Press Releases

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.

Learn More

Perrigo Reports Strong Fiscal 2007 Third Quarter Revenue Growth
Third Quarter Sales $362 million, up 9%
Third Quarter Cash Provided by Operations of $57 million
PRNewswire-FirstCall
ALLEGAN, Mich.

The Perrigo Company (NASDAQ: PRGO)(TASE: PRGO) today announced results for the third quarter of fiscal year 2007 ended March 31, 2007.

                             Perrigo Company
                 (in thousands, except per share amounts)

                         Third Quarter                 Nine Months
                      2007         2006            2007           2006

   Sales          $362,288     $332,321      $1,073,132     $1,011,752
   Net Income      $17,056      $20,860         $55,026        $59,138
   Diluted EPS       $0.18        $0.22           $0.59          $0.63
   Diluted Shares   93,298       94,044          93,604         94,143

On March 26, 2007, Perrigo completed the acquisition of nine generic prescription products and four pipeline products from Glades Pharmaceuticals, Inc. The reported results above include an acquisition-related write-off of the in-process research and development (IPR&D) of $4.8 million after-tax.

Third Quarter Results

Net sales for the third quarter of fiscal 2007 were $362.3 million, an increase of $30 million, or nine percent, compared with $332.3 million last year. Reported net income was $17.1 million, or $0.18 per share, and included the aforementioned write-off of IPR&D and a restructuring charge of $0.2 million after-tax. Excluding these charges, adjusted net income was $22.1 million, or $0.24 per share. In the third quarter last year, net income was $20.9 million, or $0.22 per share. A reconciliation of non-GAAP measures is shown in Table II at the end of this press release.

Commenting on the third quarter, Joseph C. Papa, Perrigo's President and Chief Executive Officer said, "Our strong revenue growth this quarter was driven largely by improved volume in several of our core Consumer Healthcare product categories, despite this year's mild cold and flu season. New product sales remained strong, especially in the smoking cessation category, positioning us to exceed our targeted new product sales expectations for 2007. The acquisition of generic prescription products from Glades Pharmaceuticals this quarter and the pending acquisition of Qualis, Inc. provide us additional growth prospects in the coming quarters and enhance our future product pipeline. In addition, I was pleased to note our focus on working capital and inventory in the quarter have helped drive operating cash flow of $57 million in the quarter, bringing us to $74 million year-to-date."

Nine Months Results

Net sales for the nine months ended March 31, 2007 were $1,073.1 million, an increase of $61 million, or six percent compared with $1,011.8 million last year. Reported net income was $55.0 million, or $0.59 per share, which included costs for a product recall of $4.1 million after-tax, or $0.04 per share. Excluding the write-off of IPR&D of $4.8 million after-tax and restructuring charges of $0.6 million after-tax, adjusted net income was $60.5 million, or $0.65 per share.

In the nine months a year ago, net income was $59.1 million, or $0.63 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 an 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 nine months was $59.9 million, or $0.64 per share. A reconciliation of non-GAAP measures for both years is shown in Table II at the end of this press release.

The effective tax rate for the nine months year to date was 19.4%, down from 32.9% in the same period a year ago. 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.

Consumer Healthcare

Perrigo's Consumer Healthcare segment net sales in the quarter were $262.3 million, up $23.7 million, or 9.9%, compared with $238.6 million last year. New products contributed $16.7 million in incremental sales primarily in the smoking cessation and nutrition categories. These results also include strong growth in the analgesics category and strong sales gains from store-brand operations in Mexico and the United Kingdom. Operating income in the quarter was $21.6 million, compared with $20.4 million a year ago.

For the nine months, Consumer Healthcare sales were $780.0 million, up $44.1 million, or six percent, compared with $735.9 million last year. The sales gain was driven by new product sales of $44.4 million, and increases in Mexico and the United Kingdom, offset by a decline in cough and cold product sales in the first half of the year. Operating income was $56.1 million and includes a $6.3 million charge for a recall of certain Acetaminophen products in November 2006. In fiscal 2006, operating income was $65.2 million.

