[X]
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QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
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[ ]
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TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
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Ireland
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Not Applicable
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(State or other jurisdiction of
incorporation or organization)
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(I.R.S. Employer
Identification No.)
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Treasury Building, Lower Grand Canal Street, Dublin 2, Ireland
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-
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(Address of principal executive offices)
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(Zip Code)
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Large accelerated filer [X]
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Accelerated filer [ ]
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Non-accelerated filer [ ]
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Smaller reporting company [ ]
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(Do not check if a smaller reporting company)
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PAGE
NUMBER
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PART I. FINANCIAL INFORMATION
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PART II. OTHER INFORMATION
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Three Months Ended
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September 26,
2015 |
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September 27,
2014 |
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Net sales
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$
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1,344.7
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$
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951.5
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Cost of sales
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795.9
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629.7
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Gross profit
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548.8
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321.8
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Operating expenses
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Distribution
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24.9
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14.4
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Research and development
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41.6
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36.6
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Selling
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167.9
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50.4
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Administration
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123.6
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81.5
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Restructuring
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2.2
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1.7
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Total operating expenses
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360.2
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184.6
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Operating income
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188.6
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137.2
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Interest expense, net
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43.4
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25.9
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Other expense, net
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13.0
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2.7
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Income before income taxes
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132.2
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108.6
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Income tax expense
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19.6
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12.3
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Net income
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$
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112.6
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$
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96.3
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Earnings per share
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Basic earnings per share
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$
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0.77
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$
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0.72
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Diluted earnings per share
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$
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0.77
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$
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0.72
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Weighted-average shares outstanding
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Basic
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146.3
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133.9
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Diluted
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146.9
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134.4
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Dividends declared per share
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$
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0.125
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$
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0.105
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Three Months Ended
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September 26, 2015
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September 27, 2014
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Net income
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$
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112.6
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$
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96.3
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Other comprehensive income (loss):
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Foreign currency translation adjustments
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(39.8
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(63.8
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Change in fair value of derivative financial instruments, net of tax
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0.1
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(2.1
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Change in fair value of investment securities, net of tax
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2.5
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0.6
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Other comprehensive (loss), net of tax
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(37.2
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(65.3
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Comprehensive income
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$
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75.4
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$
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31.0
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September 26,
2015 |
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June 27,
2015 |
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Assets
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Cash and cash equivalents
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$
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506.5
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$
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785.6
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Investment securities
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16.5
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12.7
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Accounts receivable, net of allowance for doubtful accounts of $2.1 million and $2.4 million, respectively
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1,232.2
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1,282.1
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Inventories
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888.0
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838.9
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Current deferred income taxes
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69.0
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122.3
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Prepaid expenses and other current assets
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168.6
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141.3
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Total current assets
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2,880.8
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3,182.9
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Property and equipment, net
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924.1
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932.4
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Goodwill and other indefinite-lived intangible assets
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7,355.2
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7,235.0
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Other intangible assets, net
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8,290.2
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8,105.6
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Non-current deferred income taxes
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27.8
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39.6
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Other non-current assets
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225.0
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225.1
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Total non-current assets
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16,822.3
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16,537.7
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Total assets
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$
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19,703.1
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$
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19,720.6
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Liabilities and Shareholders’ Equity
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Accounts payable
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$
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541.2
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$
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747.5
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Short-term debt
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86.9
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6.4
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Payroll and related taxes
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112.2
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133.9
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Accrued customer programs
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367.1
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368.1
