PERRIGO COMPANY PLC DUBLIN, Feb. 5, 2015 /PRNewswire/ --
-- Fiscal second quarter net sales increased to a second quarter record of
$1.07 billion.
-- Excluding the effect of the pre-closing debt and equity issuances
related to the previously announced acquisition of Omega Pharma NV
("Omega"), fiscal second quarter adjusted net income increased 32% to a
second quarter record of $245 million, with adjusted diluted earnings
per share of $1.82.
-- Reported fiscal second quarter GAAP net income of $70 million and GAAP
diluted earnings per share of $0.51.
-- Record fiscal second quarter adjusted gross margin of 45.2% (GAAP gross
margin of 35.8%) and adjusted operating margin of 29.5% (GAAP operating
margin of 17.2%).
-- Record second quarter operating cash flow of $273 million.
-- Excluding the effect of the pre-closing debt and equity issuances
related to Omega, management expects full-year fiscal 2015 adjusted
earnings range of $7.25 to $7.45 per diluted share, an increase of 13%
to 17% over fiscal 2014 adjusted earnings per share, and GAAP earnings
of between $3.66 and $3.86 per diluted share.
Perrigo Company plc (NYSE: PRGO; TASE) today announced results for its second quarter ended December 27, 2014.
http://photos.prnewswire.com/prnvar/20120301/DE62255LOGO
Perrigo's Chairman, President and CEO Joseph C. Papa commented, "The team's financial performance for the quarter was generally in-line with our expectations, highlighted by record second quarter net sales, adjusted net income and adjusted margins. U.S. OTC grew approximately 2%, and we realized new product sales of $54 million, primarily in the Rx segment. Offsetting these positive impacts, we experienced the previously disclosed quarterly decline in CHC contract sales and disappointing sales in the VMS Nutritional and Animal Health categories. Our team remains intensely focused on launching greater than $235 million in new products in fiscal 2015, the majority in the second half of the year, illustrating our continued commitment to make quality healthcare more affordable for consumers around the globe."
Refer to Tables I, II, and III at the end of this press release for a reconciliation of non-GAAP adjustments to the current year and prior year periods and additional non-GAAP information. The Company's reported results are summarized in the attached Consolidated Statements of Operations, Balance Sheets and Cash Flows.
Perrigo Company plc
(in millions, except per share amounts)
(see the attached Table I for reconciliation to GAAP numbers)
(YoY % Change may not calculate due to rounding)
Fiscal 2015 Fiscal 2014
Second Second YoY
Quarter Quarter
Ended Ended
12/27/2014 12/28/2013 % Change
---------- ---------- --------
Net Sales $1,071.7 $979.0 9%
Reported
Net
Income
(Loss) $70.2 $(86.0) NM
Adjusted
Net
Income $244.9 $185.3 32%
Reported
Diluted
EPS $0.51 $(0.87) NM
Adjusted
Diluted
EPS $1.82 $1.87 -3%
Reported
Diluted
Shares 136.8 98.7 39%
Adjusted
Diluted
Shares 134.5 99.2 36%
Second Quarter Results
Net sales in the quarter were $1.07 billion, an increase of 9% over the second quarter of fiscal 2014, primarily attributable to $79 million in incremental sales of Tysabri® from the acquisition of Elan Corporation plc ("Elan") and new product sales of $54 million. This increase was offset partially by lower sales volumes in the contract manufacturing and Animal Health categories within Consumer Healthcare and the VMS and infant foods categories within the Nutritionals segment, as well as a negative foreign exchange impact of $7 million.
Excluding charges as outlined in Table I at the end of this release, second quarter fiscal 2015 adjusted net income increased 32% to $245 million or $1.82 per diluted share versus $1.87 for the same period last year. The earnings for the quarter exclude $0.06 per share of dilution attributable to the pre-closing debt and equity issuances related to the Omega transaction.
Consumer Healthcare
Consumer Healthcare Segment
(in millions)
(see the attached Table II for reconciliation to GAAP numbers)
(YoY % Change may not calculate due to rounding)
Fiscal 2015 Fiscal 2014
Second Second YoY
Quarter Quarter
Ended Ended
12/27/2014 12/28/2013 % Change
---------- ---------- --------
Net
Sales $529.6 $536.3 -1%
Reported
Gross
Profit $168.8 $171.7 -2%
Adjusted
Gross
Profit $175.4 $175.1 -%
Reported
Operating
Income $74.9 $89.5 -16%
Adjusted
Operating
Income $95.7 $93.5 +2%
Reported
Gross
Margin 31.9% 32.0% -10 bps
Adjusted
Gross
Margin 33.1% 32.7% +40 bps
Reported
Operating
Margin 14.1% 16.7% -260 bps
Adjusted
Operating
Margin 18.1% 17.4% +70 bps
Consumer Healthcare segment net sales were $530 million, reflecting an increase in sales of existing products of $13 million (primarily in the smoking cessation category) and $13 million related to new product sales and the acquisition of OTC products from Aspen. These combined increases were more than offset by a decline of $30 million in sales of existing products (primarily in the contract manufacturing and Animal Health categories).
Adjusted gross margin grew 40 bps due to greater sales of higher margin products versus last year, while adjusted operating margin was driven by relatively lower promotional expenses versus last year.
Nutritionals
Nutritionals Segment
(in millions)
(see the attached Table II for reconciliation to GAAP numbers)
(YoY % Change may not calculate due to rounding)
Fiscal 2015 Fiscal 2014
Second Second YoY
Quarter Quarter
Ended Ended
12/27/2014 12/28/2013 % Change
---------- ---------- --------
Net
Sales $130.6 $139.7 -7%
Reported
Gross
Profit $31.8 $38.7 -18%
Adjusted
Gross
Profit $34.9 $41.8 -17%
Reported
Operating
Income $7.2 $13.3 -46%
Adjusted
Operating
Income $14.4 $20.7 -31%
Reported
Gross
Margin 24.4% 27.7% -330 bps
Adjusted
Gross
Margin 26.7% 29.9% -320 bps
Reported
Operating
Margin 5.5% 9.6% -410 bps
Adjusted
Operating
Margin 11.0% 14.8% -380 bps
The Nutritionals segment reported second quarter net sales of $131 million as new product sales of $12 million were more than offset by $12 million in lower year-over-year sales primarily in the VMS and infant food categories and $8 million in discontinued products. Increased competition in the VMS category and retailer promotion in the infant food categories were the primary drivers in the quarter.
