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Perrigo Reports Record Fourth Quarter and Fiscal Year Revenue, Earnings and Cash Flow From Operations
Date:8/16/2012

ALLEGAN, Mich., Aug. 16, 2012 /PRNewswire/ -- Perrigo Company (Nasdaq: PRGO; TASE) today announced results for its fourth quarter and full year ended June 30, 2012.

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

Perrigo's Chairman and CEO Joseph C. Papa commented, "For the sixth straight year, we delivered year-over-year record sales and earnings while continuing to make investments in our facilities and production processes which we believe will further enhance our own already high standards of excellent product quality. During this fiscal year, we also announced the acquisition of CanAm Care to broaden our diabetes category offerings, multiple supply agreements for infant formula in China and numerous new product launches. The penetration of store brand share in the U.S. market continues to gain momentum as retailers and patients continue to turn to high quality, affordable alternatives for their healthcare needs. We look forward to another great year, with many new products in the pipeline across all segments."

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

The Company's reported results are summarized in the attached Consolidated Statements of Income, Balance Sheets and Cash Flows.Perrigo Company
(from continuing operations, in thousands, except per share amounts)
(see the attached Table I for reconciliation to GAAP numbers)

 Fourth Quarter

Fiscal Year2012

2011

2012

2011Net Sales

$831,767

$704,629

$3,173,249

$2,755,029Reported Income

$107,050

$85,570

$392,974

$340,558Adjusted Income

$120,946

$95,418

$469,375

$375,361Reported Diluted EPS

$1.14

$0.91

$4.18

$3.64Adjusted Diluted EPS

$1.28

$1.02

$4.99

$4.01Diluted Shares

94,296

93,853

94,052

93,529Fourth Quarter Results
Net sales for the fourth quarter of fiscal 2012 were approximately $832 million, an increase of 18% compared to last year. Excluding the charges outlined in Table I at the end of this release, fourth quarter fiscal 2012 adjusted income from continuing operations was $121 million, or $1.28 per diluted share, up from $95 million, or $1.02 per diluted share, a year ago.

Fiscal Year Results
Net sales from fiscal 2012 were $3.2 billion, an increase of 15% over fiscal 2011. The increase was driven primarily by $245 million of net sales attributable to the Paddock Labs and CanAm Care acquisitions and new product sales of $211 million, which excludes $6 million of new products launched by Paddock Labs. Reported gross profit was $1.1 billion, up 16%, and reported gross margin was 34.5%, slightly up from 34.3% last year. Adjusted gross profit was $1.2 billion, up 21%, and adjusted gross margin was 37.1%, up from 35.4% last year. The gross margin improvement was driven primarily by new products and the acquisition of Paddock Labs. Reported operating margin increased 10 basis points to 17.9%, and adjusted operating margin increased 200 basis points to 21.6%. Reported income from continuing operations was $393 million, an increase of 15%. Adjusted income from continuing operations was $469 million, or an increase of 25% from fiscal 2011.

Consumer Healthcare
Consumer Healthcare segment net sales in the fourth quarter were $484 million, compared with $434 million in the fourth quarter last year, an increase of $50 million or 12%. The increase resulted from increased sales of existing products of $30 million (primarily in the cough/cold, analgesics and smoking cessation categories), $26 million of new product sales (primarily in the gastrointestinal and dermatological care categories) and $10 million attributable to sales from the CanAm Care acquisition. These increases were partially offset by a decline in sales of existing products of $12 million, primarily in the gastrointestinal and contract categories, as well as a $4 million decline in sales due to unfavorable changes in foreign currency exchange rates. Reported gross profit was $150 million, compared to $133 million a year ago. Adjusted gross profit was $151 million compared to $134 million a year ago. Adjusted gross margin increased 20 basis points to 31.2%. Reported operating income was $79 million, compared with $74 million a year ago, and adjusted operating income was $82 million compared to $77 million a year ago. Adjusted operating margin decreased 100 basis points to 16.9% due to higher spending on sales and marketing promotions to support new product launches and the inclusion of expenses related to the CanAm Care acquisition.

