-----BEGIN PRIVACY-ENHANCED MESSAGE----- Proc-Type: 2001,MIC-CLEAR Originator-Name: webmaster@www.sec.gov Originator-Key-Asymmetric: MFgwCgYEVQgBAQICAf8DSgAwRwJAW2sNKK9AVtBzYZmr6aGjlWyK3XmZv3dTINen TWSM7vrzLADbmYQaionwg5sDW3P6oaM5D3tdezXMm7z1T+B+twIDAQAB MIC-Info: RSA-MD5,RSA, EwZ9VaiBQHEwAK7rrC+Vf7mtK1D3PTNKcL1CSCoxlHE826Tl4bQ5ksTNrzhrz2f3 5Io7YC99Xzdp8HMrdQ9Fqg== 0000891092-03-002036.txt : 20030811 0000891092-03-002036.hdr.sgml : 20030811 20030811093414 ACCESSION NUMBER: 0000891092-03-002036 CONFORMED SUBMISSION TYPE: 8-K PUBLIC DOCUMENT COUNT: 2 CONFORMED PERIOD OF REPORT: 20030811 ITEM INFORMATION: ITEM INFORMATION: Financial statements and exhibits FILED AS OF DATE: 20030811 FILER: COMPANY DATA: COMPANY CONFORMED NAME: PERRIGO CO CENTRAL INDEX KEY: 0000820096 STANDARD INDUSTRIAL CLASSIFICATION: PHARMACEUTICAL PREPARATIONS [2834] IRS NUMBER: 382799573 STATE OF INCORPORATION: MI FISCAL YEAR END: 0630 FILING VALUES: FORM TYPE: 8-K SEC ACT: 1934 Act SEC FILE NUMBER: 000-19725 FILM NUMBER: 03833294 BUSINESS ADDRESS: STREET 1: 515 EASTERN AVENUE CITY: ALLEGAN STATE: MI ZIP: 49010 BUSINESS PHONE: 6166738451 MAIL ADDRESS: STREET 1: 515 EASTERN AVENUE CITY: ALLEGAN STATE: MI ZIP: 49010 8-K 1 e15455_8k.txt FORM 8-K 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): August 11, 2003 PERRIGO COMPANY (Exact name of registrant as specified in charter) MICHIGAN 0-19725 38-2799573 - --------------- ------------ ---------------- (State of other (Commission (I.R.S. Employer Jurisdiction of File Number) Identification Incorporation) Number) 515 Eastern Avenue, Allegan, Michigan 49010 - ------------------------------------- ---------- (Address of principal executive offices) (Zip Code) Registrant's telephone number, including area code: (616) 673-8451 Item 7(c). Exhibits Exhibit 99 Press Release: "PERRIGO COMPANY REPORTS FISCAL 2003 EARNINGS OF $0.76 PER SHARE" ITEM 12. Disclosure of Results of Operations and Financial Condition On August 11, 2003, the Perrigo Company released earnings for fourth quarter and year end for fiscal 2003. The earnings release contains a non-GAAP measure which is defined as a financial measure of the Company's performance that excludes or includes amounts thereby differentiating it from the most directly comparable measure presented in the financial statements that are calculated and presented in accordance with Generally Accepted Accounting Principles (GAAP). Pursuant to the requirements of Regulation G, the Company has provided a reconciliation within its earnings release to the most directly comparable GAAP measure for this non-GAAP measure. The Company excludes unusual litigation income and restructuring and impairment charges related to the Mexico operations when monitoring and evaluating the on-going financial results and trends of its business due to the non-recurring nature of this item. The Company believes this information is also useful for investors since excluding these non-recurring items provide important insight into the Company's ongoing operations. The press release related to Perrigo's earnings is attached as Exhibit 99. 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 (Registrant) By: /s/ Douglas R. Schrank ---------------------------------- Dated: August 11, 2003 Douglas R. Schrank Executive Vice President and Chief Financial Officer (Principal Accounting and Financial Officer) Exhibit Index Exhibit 99 - Press Release issued by Perrigo Company on August 11, 2003. EX-99 3 e15455ex99.txt PRESS RELEASE Exhibit 99 Perrigo Company (Nasdaq: PRGO) (in thousands, except per share amounts) Fourth Quarter Year-To-Date 2003 2002 2003 2002 Sales $182,635 $182,021 $825,987 $826,322 Net Income $4,324 $(71) $54,048 $44,790 Diluted EPS $0.06 - $0.76 $0.60 Diluted Shares 71,439 72,307 71,158 74,606 Fiscal Year 2003 Sales for the twelve months ended June 28, 2003 were $826.0 million compared with $826.3 million in fiscal 2002. Net income increased 21 percent to $54.0 million, or $0.76 per share, from $44.8 million or $0.60 per share last year. On an operating basis, excluding certain items in both years, net income was $52.0 million, or $0.73 per share in fiscal 2003, an increase in net income of 20 percent, compared with net income of $43.6 million, or $0.58 per share, for the prior year. Reported net income in fiscal 2003 included after-tax income of $2.0 million, or $0.03 per share, from a vitamin litigation settlement. Reported net income in fiscal 2002 included after-tax income of $17.9 million, or $0.24 per