Second quarter gross margin contracted due to competition in the market place in the VMS category and an isolated $3 million inventory loss, which the Company expects to recover in a future period through an insurance claim.
Rx Pharmaceuticals
Rx Pharmaceuticals Segment
(in millions)
(see the attached Table II for reconciliation to GAAP numbers)
(YoY % Change may not calculate due to rounding)
Fiscal 2015 Fiscal 2014
Second Second YoY
Quarter Quarter
Ended Ended
12/27/2014 12/28/2013 % Change
---------- ---------- --------
Net
Sales $276.6 $246.6 +12%
Reported
Gross
Profit $149.5 $128.8 +16%
Adjusted
Gross
Profit $167.3 $150.2 +11%
Reported
Operating
Income $109.7 $100.4 +9%
Adjusted
Operating
Income $127.7 $123.1 +4%
Reported
Gross
Margin 54.0% 52.2% +180 bps
Adjusted
Gross
Margin 60.5% 60.9% -40 bps
Reported
Operating
Margin 39.6% 40.7% -110 bps
Adjusted
Operating
Margin 46.2% 49.9% -370 bps
The Rx Pharmaceuticals segment reported second quarter net sales of $277 million due to new product sales of $33 million and increased volumes, partially offset by discontinued products of $14 million.
Adjusted operating margin was impacted by higher investments in both clinical R&D and in growing the specialty pharmaceuticals sales force.
API
API Segment
(in millions)
(see the attached Table II for reconciliation to GAAP numbers)
(YoY % Change may not calculate due to rounding)
Fiscal 2015 Fiscal 2014
Second Second YoY
Quarter Quarter
Ended Ended
12/27/2014 12/28/2013 % Change
---------- ---------- --------
Net
Sales $30.0 $30.0 -%
Reported
Gross
Profit $13.2 $16.5 -20%
Adjusted
Gross
Profit $13.7 $17.1 -20%
Reported
Operating
Income $7.4 $8.2 -10%
Adjusted
Operating
Income $7.9 $8.7 -9%
Reported
Gross bps
Margin 43.9% 55.2% -1,130
Adjusted
Gross bps
Margin 45.5% 56.9% -1,140
Reported
Operating
Margin 24.7% 27.4% -270 bps
Adjusted
Operating
Margin 26.3% 29.1% -280 bps
The API segment's second quarter net sales were flat versus last year due to a slight increase in sales of existing products offset by unfavorable changes in foreign currency exchange rates.
Gross margin was impacted primarily by the expiration of U.S. exclusivity on the generic version of temozolomide while operating margin flow-through benefited from lower selling, general and administration costs.
Specialty Sciences
Specialty Sciences Segment
(in millions)
(see the attached Table II for reconciliation to GAAP numbers)
Fiscal 2015 Fiscal 2014
Second Second YoY
Quarter Quarter
Ended Ended
12/27/2014 12/28/2013 % Change
---------- ---------- --------
Net
Sales $86.6 $7.4 +1,070%
Reported
Gross
Profit $14.1 $(1.3) NM
Adjusted
Gross
Profit $86.6 $7.4 +1,070%
Reported
Operating
Income $9.5 $(19.0) NM
Adjusted
Operating
Income $82.8 $4.3 +1,826%
Reported
Gross
Margin 16.3% (17.1)% NM
Adjusted
Gross
Margin 100.0% 100.0% - bps
Reported
Operating
Margin 11.0% (256.2)% NM
Adjusted
Operating
Margin 95.6% 57.6% +3,800 bps
During the second quarter, the Company recognized $87 million of royalty revenue related to Biogen Idec's global sales of its Multiple Sclerosis drug Tysabri(®). The increase is due to the timing of the closing of the Elan acquisition on December 18, 2013 as well as the higher current royalty rate of 18% versus 12% last year.
Closing
Excluding the charges outlined in Table III (which includes all impacts related to the Omega acquisition), the Company expects fiscal 2015 adjusted earnings to be between $7.25 and $7.45 per diluted share as compared to $6.39 in fiscal 2014. This range implies a year-over-year growth rate in adjusted earnings per diluted share of 13% to 17% over fiscal 2014. The Company also expects fiscal 2015 reported earnings to be between $3.66 and $3.86 per diluted share as compared to $1.77 in fiscal 2014. A reconciliation to GAAP measures is attached in Table III.
The following factors are not reflected in the guidance range above:
-- Debt and equity financing costs and additional shares issued related to
the Omega financings of $0.44 per diluted share.
-- Omega operating results for the remaining forecast period, shares to be
issued to complete the acquisition, and transaction related costs.
The conference call will be begin at 9:00 a.m. (ET) live via webcast to interested parties in the investor relations section of the Perrigo website at http://perrigo.investorroom.com/events-webcasts or by phone at 877-248-9413, International 973-582-2737, and reference ID#66179145. A taped replay of the call will be available beginning at approximately 1:00 p.m. (ET) Thursday, February 5, 2015 until midnight Friday, February 20, 2015. To listen to the replay, dial 855-859-2056, International 404-537-3406, and use access code 66179145.
