Ireland | Not Applicable | |
(State or other jurisdiction of incorporation or organization) | (I.R.S. Employer Identification No.) | |
The Sharp Building, Hogan Place, Dublin 2, Ireland | - | |
(Address of principal executive offices) | (Zip Code) |
• | Amortization expense related primarily to acquired intangible assets |
• | Change in financial assets |
• | Losses on investment securities |
• | Acquisition and integration-related charges and contingent consideration adjustments |
• | Milestone income related to royalty rights |
• | Impairment charges |
• | Restructuring charges and other termination benefits |
• | Separation and reorganization expense |
• | Unusual litigation |
• | Gain/loss on divestitures |
• | Foreign currency translation movement |
• | Animal health net sales |
• | Non-GAAP tax adjustments |
• | Amortization expense related primarily to acquired intangible assets |
• | Change in financial assets |
• | Operating results attributable to held-for-sale businesses |
• | Impairment charges |
• | Restructuring charges and other termination benefits |
• | Gain/Loss on divestitures |
• | Unusual litigation |
• | Acquisition and integration-related charges and contingent consideration adjustments |
• | Milestone revenue related to royalty rights |
• | Exited Russian business |
• | Existed Belgium distribution sales |
• | Non-GAAP tax adjustments |
• | Amortization expense related primarily to acquired intangible assets |
• | Change in financial assets |
• | Losses on investment securities |
• | Acquisition and integration-related charges and contingent consideration adjustments |
• | Impairment charges |
• | Restructuring charges and other termination benefits |
• | Separation and reorganization expense |
• | Unusual litigation |
• | Milestone income related to royalty rights |
• | Gain/loss on divestitures |
• | Foreign currency translation movement |
• | Animal health net sales |
• | Non-GAAP tax adjustments |
• | Amortization expense related primarily to acquired intangible assets |
• | Change in financial assets |
• | Operating results attributable to held-for-sale businesses |
• | Impairment charges |
• | Restructuring charges and other termination benefits |
• | Gain/Loss on divestitures |
• | Unusual litigation |
• | Acquisition and integration-related charges and contingent consideration adjustments |
• | Milestone revenue related to royalty rights |
• | Loss on early debt extinguishment |
• | Loss on hedges related to debt tender |
• | Exited Russian business |
• | Existed Belgium distribution sales |
• | Non-GAAP tax adjustments |
(d) | Exhibits |
(Registrant) | ||||
PERRIGO COMPANY PLC | ||||
By: | /s/ Ronald L. Winowiecki | |||
Dated: | February 27, 2019 | Ronald L. Winowiecki | ||
Chief Financial Officer | ||||
• | Full-year 2018 GAAP ("Reported") net sales of $4.7 billion, reflecting a 4% decline versus a year ago; Fourth quarter 2018 reported net sales of $1.2 billion, a 7% decline versus the prior year. |
• | Full-year 2018 Worldwide Consumer businesses reported net sales of $3.9 billion, relatively flat year-over-year; Fourth quarter Worldwide Consumer businesses reported net sales of $973 million, down 4% year-over-year. |
• | Full-year 2018 Worldwide Consumer businesses net sales grew approximately 1% on an organic constant currency basis, excluding the year-over-year negative impact from the animal health business. |
• | Prescription Pharmaceuticals ("RX") fourth-quarter net sales of $222 million, down 15% year-over-year; a sequential improvement versus third quarter 2018 results due to new products and decelerating pricing pressure. |
• | Full-year 2018 consolidated new product sales of $170 million. |
• | Worldwide Consumer business market shares stable in growing markets. |
• | Full-year 2018 reported diluted earnings per share ("EPS") of $0.95; fourth quarter reported diluted EPS of $0.60. |
• | Full-year 2018 adjusted ("Non-GAAP") diluted EPS of $4.55; Fourth quarter adjusted diluted EPS of $0.97. |
• | Full-year 2018 cash flow from operations was $593 million, or $643 million excluding a $50 million investment for the rights to Nasonex® OTC, representing 102% cash conversion to adjusted net income. |