For fiscal year 2012, Consumer Healthcare net sales increased $131 million or 8%, compared to fiscal 2011. The increase was due to new product sales of $102 million (mainly in the cough/cold, gastrointestinal, diabetes and dermatological care categories), an increase in existing product sales of $48 million (mainly in the cough/cold, feminine hygiene and smoking cessation categories) and $18 million in sales attributable to the CanAm Care acquisition. These increases were partially offset by a decline of $34 million in sales of existing products (mainly in the gastrointestinal, analgesics and contract manufacturing categories). Sales were negatively affected by approximately $4 million due to unfavorable changes in foreign currency exchange rates.

Nutritionals
The Nutritionals segment fourth quarter net sales were $135 million, compared to $123 million last year, an increase of 10%. This increase was due primarily to new product sales of $13 million (primarily in the infant formula category) attributable to retail shipments in advance of a planned July 1st shutdown of the Company's Vermont Plant to do an SAP conversion and to prepare for the installation of a new packaging line. Reported gross profit was $38 million, compared to $37 million a year ago. Reported operating income was $14 million, up from $12 million a year ago while the reported operating margin increased 60 basis points. Adjusted operating income increased to approximately $22 million, up from $18 million a year ago, as the adjusted operating margin increased 200 basis points to 16.3% due to the decision to restructure operations at the Company's Florida facility.

Net sales for fiscal 2012 decreased $2 million to $501 million compared to fiscal 2011. Existing product sales within the infant formula category were lower due to the absence of increased demand when a competitor's product returned to the market following a prior recall. In addition, the VMS product category net sales decreased by approximately $14 million due primarily to SKU rationalization as a result of increased competition. These decreases were partially offset by increased sales in the infant and toddler foods product category of $13 million.

Rx Pharmaceuticals
The Rx Pharmaceuticals segment fourth quarter net sales were $157 million, compared with $92 million a year ago, an increase of 70%. This increase was due to net sales of $58 million from the Paddock Labs acquisition and new product sales of $11 million. Reported gross profit was $74 million, compared to $50 million a year ago, while adjusted gross profit was $82 million, compared to $53 million a year ago. Reported gross margin decreased 730 basis points to 47.1%, while the adjusted gross margin decreased 510 basis points to 52.5%, due primarily to certain pre-launch production costs, relative product mix and production variances. Reported operating income was $54 million, an increase of $16 million from last year, and adjusted operating income was $64 million, compared to $41 million a year ago. Adjusted operating margin decreased 410 basis points from last year to 40.5%.

Net sales for fiscal 2012 increased 80%, or $274 million, compared to fiscal 2011 due to net sales of $228 million from the Paddock Labs acquisition, new product sales of $29 million and growth in the base business. Reported gross margin increased 20 basis points to 47.7%, and reported operating margin increased 120 basis points to 36.2% from a year ago. Adjusted gross margin increased 660 basis points to 57.3%, and adjusted operating margin increased 780 basis points to 46.0% from a year ago.

API
The API segment reported fourth quarter net sales of $38 million, compared with $37 million a year ago. Reported operating income increased $12 million to $18 million compared to last year, while adjusted operating income increased $11 million compared to $7 million last year. Reported operating margin increased 3,010 basis points to 46.8%, while the adjusted operating margin increased 2,870 basis points to 48.0%. The performance of the API segment was favorably impacted due to a commercial agreement with a customer to supply a generic product that was launched in the fourth quarter of fiscal 2012, which unexpectedly received 180-day exclusivity status.

Net sales for fiscal 2012 increased 6%, or $10 million, compared to fiscal 2011 due to $12 million of increased demand in the U.S. for fluticasone and $7 million of new product sales. The Company also recognized $4 million in sales due to the commercial agreement mentioned above. These increases were partially offset by pricing pressures on a key product of $8 million, along with a $2 million negative impact due to unfavorable changes in foreign currency exchange rates.

Other
Continuing operations for the Other category, consisting of the Israel Pharmaceutical and Diagnostic Products operating segment, reported fourth quarter net sales of $17 million compared with $18 million a year ago. The segment reported adjusted operating income of $0.6 million, flat to last year. Net sales for fiscal 2012 increased 9% to $73 million, up from $67 million a year ago. Adjusted operating income was $4 million compared to $3 million for fiscal 2011. 

Guidance
Chairman and CEO Joseph C. Papa concluded, "We had strong performance and execution across our businesses during fiscal 2012. With macroeconomic tailwinds blowing in our favor, we look to build on that success in fiscal 2013."