From its beginnings as a packager of generic home remedies in 1887, Perrigo Company plc, headquartered in Ireland, has grown to become a leading global healthcare supplier. Perrigo develops, manufactures and distributes over-the-counter (OTC) and generic prescription (Rx) pharmaceuticals, nutritional products and active pharmaceutical ingredients (API), and has a specialty sciences business comprised of assets focused on the treatment of Multiple Sclerosis. The Company is the world's largest manufacturer of OTC healthcare products for the store brand market and an industry leader in pharmaceutical technologies. Perrigo's mission is to offer uncompromised "Quality Affordable Healthcare Products®," and it does so across a wide variety of product categories primarily in the United States, United Kingdom, Mexico, Israel and Australia, as well as more than 40 other key markets worldwide, including Canada, China and Latin America. Visit Perrigo on the Internet (http://www.perrigo.com).
Note: Certain statements in this report 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 particular, statements about the Company's expectations, beliefs, plans, objectives, assumptions, future events or future performance contained in this report, including certain statements contained in "Management's Discussion and Analysis of Financial Condition and Results of Operations" are 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 the negative of those terms or other comparable terminology.
Please see the Company's documents filed with the Securities and Exchange Commission, including the Company's annual reports filed on Form 10-K, quarterly reports on Form 10-Q, and any amendments thereto for a discussion of certain important risk factors that relate to forward-looking statements contained in this document. The Company has based these forward-looking statements on its current expectations, assumptions, estimates and projections. While the Company believes these expectations, assumptions, estimates and projections are reasonable, such forward-looking statements are only predictions and involve known and unknown risks and uncertainties, many of which are beyond the Company's control. These and other important factors may cause actual results, performance or achievements to differ materially from those expressed or implied by these forward-looking statements. Any forward-looking statements are made only as of the date hereof, and 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 PLC
CONSOLIDATED STATEMENTS OF OPERATIONS
(in millions, except per share amounts)
Three Months Ended Six Months Ended
------------------ ----------------
December 27, December 28, December 27, December 28,
2014 2013 2014 2013
---- ---- ---- ----
Net sales $1,071.7 $979.0 $2,023.1 $1,912.4
Cost of sales 687.9 618.3 1,317.6 1,195.4
----- ----- ------- -------
Gross profit 383.8 360.7 705.5 717.0
----- ----- ----- -----
Operating expenses
Distribution 14.8 14.0 29.2 27.2
Research and development 53.2 37.5 89.8 69.8
Selling 44.9 47.3 95.3 97.6
Administration 84.1 154.4 165.5 233.2
Write-off of in-process research and - 6.0 - 6.0
development
Restructuring 2.4 14.9 4.2 17.0
--- ---- --- ----
Total operating expenses 199.4 274.1 384.0 450.8
Operating income 184.4 86.6 321.5 266.2
Interest expense, net 30.8 29.7 56.7 51.1
Other expense, net 59.3 4.1 61.9 5.1
Loss on extinguishment of debt 9.6 165.8 9.6 165.8
--- ----- --- -----
Income (loss) before income taxes 84.7 (113.0) 193.3 44.2
Income tax expense (benefit) 14.5 (27.0) 26.8 18.9
---- ----- ---- ----
Net income (loss) $70.2 $(86.0) $166.5 $25.3
===== ====== ====== =====
Earnings (loss) per share
Basic earnings (loss) per share $0.52 $(0.87) $1.23 $0.26
Diluted earnings (loss) per share $0.51 $(0.87) $1.23 $0.26
Weighted average shares outstanding
Basic 136.3 98.7 135.1 96.4
Diluted 136.8 98.7 135.6 96.9
Dividends declared per share $0.105 $0.09 $0.21 $0.18
PERRIGO COMPANY PLC
CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME
(in millions)
Three Months Ended Six Months Ended
------------------ ----------------
December 27, December 28, December 27, December 28,
2014 2013 2014 2013
---- ---- ---- ----
Net income (loss) $70.2 $(86.0) $166.5 $25.3
Other comprehensive income (loss):
Foreign currency translation (60.4) 16.5 (124.2) 53.1
adjustments
Change in fair value of derivative (3.7) (1.4) (5.8) (10.6)
financial instruments
Change in fair value of investment (1.1) (4.8) (0.5) (4.8)
securities
Change in post-retirement and pension (1.7) - (1.7) (0.1)
liability adjustments
Other comprehensive income (loss) (66.9) 10.3 (132.2) 37.6
-----
Comprehensive income (loss) $3.3 $(75.7) $34.3 $62.9
==== ====== ===== =====
PERRIGO COMPANY PLC
CONSOLIDATED BALANCE SHEETS
(in millions)
