Perrigo Reports Record Fourth Quarter and Fiscal Year Revenue, Earnings and Cash Flow From Operations

- Full-year revenue from continuing operations increased $418 million, or 15%, to a record $3.2 billion.

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 Year


2012

2011

2012

2011

Net Sales

$831,767

$704,629

$3,173,249

$2,755,029

Reported Income

$107,050

$85,570

$392,974

$340,558

Adjusted Income

$120,946

$95,418

$469,375

$375,361

Reported Diluted EPS

$1.14

$0.91

$4.18

$3.64

Adjusted Diluted EPS

$1.28

$1.02

$4.99

$4.01

Diluted Shares

94,296

93,853

94,052

93,529

Fourth 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 COMPANY

CONSOLIDATED STATEMENTS OF INCOME

(in thousands, except per share amounts)

















 

Fiscal Year







2012



2011




2010

Net sales


$

3,173,249


$

2,755,029



$

2,268,150

Cost of sales



2,077,651



1,810,159




1,521,917

Gross profit



1,095,598



944,870




746,233

Operating expenses











   Distribution



39,122



34,684




28,322

   Research and development



105,774



89,250




83,515

   Selling and administration



372,721



329,698




269,974

      Subtotal



517,617



453,632




381,811

   Write-off of in-process research and
    development


-



-




19,000

   Restructuring



8,755



1,033




9,523

      Total



526,372



454,665




410,334

Operating income



569,226



490,205




335,899

Interest, net



60,736



42,312




28,415

Other income, net



(3,499)



(2,661)




(1,165)

Income from continuing operations before income taxes


511,989



450,554




308,649

Income tax expense



119,015



109,996




84,215

Income from continuing operations



392,974



340,558




224,434

Income (loss) from discontinued operations,
  net of tax


8,639



(1,361)




(635)

Net income 


$

401,613


$

339,197



$

223,799

Earnings (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



$

2.41

Weighted average shares outstanding










   Basic



93,219



92,313




91,399

   Diluted



94,052



93,529




92,845

Dividends 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 COMPANY

CONSOLIDATED BALANCE SHEETS

(in thousands)











June 30, 2012



June 25, 2011

Assets







Current assets







   Cash and cash equivalents


$

602,489


$

310,104

   Accounts receivable, net



572,582



477,851

   Inventories 



547,455



505,576

   Current deferred income taxes



45,738



30,474

   Income taxes refundable



1,047



370

   Prepaid expenses and other current assets



26,610



50,350

   Current assets of discontinued operations 



-



2,568

          Total current assets



1,795,921



1,377,293

Property and equipment







   Land



40,376



39,868

   Buildings



343,279



324,773

   Machinery and equipment



735,182



641,157




1,118,837



1,005,798

   Less accumulated depreciation



(540,487)



(498,490)




578,350



507,308








Goodwill and other indefinite-lived intangible assets



820,122



644,902

Other intangible assets, net



729,253



567,573

Non-current deferred income taxes



13,444



10,531

Other non-current assets



86,957



81,614



$

4,024,047


$

3,189,221








Liabilities and Shareholders' Equity







Current liabilities







   Accounts payable


$

317,341


$

343,278

   Short-term debt



90



2,770

   Payroll and related taxes



89,934



81,455

   Accrued customer programs



116,055



91,374

   Accrued liabilities



76,406



57,514

   Accrued income taxes



12,905



10,551

   Current portion of long-term debt



40,000



15,000

   Current liabilities of discontinued operations 



-



4,093

          Total current liabilities



652,731



606,035

Non-current liabilities







   Long-term debt, less current portion



1,329,235



875,000

   Non-current deferred income taxes



24,126



10,601

   Other non-current liabilities



165,310



166,598

          Total non-current liabilities



1,518,671



1,052,199

Shareholders' Equity







   Controlling interest:







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



-



-

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



504,708



467,661

         Accumulated other comprehensive income



39,404



127,050

         Retained earnings



1,306,925



934,333




1,851,037



1,529,044

   Noncontrolling interest



1,608



1,943

          Total shareholders' equity



1,852,645



1,530,987



$

4,024,047


$

3,189,221








Supplemental Disclosures of Balance Sheet Information







   Related to Continuing Operations







          Allowance for doubtful accounts


$

2,556


$

7,837

          Working capital 


$

1,143,190


$

772,783

          Preferred stock, shares issued and outstanding



-



-

          Common stock, shares issued and outstanding



93,484



92,778















See accompanying notes to consolidated financial statements.