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Accrued liabilities
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308.8
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246.4
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Accrued income taxes
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82.3
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52.6
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Current deferred income taxes
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104.5
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80.6
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Current portion of long-term debt
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58.2
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58.2
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Total current liabilities
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1,661.2
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1,693.7
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Long-term debt, less current portion
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5,229.9
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5,246.9
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Non-current deferred income taxes
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1,705.1
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1,745.1
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Other non-current liabilities
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374.9
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372.1
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Total non-current liabilities
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7,309.9
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7,364.1
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Total liabilities
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8,971.1
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9,057.8
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Commitments and contingencies - Note 12
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Preferred shares, $0.0001 par value, 10 million shares authorized
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—
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—
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Ordinary shares, €0.001 par value, 10 billion shares authorized
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8,632.8
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8,621.9
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Accumulated other comprehensive income
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65.2
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102.4
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Retained earnings
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2,034.0
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1,938.3
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Total controlling interest
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10,732.0
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10,662.6
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Noncontrolling interest
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—
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0.2
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Total shareholders’ equity
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10,732.0
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10,662.8
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Total liabilities and shareholders' equity
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$
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19,703.1
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$
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19,720.6
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Supplemental Disclosures of Balance Sheet Information
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Preferred shares, issued and outstanding
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—
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—
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Ordinary shares, issued and outstanding
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146.4
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146.3
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Three Months Ended
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September 26, 2015
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September 27, 2014
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Cash Flows From (For) Operating Activities
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Net income
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$
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112.6
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$
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96.3
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Adjustments to derive cash flows
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Depreciation and amortization
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175.4
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126.6
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Share-based compensation
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14.3
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8.8
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Non-cash restructuring charges
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2.2
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1.7
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Deferred income taxes
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(14.2
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(20.1
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Other non-cash adjustments
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3.2
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0.3
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Subtotal
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293.5
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213.6
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Increase (decrease) in cash due to:
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Accounts receivable
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46.2
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57.3
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Inventories
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(57.0
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(29.7
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)
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Accounts payable
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(194.0
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(32.5
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Payroll and related taxes
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(22.8
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(34.9
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Accrued customer programs
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(0.4
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18.1
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Accrued liabilities
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61.5
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0.6
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Accrued income taxes
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15.2
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14.6
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Other
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(6.2
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(12.0
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Subtotal
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(157.5
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)
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(18.5
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Net cash from (for) operating activities
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136.0
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195.1
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Cash Flows From (For) Investing Activities
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Acquisitions of businesses, net of cash acquired
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(405.1
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)
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—
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Additions to property and equipment
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(38.6
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(31.7
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Other investing
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(5.0
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1.0
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Net cash from (for) investing activities
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(448.7
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)
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(30.7
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)
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Cash Flows From (For) Financing Activities
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Repayments of long-term debt
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(14.3
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(39.5
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Borrowings (repayments) of short-term debt, net
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79.0
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(2.1
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)
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Issuance of ordinary shares
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2.2
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2.6
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Shares withheld for payment of employees' withholding tax liability
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(9.0
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)
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(7.5
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)
|
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Cash dividends
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(18.3
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)
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(14.1
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)
|
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Other financing
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4.1
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(0.7
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)
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Net cash from (for) financing activities
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43.7
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(61.3
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)
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Effect of exchange rate changes on cash
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(10.1
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)
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(11.1
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)
|
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Net increase (decrease) in cash and cash equivalents
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(279.1
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)
|
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92.0
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Cash and cash equivalents, beginning of period
|
785.6
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|
799.5
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Cash and cash equivalents, end of period
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$
|
506.5
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$
|
891.5
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Supplemental Disclosures of Cash Flow Information
