Ireland | Not Applicable | |
(State or other jurisdiction of incorporation or organization) | (I.R.S. Employer Identification No.) | |
Treasury Building, Lower Grand Canal Street, Dublin 2, Ireland | - | |
(Address of principal executive offices) | (Zip Code) |
• | Tysabri® royalty stream - change in fair value |
• | Amortization of acquired assets related to business combinations and asset acquisitions |
• | Goodwill and intangible asset impairment charges |
• | Restructuring charges related to organizational improvements |
• | Unusual litigation expense |
• | Gain from divestitures |
• | Operating results attributable to held-for-sale businesses |
• | Acquisition and integration-related charges |
• | Tax effects of non-GAAP adjustments |
• | Goodwill, intangible, and equity method investment impairment charges |
• | Tysabri® royalty stream - change in fair value |
• | Legal and consulting fees related to hostile takeover defense |
• | Amortization of acquired assets related to business combinations and asset acquisitions |
• | Restructuring charges related to completed business acquisition and organizational improvements |
• | Acquisition and integration-related charges |
• | Equity method investment losses |
• | Loss on early debt extinguishment |
• | Unusual litigation |
• | Tax effects of non-GAAP adjustments |
• | Goodwill intangible asset, and held-for-sale impairment charges |
• | Tysabri® royalty stream - change in fair value |
• | Amortization of acquired assets related to business combinations and asset acquisitions |
• | Restructuring charges related to organizational improvements |
• | Acquisition and integration-related charges |
• | Unusual litigation expense |
• | Operating results attributable to held-for-sale businesses |
• | Equity method investment losses |
• | Gain from divestitures |
• | Tax effects of non-GAAP adjustments |
• | Goodwill, intangible, and equity method investment impairment charges |
• | Tysabri® royalty stream - change in fair value |
• | Legal and consulting fees related to hostile takeover defense |
• | Amortization of acquired assets related to business combinations and asset acquisitions |
• | Restructuring charges related to completed business acquisition and organizational improvements |
• | Acquisition and integration-related charges |
• | Equity method investment losses |
• | Loss on early debt extinguishment |
• | Unusual litigation |
• | Losses on acquisition-related foreign-currency hedges |
• | Initial payment made in connection with an R&D arrangement |
• | Tax effects of non-GAAP adjustments |
• | Amortization of acquired assets related to business combinations and asset acquisitions |
• | Sale of Tysabri® royalty stream |
• | Restructuring charges related to organizational improvements |
• | Loss on early debt extinguishment |
• | Tax effects of non-GAAP adjustments |
• | Amortization of acquired assets related to business combinations and asset acquisitions |
• | Operating results attributable to held-for-sale businesses |
• | Goodwill intangible asset, and held-for-sale impairment charges |
• | Restructuring charges related to organizational improvements |
• | Tysabri® royalty stream - change in fair value |
• | Gain from divestitures |
• | Acquisition and integration-related charges |
• | Unusual litigation expense |
• | Equity method investments losses |
• | Tax effects of non-GAAP adjustments |
(d) | Exhibits |
99.1 | Press Release issued by Perrigo Company plc on May 22, 2017, furnished solely pursuant to Item 2.02 of Form 8-K. |
(Registrant) | ||||
PERRIGO COMPANY PLC | ||||
By: | /s/ Ronald L. Winowiecki | |||
Dated: | May 22, 2017 | Ronald L. Winowiecki | ||
Acting Chief Financial Officer | ||||
(Principal Accounting and Financial Officer) | ||||
99.1 | Press Release issued by Perrigo Company plc on May 23, 2017, furnished solely pursuant to Item 2.02 of Form 8-K. |
• | Comprehensive Form 10-K reflects accounting treatment of historical Tysabri® royalty stream as a financial asset |
• | No impact on net cash flows or previously closed sale of Tysabri® |
• | Revised previously reported 2016 guidance to reflect the new accounting treatment for Tysabri® at its statutory tax rate of 12.5%: |
• | Exceeded or performed at the high end of final 2016 guidance ranges above: |
• | Realized fourth quarter reported net sales of $1.3 billion and diluted loss per share of $(9.48), primarily due to impairment charges and a reduction in fair value for Tysabri®; delivered fourth quarter adjusted diluted EPS of $1.24 |
• | Company expects 2017 net sales to be in the range of $4.6 to $4.8 billion; expects calendar year 2017 reported diluted EPS to be in the range of $0.22 to $0.57 and adjusted diluted EPS to be in the range of $4.15 to $4.50, including contributions from the Israel Active Pharmaceutical Ingredients (API) business |
• | Company to file first quarter 2017 Form 10-Q as soon as practical |
• | 2017 Annual General Meeting of Shareholders to be held on July 20, 2017 |
