UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 8-K
CURRENT REPORT
Pursuant to Section 13 OR 15(d) of The Securities Exchange Act of 1934
Date of Report (Date of earliest event reported):
February 6, 2014
PERRIGO COMPANY PLC
(Exact name of registrant as specified in its charter)
| Ireland | 333-190859 | Not Applicable |
| (State of other | (Commission | (IRS Employer |
| Jurisdiction of | File Number) | Identification |
| Incorporation) | No.) |
Treasury Building, Lower Grand Canal Street, Dublin 2, Ireland
(Address of principal executive offices)
Registrant's telephone number, including area code: +353 1 6040031
| (Former name or address, if changed since last report) |
Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions:
¨ Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425)
¨ Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12)
¨ Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b))
¨ Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c))
| ITEM 2.02. | Results of Operations and Financial Condition |
On February 6, 2014, Perrigo Company plc (the “Company”) released earnings for the second quarter and year-to-date fiscal 2014. The press release related to the Company’s earnings is attached as Exhibit 99.1.
The earnings release contains certain non-GAAP measures. A “non-GAAP financial measure” is defined as a numerical measure of a company’s financial performance that excludes or includes amounts different than the most directly comparable measure calculated and presented in accordance with U.S. Generally Accepted Accounting Principles (GAAP) in the statements of income, balance sheets or statements of cash flows of the company. Pursuant to the requirements of Regulation G, the Company has provided a reconciliation for cost of sales, gross profit, operating expenses, operating income, income tax expense, net income and earnings per share within its earnings release to the most directly comparable U.S. GAAP measures for these non-GAAP measures.
The Company excludes the items listed below in the applicable period when monitoring and evaluating the on-going financial results and trends of its business, and believes that presenting operating results excluding these items is also useful for investors, since it provides important insight into the Company's on-going core business operations on a normalized basis. Adjusted earnings is one of the primary indicators management uses for planning and forecasting in future periods, including trending and analyzing the core operating performance of the Company’s business from period to period without the effect of the non-core business items indicated. Management uses adjusted earnings to prepare operating budgets and forecasts and to measure the Company’s performance against those budgets and forecasts on a corporate and segment level.
Items excluded from reported results and guidance:
Second Quarter and Year-to-Date Fiscal 2013 Results
| - | Amortization of acquired intangible assets related to business combinations and asset acquisitions |
| - | A charge associated with the step-up in value of inventory acquired |
| - | Transaction and severance charges for completed business acquisitions |
| - | Loss on sale of investment |
Second Quarter and Year-to-Date Fiscal 2014 Results
| - | Amortization of acquired intangible assets related to business combinations and asset acquisitions |
| - | Transaction charges for completed business acquisition |
| - | Restructuring charges related to completed business acquisition and for organizational improvements |
| - | Write-offs of in-process research and development |
| - | Escrow settlement |
| - | Write-off of contingent consideration |
| - | Losses on equity method investments |
| - | Litigation settlement |
Fiscal 2013 Results
| - | Amortization of acquired intangible assets related to business combinations and asset acquisitions |
| - | Charges associated with the step-ups in value of inventory acquired |
| - | Acquisition, severance and other integration-related charges for completed business acquisitions |
| - | Losses on sales of investments |
| - | Write-off of in-process research and development |
| - | Restructuring charges related to completed business acquisition |
Fiscal 2014 Guidance
| - | Amortization of acquired intangible assets related to business combinations and asset acquisitions |
| - | Transaction charges for completed business acquisition |
| - | Litigation settlement |
| - | Restructuring charges related to completed business acquisition and for organizational improvements |
| - | Write-offs of in-process research and development |
| - | Escrow settlement |
| - | Write-off of contingent consideration |
| - | Losses on equity method investments |
The information in this Report is being furnished and shall not be deemed “filed” for purposes of Section 18 of the Securities Exchange Act of 1934, as amended, or otherwise subject to the liabilities of that Section. The information in this Report shall not be deemed incorporated by reference into any filing under the Securities Act of 1933, as amended, except as shall be expressly set forth by specific reference in such filing.
| ITEM 9.01. | Financial Statements and Exhibits |
| (d) | Exhibits |
| 99.1 | Press release issued by Perrigo Company plc on February 6, 2014, furnished solely pursuant to Item 2.02 of Form 8-K. |
SIGNATURES
Pursuant to the requirement of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized.
| PERRIGO COMPANY PLC | ||
| (Registrant) | ||
| By: | /s/ Judy L. Brown | |
| Dated: February 6, 2014 | Judy L. Brown | |
| Executive Vice President and | ||
| Chief Financial Officer | ||
| (Principal Accounting and Financial Officer) | ||
Exhibit Index
Exhibit 99.1 – Press Release issued by Perrigo Company plc on February 6, 2014, furnished solely pursuant to Item 2.02 of Form 8-K.
Perrigo Company plc Reports Record Revenue, Adjusted Earnings and Margins
DUBLIN, Feb. 6, 2014 /PRNewswire/ --
Perrigo Company plc (NYSE: PRGO; TASE: PRGO) today announced results for its second quarter ended December 28, 2013.
(Logo: http://photos.prnewswire.com/prnh/20120301/DE62255LOGO )
Perrigo's Chairman, President and CEO Joseph C. Papa commented, "This was an exceptional quarter for Perrigo as the team delivered record results and closed the largest acquisition in our history ahead of schedule. The Elan acquisition provides Perrigo with a platform to execute our strategic growth plan into the future. This quarter, the team delivered all-time record revenue, as well as record adjusted earnings and margins. The growth was driven by strong new product sales of $53 million offset by a relatively later start to the cough, cold and flu season versus last year. The Nutrition segment continued its strong performance as our new plastic container in the infant formula category continues to gain market share. The Rx segment had another great quarter with all-time record second quarter adjusted gross and operating margins. This is also the first quarter we reported our revenue stream from the Multiple Sclerosis drug Tysabri®. We continue to deliver on our top priority of providing "Quality Affordable Healthcare Products™" for consumers and customers around the world."
Refer to Tables I and II at the end of this press release for adjustments in the current year and prior year periods and additional non-GAAP information. The Company's reported results are summarized in the attached Condensed Consolidated Statements of Operations, Balance Sheets and Cash Flows.
Perrigo Company plc (in millions, except per share amounts) (see the attached Table I for reconciliation to GAAP numbers) (YoY % Change may not calculate due to rounding) | |||
|
| |||
|
| Fiscal 2014 | Fiscal 2013 |
|
|
| Second Quarter Ended | Second Quarter Ended |
YoY |
|
| 12/28/2013 | 12/29/2012 | % Change |
|
|
|
|
|
Net Sales | $979.0 | $883.0 | +11% |
Reported Net Income (Loss) | ($86.0) | $106.0 | NM |
Adjusted Net Income | $185.3 | $128.1 | +45% |
Reported Diluted EPS Income (Loss) | ($0.87) | $1.12 | NM |
Adjusted Diluted EPS | $1.87 | $1.36 | +38% |
Reported Diluted Shares | 98.7 | 94.5 | +4% |
Adjusted Diluted Shares | 99.2 | 94.5 | +5% |
Second Quarter Results
Net sales in the quarter were $979 million, an increase of 11% over the second quarter of fiscal 2013, driven primarily by $53 million in new product sales and $39 million attributable to the acquisitions of Rosemont Pharmaceuticals Ltd. ("Rosemont"), Fera Pharmaceuticals, LLC ("Fera"), Elan Corporation plc ("Elan") and Velcera, Inc. ("Velcera"), along with continued growth in our overall base business. Excluding charges as outlined in Table I at the end of this release, second quarter fiscal 2014 adjusted net income increased 45% to $185 million, or $1.87 per diluted share. Reported net loss was $86 million, or ($0.87) per diluted share. The disparity between the reported net loss and adjusted net income was due primarily to $269 million of acquisition-related charges, which includes $94 million in administrative expenses and a loss on extinguishment of debt of $166 million.
