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Perrigo Reports Record Revenue and Adjusted Earnings
Date:5/7/2013

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 2012Third

 Quarter
Ended

Third

 Quarter
Ended

 

 

YoY3/30/2013

3/31/2012

% ChangeNet 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 2012Third

Quarter
Ended

Third

Quarter

Ended

YoY3/30/2013

3/31/2012

% ChangeNet 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 bpsAdjusted Gross Margin

33.5%

31.5%

+200 bpsReported Operating Margin

17.9%

17.7%

+20 bpsAdjusted Operating Margin

18.8%

18.2%

+60 bpsConsumer 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 2012Third

 Quarter
Ended

Third

 Quarter

Ended

 

 

YoY3/30/2013

3/31/2012

% ChangeNet 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 bpsAdjusted Gross Margin

25.5%

28.4%

-290 bpsReported Operating Margin

5.2%

1.6%

+360 bpsAdjusted Operating Margin

10.7%

13.2%

-250 bpsThe 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 2012Third

 Quarter

Ended

Third

 Quarter

Ended

 

 

YoY3/30/2013

3/31/2012

% ChangeNet 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 bpsAdjusted Gross Margin

57.9%

59.1%

-120 bpsReported Operating Margin

38.8%

43.2%

-440 bpsAdjusted 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 2012Third

 Quarter
Ended

Third

 Quarter

Ended

 

 

YoY3/30/2013

3/31/2012

% ChangeNet 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 bpsAdjusted Gross Margin

52.1%

51.9%

+20 bpsReported Operating Margin

28.5%

28.3%

+20 bpsAdjusted Operating Margin

29.7%

29.6%

+10 bpsThe 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 COMPANYCONDENSED CONSOLIDATED STATEMENTS OF INCOME(in thousands, except per share amounts)(unaudited)Three Months EndedNine Months EndedMarch 30,
2013March 31,
2012March 30,
2013March 31,
2012Net sales

$
919,825$
778,017$
2,572,594$
2,341,482Cost of sales

588,464498,7441,648,7991,539,755Gross profit

331,361279,273923,795801,727Operating expensesDistribution

12,56910,18135,03529,540Research and development

28,52627,95084,24478,736Selling and administration

111,66087,991305,480278,080Restructuring

—7,081—7,081Total operating expenses

152,755133,203424,759393,437Operating income

178,606146,070499,036408,290Interest, net

16,07016,65147,23744,862Other expense (income), net

841(5,202)855(4,221)Losses on sales of investments

1,608—4,657—Income before income taxes

160,087134,621446,287367,649Income tax expense

48,16318,894122,82881,725Net income

$
,924$
5,727$
323,459$
285,924Earnings per shareBasic earnings per share

$
.19$
.24$
3.45$
3.07Diluted earnings per share

$
.18$
.23$
3.42$
3.04Weighted average shares outstandingBasic

93,98993,33093,83393,152Diluted

94,51994,12494,44394,028Dividends declared per share

$
.09$
.08$
.26$
.23PERRIGO COMPANYCONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME(in thousands)(unaudited)Three Months EndedNine Months EndedMarch 30,
2013March 31,
2012March 30,
2013March 31,
2012Net income

$
,924$
5,727$
323,459$
285,924Other comprehensive income (loss):Change in fair value of derivative financial instruments, net of tax

1,6382,6428,344(6,650)Foreign currency translation adjustments

4,78422,21438,234(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

6,71724,82847,869(51,250)Comprehensive income

$
8,641$
40,555$
371,328$
234,674PERRIGO COMPANYCONDENSED CONSOLIDATED BALANCE SHEETS(in thousands)(unaudited)March 30,
2013June 30,
2012March 31,
2012AssetsCurrent assetsCash and cash equivalents

$
300,827$
2,489$
554,280Accounts receivable, net

618,666572,582560,740Inventories

684,741547,455589,947Current deferred income taxes

43,06845,73851,269Income taxes refundable

5,4791,047766Prepaid expenses and other current assets

44,84726,61033,886Total current assets

1,697,6281,795,9211,790,888Property and equipment

1,236,4441,118,8371,096,749Less accumulated depreciation

(593,186)(540,487)(532,335)643,258578,350564,414Goodwill and other indefinite-lived intangible assets