• | Company to conduct conference call on May 23, 2017 at 8:30 am EDT |
Calendar Year Ended | Calendar Year Ended | YoY | Constant Currency | |||||||
12/31/2016 | 12/31/2015 | % Change | % Change(2) | |||||||
Reported Net Sales | $5,281 | $5,015 | 5 | % | ||||||
Reported Operating Income (Loss) | $(2,000) | $450 | NM | |||||||
Reported Net Loss | $(4,013) | $(2) | NM | |||||||
Reported Diluted Loss per Share | $(28.01) | $(0.01) | NM | |||||||
Reported Diluted Shares | 143.3 | 144.6 | (1 | )% | ||||||
Adjusted Net Sales(1) | $5,168 | $4,852 | 7 | % | 8 | % | ||||
Adjusted Operating Income | $1,084 | $1,107 | (2 | )% | ||||||
Adjusted Net Income | $728 | $799 | (9 | )% | ||||||
Adjusted Diluted Earnings per Share | $5.07 | $5.57 | (9 | )% | ||||||
Adjusted Diluted Shares | 143.6 | 143.4 | NM |
(1) | Calendar year 2016 net sales exclude $113 million of net sales from held-for-sale businesses and divestitures, primarily U.S. VMS and the European sports brand. For comparative purposes, calendar year 2015 net sales have been adjusted in this presentation to exclude $163 million of sales attributable to held-for-sale businesses, primarily U.S. VMS, the European sports brand and the Indian API business. This 2015 net sales adjustment does not impact any other prior year amounts or metrics. |
Fourth Quarter Ended | Fourth Quarter Ended | YoY | Constant Currency | |||||||
12/31/2016 | 12/31/2015 | % Change | % Change(2) | |||||||
Reported Net Sales | $1,331 | $1,359 | (2 | )% | ||||||
Reported Net Loss | $(1,359) | $(218) | NM | |||||||
Reported Diluted Loss per Share | $(9.48) | $(1.51) | NM | |||||||
Reported Diluted Shares | 143.4 | 144.9 | (1 | )% | ||||||
Adjusted Net Sales(1) | N/A | $1,315 | 1 | % | 4 | % | ||||
Adjusted Net Income | $178 | $202 | (12 | )% | ||||||
Adjusted Diluted Earnings per Share | $1.24 | $1.39 | (11 | )% | ||||||
Adjusted Diluted Shares | 143.6 | 145.4 | (1 | )% |
(1) | For comparative purposes, fourth quarter 2015 net sales have been adjusted in this presentation to exclude $45 million of sales attributable to held-for-sale businesses. This 2015 net sales adjustment does not impact any other prior year amounts or metrics. |
Fourth Quarter Ended | Fourth Quarter Ended | YoY | Constant Currency | ||||||||
12/31/2016 | 12/31/2015 | Change | % Change(3) | ||||||||
Reported Net Sales | $627 | $643 | (3 | )% | |||||||
Reported Gross Profit | $210 | $206 | 2 | % | |||||||
Reported Gross Margin | 33.5 | % | 32.1 | % | 140 bps | ||||||
Reported Operating Income | $83 | $93 | (10 | )% | |||||||
Reported Operating Margin | 13.3 | % | 14.4 | % | (110) bps | ||||||
Adjusted Net Sales(1) | N/A | $599 | 5 | % | 5 | % | |||||
Adjusted Gross Profit | $223 | $218 | 2 | % | |||||||
Adjusted Gross Margin(2) | 35.5 | % | 34.0 | % | 150 bps | ||||||
Adjusted Operating Income | $139 | $125 | 11 | % | |||||||
Adjusted Operating Margin(2) | 22.2 | % | 19.5 | % | 270 bps |
(1) | For comparative purposes, fourth quarter 2015 net sales have been adjusted in this presentation to exclude $44 million of sales attributable to the U.S. VMS business, which was sold in the third quarter 2016. This 2015 net sales adjustment does not impact any other prior year amounts or metrics. |
Fourth Quarter Ended | Fourth Quarter Ended | YoY | Constant Currency | ||||||||
12/31/2016 | 12/31/2015 | Change | % Change(2) | ||||||||
Reported Net Sales | $420 | $434 | (3)% | 3 | % | ||||||
Reported Gross Profit | $151 | $196 | (23)% | ||||||||
Reported Gross Margin | 36.1 | % | 45.2 | % | (910) bps | ||||||
Reported Operating Loss | $(76) | $(156) | NM | ||||||||
Reported Operating Margin | (18.1 | )% | (35.8 | )% | NM | ||||||
Adjusted Gross Profit | $176 | $208 | (15)% | ||||||||
Adjusted Gross Margin(1) | 41.9 | % | 47.8 | % | (590 | ) bps | |||||
Adjusted Operating Income | $36 | $53 | (31)% | ||||||||
Adjusted Operating Margin(1) | 8.7 | % | 12.1 | % | (340 | ) bps |
(1) | Q4 2016 and 2015 adjusted gross margin and operating margin use reported net sales as the denominator. |
Fourth Quarter Ended | Fourth Quarter Ended | YoY | Constant Currency | ||||||||
12/31/2016 | 12/31/2015 | change | % Change(2) | ||||||||
Reported Net Sales | $266 | $259 | 3 | % | 3 | % | |||||
Reported Gross Profit | $121 | $131 | (7 | )% | |||||||
Reported Gross Margin | 45.5 | % | 50.5 | % | (500) bps | ||||||
Reported Operating Income (Loss) | $(259) | $94 | NM | ||||||||
Reported Operating Margin | (97.3 | )% | 36.4 | % | NM | ||||||
Adjusted Gross Profit | $149 | $145 | 3 | % | |||||||
Adjusted Gross Margin(1) | 56.1 | % | 56.0 | % | 10 bps | ||||||
Adjusted Operating Income | $115 | $109 | 5 | % | |||||||
Adjusted Operating Margin(1) | 43.2 | % | 42.1 | % | 110 bps |
(1) | Q4 2016 and 2015 adjusted gross margin and operating margin use reported net sales as the denominator. |
Year Ended | Six Months Ended | Year Ended | |||||||||||||
December 31, 2016 | December 31, 2015 | June 27, 2015 | June 28, 2014 | ||||||||||||
