EX-99 3 c76408exv99.txt THIRD QUARTER 2003 PRESS RELEASE EXHIBIT 99 [PERRIGO LOGO] NEWS RELEASE FOR IMMEDIATE RELEASE FOR RELEASE: Ernest J. Schenk, Manager, Investor Relations and Communication (269) 673-9212 CONTACT: E-mail: eschenk@perrigo.com PERRIGO COMPANY REPORTS THIRD QUARTER FISCAL 2003 EARNINGS OF $0.20 PER SHARE ALLEGAN, Michigan -- April 23, 2003 -- The Perrigo Company (Nasdaq: PRGO) today announced results for the third quarter and nine months of fiscal 2003 ended March 29, 2003. Perrigo Company (Nasdaq: PRGO) (in thousands, except per share amounts)
Third Quarter Year-To-Date ------------- ------------ 2003 2002 2003 2002 ---- ---- ---- ---- Sales $202,616 $198,491 $643,352 $644,301 Net Income $ 14,132 $ 17,910 $ 49,724 $ 44,861 Diluted EPS $0.20 $0.24 $0.70 $0.60 Diluted Shares 70,601 73,859 70,967 74,939
Net sales for the third quarter were $202.6 million, an increase of two percent compared with $198.5 million last year. Net income was $14.1 million, or $0.20 per share, compared with net income of $17.9 million, or $0.24 per share a year ago, which included income from the settlement of a lawsuit of $5.0 million after-tax, or $0.07 per share. Without the lawsuit settlement, earnings on an operating basis were $12.9 million, or $0.17 per share, last year. Commenting on the third quarter, David T. Gibbons, Perrigo President and Chief Executive Officer, said, "We delivered excellent results this quarter. Our improved operational efficiency and rising productivity were significant contributors to higher gross profits. Higher-than-anticipated sales volume and good product mix also helped profits. Lastly, we benefited from good expense control and improved results at our Mexican operation. Cash flow from operations was $45 million during the quarter and stands at $82 million year-to-date. We continue to be virtually debt-free and remain in a very strong financial position." Net sales for the nine months ended March 29, 2003, were $643.4 million compared with $644.3 million a year ago. Net income for the nine months improved to $49.7 million, or $0.70 per share, from $44.9 million, or $0.60 per share for last year. Excluding proceeds from a lawsuit settlement in the first quarter this year of $2.0 million after-tax, or $0.03 per share, and income from the settlement of a lawsuit last year of $5.0 million after-tax, or $0.07 per share, net income on an operating basis increased 20 percent to $47.7 million, or $0.67 per share, from $39.9 million, or 515 Eastern Ave. Allegan, Michigan 49010 (269) 673-8451 $0.53 per share, for the prior year. Commenting further, Mr. Gibbons stated, "Over the past few quarters, our earnings have been driven by operational benefits, specifically, improved operating efficiencies and supply chain management. We have been making good progress, not driven by any single initiative, but from contributions across many functional areas. I am very proud of our employees' combined efforts, and I'm pleased that we continue to outpace our own goals. We feel very good about our operational momentum, and look forward to the upcoming launch of store brand equivalents to the branded allergy medication Claritin(R). "In line with our historical seasonal pattern, we anticipate sequentially lower fourth-quarter sales and margins and expect earnings of $0.04 to $0.05 per share. With year-to-date results of $0.70 per share, we now project earnings of $0.74 to $0.75 for the full year, compared with $0.60 per share for fiscal 2003, restated for expensing of stock options." The Company noted that, effective with the fiscal second quarter ended December 28, 2002, it elected to expense stock option compensation. All prior periods have been restated 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 restated results in the summary table at the end of this announcement. 