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Perrigo is a leading global consumer-focused self-care company. Our vision is to make 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's Second Quarter Revenue Growth Driven By New Products
PRNewswire-FirstCall
ALLEGAN, Mich.

The Perrigo Company (NASDAQ: PRGO)(TASE: PRGO) today announced results for the second quarter of fiscal year 2007 ended December 30, 2006.

                             Perrigo Company
                 (in thousands, except per share amounts)

                         Second Quarter            Six Months
                        2007        2006        2007        2006
   Sales            $370,629    $359,697    $710,844    $679,431
   Net Income        $21,088     $25,366     $37,970     $38,277
   Diluted EPS         $0.23       $0.27       $0.41       $0.41
   Diluted Shares     93,506      93,963      93,595      94,167


  Second Quarter Results

Sales for the second quarter of fiscal 2007 were $370.6 million, an increase of three percent from $359.7 million last year. Net income was $21.1 million, or $0.23 per share, and included costs for a product recall of $3.2 million after-tax, or $0.03 per share. In the second quarter last year, net income was $25.4 million, or $0.27 per share, and included a gain on the sale of the Company's interest in a Canadian distribution company of $2.9 million after-tax, or $0.03 per share. Excluding this transaction, adjusted net income last year was $22.4 million, or $0.24 per share. A reconciliation of non-GAAP measures is shown in Table II at the end of this press release.

Commenting on the second quarter, Joseph C. Papa, Perrigo's President and Chief Executive Officer said, "I am pleased with the continued success of our new product launches this year, led by those in our Smoking Cessation category. While Perrigo had another strong new product quarter, our results reflect the impact of the November 2006 Acetaminophen recall and the lower than anticipated sales of cough/cold and pain reliever products in the Consumer Healthcare business. The weak demand for our key products corresponds to the mild cold and flu season experienced through December. This is similar to what we've seen the past two cough/cold seasons."

Six Months Results

Sales for the first six months ended December 30, 2006 were $710.8 million, an increase of five percent compared with $679.4 million last year. Net income was $38.0 million, or $0.41 per share, which included expenses for a product recall of $3.9 million after-tax, or $0.04 per share.

In the first six months last fiscal year, net income was $38.3 million, or $0.41 per share. Excluding an acquisition-related write-off of the step-up in the value of inventory acquired in the first quarter last year ($3.7 million after-tax, or $0.04 per share) and a gain on the sale of the non-controlling interest in a Canadian distribution company ($2.9 million after-tax, or $0.03 per share) in the second quarter last year, net income for the six months was $39.1 million, or $0.41 per share. A reconciliation of non-GAAP measures is shown in Table II at the end of this press release.

The effective tax rate for the six months year to date was 18.4%, down from 33.9% last year. This lower rate was a result of the higher proportion of income from non-US businesses versus last year, international tax planning and the retroactive renewal of the research and development tax credit that was part of the Tax Relief and Healthcare Act enacted into law this quarter.

Consumer Healthcare

Consumer Healthcare segment sales in the quarter were $275.9 million, compared with $270.2 million in the second quarter last year. These results included $19.5 million in new product sales, led by the recently launched coated mint nicotine gum and nicotine lozenge products, offset by a decline in cough/cold and pain relief products. Operating income was $17.4 million, compared with $31.4 million a year ago, reflecting lower cough/cold and analgesics category sales and expenses for a product recall.

For the first six months of fiscal 2007, Consumer Healthcare sales were $517.8 million, compared with $497.3 million in the first six months last fiscal year. These results included $26.8 million in new product sales, offset by a decline in cough and cold category product sales. Operating income was $34.5 million, compared with $44.8 million a year ago.

On November 9, 2006, Perrigo announced that it had initiated a voluntary, nationwide product recall to the retail level of certain lots of its store brand Acetaminophen 500 mg caplets. At that time, the Company estimated the cost to pull back product from the retailers' warehouses and shelves to be $2.9 million pre-tax. The scope of the recall grew subsequent to that announcement as the Company proactively addressed consumers' inquiries. The Company now estimates that the total cost of the recall, including consumer level returns and refunds will be $6.0 million pre-tax, $3.9 million after- tax, or $0.04 per share. Discussions continue with the raw material supplier to determine the extent to which the recall-related materials costs may be recoverable.

Rx Pharmaceuticals

The Rx Pharmaceuticals segment reported sales of $28.3 million in the quarter, including $6.2 million of service and royalty revenue, compared with $28.6 million a year ago. Operating income was $3.7 million, compared with $5.3 million last year, primarily as a result of increased investment for research and development.

For the first six months of fiscal 2007, sales were $59.7 million and operating income was $9.5 million. For the same period last year, sales were $57.7 million and operating income was $9.1 million, including a pre-tax charge of $2.8 million for a product recall in the first quarter.