Consumer Healthcare
Consumer Healthcare Segment (in millions) (see the attached Table II for reconciliation to GAAP numbers) (YoY % Change may not calculate due to rounding) | ||||
|
| ||||
|
| Fiscal 2014 | Fiscal 2013 |
| |
|
| Second Quarter Ended | Second Quarter Ended |
YoY | |
|
| 12/28/2013 | 12/29/2012 | % Change | |
|
|
|
|
| |
Net Sales | $536.3 | $539.3 | -1% | |
Reported Gross Profit | $171.7 | $162.3 | +6% | |
Adjusted Gross Profit | $175.1 | $173.2 | +1% | |
Reported Operating Income | $89.5 | $86.1 | +4% | |
Adjusted Operating Income | $93.5 | $98.6 | -5% | |
|
|
|
|
| |
Reported Gross Margin | 32.0% | 30.1% | +190 bps | |
Adjusted Gross Margin | 32.7% | 32.1% | +50 bps | |
Reported Operating Margin | 16.7% | 16.0% | +70 bps | |
Adjusted Operating Margin | 17.4% | 18.3% | -90 bps | |
Consumer Healthcare segment net sales were $536 million, reflecting an increase in sales volumes of existing products of $19 million (primarily in the smoking cessation and gastrointestinal categories), along with new product sales of $17 million (primarily in the cough/cold and smoking cessation categories) and $5 million of incremental sales attributable to the Velcera acquisition. These increases were offset by a decline of $46 million in sales of existing products (primarily in the contract manufacturing and analgesics categories).
Adjusted gross margin expanded 50 basis points due to new products and incremental gross margin attributable to the Velcera acquisition. The adjusted operating margin was impacted by accelerated investments in R&D.
Nutritionals
Nutritionals Segment (in millions) (see the attached Table II for reconciliation to GAAP numbers) (YoY % Change may not calculate due to rounding) | |||
|
| |||
|
| Fiscal 2014 | Fiscal 2013 |
|
|
| Second Quarter Ended | Second Quarter Ended |
YoY |
|
| 12/28/2013 | 12/29/2012 | % Change |
|
|
|
|
|
Net Sales | $139.7 | $121.9 | +15% |
Reported Gross Profit | $38.7 | $30.1 | +29% |
Adjusted Gross Profit | $41.8 | $33.2 | +26% |
Reported Operating Income | $13.3 | $7.2 | +86% |
Adjusted Operating Income | $20.7 | $14.5 | +43% |
|
|
|
|
|
Reported Gross Margin | 27.7% | 24.7% | +300 bps |
Adjusted Gross Margin | 29.9% | 27.2% | +270 bps |
Reported Operating Margin | 9.6% | 5.9% | +370 bps |
Adjusted Operating Margin | 14.8% | 11.9% | +290 bps |
The Nutritionals segment reported second quarter net sales of $140 million, compared with $122 million a year ago, an increase of 15% led by continued strength in sales of the SmarTub® infant formula. All product categories within the segment grew year-over-year, with existing product sales increasing $15 million and new product sales of $4 million.
Second quarter adjusted gross and operating margin expansions were due primarily to improved operating efficiencies and expense leverage on increased sales.
Rx Pharmaceuticals
Rx Pharmaceuticals Segment (in millions) (see the attached Table II for reconciliation to GAAP numbers) (YoY % Change may not calculate due to rounding) | |||
|
| |||
|
| Fiscal 2014 | Fiscal 2013 |
|
|
| Second Quarter Ended | Second Quarter Ended |
YoY |
|
| 12/28/2013 | 12/29/2012 | % Change |
|
|
|
|
|
Net Sales | $246.6 | $162.5 | +52% |
Reported Gross Profit | $128.8 | $86.0 | +50% |
Adjusted Gross Profit | $150.2 | $94.5 | +59% |
Reported Operating Income | $100.4 | $64.1 | +57% |
Adjusted Operating Income | $123.1 | $74.0 | +66% |
|
|
|
|
|
Reported Gross Margin | 52.2% | 52.9% | -70 bps |
Adjusted Gross Margin | 60.9% | 58.1% | +280 bps |
Reported Operating Margin | 40.7% | 39.4% | +130 bps |
Adjusted Operating Margin | 49.9% | 45.6% | +440 bps |
The Rx Pharmaceuticals segment second quarter net sales increased 52% to $247 million due primarily to incremental net sales of $26 million from the Rosemont and Fera acquisitions, new product sales of $24 million and product mix.
Adjusted gross margin increased due primarily to product mix and acquisitions. Adjusted operating margin expanded year-over-year on the gross margin expansion, offset by higher distribution, selling, general and administrative costs and investments in R&D due to the inclusion of Rosemont.
API
API Segment (in millions) (see the attached Table II for reconciliation to GAAP numbers) (YoY % Change may not calculate due to rounding) | |||
|
| |||
|
| Fiscal 2014 | Fiscal 2013 |
|
|
| Second Quarter Ended | Second Quarter Ended |
YoY |
|
| 12/28/2013 | 12/29/2012 | % Change |
|
|
|
|
|
Net Sales | $30.0 | $40.9 | -27% |
Reported Gross Profit | $16.5 | $22.9 | -28% |
Adjusted Gross Profit | $17.1 | $23.4 | -27% |
Reported Operating Income | $8.2 | $13.8 | -41% |
Adjusted Operating Income | $8.7 | $14.3 | -39% |
|
|
|
|
|
Reported Gross Margin | 55.2% | 56.0% | -90 bps |
Adjusted Gross Margin | 56.9% | 57.2% | -30 bps |
Reported Operating Margin | 27.4% | 33.8% | -650 bps |
Adjusted Operating Margin | 29.1% | 35.0% | -590 bps |
The API segment's net sales declined to $30 million due primarily to a decrease in sales of existing products of $17 million as a result of increased competition, partially offset by $7 million in new product sales.
Gross and operating margins were impacted by the decrease in sales of existing products referred to above, partially offset by lower selling, general and administrative expenses.
Specialty Sciences
Specialty Sciences Segment (in millions) (see the attached Table II for reconciliation to GAAP numbers) (YoY % Change may not calculate due to rounding) | |
|
| |
|
| Fiscal 2014 |
|
| Second Quarter Ended |
|
| 12/28/2013 |
|
|
|
Net Sales | $7.4 |
Reported Gross Profit (Loss) | ($1.3) |
Adjusted Gross Profit | $7.4 |
Reported Operating Income (Loss) | ($19.0) |
Adjusted Operating Income | $4.3 |
|
|
|
Reported Gross Margin | N/M |
Adjusted Gross Margin | 100.0% |
Reported Operating Margin | N/M |
Adjusted Operating Margin | 57.6% |
Between December 18, 2013, the date the Company acquired Elan and December 28, 2013, the Company recognized $7 million of revenues related to global sales of Multiple Sclerosis drug Tysabri®, which is manufactured and distributed by Biogen Idec, Inc.
Reported gross profit and operating loss were impacted by $9 million of amortization expense and $14 million of restructuring charges, respectively. Operating expenses included ongoing R&D investments related to the D005 Phase II clinical program in Alzheimer's Diseases plus other Irish-based operating costs.
Other
The Other category reported second quarter net sales of $19 million, compared with approximately $18 million a year ago, due primarily to favorable changes in foreign currency exchange rates and new product launches.
Adjusted operating income was $1 million, flat from last year.
Sale of shares in Prothena Corporation plc ("Prothena")
On February 3, 2014, the Company received net proceeds of $79 million from the sale of an underwritten public offering of 3,182,253 ordinary shares of Prothena at a price to the public of $26.00 per ordinary share.
Closing
Chairman, President and CEO Joseph C. Papa concluded, "This quarter was another record driven by our Rx and Nutritional business segments and strong new product sales. While the sales within the Consumer Healthcare segment were impacted by a relatively later start to the cough, cold and flu season, which makes for a difficult comparison to last year's all-time record second quarter, store brand market share continues to gain ground. We are excited to welcome the Elan team to the Perrigo family and to add Tysabri® to our portfolio. These additions, coupled with our new corporate platform, provide a foundation for us to finish strong in the second half of the year."
The Company expects fiscal 2014 reported earnings to be between $2.45 and $2.70 per diluted share as compared to $4.68 in fiscal 2013. Excluding the charges outlined in Table III at the end of this release, the Company now expects fiscal 2014 adjusted earnings to be between $6.45 and $6.70 per diluted share as compared to $5.61 in fiscal 2013. This range implies a year-over-year growth rate in adjusted earnings of 15% to 19% over fiscal 2013's adjusted earnings per diluted share.
