-----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, S1ldroOKgSqe3tC54Ob1+8oQE2upbHdgGYSRSX4zxjUTz6TOiYm4udHyF3SMlaVF J563Q9EIVwnZuUkGcRJmnw== 0001275287-06-002255.txt : 20060427 0001275287-06-002255.hdr.sgml : 20060427 20060427095632 ACCESSION NUMBER: 0001275287-06-002255 CONFORMED SUBMISSION TYPE: 8-K PUBLIC DOCUMENT COUNT: 2 CONFORMED PERIOD OF REPORT: 20060427 ITEM INFORMATION: Results of Operations and Financial Condition ITEM INFORMATION: Financial Statements and Exhibits FILED AS OF DATE: 20060427 DATE AS OF CHANGE: 20060427 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: 06783373 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 pc5559.txt FORM 8-K ================================================================================ UNITED STATES 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): April 27, 2006 PERRIGO COMPANY ------------------------------------------------------ (Exact name of registrant as specified in its charter) MICHIGAN 0-19725 38-2799573 --------------- ------------ ------------------- (State of other (Commission (IRS Employer Jurisdiction of File Number) Identification No.) Incorporation) 515 Eastern Avenue, Allegan, Michigan 49010 ---------------------------------------- ---------- (Address of principal executive offices) (Zip Code) Registrant's telephone number, including area code: (269) 673-8451 Not Applicable ------------------------------------------------------ (Former name or address, if changed since last report) Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions: [ ] Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425) [ ] Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12) [ ] Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b)) [ ] Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c)) ================================================================================ ITEM 2.02. DISCLOSURE OF RESULTS OF OPERATIONS AND FINANCIAL CONDITION - ---------- ----------------------------------------------------------- On April 27, 2006, the Perrigo Company released earnings for the third quarter of fiscal year 2006. The earnings release contains non-GAAP measures which are 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 for gross profit, operating income, net income and earnings per share within its earnings release to the most directly comparable GAAP measure for these non-GAAP measures. The Company excludes the items listed below in the applicable fiscal year when monitoring and evaluating the on-going financial results and trends of its business due to the non-recurring nature of these items. The Company believes this information is also useful for investors since excluding these non-recurring items provides important insight into the Company's on-going operations. Items excluded from reported results: Fiscal 2006 ----------- - A write-off of the step-up in value of inventory acquired - A gain on the sale of an equity investment Fiscal 2005 ----------- - A restructuring charge for organizational improvements and asset impairments - A write-off of in-process research and development - A charge for certain acquisition costs The press release related to Perrigo's earnings is attached as Exhibit 99. The information in this Report is being furnished and shall not be deemed "filed" for the purposes of Section 18 of the Securities Exchange Act of 1934, as amended, or otherwise subject to the liabilities of that Section. The information in this Report shall not be deemed incorporated by reference into any filing under the Securities Act of 1933, as amended, except as shall be expressly set forth by specific reference in such filing. ITEM 9.01. FINANCIAL STATEMENTS AND EXHIBITS - ---------- --------------------------------- (d) Exhibits 99.1 Press release issued by Perrigo Company on April 27, 2006, furnished solely pursuant to item 2.02 of Form 8-K. 