1,127,954820,122830,689Other intangible assets, net

938,544729,253752,600Non-current deferred income taxes

17,22313,44412,390Other non-current assets

71,28186,95789,073$
4,495,888$
4,024,047$
4,040,054Liabilities and Shareholders' EquityCurrent liabilitiesAccounts payable

$
325,415$
317,341$
307,017Short-term debt

4,51390—Payroll and related taxes

72,83289,93474,450Accrued customer programs

128,676116,055103,868Accrued liabilities

83,26076,40683,886Accrued income taxes

17,63912,90520,530Current portion of long-term debt

41,28540,00040,000Total current liabilities

673,620652,731629,751Non-current liabilitiesLong-term debt, less current portion

1,331,6841,329,2351,454,620Non-current deferred income taxes

80,47424,12619,543Other non-current liabilities

184,782165,310163,466Total non-current liabilities

1,596,9401,518,6711,637,629Shareholders' EquityControlling interest:Preferred stock, without par value, 10,000 shares authorized

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

530,780504,708496,320Accumulated other comprehensive income

87,27339,40475,800Retained earnings

1,605,8941,306,9251,198,7402,223,9471,851,0371,770,860Noncontrolling interest

1,3811,6081,814Total shareholders' equity

2,225,3281,852,6451,772,674$
4,495,888$
4,024,047$
4,040,054Supplemental Disclosures of Balance Sheet InformationAllowance for doubtful accounts

$
2,219$
2,556$
2,483Working capital

$
,024,008$
,143,190$
,161,137Preferred stock, shares issued and outstanding

———Common stock, shares issued and outstanding

94,02293,48493,405 PERRIGO COMPANYCONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS(in thousands)(unaudited)Nine Months EndedMarch 30, 2013March 31, 2012Cash Flows From (For) Operating ActivitiesNet income$
323,459$
285,924Adjustments to derive cash flowsGain on sale of pipeline development projects—(3,500)Restructuring—7,081Losses on sales of investments4,657—Depreciation and amortization112,817101,712Share-based compensation14,03713,924Income tax benefit from exercise of stock options(271)(447)Excess tax benefit of stock transactions(15,365)(12,202)Deferred income taxes(3,069)12,021Subtotal436,265404,513Changes in operating assets and liabilities, net of business acquisitionsAccounts 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 programs10,008(13,755)Accrued liabilities10,11317,584Accrued income taxes31,16119,077Other18,607(5,979)Subtotal(56,153)(92,893)Net cash from operating activities380,112311,620Cash Flows (For) From Investing ActivitiesAcquisitions of businesses, net of cash acquired(607,776)(582,329)Proceeds from sale of securities8,630—Proceeds from sale of intangible assets and pipeline development projects—10,500Additions 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 ActivitiesBorrowings (repayments) of short-term debt, net4,423(2,770)Borrowings of long-term debt40,7861,089,620Repayments of long-term debt(40,000)(485,000)Deferred financing fees(643)(5,108)Excess tax benefit of stock transactions15,36512,202Issuance of common stock8,70610,040Repurchase of common stock(12,321)(7,954)Cash dividends(24,490)(21,516)Net cash (for) from financing activities(8,174)589,514Effect of exchange rate changes on cash(10,974)1,336Net (decrease) increase in cash and cash equivalents(301,662)244,176Cash and cash equivalents, beginning of period602,489310,104Cash and cash equivalents, end of period$
300,827$
554,280Supplemental Disclosures of Cash Flow InformationCash paid/received during the period for:Interest paid$
31,234$
29,234Interest received$
2,473$
2,222Income taxes paid$
93,518$
53,216Income taxes refunded$
,312$
830 Table IPERRIGO COMPANYRECONCILIATION OF NON-GAAP MEASURES(in thousands, except per share amounts)(unaudited)Three Months EndedConsolidatedMarch 30, 2013March 31, 2012% ChangeGAAPNon-GAAP AdjustmentsAs AdjustedGAAPNon-GAAP AdjustmentsAs AdjustedGAAPAs AdjustedNet sales