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 will host a conference call to discuss third quarter fiscal 2003 results at 11:00 a.m. (EDT) today. The call and replay will be available via webcast on the Company's web site 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) Wednesday, April 23. To listen to the replay, call 800-642-1687, access code 9713471. 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. -More- PERRIGO COMPANY CONDENSED CONSOLIDATED STATEMENTS OF INCOME (in thousands, except per share amounts) (unaudited)
Third Quarter Year-To-Date ----------------------------- ----------------------------- 2003 2002 2003 2002 ---- ---- ---- ---- (as restated) (as restated) Net sales $ 202,616 $ 198,491 $ 643,352 $ 644,301 Cost of sales 143,910 141,883 458,671 472,650 --------- --------- --------- --------- Gross profit 58,706 56,608 184,681 171,651 Operating expenses Distribution 3,814 4,048 11,924 12,330 Research and development 5,468 5,762 16,237 17,465 Selling and administration 27,833 26,264 81,983 76,089 --------- --------- --------- --------- Subtotal 37,115 36,074 110,144 105,884 Restructuring - - - 2,046 Unusual litigation - (7,813) (3,128) (7,813) --------- --------- --------- --------- Total 37,115 28,261 107,016 100,117 --------- --------- --------- --------- Operating income 21,591 28,347 77,665 71,534 Interest and other, net (1,307) (220) (2,029) (496) --------- --------- --------- --------- Income before income taxes 22,898 28,567 79,694 72,030 Income tax expense 8,766 10,657 29,970 27,169 --------- --------- --------- --------- Net income $ 14,132 $ 17,910 $ 49,724 $ 44,861 ========= ========= ========= ========= Earnings per share Basic $ 0.20 $ 0.25 $ 0.71 $ 0.61 Diluted $ 0.20 $ 0.24 $ 0.70 $ 0.60 Weighted average shares outstanding: Basic 69,337 72,690 69,781 73,451 Diluted 70,601 73,859 70,967 74,939 Dividends declared per share $ 0.03 $ - $ 0.03 $ -
-more- PERRIGO COMPANY CONDENSED CONSOLIDATED BALANCE SHEETS (in thousands)
March 29, June 29, March 30, 2003 2002 2002 --------- --------- --------- Assets (unaudited) (as restated) (unaudited) Current assets (as restated) Cash and cash equivalents $ 105,233 $ 76,824 $ 36,674 Accounts receivable, net of allowances 84,973 82,560 98,755 Inventories, net of allowances 156,043 155,611 145,379 Prepaid expenses and other current assets 6,064 6,896 8,936 Current deferred income taxes 23,603 19,860 19,364 --------- --------- --------- Total current assets 375,916 341,751 309,108 Property and equipment 417,673 399,461 396,398 Less accumulated depreciation 206,907 188,417 184,943 --------- --------- --------- 210,766 211,044 211,455 Goodwill, net 35,919 35,919 47,471 Other 6,127 5,073 5,156 --------- --------- --------- $ 628,728 $ 593,787 $ 573,190 ========= ========= ========= Liabilities and Shareholders' Equity Current liabilities Accounts payable $ 73,489 $ 74,449 $ 61,111 Notes payable 8,741 8,338 7,321 Payrolls and related taxes 34,539 31,338 27,733 Accrued expenses 36,469 32,721 31,808 Income taxes 8,815 8,088 10,134 --------- --------- --------- Total current liabilities 162,053 154,934 138,107 Deferred income taxes 25,146 18,295 16,180 Other long-term liabilities 3,193 2,396 2,685 Shareholders' equity Preferred stock, without par value, 10,000 shares authorized - - - Common stock, without par value, 200,000 shares authorized 82,564 110,698 108,585 Unearned compensation (262) (608) (756) Accumulated other comprehensive income 348 373 619 Retained earnings 355,686 307,699 307,770 --------- --------- --------- Total shareholders' equity 438,336 418,162 416,218 --------- --------- --------- $ 628,728 $ 593,787 $ 573,190 ========= ========= ========= Supplemental Disclosures of Balance Sheet Information Allowance for doubtful accounts $ 9,907 $ 7,569 $ 8,809 Allowance for inventory $ 19,806 $ 21,360 $ 23,448 Working capital $ 213,863 $ 186,817 $ 171,001 Preferred stock, shares issued - - - Common stock, shares issued 69,425 72,550 72,471