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: April 27, 2006 Douglas R. Schrank Executive Vice President and Chief Financial Officer (Principal Accounting and Financial Officer) Exhibit Index Exhibit 99.1 - Press Release issued by Perrigo Company on April 27, 2006, furnished solely pursuant to Item 2.02 of Form 8-K. EX-99.1 2 pc5559ex991.txt EXHIBIT 99.1 Exhibit 99.1 PERRIGO COMPANY REPORTS THIRD QUARTER FISCAL 2006 FINANCIAL RESULTS ALLEGAN, Mich., April 27 /PRNewswire-FirstCall/ -- The Perrigo Company (Nasdaq: PRGO; TASE) today announced results for the third quarter of fiscal year 2006 ended March 25, 2006. The acquisition of Agis Industries was completed on March 17, 2005. Agis was first included in the consolidated balance sheet as of March 26, 2005 and operating results were first included in the quarter ended June 25, 2005. Perrigo Company (in thousands, except per share amounts) Third Quarter Nine Months --------------------------- --------------------------- 2006 2005 2006 2005 ------------ ------------ ------------ ------------ Sales $ 332,321 $ 220,093 $ 1,011,752 $ 699,560 Net Income $ 20,861 $ (379,436) $ 59,138 $ (346,020) Diluted EPS $ 0.22 $ (5.15) $ 0.63 $ (4.81) Diluted Shares 94,044 73,660 94,143 71,970 Third Quarter Results Net sales for the third quarter of fiscal 2006 were $332.3 million, an increase of $112.2 million, or 51 percent from $220.1 million last year, largely reflecting the addition of Agis' product sales. Net income was $20.9 million this year, or $0.22 per share and includes a $1.3 million reversal of the accrual related to the Loratadine recall. In fiscal 2005, the Company reported a net loss of $379.4 million, or $5.15 per share, which included charges of $395.6 million associated with the acquisition of Agis. Excluding these charges, net income and earnings per share would have been $16.2 million and $0.22 per share, respectively. (A reconciliation of these non-GAAP measures is shown in Table II at the end of this press release.) Commenting on third quarter results, David T. Gibbons, Perrigo Chairman, President and Chief Executive Officer, said, "The results in our Consumer Healthcare segment continue to reflect the ongoing market impact of pseudoephedrine-based cough and cold products, as retailers respond to the passage of Federal legislation. Despite a decline of $26 million in sales of pseudoephedrine products, our Consumer Healthcare sales increased 10 percent, as the pseudoephedrine sales loss was offset by topical product sales of $16 million related to the Agis acquisition, strong new product revenues in smoking cessation, and increased vitamin sales. In February, we began shipping over-the-counter nicotine lozenges, an aid to smoking cessation, and we expect to expand distribution of this product during the fourth quarter. We continue to see good results from our Rx and API businesses. "Cash flow in our third quarter was strong, allowing for continued share repurchases, dividend payments and debt reduction," concluded Gibbons. On February 21, 2006, the Company announced that the Board of Directors authorized the repurchase of an additional $60 million of common stock through February 16, 2007, under its ongoing share repurchase program. 1 The $395.6 million of last year's acquisition-related charges noted above included: * A write-off of in-process research and development of $388.6 million, which was not deductible for tax purposes; * A charge for operational improvements and asset impairments in the Consumer Healthcare segment of $6.4 million pre-tax, or $4.1 million after-tax; * Acquisition-related legal, audit and integration expenses of $4.6 million pre-tax, or $2.9 million after-tax. Nine Months Results Net sales for the nine months ended March 25, 2006 were $1,011.8 million, an increase of $312.2 million, or 45 percent, compared with $699.6 million last year, largely reflecting the addition of Agis' product sales. Net income for the nine months this year was $59.1 million, or $0.63 per share and includes a $1.3 million reversal of the accrual related to the Loratadine recall. In fiscal 2005, the net loss was $346.0 million, or $4.81 per share, which included a charge for the Loratadine recall of $5.3 million, or $0.07 per share. Excluding an acquisition-related write-off of the step-up in the value of inventory acquired ($3.7 million after-tax, or $0.04 per share) and a gain on the sale of the interest in a Canadian distribution company ($2.9 million after-tax, or $0.03 per share), net income for the nine months in the current year would have been $59.9 million, or $0.64 per share. In the prior year nine months, excluding the $395.6 million of acquisition-related charges, net income would have been $49.6 million, or $0.69 per share. (A reconciliation of non-GAAP measures is shown in Table II at the end of this press