December 27, June 28,
2014 2014
---- ----
Assets
Current assets
Cash and cash equivalents $3,596.1 $799.5
Investment securities 20.0 5.9
Accounts receivable, net of allowance for doubtful
accounts of $3.3 million and $2.7 million,
respectively 924.7 935.1
Inventories 641.8 631.6
Current deferred income taxes 66.6 62.8
Prepaid expenses and other current assets 115.0 116.0
Total current assets 5,364.2 2,550.9
Non-current assets
Property and equipment, net 756.8 779.9
Goodwill and other indefinite-lived intangible
assets 3,481.3 3,543.8
Other intangible assets, net 6,637.2 6,787.0
Non-current deferred income taxes 29.4 23.6
Other non-current assets 191.8 195.0
----- -----
Total non-current assets 11,096.5 11,329.3
-------- --------
Total assets $16,460.7 $13,880.2
========= =========
Liabilities and Shareholders' Equity
Current liabilities
Accounts payable $302.7 $364.3
Short-term debt - 2.1
Payroll and related taxes 85.7 112.3
Accrued customer programs 310.3 256.5
Accrued liabilities 230.1 179.4
Accrued income taxes 29.4 17.4
Current deferred income taxes 4.5 1.1
Current portion of long-term debt 362.3 141.6
Total current liabilities 1,325.0 1,074.7
Non-current liabilities
Long-term debt, less current portion 4,439.4 3,090.5
Non-current deferred income taxes 690.0 727.9
Other non-current liabilities 291.1 293.4
-----
Total non-current liabilities 5,420.5 4,111.8
------- -------
Total liabilities 6,745.5 5,186.5
------- -------
Commitments and contingencies
Shareholders' equity
Controlling interest:
Preferred shares, $0.0001 par value, 10 million
shares authorized - -
Ordinary shares, EUR0.001 par value, 10 billion
shares authorized 7,695.2 6,678.2
Accumulated other comprehensive income 7.4 139.6
Retained earnings 2,012.6 1,875.1
9,715.2 8,692.9
Noncontrolling interest - 0.8
--- ---
Total shareholders' equity 9,715.2 8,693.7
------- -------
Total liabilities and shareholders' equity $16,460.7 $13,880.2
========= =========
Supplemental Disclosures of Balance Sheet Information
Preferred shares, issued and outstanding - -
Ordinary shares, issued and outstanding 140.8 133.8
PERRIGO COMPANY PLC
CONSOLIDATED STATEMENTS OF CASH FLOWS
(in millions)
Six Months Ended
----------------
December 27, December 28,
2014 2013
---- ----
Cash Flows From (For) Operating Activities
Net income (loss) $166.5 $25.3
Adjustments to derive cash flows
Depreciation and amortization 253.7 110.4
Loss on acquisition-related foreign
currency derivatives 26.4 -
Share-based compensation 16.2 13.6
Loss on extinguishment of debt 9.6 165.8
Non-cash restructuring charges 4.2 14.3
Excess tax benefit of stock
transactions (3.8) (6.9)
Deferred income taxes (38.2) (5.4)
Other non-cash adjustments 8.6 6.3
--- ---
Subtotal 443.2 323.4
Increase (decrease) in cash due to:
Accounts receivable (4.5) (65.1)
Inventories (17.7) 10.5
Accounts payable (46.8) (70.8)
Payroll and related taxes (26.3) 13.7
Accrued customer programs 51.8 72.8
Accrued liabilities 52.0 2.0
Accrued income taxes 32.4 (50.4)
Other (16.4) (15.8)
----- -----
Subtotal 24.5 (103.1)
---- ------
Net cash from (for) operating
activities 467.7 220.3
----- -----
Cash Flows From (For) Investing Activities
Acquisitions of businesses, net of
cash acquired (83.0) (1,527.9)
Additions to property and equipment (48.0) (77.8)
Settlement of acquisition-related
foreign currency derivatives (26.4) -
Other investing 0.8 6.2
Net cash from (for) investing
activities (156.6) (1,599.5)
------ --------
Cash Flows From (For) Financing Activities
Issuances of debt 2,504.5 3,293.6
Payments on long-term debt (934.5) (1,965.0)
Deferred financing fees (24.8) (48.8)
Premium on early debt retirement - (133.5)
Issuance of ordinary shares 1,039.4 6.7
Equity issuance costs (35.7) -
Excess tax benefit of stock
transactions 3.8 6.9
Repurchase of ordinary shares (7.7) (7.3)
Cash dividends (29.0) (18.0)
Purchase of noncontrolling interest - (7.2)
Other financing (7.0) (5.0)
---- ----
Net cash from (for) financing
activities 2,509.0 1,122.4
------- -------
Effect of exchange rate changes on
cash (23.5) (2.0)
----- ----
Net increase (decrease) in cash and
cash equivalents 2,796.6 (258.8)
Cash and cash equivalents, beginning
of period 799.5 779.9
Cash and cash equivalents, end of
period $3,596.1 $521.1
======== ======
Supplemental Disclosures of Cash Flow Information
Cash paid/received during the period for:
Interest paid $56.9 $49.1
Interest received $0.4 $1.6
Income taxes paid $20.8 $73.9
Income taxes refunded $7.5 $3.6
Table I
PERRIGO COMPANY PLC
RECONCILIATION OF NON-GAAP MEASURES
(in millions, except per share amounts)
(unaudited)
Three Months Ended
------------------
Consolidated December 27, 2014 December 28, 2013 % Change
----------------- ----------------- --------
GAAP Non-GAAP As Adjusted GAAP* Non-GAAP As Adjusted* GAAP As