Restated | Restated | Restated | |||||||||||||
Net sales | $ | 5,280.6 | $ | 2,632.2 | $ | 4,227.1 | $ | 3,914.1 | |||||||
Cost of sales | 3,228.8 | 1,553.3 | 2,582.9 | 2,462.0 | |||||||||||
Gross profit | 2,051.8 | 1,078.9 | 1,644.2 | 1,452.1 | |||||||||||
Operating expenses | |||||||||||||||
Distribution | 88.3 | 47.9 | 67.7 | 55.3 | |||||||||||
Research and development | 184.0 | 88.2 | 187.8 | 152.5 | |||||||||||
Selling | 665.0 | 325.9 | 319.0 | 208.6 | |||||||||||
Administration | 452.2 | 306.8 | 385.3 | 411.3 | |||||||||||
Impairment charges | 2,631.0 | 215.6 | 6.8 | 6.0 | |||||||||||
Restructuring | 31.0 | 26.9 | 5.1 | 47.0 | |||||||||||
Total operating expenses | 4,051.5 | 1,011.3 | 971.7 | 880.7 | |||||||||||
Operating income (loss) | (1,999.7 | ) | 67.6 | 672.5 | 571.4 | ||||||||||
Tysabri® royalty stream - change in fair value | 2,608.2 | (57.3 | ) | (78.5 | ) | (26.6 | ) | ||||||||
Interest expense, net | 216.6 | 89.9 | 146.0 | 103.5 | |||||||||||
Other expense, net | 22.7 | 25.2 | 334.2 | 25.1 | |||||||||||
Loss on extinguishment of debt | 1.1 | 0.9 | 10.5 | 165.8 | |||||||||||
Income (loss) before income taxes | (4,848.3 | ) | 8.9 | 260.3 | 303.6 | ||||||||||
Income tax expense (benefit) | (835.5 | ) | (33.6 | ) | 124.2 | 70.8 | |||||||||
Net income (loss) | $ | (4,012.8 | ) | $ | 42.5 | $ | 136.1 | $ | 232.8 | ||||||
Income (loss) per share | |||||||||||||||
Basic | $ | (28.01 | ) | $ | 0.29 | $ | 0.97 | $ | 2.02 | ||||||
Diluted | $ | (28.01 | ) | $ | 0.29 | $ | 0.97 | $ | 2.01 | ||||||
Weighted-average shares outstanding | |||||||||||||||
Basic | 143.3 | 145.6 | 139.3 | 115.1 | |||||||||||
Diluted | 143.3 | 146.1 | 139.8 | 115.6 | |||||||||||
Dividends declared per share | $ | 0.58 | $ | 0.25 | $ | 0.46 | $ | 0.39 |
December 31, 2016 | December 31, 2015 | June 27, 2015 | |||||||||
Restated | Restated | ||||||||||
Assets | |||||||||||
Cash and cash equivalents | $ | 622.3 | $ | 417.8 | $ | 785.6 | |||||
Accounts receivable, net of allowance for doubtful accounts of $6.3 million, $4.5 million, and $2.6 million, respectively | 1,176.0 | 1,189.0 | 1,209.4 | ||||||||
Inventories | 795.0 | 898.7 | 935.7 | ||||||||
Current deferred income taxes | — | — | 148.2 | ||||||||
Prepaid expenses and other current assets | 212.0 | 286.1 | 150.1 | ||||||||
Total current assets | 2,805.3 | 2,791.6 | 3,229.0 | ||||||||
Property, plant and equipment, net | 870.1 | 886.2 | 932.4 | ||||||||
Tysabri® royalty stream - at fair value | 2,350.0 | 5,310.0 | 5,420.0 | ||||||||
Goodwill and other indefinite-lived intangible assets | 4,163.9 | 7,069.0 | 6,984.3 | ||||||||
Other intangible assets, net | 3,396.8 | 2,973.1 | 2,742.8 | ||||||||
Non-current deferred income taxes | 72.1 | 71.4 | 50.1 | ||||||||
Other non-current assets | 211.9 | 248.3 | 233.3 | ||||||||
Total non-current assets | 11,064.8 | 16,558.0 | 16,362.9 | ||||||||
Total assets | $ | 13,870.1 | $ | 19,349.6 | $ | 19,591.9 | |||||
Liabilities and Shareholders’ Equity | |||||||||||
Liabilities | |||||||||||
Accounts payable | $ | 471.7 | $ | 555.8 | $ | 709.3 | |||||
Payroll and related taxes | 115.8 | 125.3 | 133.9 | ||||||||
Accrued customer programs | 380.3 | 396.0 | 358.5 | ||||||||
Accrued liabilities | 263.3 | 351.9 | 257.5 | ||||||||
Accrued income taxes | 32.4 | 62.7 | 56.3 | ||||||||
Current deferred income taxes | — | — | 79.7 | ||||||||
Current indebtedness | 572.8 | 1,060.5 | 153.3 | ||||||||
Total current liabilities | 1,836.3 | 2,552.2 | 1,748.5 | ||||||||
Long-term debt, less current portion | 5,224.5 | 4,971.6 | 5,246.9 | ||||||||
Non-current deferred income taxes | 389.9 | 1,372.7 | 1,514.3 | ||||||||
Other non-current liabilities | 461.8 | 346.3 | 382.7 | ||||||||
Total non-current liabilities | 6,076.2 | 6,690.6 | 7,143.9 | ||||||||
Total liabilities | 7,912.5 | 9,242.8 | 8,892.4 | ||||||||
Shareholders’ equity | |||||||||||
Controlling interest: | |||||||||||
Preferred shares, $0.0001 par value, 10 million shares authorized | — | — | — | ||||||||
Ordinary shares, €0.001 par value, 10 billion shares authorized | 8,135.0 | 8,142.6 | 8,621.9 | ||||||||
Accumulated other comprehensive income (loss) | (81.8 | ) | (15.3 | ) | 103.5 | ||||||
Retained earnings (accumulated deficit) | (2,095.1 | ) | 1,980.1 | 1,973.9 | |||||||
Total controlling interest | 5,958.1 | 10,107.4 | 10,699.3 | ||||||||
Noncontrolling interest | (0.5 | ) | (0.6 | ) | 0.2 | ||||||
Total shareholders’ equity | 5,957.6 | 10,106.8 | 10,699.5 | ||||||||
Total liabilities and shareholders' equity | $ | 13,870.1 | $ | 19,349.6 | $ | 19,591.9 | |||||
Supplemental Disclosures of Balance Sheet Information | |||||||||||
Preferred shares, issued and outstanding | — | — | — | ||||||||
Ordinary shares, issued and outstanding | 143.4 | 143.1 | 146.3 |
Year Ended | Six Months Ended | Year Ended | |||||||||||||
December 31, 2016 | December 31, 2015 | June 27, 2015 | June 28, 2014 | ||||||||||||
Restated | Restated | Restated | |||||||||||||
Cash Flows From (For) Operating Activities | |||||||||||||||
