The Perrigo Company (NASDAQ: PRGO) today announced results for the first quarter of fiscal 2004 ended September 27, 2003.
Perrigo Company (NASDAQ: PRGO)
(In thousands, except per share amounts)
Fiscal 2004 Fiscal 2003
1st Quarter Ended 1st Quarter Ended
9/27/03 9/28/02
Sales $209,805 $213,215
Net Income $16,508 $18,778
Diluted EPS $0.23 $0.26
Diluted Shares 71,809 71,745
Net sales for fiscal 2004's first quarter were $209.8 million, a decrease of two percent from $213.2 million last year. Net income was $16.5 million, or $0.23 per share, compared with $18.8 million, or $0.26 per share, a year ago. Earnings from operations last year were $16.8 million, or $0.23 per share, excluding a lawsuit settlement in the first quarter which added $2.0 million after-tax, or $0.03 per share.
Commenting on first quarter results, David T. Gibbons, Perrigo Chairman, President and Chief Executive Officer, stated, "Sales in the first quarter were disappointing, largely the result of weakness in the cough/cold category, where we did not experience the anticipated seasonal shipments of products that address cough, cold and flu indications. This reflects our retail partners' commitment to lean inventories and their confidence in our customer service capabilities. The lack of inventory building at retail was also reflected in lower gross margins, as we did not have the level of production throughput that we anticipated. At this early stage of the cough and cold season, we still believe we can achieve revenue growth of three to five percent for the full year.
"The Company continues its strong performance in generating cash, controlling inventories and managing the business. Customer service continues at historic high levels despite our inventories being down. During the quarter, we benefited from strong sales in two new products. Following its June launch, our loratadine tablet product, comparable to the national brand Claritin-D® 24 Hour, continued to sell well. In the nutritional segment we were pleased with the sell-in of our new branded diet aid product, Dr. Steven Rosenblatt's Starch Blocker.
"Research and development expense was up only slightly as outlays for the internal development of generic prescription drug products were not yet material," said Gibbons. "During the quarter, we agreed to provide funding to a contract research and development firm for the development of 10 to 12 generic drugs over the next two years. We are excited about this step in building a generic prescription drug product portfolio."
Perrigo will host a conference call to discuss first quarter fiscal 2004 results at 11:00 a.m. (ET) 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. (ET) Friday, October 24 until midnight Tuesday, October 28. To listen to the replay, call 800-642-1687, access code 3266281.
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 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 25 - 30 of the Company's Form 10-K for the year ended June 28, 2003 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)
First Quarter
2004 2003
(as adjusted)*
Net sales $209,805 $213,215
Cost of sales 151,819 151,536
Gross profit 57,986 61,679
Operating expenses
Distribution 3,522 4,027
Research and development 5,713 5,448
Selling and administration 23,406 25,603
Subtotal 32,641 35,078
Unusual litigation - (3,128)
Total 32,641 31,950
Operating income 25,345 29,729
Interest and other, net (449) (208)
Income before income taxes 25,794 29,937
Income tax expense 9,286 11,159
Net income $16,508 $18,778
Earnings per share
Basic $0.24 $0.27
Diluted $0.23 $0.26
Weighted average shares outstanding
Basic 70,040 70,719
Diluted 71,809 71,745
* The Company has reclassified certain amounts to conform to the current year presentation.