-more- PERRIGO COMPANY CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS (in thousands) (unaudited)
Year-To-Date ------------------------------- 2003 2002 --------- --------- Cash Flows From (For) Operating Activities: (as restated) Net income $ 49,724 $ 44,861 Adjustments to derive cash flows: Depreciation and amortization 19,777 17,968 Compensation - stock options 3,998 4,549 Deferred income taxes 3,108 92 Restructuring, net of cash - 2,046 Changes in operating assets and liabilities, net of restructuring: Accounts receivable (2,845) (5,102) Inventories (712) 15,784 Current income taxes 718 (10,412) Accounts payable (750) (23,256) Payroll and related taxes 3,195 1,617 Accrued expenses 4,038 5,951 Other 1,682 (752) --------- --------- Net cash from operating activities 81,933 53,346 --------- --------- Cash Flows (For) From Investing Activities: Additions to property and equipment (19,458) (17,386) Proceeds from sale of assets held for sale - 14,161 Investment in equity subsidiaries (1,233) (41) Other - (385) --------- --------- Net cash for investing activities (20,691) (3,651) --------- --------- Cash Flows (For) From Financing Activities: Borrowings (repayments) of short-term debt, net 776 (5,554) Tax benefit of stock transactions 153 1,669 Issuance of common stock 1,353 10,232 Repurchase of common stock (33,682) (31,923) Cash dividends (1,737) - Other - 1,584 --------- --------- Net cash for financing activities (33,137) (23,992) --------- --------- Net Increase in Cash and Cash Equivalents 28,105 25,703 Cash and Cash Equivalents, at Beginning of Period 76,824 11,016 Effect of exchange rate changes on cash 304 (45) --------- --------- Cash and Cash Equivalents, at End of Period $ 105,233 $ 36,674 ========= ========= Supplemental Disclosures of Cash Flow Information: Interest paid $ 598 $ 1,266 Income taxes paid $ 26,854 $ 36,939
-more- PERRIGO COMPANY STOCK OPTION COMPENSATION EXPENSE IMPACT ON NET INCOME AND EPS (in thousands, except per share amounts) (unaudited)
Third Quarter Year-To-Date ------------------------- ------------------------- 2003 2002 2003 2002 ------- ------- ------- ------- Net income before adoption $15,507 $19,261 $53,565 $48,916 Compensation expenses (net of tax benefit) 1,375 1,351 3,841 4,055 ------- ------- ------- ------- Net income after adoption $14,132 $17,910 $49,724 $44,861 ======= ======= ======= ======= Weighted average shares outstanding: Basic 69,337 72,690 69,781 73,451 Diluted Before adoption 71,041 74,309 71,395 75,474 After adoption 70,601 73,859 70,967 74,939 Basic EPS Before adoption $ 0.22 $ 0.26 $ 0.77 $ 0.67 After adoption $ 0.20 $ 0.25 $ 0.71 $ 0.61 Diluted EPS Before adoption $ 0.22 $ 0.26 $ 0.75 $ 0.65 After adoption $ 0.20 $ 0.24 $ 0.70 $ 0.60
PERRIGO COMPANY RECONCILIATION OF NON-GAAP MEASURES (in thousands, except per share amounts) (unaudited)
Third Quarter Year-To-Date ------------------------- ------------------------- 2003 2002 2003 2002 ------- ------- ------- ------- Net income (GAAP) $14,132 $17,910 $49,724 $44,861 Less: unusual litigation, net of tax - 5,000 2,000 5,000 ------- ------- ------- ------- Net income before unusual litigation $14,132 $12,910 $47,724 $39,861 ======= ======= ======= ======= Earnings per share: Basic $ 0.20 $ 0.18 $ 0.68 $ 0.54 Diluted $ 0.20 $ 0.17 $ 0.67 $ 0.53 Weighted average shares outstanding: Basic 69,337 72,690 69,781 73,451 Diluted 70,601 73,859 70,967 74,939
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