Adjustments Adjustments* Adjusted
---- ------------ ----------- ---- ------------- ----------- ---- ---------
Net sales $1,071.7 $ - $1,071.7 $979.0 $ - $979.0 9% 9%
Cost of sales 687.9 100.8 (a) 587.1 618.3 37.5 (a) 580.8 11% 1%
----- ----- ----- ----- ---- -----
Gross profit 383.8 100.8 484.6 360.7 37.5 398.2 6% 22%
Operating expenses
Distribution 14.8 - 14.8 14.0 - 14.0 6% 6%
Research and development 53.2 10.0 (c) 43.2 37.5 - 37.5 42% 15%
Selling 44.9 5.5 (a) 39.4 47.3 5.5 (a) 41.8 -5% -6%
Administration 84.1 13.6 (a,b,d) 70.5 154.4 87.3 (a,l,m) 67.1 -46% 5%
Write-off of in-process research and development - - - 6.0 6.0 (n) - -100% - %
Restructuring 2.4 2.4 (b) - 14.9 14.9 (b) - -84% NM
--- --- --- ---- ---- ---
Total operating expenses 199.4 31.5 167.9 274.1 113.8 160.4 -27% 5%
Operating income 184.4 132.3 316.7 86.6 151.3 237.9 113% 33%
Interest expense, net 30.8 5.0 (e) 25.8 29.7 9.0 (o) 20.7 4% 25%
Other expense, net 59.3 56.4 (f,g,h) 2.9 4.1 1.8 (o) 2.3 NM 26%
Loss on extinguishment of debt 9.6 9.6 (i) - 165.8 165.8 (o) - -94% - %
--- -----
Income (loss) before income taxes 84.7 203.3 288.0 (113.0) 327.8 214.8 -175% 34%
Income tax expense (benefit) 14.5 28.6 (j) 43.1 (27.0) 56.5 (j) 29.5 -154% 46%
---- -----
Net income (loss) $70.2 $174.7 $244.9 $(86.0) $271.3 $185.3 -182% 32%
===== ====== ====== ====== ====== ======
Diluted earnings (loss) per share $0.51 $1.82 $(0.87) $1.87 -159% -3%
Diluted weighted average shares outstanding 136.8 (2.3) (k) 134.5 98.7 99.2 39% 36%
Selected ratios as a percentage of net sales**
Gross profit 35.8% 45.2% 36.8% 40.7%
Operating expenses 18.6% 15.7% 28.0% 16.4%
Operating income 17.2% 29.5% 8.8% 24.3%
Table I continued
PERRIGO COMPANY PLC
RECONCILIATION OF NON-GAAP MEASURES
(in millions, except per share amounts)
(unaudited)
Six Months Ended
----------------
Consolidated December 27, 2014 December 28, 2013 % Change
----------------- ----------------- --------
GAAP Non-GAAP As Adjusted GAAP* Non-GAAP As Adjusted* GAAP As
Adjustments Adjustments* Adjusted
---- ------------ ----------- ---- ------------- ----------- ---- ---------
Net sales $2,023.1 $ - $2,023.1 $1,912.4 $ - $1,912.4 6% 6%
Cost of sales 1,317.6 201.4 (a) 1,116.2 1,195.4 61.0 (a) 1,134.5 10% -2%
------- ----- ------- ------- ---- -------
Gross profit 705.5 201.4 906.9 717.0 61.0 777.9 -2% 17%
Operating expenses
Distribution 29.2 - 29.2 27.2 - 27.2 7% 7%
Research and development 89.8 10.0 (c) 79.8 69.8 - 69.8 29% 14%
Selling 95.3 11.0 (a) 84.3 97.6 11.0 (a) 86.6 -2% -2%
Administration 165.5 15.9 (a,b,d) 149.6 233.2 102.8 (a,m,q,r) 130.4 -29% 15%
Write-off of in-process research and development - - - 6.0 6.0 (n) - -100% - %
Restructuring 4.2 4.2 (b) - 17.0 17.0 (b) - -76% - %
--- --- --- ---- ---- ---
Total operating expenses 384.0 41.1 342.9 450.8 136.8 314.0 -15% 9%
Operating income 321.5 242.5 564.0 266.2 197.8 464.0 21% 22%
Interest expense, net 56.7 5.0 (e) 51.7 51.1 10.0 (o) 41.1 11% 26%
Other expense, net 61.9 58.4 (f,h,p) 3.5 5.1 3.5 (o) 1.6 NM 119%
Loss on extinguishment of debt 9.6 9.6 (i) - 165.8 165.8 (o) - -94% - %
--- -----
Income (loss) before income taxes 193.3 315.5 508.8 44.2 377.1 421.3 NM 21%
Income tax expense (benefit) 26.8 49.5 (j) 76.3 18.9 73.3 (j) 92.1 42% -17%
---- ----
Net income (loss) $166.5 $266.0 $432.5 $25.3 $303.8 $329.1 NM 31%
====== ====== ====== ===== ====== ======
Diluted earnings per share $1.23 $3.22 $0.26 $3.40 NM -5%
Diluted weighted average shares outstanding 135.6 (1.2) (k) 134.4 96.9 96.9
Selected ratios as a percentage of net sales**
Gross profit 34.9% 44.8% 37.5% 40.7%
Operating expenses 19.0% 17.0% 23.6% 16.4%
Operating income 15.9% 27.9% 13.9% 24.3%
Table I continued
PERRIGO COMPANY PLC
RECONCILIATION OF NON-GAAP MEASURES
* Amounts may not
sum or cross-
foot due to
rounding
**Ratios as a % to net sales may
not calculate due to rounding
NM - Calculations are not meaningful
(a) Amortization expense
(b) Restructuring and other integration-related charges
(c) R&D payment of $10.0 million made in connection with collaborative arrangement
(d) Omega transaction expenses totaling $11.6 million
(e) Omega financing fees
(f) Loss on derivatives associated with the pending Omega acquisition totaling $64.7 million
(g) Elan equity method investment losses totaling $3.0 million
(h) Income of $12.5 million from transfer of a rights agreement
(i) Bridge fees and extinguishment of debt in connection with Omega financing
(j) Tax effect of non-GAAP adjustments
(k) Weighted average effect of 6.8 million shares issued on November 26, 2014 to finance the
pending Omega acquisition
(l) Elan acquisition and integration-related charges of $93.7 million offset partially by a $4.9
million write-off of contingent consideration related to the Fera acquisition
