30,549

  Current assets of discontinued operations

2,568

7,375

         Total current assets

1,377,293

1,402,701

Property and equipment

  Land

39,868

37,215

  Buildings

324,773

306,995

  Machinery and equipment

641,157

540,959

1,005,798

885,169

  Less accumulated depreciation

(498,490)

(436,586)

507,308

448,583

Goodwill and other indefinite-lived intangible assets

644,902

618,042

Other intangible assets, net

567,573

587,000

Non-current deferred income taxes

10,531

-

Other non-current assets

81,614

52,677

$

3,189,221

$

3,109,003

Liabilities and Shareholders' Equity

Current liabilities

  Accounts payable

$

343,278

$

267,311

  Short-term debt

2,770

9,000

  Payroll and related taxes

81,455

79,219

  Accrued customer programs

91,374

59,898

  Accrued liabilities

57,514

90,046

  Accrued income taxes

10,551

11,665

  Current portion of long-term debt

15,000

400,000

  Current liabilities of discontinued operations

4,093

5,370

         Total current liabilities

606,035

922,509

Non-current liabilities

  Long-term debt, less current portion

875,000

935,000

  Non-current deferred income taxes

10,601

49,346

  Other non-current liabilities

166,598

108,208

         Total non-current liabilities

1,052,199

1,092,554

Shareholders' Equity

  Controlling interest shareholders' equity:

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

-

-

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

467,661

428,457

        Accumulated other comprehensive income

127,050

43,200

        Retained earnings

934,333

620,439

1,529,044

1,092,096

  Noncontrolling interest

1,943

1,844

         Total shareholders' equity

1,530,987

1,093,940

$

3,189,221

$

3,109,003

Supplemental Disclosures of Balance Sheet Information

  Related to Continuing Operations

         Allowance for doubtful accounts

$

7,837

$

8,015

         Working capital

$

772,783

$

478,187

         Preferred stock, shares issued and outstanding

-

-

         Common stock, shares issued and outstanding

92,778

91,694

See accompanying notes to consolidated financial statements.

PERRIGO COMPANY

CONSOLIDATED STATEMENTS OF SHAREHOLDERS' EQUITY AND COMPREHENSIVE INCOME

(in thousands, except per share amounts)

Accumulated

Common Stock

Other

Issued

Comprehensive

Comprehensive

Retained

Shares

Amount

Income (loss)

Income (loss)

Earnings

Balance at June 28, 2008

93,311

$

488,537

$

137,435

$

236,638

$

288,393

Net income

-

-

-

145,533

145,533

Accumulated other comprehensive income (loss):

  Change in fair value of derivative financial

instruments, net of $162 tax

-

-

300

300

-

  Foreign currency translation adjustments

-

-

(91,399)

(91,399)

-

  Change in fair value of investment securities

-

-

3,956

3,956

-

  Adjustment to adopt ASC 320-10-65

-

-

(5,000)

(5,000)

5,000

  Post-retirement liability adjustments, net of $214 tax

-

-

(398)

(398)

-

Issuance of common stock under:

  Stock options

720

10,062

-

-

-

  Restricted stock plan

14

-

-

-

-

Compensation for stock options

-

3,313

-

-

-

Compensation for restricted stock

-

7,040

-

-

-

Cash dividends, $0.215 per share

-

-

-

-

(19,957)

Tax effect from stock transactions

-

5,780

-

-

-

Repurchases of common stock

(1,836)

(62,489)

-

-

-

Balance at June 27, 2009

92,209

452,243

44,894

52,992

418,969

Net income

-

-

-

223,799

223,799

Accumulated other comprehensive income (loss):

  Change in fair value of derivative financial

instruments, net of $898 tax

-

-

1,668

1,668

-

  Foreign currency translation adjustments

-

-

(2,362)

(2,362)

-

  Change in fair value of investment securities

-

-

(568)

(568)