The Company expects fiscal 2013 reported earnings from continuing operations to be between $4.77 and $4.97 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 $5.30 and $5.50 per diluted share as compared to $4.99 in fiscal 2012. This new range implies a year-over-year growth rate in adjusted earnings of 6% to 10% over fiscal 2012's adjusted earnings from continuing operations per diluted share. 

Perrigo will host a conference call to discuss fiscal fourth quarter and fiscal year 2012 results at 10:00 a.m. (ET) on Thursday, August 16, 2012. The conference call will be available live via webcast to interested parties on the Perrigo website http://www.perrigo.com or by phone 877-248-9413, International 973-582-2737, and reference ID# 10926008. A taped replay of the call will be available beginning at approximately 2:00 p.m. (ET) Thursday, August 16, 2012, until midnight Friday, September 7, 2012. To listen to the replay, call 855-859-2056, International 404-537-3406, access code 10926008.From its beginnings as a packager of generic home remedies in 1887, Allegan, Michigan-based Perrigo Company has grown to become a leading global provider of quality, affordable healthcare products. Perrigo develops, manufactures and distributes over-the-counter (OTC) and generic prescription (Rx) pharmaceuticals, infant formulas, nutritional products, dietary supplements and active pharmaceutical ingredients (API). The Company is the world's largest manufacturer of OTC pharmaceutical products for the store brand market. The Company's primary markets and locations of logistics operations have evolved over the years to 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 COMPANYCONSOLIDATED STATEMENTS OF INCOME(in thousands, except per share amounts) 

Fiscal Year201220112010Net sales$

3,173,249$

2,755,029$

2,268,150Cost of sales2,077,6511,810,1591,521,917Gross profit1,095,598944,870746,233Operating expenses
Distribution
39,12234,68428,322
Research and development
105,77489,25083,515
Selling and administration
372,721329,698269,974
Subtotal
517,617453,632381,811
Write-off of in-process research and
development
--19,000
Restructuring
8,7551,0339,523
Total
526,372454,665410,334Operating income569,226490,205335,899Interest, net60,73642,31228,415Other income, net(3,499)(2,661)(1,165)Income from continuing operations before income taxes511,989450,554308,649Income tax expense119,015109,99684,215Income from continuing operations392,974340,558224,434Income (loss) from discontinued operations,
  net of tax8,639(1,361)(635)Net income $

401,613$

339,197$

223,799Earnings (loss) per share (1)
Basic

Continuing operations
$

4.22$

3.69$

2.46
Discontinued operations
0.09(0.01)(0.01)
Basic earnings per share
$

4.31$

3.67$

2.45
Diluted

Continuing operations
$

4.18$

3.64$

2.42
Discontinued operations
0.09(0.01)(0.01)
Diluted earnings per share 
$

4.27$

3.63$

2.41Weighted average shares outstanding
Basic
93,21992,31391,399
Diluted
94,05293,52992,845Dividends declared per share$

0.3100$

0.2725$

0.2425(1) The sum of individual per share amounts may not equal due to rounding.See accompanying notes to consolidated financial statements. PERRIGO COMPANYCONSOLIDATED BALANCE SHEETS(in thousands)June 30, 2012June 25, 2011AssetsCurrent assetsCash and cash equivalents$

602,489$

310,104Accounts receivable, net572,582477,851Inventories 547,455505,576Current deferred income taxes45,73830,474Income taxes refundable1,047370Prepaid expenses and other current assets26,61050,350Current assets of discontinued operations -2,568Total current assets1,795,9211,377,293Property and equipmentLand40,37639,868Buildings343,279324,773Machinery and equipment735,182641,1571,118,8371,005,798Less accumulated depreciation(540,487)(498,490)578,350507,308Goodwill and other indefinite-lived intangible assets820,122644,902Other intangible assets, net729,253567,573Non-current deferred income taxes13,44410,531Other non-current assets86,95781,614$

4,024,047$

3,189,221Liabilities and Shareholders' EquityCurrent liabilitiesAccounts payable$

317,341$

343,278Short-term debt902,770Payroll and related taxes89,93481,455Accrued customer programs116,05591,374Accrued liabilities76,40657,514Accrued income taxes12,90510,551Current portion of long-term debt40,00015,000Current liabilities of discontinued operations -4,093Total current liabilities652,731606,035Non-current liabilitiesLong-term debt, less current portion1,329,235875,000Non-current deferred income taxes24,12610,601Other non-current liabilities165,310166,598Total non-current liabilities1,518,6711,052,199Shareholders' EquityControlling interest:Preferred stock, without par value, 10,000 shares
authorized--Common stock, without par value, 200,000 shares
authorized504,708467,661Accumulated other comprehensive income39,404127,050Retained earnings1,306,925934,3331,851,0371,529,044Noncontrolling interest1,6081,943Total shareholders' equity1,852,6451,530,987$