On March 7, 2007, the Company announced that it will acquire store brand OTC pediculicide products for $12 million in cash. The production of these products, which compare to Rid® and Nix®, will be absorbed into our facilities as of the closing date, expected to be on or around June 30, 2007.

Rx Pharmaceuticals

Perrigo's Rx Pharmaceuticals segment reported sales of $34.0 million, including $5.8 million of service and royalty revenue, compared with $30.2 million a year ago. Operating income was $7.4 million, compared with $4.3 million last year.

For the first nine months of fiscal 2007, net sales were $93.7 million and operating income was $16.9 million with a 26% increase in research and development spending. For the same period last year, sales were $88.0 million and operating income was $13.4 million, including a charge of $2.8 million pre-tax for a product recall.

As noted above, the Company completed an acquisition of products from Glades Pharmaceuticals, Inc. at the end of March for $57 million in cash plus other consideration of $2.5 million for future research and development collaborations. Glades is a subsidiary of Stiefel Laboratories, Inc., a privately-owned company specializing in the branded dermatology market. The acquisition is expected to add more than $20 million in net sales annually.

API

Fiscal third quarter sales in the API segment were $30.1 million, compared with last year's $30.3 million, which included $4 million of non-product revenue. Operating income was $4.0 million, compared with $8.0 million last year. For the nine months, sales were $88.5 million, compared with $83.9 million, and operating income was $14.6 million, compared with $21.1 million last year. Spending in API research and development has increased 70% from last year. Excluding a $1.7 million write-off of the step-up in the value of inventory acquired, operating income for the nine months last year was $22.8 million.

Other

Perrigo's Other category, consisting of the Israel Consumer Products and Israel Pharmaceutical and Diagnostic Products segments, reported third quarter sales of $35.9 million, compared with $33.2 million a year ago. Operating income was $1.1 million, compared with $0.7 million last year. Sales for the nine months were $110.9 million, up 6.7%, compared with $104.0 million in the same period a year ago and operating income was $6.7 million, compared with $0.9 million last year. Excluding a $2.7 million write-off of the step-up in the value of inventory acquired, operating income for the nine months last year was $3.6 million.

Outlook

The Company continues to anticipate 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 and $0.05 per share for the write-off of IPR&D. The Company also expects full-year operating cash flow between $100 to $120 million.

Mr. Papa stated, "Our outlook continues to be positive as we focus on quality, service and cost efficiencies and look forward to assisting our customers in meeting the needs of consumers for more affordable healthcare, especially for over-the-counter store brand products. We remain committed to our investments in quality and continue to invest in R&D to enable our future launches of new products."

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. The Company has based these forward-looking statements on its current expectations, assumptions, estimates and projections. While the Company believes these expectations, assumptions, estimates and projections are reasonable, such forward-looking statements are only predictions and involve known and unknown risks and uncertainties, many of which are beyond the Company's control. These and other important factors, including those discussed under "Risk Factors" in 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, may cause actual results, performance or achievements to differ materially from those expressed or implied by these forward-looking statements. The forward-looking statements in this press release are made only as of the date hereof, and unless otherwise required by applicable securities laws, the Company disclaims any intention or obligation to update or revise any forward-looking statements, whether as a result of new information, future events or otherwise.

                                PERRIGO COMPANY
                  CONDENSED CONSOLIDATED STATEMENTS OF INCOME
                    (in thousands, except per share amounts)
                                  (unaudited)

                                  Third Quarter          Year-to-Date
                                   2007      2006        2007        2006

    Net sales                   $362,288  $332,321   $1,073,132  $1,011,752
    Cost of sales                262,079   235,043      779,981     721,988
    Gross profit                 100,209    97,278      293,151     289,764

