Perrigo Company (NASDAQ: PRGO)(TASE: PRGO) today announced results for its fourth quarter and full year ended June 27, 2009.
Perrigo's Chairman and CEO Joseph C. Papa commented, "Our sales topped $2 billion for the first time in our history. For the third straight year, we delivered year-over-year record sales and for the second straight year, we translated our top line growth to record earnings and cash flow from operations. In the fourth quarter alone we generated $157 million in operating cash flow. Our team is executing well -- growing market share, managing our supply chain, improving customer service levels, investing in quality and delivering strong returns. By bringing innovative new products to market today and continuing to invest in research and development for future launches, we continue to make quality healthcare more affordable at a time when consumers need to save money more than ever."
Papa continued, "We are also very pleased to announce the next phase in the evolution of our API business. In an effort to strengthen our position in an important and strategic segment of our business, on August 6, 2009, we acquired an 85% stake in a state-of-the-art API manufacturing facility outside of Mumbai, India for $12 million. By the middle of fiscal 2011, we expect this new facility to be on-line and to begin production of certain API products manufactured today in Germany and Israel. We also expect this facility to manufacture certain specialty APIs, as well as allow for the vertical integration of Rx and future candidate Rx-to-OTC switch products. This transition to India will enable us to leverage the capacity created in Israel for other specialty API products. We are also exiting our German manufacturing facility by the first quarter of 2011. This transformation will position Perrigo to be more competitive in the medium and long-term and allow for further growth opportunities."
In connection with the closure of the German facility (which was part of the 2005 Agis acquisition), the Company incurred restructuring charges of approximately $15 million. Refer to Table II 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 Statements of Cash Flows. As part of management's strategic review of its portfolio of businesses, in March 2009, the Company committed to a plan to sell its Israel Consumer Products business. The results of this business are reflected in the consolidated financial statements as discontinued operations for all periods presented.
Perrigo Company (from continuing operations, in thousands, except per share amounts) (see the attached table II for reconciliation to GAAP numbers) Fourth Quarter Fiscal Year -------------- ----------- 2009 2008 2009 2008 Net Sales $508,209 $474,282 $2,006,862 $1,729,921 Reported Income $32,280 $32,160 $141,098 $140,197 Adjusted Income $46,927 $42,151 $174,637 $154,485 Reported Diluted EPS $0.35 $0.34 $1.51 $1.47 Adjusted Diluted EPS $0.50 $0.44 $1.87 $1.62 Diluted Shares 93,290 95,076 93,629 95,210 Fourth Quarter Results
Net sales from continuing operations for the fourth quarter of fiscal 2009 were $508 million, an increase of 7%. Reported income from continuing operations was $32 million, or $0.35 per share, relatively flat compared with $32 million, or $0.34 per share, a year ago. Excluding charges as outlined in Table II at the end of this release, fourth quarter fiscal 2009 adjusted income from continuing operations was $47 million, or $0.50 per share.
Fiscal Year Results
Net sales from continuing operations for fiscal 2009 were $2,007 million, an increase of 16% over fiscal 2008. The year-over-year increase was driven by $214 million of incremental consolidated new product sales. Adjusted operating income of $267 million was an increase of 24% over fiscal 2008, and adjusted consolidated operating margin improved 80 basis points to 13.3%. Reported income from continuing operations was $141 million, relatively unchanged from fiscal 2008, while adjusted income from continuing operations of $175 million was a 13% increase from fiscal 2008.
Consumer Healthcare
Consumer Healthcare segment net sales in the fourth quarter were $407 million compared with $375 million in the fourth quarter last year, an increase of $32 million or 9%. The increase resulted from approximately $33 million of sales from the acquisitions of JB Labs, Unico, Diba and Brunel, and $28 million from incremental sales of new and existing products. These increases were partially offset by the impact of unfavorable changes in foreign currency exchange rates of $15 million and $14 million from divestitures and discontinued products, respectively. Reported operating income was $56 million, compared with $52 million a year ago, largely driven by increased sales and the absence of a $3 million charge to cost of sales related to the step-up in value of inventory acquired in the Galpharm acquisition and $2 million related to restructuring in the U.K. On an adjusted basis, operating income was relatively consistent with last year at $56 million compared to $57 million in fiscal 2008. Adjusted operating margin decreased 140 basis points year-over-year for the quarter due to lower gross margins and increased R&D spending.
