United States Securities and Exchange Commission
Division of Corporation Finance
100 F Street, NE
Washington, D.C. 20549
Attn: | Mary Mast |
Dan Gordon |
September 14, 2023
Re: | PERRIGO Co plc |
Form 10-K for the Year Ended December 31, 2022
Filed February 28, 2023
Form 8-K
Filed August 8, 2023
File No. 001-36353
Dear Ms. Mast and Mr. Gordon,
We refer to the letter dated August 17, 2023, relating to the review by the Staff of the Securities and Exchange Commission (the Staff) of financial statements and related disclosures of Perrigo Company plc (the Company) in the above-referenced filings and to our response letter dated August 25, 2023. We also refer to the conference call between Ms. Mast and representatives of the Company on August 30, 2023, relating to the presentation of the Companys reconciliation of Non-GAAP measures in the Form 8-K dated August 8, 2023 (the Form 8-K). During the conference call, Ms. Mast advised that the Staff continues to believe that such presentation is inconsistent with the guidance in C&DI 102.10(a) and 102.10(c), and requested that the Company revise such presentation.
The Company respectfully acknowledges the Staffs comment and informs the Staff that it will revise the referenced disclosures in its future filings so that the reconciliation tables do not resemble a non-GAAP income statement as described in C&DI 102.10(c). The following reflects the revised presentation as applied to the earnings release for the second quarter ended July 1, 2023 furnished under Item 2.02 of the Form 8-K.
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Table I
PERRIGO COMPANY PLC
RECONCILIATION OF NON-GAAP MEASURES
SELECTED CONSOLIDATED INFORMATION
(in millions, except per share amounts)
(unaudited)
Three Months Ended July 1, 2023 | ||||||||||||||||
Consolidated Continuing Operations | Gross Profit |
Operating Income |
Income from Continuing Operations(1) |
Diluted Earnings per Share(1) |
||||||||||||
Reported |
$ | 428.0 | $ | 56.8 | $ | 8.9 | $ | 0.06 | ||||||||
As a % of reported net sales(2) |
35.9 | % | 4.8 | % | 0.7 | % | ||||||||||
Pre-tax adjustments: |
||||||||||||||||
Amortization expense related primarily to acquired intangible assets |
33.7 | 69.7 | 70.1 | 0.51 | ||||||||||||
Restructuring charges and other termination benefits |
0.1 | 5.8 | 5.8 | 0.04 | ||||||||||||
Acquisition and integration-related charges and contingent consideration adjustments |
| 2.9 | 2.9 | 0.02 | ||||||||||||
Unusual litigation |
| 2.1 | 2.1 | 0.02 | ||||||||||||
(Gain) loss on investment securities |
| | 0.1 | | ||||||||||||
Milestone payments received related to royalty rights |
| | (10.0 | ) | (0.07 | ) | ||||||||||
Non-GAAP tax adjustments(3) |
| | 6.8 | 0.05 | ||||||||||||
|
|
|
|
|
|
|
|
|||||||||
Adjusted |
461.8 | 137.3 | 86.7 | 0.63 | ||||||||||||
As a % of reported net sales(2) |
38.7 | % | 11.5 | % | 7.3 | % | ||||||||||
Diluted weighted average shares outstanding (in millions) | ||||||||||||||||
Reported | 136.6 |
Note: amounts may not add due to rounding. Percentages are based on actuals.
(1) | Individual pre-tax line item adjustments have not been tax effected, as tax expense on these items are aggregated in the Non-GAAP tax adjustments line item. |
(2) | Reported net sales for the three months ended July 1, 2023 was $1,193.1. |
(3) | The non-GAAP tax adjustments are primarily due to (1) $14.3 million of tax expense related to pre-tax non-GAAP adjustments and the interim tax accounting requirements in ASC740 - Income Taxes, offset by the removal of (2) $20.6 million of tax expense related to audit settlements during the second quarter 2023. |
Table II
PERRIGO COMPANY PLC
RECONCILIATION OF NON-GAAP MEASURES
SELECTED CONSOLIDATED INFORMATION
(in millions, except per share amounts)
(unaudited)
Three Months Ended July 1, 2023 | ||||||||||||
Consolidated Continuing Operations | R&D Expense |
DSG&A Expense |
Restructuring and Other |
|||||||||
Reported |
$ | 32.2 | $ | 332.3 | $ | 6.7 | ||||||
As a % of reported net sales(1) |
2.7 | % | 27.9 | % | 0.6 | % | ||||||
Pre-tax adjustments: |
||||||||||||
Amortization expense related primarily to acquired intangible assets |
(0.2 | ) | (35.7 | ) | | |||||||
Restructuring charges and other termination benefits |
| | (5.7 | ) | ||||||||
Acquisition and integration-related charges and contingent consideration adjustments |
| (2.9 | ) | | ||||||||
Unusual litigation |
| (2.1 | ) | | ||||||||
|
|
|
|
|
|
|||||||
Adjusted |
32.0 | 291.6 | 1.0 | |||||||||
As a % of reported net sales(1) |
2.7 | % | 24.4 | % | 0.1 | % |
Note: amounts may not add due to rounding. Percentages are based on actuals.
(1) | Reported net sales for the three months ended July 1, 2023 was $1,193.1. |
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Table III
PERRIGO COMPANY PLC
RECONCILIATION OF NON-GAAP MEASURES
SELECTED CONSOLIDATED INFORMATION
(in millions, except per share amounts)
(unaudited)
Three Months Ended July 1, 2023 | ||||||||
Consolidated Continuing Operations | Interest and Other |
Income Tax Expense |
||||||
Reported |
$ | 34.3 | $ | 13.6 | ||||
As a % of reported net sales(1) |
2.9 | % | 1.1 | % | ||||
Effective tax rate |
60.5 | % | ||||||
Pre-tax adjustments: |
||||||||
Amortization expense related primarily to acquired intangible assets |
(0.5 | ) | | |||||
(Gain) loss on investment securities |
(0.1 | ) | | |||||
Milestone payments received related to royalty rights |
10.0 | | ||||||
Non-GAAP tax adjustments(2) |
| (6.8 | ) | |||||
|
|
|
|
|||||
Adjusted |
43.8 | 6.8 | ||||||
As a % of reported net sales(1) |
3.7 | % | 0.5 | % | ||||
Adjusted effective tax rate |
7.3 | % |
Note: amounts may not add due to rounding. Percentages are based on actuals.
(1) | Reported net sales for the three months ended July 1, 2023 was $1,193.1. |
(2) | The non-GAAP tax adjustments are primarily due to (1) $14.3 million of tax expense related to pre-tax non-GAAP adjustments and the interim tax accounting requirements in ASC740 - Income Taxes, offset by the removal of (2) $20.6 million of tax expense related to audit settlements during the second quarter 2023. |
* * *
We appreciate the opportunity to address the Staffs comments. If you have any further questions regarding this matter, please contact Eduardo Bezerra, Chief Financial Officer, at eduardo.bezerra@perrigo.com.
Very truly yours, |
/s/ Eduardo Bezerra |
Eduardo Bezerra |
Chief Financial Officer |
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