The Perrigo Company (NASDAQ: PRGO) today announced results for the third quarter and nine months of fiscal 2003 ended March 29, 2003.
Perrigo Company (NASDAQ: PRGO)
(in thousands, except per share amounts)
Third Quarter Year-To-Date
2003 2002 2003 2002
Sales $202,616 $198,491 $643,352 $644,301
Net Income $14,132 $17,910 $49,724 $44,861
Diluted EPS $0.20 $0.24 $0.70 $0.60
Diluted Shares 70,601 73,859 70,967 74,939
Net sales for the third quarter were $202.6 million, an increase of two percent compared with $198.5 million last year. Net income was $14.1 million, or $0.20 per share, compared with net income of $17.9 million, or $0.24 per share a year ago, which included income from the settlement of a lawsuit of $5.0 million after-tax, or $0.07 per share. Without the lawsuit settlement, earnings on an operating basis were $12.9 million, or $0.17 per share, last year.
Commenting on the third quarter, David T. Gibbons, Perrigo President and Chief Executive Officer, said, "We delivered excellent results this quarter. Our improved operational efficiency and rising productivity were significant contributors to higher gross profits. Higher-than-anticipated sales volume and good product mix also helped profits. Lastly, we benefited from good expense control and improved results at our Mexican operation. Cash flow from operations was $45 million during the quarter and stands at $82 million year-to-date. We continue to be virtually debt-free and remain in a very strong financial position."
Net sales for the nine months ended March 29, 2003, were $643.4 million compared with $644.3 million a year ago. Net income for the nine months improved to $49.7 million, or $0.70 per share, from $44.9 million, or $0.60 per share for last year. Excluding proceeds from a lawsuit settlement in the first quarter this year of $2.0 million after-tax, or $0.03 per share, and income from the settlement of a lawsuit last year of $5.0 million after-tax, or $0.07 per share, net income on an operating basis increased 20 percent to $47.7 million, or $0.67 per share, from $39.9 million, or $0.53 per share, for the prior year.
Commenting further, Mr. Gibbons stated, "Over the past few quarters, our earnings have been driven by operational benefits, specifically, improved operating efficiencies and supply chain management. We have been making good progress, not driven by any single initiative, but from contributions across many functional areas. I am very proud of our employees' combined efforts, and I'm pleased that we continue to outpace our own goals. We feel very good about our operational momentum, and look forward to the upcoming launch of store brand equivalents to the branded allergy medication Claritin®.
"In line with our historical seasonal pattern, we anticipate sequentially lower fourth-quarter sales and margins and expect earnings of $0.04 to $0.05 per share. With year-to-date results of $0.70 per share, we now project earnings of $0.74 to $0.75 for the full year, compared with $0.60 per share for fiscal 2003, restated for expensing of stock options."
The Company noted that, effective with the fiscal second quarter ended December 28, 2002, it elected to expense stock option compensation. All prior periods have been restated to reflect the compensation cost that would have been recognized had the stock option expense been applied to all awards granted after July 1, 1995. Please refer to the restated results in the summary table at the end of this announcement.
The Company is furnishing this earnings release to the Securities and Exchange Commission via Form 8-K and it is hereby incorporated by reference. The information provided on Form 8-K includes a summary of each non-GAAP financial measure included in this earnings release and the reasons management believes these non-GAAP financial measures are useful to investors.
Perrigo will host a conference call to discuss third quarter fiscal 2003 results at 11:00 a.m. (EDT) today. The call and replay will be available via webcast on the Company's web site at www.perrigo.com/investor or by phone, toll free, 888-489-0147. A taped replay of the call will be available beginning at approximately 2:30 p.m. (EDT) Wednesday, April 23. To listen to the replay, call 800-642-1687, access code 9713471.