• | Repurchased $400 million of common stock, or 5.1 million shares, in 2018. |
Calendar 2018 | Calendar 2017 | YoY | Constant Currency | |||||||
12/31/2018 | 12/31/2017 | % Change | % Change | |||||||
Reported Net Sales | $4,732 | $4,946 | (4.3 | )% | ||||||
Reported Net Income | $131 | $120 | 9.5 | % | ||||||
Reported Diluted Earnings per Share | $0.95 | $0.84 | 12.9 | % | ||||||
Reported Diluted Shares | 138.3 | 142.6 | (3.0 | )% | ||||||
Adjusted Net Sales(1) | NA | $4,926 | (3.9 | )% | (4.6 | )% | ||||
Adjusted Net Income | $629 | $703 | (10.5 | )% | ||||||
Adjusted Diluted Earnings per Share | $4.55 | $4.93 | (7.7 | )% |
Fourth Quarter Ended | Fourth Quarter Ended | YoY | Constant Currency | |||||||
12/31/2018 | 12/31/2017 | % Change | % Change | |||||||
Reported Net Sales | $1,195 | $1,283 | (6.9 | )% | ||||||
Reported Net Income | $82 | $73 | 11.3 | % | ||||||
Reported Diluted Earnings per Share | $0.60 | $0.52 | 15.3 | % | ||||||
Reported Diluted Shares | 136.3 | 141.2 | (3.5 | )% | ||||||
Adjusted Net Sales(1) | NA | $1,279 | (6.5 | )% | (5.1 | )% | ||||
Adjusted Net Income | $132 | $180 | (26.8 | )% | ||||||
Adjusted Diluted Earnings per Share | $0.97 | $1.28 | (24.2 | )% |
Fourth Quarter Ended | Fourth Quarter Ended | YoY | Constant Currency | ||||||||
12/31/2018 | 12/31/2017 | % Change | % Change | ||||||||
Reported Net Sales | $617 | $644 | (4.1 | )% | (3.9 | )% | |||||
Reported Gross Profit | $182 | $220 | (17.2 | )% | |||||||
Reported Gross Margin | 29.5 | % | 34.1 | % | (460) bps | ||||||
Reported Operating Income | $101 | $141 | (28.7 | )% | |||||||
Reported Operating Margin | 16.4 | % | 22.0 | % | (560) bps | ||||||
Adjusted Gross Profit | $187 | $232 | (19.2 | )% | |||||||
Adjusted Gross Margin | 30.4 | % | 36.0 | % | (560) bps | ||||||
Adjusted Operating Income | $111 | $149 | (25.2 | )% | |||||||
Adjusted Operating Margin | 18.0 | % | 23.1 | % | (510) bps |
Fourth Quarter Ended | Fourth Quarter Ended | YoY | Constant Currency | ||||||||
12/31/2018 | 12/31/2017 | % Change | % Change | ||||||||
Reported Net Sales | $356 | $374 | (4.9 | )% | (0.5 | )% | |||||
Reported Gross Profit | $160 | $173 | (7.2 | %) | |||||||
Reported Gross Margin | 45.0 | % | 46.1 | % | (110) bps | ||||||
Reported Operating Income (Loss) | $(2) | $4 | (151.3 | )% | |||||||
Reported Operating Margin | (0.5 | )% | 1.0 | % | (150) bps | ||||||
Adjusted Gross Profit | $181 | $195 | (6.8 | )% | |||||||
Adjusted Gross Margin | 50.9 | % | 52.0 | % | (110) bps | ||||||
Adjusted Operating Income | $46 | $57 | (19.9 | %) | |||||||
Adjusted Operating Margin | 12.9 | % | 15.3 | % | (240) bps |
Fourth Quarter Ended | Fourth Quarter Ended | YoY | Constant Currency | ||||||||
12/31/2018 | 12/31/2017 | % Change | % Change | ||||||||
Reported Net Sales | $222 | $261 | (14.9 | )% | (14.9 | )% | |||||
Reported Gross Profit | $101 | $118 | (14.0 | )% | |||||||
Reported Gross Margin | 45.5 | % | 45.0 | % | 50 bps | ||||||
Reported Operating Income | $68 | $68 | (0.3 | )% | |||||||
Reported Operating Margin | 30.5 | % | 26.1 | % | 440 bps | ||||||
Adjusted Gross Profit | $122 | $139 | (12.3 | )% | |||||||
Adjusted Gross Margin | 54.8 | % | 53.2 | % | 160 bps | ||||||
Adjusted Operating Income | $87 | $100 | (12.4 | )% | |||||||
Adjusted Operating Margin | 39.2 | % | 38.1 | % | 110 bps |
Year Ended | |||||||||||
December 31, 2018 | December 31, 2017 | December 31, 2016 | |||||||||
Net sales | $ | 4,731.7 | $ | 4,946.2 | $ | 5,280.6 | |||||
Cost of sales | 2,900.2 | 2,966.7 | 3,228.8 | ||||||||
Gross profit | 1,831.5 | 1,979.5 | 2,051.8 | ||||||||
Operating expenses | |||||||||||
Distribution | 94.2 | 87.0 | 88.3 | ||||||||
Research and development | 218.6 | 167.7 | 184.0 | ||||||||
Selling | 595.7 | 598.4 | 665.0 | ||||||||
Administration | 435.9 | 461.1 | 452.2 | ||||||||
Impairment charges | 224.4 | 47.5 | 2,631.0 | ||||||||
Restructuring | 21.0 | 61.0 | 31.0 | ||||||||
Other operating expense (income) | 5.2 | (41.4 | ) | — | |||||||
Total operating expenses | 1,595.0 | 1,381.3 | 4,051.5 | ||||||||