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Cash paid/received during the year for:
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Interest paid
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$
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6.2
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$
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5.2
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Interest received
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$
|
0.3
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$
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0.2
|
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Income taxes paid
|
$
|
19.8
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$
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10.9
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Income taxes refunded
|
$
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1.0
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$
|
0.5
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Accounting Standard Update
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Description
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Date of Adoption
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Effect on the Financial Statements or Other Significant Matters
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Simplifying the Accounting for Measurement-Period Adjustments
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The updated guidance eliminates the requirement for an acquirer in a business combination to account for measurement-period adjustments retrospectively. Instead, acquirers must recognize measurement-period adjustments during the period in which they determine the amounts, including the effect on earnings of any amounts they would have recorded in previous periods if the accounting had been completed at the acquisition date. The guidance is effective for public business entities for fiscal years beginning after December 15, 2015, and interim periods within those fiscal years. Early adoption is permitted.
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September 26, 2015
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Provisional amounts that occur on or after the adoption date will be recognized in the period in which they are determined. The adoption of this accounting guidance did not materially impact the financial statements for the quarter ended September 26, 2015.
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Naturwohl*
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ScarAway
®
*
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GSK*
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Total purchase consideration
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$
|
150.4
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$
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27.0
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$
|
223.6
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Assets acquired:
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Cash and cash equivalents
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$
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4.6
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$
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—
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$
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—
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Accounts receivable
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3.3
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0.9
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—
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Inventories
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1.7
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—
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—
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Prepaid expenses and other current assets
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—
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0.1
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—
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Goodwill
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63.5
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4.9
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48.7
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Intangible assets:
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Trademarks, trade names, and brands
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51.8
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11.6
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132.4
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Customer relationships and distribution networks
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33.8
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9.0
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42.5
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Non-competition agreements
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0.3
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0.5
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—
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Distribution and license agreements
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21.4
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—
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—
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Other intangible assets
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107.3
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21.1
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|
174.9
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Total assets
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180.4
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27.0
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|
223.6
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Liabilities assumed:
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||||||
Accounts payable
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2.8
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—
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—
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Accrued liabilities
|
0.9
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|
—
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|
|
—
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|
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Current net deferred income tax liabilities
|
0.9
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—
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|
|
—
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|
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Non-current net deferred income tax liabilities
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25.4
|
|
|
—
|
|
|
—
|
|
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Total liabilities
|
30.0
|
|
|
—
|
|
|
—
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|
|||
Net assets acquired
|
$
|
150.4
|
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$
|
27.0
|
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$
|
223.6
|
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*
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Opening balance sheets are preliminary.
|
Perrigo ordinary shares issued
|
|
5.4
|
|
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Perrigo share price at transaction close on March 30, 2015
|
|
$
|
167.64
|
|
Total value of Perrigo ordinary shares issued
|
|
$
|
904.9
|
|
Cash consideration
|
|
2,078.3
|
|
|
Total consideration
|
|
$
|
2,983.2
|
|
Line item
|
|
June 27,
2015 |
||
Administration
|
|
$
|
29.7
|
|
Interest expense, net
|
|
23.7
|
|
|
Other expense, net
|
|
324.0
|
|
|
Loss on extinguishment of debt
|
|
9.6
|
|
|
Total acquisition-related costs
|
|
$
|
387.0
|
|
|
Gelcaps*
|
|
Omega*
|
|
Lumara
|
||||||
Total purchase consideration
|
$
|
36.4
|
|
|
$
|
2,983.2
|
|
|
$
|
83.0
|
|
Assets acquired:
|
|
|
|
|
|
||||||
Cash and cash equivalents
|
$
|
4.6
|
|
|
$
|
14.7
|
|
|
$
|
—
|
|
Accounts receivable
|
8.5
|
|
|
264.7
|
|
|
2.9
|
|
|||
Inventories
|
7.2
|
|
|
207.1
|
|
|
1.5
|
|
|||
Current net deferred tax assets
|
0.6
|
|
|
7.6
|
|
|
—
|
|
|||
Prepaid expenses and other current assets
|
2.3
|
|
|
39.2
|
|
|
0.4
|
|
|||
Property and equipment
|
6.0
|
|
|
130.8
|
|
|
0.1
|
|
|||
Goodwill
|
4.6
|
|
|
1,426.1
|
|
|
—
|
|
|||
Intangible assets:
|
|
|
|
|
|
||||||
Trademarks, trade names and brands
|
4.4
|
|
|
2,492.6
|
|
|
—
|
|
|||
Customer relationships and distribution networks
|
6.6
|
|
|
1,393.9
|
|
|
—
|
|
|||
Formulations
|
—
|
|
|
—
|
|
|
82.0
|
|
|||
Developed product technology
|
—
|
|
|
32.6
|
|
|
—
|
|
|||
Other intangible assets
|
11.0
|
|
|
3,919.1
|
|
|
82.0
|
|
|||
Other non-current assets
|
0.4
|
|
|
2.4
|
|
|
—
|
|
|||
Total assets
|
45.2
|
|
|
6,011.7
|
|
|
86.9
|
|
|||
Liabilities assumed:
|
|
|
|
|
|
||||||
Accounts payable
|
3.4
|
|
|
243.1
|
|
|
—
|
|
|||
Short-term debt
|
—
|
|
|
24.6
|
|
|
—
|
|
|||
Accrued liabilities
|
1.6
|
|
|
44.5
|
|
|
3.9
|
|
|||
Payroll and related taxes
|
—
|
|
|
51.3
|
|
|
—
|
|
|||
Accrued customer programs
|
—
|
|
|
39.8
|
|
|
—
|
|
|||
Long-term debt
|
—
|
|
|
1,471.0
|
|
|
—
|
|
|||
Non-current net deferred income tax liabilities
|
3.7
|
|
|
1,071.7
|
|
|
—
|
|
|||
Other non-current liabilities
|
0.1
|
|
|
82.5
|
|
|
—
|
|
|||
Total liabilities
|
8.8
|
|
|
3,028.5
|
|
|
3.9
|
|
|||
Net assets acquired
|
$
|
36.4
|
|
|
$
|
2,983.2
|
|
|
$
|
83.0
|
|
*
|
Opening balance sheets are preliminary.
|
Reporting Segments:
|
|
Balance at June 27, 2015
|
|
Business Acquisitions
|
|
Purchase Accounting Adjustments
|
|
Currency Translation Adjustment
|
|
Balance at September 26, 2015
|
||||||||||
CHC
|
|
$
|
1,897.5
|
|
|
$
|
4.9
|
|
|
$
|
(0.2
|
)
|
|
$
|
(3.8
|
)
|
|
$
|
1,898.4
|
|
BCH
|
|
1,551.9
|
|
|
112.2
|
|
|
(87.0
|
)
|
|
0.4
|
|
|
1,577.5
|
|
|||||
Rx
|
|
1,233.6
|
|
|
—
|
|
|
—
|
|
|
(8.1
|
)
|
|
1,225.5
|
|
|||||
Specialty Sciences
|
|
200.7
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
200.7
|
|
|||||
Other
|
|
88.2
|
|
|
—
|
|
|
—
|
|
|
(3.2
|
)
|
|
85.0
|
|
|||||
Total goodwill
|
|
$
|
4,971.9
|
|
|
$
|
117.1
|
|
|
$
|
(87.2
|
)
|
|
$
|
(14.7
|
)
|
|
$
|
4,987.1
|
|
|
September 26, 2015
|
|
June 27, 2015
|
||||||||||||
|
Gross
|
|
Accumulated Amortization
|
|
Gross
|
|
Accumulated Amortization
|
||||||||
Definite-lived intangibles
:
|
|
|
|
|
|
|
|
||||||||
Distribution and license agreements
|
$
|
6,064.2
|
|
|
$
|
582.6
|
|
|
$
|
6,029.9
|
|
|
$
|
502.3
|
|
Developed product technology/formulation and product rights
|
1,015.4
|
|
|
402.5
|
|
|
1,025.3
|
|
|
383.1
|
|
||||
Customer relationships and distribution networks
|
1,888.2
|
|
|
181.5
|
|
|
1,749.9
|
|
|
146.2
|
|
||||
Trademarks, trade names, and brands
|
502.8
|
|
|
16.7
|
|
|
340.8
|
|
|
11.5
|
|
||||
Non-compete agreements
|
15.2
|
|
|
12.3
|
|
|
14.7
|
|
|
11.9
|
|
||||
Total definite-lived intangibles
|
$
|
9,485.8
|
|
|
$
|
1,195.6
|
|
|
$
|
9,160.6
|
|
|
$
|
1,055.0
|
|
Indefinite-lived intangibles
:
|
|
|
|
|
|
|
|
||||||||
Trademarks, trade names, and brands
|
$
|
2,362.5
|
|
|
$
|
—
|
|
|
$
|
2,257.3
|
|
|
$
|
—
|
|
In-process research and development
|
5.6
|
|
|
—
|
|
|
5.8
|
|
|
—
|
|
||||
Total indefinite-lived intangibles
|
2,368.1
|
|
|
—
|
|
|
2,263.1
|
|
|
—
|
|
||||
Total other intangible assets
|
$
|
11,853.9
|
|
|
$
|
1,195.6
|
|
|
$
|
11,423.7
|
|
|
$
|
1,055.0
|
|
|
September 26,
2015 |
|
June 27,
2015 |
||||
Finished goods
|
$
|
504.7
|
|
|
$
|
468.9
|
|
Work in process
|
163.2
|
|
|
158.2
|
|
||
Raw materials
|
220.1
|
|
|
211.8
|
|
||
Total inventories
|
$
|
888.0
|
|
|
$
|
838.9
|
|
Level 1:
|
Quoted prices for identical instruments in active markets.
|
Level 2:
|
Quoted prices for similar instruments in active markets; quoted prices for identical or similar instruments in markets that are not active; and model-derived valuations in which all significant inputs are observable in active markets.
|
Level 3:
|
Valuations derived from valuation techniques in which one or more significant inputs are not observable.