4,024,047$

3,189,221Supplemental Disclosures of Balance Sheet InformationRelated to Continuing OperationsAllowance for doubtful accounts$

2,556$

7,837Working capital $

1,143,190$

772,783Preferred stock, shares issued and outstanding--Common stock, shares issued and outstanding93,48492,778See accompanying notes to consolidated financial statements. PERRIGO COMPANYCONSOLIDATED STATEMENTS OF CASH FLOWS(in thousands)Fiscal Year201220112010Cash Flows (For) From Operating ActivitiesNet income

$

401,613$

339,197$

223,799Adjustments to derive cash flowsWrite-off of in-process research and
development--19,000Gain on sale of pipeline development
projects(3,500)--(Gain) loss on sale of business(8,639)2,151(750)Restructuring and asset impairment8,6681,0339,523Depreciation and amortization135,323102,94174,104Share-based compensation18,97315,35514,696Income tax benefit from exercise of stock
options(1,796)(623)(1,302)Excess tax benefit of stock transactions(12,893)(17,193)(9,860)Deferred income taxes27,476(56,140)(16,073)Subtotal565,225386,721313,137Changes in operating assets and liabilities,
net of asset and business acquisitions
and disposition
Accounts receivable(49,349)(107,235)(21,766)Inventories5,353(30,416)(32,217)Accounts payable(23,555)57,804(1,558)Payroll and related taxes4,98861630,917Accrued customer programs(1,568)31,4405,142Accrued liabilities4,203(32,335)7,451Accrued income taxes13,74656,21626,310Other(5,667)11,1504,947Subtotal(51,849)(12,760)19,226Net cash from operating activities513,376373,961332,363Cash Flows (For) From Investing ActivitiesAcquired research and development--(19,000)Acquisitions of businesses, net of cash
acquired(582,329)2,624(868,802)Additions to property and equipment(120,192)(99,443)(57,816)Proceeds from sale of intangible assets and
pipeline development projects

10,500--Proceeds (return of consideration) from
sale of business8,639(3,558)35,980Acquisitions of assets(750)(10,750)(10,262)Proceeds from sales of securities-560-Net cash for investing activities(684,132)(110,567)(919,900)Cash Flows (For) From Financing ActivitiesRepayments of short-term debt, net(2,680)(6,230)(8,771)Borrowings of long-term debt1,089,235150,000625,000Repayments of long-term debt(610,000)(195,000)(165,000)Deferred financing fees(5,097)(5,483)(5,813)Excess tax benefit of stock transactions12,89317,1939,860Issuance of common stock11,62114,34121,444Repurchase of common stock(8,236)(8,308)(71,088)Cash dividends(29,021)(25,303)(22,329)Net cash from (for) financing activities458,715(58,790)383,303Effect of exchange rate changes on cash4,426(4,265)(3,643)Net increase (decrease) in cash and
cash equivalents292,385200,339(207,877)Cash and cash equivalents of continuing
operations, beginning of period

310,104109,765317,638Cash balance of discontinued operations,
  beginning of period--4Cash and cash equivalents, end of period

$

602,489$

310,104$

109,765Supplemental Disclosures of Cash Flow
  InformationCash paid/received during the year for:Interest paid

$

53,694$

47,455$

53,557Interest received

$

3,989$

3,726$

21,392Income taxes paid

$

82,338$

115,627$

77,420Income taxes refunded

$

910$

1,440$

1,433See accompanying notes to consolidated financial statements. 