Net income (loss) | $ | (4,012.8 | ) | $ | 42.5 | $ | 136.1 | $ | 232.8 | ||||||
Adjustments to derive cash flows | |||||||||||||||
Depreciation and amortization | 457.0 | 182.4 | 258.7 | 206.1 | |||||||||||
Loss on acquisition-related foreign currency derivatives | — | — | 326.4 | — | |||||||||||
Share-based compensation | 23.0 | 22.8 | 31.6 | 24.6 | |||||||||||
Impairment charges | 2,631.0 | 215.6 | 6.8 | 6.0 | |||||||||||
Tysabri® royalty stream - change in fair value | 2,608.2 | (57.3 | ) | (78.5 | ) | (26.6 | ) | ||||||||
Loss on extinguishment of debt | 1.1 | 0.9 | 10.5 | 165.8 | |||||||||||
Restructuring charges | 31.0 | 26.9 | 5.1 | 47.0 | |||||||||||
Deferred income taxes | (990.9 | ) | (120.0 | ) | (16.3 | ) | (49.7 | ) | |||||||
Amortization of financing fees and debt discount (premium) | (24.7 | ) | (10.2 | ) | 0.2 | 2.0 | |||||||||
Other non-cash adjustments | 33.5 | 18.1 | 10.2 | 4.5 | |||||||||||
Subtotal | 756.4 | 321.7 | 690.8 | 612.5 | |||||||||||
Increase (decrease) in cash due to: | |||||||||||||||
Accounts receivable | (0.6 | ) | 52.5 | (51.1 | ) | (140.5 | ) | ||||||||
Inventories | 100.7 | (29.6 | ) | (11.4 | ) | 84.7 | |||||||||
Accounts payable | (75.7 | ) | (194.1 | ) | 120.5 | (24.9 | ) | ||||||||
Payroll and related taxes | (41.1 | ) | (38.2 | ) | (30.2 | ) | (55.5 | ) | |||||||
Accrued customer programs | (13.9 | ) | 34.4 | 71.3 | 113.1 | ||||||||||
Accrued liabilities | (79.5 | ) | 108.1 | 42.8 | 23.0 | ||||||||||
Accrued income taxes | 20.9 | (56.8 | ) | 21.9 | (11.3 | ) | |||||||||
Other | (12.3 | ) | 2.9 | 0.6 | 31.9 | ||||||||||
Subtotal | (101.5 | ) | (120.8 | ) | 164.4 | 20.5 | |||||||||
Net cash from (for) operating activities | 654.9 | 200.9 | 855.2 | 633.0 | |||||||||||
Cash Flows From (For) Investing Activities | |||||||||||||||
Proceeds from royalty rights | 353.7 | 166.3 | 344.6 | 60.5 | |||||||||||
Acquisitions of businesses, net of cash acquired | (427.4 | ) | (791.6 | ) | (2,177.8 | ) | (1,605.8 | ) | |||||||
Asset acquisitions | (65.1 | ) | — | (4.0 | ) | — | |||||||||
Settlement of acquisition-related foreign currency derivatives | — | (1.3 | ) | (329.9 | ) | — | |||||||||
Proceeds from sale of securities | 4.5 | — | — | 81.4 | |||||||||||
Additions to property, plant and equipment | (106.2 | ) | (77.8 | ) | (137.0 | ) | (171.6 | ) | |||||||
Proceeds from sale of business | 69.1 | — | — | — | |||||||||||
Other investing | (3.6 | ) | (3.7 | ) | 1.8 | (8.8 | ) | ||||||||
Net cash from (for) investing activities | (175.0 | ) | (708.1 | ) | (2,302.3 | ) | (1,644.3 | ) | |||||||
Cash Flows From (For) Financing Activities | |||||||||||||||
Borrowings (repayments) of revolving credit agreements and other financing, net | (802.5 | ) | 718.0 | (54.0 | ) | (3.0 | ) | ||||||||
Issuances of long-term debt | 1,190.3 | — | 2,504.3 | 3,293.6 | |||||||||||
Payments on long-term debt | (559.2 | ) | (28.3 | ) | (1,823.5 | ) | (2,035.0 | ) | |||||||
Premium on early debt retirement | (0.6 | ) | — | — | (133.5 | ) | |||||||||
Deferred financing fees | (2.8 | ) | (0.3 | ) | (28.1 | ) | (48.8 | ) | |||||||
Issuance of ordinary shares | 8.3 | 4.9 | 1,043.5 | 9.8 | |||||||||||
Equity issuance costs | (10.3 | ) | — | (35.7 | ) | — | |||||||||
Repurchase of ordinary shares | — | (500.0 | ) | — | — | ||||||||||
Cash dividends | (83.2 | ) | (36.3 | ) | (64.8 | ) | (46.1 | ) | |||||||
Other financing | (8.7 | ) | (8.4 | ) | (19.3 | ) | (9.0 | ) | |||||||
Net cash from (for) financing activities | (268.7 | ) | 149.6 | 1,522.4 | 1,028.0 | ||||||||||
Effect of exchange rate changes on cash and cash equivalents | (6.7 | ) | (10.2 | ) | (89.2 | ) | 2.9 | ||||||||
Net increase (decrease) in cash and cash equivalents | 204.5 | (367.8 | ) | (13.9 | ) | 19.6 | |||||||||
Cash and cash equivalents, beginning of period | 417.8 | 785.6 | 799.5 | 779.9 | |||||||||||
Cash and cash equivalents, end of period | $ | 622.3 | $ | 417.8 | $ | 785.6 | $ | 799.5 |
Year Ended | Six Months Ended | Year Ended | |||||||||||||
December 31, 2016 | December 31, 2015 | June 27, 2015 | June 28, 2014 | ||||||||||||
Supplemental Disclosures of Cash Flow Information | |||||||||||||||
Cash paid/received during the year for: | |||||||||||||||
Interest paid | $ | 205.1 | $ | 84.2 | $ | 143.2 | $ | 98.4 | |||||||
Interest received | $ | 1.2 | $ | 0.7 | $ | 1.1 | $ | 2.4 | |||||||
Income taxes paid | $ | 139.5 | $ | 87.8 | $ | 131.0 | $ | 93.2 | |||||||
Income taxes refunded | $ | 9.3 | $ | 1.7 | $ | 9.6 | $ | 4.3 |
TABLE I | ||||||
PERRIGO COMPANY PLC | ||||||
RECONCILIATION OF NON-GAAP MEASURES | ||||||
SELECTED CONSOLIDATED INFORMATION | ||||||
(in millions, except per share amounts) | ||||||
(unaudited) | ||||||
Three Months Ended December 31, 2016 | ||||||
Consolidated | Net Income (Loss) | Diluted Earnings (Loss) per Share | ||||
Reported | $ | (1,359.1 | ) | $ | (9.48 | ) |
Adjustments: | ||||||
Tysabri® royalty stream - change in fair value | $ | 1,115.6 | $ | 7.78 | ||