|
|
September 26, 2015
|
||||||||||||||
|
Level 1
|
|
Level 2
|
|
Level 3
|
|
Total
|
||||||||
Assets:
|
|
|
|
|
|
|
|
||||||||
Investment securities
|
$
|
16.5
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
16.5
|
|
Foreign currency forward contracts
|
—
|
|
|
4.8
|
|
|
—
|
|
|
4.8
|
|
||||
Funds associated with Israeli post-employment benefits
|
—
|
|
|
16.5
|
|
|
—
|
|
|
16.5
|
|
||||
Total assets
|
$
|
16.5
|
|
|
$
|
21.3
|
|
|
$
|
—
|
|
|
$
|
37.8
|
|
Liabilities:
|
|
|
|
|
|
|
|
||||||||
Foreign currency forward contracts
|
—
|
|
|
5.9
|
|
|
—
|
|
|
5.9
|
|
||||
Total liabilities
|
$
|
—
|
|
|
$
|
5.9
|
|
|
$
|
—
|
|
|
$
|
5.9
|
|
|
June 27, 2015
|
||||||||||||||
|
Level 1
|
|
Level 2
|
|
Level 3
|
|
Total
|
||||||||
Assets:
|
|
|
|
|
|
|
|
||||||||
Investment securities
|
$
|
12.7
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
12.7
|
|
Foreign currency forward contracts
|
—
|
|
|
12.4
|
|
|
—
|
|
|
12.4
|
|
||||
Funds associated with Israeli post-employment benefits
|
—
|
|
|
17.3
|
|
|
—
|
|
|
17.3
|
|
||||
Total assets
|
$
|
12.7
|
|
|
$
|
29.7
|
|
|
$
|
—
|
|
|
$
|
42.4
|
|
Liabilities:
|
|
|
|
|
|
|
|
||||||||
Foreign currency forward contracts
|
—
|
|
|
4.6
|
|
|
—
|
|
|
4.6
|
|
||||
Total liabilities
|
$
|
—
|
|
|
$
|
4.6
|
|
|
$
|
—
|
|
|
$
|
4.6
|
|
|
September 26, 2015
|
|
June 27, 2015
|
||||
Equity securities, at cost less impairments
|
$
|
17.1
|
|
|
$
|
17.1
|
|
Gross unrealized gains
|
10.6
|
|
|
5.7
|
|
||
Gross unrealized losses
|
(11.2
|
)
|
|
(10.1
|
)
|
||
Estimated fair value of equity securities
|
$
|
16.5
|
|
|
$
|
12.7
|
|
|
Asset Derivatives
|
||||||||
|
Balance Sheet Location
|
|
Fair Value
|
||||||
|
|
|
September 26, 2015
|
|
June 27, 2015
|
||||
Designated derivatives:
|
|
|
|
|
|
||||
Foreign currency forward contracts
|
Other current assets
|
|
$
|
2.3
|
|
|
$
|
3.3
|
|
Total designated derivatives
|
|
|
$
|
2.3
|
|
|
$
|
3.3
|
|
Non-designated derivatives:
|
|
|
|
|
|
||||
Foreign currency forward contracts
|
Other current assets
|
|
$
|
2.5
|
|
|
$
|
9.1
|
|
Total non-designated derivatives
|
|
|
$
|
2.5
|
|
|
$
|
9.1
|
|
|
Liability Derivatives
|
||||||||
|
Balance Sheet Location
|
|
Fair Value
|
||||||
|
|
|
September 26, 2015
|
|
June 27, 2015
|
||||
Designated derivatives:
|
|
|
|
|
|
||||
Foreign currency forward contracts
|
Accrued liabilities
|
|
$
|
2.5
|
|
|
$
|
2.0
|
|
Total designated derivatives
|
|
|
$
|
2.5
|
|
|
$
|
2.0
|
|
Non-designated derivatives:
|
|
|
|
|
|
||||
Foreign currency forward contracts
|
Accrued liabilities
|
|
$
|
3.4
|
|
|
$
|
2.6
|
|
Total non-designated derivatives
|
|
|
$
|
3.4
|
|
|
$
|
2.6
|
|
|
|
Amount of Gain/(Loss) Recorded in OCI
(Effective Portion) |
||||||
|
|
Three Months Ended
|
||||||
Designated Cash Flow Hedges
|
|
September 26, 2015
|
|
September 27, 2014
|
||||
Interest rate swap agreements
|
|
—
|
|
|
2.7
|
|
||
Foreign currency forward contracts
|
|
(0.5
|
)
|
|
(5.2
|
)
|
||
|
|
$
|
(0.5
|
)
|
|
$
|
(2.5
|
)
|
Designated Cash Flow Hedges
|
|
Income Statement Location
|
|
Amount of Gain/(Loss) Reclassified from AOCI to Income
(Effective Portion) |
||||||
|
|
|
|
Three Months Ended
|
||||||
|
|
|
|
September 26, 2015
|
|
September 27, 2014
|
||||
Interest rate swap agreements
|
|
Interest expense, net
|
|
(0.4
|
)
|
|
(0.9
|
)
|
||
Foreign currency forward contracts
|
|
Net sales
|
|
(0.1
|
)
|
|
0.6
|
|
||
|
|
Cost of sales
|
|
0.2
|
|
|
0.4
|
|
||
|
|
Other expense, net
|
|
(0.1
|
)
|
|
(0.8
|
)
|
||
|
|
|
|
$
|
(0.4
|
)
|
|
$
|
(0.7
|
)
|
Non-Designated Derivatives
|
|
Income Statement Location
|
|
Amount of Gain/(Loss) Recognized in Income
|
||||||
|
|
|
|
Three Months Ended
|
||||||
|
|
|
|
September 26, 2015
|
|
September 27, 2014
|
||||
Foreign currency forward contracts
|
|
Other expense, net
|
|
$
|
(8.9
|
)
|
|
$
|
(1.8
|
)
|
|
|
Interest expense, net
|
|
0.1
|
|
|
(1.5
|
)
|
||