 

PERRIGO COMPANY

CONSOLIDATED STATEMENTS OF CASH FLOWS

(in thousands)












Fiscal Year



2012



2011




2010

Cash Flows (For) From Operating Activities










   Net income

$

401,613


$

339,197



$

223,799

   Adjustments to derive cash flows










      Write-off of in-process research and
       development


-



-




19,000

      Gain on sale of pipeline development
       projects


(3,500)



-




-

      (Gain) loss on sale of business


(8,639)



2,151




(750)

      Restructuring and asset impairment


8,668



1,033




9,523

      Depreciation and amortization


135,323



102,941




74,104

      Share-based compensation


18,973



15,355




14,696

      Income 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 taxes


27,476



(56,140)




(16,073)

   Subtotal


565,225



386,721




313,137

   Changes in operating assets and liabilities,
    net of asset and business acquisitions
    and disposition










      Accounts receivable


(49,349)



(107,235)




(21,766)

      Inventories


5,353



(30,416)




(32,217)

      Accounts payable


(23,555)



57,804




(1,558)

      Payroll and related taxes


4,988



616




30,917

      Accrued customer programs


(1,568)



31,440




5,142

      Accrued liabilities


4,203



(32,335)




7,451

      Accrued income taxes


13,746



56,216




26,310

      Other


(5,667)



11,150




4,947

   Subtotal


(51,849)



(12,760)




19,226

          Net cash from operating activities


513,376



373,961




332,363

Cash Flows (For) From Investing Activities










   Acquired 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 business


8,639



(3,558)




35,980

   Acquisitions 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 Activities










   Repayments of short-term debt, net


(2,680)



(6,230)




(8,771)

   Borrowings of long-term debt


1,089,235



150,000




625,000

   Repayments of long-term debt


(610,000)



(195,000)




(165,000)

   Deferred financing fees


(5,097)



(5,483)




(5,813)

   Excess tax benefit of stock transactions


12,893



17,193




9,860

   Issuance of common stock


11,621



14,341




21,444

   Repurchase of common stock


(8,236)



(8,308)




(71,088)

   Cash dividends


(29,021)



(25,303)




(22,329)

          Net cash from (for) financing activities


458,715



(58,790)




383,303

Effect of exchange rate changes on cash


4,426



(4,265)




(3,643)

          Net increase (decrease) in cash and
           cash equivalents


292,385



200,339




(207,877)

Cash and cash equivalents of continuing
  operations, beginning of period

310,104



109,765




317,638

Cash balance of discontinued operations,
  beginning of period


-



-




4

Cash and cash equivalents, end of period

$

602,489


$

310,104



$

109,765











Supplemental Disclosures of Cash Flow
  Information










   Cash paid/received during the year for:










      Interest paid

$

53,694


$

47,455



$

53,557

      Interest received

$

3,989


$

3,726



$

21,392

      Income taxes paid

$

82,338


$

115,627



$

77,420

      Income taxes refunded

$

910


$

1,440



$

1,433





















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 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 effectfrom 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 effectfrom 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

Net income

-



-



-



401,613



401,613

Accumulated other comprehensive income (loss):














   Change in fair value of derivative financial














instruments, 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 

519



11,621



-



-



-

   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


$

1,306,925















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 30, 2012


June 25, 2011


% Change


GAAP


Non-GAAP Adjustments


As Adjusted


GAAP


Non-GAAP Adjustments


As Adjusted


GAAP


As Adjusted

Net sales

$      831,767


$                 -


$       831,767


$      704,629


$                 -


$      704,629


18 %


18 %

Cost of sales

537,896


13,446

(a)

524,450


462,295


8,392

(a)