$
919,825$
-$
919,825$
778,017$
-$
778,01718 %18 %Cost of sales

588,46420,515

(a,b)

567,949498,74413,505

(a)

485,23918 %17 %Gross profit

331,36120,515351,876279,27313,505292,77819 %20 %Operating expensesDistribution

12,569-12,56910,181-10,18123 %23 %Research and development

28,526-28,52627,950-27,9502 %2 %Selling and administration

111,6609,078

(a,c)

102,58287,9915,027

(a)

82,96427 %24 %Restructuring

---7,0817,081

(e)

---Total operating expenses

152,7559,078143,677133,20312,108121,09515 %19 %Operating income

178,60629,593208,199146,07025,613171,68322 %21 %Interest, net

16,070-16,07016,651-16,651-3 %-3 %Other expense (income), net

841-841(5,202)-(5,202)--Loss on sale of investment

1,6081,608------Income before income taxes

160,08731,201191,288134,62125,613160,23419 %19 %Income tax expense

48,1639,052

(l)

57,21518,8948,661

(l)

27,555155 %108 %Net income

$
,924$
22,149$
34,073$
5,727$
,952$
32,679-3 %1 %Diluted earnings per share

$
.18$
.42$
.23$
.41-4 %1 %Diluted weighted average shares outstanding

94,51994,51994,12494,124Selected ratios as a percentage of net salesGross 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 EndedConsolidatedMarch 30, 2013March 31, 2012% ChangeGAAPNon-GAAP AdjustmentsAs AdjustedGAAPNon-GAAP AdjustmentsAs AdjustedGAAPAs AdjustedNet sales

$
2,572,594$
-$
2,572,594$
2,341,482$
-$
2,341,48210 %10 %Cost of sales

1,648,79957,146

(a,f)

1,591,6531,539,75568,797

(a,h)

1,470,9587 %8 %Gross profit

923,79557,146980,941801,72768,797870,52415 %13 %Operating expensesDistribution

35,035-35,03529,540-29,54019 %19 %Research and development

84,244-84,24478,736(3,500)

 (i) 

82,2367 %2 %Selling and administration

305,48023,929

(a,d,g)

281,551278,08024,076

(a,j)

254,00410 %11 %Restructuring

---7,0817,081

(e)

---Total operating expenses

424,75923,929400,830393,43727,657365,7808 %10 %Operating income

499,03681,075580,111408,29096,454504,74422 %15 %Interest, net

47,237-47,23744,862-44,8625 %5 %Other expense (income), net

855-855(4,221)-(4,221)--Losses on sales of investments

4,6574,657

 (k) 

------Income before income taxes

446,28785,732532,019367,64996,454464,10321 %15 %Income tax expense

122,82827,567

(l)

150,39581,72533,948

(l)

115,67350 %30 %Net income

$
323,459$
58,165$
381,624$
285,924$
2,506$
348,43013 %10 %Diluted earnings per share

$
3.42$
4.04$
3.04$
3.7113 %9 %Diluted weighted average shares outstanding

94,44394,44394,02894,028Selected ratios as a percentage of net salesGross 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 IIPERRIGO COMPANYREPORTABLE SEGMENTSRECONCILIATION OF NON-GAAP MEASURES(in thousands)(unaudited)Three Months EndedConsumer HealthcareMarch 30, 2013March 31, 2012% ChangeGAAPNon-GAAP AdjustmentsAs AdjustedGAAPNon-GAAP AdjustmentsAs AdjustedGAAPAs AdjustedNet sales

$
536,775$
-$
536,775$
448,848$
-$
448,84820 %20 %Cost of sales

360,1293,399

(a)

356,730308,4311,010

(a)

307,42117 %16 %Gross profit

176,6463,399180,045140,4171,010141,42726 %27 %Operating expenses

80,7251,631

(a)

79,09461,0341,411

(a)

59,62332 %33 %Operating income

$
95,921$
5,030$
,951$
79,383$
2,421$
81,80421 %23 %Selected ratios as a percentage of net salesGross 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 EndedConsumer HealthcareMarch 30, 2013March 31, 2012% ChangeGAAPNon-GAAP AdjustmentsAs AdjustedGAAPNon-GAAP AdjustmentsAs AdjustedGAAPAs AdjustedNet sales