Total
|
|
|
|
$
|
(8.8
|
)
|
|
$
|
(3.3
|
)
|
|
|
|
|
|
September 26,
2015 |
|
June 27,
2015 |
||||
Short-term debt
|
|
|
$
|
86.9
|
|
|
$
|
6.4
|
|
||
Term loans
|
|
|
|
|
|
||||||
*
|
2014 Term loan due December 5, 2019
|
517.7
|
|
|
530.5
|
|
|||||
Public bonds
|
|
|
|
|
|
||||||
|
Coupon
|
Due
|
|
|
|
|
|
||||
|
1.300%
|
November 8, 2016
|
(3)
|
|
500.0
|
|
|
500.0
|
|
||
*
|
4.500%
|
May 23, 2017
|
(2)
|
|
201.5
|
|
|
201.0
|
|
||
*
|
5.125%
|
December 12, 2017
|
(2)
|
|
335.8
|
|
|
335.0
|
|
||
|
2.300%
|
November 8, 2018
|
(3)
|
|
600.0
|
|
|
600.0
|
|
||
*
|
5.000%
|
May 23, 2019
|
(2)
|
|
134.3
|
|
|
134.1
|
|
||
|
3.500%
|
December 15, 2021
|
(1)
|
|
500.0
|
|
|
500.0
|
|
||
*
|
5.105%
|
July 19, 2023
|
(2)
|
|
151.1
|
|
|
150.8
|
|
||
|
4.000%
|
November 15, 2023
|
(3)
|
|
800.0
|
|
|
800.0
|
|
||
|
3.900%
|
December 15, 2024
|
(1)
|
|
700.0
|
|
|
700.0
|
|
||
|
5.300%
|
November 15, 2043
|
(3)
|
|
400.0
|
|
|
400.0
|
|
||
|
4.900%
|
December 15, 2044
|
(1)
|
|
400.0
|
|
|
400.0
|
|
||
|
Total public bonds
|
|
|
4,722.7
|
|
|
4,720.9
|
|
|||
Other financing
|
6.3
|
|
|
6.6
|
|
||||||
Unamortized premium (discount), net
|
80.4
|
|
|
87.5
|
|
||||||
Deferred financing fees
|
(39.0
|
)
|
|
(40.5
|
)
|
||||||
Total borrowings outstanding
|
5,375.0
|
|
|
5,311.4
|
|
||||||
|
Less short-term debt and current portion of long-term debt
|
(145.1
|
)
|
|
(64.6
|
)
|
|||||
Total long-term debt less current portion
|
$
|
5,229.9
|
|
|
$
|
5,246.8
|
|
(1)
|
Public bonds issued on December 2, 2014, discussed below collectively as the "2014 Bonds."
|
(2)
|
Debt assumed from Omega.
|
(3)
|
Discussed below collectively as the "2013 Bonds."
|
*
|
Debt denominated in euros subject to fluctuations in the euro-to-U.S. dollar exchange rate.
|
|
Three Months Ended
|
||||||
|
September 26,
2015 |
|
September 27,
2014 |
||||
Numerator:
|
|
|
|
||||
Net income
|
$
|
112.6
|
|
|
$
|
96.3
|
|
|
|
|
|
||||
Denominator:
|
|
|
|
||||
Weighted average shares outstanding for basic EPS
|
146.3
|
|
|
133.9
|
|
||
Dilutive effect of share-based awards
|
0.6
|
|
|
0.5
|
|
||
Weighted average shares outstanding for diluted EPS
|
146.9
|
|
|
134.4
|
|
||
|
|
|
|
||||
Anti-dilutive share-based awards excluded from computation of diluted EPS
|
0.1
|
|
|
0.1
|
|
|
Foreign currency translation adjustments
|
|
Fair value of derivative financial instruments, net of tax
|
|
Fair value of investment securities, net of tax
|
|
Post-retirement and pension liability adjustments, net of tax
|
|
Total AOCI
|
||||||||||
Balance at June 27, 2015
|
$
|
130.9
|
|
|
$
|
(16.3
|
)
|
|
$
|
(3.0
|
)
|
|
$
|
(9.2
|
)
|
|
$
|
102.4
|
|
OCI before reclassifications
|
(39.8
|
)
|
|
(0.3
|
)
|
|
2.5
|
|
|
—
|
|
|
(37.6
|
)
|
|||||
Amounts reclassified from AOCI
|
—
|
|
|
0.4
|
|
|
—
|
|
|
—
|
|
|
0.4
|
|
|||||
Other comprehensive income
|
(39.8
|
)
|
|
0.1
|
|
|
2.5
|
|
|
—
|
|
|
(37.2
|
)
|
|||||
Balance at September 26, 2015
|
$
|
91.1
|
|
|
$
|
(16.2
|
)
|
|
$
|
(0.5
|
)
|
|
$
|
(9.2
|
)
|
|
$
|
65.2
|
|
•
|
CHC
is focused primarily on the global sale of OTC store brand products including cough, cold, and allergy products, gastrointestinal products, analgesics, nicotine-replacement therapy ("NRT"), Vitamins, Minerals and Supplements ("VMS"), animal health products, infant formula and foods, and diagnostic products.
|
•
|
BCH
develops, manufactures, markets and distributes some of Europe's most well-known OTC brands in the natural health and VMS, cough, cold and allergy, NRT, personal care and derma-therapeutics, lifestyle, and anti-parasite categories.
|
•
|
Rx
develops, manufactures and markets a portfolio of generic and specialty pharmaceutical prescription drugs primarily for the U.S. and U.K. markets.
|
•
|
Specialty Sciences
is comprised primarily of royalties received from assets focused on the management of multiple sclerosis (Tysabri
®
).