(m) Favorable escrow settlement of $2.5 million related to Sergeant's
(n) Write-offs of IPR&D related to Paddock and Rosemont
(o) Elan transaction costs and extinguishment of debt
(p) Elan equity method investment losses totaling $6.2 million, offset partially by a $1.1
million investment distribution
(q) Elan acquisition and integration-related charges of $98.7 million offset partially by a $4.9
million write-off of contingent consideration related to the Fera acquisition
(r) Litigation settlement of $2.5 million
Table II
PERRIGO COMPANY PLC
REPORTABLE SEGMENTS
RECONCILIATION OF NON-GAAP MEASURES
(in millions)
(unaudited)
Three Months Ended
------------------
Consumer Healthcare December 27, 2014 December 28, 2013 % Change
----------------- ----------------- --------
GAAP Non-GAAP As Adjusted GAAP* Non-GAAP As Adjusted* GAAP As
Adjustments Adjustments* Adjusted
---- ------------ ----------- ---- ------------- ----------- ---- ---------
Net sales $529.6 $ - $529.6 $536.3 $ - $536.3 -1% -1%
Cost of sales 360.8 6.6 (a) 354.2 364.6 3.4 (a) 361.2 -1% -2%
----- --- ----- ----- --- -----
Gross profit 168.8 6.6 175.4 171.7 3.4 175.1 -2% - %
Operating expenses 93.9 14.2 (a,b,c) 79.7 82.2 0.6 (a,b,d) 81.6 14% -2%
---- ---- ---- ---- ----
Operating income $74.9 $20.8 $95.7 $89.5 $4.0 $93.5 -16% 2%
===== ===== ===== ===== ==== =====
Selected ratios as a percentage of net sales**
Gross profit 31.9% 33.1% 32.0% 32.7%
Operating expenses 17.7% 15.1% 15.3% 15.2%
Operating income 14.1% 18.1% 16.7% 17.4%
Six Months Ended
----------------
Consumer Healthcare December 27, 2014 December 28, 2013 % Change
----------------- ----------------- --------
GAAP Non-GAAP As Adjusted GAAP* Non-GAAP As Adjusted* GAAP As
Adjustments Adjustments* Adjusted
---- ------------ ----------- ---- ------------- ----------- ---- ---------
Net sales $1,022.9 $ - $1,022.9 $1,074.8 $ - $1,074.8 -5% -5%
Cost of sales 701.3 13.6 (a) 687.7 726.1 6.8 (a) 719.3 -3% -4%
----- ---- ----- ----- --- -----
Gross profit 321.6 13.6 335.2 348.7 6.8 355.5 -8% -6%
Operating expenses 181.4 18.2 (a,b,c) 163.2 169.2 3.3 (a,b,d) 165.9 7% -2%
----- ---- ----- ----- -----
Operating income $140.2 $31.8 $172.0 $179.5 $10.0 $189.5 -22% -9%
====== ===== ====== ====== ===== ======
Selected ratios as a percentage of net sales**
Gross profit 31.4% 32.8% 32.4% 33.1%
Operating expenses 17.7% 16.0% 15.7% 15.4%
Operating income 13.7% 16.8% 16.7% 17.6%
Table II continued
PERRIGO COMPANY PLC
REPORTABLE SEGMENTS
RECONCILIATION OF NON-GAAP MEASURES
(in millions)
(unaudited)
Three Months Ended
------------------
Nutritionals December 27, 2014 December 28, 2013 % Change
----------------- ----------------- --------
GAAP Non-GAAP As Adjusted GAAP* Non-GAAP As Adjusted* GAAP As
Adjustments Adjustments* Adjusted
---- ------------ ----------- ---- ------------- ----------- ---- ---------
Net sales $130.6 $ - $130.6 $139.7 $ - $139.7 -7% -7%
Cost of sales 98.7 3.1 (a) 95.6 101.0 3.1 (a) 97.9 -2% -2%
---- --- ---- ----- --- ----
Gross profit 31.8 3.1 34.9 38.7 3.1 41.8 -18% -17%
Operating expenses 24.7 4.1 (a) 20.6 25.4 4.3 (a) 21.1 -3% -3%
---- ---- ---- ----
Operating income $7.2 $7.2 $14.4 $13.3 $7.3 $20.7 -46% -31%
==== ==== ===== ===== ==== =====
Selected ratios as a percentage of net sales**
Gross profit 24.4% 26.7% 27.7% 29.9%
Operating expenses 18.9% 15.7% 18.2% 15.1%
Operating income 5.5% 11.0% 9.6% 14.8%
Six Months Ended
----------------
Nutritionals December 27, 2014 December 28, 2013 % Change
----------------- ----------------- --------
GAAP Non-GAAP As Adjusted GAAP* Non-GAAP As Adjusted* GAAP As
Adjustments Adjustments* Adjusted
---- ------------ ----------- ---- ------------- ----------- ---- ---------
Net sales $255.8 $ - $255.8 $268.7 $ - $268.7 -5% -5%
Cost of sales 190.5 6.2 (a) 184.3 199.2 6.1 (a) 193.0 -4% -5%
----- --- ----- ----- --- -----
Gross profit 65.3 6.2 71.5 69.6 6.1 75.7 -6% -6%
Operating expenses 49.6 8.3 (a) 41.3 48.5 8.6 (a) 40.0 2% 3%
---- --- ---- ---- ----
Operating income $15.7 $14.5 $30.2 $21.0 $14.7 $35.8 -25% -15%
===== ===== ===== ===== ===== =====
Selected ratios as a percentage of net sales**
Gross profit 25.5% 27.9% 25.9% 28.2%
Operating expenses 19.4% 16.1% 18.1% 14.9%
Operating income 6.1% 11.8% 7.8% 13.3%
Table II continued
PERRIGO COMPANY PLC
REPORTABLE SEGMENTS
RECONCILIATION OF NON-GAAP MEASURES
(in millions)
(unaudited)
Three Months Ended
------------------
Rx Pharmaceuticals December 27, 2014 December 28, 2013 % Change
----------------- ----------------- --------
GAAP Non-GAAP As Adjusted GAAP* Non-GAAP As Adjusted* GAAP As
Adjustments Adjustments* Adjusted
---- ------------ ----------- ---- ------------- ----------- ---- ---------
Net sales $276.6 $ - $276.6 $246.6 $ - $246.6 12% 12%