The conference call will be available live via webcast to interested parties in the investor relations section of the Perrigo website at http://perrigo.investorroom.com/events-webcasts or by phone at 877-248-9413, International 973-582-2737, and reference ID#41567436. A taped replay of the call will be available beginning at approximately 1:00 p.m. (ET) Thursday, February 6, until midnight Friday, February 21, 2014. To listen to the replay, dial 855-859-2056, International 404-537-3406, and use access code 41567436.
From its beginnings as a packager of generic home remedies in 1887, Perrigo Company plc, headquartered in Ireland, has grown to become a leading global healthcare supplier. Perrigo develops, manufactures and distributes over-the-counter (OTC) and generic prescription (Rx) pharmaceuticals, nutritional products and active pharmaceutical ingredients (API), and has a specialty sciences business comprised of assets focused on the treatment of Multiple Sclerosis and Alzheimer's Disease. The Company is the world's largest manufacturer of OTC healthcare products for the store brand market and an industry leader in pharmaceutical technologies. Perrigo's mission is to offer uncompromised "Quality Affordable Healthcare Products™," and it does so across a wide variety of product categories primarily in the United States, United Kingdom, Mexico, Israel and Australia, as well as more than 40 other key markets worldwide, including Canada, China and Latin America. Visit Perrigo on the Internet (http://www.perrigo.com).
Note: Certain statements in this report 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 particular, statements about the Company's expectations, beliefs, plans, objectives, assumptions, future events or future performance contained in this report, including certain statements contained in "Management's Discussion and Analysis of Financial Condition and Results of Operations" are 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 the negative of those terms or other comparable terminology.
Please see Item 1A of the Form 10-K of Perrigo, which the Company is the successor registrant, for the year ended June 29, 2013 and Part II, Item 1A of the Company's Form 10-Q for a discussion of certain important risk factors that relate to forward-looking statements contained in this report. 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 may cause actual results, performance or achievements to differ materially from those expressed or implied by these forward-looking statements. Any forward-looking statements 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 PLC | |||||||
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS | |||||||
(in millions, except per share amounts) | |||||||
(unaudited) | |||||||
|
|
|
|
|
|
|
|
|
|
| Three Months Ended |
| Six Months Ended | ||||
|
| December 28,
|
| December 29,
|
| December 28,
|
| December 29,
|
|
|
|
|
|
|
|
|
|
Net sales | $ 979.0 |
| $ 883.0 |
| $ 1,912.4 |
| $ 1,652.7 |
Cost of sales | 618.3 |
| 575.8 |
| 1,195.4 |
| 1,060.3 |
Gross profit | 360.7 |
| 307.2 |
| 717.0 |
| 592.4 |
|
|
|
|
|
|
|
|
|
Operating expenses |
|
|
|
|
|
|
|
Distribution | 14.0 |
| 11.7 |
| 27.2 |
| 22.5 |
Research and development | 37.5 |
| 28.3 |
| 69.8 |
| 55.7 |
Selling | 47.3 |
| 43.1 |
| 97.6 |
| 80.5 |
Administration | 154.4 |
| 60.2 |
| 233.2 |
| 113.3 |
Write-off of in-process research and development | 6.0 |
| — |
| 6.0 |
| — |
Restructuring | 14.9 |
| — |
| 17.0 |
| — |
Total operating expenses | 274.1 |
| 143.3 |
| 450.8 |
| 272.0 |
|
|
|
|
|
|
|
|
|
Operating income | 86.6 |
| 163.9 |
| 266.2 |
| 320.4 |
|
|
|
|
|
|
|
|
|
Interest, net | 29.7 |
| 15.3 |
| 51.1 |
| 31.2 |
Other expense, net | 4.1 |
| 0.1 |
| 5.1 |
| — |
Loss on sale of investment | — |
| 3.0 |
| — |
| 3.0 |
Loss on extinguishment of debt | 165.8 |
| — |
| 165.8 |
| — |
Income (loss) before income taxes | (113.0) |
| 145.5 |
| 44.2 |
| 286.2 |
Income tax expense (benefit) | (27.0) |
| 39.5 |
| 18.9 |
| 74.7 |
Net income (loss) | $ (86.0) |
| $ 106.0 |
| $ 25.3 |
| $ 211.5 |
|
|
|
|
|
|
|
|
|
Earnings (loss) per share |
|
|
|
|
|
|
|
Basic earnings (loss) per share | $ (0.87) |
| $ 1.13 |
| $ 0.26 |
| $ 2.26 |
Diluted earnings (loss) per share | $ (0.87) |
| $ 1.12 |
| $ 0.26 |
| $ 2.24 |
|
|
|
|
|
|
|
|
|
Weighted average shares outstanding |
|
|
|
|
|
|
|
Basic | 98.7 |
| 93.9 |
| 96.4 |
| 93.8 |
Diluted | 98.7 |
| 94.5 |
| 96.9 |
| 94.4 |
|
|
|
|
|
|
|
|
|
Dividends declared per share | $ 0.09 |
| $ 0.09 |
| $ 0.18 |
| $ 0.17 |
PERRIGO COMPANY PLC | |||||||
CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME (LOSS) | |||||||
(in millions) | |||||||
(unaudited) | |||||||
|
|
|
|
|
|
|
|
|
|
| Three Months Ended |
| Six Months Ended | ||||
|
| December 28,
|
| December 29,
|
| December 28,
|
| December 29,
|
Net income (loss) | $ (86.0) |
| $ 106.0 |
| $ 25.3 |
| $ 211.5 |
Other comprehensive income (loss): |
|
|
|
|
|
|
|
Change in fair value of derivative financial instruments, net of tax | (1.4) |
| 5.2 |
| (10.6) |
| 6.7 |
Foreign currency translation adjustments | 16.5 |
| 28.0 |
| 53.1 |
| 33.5 |
Change in fair value of investment securities, net of tax | (4.8) |
| 1.0 |
| (4.8) |
| 1.0 |
Post-retirement and pension liability adjustments, net of tax | — |
| — |
| (0.1) |
| — |
Other comprehensive income, net of tax | 10.3 |
| 34.2 |
| 37.6 |
| 41.2 |
Comprehensive income (loss) | $ (75.7) |
| $ 140.2 |
| $ 62.9 |
| $ 252.7 |
PERRIGO COMPANY PLC | |||
CONDENSED CONSOLIDATED BALANCE SHEETS | |||
(in millions) | |||
(unaudited) | |||
|
|
|
|
|
|
| December 28,
|
| June 29,
|
Assets |
|
|
|
Current assets |
|
|
|
Cash and cash equivalents | $ 521.1 |
| $ 779.9 |
Investment securities | 85.5 |
| — |
Accounts receivable, net of allowance for doubtful accounts of $2.7 million and $2.1 million | 769.8 |
| 651.9 |
Inventories | 702.3 |
| 703.9 |
Current deferred income taxes | 61.6 |
| 47.1 |
Income taxes refundable | 79.2 |
| 6.1 |
Prepaid expenses and other current assets | 66.5 |
| 48.0 |
Total current assets | 2,286.0 |
| 2,236.9 |
Property and equipment | 1,366.7 |
| 1,290.4 |
Less accumulated depreciation | (648.2) |
| (609.0) |
|
| 718.5 |
| 681.4 |
Goodwill and other indefinite-lived intangible assets | 3,255.6 |
| 1,174.1 |
Equity method investments | 69.0 |