|
|
Three Months Ended
|
|
Balance at September 26, 2015
|
||||||||||||
|
September 26, 2015
|
|
|||||||||||||
|
Net Sales
|
|
Operating Income (Loss)
|
|
Amortization of Intangibles
|
|
Total Assets
|
||||||||
CHC
|
$
|
675.2
|
|
|
$
|
117.3
|
|
|
$
|
19.4
|
|
|
$
|
4,211.2
|
|
BCH
|
302.2
|
|
|
4.4
|
|
|
36.3
|
|
|
6,728.0
|
|
||||
Rx
|
260.3
|
|
|
91.0
|
|
|
18.6
|
|
|
2,597.6
|
|
||||
Specialty Sciences
|
84.5
|
|
|
9.0
|
|
|
72.8
|
|
|
5,920.8
|
|
||||
Other
|
22.5
|
|
|
6.2
|
|
|
0.5
|
|
|
245.5
|
|
||||
Unallocated expenses
|
—
|
|
|
(39.3
|
)
|
|
—
|
|
|
—
|
|
||||
Total
|
$
|
1,344.7
|
|
|
$
|
188.6
|
|
|
$
|
147.6
|
|
|
$
|
19,703.1
|
|
|
Three Months Ended
|
|
Balance at
June 27,
2015
|
||||||||||||
|
September 27, 2014
|
|
|||||||||||||
|
Net Sales
|
|
Operating Income (Loss)
|
|
Amortization of Intangibles
|
|
Total Assets
|
||||||||
CHC
|
$
|
640.3
|
|
|
$
|
74.8
|
|
|
$
|
16.2
|
|
|
$
|
4,381.6
|
|
BCH
|
—
|
|
|
—
|
|
|
—
|
|
|
6,441.1
|
|
||||
Rx
|
194.5
|
|
|
64.7
|
|
|
17.0
|
|
|
2,667.9
|
|
||||
Specialty Sciences
|
91.9
|
|
|
14.9
|
|
|
72.8
|
|
|
5,979.0
|
|
||||
Other
|
24.8
|
|
|
7.1
|
|
|
0.5
|
|
|
251.0
|
|
||||
Unallocated expenses
|
—
|
|
|
(24.3
|
)
|
|
—
|
|
|
—
|
|
||||
Total
|
$
|
951.5
|
|
|
$
|
137.2
|
|
|
$
|
106.5
|
|
|
$
|
19,720.6
|
|
ITEM 2.
|
MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS
|
•
|
Consumer Healthcare
(
"CHC"
) is focused primarily on the global sale of OTC store brand products including cough, cold, and allergy products, gastrointestinal products, analgesics, nicotine-replacement therapy ("NRT"), Vitamins, Minerals and Supplements ("VMS"), animal health products, infant formula and foods, and diagnostic products.
|
•
|
Branded Consumer Healthcare
(
"BCH"
) develops, manufactures, markets and distributes some of Europe's most well-known OTC brands in the natural health and VMS, cough, cold and allergy, NRT, personal care and derma-therapeutics, lifestyle, and anti-parasite categories.
|
•
|
Prescription Pharmaceuticals
(
"Rx"
) develops, manufactures and markets a portfolio of generic and specialty pharmaceutical prescription drugs primarily for the U.S. and United Kingdom markets.
|
•
|
Specialty Sciences
is comprised primarily of royalties received from assets focused on the management of multiple sclerosis (Tysabri
®
).
|
|
Three Months Ended
|
|
% Change
|
|||||||
($ in millions)
|
September 27,
2014 |
|
September 26,
2015 |
|
||||||
Net sales
|
$
|
951.5
|
|
|
$
|
1,344.7
|
|
|
41
|
%
|
Gross profit
|
$
|
321.8
|
|
|
$
|
548.8
|
|
|
71
|
%
|
Gross profit %
|
33.8
|
%
|
|
40.8
|
%
|
|
|
|||
Operating expenses
|
$
|
184.6
|
|
|
$
|
360.2
|
|
|
95
|
%
|
Operating expenses %
|
19.4
|
%
|
|
26.8
|
%
|
|
|
|||
Operating income
|
$
|
137.2
|
|
|
$
|
188.6
|
|
|
37
|
%
|
Operating income %
|
14.4
|
%
|
|
14.0
|
%
|
|
|
|||
Interest and other, net
|
$
|
28.6
|
|
|
$
|
56.4
|
|
|
97
|
%
|
Income tax expense
|
$
|
12.3
|
|
|
$
|
19.6
|
|
|
58
|
%
|
Net income
|
$
|
96.3
|
|
|
$
|
112.6
|
|
|
17
|
%
|
•
|
On
August 28, 2015
, we acquired ScarAway
®
, a leading U.S. OTC scar management brand portfolio comprised of five products, from Enaltus, LLC for
$27.0 million
in cash. This acquisition serves as our entry into the branded OTC business in the U.S. We plan to continue to pursue niche branded opportunities for products for which there is not a store brand market.
|
|
Three Months Ended
|
||||||
($ in millions)
|
September 27, 2014
|
|
September 26, 2015
|
||||
Net sales
|
$
|
640.3
|
|
|
$
|
675.2
|
|
Gross profit
|
$
|
193.0
|
|
|
$
|
231.0
|
|
Gross profit %
|
30.1
|
%
|
|
34.2
|
%
|
||
Operating income
|
$
|
74.8
|
|
|
$
|
117.3
|
|
Operating income %
|
11.7
|
%
|
|
17.4
|
%
|
•
|
An
increase
in net sales of
$34.9 million
, or
5%
, due primarily to:
|
•
|
New product sales of
$65.3 million
related primarily to certain new infant formula products;
|
•
|
Incremental net sales of
$14.0 million
from acquisitions, primarily the acquisition of Gelcaps Exportadora de Mexico, S.A. de C.V.; and
|
•
|
Increased sales volumes totaling
$48.6 million
, primarily in the cough/cold, infant formula, and gastrointestinal categories, due in part to an expected stronger cough/cold season in the current year;
|
•
|
Offset partially by a decline of
$26.5 million
in volumes of net sales in the animal health, diabetes, and analgesics categories;
|
•
|
Discontinued products of
$52.5 million
primarily in the infant formula and animal health categories; and
|
•
|
Unfavorable foreign currency movement of
$14.0 million
.