API

Second quarter sales in the API segment were $28.6 million, compared with $26.9 million a year ago. Operating income was $5.9 million, compared with $6.5 million last year and reflects a significant increase in research and development investments. For the first six months, sales were $58.4 million, compared with $53.7 million a year ago, and operating income was $10.6 million, compared with $13.1 million last year. Excluding a $1.7 million first quarter write-off of the step-up in the value of inventory acquired, operating income for the first six months last year was $14.9 million.

Other

The Other category, consisting of the Israel Consumer Products and Israel Pharmaceutical and Diagnostic Products segments, reported sales for the second quarter of fiscal 2007 of $37.8 million, up 11 percent from $34.0 million a year ago. Operating income was $3.0 million compared with $1.0 million last year. Sales for the first six months were $75.0 million, up six percent from $70.7 million last year, and operating income was $5.6 million, compared with $0.1 million last year. Excluding a $2.7 million first quarter write-off of the step-up in the value of inventory acquired, the Other category recorded operating income of $2.8 million for the first six months last year.

Outlook

The Company anticipates earnings for the full fiscal year in the range of $0.86 to $0.91 per share, excluding $0.01 per share of restructuring costs. The Company expects its full-year tax rate to be in the range of 20 to 23 percent, down from the previous estimate of 30 to 32 percent, as a result of a change in the worldwide income mix and tax planning measures.

Mr. Papa stated, "We will focus closely on monitoring production levels and costs in the second half of the fiscal year. While some of the issues this quarter are one time events, such as the Acetaminophen recall, our focus on quality investments and the reduction of production costs will lead us in a return to historical gross margin levels."

"We will maintain our increased investments in research and development as previously planned. Our long-term outlook continues to be positive as we focus on bringing important new products to market while we deliver value to our customers and their consumers."

The Perrigo Company is a leading global healthcare supplier and the world's largest manufacturer of over-the-counter (OTC) pharmaceutical and nutritional products for the store brand market. Store brand products are sold by food, drug, mass merchandise, dollar store and club store retailers under their own labels. The Company also develops, manufactures and markets prescription generic drugs, active pharmaceutical ingredients and consumer products, and operates manufacturing facilities in the United States, Israel, the United Kingdom, Mexico, Germany and China. Visit Perrigo on the Internet (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. 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 page 1 of the Company's Form 10-K for the year ended July 1, 2006, as well as the Company's subsequent filings with the Securities and Exchange Commission, 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
                                      2007      2006       2007      2006

     Net sales                      $370,629  $359,697   $710,844  $679,431
     Cost of sales                   272,304   254,127    517,902   486,945
     Gross profit                     98,325   105,570    192,942   192,486

     Operating expenses
        Distribution                   7,155     6,953     14,539    14,103
        Research and development      14,902    12,226     27,949    24,875
        Selling and administration    49,239    47,082     97,713    93,470
        Restructuring                    642       -          642       -
          Total                       71,938    66,261    140,843   132,448

     Operating income                 26,387    39,309     52,099    60,038
     Interest, net                     3,300     5,116      7,886     9,142
     Other income, net                (2,258)   (5,791)    (2,319)   (7,037)

     Income before income taxes       25,345    39,984     46,532    57,933
     Income tax expense                4,257    14,618      8,562    19,656

     Net income                      $21,088   $25,366    $37,970   $38,277

     Earnings per share
        Basic                          $0.23     $0.27      $0.41     $0.41
        Diluted                        $0.23     $0.27      $0.41     $0.41

     Weighted average shares
      outstanding
        Basic                         91,836    92,833     92,104    93,063
        Diluted                       93,506    93,963     93,595    94,167

     Dividends declared per share    $0.0450   $0.0425    $0.0875   $0.0825



                             PERRIGO COMPANY
                  CONDENSED CONSOLIDATED BALANCE SHEETS
                              (in thousands)

                                        December 30,  July 1,   December 24,
                                            2006        2006        2005
  Assets                                (unaudited)             (unaudited)
  Current assets
     Cash and cash equivalents              $39,635     $19,018     $15,840
     Investment securities                   34,030      26,733      10,717
     Accounts receivable                    246,603     240,130     235,672
     Inventories                            322,624     302,941     262,855
     Current deferred income taxes           50,358      52,058      52,140
     Prepaid expenses and other current
      assets                                 24,515      16,298      21,841
            Total current assets            717,765     657,178     599,065

  Property and equipment                    629,325     606,907     594,802
     Less accumulated depreciation          308,999     287,549     282,196
                                            320,326     319,358     312,606