| 4.4 |
Other intangible assets, net | 7,223.3 |
| 1,157.6 |
Non-current deferred income taxes | 21.3 |
| 20.3 |
Other non-current assets | 139.1 |
| 76.1 |
|
| $ 13,712.8 |
| $ 5,350.8 |
|
|
|
|
|
Liabilities and Shareholders' Equity |
|
|
|
Current liabilities |
|
|
|
Accounts payable | $ 306.7 |
| $ 382.0 |
Short-term debt | — |
| 5.0 |
Payroll and related taxes | 158.7 |
| 82.1 |
Accrued customer programs | 210.0 |
| 131.7 |
Accrued liabilities | 140.6 |
| 95.6 |
Accrued income taxes | 4.6 |
| 11.6 |
Current deferred income taxes | — |
| 0.2 |
Current portion of long-term debt | 141.2 |
| 41.2 |
Total current liabilities | 961.8 |
| 749.4 |
Non-current liabilities |
|
|
|
Long-term debt, less current portion | 3,159.1 |
| 1,927.8 |
Non-current deferred income taxes | 846.2 |
| 127.8 |
Other non-current liabilities | 244.5 |
| 213.2 |
Total non-current liabilities | 4,249.8 |
| 2,268.8 |
Shareholders' Equity |
|
|
|
Controlling interest: |
|
|
|
Preferred shares, $0.0001 par value, 10 million shares authorized | — |
| — |
Ordinary shares, €0.001 par value, 10 billion shares authorized | 6,662.6 |
| 538.5 |
Accumulated other comprehensive income | 114.6 |
| 77.0 |
Retained earnings | 1,723.3 |
| 1,715.9 |
|
| 8,500.5 |
| 2,331.4 |
Noncontrolling interest | 0.7 |
| 1.2 |
Total shareholders' equity | 8,501.2 |
| 2,332.6 |
|
| $ 13,712.8 |
| $ 5,350.8 |
|
|
|
|
|
Supplemental Disclosures of Balance Sheet Information |
|
|
|
Preferred shares, issued and outstanding | — |
| — |
Ordinary shares, issued and outstanding | 133.7 |
| 94.1 |
PERRIGO COMPANY PLC | ||||
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS | ||||
(in millions) | ||||
(unaudited) | ||||
|
|
|
|
|
|
|
|
| Six Months Ended | ||
|
|
| December 28,
|
| June 29,
|
Cash Flows From (For) Operating Activities |
|
|
|
|
Net income |
| $ 25.3 |
| $ 211.5 |
Adjustments to derive cash flows |
|
|
|
|
Loss on extinguishment of debt |
| 165.8 |
| — |
Write-off of IPR&D |
| 6.0 |
| — |
Non-cash restructuring charges |
| 14.3 |
| — |
Loss on sale of investment |
| — |
| 3.0 |
Depreciation and amortization |
| 110.4 |
| 69.9 |
Share-based compensation |
| 13.6 |
| 9.4 |
Income tax benefit from exercise of stock options |
| 0.3 |
| 1.1 |
Excess tax benefit of stock transactions |
| (6.9) |
| (15.6) |
Deferred income taxes |
| (5.4) |
| 1.0 |
Subtotal |
| 323.4 |
| 280.3 |
|
|
|
|
|
|
Changes in operating assets and liabilities, net of acquisitions |
|
|
|
|
Accounts receivable |
| (65.1) |
| 16.2 |
Inventories |
| 10.5 |
| (45.0) |
Accounts payable |
| (70.8) |
| (18.1) |
Payroll and related taxes |
| 13.7 |
| (20.0) |
Accrued customer programs |
| 72.8 |
| 6.6 |
Accrued liabilities |
| 2.0 |
| (7.1) |
Accrued income taxes |
| (50.4) |
| 12.8 |
Other |
| (15.8) |
| 3.9 |
Subtotal |
| (103.1) |
| (50.7) |
Net cash from operating activities |
| 220.3 |
| 229.6 |
|
|
|
|
|
|
Cash Flows (For) From Investing Activities |
|
|
|
|
Acquisitions of businesses, net of cash acquired |
| (1,527.9) |
| (326.9) |
Proceeds from sales of property and equipment |
| 6.2 |
| — |
Additions to property and equipment |
| (77.8) |
| (39.3) |
Net cash for investing activities |
| (1,599.5) |
| (366.2) |
|
|
|
|
|
|
Cash Flows (For) From Financing Activities |
|
|
|
|
Purchase of noncontrolling interest |
| (7.2) |
| — |
Borrowings (repayments) of short-term debt, net |
| (5.0) |
| 2.6 |
Premium on early retirement of debt |
| (133.5) |
| — |
Net proceeds from debt issuances |
| 3,293.6 |
| 40.6 |
Repayments of long-term debt |
| (1,965.0) |
| (40.0) |
Deferred financing fees |
| (48.8) |
| (0.6) |
Excess tax benefit of stock transactions |
| 6.9 |
| 15.7 |
Issuance of common stock |
| 6.7 |
| 7.6 |
Repurchase of common stock |
| (7.3) |
| (12.2) |
Cash dividends |
| (18.0) |
| (16.0) |
Net cash from (for) financing activities |
| 1,122.4 |
| (2.3) |
Effect of exchange rate changes on cash |
| (2.0) |
| (4.1) |
Net decrease in cash and cash equivalents |
| (258.8) |
| (143.0) |
Cash and cash equivalents, beginning of period |
| 779.9 |
| 602.5 |
Cash and cash equivalents, end of period |
| $ 521.1 |
| $ 459.5 |
|
|
|
|
|
|
Supplemental Disclosures of Cash Flow Information |
|
|
|
|
Cash paid/received during the period for: |
|
|
|
|
Interest paid |
| $ 49.1 |
| $ 29.2 |
Interest received |
| $ 1.6 |
| $ 2.7 |
Income taxes paid |
| $ 73.9 |
| $ 67.9 |
Income taxes refunded |
| $ 3.6 |
| $ 1.2 |
Table I | |||||||||||||||
PERRIGO COMPANY PLC | |||||||||||||||
RECONCILIATION OF NON-GAAP MEASURES | |||||||||||||||
(in millions, except per share amounts) | |||||||||||||||
(unaudited) | |||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| Three Months Ended |
|
|
|
| ||||||||||
Consolidated | December 28, 2013 |
| December 29, 2012 |
| % Change | ||||||||||
|
| GAAP |
| Non-GAAP Adjustments* |
| As Adjusted* |
| GAAP |
| Non-GAAP Adjustments* |
| As Adjusted* |
| GAAP |
| As Adjusted |
Net sales | $ 979.0 |
| $ — |
| $ 979.0 |
| $ 883.0 |
| $ — |
| $ 883.0 |
| 11 % |
| 11 % |
Cost of sales | 618.3 |
| 37.5 | (a) | 580.8 |
| 575.8 |
| 23.3 | (a,i) | 552.5 |
| 7 % |
| 5 % |
Gross profit | 360.7 |
| 37.5 |
| 398.2 |
| 307.2 |
| 23.3 |
| 330.5 |
| 17 % |
| 20 % |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Operating expenses |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Distribution | 14.0 |
| — |
| 14.0 |
| 11.7 |
| — |
| 11.7 |
| 20 % |
| 20 % |
Research and development | 37.5 |
| — |
| 37.5 |
| 28.3 |
| — |
| 28.3 |
| 32 % |
| 32 % |
Selling | 47.3 |
| 5.5 | (a) | 41.8 |
| 43.1 |
| 5.3 | (a) | 37.8 |
| 10 % |
| 11 % |
Administration | 154.4 |
| 87.3 | (a,b,c,d) | 67.1 |
| 60.2 |
| 2.2 | (a,j) | 58.0 |
| 156 % |
| 16 % |
Write-off of in-process research and development | 6.0 |
| 6.0 | (e) | — |
| — |
| — |
| — |
| — |
| — |
Restructuring | 14.9 |
| 14.9 | (f) | — |
| — |
| — |
| — |
| — |
| — |
Total operating expenses | 274.1 |
| 113.8 |
| 160.4 |
| 143.3 |
| 7.5 |
| 135.8 |
| 91 % |
| 18 % |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Operating income | 86.6 |
| 151.3 |
| 237.8 |
| 163.9 |
| 30.8 |
| 194.6 |
| -47 % |
| 22 % |
Interest, net | 29.7 |
| 9.0 | (g) | 20.7 |
| 15.3 |
| — |
| 15.3 |
| 94 % |
| 35 % |
Other expense, net | 4.1 |
| 1.8 | (g,h) | 2.3 |
| 0.1 |
| — |
| 0.1 |
| NM |
| NM |
Loss on sale of investment | — |