 

PERRIGO COMPANYCONSOLIDATED STATEMENTS OF SHAREHOLDERS' EQUITY AND COMPREHENSIVE INCOME(in thousands, except per share amounts)AccumulatedCommon Stock OtherIssuedComprehensiveComprehensiveRetainedSharesAmountIncome (Loss)Income (Loss)EarningsBalance at June 27, 2009

92,209$

452,243$

44,894$

52,992$

418,969Net income

---223,799223,799Accumulated other comprehensive income (loss):Change in fair value of derivative financialinstruments, net of $898 tax

--1,6681,668-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 

1,34721,444---Restricted stock plan

200----Compensation for stock options

-3,854---Compensation for restricted stock 

-10,842---Cash dividends, $0.2425 per share

----(22,329)Tax effectfrom stock transactions

-11,162---Repurchases of common stock

(2,062)(71,088)---Balance at June 26, 2010

91,694428,45743,200222,105620,439Net income

---339,197339,197Accumulated other comprehensive income (loss):Change in fair value of derivative financialinstruments, net of $425 tax

--(790)(790)-Foreign currency translation adjustments

--81,69181,691-Change in fair value of investment securities

--3,1103,110-Post-retirement liability adjustments, net of $87 tax

--(161)(161)-Issuance of common stock under:Stock options 

78114,341---Restricted stock plan

445----Compensation for stock options

-3,794---Compensation for restricted stock 

-11,561---Cash dividends, $0.2725 per share

----(25,303)Tax effectfrom stock transactions

-17,816---Repurchases of common stock

(142)(8,308)---Balance at June 25, 2011

92,778467,661127,050423,047934,333Net income

---401,613401,613Accumulated other comprehensive income (loss):Change in fair value of derivative financialinstruments, net of $5,065 tax

--(9,406)(9,406)-Foreign currency translation adjustments

--(76,656)(76,656)-Change in fair value of investment securities

--(1,033)(1,033)-Post-retirement liability adjustments, net of $297 tax

--(551)(551)-Issuance of common stock under:Stock options 

51911,621---Restricted stock plan

277----Compensation for stock options

-5,009---Compensation for restricted stock 

-13,964---Cash dividends, $0.3100 per share

----(29,021)Tax effectfrom stock transactions

-14,689---Repurchases of common stock

(90)(8,236)---Balance at June 30, 2012

93,484$

504,708$

39,404$

313,967$

1,306,925See accompanying notes to consolidated financial statements.Table IPERRIGO COMPANYRECONCILIATION OF NON-GAAP MEASURES(in thousands, except per share amounts)(unaudited)Three Months EndedConsolidatedJune 30, 2012June 25, 2011% ChangeGAAPNon-GAAP AdjustmentsAs AdjustedGAAPNon-GAAP AdjustmentsAs AdjustedGAAPAs AdjustedNet sales

$
831,767$
-$
831,767$
704,629$
-$
704,62918 %18 %Cost of sales

537,89613,446

(a)

524,450462,2958,392

(a)

453,90316 %16 %Gross profit

293,87113,446307,317242,3348,392250,72621 %23 %Operating expensesDistribution

9,582-9,5828,962-8,9627 %7 %Research and development

27,038750

(b)

26,28823,408-23,40816 %12 %Selling and administration

94,6415,034

(a)

89,60785,6454,854

(a,e)

80,79111 %11 %Restructuring

1,6741,674

(c)

-1,0331,033

(c)

-62 %-Total

132,9357,458125,477119,0485,887113,16112 %11 %Operating income

160,93620,904181,840123,28614,279137,56531 %32 %Interest, net

15,874-15,87410,594-10,59450 %50 %Other expense (income), net

722-722(716)-(716)--Income from continuing operations before income taxes

144,34020,904165,244113,40814,279127,68727 %29 %Income tax expense

37,2907,008

(d)

44,29827,8384,431

(d)

32,26934 %37 %Income from continuing operations

$
7,050$
3,896$
20,946$
85,570$
9,848$
95,41825 %27 %Diluted earnings per share from continuing operations

$
.14$
.28$
.91$
.0225 %25 %Diluted weighted average shares outstanding

94,29694,29693,85393,853Selected ratios as a percentage of net salesGross profit

35.3 %36.9 %34.4 %35.6 %Operating expenses

16.0 %15.1 %16.9 %16.1 %Operating income

19.3 %21.9 %17.5 %19.5 %Fiscal Year EndedConsolidatedJune 30, 2012June 25, 2011% ChangeGAAPNon-GAAP AdjustmentsAs AdjustedGAAPNon-GAAP AdjustmentsAs AdjustedGAAPAs AdjustedNet sales

$   3,173,249$
-$
3,173,249$   2,755,029$
-$   2,755,02915 %15 %Cost of sales

2,077,65182,243

(a,f)

1,995,4081,810,15930,663

(a)