release.) Outlook Mr. Gibbons stated, "Our full year guidance for reported earnings of $0.74 to $0.78 per share remains unchanged. Our third quarter results were in line with expectations as the Consumer Healthcare business continued to reflect the impact of pseudoephedrine product dynamics, while the Rx and API segments continued to deliver good operating results. Even with increasing investments in research and development and competitive pricing on several key Rx and API products in the fourth quarter, we still anticipate that results from these businesses will help to balance the challenges in Consumer Healthcare. "We expect recently launched new products in Consumer Healthcare to make significant revenue and profit contributions in the fourth quarter. Because of the new products, fourth quarter profitability should be in line with historical levels despite increased costs for the large number of cough/cold product reformulations and for investments to support our high standards of quality assurance. "We are disappointed by the year-over-year decline in Consumer Healthcare margins driven by pseudoephedrine and the resulting operational issues. We continue to invest in quality and new product development, and remain focused on cost reduction and operational changes that are necessary to drive margin improvement," concluded Gibbons. 2 Consumer Healthcare Consumer Healthcare segment sales in the third quarter were $241.2 million compared with $219.7 million last year. A sales decline of $26 million in pseudoephedrine-based cough and cold products was offset by topical over-the-counter (OTC) product sales of $16 million related to the Agis acquisition and $24 million in new product sales. The Company began shipping nicotine polacrilix lozenges and recorded strong sales in the smoking cessation, feminine hygiene, and vitamin product categories. Operating income was $21.5 million and includes a $2.1 million reversal of the accrual related to the Loratadine recall. In fiscal 2005, operating income was $19.3 million. Excluding a $6.4 million charge for asset impairment and acquisition-related restructuring, operating income was $25.7 million. For nine months of fiscal 2006, Consumer Healthcare sales were $742.1 million, compared with $699 million in the nine months last year. A sales decline of $69 million in pseudoephedrine-based cough and cold products was offset by topical OTC product sales of $48 million related to the Agis acquisition and $51 million in new product sales. Operating income was $66.6 million, and includes a $2.1 million reversal of the accrual related to the Loratadine recall. In fiscal 2005, operating income was $73.7 million. Excluding a $6.4 million charge for asset impairment and acquisition-related restructuring, operating income was $80.1 million. Rx Pharmaceuticals The Rx Pharmaceuticals segment reported sales of $30.2 million and operating income of $4.3 million. The Company announced final approvals for desoximetasone gel, ciclopirox olamine cream, terconazole vaginal suppositories and a tentative approval for sertraline hydrochloride tablets during the quarter. In the prior year, the Rx Pharmaceutical segment reported an operating loss of $1.9 million, reflecting the Company's investment in the start-up of its generics business. For the nine months, sales were $88.0 million and operating income was $13.4 million, which included a pre-tax charge of $2.8 million for a product recall in the first quarter, compared with an operating loss of $5.5 million in the same period last year. API Third quarter sales for the API segment were $30.3 million and operating income was $8 million. Sales in the quarter included $4 million for non-product revenues. For the nine months, sales were $83.9 million and operating income was $21.1 million. Excluding a first quarter write-off of the step-up in the value of inventory acquired of $1.7 million, the API segment had operating income of $22.8 million for the nine months. Other The Other category, consisting of Israel Consumer Products and Israel Pharmaceutical and Diagnostic Products segments, reported sales of $30.6 million and an operating loss of $0.3 million. Sales for nine months were $97.8 million, with an operating loss of $0.6 million. Excluding a first quarter write-off of the step-up in the value of inventory acquired of $2.7 million, the Other category had operating income of $2.1 million. In the third quarter, unallocated expenses were $3.1 million, including corporate costs of $2.5 million and integration costs of $0.6 million. For nine months, unallocated expenses were $10.2 million, consisting of corporate costs of $7.6 million and integration costs of $2.6 million. 