| — |
| — |
| 3.0 |
| 3.0 |
| — |
| — |
| — |
Loss on extinguishment of debt | 165.8 |
| 165.8 |
| — |
| — |
| — |
| — |
| — |
| — |
Income (loss) before income taxes | (113.0) |
| 327.8 |
| 214.8 |
| 145.5 |
| 33.8 |
| 179.3 |
| NM |
| 20 % |
Income tax expense (benefit) | (27.0) |
| 56.5 | (o) | 29.5 |
| 39.5 |
| 11.7 | (o) | 51.2 |
| NM |
| -42 % |
Net income (loss) | $ (86.0) |
| $ 271.3 |
| $ 185.3 |
| $ 106.0 |
| $ 22.1 |
| $ 128.1 |
| NM |
| 45 % |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Diluted earnings (loss) per share | $ (0.87) |
|
|
| $ 1.87 |
| $ 1.12 |
|
|
| $ 1.36 |
| NM |
| 38 % |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Diluted weighted average shares outstanding | 98.7 |
|
|
| 99.2 |
| 94.5 |
|
|
| 94.5 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Selected ratios as a percentage of net sales** |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Gross profit | 36.8 % |
|
|
| 40.7 % |
| 34.8 % |
|
|
| 37.4 % |
|
|
|
|
Operating expenses | 28.0 % |
|
|
| 16.4 % |
| 16.2 % |
|
|
| 15.4 % |
|
|
|
|
Operating income | 8.8 % |
|
|
| 24.3 % |
| 18.6 % |
|
|
| 22.0 % |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| Six Months Ended |
|
|
|
| ||||||||||
Consolidated | December 28, 2013 |
| December 29, 2012 |
| % Change | ||||||||||
|
| GAAP |
| Non-GAAP Adjustments* |
| As Adjusted* |
| GAAP |
| Non-GAAP Adjustments* |
| As Adjusted* |
| GAAP |
| As Adjusted |
Net sales | $ 1,912.4 |
| $ — |
| $ 1,912.4 |
| $ 1,652.7 |
| $ — |
| $ 1,652.7 |
| 16 % |
| 16 % |
Cost of sales | 1,195.4 |
| 61.0 | (a) | 1,134.5 |
| 1,060.3 |
| 36.6 | (a,i) | 1,023.7 |
| 13 % |
| 11 % |
Gross profit | 717.0 |
| 61.0 |
| 777.9 |
| 592.4 |
| 36.6 |
| 629.0 |
| 21 % |
| 24 % |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Operating expenses |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Distribution | 27.2 |
| — |
| 27.2 |
| 22.5 |
| — |
| 22.5 |
| 21 % |
| 21 % |
Research and development | 69.8 |
| — |
| 69.8 |
| 55.7 |
| — |
| 55.7 |
| 25 % |
| 25 % |
Selling | 97.6 |
| 11.0 | (a) | 86.6 |
| 80.5 |
| 10.3 | (a) | 70.2 |
| 21 % |
| 23 % |
Administration | 233.2 |
| 102.8 | (a,c,d,k,l) | 130.4 |
| 113.3 |
| 4.5 | (a,j,m) | 108.8 |
| 106 % |
| 20 % |
Write-off of IPR&D | 6.0 |
| 6.0 | (e) | — |
| — |
| — |
| — |
| — |
| — |
Restructuring | 17.0 |
| 17.0 | (n) | — |
| — |
| — |
| — |
| — |
| — |
Total operating expenses | 450.8 |
| 136.8 |
| 314.0 |
| 272.0 |
| 14.9 |
| 257.2 |
| 66 % |
| 22 % |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Operating income | 266.2 |
| 197.8 |
| 464.0 |
| 320.4 |
| 51.5 |
| 371.9 |
| -17 % |
| 25 % |
Interest, net | 51.1 |
| 10.0 | (g) | 41.1 |
| 31.2 |
| — |
| 31.2 |
| 64 % |
| 32 % |
Other expense, net | 5.1 |
| 3.5 | (g,h) | 1.6 |
| 0.0 |
| — |
| 0.0 |
| NM |
| NM |
Loss on sale of investment | — |
| — |
| — |
| 3.0 |
| 3.0 |
| — |
| — |
| — |
Loss on extinguishment of debt | 165.8 |
| 165.8 |
| — |
| — |
| — |
| — |
| — |
| — |
Income before income taxes | 44.2 |
| 377.1 |
| 421.3 |
| 286.2 |
| 54.5 |
| 340.7 |
| -85 % |
| 24 % |
Income tax expense | 18.9 |
| 73.3 | (o) | 92.1 |
| 74.7 |
| 18.5 | (o) | 93.2 |
| -75 % |
| -1 % |
Net income | $ 25.3 |
| $ 303.8 |
| $ 329.1 |
| $ 211.5 |
| $ 36.0 |
| $ 247.5 |
| -88 % |
| 33 % |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Diluted earnings per share | $ 0.26 |
|
|
| $ 3.40 |
| $ 2.24 |
|
|
| $ 2.62 |
| -88 % |
| 30 % |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Diluted weighted average shares outstanding | 96.9 |
|
|
| 96.9 |
| 94.4 |
|
|
| 94.4 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Selected ratios as a percentage of net sales** |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Gross profit | 37.5 % |
|
|
| 40.7 % |
| 35.8 % |
|
|
| 38.1 % |
|
|
|
|
Operating expenses | 23.6 % |
|
|
| 16.4 % |
| 16.5 % |
|
|
| 15.6 % |
|
|
|
|
Operating income | 13.9 % |
|
|
| 24.3 % |
| 19.4 % |
|
|
| 22.5 % |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
* Amounts may not sum or cross-foot due to rounding |
|
|
|
|
|
|
|
|
|
| |||||
**Ratios as a % to net sales may not calculate due to rounding |
|
|
|
|
|
|
|
|
|
| |||||
NM - Calculations are not meaningful |
|
|
|
|
|
|
|
|
|
| |||||
(a) Acquisition-related amortization |
|
|
|
|
|
|
|
|
|
| |||||
(b) Elan transaction costs of $93.7 million |
|
|
|
|
|
|
|
|
| ||||||
(c) Escrow settlement of $2.5 million related to the Sergeant's acquisition |
|
|
|
|
|
|
|
|
|
| |||||
(d) Write-off of contingent consideration of $4.9 million related to the Fera acquisition |
|
|
|
|
|
|
|
|
|
| |||||
(e) Write-offs of IPR&D related to the Paddock and Rosemont acquisitions |
|
|
|
|
|
|
|
|
|
| |||||
(f) Restructuring charges related to Elan, Georgia, and Minnesota |
|
|
|
|
|
|
|
|
|
| |||||
(g) Elan transaction costs |
|
|
|
|
|
|
|
|
|
| |||||
(h) Losses on Elan equity method investments of $1.3 million |
|
|
|
|
|
|
|
|
|
| |||||
(i) Inventory step-up charge of $7.7 million |
|
|
|
|
|
|
|
|
|
| |||||
(j) Severance costs of $1.5 million |
|
|
|
|
|
|
|
|
|
| |||||
(k) Elan transaction costs of $105.7 million |
|
|
|
|
|
|
|
|
|
| |||||
(l) Litigation settlement of $2.5 million |
|
|
|
|
|
|
|
|
|
| |||||
(m) Acquisition costs of $1.9 million |
|
|
|
|
|
|
|
|
|
| |||||
(n) Restructuring charges related to Elan, Georgia, Minnesota and Velcera |
|
|
|
|
|
|
|
|
|
| |||||
(o) Total tax effect for non-GAAP pre-tax adjustments |
|
|
|
|
|
|
|
|
|
| |||||
Table II | |||||||||||||||
PERRIGO COMPANY PLC | |||||||||||||||
REPORTABLE SEGMENTS | |||||||||||||||
RECONCILIATION OF NON-GAAP MEASURES | |||||||||||||||
(in millions) | |||||||||||||||
(unaudited) | |||||||||||||||
|
|
|
|
|
|
| ||||||||||
|
| Three Months Ended |
|
|
|
| ||||||||||
Consumer Healthcare | December 28, 2013 |
| December 29, 2012 |
| % Change | ||||||||||
|
| GAAP* |
| Non-GAAP Adjustments* |
| As Adjusted* |
| GAAP* |
| Non-GAAP Adjustments* |
| As Adjusted* |
| GAAP |
| As Adjusted |
Net sales | $ 536.3 |
| $ — |
| $ 536.3 |
| $ 539.3 |
| $ — |
| $ 539.3 |
| -1 % |
| -1 % |
Cost of sales | 364.6 |
| 3.4 | (a) | 361.2 |
| 377.0 |
| 10.9 | (a,d) | 366.1 |
| -3 % |
| -1 % |
Gross profit | 171.7 |
| 3.4 |
| 175.1 |
| 162.3 |
| 10.9 |
| 173.2 |
| 6 % |
| 1 % |
Operating expenses | 82.2 |
| 0.6 | (a,b,c) | 81.6 |