PERRIGO COMPANY
CONDENSED CONSOLIDATED BALANCE SHEETS
(in thousands)
September 27, June 28, September 28,
2003 2003 2002
Assets (unaudited) (unaudited)
(as adjusted)*
Current assets
Cash and cash equivalents $83,046 $93,827 $49,214
Accounts receivable 99,200 87,018 105,777
Inventories 149,872 160,326 163,704
Current deferred income taxes 30,359 32,643 23,484
Prepaid expenses and other current
assets 10,844 5,383 8,635
Total current assets 373,321 379,197 350,814
Property and equipment 431,777 429,115 405,258
Less accumulated depreciation 216,389 210,337 195,486
215,388 218,778 209,772
Goodwill 35,919 35,919 35,919
Non-current deferred income taxes 6,677 3,968 3,668
Other non-current assets 19,140 6,108 4,295
$650,445 $643,970 $604,468
Liabilities and Shareholders' Equity
Current liabilities
Accounts payable $67,616 $72,186 $78,431
Notes payable 7,191 8,980 8,729
Payroll and related taxes 22,354 40,535 23,232
Accrued expenses 41,276 36,590 39,740
Accrued income taxes 15,264 5,568 17,864
Current deferred income taxes 2,965 2,683 3,621
Total current liabilities 156,666 166,542 171,617
Non-current deferred income taxes 25,538 25,484 22,722
Other non-current liabilities 4,727 3,520 3,079
Shareholders' equity
Preferred stock, without par
value, 10,000 shares authorized - - -
Common stock, without par value,
200,000 shares authorized 90,363 88,990 80,120
Unearned compensation (56) (111) (499)
Accumulated other comprehensive
income 187 1,282 952
Retained earnings 373,020 358,263 326,477
Total shareholders' equity 463,514 448,424 407,050
$650,445 $643,970 $604,468
Supplemental Disclosures of Balance
Sheet Information
Allowance for doubtful accounts $9,321 $10,242 $8,050
Allowance for inventory $21,602 $21,717 $20,714
Working capital $216,655 $212,655 $179,197
Preferred stock, shares issued - - -
Common stock, shares issued 69,994 70,034 69,424
* The Company has reclassified certain amounts to conform to the current year presentation.
PERRIGO COMPANY
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(in thousands)
(unaudited)
First Quarter
2004 2003
Cash Flows From Operating Activities (as adjusted)*
Net income $16,508 $18,778
Adjustments to derive cash flows
Depreciation 7,031 6,865
Compensation - stock options 1,318 1,333
Deferred income taxes (77) 746
Changes in operating assets
and liabilities
Accounts receivable (12,352) (23,283)
Inventories 10,276 (8,188)
Accounts payable (4,439) 4,659
Payroll and related taxes (18,175) (8,104)
Income taxes payable 9,705 9,759
Accrued expenses 4,712 7,049
Other (6,312) (256)
Net cash from operating activities 8,195 9,358
Cash Flows For Investing Activities
Additions to property and equipment (4,993) (5,116)
Non-current note receivable (10,000) -
Investment in equity subsidiaries (1,000) -
Net cash for investing activities (15,993) (5,116)
Cash Flows For Financing Activities
Borrowings (repayments) of
short-term debt, net (1,631) (156)
Issuance of common stock 400 143
Repurchase of common stock (343) (32,025)
Cash dividends paid (1,751) -
Other - 59
Net cash for financing activities (3,325) (31,979)
Net decrease in cash and
cash equivalents (11,123) (27,737)
Cash and cash equivalents, at
beginning of period 93,827 76,824
Effect of exchange rate changes on cash 342 127
Cash and cash equivalents, at end
of period $83,046 $49,214
Supplemental Disclosures of Cash
Flow Information
Cash paid during the year for:
Interest paid $162 $257
Income taxes paid $579 $657
* The Company has reclassified certain amounts to conform to the current year presentation.
PERRIGO COMPANY
RECONCILIATION OF NON-GAAP MEASURES
(in thousands)
(unaudited)
September 27, September 28,
2003 2002
Net income (GAAP) $16,508 $18,778
Less: unusual litigation, net of tax - 2,000
Net income before unusual litigation $16,508 $16,778
Earnings per share:
Basic 0.24 0.24
Diluted 0.23 0.23
Weighted average shares outstanding:
Basic 70,040 70,719
Diluted 71,809 71,745
SOURCE: Perrigo Company
CONTACT: Ernest J. Schenk, Manager, Investor Relations and Communication
of Perrigo Company, +1-269-673-9212, E-mail: Investor@perrigo.com
Web site: http://www.perrigo.com/