|
•
|
An
increase
of
$38.0 million
in gross profit due to:
|
•
|
Increased new product sales and favorable product mix;
|
•
|
Improved efficiencies in manufacturing facilities; and
|
•
|
Favorable commodities pricing.
|
•
|
A
decrease
of
$4.5 million
in operating expenses due to:
|
•
|
Proactive cost controls, including decreased selling expense; and
|
•
|
Decreased R&D spending due to the timing of spending for certain projects.
|
•
|
On
September 15, 2015
, we completed our acquisition of Naturwohl Pharma GmbH ("Naturwohl"), a Munich, Germany-based nutritional business known for its leading German dietary supplement brand, Yokebe.
|
•
|
On
August 28, 2015
, we completed the acquisition of a portfolio of well-established OTC brands from GlaxoSmithKline Consumer Healthcare (“GSK”).
|
•
|
Both of these acquisitions build upon the global platform we established through the Omega Pharma Invest N.V. ("Omega") acquisition, leveraging our European market share and expanding our product offerings.
|
|
Three Months Ended
|
||
($ in millions)
|
September 26, 2015
|
||
Net sales
|
$
|
302.2
|
|
Gross profit
|
$
|
164.3
|
|
Gross profit %
|
54.4
|
%
|
|
Operating income
|
$
|
4.4
|
|
Operating income %
|
1.4
|
%
|
|
Three Months Ended
|
||||||
($ in millions)
|
September 27, 2014
|
|
September 26, 2015
|
||||
Net sales
|
$
|
194.5
|
|
|
$
|
260.3
|
|
Gross profit
|
$
|
96.4
|
|
|
$
|
130.4
|
|
Gross profit %
|
49.6
|
%
|
|
50.1
|
%
|
||
Operating income
|
$
|
64.7
|
|
|
$
|
91.0
|
|
Operating income %
|
33.3
|
%
|
|
34.9
|
%
|
•
|
An
increase
in net sales of
$65.8 million
, or
34%
, due primarily to:
|
•
|
New product sales of
$18.4 million
related primarily to the launches of clobetasol propionate 0.05% spray and tacrolimus 0.1% ointment;
|
•
|
Increased sales of existing products of
$46.7 million
; and
|
•
|
Absence of planned contractual wholesaler chargeback and stock adjustments associated with pricing programs completed in the prior year; offset partially by
|
•
|
Unfavorable foreign exchange movement of
$1.2 million
.
|
•
|
An
increase
of
$34.0 million
in gross profit due primarily to:
|
•
|
Higher net sales and an improved gross profit percentage; and
|
•
|
Favorable product mix and absence of pricing initiatives completed in the prior year.
|
•
|
Partially offset by a
$7.7 million
increase
in operating expenses due to:
|
•
|
Higher research and development expenses resulting from planned higher spending on new product development; and
|
•
|
Increased selling and administrative expenses related to the specialty pharmaceuticals sales force.
|
|
Three Months Ended
|
||||||
($ in millions)
|
September 27, 2014
|
|
September 26, 2015
|
||||
Net sales
|
$
|
91.9
|
|
|
$
|
84.5
|
|
Gross profit
|
$
|
19.4
|
|
|
$
|
12.0
|
|
Gross profit %
|
21.1
|
%
|
|
14.2
|
%
|
||
Operating income
|
$
|
14.9
|
|
|
$
|
9.0
|
|
Operating income %
|
16.2
|
%
|
|
10.7
|
%
|
•
|
A
decrease
in net sales and gross profit of
$7.4 million
due primarily to unfavorable changes in foreign currency exchange rates and the current period reflecting 13 shipping weeks of product compared to 14 weeks in the prior year; and
|
•
|
A
decrease
of
$1.5 million
in operating expenses due to a reduction in administrative expenses, primarily related to legal expenses.
|
|
Three Months Ended
|
||||||
($ in millions)
|
September 27, 2014
|
|
September 26, 2015
|
||||
Net sales
|
$
|
24.8
|
|
|
$
|
22.5
|
|
Gross profit
|
$
|
13.0
|
|
|
$
|
11.1
|
|
Gross profit %
|
52.3
|
%
|
|
49.5
|
%
|
||
Operating income
|
$
|
7.1
|
|
|
$
|
6.2
|
|
Operating income %
|
28.3
|
%
|
|
27.5
|
%
|
•
|
A
decrease
in net sales of
$2.3 million
, or
9%
, due primarily to competition on certain products and unfavorable changes in foreign currency exchange rates; and
|
•
|
A
decrease
of
$1.9 million
in gross profit due primarily to a decrease in sales of existing products; partially offset by
|
•
|
A
$1.0 million
decrease
in operating expenses due to proactive cost controls and decreases in certain R&D spending.
|
•
|
On August 28, 2015, Mylan held an extraordinary meeting of its shareholders in which Mylan received the necessary Mylan shareholder approval to move forward with the Exchange Offer.
|
•
|
On September 14, 2015, Mylan commenced the Exchange Offer, which will expire on November 13, 2015, unless it is extended with the consent of the Irish Takeover Panel. The Exchange Offer provides that if all conditions to the Exchange Offer are satisfied or waived, Mylan will exchange $75.00 in cash and 2.3 Mylan ordinary shares for each of our outstanding ordinary shares that is validly tendered. The Exchange Offer is subject to various conditions, including that Mylan receive valid acceptances of holders greater than 50% of Perrigo ordinary shares.