share, from vitamin litigation and an after-tax charge of $16.6 million, or $0.22 per share, related to a restructuring of operations in Mexico. Chief Executive Officer, David T. Gibbons, commented, "We are very pleased to report strong fiscal 2003 results which reflect Perrigo's progress in strengthening its fundamentals. Earnings were up more than 20 percent as we continue to realize the payback from the investments made in our quality processes and manufacturing operations over the past two years. Our increased operational efficiencies along with business simplification and expense control initiatives were key factors in the significant gain in gross profits and net earnings." Mr. Gibbons continued, "We generated $80 million in cash from operations and stayed virtually debt-free, keeping us in a very strong financial position. This strong and predictable cash generation enabled us to repurchase 3.3 million shares during the year and allowed us to begin paying a cash dividend for the first time. In June, we began shipping the store brand version of Claritin-D(R) 24 Hour and look forward to providing additional store brand equivalents of this leading allergy relief product during fiscal 2004." Fiscal 2003 Fourth Quarter For the fourth quarter, sales were $182.6 million, a slight increase over sales of $182.0 million a year ago. Net income was $4.3 million, or $0.06 per share, compared with breakeven last year. On an operating basis, excluding certain items last year, net income was $3.7 million, or $0.05 per share. Reported net income included after-tax income of $12.9 million, or $0.17 per share, from vitamin litigation settlements and a charge of $16.6 million after-tax, or $0.22 per share, related to the restructuring of operations in Mexico. Fiscal Year 2004 Outlook Mr. Gibbons stated, "While we deliberately gave up some volume in fiscal 2003 to improve profits, as we look out to 2004 we see the opportunity for top-line growth. Our core over-the-counter (OTC) pharmaceutical and nutritional businesses remain strong, and with our new initiatives for growth we anticipate an increase in revenues of approximately three to five percent. "In 2004, we will continue to build on our consumer pharmaceutical foundation as a focus for future growth. We are committed to continuing to enhance our mission of providing affordable consumer healthcare options. We now have the quality, R&D and manufacturing resources to expand our pharmaceutical business. Our strong financial position allows us to invest $5 to $7 million toward this initiative in 2004, primarily in increased R&D for the development of generic prescription drug products. Because of the anticipated eight to ten percent earnings growth and strong cash flow in our core business, we expect 2004 earnings to be at or slightly above current levels, despite this investment for our long-term growth. We see generic prescription drugs as a natural progression that will enhance our already strong position in the OTC pharmaceutical market and will provide substantial new growth. "Implementing this new strategic direction requires a realignment of internal resources and our senior management structure. Effective immediately, John Hendrickson, Executive Vice President, Operations, will become Executive Vice President and General Manager, Perrigo Consumer Healthcare. In his new role, John will have responsibility for all functional operations within our OTC pharmaceutical and nutritional businesses. He has led our pursuit of operational excellence and has played a major role in Perrigo's strong results over the past few years. "Mark Olesnavage, Executive Vice President, Sales, Marketing and Scientific Affairs, will become Executive Vice President and General Manager, Perrigo Pharmaceuticals. In this role, Mark will be responsible for the planning, development and execution of the launch and growth of our generic Rx drug efforts. He has an extensive background in marketing, operations and business development in 22 years with Perrigo and has worked extensively with our customers to bring them a wide range of product and service solutions to consumer healthcare. He also has been an active member of the Generic Pharmaceutical Industry Association Board over the last ten years. Both John and Mark will report directly to me." With the fiscal second quarter ended December 28, 2002, Perrigo began expensing stock option compensation. All prior periods have been adjusted to reflect the compensation cost that would have