Operating income (loss) | 236.5 | 598.2 | (1,999.7 | ) | |||||||
Change in financial assets | (188.7 | ) | 24.9 | 2,608.2 | |||||||
Interest expense, net | 128.0 | 168.1 | 216.6 | ||||||||
Other (income) expense, net | 6.1 | (10.1 | ) | 22.7 | |||||||
Loss on extinguishment of debt | 0.5 | 135.2 | 1.1 | ||||||||
Income (loss) before income taxes | 290.6 | 280.1 | (4,848.3 | ) | |||||||
Income tax expense (benefit) | 159.6 | 160.5 | (835.5 | ) | |||||||
Net income (loss) | $ | 131.0 | $ | 119.6 | $ | (4,012.8 | ) | ||||
Earnings (loss) per share | |||||||||||
Basic | $ | 0.95 | $ | 0.84 | $ | (28.01 | ) | ||||
Diluted | $ | 0.95 | $ | 0.84 | $ | (28.01 | ) | ||||
Weighted-average shares outstanding | |||||||||||
Basic | 137.8 | 142.3 | 143.3 | ||||||||
Diluted | 138.3 | 142.6 | 143.3 |
December 31, 2018 | December 31, 2017 | ||||||
Assets | |||||||
Cash and cash equivalents | $ | 551.1 | $ | 678.7 | |||
Accounts receivable, net of allowance for doubtful accounts of $6.4 and $6.2, respectively | 1,073.1 | 1,130.8 | |||||
Inventories | 878.0 | 806.9 | |||||
Prepaid expenses and other current assets | 400.0 | 203.2 | |||||
Total current assets | 2,902.2 | 2,819.6 | |||||
Property, plant and equipment, net | 829.1 | 833.1 | |||||
Goodwill and indefinite-lived intangible assets | 4,029.1 | 4,265.7 | |||||
Definite-lived intangible assets, net | 2,858.9 | 3,290.5 | |||||
Deferred income taxes | 1.2 | 10.4 | |||||
Other non-current assets | 362.9 | 409.5 | |||||
Total non-current assets | 8,081.2 | 8,809.2 | |||||
Total assets | $ | 10,983.4 | $ | 11,628.8 | |||
Liabilities and Shareholders’ Equity | |||||||
Accounts payable | $ | 474.9 | $ | 450.2 | |||
Payroll and related taxes | 132.1 | 148.8 | |||||
Accrued customer programs | 442.4 | 419.7 | |||||
Accrued liabilities | 201.3 | 230.8 | |||||
Accrued income taxes | 96.5 | 116.1 | |||||
Current indebtedness | 190.2 | 70.4 | |||||
Total current liabilities | 1,537.4 | 1,436.0 | |||||
Long-term debt, less current portion | 3,052.2 | 3,270.8 | |||||
Deferred income taxes | 282.3 | 321.9 | |||||
Other non-current liabilities | 443.4 | 429.5 | |||||
Total non-current liabilities | 3,777.9 | 4,022.2 | |||||
Total liabilities | 5,315.3 | 5,458.2 | |||||
Commitments and contingencies - Refer to Note 16 | |||||||
Shareholders’ equity | |||||||
Controlling interests: | |||||||
Preferred shares, $0.0001 par value per share, 10 shares authorized | — | — | |||||
Ordinary shares, €0.001 par value per share, 10,000 shares authorized | 7,421.7 | 7,892.9 | |||||
Accumulated other comprehensive income | 84.6 | 253.1 | |||||
Retained earnings (accumulated deficit) | (1,838.3 | ) | (1,975.5 | ) | |||
Total controlling interests | 5,668.0 | 6,170.5 | |||||
Noncontrolling interest | 0.1 | 0.1 | |||||
Total shareholders’ equity | 5,668.1 | 6,170.6 | |||||
Total liabilities and shareholders' equity | $ | 10,983.4 | $ | 11,628.8 | |||
Supplemental Disclosures of Balance Sheet Information | |||||||
Preferred shares, issued and outstanding | — | — | |||||
Ordinary shares, issued and outstanding | 135.9 | 140.8 |
Year Ended | |||||||||||
December 31, 2018 | December 31, 2017 | December 31, 2016 | |||||||||
Cash Flows From (For) Operating Activities | |||||||||||
Net income | $ | 131.0 | $ | 119.6 | $ | (4,012.8 | ) | ||||
Adjustments to derive cash flows: | |||||||||||
Depreciation and amortization | 423.6 | 444.8 | 457.0 | ||||||||
Share-based compensation | 37.7 | 43.8 | 23.0 | ||||||||
Impairment charges | 224.4 | 47.5 | 2,631.0 | ||||||||
Change in financial assets | (188.7 | ) | 24.9 | 2,608.2 | |||||||
Loss on extinguishment of debt | 0.5 | 135.2 | 1.1 | ||||||||
Restructuring charges | 21.0 | 61.0 | 31.0 | ||||||||
Deferred income taxes | (17.9 | ) | (48.9 | ) | (990.9 | ) | |||||
Amortization of debt premium | (8.1 | ) | (22.4 | ) | (24.7 | ) | |||||
Other non-cash adjustments, net | (11.1 | ) | (2.7 | ) | 33.5 | ||||||
Subtotal | 612.4 | 802.8 | 756.4 | ||||||||
Increase (decrease) in cash due to: | |||||||||||
Accounts receivable | 21.0 | 3.2 | (0.6 | ) | |||||||
Inventories | (98.6 | ) | (16.0 | ) | 100.7 | ||||||
Accounts payable | 28.8 | (39.6 | ) | (75.7 | ) | ||||||