1,779,49615 %12 %Gross profit

1,095,59882,2431,177,841944,87030,663975,53316 %21 %Operating expensesDistribution

39,122-39,12234,684-34,68413 %13 %Research and development

105,774(2,750)

(b,g)

108,52489,250-89,25019 %22 %Selling and administration

372,72129,110

(a,h)

343,611329,69819,358

(a,i)

310,34013 %11 %Restructuring

8,7558,755

(c)

-1,0331,033

(c)

-748 %-Total

526,37235,115491,257454,66520,391434,27416 %13 %Operating income

569,226117,358686,584490,20551,054541,25916 %27 %Interest, net

60,736-60,73642,312-42,31244 %44 %Other income, net

(3,499)-(3,499)(2,661)-(2,661)31 %31 %Income from continuing operations before income taxes

511,989117,358629,347450,55451,054501,60814 %25 %Income tax expense

119,01540,957

(d)

159,972109,99616,251

(d)

126,2478 %27 %Income from continuing operations

$
392,974$
76,401$
469,375$
340,558$
34,803$
375,36115 %25 %Diluted earnings per share from continuing operations

$
4.18$
4.99$
3.64$
4.0115 %24 %Diluted weighted average shares outstanding

94,05294,05293,52993,529Selected ratios as a percentage of net salesGross profit

34.5 %37.1 %34.3 %35.4 %Operating expenses

16.6 %15.5 %16.5 %15.8 %Operating income

17.9 %21.6 %17.8 %19.6 %(a) Deal-related amortization(b) Net charge related to acquired R&D and proceeds from sale of IPR&D projects(c) Restructuring charges related to Florida(d) Total tax effect for non-GAAP pre-tax adjustments(e) Acquisition costs of $832(f) Inventory step-up of $27,179(g) Proceeds from sale of pipeline development projects of $3,500(h) Acquisition-related and severance costs of $9,381(i) Acquisition costs of $3,243 Table IIPERRIGO COMPANYREPORTABLE SEGMENTSRECONCILIATION OF NON-GAAP MEASURES(in thousands)(unaudited)Three Months EndedConsumer HealthcareJune 30, 2012June 25, 2011% ChangeGAAPNon-GAAP AdjustmentsAs AdjustedGAAPNon-GAAP AdjustmentsAs AdjustedGAAPAs AdjustedNet sales

$
483,982$
-$
483,982$
433,813$
-$
433,81312 %12 %Cost of sales

333,9251,008

(a)

332,917300,4291,031

(a)

299,39811 %11 %Gross profit

150,0571,008151,065133,3841,031134,41513 %12 %Operating expenses

70,7461,419

(a)

69,32759,2042,265

(a,b)

56,93919 %22 %Operating income

$
79,311$
2,427$
81,738$
74,180$
3,296$
77,4767 %6 %Selected ratios as a percentage of net salesGross profit

31.0 %31.2 %30.7 %31.0 %Operating expenses

14.6 %14.3 %13.6 %13.1 %Operating income

16.4 %16.9 %17.1 %17.9 %Fiscal Year EndedConsumer HealthcareJune 30, 2012June 25, 2011% ChangeGAAPNon-GAAP AdjustmentsAs AdjustedGAAPNon-GAAP AdjustmentsAs AdjustedGAAPAs AdjustedNet sales

$   1,815,788$
-$  1,815,788$   1,684,938$
-$
,684,9388 %8 %Cost of sales

1,255,5954,046

(a)

1,251,5491,153,5483,445

(a)

1,150,1039 %9 %Gross profit

560,1934,046564,239531,3903,445534,8355 %5 %Operating expenses

264,5405,267

(a)

259,273238,2935,975

(a,b)

232,31811 %12 %Operating income

$
295,653$
9,313$
304,966$
293,097$
9,420$
302,5171 %1 %Selected ratios as a percentage of net salesGross profit

30.9 %31.1 %31.5 %31.7 %Operating expenses

14.6 %14.3 %14.1 %13.8 %Operating income

16.3 %16.8 %17.4 %18.0 %Three Months EndedNutritionalsJune 30, 2012June 25, 2011% ChangeGAAPNon-GAAP AdjustmentsAs AdjustedGAAPNon-GAAP AdjustmentsAs AdjustedGAAPAs AdjustedNet sales

$
35,335$
-$
35,335$
23,130$
-$
23,13010 %10 %Cost of sales

96,9633,021

(a)

93,94285,6683,000

(a)