For the full year of fiscal 2009, Consumer Healthcare net sales increased 23% or $303 million compared to fiscal 2008. The increase resulted from a combination of sales of new and existing products of approximately $233 million. The increase was also driven by $140 million of sales from the acquisitions of JB Labs, Unico, Galpharm, Brunel and Diba. These combined increases were partially offset by the impact of unfavorable changes in foreign currency exchange rates of $37 million and the absence of the U.K.'s vitamins, minerals and supplements business's sales of $35 million. Reported operating income was $234 million, compared with $173 million a year ago, largely driven by increased sales. On an adjusted basis, operating income was $239 million compared to $181 million in fiscal 2008. Adjusted operating margin increased 110 basis points year-over-year due to improved product mix and cost management.
On July 13, 2009, the Company announced that it had received approval from the U.S. Food and Drug Administration (FDA) to market over-the-counter (OTC) coated nicotine polacrilex lozenge USP, 2 mg and 4 mg in cherry and cinnamon flavors.
Rx Pharmaceuticals
The Rx Pharmaceutical segment fourth quarter net sales were $49 million compared with $38 million a year ago, an increase of 27%. The increase in sales was driven by increased volume on existing products, strong base business performance and strategic pricing initiatives. Adjusted operating income was $12 million an increase of $8 million from last year due to strong gross margins and strong cost management.
For the full year of fiscal 2009, net sales for the Rx Pharmaceutical segment increased 2% from fiscal 2008 to $164 million. The increase was due primarily to new product sales of approximately $17 million, along with an increase in sales volumes on the Company's existing portfolio of products of approximately $9 million. The increases were partially offset by the absence of the fiscal 2008 receipt of a one-time cash payment of $9 million from a customer in lieu of expected future minimum royalty payments, as well as a reduction in non-product revenue of $6 million and pricing pressures due to continued competition in the marketplace for generic drugs.
API
The API segment reported fourth quarter net sales of $39 million compared with $38 million a year ago. The increase was due primarily to improved product mix and was partially offset by $3 million in unfavorable changes in foreign currency exchange rates. Adjusted operating income increased $5 million or 146% due to improved sales mix, operational efficiencies and cost management.
For the full year of fiscal 2009, net sales decreased 9% compared to fiscal 2008. This decrease was due primarily to a decline of approximately $9 million in sales of existing products, the absence of a one-time $5 million accrual reversal and approximately $4 million resulting from unfavorable changes in foreign currency exchange rates. This decrease was partially offset by new product sales of approximately $5 million. Adjusted operating income was $15 million down from $20 million.
Other
Continuing operations for the Other category, consisting of the Israel Pharmaceutical and Diagnostic Products operating segment, reported fourth quarter net sales of $13 million, compared with $23 million a year ago. The decrease was due to the change whereby the Company is now a distributor to a customer rather than a supplier to that customer and also by unfavorable changes in foreign currency exchange rates. Operating income was $2 million, up from $800 thousand last year. The increase in operating income was due primarily to effective cost management and favorable currency exchange rates.
For the full year of fiscal 2009, net sales decreased $15 million or 18%, compared to fiscal 2008. The decrease was driven primarily by a $12 million impact related to the change in a customer contract relationship mentioned above. In addition, sales decreased by approximately $3 million due to changes in the sales mix of products.
Guidance
Chairman and CEO Joseph C. Papa concluded, "In challenging economic times, Perrigo is uniquely positioned to continue to save consumers nearly a billion dollars annually on their healthcare spend while adding value for our customers and shareholders. We expect fiscal 2010 earnings from continuing operations to be between $2.00 and $2.12 per share, which implies a year-over-year growth rate of earnings from continuing operations of 7% to 13% over adjusted fiscal 2009 EPS. Perrigo is the right company in the right place at the right time."
Perrigo will host a conference call to discuss fiscal 2009 fourth quarter and full year results at 10:00 a.m. (ET) on Tuesday, August 18. 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# 20224149. A taped replay of the call will be available beginning at approximately 2:00 p.m. (ET) Tuesday, August 18, until midnight Tuesday, August 25, 2009. To listen to the replay, call 800-642-1687, International 706-645-9291, access code 20224149.