Perrigo Company is the nation's largest manufacturer of over-the-counter (non-prescription) pharmaceutical and nutritional products sold by supermarket, drug, and mass merchandise chains under their own labels. The Company's products include over-the-counter pharmaceuticals such as analgesics, cough and cold remedies, gastrointestinal, and feminine hygiene products, and nutritional products, such as vitamins, nutritional supplements and nutritional drinks. Visit Perrigo on the Internet (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. Please see the "Cautionary Note Regarding Forward-Looking Statements" on pages 23-27 of the Company's Form 10-K for the year ended June 29, 2002 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 these forward-looking statements are reasonable, it can give no assurance that such expectations will prove to be correct. 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
CONDENSED CONSOLIDATED STATEMENTS OF INCOME
(in thousands, except per share amounts)
(unaudited)
Third Quarter Year-To-Date
2003 2002 2003 2002
(as (as
restated) restated)
Net sales $202,616 $198,491 $643,352 $644,301
Cost of sales 143,910 141,883 458,671 472,650
Gross profit 58,706 56,608 184,681 171,651
Operating expenses
Distribution 3,814 4,048 11,924 12,330
Research and development 5,468 5,762 16,237 17,465
Selling and administration 27,833 26,264 81,983 76,089
Subtotal 37,115 36,074 110,144 105,884
Restructuring - - - 2,046
Unusual litigation - (7,813) (3,128) (7,813)
Total 37,115 28,261 107,016 100,117
Operating income 21,591 28,347 77,665 71,534
Interest and other, net (1,307) (220) (2,029) (496)
Income before income taxes 22,898 28,567 79,694 72,030
Income tax expense 8,766 10,657 29,970 27,169
Net income $14,132 $17,910 $49,724 $44,861
Earnings per share
Basic $0.20 $0.25 $0.71 $0.61
Diluted $0.20 $0.24 $0.70 $0.60
Weighted average shares
outstanding:
Basic 69,337 72,690 69,781 73,451
Diluted 70,601 73,859 70,967 74,939
Dividends declared per share $0.03 $ - $0.03 $ -
PERRIGO COMPANY
CONDENSED CONSOLIDATED BALANCE SHEETS
(in thousands)
March 29, June 29, March 30,
2003 2002 2002
(as (unaudited)
Assets (unaudited) restated) (as
Current assets restated)
Cash and cash equivalents $105,233 $76,824 $36,674
Accounts receivable, net of
allowances 84,973 82,560 98,755
Inventories, net of allowances 156,043 155,611 145,379
Prepaid expenses and other current
assets 6,064 6,896 8,936
Current deferred income taxes 23,603 19,860 19,364
Total current assets 375,916 341,751 309,108
Property and equipment 417,673 399,461 396,398
Less accumulated depreciation 206,907 188,417 184,943
210,766 211,044 211,455
Goodwill, net 35,919 35,919 47,471
Other 6,127 5,073 5,156
$628,728 $593,787 $573,190
Liabilities and Shareholders' Equity
Current liabilities
Accounts payable $73,489 $74,449 $61,111
Notes payable 8,741 8,338 7,321
Payrolls and related taxes 34,539 31,338 27,733
Accrued expenses 36,469 32,721 31,808
Income taxes 8,815 8,088 10,134
Total current liabilities 162,053 154,934 138,107
Deferred income taxes 25,146 18,295 16,180
Other long-term liabilities 3,193 2,396 2,685
Shareholders' equity
Preferred stock, without par
value, 10,000 shares authorized - - -
Common stock, without par value,
200,000 shares authorized 82,564 110,698 108,585
Unearned compensation (262) (608) (756)
Accumulated other comprehensive
income 348 373 619
Retained earnings 355,686 307,699 307,770
Total shareholders' equity 438,336 418,162 416,218