| 76.2 |
| 1.6 | (a) | 74.5 |
| 8 % |
| 9 % |
Operating income | $ 89.5 |
| $ 4.0 |
| $ 93.5 |
| $ 86.1 |
| $ 12.6 |
| $ 98.6 |
| 4 % |
| -5 % |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Selected ratios as a percentage of net sales** |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Gross profit | 32.0 % |
|
|
| 32.7 % |
| 30.1 % |
|
|
| 32.1 % |
|
|
|
|
Operating expenses | 15.3 % |
|
|
| 15.2 % |
| 14.1 % |
|
|
| 13.8 % |
|
|
|
|
Operating income | 16.7 % |
|
|
| 17.4 % |
| 16.0 % |
|
|
| 18.3 % |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| Six Months Ended |
|
|
|
| ||||||||||
Consumer Healthcare | December 28, 2013 |
| December 29, 2012 |
| % Change | ||||||||||
|
| GAAP* |
| Non-GAAP Adjustments* |
| As Adjusted* |
| GAAP* |
| Non-GAAP Adjustments* |
| As Adjusted* |
| GAAP |
| As Adjusted |
Net sales | $ 1,074.8 |
| $ — |
| $ 1,074.8 |
| $ 989.7 |
| $ — |
| $ 989.7 |
| 9 % |
| 9 % |
Cost of sales | 726.1 |
| 6.8 | (a) | 719.3 |
| 681.6 |
| 11.9 | (a,d) | 669.7 |
| 7 % |
| 7 % |
Gross profit | 348.7 |
| 6.8 |
| 355.5 |
| 308.1 |
| 11.9 |
| 320.0 |
| 13 % |
| 11 % |
Operating expenses | 169.2 |
| 3.3 | (a,b,c,e) | 165.9 |
| 142.7 |
| 2.9 | (a) | 139.8 |
| 19 % |
| 19 % |
Operating income | $ 179.5 |
| $ 10.0 |
| $ 189.5 |
| $ 165.4 |
| $ 14.8 |
| $ 180.2 |
| 9 % |
| 5 % |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Selected ratios as a percentage of net sales** |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Gross profit | 32.4 % |
|
|
| 33.1 % |
| 31.1 % |
|
|
| 32.3 % |
|
|
|
|
Operating expenses | 15.7 % |
|
|
| 15.4 % |
| 14.4 % |
|
|
| 14.1 % |
|
|
|
|
Operating income | 16.7 % |
|
|
| 17.6 % |
| 16.7 % |
|
|
| 18.2 % |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| Three Months Ended |
|
|
|
| ||||||||||
Nutritionals | December 28, 2013 |
| December 29, 2012 |
| % Change | ||||||||||
|
| GAAP* |
| Non-GAAP Adjustments* |
| As Adjusted* |
| GAAP* |
| Non-GAAP Adjustments* |
| As Adjusted* |
| GAAP |
| As Adjusted |
Net sales | $ 139.7 |
| $ — |
| $ 139.7 |
| $ 121.9 |
| $ — |
| $ 121.9 |
| 15 % |
| 15 % |
Cost of sales | 101.0 |
| 3.1 | (a) | 97.9 |
| 91.8 |
| 3.0 | (a) | 88.7 |
| 10 % |
| 10 % |
Gross profit | 38.7 |
| 3.1 |
| 41.8 |
| 30.1 |
| 3.0 |
| 33.2 |
| 29 % |
| 26 % |
Operating expenses | 25.4 |
| 4.3 | (a) | 21.1 |
| 23.0 |
| 4.3 | (a) | 18.7 |
| 10 % |
| 13 % |
Operating income | $ 13.3 |
| $ 7.3 |
| $ 20.7 |
| $ 7.2 |
| $ 7.3 |
| $ 14.5 |
| 86 % |
| 43 % |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Selected ratios as a percentage of net sales** |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Gross profit | 27.7 % |
|
|
| 29.9 % |
| 24.7 % |
|
|
| 27.2 % |
|
|
|
|
Operating expenses | 18.2 % |
|
|
| 15.1 % |
| 18.8 % |
|
|
| 15.4 % |
|
|
|
|
Operating income | 9.6 % |
|
|
| 14.8 % |
| 5.9 % |
|
|
| 11.9 % |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| Six Months Ended |
|
|
|
| ||||||||||
Nutritionals | December 28, 2013 |
| December 29, 2012 |
| % Change | ||||||||||
|
| GAAP* |
| Non-GAAP Adjustments* |
| As Adjusted* |
| GAAP* |
| Non-GAAP Adjustments* |
| As Adjusted* |
| GAAP |
| As Adjusted |
Net sales | $ 268.7 |
| $ — |
| $ 268.7 |
| $ 225.3 |
| $ — |
| $ 225.3 |
| 19 % |
| 19 % |
Cost of sales | 199.2 |
| 6.1 | (a) | 193.0 |
| 169.4 |
| 6.1 | (a) | 163.3 |
| 18 % |
| 18 % |
Gross profit | 69.6 |
| 6.1 |
| 75.7 |
| 56.0 |
| 6.1 |
| 62.1 |
| 24 % |
| 22 % |
Operating expenses | 48.5 |
| 8.6 | (a) | 40.0 |
| 44.9 |
| 8.5 | (a) | 36.4 |
| 8 % |
| 10 % |
Operating income | $ 21.0 |
| $ 14.7 |
| $ 35.8 |
| $ 11.0 |
| $ 14.6 |
| $ 25.6 |
| 90 % |
| 39 % |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Selected ratios as a percentage of net sales** |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Gross profit | 25.9 % |
|
|
| 28.2 % |
| 24.8 % |
|
|
| 27.5 % |
|
|
|
|
Operating expenses | 18.1 % |
|
|
| 14.9 % |
| 19.9 % |
|
|
| 16.2 % |
|
|
|
|
Operating income | 7.8 % |
|
|
| 13.3 % |
| 4.9 % |
|
|
| 11.4 % |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
* Amounts may not sum or cross-foot due to rounding |
|
|
|
|
|
|
|
| |||||||
**Ratios as a % to net sales may not calculate due to rounding |
|
|
|
|
|
|
|
| |||||||
(1) Only includes activity from December 18, 2013 to December 28, 2013 |
|
|
|
|
|
|
|
| |||||||
(a) Acquisition-related amortization |
|
|
|
|
|
|
|
| |||||||
(b) Escrow settlement of $2.5 million related to the Sergeant's acquisition |
|
|
|
|
|
|
|
| |||||||
(c) Restructuring charges of $0.5 million related to Georgia |
|
|
|
|
|
|
|
| |||||||
(d) Inventory step-up charge of $7.7 million |
|
|
|
|
|
|
|
| |||||||
(e) Restructuring charges of $0.7 million related to Velcera |
|
|
|
|
|
|
|
| |||||||
(f) Write-offs of IPR&D of $4.0 million and $2.0 million related to the Paddock and Rosemont acquisitions, respectively |
|
|
|
|
|
|
|
| |||||||
(g) Write-off of contingent consideration of $4.9 million related to the Fera acquisition |
|
|
|
|
|
|
|
| |||||||
(h) Restructuring charges of $0.2 million related to Minnesota |
|
|
|
|
|
|
|
| |||||||
(i) Severance costs of $1.5 million |
|
|
|
|
|
|
|
| |||||||
(j) Litigation settlement of $2.5 million |
|
|
|
|
|
|
|
| |||||||
(k) Restructuring charges of $1.5 million related to Minnesota |
|
|
|
|
|
|
|
| |||||||
(l) Restructuring charges of $14.3 million related to Elan and $0.3 million of other integration-related charges |
|
|
|
|
|
|
|
| |||||||
Table II (Continued) | |||||||||||||||
PERRIGO COMPANY PLC | |||||||||||||||
REPORTABLE SEGMENTS | |||||||||||||||
RECONCILIATION OF NON-GAAP MEASURES | |||||||||||||||
(in millions) | |||||||||||||||
(unaudited) | |||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| Three Months Ended |
|
|
|
| ||||||||||
Rx Pharmaceuticals | December 28, 2013 |
| December 29, 2012 |
| % Change | ||||||||||
|
| GAAP* |
| Non-GAAP Adjustments* |
| As Adjusted* |
| GAAP* |
| Non-GAAP Adjustments* |
| As Adjusted* |
| GAAP |
| As Adjusted |
Net sales | $ 246.6 |
| $ — |
| $ 246.6 |
| $ 162.5 |
| $ — |
| $ 162.5 |
| 52 % |
| 52 % |
Cost of sales | 117.8 |
| 21.4 | (a) | 96.4 |
| 76.5 |
| 8.5 | (a) | 68.0 |
| 54 % |
| 42 % |
Gross profit | 128.8 |
| 21.4 |
| 150.2 |
| 86.0 |
| 8.5 |
| 94.5 |
| 50 % |
| 59 % |
Operating expenses | 28.4 |
| 1.3 | (a,f,g,h) | 27.1 |
| 22.0 |
