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Perrigo is a leading global consumer-focused self-care company. Our vision is to making lives better by bringing “Quality, Affordable Self-Care Products” that consumers trust everywhere they are sold. The Company is a leading provider of health and wellness solutions that enhance individual well-being by empowering consumers to proactively prevent or treat conditions that can be self-managed.

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Perrigo Company Reports Fiscal 2000 and Fourth Quarter Results
PRNewswire
ALLEGAN, Mich.

The Perrigo Company (NASDAQ: PRGO) today reported results for the fiscal year and fourth quarter ended July 1, 2000.

On a proforma basis, which reflects only the ongoing over-the-counter (OTC) pharmaceutical and nutritional businesses, fiscal year sales rose five percent to $720.8 million from $687.2 million last year. Net sales were $877.6 million a year ago including the personal care business, which was divested in fiscal 2000's first quarter. Net income totaled $19.3 million, or $.26 per share, compared with net income including personal care of $1.5 million, or $.02 per share, last year. Fiscal 1999 results were affected by the conversion to an enterprise resource planning system, outsourcing costs to meet service requirements, a write-down of an investment in a Russian subsidiary and a number of one-time charges partially offset by a gain from an insurance reimbursement.

Commenting on fourth quarter and full-year results, Perrigo's newly appointed President and CEO, David T. Gibbons, stated, "During the fourth quarter we continued our efforts to reduce working capital and completed a review of our inventory requirements. Throughout the past year, we have worked to reduce inventories built since the conversion to a new computer system that took place in fiscal 1999. Additional inventory write-offs and an inventory valuation adjustment were also made in the current quarter, resulting in a negative impact on gross margin. Similarly, gross margin for the full year was impacted by higher-than-normal inventory obsolescence expenses and below normal production levels.

"The further reduction in receivables and inventory in the quarter again resulted in an improvement in the balance sheet as working capital continued to decline and operating cash flow helped us eliminate the balance of our long-term debt. I am pleased with the debt reduction, the strengthened balance sheet and the resulting financial flexibility we now have. We will focus on our total commitment to quality, meeting customers' service needs and expectations, driving down costs and seeking opportunities for growth through innovation in both our products and business processes. I am confident Perrigo will continue the progress made in fiscal 2000 toward further profitable growth."

On a proforma basis, fourth quarter sales were $150.4 million, an increase of $9.5 million, or seven percent over last year's $140.9 million. Including the results of the personal care business, net sales last year were $187.7 million. A net loss of $8.1 million, or $.11 per share for the quarter, included several one-time charges and additional expenses related to the disposition of inventory. The Company had previously indicated that these expenses would result in a loss of $.07 - $.10 per share. In the same period last year, Perrigo reported a net loss of $2.9 million, or $.04 per share, which also included a number of one-time charges.

Douglas R. Schrank, Executive Vice President and Chief Financial Officer, noted, "In the fourth quarter, we took a number of charges related to inventory write-offs and valuation."

The Company noted that the fourth quarter results included the following:

-- A $5.5 million pre-tax adjustment ($3.6 million after-tax) to the valuation of inventories.

-- A $3.0 million pre-tax charge ($2.0 million after-tax) for inventory produced in the quarter.

-- A $2.0 million pre-tax charge ($1.3 million after-tax) to increase inventory obsolescence reserves.

-- A $1.8 million pre-tax charge ($1.2 million after-tax) related to the write-down of licensing fees.

Commenting further, Mr. Schrank said, "Despite a proforma sales gain, gross margin was down substantially in the quarter. In addition to the aforementioned charges, we were negatively impacted by higher production costs as a result of the inventory decline. We also recorded a $1 million pre-tax restructuring charge to reflect the current value of an asset held for sale. These charges were partially offset by a $4.2 million pre-tax gain resulting from a civil lawsuit settlement.

"Gross profit for the year declined as we absorbed higher-than-normal inventory obsolescence expense and were negatively impacted by lower production levels and increased regulatory compliance costs.

"Our balance sheet improvement continued and at year-end working capital was $155 million, a decline of $94 million from a year-ago. Inventories declined $71 million to $127 million at year-end. Our strong operating cash flow and working capital reductions allowed us to pay down $135 million in debt, the total amount outstanding at the beginning of the year."

Perrigo Company is the nation's largest manufacturer of over-the-counter (non-prescription) pharmaceutical and nutritional products for the store brand market. Store brand products are sold by national and regional supermarket, drugstore and mass merchandise chains under their own labels and compete with nationally advertised brands. The Company's products include over-the-counter pharmaceuticals, such as analgesics, cough and cold remedies, antacids, laxatives, feminine hygiene and smoking cessation products, and nutritional products, such as vitamins, nutritional supplements and nutritional drinks. Visit Perrigo on the Internet at http://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. Please refer to pages 25-29 of the Company's Form 10-K for the year ended July 3, 1999 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 any such forward-looking statements are reasonable, it can give no assurance that such expectations will prove to be correct.

                     PERRIGO COMPANY AND SUBSIDIARIES
               CONDENSED CONSOLIDATED STATEMENTS OF INCOME
                 (In thousands, except per share amounts)
                               (Unaudited)

                              Fourth Quarter             Year-To-Date
                            July 1,      July 3,      July 1,      July 3,
                             2000         1999         2000         1999

  Net sales                $150,450     $187,742     $738,555     $877,587
  Cost of sales             130,645      149,511      583,314      691,893
  Gross profit               19,805       38,231      155,241      185,694

  Operating expenses
     Distribution             4,253        6,588       16,878       32,964
     Research and
      development             6,122        3,885       16,314       14,867
     Selling and
      administrative         23,886       27,240       89,676      117,623
     Restructuring and
      redesign                1,048        6,160        1,048        6,160
     Unusual litigation      (4,154)      (7,580)      (4,154)      (3,952)
                             31,155       36,293      119,762      167,662

  Operating (loss) income   (11,350)       1,938       35,479       18,032
  Interest and other expense    472        4,980        4,994       14,018

  (Loss) income before income
   taxes                    (11,822)      (3,042)      30,485        4,014
  Income tax (benefit)
   expense                   (3,756)        (129)      11,187        2,468

  Net (loss) income         $(8,066)     $(2,913)     $19,298       $1,546

  Basic (loss) earnings per
   share                     $(0.11)      $(0.04)       $0.26        $0.02

  Diluted (loss) earnings per
   share                     $(0.11)      $(0.04)       $0.26        $0.02


                     PERRIGO COMPANY AND SUBSIDIARIES
                       SELECTED BALANCE SHEET DATA
                              (In thousands)

                                                 July 1,      July 3,
                                                  2000         1999
  Current assets                                $268,645     $382,587
  Property and equipment                         193,580      199,662
  Other                                           23,839       33,609
     Total Assets                               $486,064     $615,858

  Current liabilities                           $113,920     $133,170
  Deferred income taxes                           19,462       14,674
  Long-term debt, less current installments            -      135,026
  Minority interest                                  922          569
  Shareholders' equity                           351,760      332,419
     Total Liabilities and Equity               $486,064     $615,858

SOURCE: Perrigo Company

Contact: Ernest J. Schenk, Manager, Investor Relations and Communication
of Perrigo Company, 616-673-9212, or E-mail: Investor@perrigo.com

Website: http://www.perrigo.com/

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