$628,728 $593,787 $573,190
Supplemental Disclosures of Balance
Sheet Information
Allowance for doubtful accounts $9,907 $7,569 $8,809
Allowance for inventory $19,806 $21,360 $23,448
Working capital $213,863 $186,817 $171,001
Preferred stock, shares issued - - -
Common stock, shares issued 69,425 72,550 72,471
PERRIGO COMPANY
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(in thousands)
(unaudited)
Year-To-Date
2003 2002
Cash Flows From (For) Operating Activities: (as
restated)
Net income $49,724 $44,861
Adjustments to derive cash flows:
Depreciation and amortization 19,777 17,968
Compensation - stock options 3,998 4,549
Deferred income taxes 3,108 92
Restructuring, net of cash - 2,046
Changes in operating assets and
liabilities, net of restructuring:
Accounts receivable (2,845) (5,102)
Inventories (712) 15,784
Current income taxes 718 (10,412)
Accounts payable (750) (23,256)
Payroll and related taxes 3,195 1,617
Accrued expenses 4,038 5,951
Other 1,682 (752)
Net cash from operating activities 81,933 53,346
Cash Flows (For) From Investing Activities:
Additions to property and equipment (19,458) (17,386)
Proceeds from sale of assets
held for sale - 14,161
Investment in equity subsidiaries (1,233) (41)
Other - (385)
Net cash for investing activities (20,691) (3,651)
Cash Flows (For) From Financing Activities:
Borrowings (repayments) of
short-term debt, net 776 (5,554)
Tax benefit of stock transactions 153 1,669
Issuance of common stock 1,353 10,232
Repurchase of common stock (33,682) (31,923)
Cash dividends (1,737) -
Other - 1,584
Net cash for financing activities (33,137) (23,992)
Net Increase in Cash and Cash Equivalents 28,105 25,703
Cash and Cash Equivalents, at
Beginning of Period 76,824 11,016
Effect of exchange rate changes on cash 304 (45)
Cash and Cash Equivalents, at End
of Period $105,233 $36,674
Supplemental Disclosures of Cash Flow Information:
Interest paid $598 $1,266
Income taxes paid $26,854 $36,939
PERRIGO COMPANY
STOCK OPTION COMPENSATION EXPENSE
IMPACT ON NET INCOME AND EPS
(in thousands, except per share amounts)
(unaudited)
Third Quarter Year-To-Date
2003 2002 2003 2002
Net income before adoption $15,507 $19,261 $53,565 $48,916
Compensation expenses (net of tax
benefit) 1,375 1,351 3,841 4,055
Net income after adoption $14,132 $17,910 $49,724 $44,861
Weighted average shares outstanding:
Basic 69,337 72,690 69,781 73,451
Diluted
Before adoption 71,041 74,309 71,395 75,474
After adoption 70,601 73,859 70,967 74,939
Basic EPS
Before adoption $0.22 $0.26 $0.77 $0.67
After adoption $0.20 $0.25 $0.71 $0.61
Diluted EPS
Before adoption $0.22 $0.26 $0.75 $0.65
After adoption $0.20 $0.24 $0.70 $0.60
PERRIGO COMPANY
RECONCILIATION OF NON-GAAP MEASURES
(in thousands, except per share amounts)
(unaudited)
Third Quarter Year-To-Date
2003 2002 2003 2002
Net income (GAAP) $14,132 $17,910 $49,724 $44,861
Less: unusual litigation, net of tax - 5,000 2,000 5,000
Net income before unusual litigation $14,132 $12,910 $47,724 $39,861
Earnings per share:
Basic $0.20 $0.18 $0.68 $0.54
Diluted $0.20 $0.17 $0.67 $0.53
Weighted average shares outstanding:
Basic 69,337 72,690 69,781 73,451
Diluted 70,601 73,859 70,967 74,939
SOURCE: Perrigo Company
CONTACT: Ernest J. Schenk, Manager, Investor Relations and Communication
of Perrigo Company, +1-269-673-9212, E-mail: eschenk@perrigo.com
Web site: http://www.perrigo.com/investor
Web site: http://www.perrigo.com/
Company News On-Call: http://www.prnewswire.com/gh/cnoc/comp/699550.html