3 Significant Events On February 2, 2006, the Company announced it received approval from the U.S. Food and Drug Administration (FDA) to market OTC nicotine polacrilix lozenges. With the approval, the Company was granted 180 days of generic market exclusivity. The FDA determined the product was bioequivalent to GlaxoSmithKline's Commit(R) lozenge, which is indicated as an aid to smoking cessation. Initial shipments of the product began in late-February. On February 2, the Company also said that it entered into a supply, purchase and license agreement with another pharmaceutical company pursuant to which the Company will produce API for the other company and sell certain intellectual property assets. The Company also entered into a collaboration agreement with that company pursuant to which the two companies will collaborate on the development and manufacture of two drug products. Revenues from sales under the supply, purchase and license agreement and fees from the collaboration agreement contributed to operating income in the third quarter and will continue to have a positive impact in the fourth quarter of fiscal 2006 and beyond. Perrigo will host a conference call to discuss fiscal 2006 third quarter results at 10 a.m. (ET) Thursday, April 27. The call and replay will be available via webcast on the Company's Web site at http://www.perrigo.com/investor/, or by phone, at 877-715-5282, International, 973-582-2850. A taped replay of the call will be available beginning at approximately 2:30 p.m. (ET) Thursday, April 27 until midnight Wednesday, May 3. To listen to the replay, call 877-519-4471, International 973-341-3080, access code 7293512. The Perrigo Company is a leading global healthcare supplier and the world's largest manufacturer of over-the-counter (OTC) pharmaceutical and nutritional products for the store brand market. Store brand products are sold by food, drug, mass merchandise, dollar store and club store retailers under their own labels. The Company also develops, manufactures and markets prescription generic drugs, active pharmaceutical ingredients and consumer products, and operates manufacturing facilities in the United States, Israel, United Kingdom, Mexico and Germany. Visit Perrigo on the Internet (http://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 33 - 41 of the Company's Form 10-K for the year ended June 25, 2005, as well as the Company's subsequent filings with the Securities and Exchange Commission, 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. 4 PERRIGO COMPANY CONDENSED CONSOLIDATED STATEMENTS OF INCOME (in thousands, except per share amounts) (unaudited)
Third Quarter Year-to-Date --------------------------- --------------------------- 2006 2005 2006 2005 ------------ ------------ ------------ ------------ Net sales $ 332,321 $ 220,093 $ 1,011,752 $ 699,560 Cost of sales 235,043 157,132 721,988 504,830 Gross profit 97,278 62,961 289,764 194,730 Operating expenses Distribution 6,438 4,032 20,541 12,130 Research and development 12,260 7,224 37,135 22,864 Selling and administration 48,225 32,552 141,695 89,808 Subtotal 66,923 43,808 199,371 124,802 Write-off of in-process research and development - 388,600 - 388,600 Restructuring - 6,382 - 6,382 Total 66,923 438,790 199,371 519,784 Operating income (loss) 30,355 (375,829) 90,393 (325,054) Interest, net 2,465 (454) 11,606 (1,405) Other income, net (2,310) (1,091) (9,346) (1,584) Income (loss) before income taxes 30,200 (374,284) 88,133 (322,065) Income tax expense 9,339 5,152 28,995 23,955 Net income (loss) $ 20,861 $ (379,436) $ 59,138 $ (346,020) Earnings (loss) per share Basic $ 0.23 $ (5.15) $ 0.64 $ (4.81) Diluted $ 0.22 $ (5.15) $ 0.63 $ (4.81) Weighted average shares outstanding Basic 92,683 73,660 92,966 71,970 Diluted 94,044 73,660 94,143 71,970 Dividends declared per share $ 0.043 $ 0.040 $ 0.125 $ 0.115
5 PERRIGO COMPANY CONDENSED CONSOLIDATED BALANCE SHEETS (in thousands)