453,903


16 %


16 %

Gross profit

293,871


13,446


307,317


242,334


8,392


250,726


21 %


23 %

















Operating expenses
















Distribution

9,582


-


9,582


8,962


-


8,962


7 %


7 %

Research and development

27,038


750

(b)

26,288


23,408


-


23,408


16 %


12 %

Selling and administration

94,641


5,034

(a)

89,607


85,645


4,854

(a,e)

80,791


11 %


11 %

Restructuring

1,674


1,674

(c)

-


1,033


1,033

(c)

-


62 %


-

Total

132,935


7,458


125,477


119,048


5,887


113,161


12 %


11 %

















Operating income

160,936


20,904


181,840


123,286


14,279


137,565


31 %


32 %

Interest, net

15,874


-


15,874


10,594


-


10,594


50 %


50 %

Other expense (income), net

722


-


722


(716)


-


(716)


-


-

Income from continuing operations before income taxes

144,340


20,904


165,244


113,408


14,279


127,687


27 %


29 %

Income tax expense

37,290


7,008

(d)

44,298


27,838


4,431

(d)

32,269


34 %


37 %

Income from continuing operations

$      107,050


$         13,896


$       120,946


$       85,570


$           9,848


$        95,418


25 %


27 %

















Diluted earnings per share from continuing operations

$            1.14




$             1.28


$           0.91




$            1.02


25 %


25 %

















Diluted weighted average shares outstanding

94,296




94,296


93,853




93,853





















Selected ratios as a percentage of net sales
















Gross 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 Ended





Consolidated

June 30, 2012


June 25, 2011


% Change


GAAP


Non-GAAP Adjustments


As Adjusted


GAAP


Non-GAAP Adjustments


As Adjusted


GAAP


As Adjusted

Net sales

$   3,173,249


$                 -


$    3,173,249


$   2,755,029


$                 -


$   2,755,029


15 %


15 %

Cost of sales

2,077,651


82,243

(a,f)

1,995,408


1,810,159


30,663

(a)

1,779,496


15 %


12 %

Gross profit

1,095,598


82,243


1,177,841


944,870


30,663


975,533


16 %


21 %

















Operating expenses
















Distribution

39,122


-


39,122


34,684


-


34,684


13 %


13 %

Research and development

105,774


(2,750)

(b,g)

108,524


89,250


-


89,250


19 %


22 %

Selling and administration

372,721


29,110

(a,h)

343,611


329,698


19,358

(a,i)

310,340


13 %


11 %

Restructuring

8,755


8,755

(c)

-


1,033


1,033

(c)

-


748 %


-

Total

526,372


35,115


491,257


454,665


20,391


434,274


16 %


13 %

















Operating income

569,226


117,358


686,584


490,205


51,054


541,259


16 %


27 %

Interest, net

60,736


-


60,736


42,312


-


42,312


44 %


44 %

Other income, net

(3,499)


-


(3,499)


(2,661)


-


(2,661)


31 %


31 %

Income from continuing operations before income taxes

511,989


117,358


629,347


450,554


51,054


501,608


14 %


25 %

Income tax expense

119,015


40,957

(d)

159,972


109,996


16,251

(d)

126,247


8 %


27 %

Income from continuing operations

$      392,974


$         76,401


$       469,375


$      340,558


$         34,803


$      375,361


15 %


25 %

















Diluted earnings per share from continuing operations

$            4.18




$            4.99


$           3.64




$           4.01


15 %


24 %

















Diluted weighted average shares outstanding

94,052




94,052


93,529




93,529





















Selected ratios as a percentage of net sales
















Gross 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 II

PERRIGO COMPANY

REPORTABLE SEGMENTS

RECONCILIATION OF NON-GAAP MEASURES

(in thousands)

(unaudited)








Three Months Ended





Consumer Healthcare

June 30, 2012


June 25, 2011


% Change


GAAP


Non-GAAP Adjustments


As Adjusted


GAAP


Non-GAAP Adjustments


As Adjusted


GAAP


As Adjusted

Net sales

$      483,982


$                  -


$     483,982


$     433,813


$                   -


$       433,813


12 %


12 %

Cost of sales

333,925


1,008

(a)