-

  Post-retirement liability adjustments, net of $233 tax

-

-

(432)

(432)

-

Issuance of common stock under:

  Stock options

1,347

21,444

-

-

-

  Restricted stock plan

200

-

-

-

-

Compensation for stock options

-

3,854

-

-

-

Compensation for restricted stock

-

10,842

-

-

-

Cash dividends, $0.2425 per share

-

-

-

-

(22,329)

Tax effect from stock transactions

-

11,162

-

-

-

Repurchases of common stock

(2,062)

(71,088)

-

-

-

Balance at June 26, 2010

91,694

428,457

43,200

222,105

620,439

Net income

-

-

-

339,197

339,197

Accumulated other comprehensive income (loss):

  Change in fair value of derivative financial

instruments, net of $425 tax

-

-

(790)

(790)

-

  Foreign currency translation adjustments

-

-

81,691

81,691

-

  Change in fair value of investment securities

-

-

3,110

3,110

-

  Post-retirement liability adjustments, net of $87 tax

-

-

(161)

(161)

-

Issuance of common stock under:

  Stock options

781

14,341

-

-

-

  Restricted stock plan

445

-

-

-

-

Compensation for stock options

-

3,794

-

-

-

Compensation for restricted stock

-

11,561

-

-

-

Cash dividends, $0.2725 per share

-

-

-

-

(25,303)

Tax effect from stock transactions

-

17,816

-

-

-

Repurchases of common stock

(142)

(8,308)

-

-

-

Balance at June 25, 2011

92,778

$

467,661

$

127,050

$

423,047

$

934,333

See accompanying notes to consolidated financial statements.

PERRIGO COMPANY

CONSOLIDATED STATEMENTS OF CASH FLOWS

(in thousands)

Fiscal Year

2010

2009

As Adjusted

As Adjusted

2011

(Note 1)

(Note 1)

Cash Flows From (For) Operating Activities

  Net income

339,197

$

223,799

$

145,533

  Adjustments to derive cash flows

     Write-off of in-process research and development

-

19,000

279

     Depreciation and amortization

102,941

74,104

71,297

     Restructuring and asset impairment

1,033

9,523

31,351

     Loss (gain) on sale of business

2,151

(750)

-

     Share-based compensation

15,355

14,696

10,353

     Income tax benefit from exercise of stock options

(623)

(1,302)

(3,490)

     Excess tax benefit of stock transactions

(17,193)

(9,860)

(2,290)

     Deferred income taxes

(57,904)

(12,585)

(1,185)

  Subtotal

384,957

316,625

251,848

   Changes in operating assets and liabilities, net of asset and

         business acquisitions and disposition

      Accounts receivable

(107,235)

(21,766)

5,747

      Inventories

(30,416)

(32,217)

6,776

      Accounts payable

57,804

(1,558)

4,444

      Payroll and related taxes

616

30,917

(20,351)

      Accrued customer programs

31,440

5,142

1,124

      Accrued liabilities

(32,335)

7,451

(12,371)

      Accrued income taxes

56,216

26,310

7,553

      Other

12,914

1,459

(5,013)

    Subtotal

(10,996)

15,738

(12,091)

         Net cash from operating activities

373,961

332,363

239,757

Cash Flows (For) From Investing Activities

  Proceeds from sales of securities

560

-

-

  Acquired research and development

-

(19,000)

-

  Additions to property and equipment

(99,443)

(57,816)

(57,431)

  (Return of) proceeds from sale of business

(3,558)

35,980

-

  Acquisitions of assets

(10,750)

(10,262)

(1,000)

  Acquisitions of businesses, net of cash acquired

2,624

(868,802)

(88,248)

          Net cash for investing activities

(110,567)

(919,900)

(146,679)

Cash Flows (For) From Financing Activities

  Repayments of short-term debt, net

(6,230)

(8,771)

(13,736)

  Borrowings of long-term debt

150,000

625,000

-

  Repayments of long-term debt

(195,000)

