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Perrigo Company Reports Operating Results (10-K)

August 16, 2011 | About:
10qk

10qk

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Perrigo Company (PRGO) filed Annual Report for the period ended 2011-06-25.

Perrigo Company has a market cap of $8.16 billion; its shares were traded at around $88.41 with a P/E ratio of 23.79 and P/S ratio of 3.6. The dividend yield of Perrigo Company stocks is 0.32%. Perrigo Company had an annual average earning growth of 17.7% over the past 10 years. GuruFocus rated Perrigo Company the business predictability rank of 2.5-star.

Highlight of Business Operations:

In March 2009, the Company committed to a plan to sell its Israel Consumer Products business. This business primarily sold consumer products to the Israeli market, including cosmetics, toiletries and detergents, and was previously reported as part of the Company s Other category. In the third quarter of fiscal 2009, the Israel Consumer Products business had met the criteria set forth in ASC 360-10 to be accounted for as discontinued operations. On February 26, 2010, the Company completed the sale of its Israel Consumer Products business to Emilia Group, a subsidiary of O. Feller Holdings Ltd., for approximately $47,000, of which approximately $11,000, subject to foreign currency fluctuations between the Israeli shekel and the U.S. dollar, is contingent upon satisfaction of contingency factors specified in the agreement. After the finalization of post-closing working capital adjustments in the third quarter of fiscal 2011, the sale resulted in a pre-tax loss of $1,407. The Israel Consumer Products business is considered a discontinued operation, and as a result, all consolidated financial statements in this Annual Report on Form 10-K have been adjusted accordingly to reflect this financial statement presentation. See Note 3 of the Notes to Consolidated Financial Statements for information concerning the sale of Israel Consumer Products.

The Company launched various new products in fiscal 2011, most notably fexofenadine 180 mg tablets and naproxen sodium soft gels, which compete with the national brands Allegra® tablets and Aleve® liquid gels, respectively. Net sales related to new products were $54,200 for fiscal 2011, $65,700 for fiscal 2010 and $317,300 for fiscal 2009. In fiscal 2009, the Company considered a Consumer Healthcare product to be new if it was added to the Company s product lines within 18 months prior to the end of the period for which net sales are being measured, unless otherwise noted. Starting in fiscal 2010, the Company shortened this period to 12 months.

Net sales related to new products were approximately $16,500 for fiscal 2011, $4,500 for fiscal 2010 and $10,800 for fiscal 2009. In fiscal 2009, the Company considered a Nutritionals' product to be new if it was added to the Company s product lines within 18 months prior to the end of the period for which net sales are being measured, unless otherwise noted. Starting in fiscal 2010, the Company shortened this period to 12 months.

Subsequent to the Company's fiscal year end, on July 26, 2011, the Company completed the acquisition of substantially all of the assets of privately-held Paddock Laboratories, Inc. (Paddock) for approximately $547,000 in cash. The Company funded the transaction using a new $250,000 five-year term loan, $212,000 of cash on hand and $85,000 from its accounts receivable securitization program. As of the end of the fourth quarter of fiscal 2011, the Company had incurred $2,560 of acquisition costs, of which $1,315, $695 and $550 were expensed in operations in the second, third and fourth quarters of fiscal 2011, respectively. Headquartered in Minneapolis, Minnesota, Paddock is a manufacturer and marketer of generic Rx pharmaceutical products. As part of closing the acquisition, the Company divested a small portfolio of generic pharmaceutical products in response to the Federal Trade Commission (FTC) review. The acquisition expanded the Company s generic Rx product offering, pipeline and scale and is expected to add over $200,000 in sales on an annual basis.

On May 26, 2010, the Company announced that it acquired the pending ANDA for the generic therapeutic-like equivalent of HalfLytely® and Bisacodyl tablets bowel prep kit from Novel Laboratories, Inc. (Novel) for $3,000 in cash and a $2,000 milestone payment based on tentative approval of the ANDA by the FDA. The milestone payment and the full amount of the purchase price, which related to acquired research and development, was capitalized and immediately written off as in-process research and development in the fourth quarter of fiscal 2010.

Ltd. (Teva) (formerly Barr Laboratories, Inc.), a partner with the Company for this product and the holder of the ANDA. The Company completed certain milestones with respect to the development of this product in the second fiscal quarter of 2009 that resulted in the recognition of $2,500 in revenue. On July 31, 2009, Teva received FDA final approval for its ANDA. This event triggered additional milestone payments for the Company that resulted in the recognition of an additional $11,500 and $9,000 of revenue in fiscal 2010 and 2011, respectively. The product, which is being supplied by the Company, was launched by Teva in June 2011, at which time the Company began recording its share of the net profits from Teva's product sales.

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