82,66813 %14 %Gross profit

38,3723,02141,39337,4623,00040,4622 %2 %Operating expenses

24,5835,289

(a,c)

19,29425,5962,789

(a)

22,807(4)%(15)%Operating income

$
3,789$
8,310$
22,099$
,866$
5,789$
7,65516 %25 %Selected ratios as a percentage of net salesGross profit

28.4 %30.6 %30.4 %32.9 %Operating expenses

18.2 %14.3 %20.8 %18.5 %Operating income

10.2 %16.3 %9.6 %14.3 %Fiscal Year EndedNutritionalsJune 30, 2012June 25, 2011% ChangeGAAPNon-GAAP AdjustmentsAs AdjustedGAAPNon-GAAP AdjustmentsAs AdjustedGAAPAs AdjustedNet sales

$
501,026$
-$
501,026$
503,349$
-$
503,349(0)%(0)%Cost of sales

371,29214,913

(a)

356,379343,99711,999

(a)

331,9988 %7 %Gross profit

129,73414,913144,647159,35211,999171,351(19)%(16)%Operating expenses

96,71123,217

(a,d)

73,49491,31211,173

(a)

80,1396 %(8)%Operating income

$
33,023$
38,130$
71,153$
8,040$
23,172$
91,212(51)%(22)%Selected ratios as a percentage of net salesGross profit

25.9 %28.9 %31.7 %34.0 %Operating expenses

19.3 %14.7 %18.1 %15.9 %Operating income

6.6 %14.2 %13.5 %18.1 %Three Months EndedRx PharmaceuticalsJune 30, 2012June 25, 2011% ChangeGAAPNon-GAAP AdjustmentsAs AdjustedGAAPNon-GAAP AdjustmentsAs AdjustedGAAPAs AdjustedNet sales

$
56,975$
-$
56,975$
92,467$
-$
92,46770 %70 %Cost of sales

83,0198,532

(a)

74,48742,1552,923

(a)

39,23297 %90 %Gross profit

73,9568,53282,48850,3122,92353,23547 %55 %Operating expenses

19,650750

(e)

18,90012,039-12,03963 %57 %Operating income

$
54,306$
9,282$
3,588$
38,273$
2,923$
41,19642 %54 %Selected ratios as a percentage of net salesGross profit

47.1 %52.5 %54.4 %57.6 %Operating expenses

12.5 %12.0 %13.0 %13.0 %Operating income

34.6 %40.5 %41.4 %44.6 %(a) Deal-related amortization(b) Restructuring charges of $1,033 related to Florida(c) Restructuring charges of $1,674 related to Florida(d) Restructuring charges of $8,755 related to Florida(e) Net charge related to acquired R&D and proceeds from sale of IPR&D projects(f) Inventory step-up of $27,179(g) Proceeds from sale of pipeline development projects of $3,500(h) Severance costs of $3,755 Table II (Continued)PERRIGO COMPANYREPORTABLE SEGMENTSRECONCILIATION OF NON-GAAP MEASURES(in thousands)(unaudited)Fiscal Year EndedRx PharmaceuticalsJune 30, 2012June 25, 2011% ChangeGAAPNon-GAAP AdjustmentsAs AdjustedGAAPNon-GAAP AdjustmentsAs AdjustedGAAPAs AdjustedNet sales

$
7,389$
-$
7,389$
343,717$
-$
343,71780 %80 %Cost of sales

323,11559,607

(a,f)

263,508180,34510,958

(a)

169,38779 %56 %Gross profit

294,27459,607353,881163,37210,958174,33080 %103 %Operating expenses

71,0761,005

(e,g,h)

70,07143,008-43,00865 %63 %Operating income

$
223,198$
,612$
283,810$
20,364$
,958$
31,32285 %116 %Selected ratios as a percentage of net salesGross profit

47.7 %57.3 %47.5 %50.7 %Operating expenses

11.5 %11.3 %12.5 %12.5 %Operating income

36.2 %46.0 %35.0 %38.2 %Three Months EndedAPIJune 30, 2012June 25, 2011% ChangeGAAPNon-GAAP AdjustmentsAs AdjustedGAAPNon-GAAP AdjustmentsAs AdjustedGAAPAs AdjustedNet sales

$
38,435$
-$
38,435$
36,817$
-$
36,8174 %4 %Cost of sales

12,462482

(a)