| 1.5 | (i) | 20.5 |
| 29 % |
| 33 % |
Operating income | $ 100.4 |
| $ 22.7 |
| $ 123.1 |
| $ 64.1 |
| $ 10.0 |
| $ 74.0 |
| 57 % |
| 66 % |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Selected ratios as a percentage of net sales** |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Gross profit | 52.2 % |
|
|
| 60.9 % |
| 52.9 % |
|
|
| 58.1 % |
|
|
|
|
Operating expenses | 11.5 % |
|
|
| 11.0 % |
| 13.5 % |
|
|
| 12.6 % |
|
|
|
|
Operating income | 40.7 % |
|
|
| 49.9 % |
| 39.4 % |
|
|
| 45.6 % |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| Six Months Ended |
|
|
|
| ||||||||||
Rx Pharmaceuticals | December 28, 2013 |
| December 29, 2012 |
| % Change | ||||||||||
|
| GAAP* |
| Non-GAAP Adjustments* |
| As Adjusted* |
| GAAP* |
| Non-GAAP Adjustments* |
| As Adjusted* |
| GAAP |
| As Adjusted |
Net sales | $ 450.2 |
| $ — |
| $ 450.2 |
| $ 325.5 |
| $ — |
| $ 325.5 |
| 38 % |
| 38 % |
Cost of sales | 208.9 |
| 37.4 | (a) | 171.5 |
| 152.8 |
| 16.9 | (a) | 135.9 |
| 37 % |
| 26 % |
Gross profit | 241.3 |
| 37.4 |
| 278.8 |
| 172.7 |
| 16.9 |
| 189.6 |
| 40 % |
| 47 % |
Operating expenses | 57.8 |
| 5.3 | (a,f,g,h,j,k) | 52.5 |
| 40.2 |
| 1.5 | (i) | 38.6 |
| 44 % |
| 36 % |
Operating income | $ 183.5 |
| $ 42.7 |
| $ 226.2 |
| $ 132.6 |
| $ 18.4 |
| $ 150.9 |
| 38 % |
| 50 % |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Selected ratios as a percentage of net sales** |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Gross profit | 53.6 % |
|
|
| 61.9 % |
| 53.1 % |
|
|
| 58.2 % |
|
|
|
|
Operating expenses | 12.8 % |
|
|
| 11.7 % |
| 12.3 % |
|
|
| 11.9 % |
|
|
|
|
Operating income | 40.8 % |
|
|
| 50.2 % |
| 40.7 % |
|
|
| 46.4 % |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| Three Months Ended |
|
|
|
| ||||||||||
API | December 28, 2013 |
| December 29, 2012 |
| % Change | ||||||||||
|
| GAAP* |
| Non-GAAP Adjustments* |
| As Adjusted* |
| GAAP* |
| Non-GAAP Adjustments* |
| As Adjusted* |
| GAAP |
| As Adjusted |
Net sales | $ 30.0 |
| $ — |
| $ 30.0 |
| $ 40.9 |
| $ — |
| $ 40.9 |
| -27 % |
| -27 % |
Cost of sales | 13.5 |
| 0.5 | (a) | 12.9 |
| 18.0 |
| 0.5 | (a) | 17.5 |
| -25 % |
| -26 % |
Gross profit | 16.5 |
| 0.5 |
| 17.1 |
| 22.9 |
| 0.5 |
| 23.4 |
| -28 % |
| -27 % |
Operating expenses | 8.3 |
| — |
| 8.3 |
| 9.1 |
| — |
| 9.1 |
| -8 % |
| -8 % |
Operating income | $ 8.2 |
| $ 0.5 |
| $ 8.7 |
| $ 13.8 |
| $ 0.5 |
| $ 14.3 |
| -41 % |
| -39 % |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Selected ratios as a percentage of net sales** |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Gross profit | 55.2 % |
|
|
| 56.9 % |
| 56.0 % |
|
|
| 57.2 % |
|
|
|
|
Operating expenses | 27.8 % |
|
|
| 27.8 % |
| 22.2 % |
|
|
| 22.2 % |
|
|
|
|
Operating income | 27.4 % |
|
|
| 29.1 % |
| 33.8 % |
|
|
| 35.0 % |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| Six Months Ended |
|
|
|
| ||||||||||
API | December 28, 2013 |
| December 29, 2012 |
| % Change | ||||||||||
|
| GAAP* |
| Non-GAAP Adjustments* |
| As Adjusted* |
| GAAP* |
| Non-GAAP Adjustments* |
| As Adjusted* |
| GAAP |
| As Adjusted |
Net sales | $ 73.2 |
| $ — |
| $ 73.2 |
| $ 77.3 |
| $ — |
| $ 77.3 |
| -5 % |
| -5 % |
Cost of sales | 26.8 |
| 1.0 | (a) | 25.7 |
| 33.0 |
| 0.9 | (a) | 32.1 |
| -19 % |
| -20 % |
Gross profit | 46.4 |
| 1.0 |
| 47.4 |
| 44.2 |
| 0.9 |
| 45.2 |
| 5 % |
| 5 % |
Operating expenses | 15.7 |
| — |
| 15.7 |
| 17.1 |
| — |
| 17.1 |
| -8 % |
| -8 % |
Operating income | $ 30.6 |
| $ 1.0 |
| $ 31.7 |
| $ 27.1 |
| $ 0.9 |
| $ 28.1 |
| 13 % |
| 13 % |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Selected ratios as a percentage of net sales** |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Gross profit | 63.4 % |
|
|
| 64.8 % |
| 57.3 % |
|
|
| 58.5 % |
|
|
|
|
Operating expenses | 21.5 % |
|
|
| 21.5 % |
| 22.1 % |
|
|
| 22.1 % |
|
|
|
|
Operating income | 41.9 % |
|
|
| 43.3 % |
| 35.1 % |
|
|
| 36.3 % |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
* Amounts may not sum or cross-foot due to rounding |
|
|
|
|
|
|
|
| |||||||
**Ratios as a % to net sales may not calculate due to rounding |
|
|
|
|
|
|
|
| |||||||
(1) Only includes activity from December 18, 2013 to December 28, 2013 |
|
|
|
|
|
|
|
| |||||||
(a) Acquisition-related amortization |
|
|
|
|
|
|
|
| |||||||
(b) Escrow settlement of $2.5 million related to the Sergeant's acquisition |
|
|
|
|
|
|
|
| |||||||
(c) Restructuring charges of $0.5 million related to Georgia |
|
|
|
|
|
|
|
| |||||||
(d) Inventory step-up charge of $7.7 million |
|
|
|
|
|
|
|
| |||||||
(e) Restructuring charges of $0.7 million related to Velcera |
|
|
|
|
|
|
|
| |||||||
(f) Write-offs of IPR&D of $4.0 million and $2.0 million related to the Paddock and Rosemont acquisitions, respectively |
|
|
|
|
|
|
|
| |||||||
(g) Write-off of contingent consideration of $4.9 million related to the Fera acquisition |
|
|
|
|
|
|
|
| |||||||
(h) Restructuring charges of $0.2 million related to Minnesota |
|
|
|
|
|
|
|
| |||||||
(i) Severance costs of $1.5 million |
|
|
|
|
|
|
|
| |||||||
(j) Litigation settlement of $2.5 million |
|
|
|
|
|
|
|
| |||||||
(k) Restructuring charges of $1.5 million related to Minnesota |
|
|
|
|
|
|
|
| |||||||
(l) Restructuring charges of $14.3 million related to Elan and $0.3 million of other integration-related charges |
|
|
|
|
|
|
|
| |||||||
Table II (Continued) | |||||||||||||||
PERRIGO COMPANY PLC | |||||||||||||||
REPORTABLE SEGMENTS | |||||||||||||||
RECONCILIATION OF NON-GAAP MEASURES | |||||||||||||||
(in millions) | |||||||||||||||
(unaudited) | |||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| Three and Six Months Ended (1) |
|
|
|
|
|
|
|
|
|
| ||||
Specialty Sciences | December 28, 2013 |
|
|
|
|
|
|
|
|
|
| ||||
|
| GAAP* |
| Non-GAAP Adjustments* |
| As Adjusted* |
|
|
|
|
|
|
|
|
|
|
Net sales | $ 7.4 |
| $ — |
| $ 7.4 |
|
|
|
|
|
|
|
|
|
|
Cost of sales | 8.7 |
| 8.7 | (a) | — |
|
|
|
|
|
|
|
|
|
|
Gross profit | (1.3) |
| 8.7 |
| 7.4 |
|
|
|
|
|
|
|
|
|
|
Operating expenses | 17.7 |
| 14.6 | (l) | 3.1 |
|
|
|
|
|
|
|
|
|
|
Operating income (loss) | $ (19.0) |
| $ 23.2 |
| $ 4.3 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Selected ratios as a percentage of net sales** |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Gross profit | (17.1)% |
