DUBLIN, April 25, 2017 /PRNewswire/ -- Perrigo
Company plc (NYSE; TASE: PRGO), a leading provider of Quality,
Affordable Healthcare Products®, today announced that
the Company's Board of Directors, after consultation with
management and discussion with Ernst & Young LLP, the Company's
independent accounting firm ("EY"), and following the
recommendation of the Company's Audit Committee, concluded that the
Company's previously issued financial statements (and any related
audit reports of EY) for the following periods (collectively, the
"Relevant Periods") should no longer be relied upon:
- the fiscal years ended June 28,
2014 and June 27, 2015;
- the transition period from June 28,
2015 to December 31, 2015;
and
- the quarterly periods ended December 28,
2013, March 29, 2014,
September 27, 2014, December 27, 2014, March
28, 2015, September 26, 2015,
April 2, 2016, July 2, 2016 and October
1, 2016.
This determination follows a correction in accounting under U.S.
generally accepted accounting principles ("U.S. GAAP") related to
the Tysabri® royalty stream. After an extensive
evaluation of the facts and circumstances and the judgments
required to determine the appropriate classification, it was
determined that, under U.S. GAAP, the Tysabri® royalty
stream should be recorded as a financial asset, rather than an
intangible asset, on the date of acquisition, and the Company
adopted this change. In addition, in connection with the financial
closing for the year ended December 31,
2016, the Company identified certain deferred tax assets
that existed at the time of the acquisition of Omega Pharma Invest
N.V. ("Omega") on April 1, 2015, in
the amount of approximately $220
million. The resulting balance sheet reclassification will
require a reduction of goodwill, offset by a corresponding
reduction to net deferred tax liabilities at the date of the Omega
acquisition. Further, the Company has evaluated the accounting
effect subsequent to the acquisition date related to the identified
deferred tax assets, including the impairments of Omega goodwill
recorded in fiscal 2016, and has also concluded that a correction
of accounting is required in certain Relevant Periods.
The Company has determined that it is necessary to restate
certain previously issued financial statements to address these
issues. However, the Company does not expect these changes to have
a material impact on net cash flows and does not expect an impact
on the previously closed sale of Tysabri®.
The Company has elected to account for the Tysabri®
financial asset using the fair value option model, which requires
the Company to adjust its financial statements for the Relevant
Periods to (1) remove the Tysabri® royalty stream
from net sales in its income statement, (2) remove the
amortization expense (reflected in cost of goods sold) associated
with recording the Tysabri® royalty stream as an
intangible asset, and (3) include the quarterly changes in
fair value of the Tysabri® royalty stream as a component
of other income/expense. The change in accounting may affect the
amount and timing of noncash income or expense associated with the
Tysabri® asset, and the Company's Statements of Cash
Flows for the Relevant Periods will reflect the cash received from
the Tysabri® royalty stream as cash from investing
activities, rather than as cash from operating activities.
Select Preliminary Unaudited First Quarter 2017 Financial
Results
Perrigo also announced today that preliminary
unaudited first quarter 2017 consolidated net sales were
approximately $1.2 billion comprised
of Consumer Healthcare Americas (CHCA) nets sales of $0.58 billion, Consumer Healthcare International
(CHCI) net sales of $0.37 billion and
Rx net sales of $0.22 billion. These
results do not include any contributions from
Tysabri®.
Select Guidance Metrics to Exclude
Tysabri®
The Company is issuing select guidance
metrics to exclude Tysabri® and expects 2017 net sales
to be in the range of $4.6 billion to $4.8
billion and cash flow from operations of greater than
$575 million.
Credit Amendment and Redemption of Outstanding
Debt
The Company has entered into amendments to its term
loan agreement and its revolving credit agreement to remain in
compliance with these agreements. Further information about the
amendments can be found in the Company's Current Report on Form 8-K
filed today.
Separately, on April 7, 2017, the
Company issued a notice of redemption to redeem all of the
$600 million in aggregate principal
amount of the outstanding 2.300% senior notes due in 2018. The
Company expects to redeem all of these notes on May 8, 2017 using available cash on hand.
Perrigo CEO John T. Hendrickson
stated, "While the finance team is focused on filing the
restatements as soon as practical, I and the Perrigo leadership
team remain focused on driving our business and creating value for
shareholders. This focus is illustrated by a busy first
quarter. We have closed the sale of Tysabri® for
$2.2 billion in cash plus up to
$650 million in potential milestone
payments, and consistent with our investment grade philosophy, we
have initiated our debt pay down strategy. Our cost optimization
program is well underway to achieve greater than $130 million in savings by mid-2018. I am pleased
that our consolidated first quarter 2017 top line results were
consistent with our plan and continue to anticipate 2017 will be a
year of execution to reestablish our foundation, with a projected
return to consolidated growth in 2018. I look forward to
capitalizing on our unique business model and focusing on Perrigo's
core strengths in providing Quality, Affordable Healthcare
Products® to customers and patients around the
globe."
Quiet Period
As the Company continues to address these
matters, Perrigo is in a quiet period regarding all matters until
the filing of its financial statements.
Conference Call
The Company will host a conference
call at 5:00 p.m. ET (2:00 p.m. PT), April 25,
2017 to provide a business update. The conference call will
be available 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
#10739525. A taped replay of the call will be available beginning
at approximately 9:00 p.m. (ET) Tuesday, April 25, until midnight Thursday,
May 25, 2017. To listen to the replay, dial 800-585-8367,
International 404-537-3406, and use access code 10739525.
About Perrigo
Perrigo Company plc, a leading global
healthcare company, delivers value to its customers and consumers
by providing Quality Affordable Healthcare
Products®. Founded in 1887 as a packager of home
remedies, Perrigo has built a unique business model that is best
described as the convergence of a fast-moving consumer goods
company, a high-quality pharmaceutical manufacturing organization
and a world-class supply chain network. Perrigo is the world's
largest manufacturer of over-the-counter ("OTC") healthcare
products and supplier of infant formulas for the store brand
market. The Company also is a leading provider of branded OTC
products throughout Europe and the
U.S., as well as a leading producer of "extended topical"
prescription drugs. Perrigo, headquartered in Ireland, sells its products primarily in
North America and Europe, as well as in other markets, including
Australia, Israel and China. Visit Perrigo online at
(http://www.perrigo.com).
Forward-Looking Statements
Certain statements in this
press release are "forward-looking statements." 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 the
negative of those terms or other comparable terminology. 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,
including the time, effort and expense to complete the
restatements, future impairment charges, the ability to achieve its
guidance, the completion of announced acquisitions or dispositions,
the ability to execute and achieve the desired benefits of
announced initiatives, and the timing, amount and cost of any share
repurchases. In addition, the Company may identify and be unable to
remediate one or more material weaknesses in its internal control
over financial reporting, may encounter unanticipated material
issues or additional adjustments that could delay the completion of
the restatements or the filing of required periodic reports with
the SEC, or may be unable to regain compliance with the NYSE
continued listing rules. Furthermore, the Company and/or its
subsidiaries may incur additional tax liabilities in respect of
2016 and prior years as a result of any restatement or may be found
to have breached certain provisions of Irish company legislation in
respect of prior financial statements and if so may incur
additional expenses and penalties. These and other important
factors, including those discussed under "Risk Factors" in the
Company's Form 10-KT for the six-month period ended December 31, 2015, as well as the Company's
subsequent filings with the United States Securities and Exchange
Commission, may cause actual results, performance or achievements
to differ materially from those expressed or implied by these
forward-looking statements. The forward-looking statements in this
press release 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.
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SOURCE Perrigo Company plc