Payroll and related taxes | (34.5 | ) | (27.4 | ) | (41.1 | ) | |||||
Accrued customer programs | 25.5 | 34.6 | (13.9 | ) | |||||||
Accrued liabilities | (20.9 | ) | (47.8 | ) | (79.5 | ) | |||||
Accrued income taxes | 68.1 | (6.1 | ) | 20.9 | |||||||
Other, net | (8.8 | ) | (4.8 | ) | (12.3 | ) | |||||
Subtotal | (19.4 | ) | (103.9 | ) | (101.5 | ) | |||||
Net cash from (for) operating activities | 593.0 | 698.9 | 654.9 | ||||||||
Cash Flows From (For) Investing Activities | |||||||||||
Proceeds from royalty rights | 13.7 | 87.3 | 353.7 | ||||||||
Acquisitions of businesses, net of cash acquired | — | (0.4 | ) | (427.4 | ) | ||||||
Asset acquisitions | (35.6 | ) | — | (65.1 | ) | ||||||
Purchase of investment securities | (7.5 | ) | — | — | |||||||
Proceeds from sale of securities | — | — | 4.5 | ||||||||
Additions to property, plant and equipment | (102.6 | ) | (88.6 | ) | (106.2 | ) | |||||
Net proceeds from sale of business and other assets | 5.2 | 154.6 | 69.1 | ||||||||
Proceeds from sale of the Tysabri® financial asset | — | 2,200.0 | — | ||||||||
Other investing, net | — | (14.8 | ) | (3.6 | ) | ||||||
Net cash from (for) investing activities | (126.8 | ) | 2,338.1 | (175.0 | ) | ||||||
Cash Flows From (For) Financing Activities | |||||||||||
Borrowings (repayments) of revolving credit agreements and other financing, net | (4.4 | ) | 6.8 | (802.5 | ) | ||||||
Issuances of long-term debt | 431.0 | — | 1,190.3 | ||||||||
Payments on long-term debt | (482.5 | ) | (2,611.0 | ) | (559.2 | ) | |||||
Premium on early debt retirement | — | (116.1 | ) | (0.6 | ) | ||||||
Deferred financing fees | (2.4 | ) | (4.8 | ) | (2.8 | ) | |||||
Issuance of ordinary shares | 1.3 | 0.7 | 8.3 | ||||||||
Equity issuance costs | — | — | (10.3 | ) | |||||||
Repurchase of ordinary shares | (400.0 | ) | (191.5 | ) | — | ||||||
Cash dividends | (104.9 | ) | (91.1 | ) | (83.2 | ) | |||||
Other financing, net | (10.0 | ) | 2.3 | (8.7 | ) | ||||||
Net cash from (for) financing activities | (571.9 | ) | (3,004.7 | ) | (268.7 | ) | |||||
Effect of exchange rate changes on cash and cash equivalents | (21.9 | ) | 24.1 | (6.7 | ) | ||||||
Net increase (decrease) in cash and cash equivalents | (127.6 | ) | 56.4 | 204.5 | |||||||
Cash and cash equivalents, beginning of period | 678.7 | 622.3 | 417.8 | ||||||||
Cash and cash equivalents, end of period | $ | 551.1 | $ | 678.7 | $ | 622.3 |
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, 2018 | |||||||||
Consolidated | Net Sales | Net Income | Diluted Earnings per Share | ||||||
Reported | $ | 1,195.2 | $ | 81.5 | $ | 0.60 | |||
Adjustments: | |||||||||
Amortization expense related primarily to acquired intangible assets | $ | 78.0 | $ | 0.57 | |||||
Separation and reorganization expense | 7.3 | 0.05 | |||||||
Unusual litigation | 1.8 | 0.01 | |||||||
Restructuring charges and other termination benefits | 1.2 | 0.01 | |||||||
Gain/loss on divestitures | 0.9 | 0.01 | |||||||
Impairment charges | 0.9 | 0.01 | |||||||
Acquisition and integration-related charges and contingent consideration adjustments | (1.2 | ) | (0.01 | ) | |||||
Losses on investment securities | (2.2 | ) | (0.02 | ) | |||||
Milestone income related to royalty rights | (3.0 | ) | (0.02 | ) | |||||
Change in financial assets | (122.8 | ) | (0.90 | ) | |||||
Non-GAAP tax adjustments* | 89.4 | 0.66 | |||||||
Adjusted | $ | 131.8 | $ | 0.97 | |||||
Diluted weighted average shares outstanding | |||||||||
Reported | 136.3 | ||||||||
*The non-GAAP tax adjustments include the following: (1) $(53.1) million of tax effects of pretax non-GAAP adjustments; (2) $(34.7) million net impact related to valuation allowances on deferred tax assets commensurate with non-GAAP pre-tax measures; and (3) $(1.6) million net impact related to regulatory changes. |
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, 2017 | |||||||||
Consolidated | Net Sales | Net Income | Diluted Earnings per Share | ||||||
Reported | $ | 1,283.0 | $ | 73.1 | $ | 0.52 | |||
Adjustments: | |||||||||
Amortization expense primarily related to acquired intangible assets | $ | — | $ | 90.1 | $ | 0.64 | |||