Impairment charges | 600.5 | 4.18 | ||||
Amortization expense related primarily to acquired intangible assets | 94.9 | 0.67 | ||||
Unusual litigation | 18.4 | 0.13 | ||||
Restructuring charges | 13.1 | 0.09 | ||||
Operating results attributable to held-for-sale businesses* | 11.5 | 0.08 | ||||
Acquisition and integration-related charges | 3.3 | 0.02 | ||||
Gain on divestitures | (7.8 | ) | (0.05 | ) | ||
Non-GAAP tax adjustments*** | (312.9 | ) | (2.18 | ) | ||
Adjusted | $ | 177.5 | $ | 1.24 | ||
As a % of adjusted net sales | ||||||
Diluted weighted average shares outstanding | ||||||
Reported | 143.4 | |||||
Effect of dilution as reported amount was a loss, while adjusted amount was income** | 0.2 | |||||
Adjusted | 143.6 | |||||
*Held-for-sale businesses include the European sports brand and the India API business. | ||||||
**In the period of a net loss, diluted shares outstanding equal basic shares outstanding. | ||||||
*** The non-GAAP tax adjustment includes the following: (1) $(187.1) million of tax effects of pretax non-GAAP adjustments that are calculated based upon the specific rate of the applicable jurisdiction of the pretax item; (2) a $20.6 million effect on non-GAAP income taxes related to the interim tax accounting requirements within ASC 740, Income Taxes; and (3) Discrete income tax adjustments of $(26.9) million related to jurisdictional tax rate changes in France & Italy, $102.6 million net impact of valuation allowances on deferred tax assets commensurate with non-GAAP pre-tax measures and $(222.1) million valuation allowance release due to the sales of Tysabri. The GAAP tax benefit recorded in the current quarter related to these items has been excluded from non-GAAP net income. |
TABLE I (CONTINUED) | ||||||
PERRIGO COMPANY PLC | ||||||
RECONCILIATION OF NON-GAAP MEASURES | ||||||
SELECTED CONSOLIDATED INFORMATION | ||||||
(in millions, except per share amounts) | ||||||
(unaudited) | ||||||
Three Months Ended December 31, 2015 | ||||||
Consolidated | Net Income (Loss) | Diluted Earnings (Loss) per Share | ||||
Reported | $ | (218.4 | ) | $ | (1.51 | ) |
Adjustments: | ||||||
Impairment charges | $ | 226.3 | $ | 1.56 | ||
Tysabri® royalty stream - change in fair value | 116.6 | 0.80 | ||||
Legal and consulting fees related to Mylan defense | 71.3 | 0.49 | ||||
Amortization expense related primarily to acquired intangible assets | 54.9 | 0.38 | ||||
Restructuring charges | 24.7 | 0.17 | ||||
Acquisition and integration-related charges | 9.3 | 0.06 | ||||
Losses on equity method investments | 2.7 | 0.02 | ||||
Loss on early debt extinguishment | 0.9 | 0.01 | ||||
Unusual litigation | (1.7 | ) | (0.01 | ) | ||
Non-GAAP tax adjustments*** | (84.2 | ) | (0.58 | ) | ||
Adjusted | $ | 202.4 | $ | 1.39 |
Diluted weighted average shares outstanding | ||||||
Reported | 144.9 | |||||
Effect of dilution as reported amount was a loss, while adjusted amount was income**. | 0.5 | |||||
Adjusted | 145.4 | |||||
2015 QTD Net Sales excluding the U.S. VMS business and the European sports brand | Net Sales | |||||
Reported | $ | 1,359.1 | ||||
Operating results attributable to held-for-sale businesses* | (44.5 | ) | ||||
Adjusted | $ | 1,314.6 | ||||
*Held-for-sale businesses include the the U.S. VMS business and European sports brand. | ||||||
**In the period of a net loss, diluted shares outstanding equal basic shares outstanding. | ||||||
*** The non-GAAP tax adjustment includes the following: (1) $(91.4) million of tax effects of pretax non-GAAP adjustments that are calculated based upon the specific rate of the applicable jurisdiction of the pretax item; (2) a $0.4 million effect on non-GAAP income taxes related to the interim tax accounting requirements within ASC 740, Income Taxes; and (3) $6.8 million discrete income tax adjustments related to debt restructuring for the acquisition of Omega. The GAAP tax benefit recorded in the current quarter related to these items has been excluded from non-GAAP net income. |
TABLE I (CONTINUED) | ||||||||||||
PERRIGO COMPANY PLC | ||||||||||||
RECONCILIATION OF NON-GAAP MEASURES | ||||||||||||
SELECTED CONSOLIDATED INFORMATION | ||||||||||||
(in millions, except per share amounts) | ||||||||||||
(unaudited) | ||||||||||||
Twelve Months Ended December 31, 2016 | ||||||||||||
Consolidated | Net Sales | Operating Income (Loss) | Net Income (Loss) | Diluted Earnings (Loss) per Share | ||||||||
Reported | $ | 5,280.6 | $ | (1,999.7 | ) | $ | (4,012.8 | ) | $ | (28.01 | ) | |
Adjustments: | ||||||||||||
Impairment charges | $ | — | $ | 2,631.0 | $ | 2,653.4 | $ | 18.48 | ||||
Tysabri® royalty stream - change in fair value | — | — | 2,608.2 | 18.16 |
Amortization expense related primarily to acquired intangible assets | — | 363.9 | 363.9 | 2.59 | ||||||||
Restructuring charges | — | 31.0 | 31.0 | 0.22 | ||||||||
Acquisition and integration-related charges | — | 24.3 | 25.4 | 0.18 | ||||||||
Unusual litigation | — | 18.4 | 18.4 | 0.13 | ||||||||
