The Perrigo Company (NASDAQ: PRGO) today announced results for the second quarter and six months of fiscal 2003 ended December 28, 2002.
Perrigo Company (NASDAQ: PRGO)
(in thousands, except per share amounts)
Second Quarter Year-To-Date
2003 2002 2003 2002
Sales $227,521 $228,694 $440,736 $445,810
Net Income $16,814 $15,214 $35,592 $26,951
Diluted Shares 70,394 74,560 71,003 75,369
Diluted EPS $0.24 $0.20 $0.50 $0.36
Net sales for the second quarter were $227.5 million, compared with $228.7 million last year. Net income increased 11 percent to $16.8 million, or $0.24 per share, compared with $15.2 million, or $0.20 per share, a year ago.
The Company noted that, effective for the fiscal second quarter, it has 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. Before adoption of this expense, earnings were $0.25 per share, compared with $0.22 per share last year. Please refer to the restated results in the summary table at the end of this announcement.
Commenting on the second quarter, David T. Gibbons, Perrigo President and Chief Executive Officer stated, "We are pleased with the excellent results recorded again this quarter. Our earnings reflect not only the continuing focus on operational efficiency, cost reduction and working capital management, but favorable mix and pricing, which contributed to an improvement in margins. Cash flow and the balance sheet remain strong, with cash from operations in the first six months exceeding $37 million."
Net sales for the six months ended December 28, 2002, were $440.7 million, a decline of one percent, compared with $445.8 million last year. Net income for the six months was $35.6 million, or $0.50 per share, including a lawsuit settlement of $2.0 million after-tax, or $0.03 per share. Excluding the lawsuit settlement, net income was $33.6 million, or $0.47 per share, an increase of 25 percent compared with net income of $27.0 million, or $0.36 per share, a year ago.
Mr. Gibbons noted, "We have had a great start to our fiscal year, reporting record earnings over the past six months while continuing to make good progress in achieving our long-term goals. With another weak cough, cold and flu season underway, and the recent launch of new national brand products in the allergy category, we remain cautious about the second half of the year."
On January 23, 2003, the Company announced that its Board of Directors declared the Company's first quarterly dividend of $0.025 per share, payable on March 21, 2003, to shareholders of record on February 28, 2003. Said Gibbons, "We are pleased to be able to make this commitment to our shareholders. The strong cash flow, the strong balance sheet and our confidence in our long-term prospects support the Board's decision to adopt a policy of paying quarterly cash dividends."
The Company also recently announced the appointment of the following new Board members: Gary M. Cohen, President, BD Medical Systems, Becton, Dickinson and Company; Judith A. Hemberger, Executive Vice President and Chief Operating Officer, Pharmion Corporation; and Gary K. Kunkle, Jr., President and Chief Operating Officer of DENTSPLY International, Inc. With these additions, seven of Perrigo's nine directors will meet the standards of independence under all existing and proposed stock exchange governance guidelines. Mr. Gibbons said, "Our decision to expense options, the addition of independent directors, the implementation of new standards of governance and the initiation of dividend payments demonstrate our commitment to our shareholders' interests."
Perrigo will host a conference call to discuss second quarter fiscal 2003 results at 11:00 a.m. (EST) 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. (EST) Monday, January 27. To listen to the replay, call 800-642-1687, access code 7622482.
