Perrigo Company (NASDAQ: PRGO) today announced results for the third quarter and nine months ended March 31, 2001.
Net sales for the quarter were $192.0 million, an increase of four percent compared with $184.5 million last year. Net income was $10.1 million, up 58 percent from $6.4 million a year ago. Earnings per share were $0.14 in the quarter compared with $0.09 in the third quarter of fiscal 2000.
David T. Gibbons, Perrigo's President and Chief Executive Officer, stated, "Higher revenues and margins, along with interest income from our strong cash position, contributed to the improved earnings for the quarter. While the cough and cold season has proven to be weak overall, sales in our key cough/cold and analgesic product categories benefited from a stronger February and March. In the third quarter last year, our gross profit margin was impacted by high inventory obsolescence expenses. This year, tighter inventory controls kept those expenses near historically low levels. I am also pleased to note that efficient working capital management contributed $25 million in operating cash flow in the quarter."
In November 2000, in compliance with the Food and Drug Administration's (FDA) recommendation, the Company voluntarily discontinued production and halted shipments of all products containing the ingredient phenylpropanolamine (PPA). On a proforma basis, excluding the PPA discontinuation, which resulted in a $14 million reduction in sales in the fiscal second quarter, and $17.8 million in sales from a business sold in fiscal year 2000, the Company reported nine months sales of $590.2 million compared with $579.8 million a year ago. The PPA discontinuation also resulted in a charge of $24.0 million or $0.21 per share, in the fiscal second quarter. Proforma net income was $36.8 million or $0.50 per share versus $27.0 million or $0.37 per share last year. Including the PPA related reduction in sales, reported net sales in the nine months were $576.2 million and reported net income, including the PPA charge, was $21.5 million or $0.29. For the nine months last year, including the divested personal care business, Perrigo reported net income of $27.4 million or $0.37 per share.
"Excluding the PPA product discontinuations, our nine months earnings have improved significantly over last year on a modest sales gain. Favorable obsolescence expense, combined with sound inventory management, has resulted in margin improvement, despite higher compliance costs. We have also benefited from a strong cash position and no long-term debt," said Gibbons. "Going forward, we anticipate that increased funding for research and development and higher costs for our global quality improvement and compliance initiatives will carry through fiscal 2002. We will be challenged with absorbing these costs over the next several quarters, and until the longer- term payoff of production efficiencies are fully incorporated in operations, we expect modest growth in earnings."
Douglas R. Schrank, Executive Vice President and Chief Financial Officer, stated, "Due to the seasonal nature of our business, our profitability is generally the weakest in our June quarter. Additionally, this year we will see higher quality and compliance expenses impacting cost of sales. These costs become more visible when quarterly revenues hit their seasonal lows. Consequently, we anticipate earnings for Perrigo's fiscal fourth quarter to be in a range of $(0.02) to $0.01 per share. For the full year ending June 30, 2001, we expect earnings to be in a range of $0.48 to $0.51 per share, excluding the PPA product discontinuation costs in the second quarter."
Perrigo will host a conference call to discuss third quarter 2001 results at 11:00 a.m. (EDT) today. The call and replay will be available via webcast on the Company's web site at http://www.perrigo.com/investor . The conference call may also be accessed by phone on a listen-only basis by calling 1-800-230-1085 and asking for Perrigo's third quarter review. A taped replay of the call will be available beginning at approximately 2:30 p.m. (EDT) Tuesday, May 1. To listen to the replay, call 1-800-475-6701, access code 584136 (outside the United States, call 320-365-3844).
Perrigo Company is the nation's largest manufacturer of over-the-counter (non-prescription) pharmaceutical and nutritional products for the store brand market. Store brand products are sold by national and regional supermarket, drugstore and mass merchandise chains under their own labels and compete with nationally advertised brands. The Company's products include over-the-counter pharmaceuticals, such as analgesics, cough and cold remedies, antacids, laxatives, feminine hygiene and smoking cessation products, and nutritional products, such as vitamins, nutritional supplements and nutritional drinks. Visit Perrigo on the Internet at 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. Please refer to pages 23-27 of the Company's Form 10-K for the year ended July 1, 2000 for a discussion of certain important factors that relate to forward- looking statements contained in this press release. Although the Company believes that the expectations reflected in any such forward-looking statements are reasonable, it can give no assurance that such expectations will prove to be correct.
CONDENSED CONSOLIDATED STATEMENTS OF INCOME
(In thousands, except per share amounts)
Third Quarter Year-To-Date
March 31, April 1, March 31, April 1,
2001 2000 2001 2000
Net sales $191,956 $184,528 $576,171 $597,536
Cost of sales 144,472 148,264 429,653 463,407
PPA product discontinuation - - 20,200 -
Gross profit 47,484 36,264 126,318 134,129
Distribution 4,080 4,071 11,498 12,521
Research and development 5,202 2,799 12,630 10,192
Selling and administration 24,410 19,407 71,679 64,588
Unusual litigation (538) - (995) -
33,154 26,277 94,812 87,301
Operating income 14,330 9,987 31,506 46,828
Interest and other, net (1,687) 10 (2,822) 4,521
Income before income taxes 16,017 9,977 34,328 42,307
Income tax expense 5,916 3,602 12,873 14,943
Net income $10,101 $6,375 $21,455 $27,364
Basic earnings per share $0.14 $0.09 $0.29 $0.37
Diluted earnings per share $0.14 $0.09 $0.29 $0.37
Shares outstanding used for
basic EPS calculation 73,468 73,367 73,485 73,347
Shares outstanding used for
diluted EPS calculation 74,552 73,537 74,081 73,531
SELECTED BALANCE SHEET DATA
March 31, July 1,
Current assets $324,965 $268,645
Property & equipment, net 193,791 193,580
Other assets 22,768 23,839
Total Assets $541,524 $486,064
Current liabilities $149,439 $113,920
Deferred income taxes 18,967 19,462
Minority interest 903 922
Shareholders' equity 372,215 351,760
Total Liabilities and Equity $541,524 $486,064
SELECTED STATEMENTS OF CASH FLOWS DATA
March 31, April 1,
Net income $21,455 $27,364
Depreciation and amortization 18,055 16,987
Other operating activities 40,541 41,723
Net cash from operating activities 80,051 86,074
Additions to property and
equipment (17,373) (10,634)
Proceeds from sale of assets
held for sale - 31,186
Net cash (for) from investing
activities (17,373) 20,552
Net cash from (for) financing
activities 493 (107,438)
Net Increase (Decrease) in Cash
and Cash Equivalents 63,171 (812)
Cash and Cash Equivalents, at
Beginning of Period 7,055 1,695
Cash and Cash Equivalents, at End
of Period $70,226 $883
SOURCE: Perrigo Company
Contact: Ernest J. Schenk, Manager, Investor Relations and Communication
of Perrigo Company, 616-673-9212, or E-mail: Investor@perrigo.com
Company News On-Call: http://www.prnewswire.com/comp/699550.html or fax,
800-758-5804, ext. 699550