Operating results attributable to held-for-sale businesses* | (112.8 | ) | 15.3 | 15.3 | 0.11 | |||||||
Losses on equity method investments | — | — | 4.2 | 0.03 | ||||||||
Gain on divestitures | — | — | (7.7 | ) | (0.05 | ) | ||||||
Non-GAAP tax adjustments*** | — | — | (971.3 | ) | (6.77 | ) | ||||||
Adjusted | $ | 5,167.8 | $ | 1,084.2 | $ | 728.0 | $ | 5.07 | ||||
Diluted weighted average shares outstanding | ||||||||||||
Reported | 143.3 | |||||||||||
Effect of dilution as reported amount was a loss, while adjusted amount was income** | 0.3 | |||||||||||
Adjusted | 143.6 | |||||||||||
*Held-for-sale businesses include the U.S. VMS business, European sports brand, and India API business | ||||||||||||
**In the period of a net loss, diluted shares outstanding equal basic shares outstanding. | ||||||||||||
***The non-GAAP tax adjustment includes the following: (1) $(802.5) million of tax effects of pretax non-GAAP adjustments that are calculated based upon the specific rate of the applicable jurisdiction of the pretax item; and (2) Discrete income tax adjustments of: $(49.3) million related to jurisdictional tax rate changes in Italy, UK, Germany & France, $102.6 million net impact of valuation allowances on deferred tax assets commensurate with non-GAAP pre-tax measures, and $(222.1) million valuation allowance release due to the sale of Tysabri. The GAAP tax benefit recorded in the current quarter related to these items has been excluded from non-GAAP net income. |
TABLE I (CONTINUED) | |||||||||
PERRIGO COMPANY PLC | |||||||||
RECONCILIATION OF NON-GAAP MEASURES | |||||||||
SELECTED CONSOLIDATED INFORMATION | |||||||||
(in millions, except per share amounts) | |||||||||
(unaudited) | |||||||||
Twelve Months Ended December 31, 2015 | |||||||||
Consolidated | Operating Income | Net Income (Loss) | Diluted Earnings (Loss) per Share | ||||||
Reported | $ | 450.4 | $ | (1.9 | ) | $ | (0.01 | ) | |
Adjustments: | |||||||||
Losses on acquisition-related foreign currency hedges | $ | — | $ | 268.5 | $ | 1.87 | |||
Amortization expense related primarily to acquired intangible assets | 251.7 | 251.7 | 1.76 | ||||||
Impairment charges | 222.8 | 235.3 | 1.64 | ||||||
Legal and consulting fees related to Mylan defense | 100.3 | 100.3 | 0.70 | ||||||
Acquisition and integration-related charges | 35.2 | 35.7 | 0.25 | ||||||
Restructuring charges | 28.2 | 28.2 | 0.20 | ||||||
Loss on debt extinguishment | — | 20.5 | 0.14 | ||||||
Initial payment made in connection with an R&D arrangement | 18.0 | 18.0 | 0.13 | ||||||
Losses on equity method investments | — | 10.7 | 0.07 |
Unusual litigation | 0.3 | 0.3 | — | ||||||
Tysabri® royalty stream - change in fair value | (88.8 | ) | (0.62 | ) | |||||
Non-GAAP tax adjustments*** | — | (79.6 | ) | (0.56 | ) | ||||
Adjusted | $ | 1,106.9 | $ | 798.9 | $ | 5.57 | |||
Diluted weighted average shares outstanding | |||||||||
Reported | 144.6 | ||||||||
Weighted average effect of 6.8 million shares issued on November 26, 2014 to finance the Omega acquisition, which closed on March 30, 2015. In addition, effect of dilution as reported amount was a loss, while adjusted amount was income**. | (1.2 | ) | |||||||
Adjusted | 143.4 | ||||||||
2015 YTD Net Sales excluding the U.S. VMS business and the European sports brand | Net Sales | ||||||||
Reported | $ | 5,014.7 | |||||||
Operating results attributable to held-for-sale businesses* | (162.6 | ) | |||||||
Adjusted | $ | 4,852.1 | |||||||
*Held-for-sale businesses include the U.S. VMS business and the European sports brand. | |||||||||
**In the period of a net loss, diluted shares outstanding equal basic shares outstanding. | |||||||||
*** The non-GAAP tax adjustment includes the following: (1) $(135.5) million of tax effects of pretax non-GAAP adjustments that are calculated based upon the specific rate of the applicable jurisdiction of the pretax item; (2) a $2.5 million effect on non-GAAP income taxes related to the interim tax accounting requirements within ASC 740, Income Taxes; and (3) $53.4 million of discrete income tax adjustments related to debt restructuring for the acquisition of Omega. The GAAP tax benefit recorded in the current quarter related to these items has been excluded from non-GAAP net income. |
TABLE II | ||||||||||||||||||||
PERRIGO COMPANY PLC | ||||||||||||||||||||
RECONCILIATION OF NON-GAAP MEASURES | ||||||||||||||||||||
SELECTED SEGMENT INFORMATION | ||||||||||||||||||||
(in millions) | ||||||||||||||||||||
(unaudited) | ||||||||||||||||||||
Three Months Ended | Three Months Ended | |||||||||||||||||||
December 31, 2016 | December 31, 2015 | |||||||||||||||||||
Consumer Healthcare Americas | Net Sales | Gross Profit | Operating Income | Net Sales | Gross Profit | Operating Income | ||||||||||||||
Reported | $ | 626.8 | $ | 210.0 | $ | 83.3 | $ | 643.2 | $ | 206.2 | $ | 92.8 | ||||||||
Adjustments: | ||||||||||||||||||||
Amortization expense related primarily to acquired intangible assets | 12.6 | 17.7 | 12.2 | 17.9 | ||||||||||||||||