|
|
| 100.0 % |
|
|
|
|
|
|
|
|
|
|
Operating expenses | 239.1 % |
|
|
| 42.4 % |
|
|
|
|
|
|
|
|
|
|
Operating income (loss) | (256.2)% |
|
|
| 57.6 % |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| Three Months Ended |
|
|
|
| ||||||||||
Other | December 28, 2013 |
| December 29, 2012 |
| % Change | ||||||||||
|
| GAAP* |
| Non-GAAP Adjustments* |
| As Adjusted* |
| GAAP* |
| Non-GAAP Adjustments* |
| As Adjusted* |
| GAAP |
| As Adjusted |
Net sales | $ 19.0 |
| $ — |
| $ 19.0 |
| $ 18.4 |
| $ — |
| $ 18.4 |
| 4 % |
| 3 % |
Cost of sales | 12.9 |
| 0.4 | (a) | 12.4 |
| 12.5 |
| 0.4 | (a) | 12.1 |
| 3 % |
| 2 % |
Gross profit | 6.1 |
| 0.4 |
| 6.6 |
| 5.8 |
| 0.4 |
| 6.2 |
| 5 % |
| 6 % |
Operating expenses | 5.5 |
| — |
| 5.5 |
| 5.2 |
| — |
| 5.2 |
| 7 % |
| 7 % |
Operating income | $ 0.6 |
| $ 0.4 |
| $ 1.1 |
| $ 0.7 |
| $ 0.4 |
| $ 1.1 |
| -8 % |
| -1 % |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Selected ratios as a percentage of net sales** |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Gross profit | 32.3 % |
|
|
| 34.6 % |
| 31.9 % |
|
|
| 33.9 % |
|
|
|
|
Operating expenses | 29.1 % |
|
|
| 29.1 % |
| 28.3 % |
|
|
| 28.1 % |
|
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|
Operating income | 3.2 % |
|
|
| 5.6 % |
| 3.6 % |
|
|
| 5.8 % |
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| Six Months Ended |
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| ||||||||||
Other | December 28, 2013 |
| December 29, 2012 |
| % Change | ||||||||||
|
| GAAP* |
| Non-GAAP Adjustments* |
| As Adjusted* |
| GAAP* |
| Non-GAAP Adjustments* |
| As Adjusted* |
| GAAP |
| As Adjusted |
Net sales | $ 38.1 |
| $ — |
| $ 38.1 |
| $ 34.9 |
| $ — |
| $ 34.9 |
| 9 % |
| 9 % |
Cost of sales | 25.8 |
| 0.9 | (a) | 24.9 |
| 23.5 |
| 0.8 | (a) | 22.7 |
| 10 % |
| 10 % |
Gross profit | 12.3 |
| 0.9 |
| 13.2 |
| 11.4 |
| 0.8 |
| 12.2 |
| 8 % |
| 8 % |
Operating expenses | 10.5 |
| — |
| 10.5 |
| 10.3 |
| — |
| 10.3 |
| 2 % |
| 2 % |
Operating income | $ 1.8 |
| $ 0.9 |
| $ 2.7 |
| $ 1.1 |
| $ 0.8 |
| $ 1.9 |
| 65 % |
| 42 % |
|
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|
Selected ratios as a percentage of net sales** |
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|
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|
Gross profit | 32.3 % |
|
|
| 34.7 % |
| 32.6 % |
|
|
| 34.9 % |
|
|
|
|
Operating expenses | 27.6 % |
|
|
| 27.6 % |
| 29.5 % |
|
|
| 29.5 % |
|
|
|
|
Operating income | 4.7 % |
|
|
| 7.0 % |
| 3.1 % |
|
|
| 5.4 % |
|
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* Amounts may not sum or cross-foot due to rounding |
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| |||||||
**Ratios as a % to net sales may not calculate due to rounding |
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| |||||||
(1) Only includes activity from December 18, 2013 to December 28, 2013 |
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| |||||||
(a) Acquisition-related amortization |
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| |||||||
(b) Escrow settlement of $2.5 million related to the Sergeant's acquisition |
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| |||||||
(c) Restructuring charges of $0.5 million related to Georgia |
|
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| |||||||
(d) Inventory step-up charge of $7.7 million |
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| |||||||
(e) Restructuring charges of $0.7 million related to Velcera |
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| |||||||
(f) Write-offs of IPR&D of $4.0 million and $2.0 million related to the Paddock and Rosemont acquisitions, respectively |
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| |||||||
(g) Write-off of contingent consideration of $4.9 million related to the Fera acquisition |
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| |||||||
(h) Restructuring charges of $0.2 million related to Minnesota |
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| |||||||
(i) Severance costs of $1.5 million |
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| |||||||
(j) Litigation settlement of $2.5 million |
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| |||||||
(k) Restructuring charges of $1.5 million related to Minnesota |
|
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| |||||||
(l) Restructuring charges of $14.3 million related to Elan and $0.3 million of other integration-related charges |
|
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|
|
|
|
|
| |||||||
RECONCILIATION OF NON-GAAP MEASURES |
| ||
(unaudited) |
| ||
|
|
|
|
|
|
|
| Full Year |
|
|
|
| Fiscal 2014 Guidance |
|
|
| FY14 reported diluted EPS range | $2.45 - $2.70 |
|
|
| Charges associated with acquisition and other integration-related costs | 2.06 |
|
|
| Acquisition-related amortization(1) | 1.73 |
|
|
| Charges associated with restructuring | 0.20 |
|
|
| Charges associated with write-offs of in-process R&D | 0.03 |
|
|
| Charge associated with litigation settlement | 0.01 |
|
|
| Losses on Elan equity method investments | 0.01 |
|
|
| Earnings associated with write-off of contingent consideration | (0.03) |
|
|
| Earnings associated with escrow settlement | (0.01) |
|
|
| FY14 adjusted diluted EPS range | $6.45 - $6.70 |
|
|
|
|
|
|
|
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| Fiscal 2013 |
|
|
| FY13 reported diluted EPS | $4.68 |
|
|
| Acquisition-related amortization(1) | 0.668 |
|
|
| Charges associated with inventory step-ups | 0.077 |
|
|
| Charges associated with acquisition, severance and other integration-related costs | 0.061 |
|
|
| Charge associated with write-off of in-process R&D | 0.059 |
|
|
| Losses on sales of investments | 0.047 |
|
|
| Charge associated with restructuring | 0.018 |
|
|
| FY13 adjusted diluted EPS | $5.61 |
|
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|
| (1) Amortization of acquired intangible assets related to business combinations and asset acquisitions. | ||
CONTACT: Arthur J. Shannon, Vice President, Investor Relations and Global Communications, (269) 686-1709, E-mail: ajshannon@perrigo.com or Bradley Joseph, Director, Investor Relations and Global Communications, (269) 686-3373, E-mail: bradley.joseph@perrigo.com