been recognized had the stock option expense been applied to all awards granted after July 1, 1995. Please refer to the adjusted results in the summary table contained in this announcement. Perrigo will host a conference call to discuss fourth quarter fiscal 2003 results at 11:00 a.m. (EDT) today. The call and replay will be available via webcast on the Company's website at www.perrigo.com/investor or by phone, toll free, 888-489-0147. A taped replay of the call will be available beginning at approximately 2:30 p.m. (EDT) Monday, August 11. To listen to the replay, call 800-642-1687, access code 2120625. The Company is furnishing this earnings release to the Securities and Exchange Commission via Form 8-K and it is hereby incorporated by reference. The information provided on Form 8-K includes a summary of each non-GAAP financial measure included in this earnings release and the reasons management believes these non-GAAP financial measures are useful to investors. Perrigo Company is the nation's largest manufacturer of over-the-counter (non-prescription) pharmaceutical and nutritional products sold by supermarket, drug, and mass merchandise chains under their own labels. The Company's products include over-the-counter pharmaceuticals such as analgesics, cough and cold remedies, gastrointestinal, and feminine hygiene products, and nutritional products, such as vitamins, nutritional supplements and nutritional drinks. Visit Perrigo on the Internet (www.perrigo.com ). Note: Certain statements in this press release are forward-looking statements within the meaning of Section 21E of the Securities Exchange Act of 1934, as amended, and are subject to the safe harbor created thereby. These statements relate to future events or the Company's future financial performance and involve known and unknown risks, uncertainties and other factors that may cause the actual results, levels of activity, performance or achievements of the Company or its industry to be materially different from those expressed or implied by any forward-looking statements. In some cases, forward-looking statements can be identified by terminology such as "may," "will," "could," "would," "should," "expect," "plan," "anticipate," "intend," "believe," "estimate," "predict," "potential" or other comparable terminology. Please see the "Cautionary Note Regarding Forward-Looking Statements" on pages 23-27 of the Company's Form 10-K for the year ended June 29, 2002 for a discussion of certain important factors that relate to forward-looking statements contained in this press release. Although the Company believes that the expectations reflected in these forward-looking statements are reasonable, it can give no assurance that such expectations will prove to be correct. 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 CONDENSED CONSOLIDATED STATEMENTS OF INCOME (in thousands, except per share amounts) Fourth Quarter Year-To-Date 2003 2002* 2003 2002* (unaudited) (unaudited) Net sales $182,635 $182,021 $825,987 $826,322 Cost of sales 137,405 135,972 596,076 608,622 Gross profit 45,230 46,049 229,911 217,700 Operating expenses Distribution 3,639 3,997 15,563 16,327 Research and development 7,078 8,224 23,315 25,689 Selling and administration 27,934 27,893 108,983 103,982 Subtotal 38,651 40,114 147,861 145,998 Restructuring - 5,090 - 7,136 Goodwill impairment - 11,524 - 11,524 Unusual litigation - (20,078) (3,128) (27,891) Total 38,651 36,650 144,733 136,767 Operating income 6,579 9,399 85,178 80,933 Interest and other, net 15 (859) (1,080) (1,355) Income before income taxes 6,564 10,258 86,258 82,288 Income tax expense 2,240 10,329 32,210 37,498 Net income $4,324 $(71) $54,048 $44,790 Earnings per share Basic $0.06 $ - $0.77 $0.61 Diluted $0.06 $ - $0.76 $0.60 Weighted average shares outstanding: Basic 69,614 72,307 69,746 73,164 Diluted 71,439 72,307 71,158 74,606 Dividends declared per share $0.03 $ - $0.05 $ - *As adjusted for expensing of stock options. PERRIGO COMPANY CONSOLIDATED BALANCE SHEETS (in thousands) June 28, June 29, Assets 2003 2002* Current assets Cash and cash equivalents $93,827 $76,824 Accounts receivable 87,018 82,560 Inventories 160,326 155,611 Prepaid expenses and other current assets 5,383 6,896 Current deferred income taxes 32,643 23,484 Total current assets 379,197 345,375 Property and equipment Land 13,962 13,700 Building 188,509 182,960 Machinery and equipment 226,644 202,801 429,115 399,461 Less accumulated depreciation 210,337 188,417 218,778 211,044 