March 25, June 25, March 26, 2006 2005 2005 ------------- ------------- ------------- (unaudited) (unaudited) Assets Current assets Cash and cash equivalents $ 29,168 $ 16,707 $ 40,735 Investment securities 6,685 17,761 33,200 Accounts receivable 220,425 210,308 203,849 Inventories 273,668 272,980 301,270 Current deferred income taxes 47,088 55,987 47,380 Prepaid expenses and other current assets 16,010 35,064 28,690 Total current assets 593,044 608,807 655,124 Property and equipment 599,702 586,306 576,049 Less accumulated depreciation 281,733 262,505 253,316 317,969 323,801 322,733 Restricted cash 400,000 400,000 400,000 Goodwill 147,633 150,293 150,226 Other intangible assets 138,043 147,967 142,050 Non-current deferred income taxes 32,725 26,964 13,922 Other non-current assets 41,460 47,144 47,126 $ 1,670,874 $ 1,704,976 $ 1,731,181 Liabilities and Shareholders' Equity Current liabilities Accounts payable $ 163,494 $ 142,789 $ 141,621 Notes payable 26,969 25,345 22,334 Current maturities of long-term liabilities - - 20,000 Payroll and related taxes 48,632 42,326 48,160 Accrued customer programs 46,020 41,666 31,302 Accrued liabilities 46,832 57,532 74,496 Accrued income taxes 7,004 21,225 15,201 Current deferred income taxes 9,002 9,659 9,010 Total current liabilities 347,953 340,542 362,124 Non-current liabilities Long-term debt 594,360 656,128 666,706 Non-current deferred income taxes 68,924 74,379 59,740 Other non-current liabilities 35,274 43,090 33,637 Total non-current liabilities 698,558 773,597 760,083 Shareholders' equity Preferred stock, without par value, 10,000 shares authorized - - - Common stock, without par value, 200,000 shares authorized 518,996 527,748 527,220 Accumulated other comprehensive income (loss) (7,377) (1,687) 6,275 Retained earnings 112,744 64,776 75,479 Total shareholders' equity 624,363 590,837 608,974 $ 1,670,874 $ 1,704,976 $ 1,731,181 Supplemental Disclosures of Balance Sheet Information Allowance for doubtful accounts $ 10,619 $ 10,370 $ 8,280 Allowance for inventory $ 43,035 $ 38,095 $ 27,841 Working capital $ 245,091 $ 268,265 $ 293,000 Preferred stock, shares issued - - - Common stock, shares issued 93,087 93,903 93,802
6 PERRIGO COMPANY CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS (in thousands) (unaudited) Year-to-Date ------------------------------- 2006 2005 -------------- -------------- Cash Flows (For) From Operating Activities Net income (loss) $ 59,138 $ (346,020) Adjustments to derive cash flows Write-off of in-process research and development - 388,600 Depreciation and amortization 42,155 23,561 Share-based compensation 7,274 4,828 Deferred income taxes (2,707) (5,860) Sub-total 105,860 65,109 Changes in operating assets and liabilities Accounts receivable (8,701) (11,320) Inventories 1,201 10,202 Accounts payable 19,180 (7,108) Payroll and related taxes 5,928 (14,369) Accrued customer programs 4,354 (2,398) Accrued liabilities (12,358) 4,090 Accrued income taxes (17,480) 3,805 Other 12,648 6,381 Sub-total 4,772 (10,717) Net cash from operating activities 110,632 54,392 Cash Flows (For) From Investing Activities Purchases of securities (29,134) (81,070) Proceeds from sales of securities 39,384 243,975 Additions to property and equipment (18,672) (15,576) Acquisition of business, net of cash acquired - (381,569) Acquisition of assets - (5,562) Increase in restricted cash - (400,000) Net cash for investing activities (8,422) (639,802) Cash (For) From Financing Activities Borrowings of short-term debt, net 1,543 3,622 Borrowings of long-term debt 15,000 615,000 Repayments of long-term debt (75,000) - Increase in deferred debt issue costs - (1,017) Tax effect of stock transactions (762) 1,087 Issuance of common stock 5,223 6,137 Repurchases of common stock (20,488) (122) Cash dividends (11,660) (8,195) Net cash (for) from financing activities (86,144) 616,512 Net increase in cash and cash equivalents 16,066 31,102 Cash and cash equivalents, at beginning of period 16,707 8,392 Effect of exchange rate changes on cash (3,605) 1,241 Cash and cash equivalents, at end of period $ 29,168 $ 40,735 Supplemental Disclosures of Cash Flow Information Cash paid/received during the period for: Interest paid $ 27,093 $ 231 Interest received $ 15,870 $ 2,193 Income taxes paid $ 40,106 $ 22,537 Income taxes refunded $ 5,239 $ 4,196 7 Table I PERRIGO COMPANY SEGMENT INFORMATION (in thousands) (unaudited)