Restructuring charges and other termination benefits | — | 6.3 | 0.04 | ||||||
Change in financial assets | — | 0.7 | — | ||||||
Impairment charges | — | 0.1 | — | ||||||
Unusual litigation | — | (0.2 | ) | — | |||||
Gain/loss on divestitures | — | (0.3 | ) | — | |||||
Operating results attributable to held-for-sale business* | (4.1 | ) | (0.7 | ) | — | ||||
Acquisition and integration-related charges and contingent consideration adjustments | — | (0.8 | ) | (0.01 | ) | ||||
Milestone income related to royalty rights | — | (10.0 | ) | (0.07 | ) | ||||
Non-GAAP tax adjustments** | — | 21.9 | 0.16 | ||||||
Adjusted | $ | 1,278.9 | $ | 180.2 | $ | 1.28 | |||
Diluted weighted average shares outstanding | |||||||||
Reported | 141.2 | ||||||||
*Held-for-sale business includes the Israel API business. | |||||||||
**The non-GAAP tax adjustments include the following: (1) $(15.7) million effect on non-GAAP income taxes related to the interim tax accounting requirements within ASC 740; (2) $(12.5) million net impact related to valuation allowances on deferred tax assets commensurate with non-GAAP pre-tax measures; (3) $(6.8) million of tax effects of pretax non-GAAP adjustments, including the sale of assets; (4) $10.0 million of tax effect related to audit settlements and other discrete items and; (5) $3.1 million of tax adjustments related to tax reform. |
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, 2018 | |||||||||
Net Sales | Net Income | Diluted Earnings per Share | |||||||
Reported | $ | 4,731.7 | $ | 131.0 | $ | 0.95 | |||
Adjustments: | |||||||||
Amortization expense related primarily to acquired intangible assets | $ | 338.6 | $ | 2.44 | |||||
Impairment charges | 224.4 | 1.62 | |||||||
Acquisition and integration-related charges and contingent consideration adjustments | 56.6 | 0.41 | |||||||
Restructuring charges and other termination benefits | 28.4 | 0.21 | |||||||
Separation and reorganization expense | 13.9 | 0.10 | |||||||
Losses on investment securities | 9.3 | 0.07 | |||||||
Unusual litigation | 3.2 | 0.02 | |||||||
Gain/Loss on divestitures | (2.3 | ) | (0.02 | ) | |||||
Milestone income related to royalty rights | (3.0 | ) | (0.02 | ) | |||||
Change in financial assets | (188.7 | ) | (1.36 | ) | |||||
Non-GAAP tax adjustments* | 17.5 | 0.13 | |||||||
Adjusted | $ | 628.9 | $ | 4.55 | |||||
Diluted weighted average shares outstanding | |||||||||
Reported | 138.3 | ||||||||
*The non-GAAP tax adjustments include the following: (1) $(42.5) million net impact related to valuation allowances on deferred tax assets commensurate with non-GAAP pre-tax measures and (2) $25.0 million of tax effects of pretax non-GAAP adjustments. |
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, 2017 | |||||||||
Consolidated | Net Sales | Net Income | Diluted Earnings per Share | ||||||
Reported | $ | 4,946.2 | $ | 119.6 | $ | 0.84 | |||
Adjustments: | |||||||||
Amortization expense primarily related to acquired intangible assets | $ | — | $ | 355.5 | $ | 2.49 | |||
Loss on early debt extinguishment | — | 135.2 | 0.95 | ||||||
Restructuring charges and other termination benefits | — | 61.0 | 0.43 | ||||||
Impairment charges | — | 47.5 | 0.33 | ||||||
Change in financial assets | — | 24.9 | 0.17 | ||||||
Loss on hedges related to debt tender | — | 5.9 | 0.04 | ||||||
Operating results for held-for-sale businesses* | (20.7 | ) | (3.1 | ) | (0.02 | ) | |||
Unusual litigation | — | (9.0 | ) | (0.06 | ) | ||||
Milestone income related to royalty rights | — | (10.0 | ) | (0.07 | ) | ||||
Acquisition and integration-related charges and contingent consideration adjustments | — | (18.9 | ) | (0.13 | ) | ||||
Gain/loss on divestitures | — | (24.8 | ) | (0.17 | ) | ||||
Non-GAAP tax adjustments** | — | 18.9 | 0.13 | ||||||
Adjusted | $ | 4,925.5 | $ | 702.7 | $ | 4.93 | |||
Diluted weighted average shares outstanding | |||||||||
Reported | 142.6 | ||||||||
For Comparative Purposes*** | Net Sales | ||||||||
Adjusted | $ | 4,925.5 | |||||||
Operating results attributable to held-for-sale businesses Q1 and Q2 | (34.9 | ) | |||||||
Adjusted | $ | 4,890.6 | |||||||