$   1,526,479$
-$   1,526,479$   1,331,806$
-$
,331,80615 %15 %Cost of sales

1,041,74415,328

(a,b)

1,026,416913,2183,038

(a)

910,18014 %13 %Gross profit

484,73515,328500,063418,5883,038421,62616 %19 %Operating expenses

223,4484,528

(a)

218,920187,7663,848

(a)

183,91819 %19 %Operating income

$
261,287$
9,856$
281,143$
230,822$
,886$
237,70813 %18 %Selected ratios as a percentage of net salesGross 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 EndedNutritionalsMarch 30, 2013March 31, 2012% ChangeGAAPNon-GAAP AdjustmentsAs AdjustedGAAPNon-GAAP AdjustmentsAs AdjustedGAAPAs AdjustedNet sales

$
33,344$
-$
33,344$
7,683$
-$
7,68313 %13 %Cost of sales

102,3683,050

(a)

99,31887,3333,021

(a)

84,31217 %18 %Gross profit

30,9763,05034,02630,3503,02133,3712 %2 %Operating expenses

24,0114,260

(a)

19,75128,50510,697

(a,c)

17,808-16 %11 %Operating income

$
,965$
7,310$
4,275$
,845$
3,718$
5,563278 %-8 %Selected ratios as a percentage of net salesGross 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 EndedNutritionalsMarch 30, 2013March 31, 2012% ChangeGAAPNon-GAAP AdjustmentsAs AdjustedGAAPNon-GAAP AdjustmentsAs AdjustedGAAPAs AdjustedNet sales

$
358,705$
-$
358,705$
365,691$
-$
365,691-2 %-2 %Cost of sales

271,7499,149

(a)

262,600277,54211,892

(a)

265,650-2 %-1 %Gross profit

86,9569,14996,10588,14911,892100,041-1 %-4 %Operating expenses

68,94812,771

(a)

56,17774,51117,928

(a,c)

56,583-7 %-1 %Operating income

$
8,008$
21,920$
39,928$
3,638$
29,820$
43,45832 %-8 %Selected ratios as a percentage of net salesGross 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 EndedRx PharmaceuticalsMarch 30, 2013March 31, 2012% ChangeGAAPNon-GAAP AdjustmentsAs AdjustedGAAPNon-GAAP AdjustmentsAs AdjustedGAAPAs AdjustedNet sales

$
89,410$
-$
89,410$
55,591$
-$
55,59122 %22 %Cost of sales

92,89413,145

(a,d)

79,74972,2588,574

(a)

63,68429 %25 %Gross profit

96,51613,145109,66183,3338,57491,90716 %19 %Operating expenses

23,09763

(a)

23,03416,076-16,07644 %43 %Operating income

$
73,419$
3,208$
86,627$
7,257$
8,574$
75,8319 %14 %Selected ratios as a percentage of net salesGross 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 COMPANYREPORTABLE SEGMENTSRECONCILIATION OF NON-GAAP MEASURES(in thousands)(unaudited)Nine Months EndedRx PharmaceuticalsMarch 30, 2013March 31, 2012% ChangeGAAPNon-GAAP AdjustmentsAs AdjustedGAAPNon-GAAP AdjustmentsAs AdjustedGAAPAs AdjustedNet sales

$
514,893$
-$
514,893$
460,414$
-$
460,41412 %12 %Cost of sales

245,65730,004

(a,d)

215,653244,24351,075

(a,f)

193,1681 %12 %Gross profit

269,23630,004299,240216,17151,075267,24625 %12 %Operating expenses

63,2541,589

(a,e)

61,66554,455255

(g,h)

54,20016 %14 %Operating income

$
205,982$
31,593$
237,575$
,716$
51,330$
213,04627 %12 %Selected ratios as a percentage of net salesGross 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 EndedAPIMarch 30, 2013March 31, 2012% ChangeGAAPNon-GAAP AdjustmentsAs AdjustedGAAPNon-GAAP AdjustmentsAs AdjustedGAAPAs AdjustedNet sales

$
41,114$
-$
41,114$
36,951$
-$
36,95111 %11 %Cost of sales

20,199498

(a)