Goodwill 35,919 35,919 Non-current deferred income taxes 3,968 3,964 Other 6,108 5,073 $643,970 $601,375 Liabilities and Shareholders' Equity Current liabilities Accounts payable $72,186 $74,449 Notes payable 8,980 8,338 Payrolls and related taxes 40,535 31,338 Accrued expenses 36,590 32,721 Accrued income taxes 5,568 8,088 Current deferred income taxes 2,683 3,624 Total current liabilities 166,542 158,558 Deferred income taxes 25,484 22,259 Other long-term liabilities 3,520 2,396 Shareholders' equity Preferred stock, without par value, 10,000 shares authorized - - Common stock, without par value, 200,000 shares authorized 88,990 110,698 Unearned compensation (111) (608) Accumulated other comprehensive income 1,282 373 Retained earnings 358,263 307,699 Total shareholders' equity 448,424 418,162 $643,970 $601,375 Supplemental Disclosures of Balance Sheet Information Allowance for doubtful accounts $10,242 $8,465 Allowance for inventory $21,717 $21,360 Working capital $212,655 $186,817 Preferred stock, shares issued - - Common stock, shares issued 70,034 72,550 *As adjusted for expensing of stock options. PERRIGO COMPANY CONSOLIDATED STATEMENTS OF CASH FLOWS (in thousands) Fiscal Year 2003 2002* Cash Flows From (For) Operating Activities Net income $54,048 $44,790 Adjustments to derive cash flows Depreciation and amortization 26,126 25,613 Compensation - stock options 5,224 6,066 Deferred income taxes (6,847) 1,711 Goodwill impairment - 11,524 Restructuring - 7,136 Changes in operating assets and liabilities net of restructuring Accounts receivable, net (4,427) 14,301 Inventories (4,656) 5,512 Accounts payable (2,329) (9,955) Payrolls and related taxes 9,185 5,218 Accrued expenses 3,869 4,878 Current income taxes (2,516) (12,492) Other 2,557 123 Net cash from (for) operating activities 80,234 104,425 Cash Flows (For) From Investing Activities Additions to property and equipment (32,296) (27,528) Proceeds from sale of assets held for sale - 14,161 Business acquisitions, net of cash - - Other (980) (398) Net cash (for) from investing activities (33,276) (13,765) Cash Flows From (For) Financing Activities Net borrowings of short-term debt 640 - Net repayments of short-term debt - (4,506) Tax benefit of stock transactions 63 1,260 Issuance of common stock 7,231 10,192 Repurchase of common stock (33,682) (31,923) Cash dividends (3,484) - Other (596) 131 Net cash from (for) financing activities (29,828) (24,846) Net increase in cash and cash equivalents 17,130 65,814 Cash and cash equivalents, at beginning of period 76,824 11,016 Effect of exchange rate changes on cash (127) (6) Cash and cash equivalents, at end of period $93,827 $76,824 Supplemental Disclosures of Cash Flow Information Cash paid during the year for: Interest $1,257 $1,542 Income taxes $43,417 $47,103 *As adjusted for expensing of stock options. PERRIGO COMPANY STOCK OPTION COMPENSATION EXPENSE IMPACT ON NET INCOME AND EPS (in thousands, except per share amounts) Fourth Quarter Year-To-Date 2003 2002 2003 2002 (unaudited)(unaudited) Net income before adoption $5,300 $1,281 $58,865 $50,197 Compensation expenses (net of tax benefit) 976 1,352 4,817 5,407 Net income after adoption $4,324 $(71) $54,048 $44,790 Weighted average shares outstanding: Basic 69,614 72,307 69,746 73,164 Diluted Before adoption 71,755 74,051 71,498 75,113 After adoption 71,439 72,307 71,158 74,606 Basic EPS Before adoption $0.08 $0.02 $0.84 $0.69 After adoption $0.06 $ - $0.77 $0.61 Diluted EPS Before adoption $0.07 $0.02 $0.82 $0.67 After adoption $0.06 $ - $0.76 $0.60 PERRIGO COMPANY RECONCILIATION OF NON-GAAP MEASURES (in thousands, except per share amounts) Fourth Quarter Year-To-Date 2003 2002* 2003 2002* (unaudited)(unaudited) Net income (GAAP) $4,324 $(71) $54,048 $44,790 Less: unusual litigation, net of tax - 12,850 2,000 17,850 Plus: Quifa restructuring - 16,614 - 16,614 Net income (operating basis) $4,324 $3,693 $52,048 $43,554 Earnings per share: Basic $0.06 $0.05 $0.75 $0.60 Diluted $0.06 $0.05 $0.73 $0.58 Weighted average shares outstanding: Basic 69,614 72,307 69,746 73,164 Diluted 71,439 75,049 71,158 74,606 * As adjusted for expensing of stock options. SOURCE Perrigo Company -0- 08/11/2003 /CONTACT: Ernest J. Schenk, Manager, Investor Relations and Communication of Perrigo Company, +1-269-673-9212, E-mail: eschenk@perrigo.com / /Web site: http://www.perrigo.com http://www.perrigo.com/investor / (PRGO) CO: Perrigo Company ST: Michigan IN: MTC SU: ERN PER CCA MAV -----END PRIVACY-ENHANCED MESSAGE-----