Unusual litigation | — | 10.2 | — | 0.3 | ||||||||||||||||
Impairment charges | — | 27.1 | — | 1.5 | ||||||||||||||||
Restructuring charges | — | (0.1 | ) | — | 12.8 | |||||||||||||||
Acquisition and integration-related charges | — | 1.2 | — | — | ||||||||||||||||
Adjusted | $ | 222.6 | $ | 139.4 | $ | 218.4 | $ | 125.3 | ||||||||||||
As a % of reported net sales | 35.5 | % | 22.2 | % | 34.0 | % | 19.5 | % | ||||||||||||
For Comparative Purposes* | ||||||||||||||||||||
Reported | $ | 643.2 | ||||||||||||||||||
Operating results attributable to held-for-sale businesses* | (44.3 | ) | ||||||||||||||||||
Adjusted | $ | 598.9 | ||||||||||||||||||
*Q4 2015 net sales adjustment made for comparison purposes only and does not change any other prior year financial information or metrics since the U.S. VMS business was not held-for-sale in 2015. Q4 2015 gross margin and operating margin use reported net sales as the denominator. | ||||||||||||||||||||
TABLE II (CONTINUED) | |||||||||||||||||||
PERRIGO COMPANY PLC | |||||||||||||||||||
RECONCILIATION OF NON-GAAP MEASURES | |||||||||||||||||||
SELECTED SEGMENT INFORMATION | |||||||||||||||||||
(in millions) | |||||||||||||||||||
(unaudited) | |||||||||||||||||||
Three Months Ended | Three Months Ended | ||||||||||||||||||
December 31, 2016 | December 31, 2015 | ||||||||||||||||||
Consumer Healthcare International | Net Sales | Gross Profit | Operating Income (Loss) | Net Sales | Gross Profit | Operating Income | |||||||||||||
Reported | $ | 419.5 | $ | 151.3 | $ | (76.1 | ) | $ | 434.3 | $ | 196.3 | $ | (155.5 | ) | |||||
Adjustments: | |||||||||||||||||||
Amortization expense related primarily to acquired intangible assets | 20.8 | 48.4 | 11.4 | 23.0 | |||||||||||||||
Impairment charges | — | 34.1 | — | 185.1 | |||||||||||||||
Unusual litigation | — | 8.2 | — | — | |||||||||||||||
Operating results attributable to held-for-sale business* | 3.6 | 10.3 | — | — | |||||||||||||||
Restructuring charges | — | 10.5 | — | 0.2 | |||||||||||||||
Acquisition and integration-related charges | — | 1.0 | — | (0.2 | ) | ||||||||||||||
Adjusted | $ | 175.7 | $ | 36.4 | $ | 207.7 | $ | 52.6 | |||||||||||
As a % of reported net sales | 41.9 | % | 8.7 | % | 47.8 | % | 12.1 | % | |||||||||||
*Held-for-sale businesses include the European sports brand. | |||||||||||||||||||
Three Months Ended | Three Months Ended | ||||||||||||||||||
December 31, 2016 | December 31, 2015 | ||||||||||||||||||
Prescription Pharmaceuticals | Net Sales | Gross Profit | Operating Income | Net Sales | Gross Profit | Operating Income | |||||||||||||
Reported | $ | 265.9 | $ | 121.0 | $ | (258.5 | ) | $ | 259.1 | $ | 130.8 | $ | 94.3 | ||||||
Adjustments: | |||||||||||||||||||
Amortization expense related to acquired intangible assets | 28.0 | 28.1 | 14.2 | 14.3 | |||||||||||||||
Unusual litigation | — | — | — | (2.0 | ) | ||||||||||||||
Restructuring charges | — | 2.1 | — | 2.6 | |||||||||||||||
Impairment charges | — | 342.4 | — | — | |||||||||||||||
Acquisition and integration-related charges | — | 0.9 | — | — | |||||||||||||||
Adjusted | $ | 149.0 | $ | 115.0 | $ | 145.0 | $ | 109.2 | |||||||||||
As a % of reported net sales | 56.1 | % | 43.2 | % | 56.0 | % | 42.1 | % | |||||||||||
TABLE III | |||||||||||||
PERRIGO COMPANY PLC | |||||||||||||
RECONCILIATION OF NON-GAAP MEASURES | |||||||||||||
CONSTANT CURRENCY | |||||||||||||
(in millions) | |||||||||||||
(unaudited) | |||||||||||||
Three Months Ended | |||||||||||||
Net sales | December 31, 2016 | December 31, 2015 | Total Change | FX Change | Constant Currency Change | ||||||||
Consolidated* | $ | 1,331.2 | $ | 1,314.6 | 1% | (3)% | 4% | ||||||
CHCA* | 626.8 | 598.9 | 5% | —% | 5% | ||||||||
CHCI | 419.5 | 434.1 | (3)% | (6)% | 3% | ||||||||
RX | 265.9 | 259.1 | 3% | —% | 3% | ||||||||
Twelve Months Ended | |||||||||||||
Net sales | December 31, 2016 | December 31, 2015 | Total Change | FX Change | Constant Currency Change | ||||||||
Consolidated* | $ | 5,167.8 | $ | 4,852.1 | 7% | (1)% | 8% | ||||||
*Q4 2015, full year 2015, and full year 2016 net sales are adjusted to exclude sales attributable to held-for-sale businesses. See Tables I and II for non-GAAP reconciliations. |
TABLE IV | ||||
PERRIGO COMPANY PLC | ||||
RECONCILIATION OF NON-GAAP MEASURES | ||||
2017 GUIDANCE | ||||
(in millions, except per share amounts) | ||||
(unaudited) | ||||
Full Year | ||||
2017 EPS Guidance | ||||
Reported | $0.22 - $0.57 | |||
Amortization expense related primarily to acquired intangible assets | 2.40 | |||
Sale of Tysabri® royalty stream (2) | (0.03) | |||
Restructuring charges | 0.28 | |||
Loss on early debt extinguishment | 0.12 | |||
Tax effect of non-GAAP adjustments (1) | 1.16 | |||
Adjusted | $4.15 - $4.50 | |||
(1) | Includes tax effect of pretax non-GAAP adjustments calculated based upon the specific rate of the applicable jurisdiction of the pretax item and certain adjustments for discrete tax items. | |||