(165,000)

(31,380)

  Deferred financing fees

(5,483)

(5,813)

-

  Excess tax benefit of stock transactions

17,193

9,860

2,290

  Issuance of common stock

14,341

21,444

10,062

  Repurchase of common stock

(8,308)

(71,088)

(62,489)

  Cash dividends

(25,303)

(22,329)

(19,957)

         Net cash (for) from financing activities

(58,790)

383,303

(115,210)

Effect of exchange rate changes on cash

(4,265)

(3,643)

2,361

       Net increase (decrease) in cash and cash equivalents

200,339

(207,877)

(19,771)

Cash and cash equivalents of continuing operations, beginning of period

109,765

317,638

337,405

Cash balance of discontinued operations, beginning of period

-

4

8

Cash and cash equivalents, end of period

310,104

109,765

317,642

      Less cash balance of discontinued operations, end of period

-

-

(4)

Cash and cash equivalents of continuing operations, end of period

310,104

$

109,765

$

317,638

Supplemental Disclosures of Cash Flow Information

  Cash paid/received during the year for:

     Interest paid

47,455

$

53,557

$

48,202

     Interest received

3,726

$

21,392

$

24,258

     Income taxes paid

115,627

$

77,420

$

73,276

     Income taxes refunded

1,440

$

1,433

$

11,283

See accompanying notes to consolidated financial statements.

Table I

PERRIGO COMPANY

RECONCILIATION OF NON-GAAP MEASURES

(in thousands, except per share amounts)

(unaudited)

Three Months Ended

Consolidated

June 25, 2011

June 26, 2010

% Change

GAAP

Non-GAAP Adjustments

As Adjusted

GAAP

Non-GAAP Adjustments

As Adjusted

GAAP

As Adjusted

Net sales

$       704,629

$             -

$       704,629

$       619,760

$             -

$       619,760

14 %

14 %

Cost of sales

462,295

8,392

(a)

453,903

421,759

15,719

(a,e)

406,040

10 %

12 %

Gross profit

242,334

8,392

250,726

198,001

15,719

213,720

22 %

17 %

Operating expenses

Distribution

8,962

-

8,962

6,848

-

6,848

31 %

31 %

Research and development

23,408

-

23,408

26,362

-

26,362

(11)%

(11)%

Selling and administration

85,645

4,854

(a,b)

80,791

81,157

7,985

(a,f)

73,172

6 %

10 %

Write-off of in-process research and development

-

-

-

5,000

5,000

(g)

-

(100)%

-

Restructuring

1,033

1,033

(c)

-

2,049

2,049

(h)

-

(50)%

-

Total

119,048

5,887

113,161

121,416

15,034

106,382

Operating income

123,286

14,279

137,565

76,585

30,753

107,338

61 %

28 %

Interest, net

10,594

-

10,594

10,546

2,800

(i)

7,746

0 %

37 %

Other (income) expense, net

(716)

-

(716)

521

-

521

-

-

Income from continuing operations before income taxes

113,408

14,279

127,687

65,518

33,553

99,071

73 %

29 %

Income tax expense

27,838

4,431

(d)

32,269

16,517

11,015

(d)

27,532

69 %

17 %

Income from continuing operations

$         85,570

$      9,848

$         95,418

$         49,001

$    22,538

$         71,539

75 %

33 %

Diluted earnings per share from continuing operations

$             0.91

$             1.02

$             0.53

$             0.77

72 %

32 %

Diluted weighted average shares outstanding

93,853

93,853

92,948

92,948

Selected ratios as a percentage of net sales

Gross profit

34.4 %

35.6 %

31.9 %

34.5 %

Operating expenses

16.9 %

16.1 %

19.6 %

17.2 %

Operating income

17.5 %

19.5 %

12.4 %

17.3 %

Fiscal Year Ended

Consolidated

June 25, 2011

June 26, 2010

% Change

GAAP

Non-GAAP Adjustments

As Adjusted

GAAP

Non-GAAP Adjustments

As Adjusted

GAAP

As Adjusted

Net sales

$    2,755,029

$             -

$    2,755,029

$    2,268,150

$             -

$    2,268,150

21 %

21 %

Cost of sales

1,810,159

30,663

(a)