Perrigo Company is a leading global healthcare supplier that develops, manufactures and distributes OTC and generic prescription pharmaceuticals, nutritional products, active pharmaceutical ingredients (API) and pharmaceutical and medical diagnostic products. 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 manufacturing and logistics operations are the United States, Israel, Mexico and the United Kingdom. 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 27, 2009, 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 2009 2008 2007 ---- ---- ---- Net sales $2,006,862 $1,729,921 $1,368,351 Cost of sales 1,410,865 1,212,193 1,001,167 --------- --------- --------- Gross profit 595,997 517,728 367,184 ------- ------- ------- Operating expenses Distribution 24,203 25,152 23,478 Research and development 77,922 72,191 66,480 Selling and administration 231,639 220,429 170,124 ------- ------- ------- Subtotal 333,764 317,772 260,082 ------- ------- ------- Write-off of in-process research and development 279 2,786 8,252 Restructuring 14,647 2,312 879 ------ ----- --- Total 348,690 322,870 269,213 ------- ------- ------- Operating income 247,307 194,858 97,971 Interest, net 27,154 17,415 16,110 Other expense (income), net 1,269 (503) (5,271) Investment impairment 15,104 - - ------- ------- ------- Income from continuing operations before income taxes 203,780 177,946 87,132 Income tax expense 62,682 37,749 14,298 ------ ------ ------ Income from continuing operations 141,098 140,197 72,834 Income (loss) from discontinued operations, net of tax 2,951 (4,424) 963 ----- ------ --- Net income $144,049 $135,773 $73,797 ======== ======== ======= Earnings (loss) per share (1) Basic Continuing operations $1.53 $1.51 $0.79 Discontinued operations 0.03 (0.05) 0.01 ---- ----- ---- Basic earnings per share $1.56 $1.46 $0.80 Diluted Continuing operations $1.51 $1.47 $0.78 Discontinued operations 0.03 (0.05) 0.01 ---- ----- ---- Diluted earnings per share $1.54 $1.43 $0.79 Weighted average shares outstanding Basic 92,183 93,124 92,230 Diluted 93,629 95,210 93,807 Dividends declared per share $0.215 $0.195 $0.178 (1) The sum of individual per share amounts may not equal due to rounding. PERRIGO COMPANY CONSOLIDATED BALANCE SHEETS (in thousands) June 27, June 28, Assets 2009 2008 ---- ---- Current assets Cash and cash equivalents $316,133 $318,599 Investment securities 3 560 Accounts receivable, net 325,810 317,875 Inventories 384,794 374,782 Current deferred income taxes 41,941 42,241 Income taxes refundable 8,926 10,215 Prepaid expenses and other current assets 23,658 36,951 Current assets of discontinued operations 51,699 58,968 ------ ------ Total current assets 1,152,964 1,160,191 Property and equipment Land 22,876 22,275 Buildings 262,990 254,030 Machinery and equipment 478,085 443,288 ------- ------- 763,951 719,593 Less accumulated depreciation (409,634) (381,053) -------- -------- 354,317 338,540 Restricted cash 400,000 400,000 Goodwill and other indefinite- lived intangible assets 268,819 287,112 Other intangible assets, net 214,207 220,724 Non-current deferred income taxes 74,438 73,726 Other non-current assets 49,756 63,914 Non-current assets of discontinued operations 21,854 34,202 ------ ------ $2,536,355 $2,578,409 ========== ========== Liabilities and Shareholders' Equity Current liabilities Accounts payable $271,537 $235,922 Payroll and related taxes 54,196 70,977 Accrued customer programs 54,461 53,419 Accrued liabilities 61,704 55,055 Accrued income taxes 3,334 3,317 Current deferred income taxes 18,528 24,493 Current portion of long-term debt 17,181 20,095 Current liabilities of discontinued operations 19,620 25,716 ------ ------ Total current liabilities 500,561 488,994 Non-current liabilities Long-term debt, less