11,98021,887976

(a)

20,911(43)%(43)%Gross profit

25,97348226,45514,93097615,90674 %66 %Operating expenses

8,002-8,0028,784-8,784(9)%(9)%Operating income

$
7,971$
482$
8,453$
,146$
976$
7,122192 %159 %Selected ratios as a percentage of net salesGross profit

67.6 %68.8 %40.6 %43.2 %Operating expenses

20.8 %20.8 %23.9 %23.9 %Operating income

46.8 %48.0 %16.7 %19.3 %Fiscal Year EndedAPIJune 30, 2012June 25, 2011% ChangeGAAPNon-GAAP AdjustmentsAs AdjustedGAAPNon-GAAP AdjustmentsAs AdjustedGAAPAs AdjustedNet sales

$
5,782$
-$
5,782$
55,717$
-$
55,7176 %6 %Cost of sales

78,6181,989

(a)

76,62987,3172,503

(a)

84,814(10)%(10)%Gross profit

87,1641,98989,15368,4002,50370,90327 %26 %Operating expenses

31,639-31,63930,581-30,5813 %3 %Operating income

$
55,525$
,989$
57,514$
37,819$
2,503$
40,32247 %43 %Selected ratios as a percentage of net salesGross profit

52.6 %53.8 %43.9 %45.5 %Operating expenses

19.1 %19.1 %19.6 %19.6 %Operating income

33.5 %34.7 %24.3 %25.9 %Three Months EndedOtherJune 30, 2012June 25, 2011% ChangeGAAPNon-GAAP AdjustmentsAs AdjustedGAAPNon-GAAP AdjustmentsAs AdjustedGAAPAs AdjustedNet sales

$
7,040$
-$
7,040$
8,402$
-$
8,402(7)%(7)%Cost of sales

11,527403

(a)

11,12412,156462

(a)

11,694(5)%(5)%Gross profit

5,5134035,9166,2464626,708(12)%(12)%Operating expenses

5,348-5,3486,078-6,078(12)%(12)%Operating income

$
5$
403$
568$
8$
462$
30(2)%(10)%Selected ratios as a percentage of net salesGross profit

32.4 %34.7 %33.9 %36.5 %Operating expenses

31.4 %31.4 %33.0 %33.0 %Operating income

1.0 %3.3 %0.9 %3.4 %Fiscal Year EndedOtherJune 30, 2012June 25, 2011% ChangeGAAPNon-GAAP AdjustmentsAs AdjustedGAAPNon-GAAP AdjustmentsAs AdjustedGAAPAs AdjustedNet sales

$
73,264$
-$
73,264$
7,308$
-$
7,3089 %9 %Cost of sales

49,0311,688

(a)

47,34344,9521,758

(a)

43,1949 %10 %Gross profit

24,2331,68825,92122,3561,75824,1148 %7 %Operating expenses

21,489-21,48921,090-21,0902 %2 %Operating income

$
2,744$
,688$
4,432$
,266$
,758$
3,024117 %47 %Selected ratios as a percentage of net salesGross profit

33.1 %35.4 %33.2 %35.8 %Operating expenses

29.3 %29.3 %31.3 %31.3 %Operating income

3.7 %6.0 %1.9 %4.5 %(a) Deal-related amortization(b) Restructuring charges of $1,033 related to Florida(c) Restructuring charges of $1,674 related to Florida(d) Restructuring charges of $8,755 related to Florida(e) Net charge related to acquired R&D and proceeds from sale of IPR&D projects(f) Inventory step-up of $27,179(g) Proceeds from sale of pipeline development projects of $3,500(h) Severance costs of $3,755 Table IIIPERRIGO COMPANYFY 2013 GUIDANCE AND FY 2012 EPSRECONCILIATION OF NON-GAAP MEASURES(unaudited)Fiscal 2013 GuidanceFY13 reported diluted EPS range

$4.77 - $4.97Deal-related amortization (1)

0.53FY13 adjusted diluted EPS range

$5.30 - $5.50Fiscal 2012*FY12 reported diluted EPS from continuing operations

$4.18Deal-related amortization (1)

0.523Charge associated with inventory step-up

0.181Charges associated with acquisition-related and severance costs

0.062Charges associated with restructuring

0.061Net charge associated with acquired R&D and proceeds from sale of IPR&D projects

0.012Earnings 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. 


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SOURCE Perrigo Company
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