1,779,496

1,521,917

29,640

(a,k)

1,492,277

19 %

19 %

Gross profit

944,870

30,663

975,533

746,233

29,640

775,873

27 %

26 %

Operating expenses

Distribution

34,684

-

34,684

28,322

-

28,322

22 %

22 %

Research and development

89,250

-

89,250

83,515

-

83,515

7 %

7 %

Selling and administration

329,698

19,358

(a,j)

310,340

269,974

14,580

(a,l)

255,394

22 %

22 %

Write-off of in-process research and development

-

-

-

19,000

19,000

(g)

-

(100)%

-

Restructuring

1,033

1,033

(c)

-

9,523

9,523

(m)

-

(89)%

-

Total

454,665

20,391

434,274

410,334

43,103

367,231

Operating income

490,205

51,054

541,259

335,899

72,743

408,642

46 %

32 %

Interest, net

42,312

-

42,312

28,415

3,500

(i)

24,915

49 %

70 %

Other income, net

(2,661)

-

(2,661)

(1,165)

-

(1,165)

128 %

128 %

Income from continuing operations before income taxes

450,554

51,054

501,608

308,649

76,243

384,892

46 %

30 %

Income tax expense

109,996

16,251

(d)

126,247

84,215

19,582

(d)

103,797

31 %

22 %

Income from continuing operations

$       340,558

$    34,803

$       375,361

$       224,434

$    56,661

$       281,095

52 %

34 %

Diluted earnings per share from continuing operations

$             3.64

$             4.01

$             2.42

$             3.03

50 %

32 %

Diluted weighted average shares outstanding

93,529

93,529

92,845

92,845

Selected ratios as a percentage of net sales

Gross profit

34.3 %

35.4 %

32.9 %

34.2 %

Operating expenses

16.5 %

15.8 %

18.1 %

16.2 %

Operating income

17.8 %

19.6 %

14.8 %

18.0 %

(a) Deal-related amortization

(b) Acquisition costs of $832

(c) Restructuring charges related to Florida

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

(e) Inventory step-ups of $9,873

(f) Acquisition costs of $5,137

(g) Write-off of in-process R&D related to acquired ANDAs

(h) Restructuring charges related to Germany

(i) Acquisition costs

(j) Acquisition costs of $3,243

(k) Inventory step-ups of $10,904

(l) Acquisition costs of $8,189

(m) Restructuring charges related to Germany and Florida

Table II

PERRIGO COMPANY

REPORTABLE SEGMENTS

RECONCILIATION OF NON-GAAP MEASURES

(in thousands)

(unaudited)

Three Months Ended

Consumer Healthcare

June 25, 2011

June 26, 2010

% Change

GAAP

Non-GAAP Adjustments

As Adjusted

GAAP

Non-GAAP Adjustments

As Adjusted

GAAP

As Adjusted

Net sales

$       433,813

$             -

$       433,813

$       398,863

$             -

$       398,863

9 %

9 %

Cost of sales

300,429

1,031

(a)

299,398

267,381

1,051

(a,c)

266,330

12 %

12 %

Gross profit

133,384

1,031

134,415

131,482

1,051

132,533

1 %

1 %

Operating expenses

59,204

2,265

(a,b)

56,939

62,137

1,082

(a)