Cost of sales 127.1 17.8 (a) 109.3 117.8 21.4 (a) 96.4 8% 13%
----- ---- ----- ----- ---- ----
Gross profit 149.5 17.8 167.3 128.8 21.4 150.2 16% 11%
Operating expenses 39.8 0.2 (a) 39.6 28.4 1.3 (a,b,e,f) 27.1 40% 46%
---- ---- ---- ----
Operating income $109.7 $18.0 $127.7 $100.4 $22.7 $123.1 9% 4%
====== ===== ====== ====== ===== ======
Selected ratios as a percentage of net sales**
Gross profit 54.0% 60.5% 52.2% 60.9%
Operating expenses 14.4% 14.3% 11.5% 11.0%
Operating income 39.6% 46.2% 40.7% 49.9%
Six Months Ended
----------------
Rx Pharmaceuticals December 27, 2014 December 28, 2013 % Change
----------------- ----------------- --------
GAAP Non-GAAP As Adjusted GAAP* Non-GAAP As Adjusted* GAAP As
Adjustments Adjustments* Adjusted
---- ------------ ----------- ---- ------------- ----------- ---- ---------
Net sales $471.2 $ - $471.2 $450.2 $ - $450.2 5% 5%
Cost of sales 225.3 34.8 (a) 190.5 208.9 37.4 (a) 171.5 8% 11%
----- ---- ----- ----- ---- -----
Gross profit 245.9 34.8 280.7 241.3 37.4 278.8 2% 1%
Operating expenses 71.5 0.4 (a) 71.1 57.8 5.3 (a,b,e,f,g) 52.5 24% 35%
---- ---- ---- ----
Operating income $174.4 $35.2 $209.6 $183.5 $42.7 $226.2 -5% -7%
====== ===== ====== ====== ===== ======
Selected ratios as a percentage of net sales**
Gross profit 52.2% 59.6% 53.6% 61.9%
Operating expenses 15.2% 15.1% 12.8% 11.7%
Operating income 37.0% 44.5% 40.8% 50.2%
Table II continued
PERRIGO COMPANY PLC
REPORTABLE SEGMENTS
RECONCILIATION OF NON-GAAP MEASURES
(in millions)
(unaudited)
Three Months Ended
------------------
API December 27, 2014 December 28, 2013 % Change
----------------- ----------------- --------
GAAP Non-GAAP As Adjusted GAAP* Non-GAAP As Adjusted* GAAP As
Adjustments Adjustments* Adjusted
---- ------------ ----------- ---- ------------- ----------- ---- ---------
Net sales $30.0 $ - $30.0 $30.0 $ - $30.0 - % - %
Cost of sales 16.8 0.5 (a) 16.3 13.5 0.5 (a) 12.9 25% 26%
---- --- ---- ---- --- ----
Gross profit 13.2 0.5 13.7 16.5 0.5 17.1 -20% -20%
Operating expenses 5.8 - 5.8 8.3 - 8.3 31% 31%
--- --- --- ---
Operating income $7.4 $0.5 $7.9 $8.2 $0.5 $8.7 -10% -9%
==== ==== ==== ==== ==== ====
Selected ratios as a percentage of net sales**
Gross profit 43.9% 45.5% 55.2% 56.9%
Operating expenses 19.2% 19.2% 27.8% 27.8%
Operating income 24.7% 26.3% 27.4% 29.1%
Six Months Ended
----------------
API December 27, 2014 December 28, 2013 % Change
----------------- ----------------- --------
GAAP Non-GAAP As Adjusted GAAP* Non-GAAP As Adjusted* GAAP As
Adjustments Adjustments* Adjusted
---- ------------ ----------- ---- ------------- ----------- ---- ---------
Net sales $54.8 $ - $54.8 $73.2 $ - $73.2 -25% -25%
Cost of sales 28.6 1.0 (a) 27.6 26.8 1.0 (a) 25.7 7% 7%
---- --- ---- ---- --- ----
Gross profit 26.2 1.0 27.2 46.4 1.0 47.4 -44% -43%
Operating expenses 11.8 - 11.8 15.7 - 15.7 -26% -26%
---- ---- ---- ----
Operating income $14.4 $1.0 $15.4 $30.6 $1.0 $31.7 -53% -51%
===== ==== ===== ===== ==== =====
Selected ratios as a percentage of net sales**
Gross profit 47.7% 49.6% 63.4% 64.8%
Operating expenses 21.3% 21.3% 21.5% 21.5%
Operating income 26.4% 28.2% 41.9% 43.3%
Table II continued
PERRIGO COMPANY PLC
REPORTABLE SEGMENTS
RECONCILIATION OF NON-GAAP MEASURES
(in millions)
(unaudited)
Three Months Ended
------------------
Specialty Sciences December 27, 2014 December 28, 2013 (1) % Change
----------------- -------------------- --------
GAAP Non-GAAP As Adjusted GAAP* Non-GAAP Adjustments* As Adjusted* GAAP As Adjusted
Adjustments
Net sales $86.6 $ - $86.6 $7.4 $ - $7.4 NM NM
Cost of sales 72.5 72.5 (a) - 8.7 8.7 (a) - NM NM
---- ---- --- --- --- ---
Gross profit 14.1 72.5 86.6 (1.3) 8.7 7.4 NM NM
Operating expenses 4.6 0.8 (a,b) 3.8 17.7 14.6 (a,b) 3.1 -74% 21%
--- --- ---- ---
Operating income (loss) $9.5 $73.3 $82.8 $(19.0) $23.3 $4.3 -150% NM
==== ===== ===== ====== ===== ====
Selected ratios as a percentage of net sales**
Gross profit 16.3% 100.0% (17.1)% 100.0%
Operating expenses 5.3% 4.4% 239.1% 42.4%
Operating income (loss) 11.0% 95.6% (256.2)% 57.6%
Six Month Ended
---------------
Specialty Sciences December 27, 2014 December 28, 2013 (1) % Change
----------------- -------------------- --------
GAAP Non-GAAP As Adjusted GAAP* Non-GAAP Adjustments* As Adjusted* GAAP As Adjusted
Adjustments
Net sales $178.4 $ - $178.4 $7.4 $ - $7.4 NM NM
Cost of sales 145.0 145.0 (a) - 8.7 8.7 (a) - NM NM
----- ----- --- --- --- ---
Gross profit 33.4 145.0 178.4 (1.3) 8.7 7.4 NM NM
Operating expenses 9.0 1.2 (a,b) 7.8 17.7 14.6 (a,b) 3.1 -49% 151%
--- --- ---- ---
Operating income (loss) $24.4 $146.2 $170.6 $(19.0) $23.3 $4.3 NM NM
===== ====== ====== ====== ===== ====
Selected ratios as a percentage of net sales**
Gross profit 18.7% 100.0% (17.1)% 100.0%
Operating expenses 5.1% 4.4% 239.1% 42.4%