Third Quarter Fiscal Year ------------------------------- ------------------------------- 2006 2005 2006 2005 -------------- -------------- -------------- -------------- Segment Sales Consumer Healthcare $ 241,238 $ 219,690 $ 742,091 $ 698,993 Rx Pharmaceuticals 30,237 403 87,976 567 API 30,250 - 83,903 - Other 30,596 - 97,782 - Total $ 332,321 $ 220,093 $ 1,011,752 $ 699,560 Segment Operating Income (Loss) Consumer Healthcare $ 21,471 $ 19,283 $ 66,644 $ 73,708 Rx Pharmaceuticals 4,260 (1,887) 13,396 (5,537) API 7,969 - 21,099 - Other (290) - (570) - Unallocated expenses (3,055) - (10,176) - Write-off of in process R&D - (388,600) - (388,600) Acquisition and integration costs - (4,625) - (4,625) Total $ 30,355 $ (375,829) $ 90,393 $ (325,054)
8 Table II PERRIGO COMPANY RECONCILIATION OF NON-GAAP MEASURES (in thousands, except per share amounts) (unaudited)
Third Quarter Fiscal Year ------------------------------- ------------------------------- 2006 2005 2006 2005 -------------- -------------- -------------- -------------- Net sales $ 332,321 $ 220,093 $ 1,011,752 $ 699,560 Reported gross profit $ 97,278 $ 62,961 $ 289,764 $ 194,730 Inventory step-up - - 4,762 - Adjusted gross profit $ 97,278 $ 62,961 $ 294,526 $ 194,730 Adjusted gross profit % 29.3% 28.6% 29.1% 27.8% Reported operating income (loss) $ 30,355 $ (375,829) $ 90,393 $ (325,054) Inventory step-up - - 4,762 - Perrigo operational improvements - 3,150 - 3,150 Perrigo asset impairments - 3,232 - 3,232 Write-off of in-process R&D - 388,600 - 388,600 Acquisition costs - 4,625 - 4,625 Adjusted operating income $ 30,355 $ 23,778 $ 95,155 $ 74,553 Reported net income (loss) $ 20,861 $ (379,436) $ 59,138 $ (346,020) Inventory step-up (1) - - 3,714 - Gain on sale of equity investment (2) - (2,939) - Perrigo operational improvements (3) - 2,016 - 2,016 Perrigo asset impairments (3) - 2,068 - 2,068 Write-off of in-process R&D(4) - 388,600 - 388,600 Acquisition costs (3) - 2,960 - 2,960 Adjusted net income $ 20,861 $ 16,208 $ 59,913 $ 49,624 Diluted earnings (loss) per share Reported $ 0.22 $ (5.15) $ 0.63 $ (4.81) Adjusted $ 0.22 $ 0.22 $ 0.64 $ 0.69 Diluted weighted average shares outstanding 94,044 73,660 94,143 71,970
(1) Net of taxes at 22% (2) Net of taxes at 37% (3) Net of taxes at 36% (4) Write-off of in-process research and development is a permanent difference for tax purposes and thus is not tax effected 9 Table II (Continued) REPORTABLE SEGMENTS RECONCILIATION OF NON-GAAP MEASURES (in thousands, except per share amounts) (unaudited)
Third Quarter Year-To-Date ------------------------------- ------------------------------- 2006 2005 2006 2005 -------------- -------------- -------------- -------------- Consumer Healthcare Net sales $ 241,238 $ 219,690 $ 742,091 $ 698,993 Reported gross profit $ 61,467 $ 62,648 $ 184,838 $ 194,499 Inventory step-up - - 318 - Adjusted gross profit $ 61,467 $ 62,648 $ 185,156 $ 194,499 Adjusted gross profit % 25.5% 28.5% 25.0% 27.8% Reported operating income $ 21,471 $ 19,283 $ 66,644 $ 73,708 Inventory step-up - 318 Perrigo operational improvements - 3,150 - 3,150 Perrigo asset impairments - 3,232 - 3,232 Adjusted operating income $ 21,471 $ 25,665 $ 66,962 $ 80,090 API Net sales $ 30,250 $ - $ 83,903 $ - Reported gross profit $ 14,310 $ - $ 39,111 $ - Inventory step-up - - 1,747 - Adjusted gross profit $ 14,310 $ - $ 40,858 $ - Adjusted gross profit % 47.3% 0.0% 48.7% 0.0% Reported operating income $ 7,969 $ - $ 21,099 $ - Inventory step-up - - 1,747 - Adjusted operating income $ 7,969 $ - $ 22,846 $ - Other Net sales $ 30,596 $ - $ 97,782 $ - Reported gross profit $ 9,957 $ - $ 31,054 $ - Inventory step-up - - 2,697 - Adjusted gross profit $ 9,957 $ - $ 33,751 $ - Adjusted gross profit % 32.5% 0.0% 34.5% 0.0% Reported operating loss $ (290) $ - $ (570) $ - Inventory step-up - - 2,697 - Adjusted operating loss $ (290) $ - $ 2,127 $ - Unallocated Reported operating loss $ (3,055) $ (393,225) $ (10,176) $ (393,225) Write-off of in-process R&D - 388,600 - 388,600 Acquisition costs - 4,625 - 4,625 Adjusted operating loss $ (3,055) $ - $ (10,176) $ -
SOURCE Perrigo Company -0- 04/27/2006 /CONTACT: Ernest J. Schenk, Manager, Investor Relations and Communication of Perrigo Company, +1-269-673-9212, E-mail:eschenk@perrigo.com / /First Call Analyst: / /FCMN Contact: phooker@perrigo.com / /Web site: http://www.perrigo.com / 10 -----END PRIVACY-ENHANCED MESSAGE-----