  Restricted cash                           400,000     400,000     400,000
  Goodwill                                  188,272     152,183     150,067
  Other intangible assets                   134,187     132,426     141,079
  Non-current deferred income taxes          46,039      43,143      36,130
  Other non-current assets                   47,474      46,336      45,129
                                         $1,854,063  $1,750,624  $1,684,076

  Liabilities and Shareholders' Equity
  Current liabilities
     Accounts payable                      $173,008    $179,740    $149,541
     Notes payable                           18,333      20,081      20,975
     Payroll and related taxes               41,049      54,153      42,021
     Accrued customer programs               45,436      49,534      50,775
     Accrued liabilities                     44,328      45,335      55,898
     Accrued income taxes                    23,311      14,132      11,539
     Current deferred income taxes            6,193       8,456      13,727
            Total current liabilities       351,658     371,431     344,476

  Non-current liabilities
     Long-term debt                         668,784     621,717     634,956
     Non-current deferred income taxes      106,702      81,923      64,182
     Other non-current liabilities           34,646      34,809      34,807
            Total non-current
             liabilities                    810,132     738,449     733,945

  Shareholders' equity
     Preferred stock, without par value,
      10,000 shares authorized                  -           -           -
     Common stock, without par value,
      200,000 shares authorized             509,910     516,098     518,459
     Accumulated other comprehensive
      income (loss)                          31,456       3,593      (8,645)
     Retained earnings                      150,907     121,053      95,841
            Total shareholders' equity      692,273     640,744     605,655
                                         $1,854,063  $1,750,624  $1,684,076

  Supplemental Disclosures of Balance
   Sheet Information
     Allowance for doubtful accounts        $12,198     $11,178     $11,088
     Allowance for inventory                $39,098     $42,509     $44,201
     Working capital                       $366,107    $285,747    $254,589
     Preferred stock, shares issued             -           -           -
     Common stock, shares issued             92,666      92,922      93,104



                             PERRIGO COMPANY
             CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
                              (in thousands)
                               (unaudited)

                                                         Year-To-Date
                                                     2007             2006
      Cash Flows (For) From Operating
       Activities
         Net income                               $37,970          $38,277
         Adjustments to derive cash
          flows
            Depreciation and
             amortization                          27,681           26,753
            Share-based compensation                5,718            4,741
            Deferred income taxes                  (4,248)          (7,506)
         Sub-total                                 67,121           62,265

         Changes in operating assets and
          liabilities
            Accounts receivable                    (9,295)         (23,845)
            Inventories                           (22,919)          11,956
            Accounts payable                       (4,034)           5,480
            Payroll and related taxes             (12,658)            (580)
            Accrued customer programs              (4,098)           9,109
            Accrued liabilities                      (937)          (3,133)
            Accrued income taxes                    9,480          (12,811)
            Other                                  (5,025)           6,797
         Sub-total                                (49,486)          (7,027)
               Net cash from operating
                activities                         17,635           55,238

      Cash Flows (For) From Investing
       Activities
         Purchase of securities                  (117,746)         (27,887)
         Proceeds from sales of
          securities                              111,665           34,586
         Additions to property and
          equipment                               (19,784)         (12,112)
         Proceeds from sales of property
          and equipment                             2,613              -
               Net cash for investing
                activities                        (23,252)          (5,413)

      Cash (For) From Financing
       Activities
         Repayments of short-term debt,
          net                                      (1,699)          (4,471)
         Borrowings of long-term debt              60,000           15,000
         Repayments of long-term debt             (15,000)         (35,000)
         Tax effect of stock
          transactions                                (59)            (635)
         Issuance of common stock                   3,700            3,006
         Repurchase of common stock               (15,547)         (16,401)
         Cash dividends                            (8,116)          (7,702)
               Net cash (for) from
                financing activities               23,279          (46,203)

              Net increase in cash and
               cash equivalents                    17,662            3,622
      Cash and cash equivalents, at
       beginning of period                         19,018           16,707
      Effect of exchange rate changes on
       cash                                         2,955           (4,489)
      Cash and cash equivalents, at end
       of period                                  $39,635          $15,840

      Supplemental Disclosures of Cash
       Flow Information
         Cash paid/received during the
          period for:
            Interest paid                         $17,062          $17,680
            Interest received                      $9,831          $10,614
            Income taxes paid                      $6,727          $32,361
            Income taxes refunded                  $1,369           $5,164



                                 Table I
                             PERRIGO COMPANY
                           SEGMENT INFORMATION
                              (in thousands)
                               (unaudited)