61,055

(5)%

(7)%

Operating income

$         74,180

$      3,296

$         77,476

$         69,345

$      2,133

$         71,478

7 %

8 %

Selected ratios as a percentage of net sales

Gross profit

30.7 %

31.0 %

33.0 %

33.2 %

Operating expenses

13.6 %

13.1 %

15.6 %

15.3 %

Operating income

17.1 %

17.9 %

17.4 %

17.9 %

Fiscal Year Ended

Consumer Healthcare

June 25, 2011

June 26, 2010

% Change

GAAP

Non-GAAP Adjustments

As Adjusted

GAAP

Non-GAAP Adjustments

As Adjusted

GAAP

As Adjusted

Net sales

$    1,684,938

$             -

$    1,684,938

$    1,573,749

$             -

$    1,573,749

7 %

7 %

Cost of sales

1,153,548

3,445

(a)

1,150,103

1,050,340

3,079

(a,c)

1,047,261

10 %

10 %

Gross profit

531,390

3,445

534,835

523,409

3,079

526,488

2 %

2 %

Operating expenses

238,293

5,975

(a,b)

232,318

219,732

3,290

(a)

216,442

8 %

7 %

Operating income

$       293,097

$      9,420

$       302,517

$       303,677

$      6,369

$       310,046

(3)%

(2)%

Selected ratios as a percentage of net sales

Gross profit

31.5 %

31.7 %

33.3 %

33.5 %

Operating expenses

14.1 %

13.8 %

14.0 %

13.8 %

Operating income

17.4 %

18.0 %

19.3 %

19.7 %

Three Months Ended

Nutritionals

June 25, 2011

June 26, 2010

% Change

GAAP

Non-GAAP Adjustments

As Adjusted

GAAP

Non-GAAP Adjustments

As Adjusted

GAAP

As Adjusted

Net sales

$       123,130

$             -

$       123,130

$         83,751

$             -

$         83,751

47 %

47 %

Cost of sales

85,668

3,000

(a)

82,668

69,102

11,296

(a,d)

57,806

24 %

43 %

Gross profit

37,462

3,000

40,462

14,649

11,296

25,945

156 %

56 %

Operating expenses

25,596

2,789

(a)

22,807

15,751

1,766

(a)

13,985

63 %

63 %

Operating income (loss)

$         11,866

$      5,789

$         17,655

$         (1,102)

$    13,062

$         11,960

-

48 %

Selected ratios as a percentage of net sales

Gross profit

30.4 %

32.9 %

17.5 %

31.0 %

Operating expenses

20.8 %

18.5 %

18.8 %

16.7 %

Operating income (loss)

9.6 %

14.3 %

(1.3)%

14.3 %

Fiscal Year Ended

Nutritionals

June 25, 2011

June 26, 2010

% Change

GAAP

Non-GAAP Adjustments

As Adjusted

GAAP

Non-GAAP Adjustments

As Adjusted

GAAP

As Adjusted

Net sales

$       503,349

$             -

$       503,349

$       259,275

$             -

$       259,275

94 %

94 %

Cost of sales

343,997

11,999

(a)

331,998

220,671

11,296

(a,d)

209,375

56 %

59 %

Gross profit

159,352

11,999

171,351

38,604

11,296

49,900

313 %

243 %

Operating expenses

91,312

11,173

(a)

80,139

36,347

3,814

(a,e)

32,533

151 %

146 %

Operating income

$         68,040

$    23,172

$         91,212

$           2,257

$    15,110

$         17,367

2,915 %

425 %

Selected ratios as a percentage of net sales

Gross profit

31.7 %

34.0 %

14.9 %

19.2 %

Operating expenses

18.1 %

15.9 %

14.0 %

12.5 %

Operating income

13.5 %

18.1 %

0.9 %

6.7 %

Three Months Ended

Rx Pharmaceuticals

June 25, 2011

June 26, 2010

% Change

GAAP

Non-GAAP Adjustments

As Adjusted

GAAP

Non-GAAP Adjustments

As Adjusted

GAAP

As Adjusted

Net sales

$         92,467

$             -

$         92,467

$         82,875

$             -

$         82,875

12 %

12 %

Cost of sales

42,155

2,923

(a)