current portion 875,000 895,095 Non-current deferred income taxes 139,916 138,158 Other non-current liabilities 87,024 106,453 Non-current liabilities of discontinued operations 11,933 15,994 ------ ------ Total non-current liabilities 1,113,873 1,155,700 Shareholders' Equity Preferred stock, without par value, 10,000 shares authorized - - Common stock, without par value, 200,000 shares authorized 452,243 488,537 Accumulated other comprehensive income 50,592 155,184 Retained earnings 419,086 289,994 ------- ------- Total shareholders' equity 921,921 933,715 ------- ------- $2,536,355 $2,578,409 ========== ========== Supplemental Disclosures of Balance Sheet Information Related to Continuing Operations Allowance for doubtful accounts $11,394 $7,511 Working capital $620,324 $637,945 Preferred stock, shares issued and outstanding - - Common stock, shares issued and outstanding 92,209 93,311 PERRIGO COMPANY CONSOLIDATED STATEMENTS OF SHAREHOLDERS' EQUITY AND COMPREHENSIVE INCOME (in thousands) Common Stock Accumulated Comprehen- Issued Other sive ------ Comprehensive Income Retained Shares Amount Income (loss) (loss) Earnings ------ ------ ------------- ------- -------- Balance at July 1, 2006 92,922 $516,098 $3,593 $77,170 $121,053 Net income - - - 73,797 73,797 Accumulated other comprehensive income (loss): Change in fair value of derivative financial instruments, net of $606 tax - - (1,126) (1,126) Foreign currency translation adjustments - - 53,074 53,074 - Change in fair value of investment securities (1,415) (1,415) - Adjustment from adoption of SFAS 158, net of $1,373 tax - - 2,550 - - Issuance of common stock under: Stock options 1,496 15,362 - - - Restricted stock plan 338 - - - - Compensation for stock options - 3,793 - - - Compensation for restricted stock - 5,160 - - - Cash dividends, $0.178 per share - - - - (16,476) Tax effect from stock transactions - 1,470 - - - Purchases and retirements of common stock (1,361) (22,464) - - - ------ ------- ---- ---- ---- Balance at June 30, 2007 93,395 519,419 56,676 124,330 178,374 ======= Net income - - - 135,773 135,773 Accumulated other comprehensive income (loss): Change in fair value of derivative financial instruments, net of $1,852 tax - - (3,440) (3,440) - Foreign currency translation adjustments - - 105,826 105,826 - Change in fair value of investment securities (3,453) (3,453) - Post-retirement liability adjustments, net of $229 tax - - (425) (425) - Adjustment to adopt FIN 48 - - - - (5,934) Issuance of common stock under: Stock options 2,393 32,210 - - - Restricted stock plan 19 - - - - Compensation for stock options - 2,730 - - - Compensation for restricted stock - 5,739 - - - Cash dividends, $0.195 per share - - - - (18,219) Tax effect from stock transactions - 6,603 - - - Purchases and retirements of common stock (2,496) (78,164) - - - ------ ------- ----- ----- ----- Balance at June 28, 2008 93,311 488,537 155,184 234,281 289,994 ======= Net income - - - 144,049 144,049 Accumulated other comprehensive income (loss): Change in fair value of derivative financial instruments, net of $162 tax - - 300 300 - Foreign currency translation adjustments - - (103,450) (103,450) - Change in fair value of investment securities 3,956 3,956 - Adjustment to adopt FSP FAS 115-2 - - (5,000) (5,000) 5,000 Post-retirement liability adjustments, net of $214 tax - - (398) (398) - Issuance of common stock under: Stock options 720 10,062 - - - Restricted stock plan 14 - - - - Compensation for stock options - 3,313 - - - Compensation for restricted stock - 7,040 - - - Cash dividends, $0.215 per share - - - - (19,957) Tax effect from stock transactions - 5,780 - - - Purchases and retirements of common stock (1,836) (62,489) - - - ------ ------- ----- ----- ----- Balance at June 27, 2009 