332,917


300,429


1,031

(a)

299,398


11 %


11 %

Gross profit

150,057


1,008


151,065


133,384


1,031


134,415


13 %


12 %

Operating expenses

70,746


1,419

(a)

69,327


59,204


2,265

(a,b)

56,939


19 %


22 %

Operating income

$       79,311


$           2,427


$      81,738


$       74,180


$           3,296


$         77,476


7 %


6 %

















Selected ratios as a percentage of net sales
















Gross 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 Ended





Consumer Healthcare

June 30, 2012


June 25, 2011


% Change


GAAP


Non-GAAP Adjustments


As Adjusted


GAAP


Non-GAAP Adjustments


As Adjusted


GAAP


As Adjusted

Net sales

$   1,815,788


$                  -


$  1,815,788


$   1,684,938


$                  -


$    1,684,938


8 %


8 %

Cost of sales

1,255,595


4,046

(a)

1,251,549


1,153,548


3,445

(a)

1,150,103


9 %


9 %

Gross profit

560,193


4,046


564,239


531,390


3,445


534,835


5 %


5 %

Operating expenses

264,540


5,267

(a)

259,273


238,293


5,975

(a,b)

232,318


11 %


12 %

Operating income

$      295,653


$           9,313


$     304,966


$     293,097


$           9,420


$       302,517


1 %


1 %

















Selected ratios as a percentage of net sales
















Gross 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 Ended





Nutritionals

June 30, 2012


June 25, 2011


% Change


GAAP


Non-GAAP Adjustments


As Adjusted


GAAP


Non-GAAP Adjustments


As Adjusted


GAAP


As Adjusted

Net sales

$      135,335


$                 -


$     135,335


$     123,130


$                 -


$       123,130


10 %


10 %

Cost of sales

96,963


3,021

(a)

93,942


85,668


3,000

(a)

82,668


13 %


14 %

Gross profit

38,372


3,021


41,393


37,462


3,000


40,462


2 %


2 %

Operating expenses

24,583


5,289

(a,c)

19,294


25,596


2,789

(a)

22,807


(4)%


(15)%

Operating income

$       13,789


$           8,310


$      22,099


$       11,866


$           5,789


$         17,655


16 %


25 %

















Selected ratios as a percentage of net sales
















Gross 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 Ended





Nutritionals

June 30, 2012


June 25, 2011


% Change


GAAP


Non-GAAP Adjustments


As Adjusted


GAAP


Non-GAAP Adjustments


As Adjusted


GAAP


As Adjusted

Net sales

$      501,026


$                 -


$     501,026


$     503,349


$                 -


$       503,349


(0)%


(0)%

Cost of sales

371,292


14,913

(a)

356,379


343,997


11,999

(a)

331,998


8 %


7 %

Gross profit

129,734


14,913


144,647


159,352


11,999


171,351


(19)%


(16)%

Operating expenses

96,711


23,217

(a,d)

73,494


91,312


11,173

(a)

80,139


6 %


(8)%

Operating income

$       33,023


$         38,130


$      71,153


$       68,040


$         23,172


$         91,212


(51)%


(22)%

















Selected ratios as a percentage of net sales
















Gross 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 Ended





Rx Pharmaceuticals

June 30, 2012


June 25, 2011


% Change


GAAP


Non-GAAP Adjustments


As Adjusted


GAAP


Non-GAAP Adjustments


As Adjusted


GAAP


As Adjusted

Net sales

$      156,975


$                  -


$     156,975


$       92,467


$                  -


$         92,467


70 %


70 %

Cost of sales

83,019


8,532

(a)

74,487


42,155


2,923

(a)

39,232


97 %


90 %

Gross profit

73,956


8,532


82,488


50,312


2,923


53,235


47 %


55 %

Operating expenses

19,650


750

(e)

18,900


12,039


-


12,039


63 %


57 %

Operating income

$       54,306


$           9,282


$      63,588


$       38,273


$           2,923


$         41,196


42 %


54 %