39,232

52,374

2,463

(a)

49,911

(20)%

(21)%

Gross profit

50,312

2,923

53,235

30,501

2,463

32,964

65 %

61 %

Operating expenses

12,039

-

12,039

16,843

5,000

(a,f)

11,843

(29)%

2 %

Operating income

$         38,273

$      2,923

$         41,196

$         13,658

$      7,463

$         21,121

180 %

95 %

Selected ratios as a percentage of net sales

Gross profit

54.4 %

57.6 %

36.8 %

39.8 %

Operating expenses

13.0 %

13.0 %

20.3 %

14.3 %

Operating income

41.4 %

44.6 %

16.5 %

25.5 %

(a) Deal-related amortization

(b) Restructuring charges of $1,033 related to Florida

(c) Inventory step-up of $471

(d) Inventory step-up of $9,402

(e) Restructuring charges of $699 related to Florida

(f) Write-off of in-process R&D related to acquired ANDAs

(g) Restructuring charges related to Germany

(h) Inventory step-ups of $1,031

Table II (Continued)

PERRIGO COMPANY

REPORTABLE SEGMENTS

RECONCILIATION OF NON-GAAP MEASURES

(in thousands)

(unaudited)

Fiscal Year Ended

Rx Pharmaceuticals

June 25, 2011

June 26, 2010

% Change

GAAP

Non-GAAP Adjustments

As Adjusted

GAAP

Non-GAAP Adjustments

As Adjusted

GAAP

As Adjusted

Net sales

$   343,717

$             -

$   343,717

$   237,569

$             -

$   237,569

45 %

45 %

Cost of sales

180,345

10,958

(a)

169,387

129,441

10,800

(a)

118,641

39 %

43 %

Gross profit

163,372

10,958

174,330

108,128

10,800

118,928

51 %

47 %

Operating expenses

43,008

-

43,008

59,625

19,000

(f)

40,625

(28)%

6 %

Operating income

$   120,364

$    10,958

$   131,322

$     48,503

$    29,800

$     78,303

148 %

68 %

Selected ratios as a percentage of net sales

Gross profit

47.5 %

50.7 %

45.5 %

50.1 %

Operating expenses

12.5 %

12.5 %

25.1 %

17.1 %

Operating income

35.0 %

38.2 %

20.4 %

33.0 %

Three Months Ended

API

June 25, 2011

June 26, 2010

% Change

GAAP

Non-GAAP Adjustments

As Adjusted

GAAP

Non-GAAP Adjustments

As Adjusted

GAAP

As Adjusted

Net sales

$     36,817

$             -

$     36,817

$     38,986

$             -

$     38,986

(6)%

(6)%

Cost of sales

21,887

976

(a)

20,911

23,115

494

(a)

22,621

(5)%

(8)%

Gross profit

14,930

976

15,906

15,871

494

16,365

(6)%

(3)%

Operating expenses

8,784

-

8,784

8,940

2,049

(g)

6,891

(2)%

27 %

Operating income

$       6,146

$         976

$       7,122

$       6,931

$      2,543

$       9,474

(11)%

(25)%

Selected ratios as a percentage of net sales

Gross profit

40.6 %

43.2 %

40.7 %

42.0 %

Operating expenses

23.9 %

23.9 %

22.9 %

17.7 %

Operating income

16.7 %

19.3 %

17.8 %

24.3 %

Fiscal Year Ended

API

June 25, 2011

June 26, 2010

% Change

GAAP

Non-GAAP Adjustments

As Adjusted

GAAP

Non-GAAP Adjustments

As Adjusted

GAAP

As Adjusted

Net sales

$   155,717

$             -

$   155,717

$   139,980

$             -

$   139,980

11 %

11 %

Cost of sales

87,317

2,503

(a)

84,814

84,499

1,980

(a)