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)
(unaudited)
Second Quarter Year-To-Date
2003 2002 2003 2002
(as restated) (as restated)
Net sales $227,521 $228,694 $440,736 $445,810
Cost of sales 163,225 165,990 314,761 330,767
Gross profit 64,296 62,704 125,975 115,043
Operating expenses
Distribution 4,083 4,265 8,110 8,282
Research and development 5,321 6,407 10,769 11,703
Selling and administration 28,547 25,732 54,150 49,825
Subtotal 37,951 36,404 73,029 69,810
Restructuring - 2,046 - 2,046
Unusual litigation - - (3,128) -
Total 37,951 38,450 69,901 71,856
Operating income 26,345 24,254 56,074 43,187
Interest and other, net (514) (113) (722) (276)
Income before income taxes 26,859 24,367 56,796 43,463
Income tax expense 10,045 9,153 21,204 16,512
Net income $16,814 $15,214 $35,592 $26,951
Earnings per share
Basic $0.24 $0.21 $0.51 $0.36
Diluted $0.24 $0.20 $0.50 $0.36
Weighted average shares
outstanding:
Basic 69,273 73,343 70,000 73,842
Diluted 70,394 74,560 71,003 75,369
PERRIGO COMPANY
CONDENSED CONSOLIDATED BALANCE SHEETS
(in thousands)
December 28, June 29, December 29,
2002 2002 2001
Assets (unaudited) (as restated) (unaudited)
Current assets (as restated)
Cash and cash equivalents $71,773 $76,824 $814
Accounts receivable, net of
allowances 102,722 82,560 112,214
Inventories, net of allowances 153,477 155,611 161,677
Prepaid expenses and other current
assets 6,907 6,896 10,613
Current deferred income taxes 21,657 19,860 23,463
Total current assets 356,536 341,751 308,781
Property and equipment 411,858 399,461 388,102
Less accumulated depreciation 201,759 188,417 178,593
210,099 211,044 209,509
Goodwill, net 35,919 35,919 47,471
Other 4,678 5,073 3,258
$607,232 $593,787 $569,019
Liabilities and Shareholders' Equity
Current liabilities
Accounts payable $68,970 $74,449 $68,429
Notes payable 9,469 8,338 6,631
Payrolls and related taxes 27,884 31,338 22,531
Accrued expenses 41,931 32,721 33,847
Income taxes 9,872 8,088 10,680
Total current liabilities 158,126 154,934 142,118
Deferred income taxes 20,428 18,295 15,770
Long-term debt - - 1,600
Other long-term liabilities 3,212 2,396 2,426
Shareholders' equity
Preferred stock, without par
value, 10,000 shares authorized - - -
Common stock, without par value,
200,000 shares authorized 81,699 110,698 117,727
Unearned compensation (414) (608) (903)
Accumulated other comprehensive
income 890 373 420
Retained earnings 343,291 307,699 289,861
Total shareholders' equity 425,466 418,162 407,105
$607,232 $593,787 $569,019
Supplemental Disclosures of Balance
Sheet Information
Allowance for doubtful accounts $9,465 $7,569 $8,825
Allowance for inventory $20,855 $21,360 $27,056
Working capital $198,410 $186,817 $166,663
Preferred stock, shares issued - - -
Common stock, shares issued 69,479 72,550 73,372
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 $35,592 $26,951
Depreciation and amortization 13,505 12,312
Compensation - stock options 2,667 3,033
51,764 42,296
Accounts receivable (20,162) (18,627)
Inventories 2,134 (568)
Current and deferred income
taxes 2,120 (14,317)
Accounts payable (5,479) (15,958)
Restructuring, net of cash - 2,046
Other 7,082 3,617
Net cash from (for)
operating activities 37,459 (1,511)
Cash Flows (For) From Investing
Activities:
Additions to property and
equipment (11,975) (9,731)
Proceeds from sale of assets
held for sale - 14,161
Other - (426)
Net cash (for) from
investing activities (11,975) 4,004
Cash Flows From (For) Financing
Activities:
Borrowings (repayments) of
short-term debt, net 1,131 (4,541)
Tax benefit of stock
transactions - 1,603
Issuance of common stock 1,059 10,036
Repurchase of common stock (32,667) (21,454)
Other (58) 1,661
Net cash for financing
activities (30,535) (12,695)
Net Decrease in Cash and Cash
Equivalents (5,051) (10,202)
Cash and Cash Equivalents, at
Beginning of Period 76,824 11,016
Cash and Cash Equivalents, at End
of Period $71,773 $814
Supplemental Disclosures of Cash
Flow Information:
Interest paid $467 $1,051
Income taxes paid $18,922 $29,970
PERRIGO COMPANY
STOCK OPTION COMPENSATION EXPENSE
IMPACT ON NET INCOME AND EPS
(in thousands, except per share amounts)
(unaudited)
Second Quarter Year-To-Date
2003 2002 2003 2002
Net income before adoption $18,047 $16,565 $38,058 $29,655
Compensation expenses (net of tax
benefit) 1,233 1,351 2,466 2,704
Net income after adoption $16,814 $15,214 $35,592 $26,951
Weighted average shares outstanding
Basic 69,273 73,343 70,000 73,842
Diluted
Before adoption 71,017 75,227 71,572 76,064
After adoption 70,394 74,560 71,003 75,369
Basic EPS
Before adoption $0.26 $0.23 $0.54 $0.40
After adoption $0.24 $0.21 $0.51 $0.36
Diluted EPS
Before adoption $0.25 $0.22 $0.53 $0.39
After adoption $0.24 $0.20 $0.50 $0.36
SOURCE: Perrigo Company
CONTACT: Ernest J. Schenk, Manager, Investor Relations and Communication
of Perrigo Company, +1-269-673-9212, or E-mail: Investor@perrigo.com
Web site: http://www.perrigo.com/investor
Web site: http://www.perrigo.com/
Company News On-Call: http://www.prnewswire.com/gh/cnoc/comp/699550.html