*Held-for-sale businesses include the European sports brand as well as the India and Israel API businesses. | |||||||||
**The non-GAAP tax adjustments include the following: (1) $(97.2) million net impact related to valuation allowances on deferred tax assets commensurate with non-GAAP pre-tax measures; (2) $(2.8) million of tax effect related to audit settlements and other discrete items; (3) $78.0 million of tax effects of pretax non-GAAP adjustments, including the sale of assets and; (4) $3.1 million of tax adjustments related to tax reform. | |||||||||
***YTD 2017 adjusted net sales adjustment made for Q1 and Q2 2017 made for YTD 2017 adjusted net sales are for comparison purposes only and does not change any other prior year since the API business was not held-for-sale during Q1 and Q2 of 2017. |
TABLE II | |||||||||||||||||||
PERRIGO COMPANY PLC | |||||||||||||||||||
RECONCILIATION OF NON-GAAP MEASURES | |||||||||||||||||||
SELECTED SEGMENT INFORMATION | |||||||||||||||||||
(in millions) | |||||||||||||||||||
(unaudited) | |||||||||||||||||||
Three Months Ended | Three Months Ended | ||||||||||||||||||
December 31, 2018 | December 31, 2017 | ||||||||||||||||||
Consumer Healthcare Americas | Net Sales | Gross Profit | Operating Income | Net Sales | Gross Profit | Operating Income | |||||||||||||
Reported | $ | 616.9 | $ | 181.8 | $ | 100.9 | $ | 643.5 | $ | 219.5 | $ | 141.4 | |||||||
Adjustments: | |||||||||||||||||||
Amortization expense related primarily to acquired intangible assets | $ | 5.5 | $ | 10.2 | $ | 12.1 | $ | 16.9 | |||||||||||
Unusual litigation | — | — | — | (10.2 | ) | ||||||||||||||
Impairment charges | — | 0.2 | — | — | |||||||||||||||
Restructuring charges and other termination benefits | — | — | — | 0.2 | |||||||||||||||
Acquisition and integration-related charges and contingent consideration adjustments | — | — | — | 0.5 | |||||||||||||||
Adjusted | $ | 187.3 | $ | 111.3 | $ | 231.6 | $ | 148.8 | |||||||||||
As a % of reported net sales | 30.4 | % | 18.0 | % | 36.0 | % | 23.1 | % | |||||||||||
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, 2018 | December 31, 2017 | ||||||||||||||||||
Consumer Healthcare International | Net Sales | Gross Profit | Operating Income (Loss) | Net Sales | Gross Profit | Operating Income | |||||||||||||
Reported | $ | 355.9 | $ | 160.1 | $ | (1.9 | ) | $ | 374.1 | $ | 172.5 | $ | 3.7 | ||||||
Adjustments: | |||||||||||||||||||
Amortization expense related primarily to acquired intangible assets | $ | 21.2 | $ | 47.0 | $ | 22.0 | $ | 51.8 | |||||||||||
Impairment charges | — | 0.7 | — | — | |||||||||||||||
Unusual litigation | — | 1.8 | — | — | |||||||||||||||
Restructuring charges and other termination benefits | — | (1.7 | ) | — | 3.8 | ||||||||||||||
Acquisition and integration-related charges and contingent consideration adjustments | — | — | — | (2.0 | ) | ||||||||||||||
Adjusted | $ | 181.3 | $ | 45.9 | $ | 194.5 | $ | 57.3 | |||||||||||
As a % of reported net sales | 50.9 | % | 12.9 | % | 52.0 | % | 15.3 | % | |||||||||||
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, 2018 | December 31, 2017 | ||||||||||||||||||
Prescription Pharmaceuticals | Net Sales | Gross Profit | Operating Income | Net Sales | Gross Profit | Operating Income | |||||||||||||
Reported | $ | 222.4 | $ | 101.2 | $ | 67.9 | $ | 261.3 | $ | 117.6 | $ | 68.1 | |||||||
Adjustments: | |||||||||||||||||||
Amortization expense related primarily to acquired intangible assets | $ | 20.7 | $ | 20.8 | $ | 21.4 | $ | 21.0 | |||||||||||
Gain/loss on divestitures | — | (0.2 | ) | — | (0.3 | ) | |||||||||||||
Unusual litigation | — | — | — | 10.0 | |||||||||||||||
Restructuring charges and other termination benefits | — | — | — | (0.1 | ) | ||||||||||||||
Impairment charges | — | — | — | 0.1 | |||||||||||||||
Acquisition and integration-related charges and contingent consideration adjustments | — | (1.2 | ) | — | 0.7 | ||||||||||||||
Adjusted | $ | 121.9 | $ | 87.3 | $ | 139.0 | $ | 99.5 | |||||||||||
As a % of reported net sales | 54.8 | % | 39.2 | % | 53.2 | % | 38.1 | % |
TABLE II (CONTINUED) | |||||||||||||||||||
PERRIGO COMPANY PLC | |||||||||||||||||||