19,70118,276490

(a)

17,78611 %11 %Gross profit

20,91549821,41318,67549019,16512 %12 %Operating expenses

9,187-9,1878,213-8,21312 %12 %Operating income

$
,728$
498$
2,226$
,462$
490$
,95212 %12 %Selected ratios as a percentage of net salesGross 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 EndedAPIMarch 30, 2013March 31, 2012% ChangeGAAPNon-GAAP AdjustmentsAs AdjustedGAAPNon-GAAP AdjustmentsAs AdjustedGAAPAs AdjustedNet sales

$
8,387$
-$
8,387$
27,347$
-$
27,347-7 %-7 %Cost of sales

53,2291,442

(a)

51,78766,9131,507

(a)

65,406-20 %-21 %Gross profit

65,1581,44266,60060,4341,50761,9418 %8 %Operating expenses

26,291-26,29124,064-24,0649 %9 %Operating income

$
38,867$
,442$
40,309$
36,370$
,507$
37,8777 %6 %Selected ratios as a percentage of net salesGross 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 EndedOtherMarch 30, 2013March 31, 2012% ChangeGAAPNon-GAAP AdjustmentsAs AdjustedGAAPNon-GAAP AdjustmentsAs AdjustedGAAPAs AdjustedNet sales

$
9,182$
-$
9,182$
8,944$
-$
8,9441 %1 %Cost of sales

12,874423

(a)

12,45112,446410

(a)

12,0363 %3 %Gross profit

6,3084236,7316,4984106,908-3 %-3 %Operating expenses

4,666-4,6665,652-5,652-17 %-17 %Operating income

$
,642$
423$
2,065$
846$
410$
,25694 %64 %Selected ratios as a percentage of net salesGross 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 EndedOtherMarch 30, 2013March 31, 2012% ChangeGAAPNon-GAAP AdjustmentsAs AdjustedGAAPNon-GAAP AdjustmentsAs AdjustedGAAPAs AdjustedNet sales

$
54,130$
-$
54,130$
56,224$
-$
56,224-4 %-4 %Cost of sales

36,4201,223

(a)

35,19737,8391,285

(a)

36,554-4 %-4 %Gross profit

17,7101,22318,93318,3851,28519,670-4 %-4 %Operating expenses

14,980-14,98016,330-16,330-8 %-8 %Operating income

$
2,730$
,223$
3,953$
2,055$
,285$
3,34033 %18 %Selected ratios as a percentage of net salesGross 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 IIIPERRIGO COMPANYFY 2013 GUIDANCE AND FY 2012 EPSRECONCILIATION OF NON-GAAP MEASURES(unaudited)Full YearFiscal 2013 GuidanceFY13 reported diluted EPS range (1)$4.67 - $4.87Deal-related amortization (1,2)0.68Charges associated with inventory step-ups (1)0.08Charges associated with acquisition and severance costs (1)0.05Losses on sales of investments0.05FY13 adjusted diluted EPS range$5.53 - $5.73Fiscal 2012*FY12 reported diluted EPS from continuing operations$4.18Deal-related amortization (2)0.523Charge associated with inventory step-up0.181Charges associated with acquisition-related and severance costs0.062Charges associated with restructuring0.061Net charge associated with acquired R&D and proceeds from sale of IPR&D projects0.012Earnings 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 IVPERRIGO COMPANYRECONCILIATION OF NON-GAAP MEASURES(in thousands, except per share amounts)(unaudited)Q3 FY13Q3 FY12% ChangeReported net income

$
,924$
5,727-3%Total non-GAAP pre-tax adjustments

31,20125,61322%Total tax effect for non-GAAP pre-tax adjustments

(9,052)(8,661)5%Adjusted net income

134,073132,6791%Discrete tax item

-(18,825)-Adjusted net income excluding discrete tax item

$
34,073$
3,85418%Diluted weighted average shares outstanding

94,51994,124Reported diluted EPS

$
.18$
.23-4%Adjusted diluted EPS

$
.42$
.411%Adjusted diluted EPS excluding discrete tax item

$
.42$
.2117% 


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SOURCE Perrigo Company
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