82,519

3 %

3 %

Gross profit

68,400

2,503

70,903

55,481

1,980

57,461

23 %

23 %

Operating expenses

30,581

-

30,581

40,169

8,810

(a,g)

31,359

(24)%

(2)%

Operating income

$     37,819

$      2,503

$     40,322

$     15,312

$    10,790

$     26,102

147 %

54 %

Selected ratios as a percentage of net sales

Gross profit

43.9 %

45.5 %

39.6 %

41.0 %

Operating expenses

19.6 %

19.6 %

28.7 %

22.4 %

Operating income

24.3 %

25.9 %

10.9 %

18.6 %

Three Months Ended

Other

June 25, 2011

June 26, 2010

% Change

GAAP

Non-GAAP Adjustments

As Adjusted

GAAP

Non-GAAP Adjustments

As Adjusted

GAAP

As Adjusted

Net sales

$     18,402

$             -

$     18,402

$     15,285

$             -

$     15,285

20 %

20 %

Cost of sales

12,156

462

(a)

11,694

9,787

414

(a)

9,373

24 %

25 %

Gross profit

6,246

462

6,708

5,498

414

5,912

14 %

13 %

Operating expenses

6,078

-

6,078

4,896

-

4,896

24 %

24 %

Operating income

$          168

$         462

$          630

$          602

$         414

$       1,016

(72)%

(38)%

Selected ratios as a percentage of net sales

Gross profit

33.9 %

36.5 %

36.0 %

38.7 %

Operating expenses

33.0 %

33.0 %

32.0 %

32.0 %

Operating income

0.9 %

3.4 %

3.9 %

6.6 %

Fiscal Year Ended

Other

June 25, 2011

June 26, 2010

% Change

GAAP

Non-GAAP Adjustments

As Adjusted

GAAP

Non-GAAP Adjustments

As Adjusted

GAAP

As Adjusted

Net sales

$     67,308

$             -

$     67,308

$     57,577

$             -

$     57,577

17 %

17 %

Cost of sales

44,952

1,758

(a)

43,194

36,966

2,485

(a,h)

34,481

22 %

25 %

Gross profit

22,356

1,758

24,114

20,611

2,485

23,096

8 %

4 %

Operating expenses

21,090

-

21,090

18,410

-

18,410

15 %

15 %

Operating income

$       1,266

$      1,758

$       3,024

$       2,201

$      2,485

$       4,686

(42)%

(35)%

Selected ratios as a percentage of net sales

Gross profit

33.2 %

35.8 %

35.8 %

40.1 %

Operating expenses

31.3 %

31.3 %

32.0 %

32.0 %

Operating income

1.9 %

4.5 %

3.8 %

8.1 %

(a) Deal-related amortization

(b) Restructuring charges of $1,033 related to Florida

(c) Inventory step-up of $471

(d) Inventory step-up of $9,402

(e) Restructuring charges of $699 related to Florida

(f) Write-off of in-process R&D related to acquired ANDAs

(g) Restructuring charges related to Germany

(h) Inventory step-ups of $1,031

Table III

PERRIGO COMPANY

FY 2012 GUIDANCE AND FY 2011 EPS

RECONCILIATION OF NON-GAAP MEASURES

(unaudited)

Fiscal 2012 Guidance*

FY12 reported diluted EPS from continuing operations range

$3.79 - $3.94

   Deal-related amortization (1)

0.54

   Charge associated with inventory step-up

0.11

   Charges associated with acquisition-related costs

0.06

FY12 adjusted diluted EPS from continuing operations range

$4.50 - $4.65

Fiscal 2011*

FY11 reported diluted EPS from continuing operations

$3.64

   Deal-related amortization (1)

0.34

   Charges associated with acquisition-related costs

0.02

   Charges associated with restructuring

0.01

FY11 adjusted diluted EPS from continuing operations

$4.01

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

*All information based on continuing operations.

SOURCE Perrigo Company



RELATED LINKS

http://www.perrigo.com