RECONCILIATION OF NON-GAAP MEASURES | |||||||||||||||||||
SELECTED SEGMENT INFORMATION | |||||||||||||||||||
(in millions) | |||||||||||||||||||
(unaudited) | |||||||||||||||||||
Twelve Months Ended | Twelve Months Ended | ||||||||||||||||||
December 31, 2018 | December 31, 2017 | ||||||||||||||||||
Consumer Healthcare Americas | Net Sales | Gross Profit | Operating Income | Net Sales | Gross Profit | Operating Income | |||||||||||||
Reported | $ | 2,411.6 | $ | 762.2 | $ | 147.6 | $ | 2,429.9 | $ | 817.8 | $ | 445.0 | |||||||
Adjustments: | |||||||||||||||||||
Amortization expense primarily related to acquired intangible assets | $ | 37.1 | $ | 56.0 | $ | 48.8 | $ | 68.0 | |||||||||||
Unusual litigation | — | — | — | (10.2 | ) | ||||||||||||||
Impairment charges | — | 222.6 | — | 4.5 | |||||||||||||||
Restructuring charges and other termination benefits | — | 0.4 | — | 27.4 | |||||||||||||||
Acquisition and integration-related charges and contingent consideration adjustments | — | 48.6 | — | (2.4 | ) | ||||||||||||||
Adjusted | $ | 799.3 | $ | 475.2 | $ | 866.6 | $ | 532.3 | |||||||||||
As a % of reported net sales | 33.1 | % | 19.7 | % | 35.7 | % | 21.9 | % | |||||||||||
TABLE II (CONTINUED) | |||||||||||||||||||
PERRIGO COMPANY PLC | |||||||||||||||||||
RECONCILIATION OF NON-GAAP MEASURES | |||||||||||||||||||
SELECTED SEGMENT INFORMATION | |||||||||||||||||||
(in millions) | |||||||||||||||||||
(unaudited) | |||||||||||||||||||
Twelve Months Ended | Twelve Months Ended | ||||||||||||||||||
December 31, 2018 | December 31, 2017 | ||||||||||||||||||
Consumer Healthcare International | Net Sales | Gross Profit | Operating Income | Net Sales | Gross Profit | Operating Income | |||||||||||||
Reported | $ | 1,495.9 | $ | 702.5 | $ | 16.5 | $ | 1,491.0 | $ | 682.0 | $ | 12.5 | |||||||
Adjustments: | |||||||||||||||||||
Amortization expense primarily related to acquired intangible assets | $ | 87.6 | $ | 200.1 | $ | 84.7 | $ | 199.2 | |||||||||||
Impairment charges | — | 1.8 | — | 4.8 | |||||||||||||||
Restructuring charges and other termination benefits | — | 17.4 | — | 17.1 | |||||||||||||||
Unusual litigation | — | 3.2 | — | (8.8 | ) | ||||||||||||||
Operating results attributable to held-for-sale business* | — | — | 0.5 | 0.5 | |||||||||||||||
Acquisition and integration-related charges and contingent consideration adjustments | — | (0.3 | ) | — | (1.5 | ) | |||||||||||||
Adjusted | $ | 790.1 | $ | 238.7 | $ | 767.2 | $ | 223.8 | |||||||||||
As a % of reported net sales | 52.8 | % | 16.0 | % | 51.5 | % | 15.0 | % | |||||||||||
* Includes the European sports brand. | |||||||||||||||||||
TABLE II (CONTINUED) | |||||||||||||||||||
PERRIGO COMPANY PLC | |||||||||||||||||||
RECONCILIATION OF NON-GAAP MEASURES | |||||||||||||||||||
SELECTED SEGMENT INFORMATION | |||||||||||||||||||
(in millions) | |||||||||||||||||||
(unaudited) | |||||||||||||||||||
Twelve Months Ended | Twelve Months Ended | ||||||||||||||||||
December 31, 2018 | December 31, 2017 | ||||||||||||||||||
Prescription Pharmaceuticals | Net Sales | Gross Profit | Operating Income | Net Sales | Gross Profit | Operating Income | |||||||||||||
Reported | $ | 824.2 | $ | 366.9 | $ | 222.6 | $ | 969.7 | $ | 449.7 | $ | 307.6 | |||||||
Adjustments: | |||||||||||||||||||
Amortization expense primarily related to acquired intangible assets | $ | 81.9 | $ | 82.4 | $ | 86.7 | $ | 86.7 | |||||||||||
Gain/loss on divestitures | — | (1.4 | ) | — | (23.3 | ) | |||||||||||||
Unusual litigation | — | — | — | 10.0 | |||||||||||||||
Restructuring charges and other termination benefits | — | 0.3 | — | 5.8 | |||||||||||||||
Impairment charges | — | — | — | 34.9 | |||||||||||||||
Acquisition and integration-related charges and contingent consideration adjustments | — | 8.3 | (0.1 | ) | (15.0 | ) | |||||||||||||
Adjusted | $ | 448.8 | $ | 312.2 | $ | 536.3 | $ | 406.7 | |||||||||||
As a % of reported net sales | 54.5 | % | 37.9 | % | 55.3 | % | 41.9 | % | |||||||||||
TABLE III | |||||||||||||
PERRIGO COMPANY PLC | |||||||||||||
RECONCILIATION OF NON-GAAP MEASURES | |||||||||||||
CONSTANT CURRENCY | |||||||||||||
(in millions) | |||||||||||||