                                      Second Quarter       Fiscal Year
                                      2007      2006      2007      2006
  Segment Sales
  Consumer Healthcare               $275,947  $270,222  $517,756  $497,322
  Rx Pharmaceuticals                  28,260    28,645    59,685    57,739
  API                                 28,633    26,863    58,412    53,654
  Other                               37,789    33,967    74,991    70,716
         Total                      $370,629  $359,697  $710,844  $679,431

  Segment Operating Income (Loss)
  Consumer Healthcare                $17,420   $31,436   $34,520   $44,762
  Rx Pharmaceuticals                   3,686     5,300     9,473     9,136
  API                                  5,929     6,545    10,587    13,131
  Other                                2,976       994     5,640       130
  Unallocated expenses                (3,624)   (4,966)   (8,121)   (7,121)
         Total                       $26,387   $39,309   $52,099   $60,038



                                 Table II
                             PERRIGO COMPANY
                   RECONCILIATION OF NON-GAAP MEASURES
                 (in thousands, except per share amounts)
                               (unaudited)

                                       Second Quarter       Fiscal Year
                                       2007      2006      2007      2006

  Net sales                          $370,629  $359,697  $710,844  $679,431

  Reported gross profit               $98,325  $105,570  $192,942  $192,486
  Inventory step-up                       -         -         -       4,762
  Adjusted gross profit               $98,325  $105,570  $192,942  $197,248
  Adjusted gross profit %                26.5%     29.3%     27.1%     29.0%


  Reported operating income           $26,387   $39,309   $52,099   $60,038
  Inventory step-up                       -         -         -       4,762
  Restructuring                           642       -         642       -
  Adjusted operating income           $27,029   $39,309   $52,741   $64,800


  Reported net income                 $21,088   $25,366   $37,970   $38,277
  Inventory step-up (1)                   -         -         -       3,714
  Restructuring (2)                       417       -         417       -
  Gain on sale of equity
   investment (3)                         -      (2,939)      -      (2,939)
  Adjusted net income                 $21,505   $22,427   $38,387   $39,052

  Diluted earnings per share
  Reported                              $0.23     $0.27     $0.41     $0.41
  Adjusted                              $0.23     $0.24     $0.41     $0.41

  Diluted weighted average shares
   outstanding                         93,506    93,963    93,595    94,167

  (1) Net of taxes at 22%
  (2) Net of taxes at 35%
  (3) Net of taxes at 37%



                           Table II (Continued)
                           REPORTABLE SEGMENTS
                   RECONCILIATION OF NON-GAAP MEASURES
                 (in thousands, except per share amounts)
                               (unaudited)

                                       Second Quarter       Fiscal Year
                                       2007      2006      2007      2006
     Consumer Healthcare
     Net sales                       $275,947  $270,222  $517,756  $497,322

     Reported gross profit            $59,346   $69,729  $115,547  $122,373
     Inventory step-up                    -         -         -         318
     Adjusted gross profit            $59,346   $69,729  $115,547  $122,691
     Adjusted gross profit %             21.5%     25.8%     22.3%     24.7%

     Reported operating income        $17,420   $31,436   $34,520   $44,762
     Inventory step-up                    -         -         -         318
     Restructuring                        642       -         642       -
     Adjusted operating income        $18,062   $31,436   $35,162   $45,080

     API
     Net sales                        $28,633   $26,863   $58,412   $53,654

     Reported gross profit            $14,085   $12,797   $25,964   $24,801
     Inventory step-up                    -         -         -       1,747
     Adjusted gross profit            $14,085   $12,797   $25,964   $26,548
     Adjusted gross profit %             49.2%     47.6%     44.4%     49.5%

     Reported operating income         $5,929    $6,545   $10,587   $13,131
     Inventory step-up                    -         -         -       1,747
     Adjusted operating income         $5,929    $6,545   $10,587   $14,878

     Other
     Net sales                        $37,789   $33,967   $74,991   $70,716

     Reported gross profit            $13,507   $11,452   $26,257   $22,095
     Inventory step-up                    -         -         -       2,697
     Adjusted gross profit            $13,507   $11,452   $26,257   $24,792
     Adjusted gross profit %             35.7%     33.7%     35.0%     35.1%

     Reported operating income
      (loss)                           $2,976      $994    $5,640      $130
     Inventory step-up                    -         -         -       2,697
     Adjusted operating income         $2,976      $994    $5,640    $2,827

First Call Analyst:
FCMN Contact: pblain@perrigo.com

SOURCE: Perrigo Company

CONTACT: Arthur J. Shannon, Vice President, Investor Relations and
Communication, +1-269-686-1709, E-mail: ajshannon@perrigo.com, or Ernest J.
Schenk, Manager, Investor Relations and Communication, +1-269-673-9212, E-
mail: eschenk@perrigo.com, both of Perrigo Company

Web site: http://www.perrigo.com/