Operating income (loss) 13.7% 95.6% (256.2)% 57.6%
Table II continued
PERRIGO COMPANY PLC
REPORTABLE SEGMENTS
RECONCILIATION OF NON-GAAP MEASURES
(in millions)
(unaudited)
Three Months Ended
------------------
Other December 27, 2014 December 28, 2013 % Change
----------------- ----------------- --------
GAAP Non-GAAP As Adjusted GAAP* Non-GAAP Adjustments* As Adjusted* GAAP As Adjusted
Adjustments
Net sales $18.3 $ - $18.3 $19.0 $ - $19.0 -3% -3%
Cost of sales 11.9 0.4 (a) 11.5 12.9 0.4 (a) 12.4 -7% -7%
---- --- ---- ---- --- ----
Gross profit 6.4 0.4 6.8 6.1 0.4 6.6 5% 3%
Operating expenses 5.3 - 5.3 5.5 - 5.5 -5% -5%
--- --- --- ---
Operating income $1.1 $0.4 $1.5 $0.6 $0.4 $1.1 91% 45%
==== ==== ==== ==== ==== ====
Selected ratios as a percentage of net sales**
Gross profit 35.1% 37.1% 32.3% 34.6%
Operating expenses 28.7% 28.7% 29.1% 29.1%
Operating income 6.4% 8.4% 3.2% 5.6%
Six Months Ended
----------------
Other December 27, 2014 December 28, 2013 % Change
----------------- ----------------- --------
GAAP Non-GAAP As Adjusted GAAP* Non-GAAP Adjustments* As Adjusted* GAAP As Adjusted
Adjustments
Net sales $40.0 $ - $40.0 $38.1 $ - $38.1 5% 5%
Cost of sales 26.9 0.8 (a) 26.1 25.8 0.9 (a) 24.9 4% 5%
---- --- ---- ---- --- ----
Gross profit 13.1 0.8 13.9 12.3 0.9 13.2 7% 5%
Operating expenses 11.1 - 11.1 10.5 - 10.5 5% 5%
---- ---- ---- ----
Operating income $2.0 $0.8 $2.8 $1.8 $0.9 $2.7 14% 4%
==== ==== ==== ==== ==== ====
Selected ratios as a percentage of net sales**
Gross profit 32.8% 34.8% 32.3% 34.7%
Operating expenses 27.7% 27.7% 27.6% 27.6%
Operating income 5.1% 7.0% 4.7% 7.0%
Table II continued
PERRIGO COMPANY PLC
REPORTABLE SEGMENTS
RECONCILIATION OF NON-GAAP MEASURES
* Amounts may not sum or cross-foot due to rounding
**Ratios as a % to net sales may not calculate due to rounding
NM - Calculations are not meaningful
(1) Only includes activity from December 18, 2013 to December 28, 2013
(a) Amortization expense
(b) Restructuring and other integration-related charges
(c) R&D payment of $10.0 million made in connection with collaborative arrangement
(d) Favorable escrow settlement of $2.5 million related to Sergeant's
(e) Write-offs of IPR&D related to Paddock and Rosemont
(f) Favorable write-off of $4.9 million of contingent consideration related to the Fera acquisition
(g) Litigation settlement of $2.5 million
Table III
PERRIGO COMPANY PLC
FY 2015 GUIDANCE AND FY 2014 EPS
RECONCILIATION OF NON-GAAP MEASURES
(in millions except for per share amounts)
(unaudited)
Full Year
Fiscal 2015 Guidance (1)
-----------------------
FY15 reported diluted EPS range $3.66 - $3.86
Acquisition-related amortization (2) 2.48
Acquisition-related costs 0.64
Incremental interest expense (3) 0.23
Share dilution (4) 0.21
R&D payment made in connection with
collaborative arrangement 0.06
Losses on Elan equity method
investments 0.04
Restructuring and impairments 0.03
Investment distribution (0.01)
Transfer of rights agreement (0.09)
------
FY15 adjusted diluted EPS range $7.25 - $7.45
=============
FY15 net income - reported $504.1 - $531.1
Acquisition-related amortization (2) 343.5
Acquisition-related costs 88.7
Incremental interest expense (3) 37.0
R&D payment made in connection with
collaborative arrangement 8.7
Losses on equity method investments 6.2
Restructuring and impairments 3.9
Investment distribution (0.9)
Transfer of rights agreement (12.5)
FY15 net income - adjusted $978.7 - $1,005.7
=================
FY14 adjusted net income $739.5
% change 32% - 36%
Table III continued
PERRIGO COMPANY PLC
FY 2015 GUIDANCE AND FY 2014 EPS
RECONCILIATION OF NON-GAAP MEASURES
(unaudited)
Full Year Fiscal 2014
---------------------
FY14 reported diluted EPS $1.77
Acquisition-related costs 2.06
Acquisition-related amortization (2) 1.93
Restructuring and impairments 0.34
Charges associated with litigation
settlements 0.11
Losses on sales of investments 0.09
Losses on Elan equity method
investments 0.06
Charges associated with write-offs of
in-process R&D 0.03
Charge associated with contingent
consideration adjustment 0.01
Earnings associated with escrow
settlement (0.01)
FY14 adjusted diluted EPS $6.39
=====
(1) Guidance excludes
Omega operating results
for the remaining
forecast period, shares
to be issued to complete
the acquisition, and
future transaction-
related costs.
(2) Amortization of
acquired intangible
assets related to
business combinations and
asset acquisitions.
(3) Effect of incremental
interest expense from
$1.6 billion of senior
notes issued on December
2, 2014 to finance the
pending Omega
acquisition.
(4) Weighted average
impact of 6.8 million
shares issued on November
26, 2014 to finance the
pending Omega
acquisition.
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SOURCE Perrigo Company plc