(unaudited) | |||||||||||||
Three Months Ended | |||||||||||||
December 31, 2018 | December 31, 2017 | Total Change | FX Change | Constant Currency Change | |||||||||
Net sales | |||||||||||||
Consolidated* | $ | 1,195.2 | $ | 1,278.9 | (6.5)% | 1.4% | (5.1)% | ||||||
CHCA | $ | 616.9 | $ | 643.5 | (4.1)% | 0.2% | (3.9)% | ||||||
CHCI | $ | 355.9 | $ | 374.1 | (4.9)% | 4.4% | (0.5)% | ||||||
RX | $ | 222.4 | $ | 261.3 | (14.9)% | —% | (14.9)% | ||||||
CHCA | $ | 616.9 | $ | 643.5 | |||||||||
Less: animal health net sales | (15.3 | ) | (28.4 | ) | |||||||||
$ | 601.6 | $ | 615.1 | (2.2)% | 0.3% | (1.9)% | |||||||
CHCA | $ | 616.9 | $ | 643.5 | |||||||||
CHCI | 355.9 | 374.1 | |||||||||||
$ | 972.8 | $ | 1,017.6 | (4.4)% | 1.8% | (2.6)% | |||||||
Less: animal health net sales | (15.3 | ) | (28.4 | ) | |||||||||
Less: Belgium distribution net sales | — | (2.2 | ) | ||||||||||
$ | 957.5 | $ | 987.0 | (3.0)% | 1.8% | (1.2)% | |||||||
*2017 net sales are adjusted to exclude sales attributable to divested businesses. See Table I for non-GAAP reconciliations. | |||||||||||||
TABLE III | |||||||||||||
PERRIGO COMPANY PLC | |||||||||||||
RECONCILIATION OF NON-GAAP MEASURES | |||||||||||||
CONSTANT CURRENCY | |||||||||||||
(in millions) | |||||||||||||
(unaudited) | |||||||||||||
Twelve Months Ended | |||||||||||||
December 31, 2018 | December 31, 2017 | Total Change | FX Change | Constant Currency Change | |||||||||
Net sales | |||||||||||||
Consolidated* | $ | 4,731.7 | $ | 4,946.2 | (3.9)% | (0.7)% | (4.6)% | ||||||
CHCA | $ | 2,411.6 | $ | 2,429.9 | (0.8)% | 0.2% | (0.6)% | ||||||
CHCI | $ | 1,495.9 | $ | 1,491.0 | 0.3% | (2.5)% | (2.2)% | ||||||
RX | $ | 824.2 | $ | 969.7 | (15.0)% | —% | (15.0)% | ||||||
CHCA | $ | 2,411.6 | $ | 2,429.9 | |||||||||
CHCI | 1,495.9 | 1,491.0 | |||||||||||
$ | 3,907.5 | $ | 3,920.9 | (0.3)% | (0.9)% | (1.2)% | |||||||
Less: animal health net sales | (93.9 | ) | (141.3 | ) | |||||||||
Less: Belgium distribution and Russian business net sales | — | (33.0 | ) | ||||||||||
$ | 3,813.6 | $ | 3,746.6 | 1.8% | (0.9)% | 0.9% | |||||||
*2017 net sales are adjusted to exclude sales attributable to divested businesses. See Table I for non-GAAP reconciliations. | |||||||||||||
TABLE V | |||
PERRIGO COMPANY PLC | |||
RECONCILIATION OF NON-GAAP MEASURES | |||
(in millions) | |||
(unaudited) | |||
Twelve Months Ended | |||
December 31, 2018 | |||
Operating cash flow | $ | 593.0 | |
Less: R&D Investments | 50.0 | ||
Adjusted operating cash flow | $ | 643.0 | |
Adjusted net income | $ | 628.9 | |
Cash conversion ratio | 102 | % | |
TABLE VI | ||||||||||
PERRIGO COMPANY PLC | ||||||||||
RECONCILIATION OF NON-GAAP MEASURES | ||||||||||
SELECTED CONSOLIDATED AND SEGMENT INFORMATION | ||||||||||
(in millions, except per share amounts) | ||||||||||
(unaudited) | ||||||||||
Three Months Ended | ||||||||||
December 31, 2018 | December 31, 2017 | Total Change | ||||||||
Consolidated adjusted net sales | NA | $ | 1,278.9 | (6.5)% | ||||||
Consolidated adjusted net income | $ | 131.8 | $ | 180.2 | (26.8)% | |||||
Consolidated adjusted EPS | $ | 0.97 | $ | 1.28 | (24.2)% | |||||
Adjusted gross profit | ||||||||||
CHCA | $ | 187.3 | $ | 231.6 | (19.2)% | |||||
CHCI | $ | 181.3 | $ | 194.5 | (6.8)% | |||||
RX | $ | 121.9 | $ | 139.0 | (12.3)% | |||||
Adjusted gross margin | ||||||||||
CHCA | 30.4 | % | 36.0 | % | (560) bps | |||||
CHCI | 50.9 | % | 52.0 | % | (110) bps | |||||
RX | 54.8 | % | 53.2 | % | 160 bps | |||||
Adjusted operating income | ||||||||||
CHCA | $ | 111.3 | $ | 148.8 | (25.2)% | |||||
CHCI | $ | 45.9 | $ | 57.3 | (19.9)% | |||||
RX | $ | 87.3 | $ | 99.5 | (12.4)% | |||||
Adjusted operating margin | ||||||||||
CHCA | 18.0 | % | 23.1 | % | (510) bps | |||||
CHCI | 12.9 | % | 15.3 | % | (240) bps | |||||
RX | 39.2 | % | 38.1 | % | 110 bps | |||||
Twelve Months Ended | ||||||||||
December 31, 2018 | December 31, 2017 | Total Change | ||||||||
Consolidated adjusted net sales | NA | $ | 4,925.5 | (3.9)% | ||||||
Consolidated adjusted net income | $ | 628.9 | $ | 702.7 | (10.5)% | |||||
Consolidated adjusted EPS | $ | 4.55 | $ | 4.93 | (7.7)% | |||||