(2) | Subject to the finalization of the gain/loss on the sale of Tysabri |
TABLE V | |||||||||||||||||||||
PERRIGO COMPANY PLC | |||||||||||||||||||||
RECONCILIATION OF NON-GAAP MEASURES | |||||||||||||||||||||
SELECTED CONSOLIDATED INFORMATION | |||||||||||||||||||||
(in millions) | |||||||||||||||||||||
(unaudited) | |||||||||||||||||||||
Three Months Ended | Twelve Months Ended | ||||||||||||||||||||
December 31, 2016 | December 31, 2015 | Total Change | December 31, 2016 | December 31, 2015 | Total Change | ||||||||||||||||
Adjusted net income | $ | 177.5 | $ | 202.4 | (12 | )% | $ | 728.0 | $ | 798.9 | (9 | )% | |||||||||
Adjusted earnings per share | $1.24 | $1.39 | (11 | )% | $5.07 | $5.57 | (9 | )% | |||||||||||||
Adjusted gross profit | |||||||||||||||||||||
CHCA | $ | 222.6 | $ | 218.4 | 2 | % | |||||||||||||||
CHCI | $ | 175.7 | $ | 207.7 | (15 | )% | |||||||||||||||
RX | $ | 149.0 | $ | 145.0 | 3 | % | |||||||||||||||
Adjusted operating income | |||||||||||||||||||||
CHCA | $ | 139.4 | $ | 125.3 | 11 | % | |||||||||||||||
CHCI | $ | 36.4 | $ | 52.6 | (31 | )% | |||||||||||||||
RX | $ | 115.0 | $ | 109.2 | 5 | % |
TABLE VI | |||
PERRIGO COMPANY PLC | |||
RECONCILIATION OF NON-GAAP MEASURES | |||
REVISED 2016 EPS GUIDANCE | |||
(unaudited) | |||
Full Year | |||
Revised 2016 EPS Guidance | |||
Reported | $(28.38) - $(28.08) | ||
Amortization expense related primarily to acquired intangible assets | 2.59 | ||
Operating results attributable to held-for-sale businesses (1) | 0.11 | ||
Impairment charges | 18.48 | ||
Restructuring charges | 0.22 | ||
Tysabri® royalty stream - change in fair value | 18.16 | ||
Gain on divestitures | (0.05) | ||
Acquisition and integration-related charges | 0.18 | ||
Unusual litigation | 0.13 | ||
Losses on equity method investments | 0.03 | ||
Tax effect of non-GAAP adjustments (2) | (6.77) | ||
Adjusted | $4.70 - $5.00 | ||
Full Year | |||
(in billions) | Revised 2016 Net Sales Guidance |
Consolidated Net Sales | |||
Reported | $5.1 - $5.3 | ||
Operating results attributable to held-for-sale businesses (1) | (0.1) | ||
Adjusted | $5.0 - $5.2 | ||
(1) | Held-for-sale businesses include the U.S. VMS business, European sports brand, and the India API business. | ||
(2) | Includes tax effect of pretax non-GAAP adjustments calculated based upon the specific rate of the applicable jurisdiction of the pretax item and certain adjustments for discrete tax items. | ||
TABLE VII | ||||
PERRIGO COMPANY PLC | ||||
RECONCILIATION OF NON-GAAP MEASURES | ||||
PREVIOUS PRELIMINARY RESULTS REPORTED FEBRUARY 27, 2017 | ||||
(in millions, except per share amounts) | ||||
(unaudited) | ||||
AS OF FEBRUARY 27, 2017 | ||||
Year Ended | ||||
Diluted Earnings (Loss) per Share | December 31, 2016 | |||
Reported | $(28.85) - $(29.00) | |||
Adjustments: | ||||
Impairment charges | $37.54 | |||
Amortization expense related primarily to acquired intangible assets | 4.52 | |||
Restructuring charges | 0.22 | |||
Acquisition and integration-related charges | 0.15 | |||
Operating results attributable to held-for-sale businesses (1) | 0.11 | |||
Unusual litigation | 0.07 | |||
Losses on equity method investments | 0.03 | |||
Legal and consulting fees related to Mylan defense | 0.01 | |||
Gain on divestitures | (0.05) | |||
Tax effect of non-GAAP adjustments (2) | (6.50) | |||
Adjusted | $7.10 - $7.25 | |||
(1) Held-for-sale businesses include the U.S. VMS business, European sports brand, and the India API business. | ||||
(2) Includes tax effect of pretax non-GAAP adjustments calculated based upon the specific rate of the applicable jurisdiction of the pretax item and certain adjustments for discrete tax items. | ||||
AS OF FEBRUARY 27, 2017 | ||||
Year Ended | ||||
December 31, 2016 | ||||
Consolidated Net Sales | ||||
Reported | $ | 5,634.8 | ||
Operating results attributable to held-for-sale businesses | (113.8 | ) | ||
Adjusted | $ | 5,521.0 |
TABLE VII (continued) | ||||||||||
PERRIGO COMPANY PLC | ||||||||||
RECONCILIATION OF NON-GAAP MEASURES | ||||||||||
PREVIOUS PRELIMINARY RESULTS REPORTED FEBRUARY 27, 2017 | ||||||||||
(in millions, except per share amounts) | ||||||||||
(unaudited) | ||||||||||
AS OF FEBRUARY 27, 2017 | ||||||||||
Year Ended | ||||||||||
December 31, 2016 | ||||||||||
Reported | Adjusted | |||||||||
Full year 2016 EPS range as of February 27, 2017 | $(28.85) - $(29.00) | $7.10 - $7.25 | ||||||||
Impact of previous accounting for Tysabri on previously reported results | Reported | Amortization expense | Adjusted | |||||||
Net sales | $ | 351.6 | $ | — | $ | 351.6 | ||||
Cost of sales | (290.0 | ) | 290.0 | — | ||||||
Operating income | $ | 61.6 | $ | 290.0 | $ | 351.6 | ||||
Tax at 12.5% statutory rate | $ | (7.7 | ) | $ | (44.0 | ) | ||||
Net income | $ | 53.9 | $ | 307.6 | ||||||
Diluted shares | 143.3 | 143.6 | ||||||||
Earnings per share impact | $ | 0.38 | $ | 2.14 | ||||||
2016 full year EPS range excluding impact of Tysabri as of February 27, 2017 | $(29.23) - $(29.38) | $4.96 - $5.11 | ||||||||