92,209 $452,243 $50,592 39,457 419,086 ====== ======== ======= ====== ======= PERRIGO COMPANY CONSOLIDATED STATEMENTS OF CASH FLOWS (in thousands) Fiscal Year ----------- 2009 2008 2007 ---- ---- ---- Cash Flows From (For) Operating Activities Net income $144,049 $135,773 $73,797 Adjustments to derive cash flows Write-off of in- process research and development 279 2,786 8,252 Depreciation and amortization 70,142 69,231 58,032 Restructuring and asset impairment 31,351 12,658 2,913 Share-based compensation 10,353 8,469 8,953 Income tax benefit from exercise of stock options (3,490) 3,992 1,482 Excess tax benefit of stock transactions (2,290) (10,595) (2,952) Deferred income taxes (1,422) (1,542) (4,335) ------ ------ ------ Sub-total 248,972 220,772 146,142 ------- ------- ------- Changes in operating assets and liabilities, net of asset and business acquisitions Accounts receivable 6,446 (38,742) (36,812) Inventories 341 (72,480) 18,786 Income taxes refundable (1,066) (6,883) - Accounts payable 24,821 67,638 (19,186) Payroll and related taxes (20,621) 27,046 (4,956) Accrued customer programs 1,124 5,450 (1,316) Accrued liabilities (13,483) 1,773 1,184 Accrued income taxes 13,201 31,274 18,224 Other (1,390) 8,467 5,375 ------ ----- ----- Sub-total 9,373 23,543 (18,701) ----- ------ ------- Net cash from operating activities 258,345 244,315 127,441 ------- ------- ------- Cash Flows (For) From Investing Activities Purchase of securities - (176,298) (335,016) Proceeds from sales of securities - 208,097 312,521 Issuance of note receivable - - (1,000) Additions to property and equipment (59,238) (44,824) (45,014) Proceeds from sales of property and equipment - - 2,613 Cash acquired in asset exchange 2,115 - - Acquisitions of assets (1,000) (12,401) (59,538) Acquisitions of businesses, net of cash acquired (88,248) (83,312) - Equity investment - (12,500) - ------ ------ ------- Net cash for investing activities (146,371) (121,238) (125,434) -------- -------- -------- Cash Flows (For) From Financing Activities Repayments of short-term debt, net (13,736) (11,776) (8,295) Borrowings of long-term debt - 465,000 130,000 Repayments of long-term debt (31,380) (225,801) (90,000) Excess tax benefit of stock transactions 2,290 10,595 2,952 Issuance of common stock 10,062 32,210 15,362 Repurchase of common stock (62,489) (78,164) (22,464) Cash dividends (19,957) (18,219) (16,476) ------- ------- ------- Net cash (for) from financing activities (115,210) 173,845 11,079 -------- ------- ------ Effect of exchange rate changes on cash 769 (8,623) (1,799) --- ------ ------ Net increase (decrease) in cash and cash equivalents (2,467) 288,299 11,287 Cash and cash equivalents of continuing operations, beginning of period 318,599 30,301 19,018 Cash balance of discontinued operations, beginning of period 5 4 - --- --- --- Cash and cash equivalents, end of period 316,137 318,604 30,305 Less cash balance of discontinued operations, end of period (4) (5) (4) -- -- -- Cash and cash equivalents of continuing operations, end of period $316,133 $318,599 $30,301 ======== ======== ======= Supplemental Disclosures of Cash Flow Information Cash paid/received during the year for: Interest paid $47,066 $37,111 $36,020 Interest received $24,348 $21,664 $20,079 Income taxes paid $73,276 $32,718 $12,896 Income taxes refunded $11,283 $7,693 $11,316 Table I PERRIGO COMPANY SEGMENT INFORMATION (in thousands) (unaudited) Fourth Quarter Fiscal Year -------------- ----------- 2009 2008 2009 2008 ---- ---- ---- ---- Segment Net Sales Consumer Healthcare $407,009 $374,645 $1,638,770 $1,336,140 Rx Pharmaceuticals 48,840 38,425 164,163 161,271 API 38,940 38,313 136,002 149,553 Other 13,420 22,899 67,927 82,957 ------ ------ ------ ------ Total $508,209 $474,282 $2,006,862 $1,729,921 ======== ======== ========== ========== Segment Operating Income (Loss) Consumer Healthcare $56,059 $52,105 $233,756 $172,654 Rx Pharmaceuticals 12,090 (5,774) 29,028 21,386 API (5,409) 3,752 433 20,475 Other 2,353 809 7,680 7,030 Unallocated expenses (9,569) (10,513) (23,311) (23,901) Write-off of in-process R&D - - (279) (2,786) ----- ----- ----- ------ Total $55,524 $40,379 $247,307 $194,858 ======= ======= ======== ======== *All information based on continuing operations. Table II PERRIGO COMPANY RECONCILIATION OF NON-GAAP MEASURES (in thousands, except per share amounts) (unaudited) Fourth Quarter -------------- 2009 2008 % Change ---- ---- --------- Net sales $508,209 $474,282 7% Reported gross profit $163,853 $135,093 21% Inventory step-up - Unico - - Inventory step-up - Diba - - Inventory step-up - JB Labs - - Inventory step-up - Galpharm - 2,878 Impairment of fixed assets - - Impairment of intangible asset - 10,346 ----- ------ Adjusted gross profit $163,853 $148,317 10% ======== ======== Adjusted gross profit % 32.2% 31.3% Reported operating expenses $108,329 $94,714 14% Loss on asset exchange - - Restructuring costs - Germany (14,647) - Restructuring costs - West Coast - (143) Restructuring costs - United Kingdom - (1,821) ----- ------ Adjusted operating expenses $93,682 $92,750 1% ======= ======= Adjusted operating expenses % 18.4% 19.6% Reported operating income $55,524 $40,379 38% Inventory step-up - Unico - - Inventory step-up - Diba - - Inventory step-up - JB Labs - - Inventory step-up - Galpharm - 2,878 Impairment of fixed assets - - Impairment of intangible asset - 10,346 Loss on asset exchange - - Restructuring costs - Germany 14,647 - Restructuring costs - West Coast - 143 Restructuring costs - United Kingdom - 1,821 Write-off of in-process R&D - Diba acquisition - - Write-off of in-process R&D - Galpharm acquisition - - ----- ----- Adjusted operating income $70,171 $55,567 26% ======= ======= Adjusted operating income % 13.8% 11.7% Reported income from continuing operations $32,280 $32,160 0% Inventory step-up - Unico (5) - - Inventory step-up - Diba (1) - - Inventory step-up - JB Labs (2) - - Inventory step-up - Galpharm (1) - 2,072 Impairment of fixed assets (4) - - Impairment of intangible asset (3) - 6,518 Investment impairment (6) - - Loss on asset exchange (6) - - Restructuring costs - Germany (6) 14,647 - Restructuring costs - West Coast (3) - 90 Restructuring costs - United Kingdom (1) - 1,311 Write-off of in-process R&D - Diba acquisition (1) - - Write-off of in-process R&D - Galpharm acquisition (1) - - ----- ----- Adjusted income from continuing operations $46,927 $42,151 11% ======= ======= Diluted earnings per share from continuing operations Reported $0.35 $0.34 2% Adjusted $0.50 $0.44 13% Diluted weighted average shares outstanding 93,290 95,076 Fiscal Year ----------- 2009 2008 % Change ---- ---- --------- Net sales $2,006,862 $1,729,921 16% Reported gross profit $595,997 $517,728 15% Inventory step-up - Unico 1,062 - Inventory step-up - Diba 1,503 - Inventory step-up - JB Labs 358 - Inventory step-up - Galpharm - 5,756 Impairment of fixed assets 1,600 - Impairment of intangible asset - 10,346 ----- ------ Adjusted gross profit $600,520 $533,830 12% ======== ======== Adjusted gross profit % 29.9% 30.9% Reported operating expenses $348,690 $322,870 8% Loss on asset exchange (639) - Restructuring costs - Germany (14,647) - Restructuring costs - West Coast - (491) Restructuring costs - United Kingdom - (1,821) ----- ------ Adjusted operating expenses $333,404 $320,558 4% ======== ======== Adjusted operating expenses % 16.6% 18.5% Reported operating income $247,307 $194,858 27% Inventory step-up - Unico 1,062 - Inventory step-up - Diba 1,503 - Inventory step-up - JB Labs 358 - Inventory step-up - Galpharm - 5,756 Impairment of fixed assets 1,600 - Impairment of intangible asset - 10,346 Loss on asset exchange 639 - Restructuring costs - Germany 14,647 - Restructuring costs - West Coast - 491 Restructuring costs - United Kingdom - 1,821 Write-off of in-process R&D - Diba acquisition 279 - Write-off of in-process R&D - Galpharm acquisition - 2,786 ----- ----- Adjusted operating income $267,395 $216,058 24% ======== ======== Adjusted operating income % 13.3% 12.5% Reported income from continuing operations $141,098 $140,197 1% Inventory step-up - Unico (5) 645 - Inventory step-up - Diba (1) 1,082 - Inventory step-up - JB Labs (2) 229 - Inventory step-up - Galpharm (1) - 4,144 Impairment of fixed assets (4) 992 - Impairment of intangible asset (3) - 6,518 Investment impairment (6) 15,104 - Loss on asset exchange (6) 639 - Restructuring costs - Germany (6) 14,647 - Restructuring costs - West Coast (3) - 309 Restructuring costs - United Kingdom (1) - 1,311 Write-off of in-process R&D - Diba acquisition (1) 201 - Write-off of in-process R&D - Galpharm acquisition (1) - 2,006 ----- ----- Adjusted income from continuing operations $174,637 $154,485 13% ======== ======== Diluted earnings per share from continuing operations Reported $1.51 $1.47 2% Adjusted $1.87 $1.62 15% Diluted weighted average shares outstanding 93,629 95,210 (1) Net of taxes at 28% (2) Net of taxes at 36% (3) Net of taxes at 37% (4) Net of taxes at 38% (5) Net of taxes at 39.3% (6) No tax impact *All information based on continuing operations. Table II (Continued) REPORTABLE SEGMENTS RECONCILIATION OF NON-GAAP MEASURES (in thousands) (unaudited) Fourth Quarter -------------- 2009 2008 % Change ---- ---- --------- Consumer Healthcare Net sales $407,009 $374,645 9% Reported gross profit $119,782 $111,037 8% Inventory step-up - Unico - - Inventory step-up - Diba - - Inventory step-up - JB Labs - - Inventory step-up - Galpharm - 2,878 Impairment of fixed assets - - ----- ----- Adjusted gross profit $119,782 $113,915 5% ======== ======== Adjusted gross profit % 29.4% 30.4% Reported operating expenses $63,725 $58,932 8% Loss on asset exchange - - Restructuring costs - West Coast - (143) Restructuring costs - United Kingdom - (1,821) ---- ------ Adjusted operating expenses $63,725 $56,968 12% ======= ======= Adjusted operating expenses % 15.7% 15.2% Reported operating income $56,059 $52,105 8% Inventory step-up - Unico - - Inventory step-up - Diba - - Inventory step-up - JB Labs - - Inventory step-up - Galpharm - 2,878 Impairment of fixed assets - - Loss on asset exchange - - Restructuring costs - West Coast - 143 Restructuring costs - United Kingdom - 1,821 ---- ----- Adjusted operating income $56,059 $56,947 -2% ======= ======= Adjusted operating income % 13.8% 15.2% Rx Pharmaceuticals Net sales $48,840 $38,425 27% Reported gross profit $21,010 $3,969 Impairment of intangible asset - 10,346 ---- ------ Adjusted gross profit $21,010 $14,315 47% ======= ======= Adjusted gross profit % 43.0% 37.3% Reported operating income (loss) $12,090 $(5,774) -309% Impairment of intangible asset - 10,346 ---- ------ Adjusted operating income $12,090 $4,572 164% ======= ====== Adjusted operating income % 24.8% 11.9% API Net sales $38,940 $38,313 2% Reported operating expenses $22,529 $9,678 Restructuring costs - Germany (14,647) - ------- ---- Adjusted operating expenses $7,882 $9,678 -19% ====== ====== Adjusted operating expenses % 20.2% 25.3% Reported operating income (loss) $(5,409) $3,752 -244% Restructuring costs - Germany 14,647 - ------ ----- Adjusted operating income $9,238 $3,752 146% ====== ====== Adjusted operating income % 23.7% 9.8% Unallocated Reported operating loss $(9,569) $(10,513) -9% Write-off of in- process R&D - Diba acquisition - - Write-off of in- process R&D - Galpharm acquisition - - ----- ----- Adjusted operating loss $(9,569) $(10,513) -9% ======= ======== Fiscal Year ----------- 2009 2008 % Change ---- ---- --------- Consumer Healthcare Net sales $1,638,770 $1,336,140 23% Reported gross profit $460,133 $377,765 22% Inventory step-up - Unico 1,062 - Inventory step-up - Diba 1,503 - Inventory step-up - JB Labs 358 - Inventory step-up - Galpharm - 5,756 Impairment of fixed assets 1,600 - ----- ---- Adjusted gross profit $464,656 $383,521 21% ======== ======== Adjusted gross profit % 28.4% 28.7% Reported operating expenses $226,379 $205,111 10% Loss on asset exchange (639) - Restructuring costs - West Coast - (491) Restructuring costs - United Kingdom - (1,821) ---- ------ Adjusted operating expenses $225,740 $202,799 11% ======== ======== Adjusted operating expenses % 13.8% 15.2% Reported operating income $233,756 $172,654 35% Inventory step-up - Unico 1,062 - Inventory step-up - Diba 1,503 - Inventory step-up - JB Labs 358 - Inventory step-up - Galpharm - 5,756 Impairment of fixed assets 1,600 - Loss on asset exchange 639 - Restructuring costs - West Coast - 491 Restructuring costs - United Kingdom - 1,821 ---- ----- Adjusted operating income $238,918 $180,722 32% ======== ======== Adjusted operating income % 14.6% 13.5% Rx Pharmaceuticals Net sales $164,163 $161,271 2% Reported gross profit $63,801 $58,622 9% Impairment of intangible asset - 10,346 ---- ------ Adjusted gross profit $63,801 $68,968 -7% ======= ======= Adjusted gross profit % 38.9% 42.8% Reported operating income (loss) $29,028 $21,386 36% Impairment of intangible asset - 10,346 ---- ------ Adjusted operating income $29,028 $31,732 -9% ======= ======= Adjusted operating income % 17.7% 19.7% API Net sales $136,002 $149,553 -9% Reported operating expenses $47,124 $34,717 36% Restructuring costs - Germany (14,647) - ------- ---- Adjusted operating expenses $32,477 $34,717 -6% ======= ======= Adjusted operating expenses % 23.9% 23.2% Reported operating income (loss) $433 $20,475 -98% Restructuring costs - Germany 14,647 - ------ ---- Adjusted operating income $15,080 $20,475 -26% ======= ======= Adjusted operating income % 11.1% 13.7% Unallocated Reported operating loss $(23,590) $(26,687) -12% Write-off of in- process R&D - Diba acquisition 279 - Write-off of in- process R&D - Galpharm acquisition - 2,786 ---- ----- Adjusted operating loss $(23,311) $(23,901) -2% ======== ======== *All information based on continuing operations. Table III PERRIGO COMPANY RECONCILIATION OF NON-GAAP MEASURES (in thousands) (unaudited) Fourth Quarter Adjustment - Reported Cost of Inventory Sales Step-Up ---------------- ----------------- 2009 2008 2009 2008 ---- ---- ---- ---- Segments Consumer Healthcare $287,226 $263,607 $- $(2,878) Rx Pharmaceuticals 27,829 34,456 - - API 21,820 24,884 - - Other 7,481 16,242 - - ----- ------ --- --- Total $344,356 $339,189 $- $(2,878) ======== ======== === ======= Adjustment - Fourth Quarter Intangible Adjusted Cost of Asset Impairment Sales ---------------- ---------------- 2009 2008 2009 2008 % Change ---- ---- ---- ---- --------- Segments Consumer Healthcare $- $- $287,226 $260,729 10% Rx Pharmaceuticals - (10,346) 27,829 24,110 15% API - - 21,820 24,884 -12% Other - - 7,481 16,242 -54% --- --- ----- ------ Total $- $(10,346) $344,356 $325,965 6% === ======== ======== ======== *All information based on continuing operations.
First Call Analyst:
FCMN Contact: Penny.bursma@perrigo.com
SOURCE: Perrigo Company
CONTACT: Arthur J. Shannon, Vice President, Investor Relations and
Communication, +1-269-686-1709, ajshannon@perrigo.com; or Daniel B. Willard,
Manager, Investor Relations, and Communication, +1-269-686-1597,
dbwillard@perrigo.com
Web Site: http://www.perrigo.com/