|
•
|
On September 17, 2015, we issued a solicitation/recommendation statement unanimously recommending that our shareholders do not tender into the Exchange Offer.
|
Exhibit
Number
|
|
Description
|
|
|
|
3.1
|
|
Certificate of Incorporation of Perrigo Company plc (formerly known as Perrigo Company Limited) (incorporated by reference to Exhibit 4.1 of our Registration Statement on Form S-8 filed December 19, 2013).
|
|
|
|
3.2
|
|
Amended and Restated Memorandum and Articles of Association of Perrigo Company plc (formerly known as Perrigo Company Limited) (incorporated by reference to Exhibit 4.2 of our Registration Statement on Form S-8 filed December 19, 2013).
|
|
|
|
10.1
|
|
Form of Performance-Based Restricted Stock Unit Award Agreement for Non-U.S. Participants under the Perrigo Company plc 2013 Long-Term Incentive Plan (filed herewith).
|
|
|
|
10.2
|
|
Amendment Five to the Nonqualified Deferred Compensation Plan, dated as of August 17, 2015 (filed herewith).
|
|
|
|
31.1
|
|
Rule 13a-14(a) Certification by Joseph C. Papa, Chairman and Chief Executive Officer.
|
|
|
|
31.2
|
|
Rule 13a-14(a) Certification by Judy L. Brown, Executive Vice President and Chief Financial Officer.
|
|
|
|
32
|
|
Certification Pursuant to 18 United States Code 1350 and Rule 13a-14(b) of the Securities Exchange Act of 1934.
|
|
|
|
101.INS
|
|
XBRL Instance Document.
|
|
|
|
101.SCH
|
|
XBRL Taxonomy Extension Schema Document.
|
|
|
|
101.CAL
|
|
XBRL Taxonomy Extension Calculation Linkbase Document.
|
|
|
|
101.DEF
|
|
XBRL Taxonomy Extension Definition Linkbase Document.
|
|
|
|
101.LAB
|
|
XBRL Taxonomy Extension Label Linkbase Document.
|
|
|
|
101.PRE
|
|
XBRL Taxonomy Extension Presentation Linkbase Document.
|
|
|
|
PERRIGO COMPANY PLC
|
|
|
|
(Registrant)
|
|
|
|
|
Date:
|
November 2, 2015
|
|
By: /s/ Joseph C. Papa
|
|
|
|
Joseph C. Papa
|
|
|
|
Chairman and Chief Executive Officer
|
|
|
|
(Principal Executive Officer)
|
|
|
|
|
Date:
|
November 2, 2015
|
|
By: /s/ Judy L. Brown
|
|
|
|
Judy L. Brown
|
|
|
|
Executive Vice President and Chief Financial Officer
|
|
|
|
(Principal Accounting and Financial Officer)
|
“(b)
|
Subsequent Plan Years
. A Participant’s deferral election shall apply to all subsequent Plan Years until revoked or altered in accordance with the terms of the Plan (an “evergreen election”); provided, however, that the Participant’s election shall become irrevocable as of each December 31 for Base Annual Salary, Annual Bonus or Directors Fees payable for services to be rendered in the Plan Year immediately following such December 31.
|
(c)
|
Special Election for Section 409A Performance Based Annual Bonuses
. Notwithstanding subsection (b) above, if the Committee determines that an Annual Bonus eligible for deferral satisfies the requirements of “performance based compensation” within the meaning of Code Section 409A, any election to defer such Annual Bonus must be made no later than the date which is six months prior to the end of the performance period, and a Participant’s evergreen election to defer such Annual Bonus shall become irrevocable on the date which is six months prior to the end of the performance period (i.e., the election shall become irrevocable on June 30 of the calendar year performance period in which such June 30 occurs). Any deferral of an Annual Bonus shall be made in accordance with the rules and procedures established by the Committee.”
|
|
PERRIGO COMPANY
|
|
|
By
|
/s/ Michael Kelly
|
|
Its: Chairman, Retirement Committee
|
1.
|
I have reviewed this report on Form 10-Q of Perrigo Company plc;
|
2.
|
Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;
|
3.
|
Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;
|
4.
|
The registrant’s other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:
|
a.
|
designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;
|
b.
|
designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;
|
c.
|
evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and
|
d.
|
disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and
|
5.
|
The registrant’s other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of the registrant’s board of directors:
|
a.
|
all significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting, which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and
|
b.
|
any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting.
|
/s/ Joseph C. Papa
|
Joseph C. Papa
|
Chairman and Chief Executive Officer
|
|
1.
|
I have reviewed this report on Form 10-Q of Perrigo Company plc;
|
2.
|
Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;
|
3.
|
Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;
|
4.
|
The registrant’s other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:
|
a.
|
designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;
|
b.
|
designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;
|
c.
|
evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and
|
d.
|
disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and
|
5.
|
The registrant’s other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of the registrant’s board of directors:
|
a.
|
all significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting, which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and
|
b.
|
any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting.
|
/s/ Judy L. Brown
|
Judy L. Brown
|
Executive Vice President and Chief Financial Officer
|
|
|
Re:
|
Perrigo Company plc
|
(i)
|
this Quarterly Report on Form 10-Q fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934 (15 U.S.C. 78m or 78o(d)); and
|
(ii)
|
the information contained in this report fairly presents, in all material respects, the financial condition and results of operations of Perrigo Company plc.
|
/s/ Joseph C. Papa
|
|
/s/ Judy L. Brown
|
Joseph C. Papa
|
|
Judy L. Brown
|
Chairman and Chief Executive Officer
|
|
Executive Vice President and Chief Financial Officer
|
|
|
|