    Operating expenses
      Distribution                 7,020     6,438       21,559      20,541
      Research and development    16,390    12,260       44,339      37,135
      Selling and administration  44,710    48,225      142,423     141,695
        Subtotal                  68,120    66,923      208,321     199,371
      Write-off of in-process
       research and development    8,252     -            8,252      -
      Restructuring                  306     -              948      -
          Total                   76,678    66,923      217,521     199,371

    Operating income              23,531    30,355       75,630      90,393
    Interest, net                  3,650     2,465       11,536      11,606
    Other income, net             (1,874)   (2,310)      (4,193)     (9,346)

    Income before income taxes    21,755    30,200       68,287      88,133
    Income tax expense             4,699     9,339       13,261      28,995

    Net income                   $17,056   $20,861      $55,026     $59,138

    Earnings per share
       Basic                       $0.19     $0.23        $0.60       $0.64
       Diluted                     $0.18     $0.22        $0.59       $0.63

    Weighted average shares
     outstanding
       Basic                      91,643    92,683       92,161      92,966
       Diluted                    93,298    94,044       93,604      94,143

    Dividends declared per share  $0.045    $0.043       $0.133      $0.125



                             PERRIGO COMPANY
                  CONDENSED CONSOLIDATED BALANCE SHEETS
                              (in thousands)

                                         March 31,    July 1,    March 25,
                                            2007        2006        2006
  Assets                                (unaudited)             (unaudited)
  Current assets
    Cash and cash equivalents               $34,873     $19,018     $29,168
    Investment securities                    58,220      26,733       6,685
    Accounts receivable                     246,582     240,130     220,425
    Inventories                             310,272     302,941     273,668
    Current deferred income taxes            39,122      52,058      47,088
    Prepaid expenses and other current
     assets                                  23,833      16,298      16,010
            Total current assets            712,902     657,178     593,044

  Property and equipment                    641,343     606,907     599,702
    Less accumulated depreciation           320,672     287,549     281,733
                                            320,671     319,358     317,969

  Restricted cash                           422,000     400,000     400,000
  Goodwill                                  189,450     152,183     147,633
  Other intangible assets                   155,899     132,426     138,043
  Non-current deferred income taxes          42,624      43,143      32,725
  Other non-current assets                   47,015      46,336      41,460
                                         $1,890,561  $1,750,624  $1,670,874

  Liabilities and Shareholders' Equity
  Current liabilities
    Accounts payable                       $158,499    $179,740    $163,494
    Notes payable                             3,763      20,081      26,969
    Payroll and related taxes                43,590      54,153      48,632
    Accrued customer programs                40,494      49,534      46,020
    Accrued liabilities                      48,135      45,335      46,832
    Accrued income taxes                     16,210      14,132       7,004
    Current deferred income taxes            13,886       8,456       9,002
    Current portion of long-term debt        14,910         -           -
            Total current liabilities       339,487     371,431     347,953

  Non-current liabilities
    Long-term debt                          709,342     621,717     594,360
    Non-current deferred income taxes       102,129      81,923      68,924
    Other non-current liabilities            34,346      34,809      35,274
            Total non-current liabilities   845,817     738,449     698,558

  Shareholders' equity
    Preferred stock, without par value,
     10,000 shares authorized                   -           -           -
    Common stock, without par value,
     200,000 shares authorized              507,025     516,098     518,996
    Accumulated other comprehensive
     income (loss)                           34,434       3,593      (7,377)
    Retained earnings                       163,798     121,053     112,744
            Total shareholders' equity      705,257     640,744     624,363
                                         $1,890,561  $1,750,624  $1,670,874

  Supplemental Disclosures of Balance
   Sheet Information
    Allowance for doubtful accounts          $9,933     $11,178     $10,619
    Allowance for inventory                 $37,390     $42,509     $43,035
    Working capital                        $373,415    $285,747    $245,091
    Preferred stock, shares issued              -           -           -
    Common stock, shares issued              92,510      92,922      93,087



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

                                                        Year-to-Date
                                                   2007              2006
     Cash Flows (For) From Operating Activities
        Net income                                $55,026           $59,138
        Adjustments to derive cash flows
          Write-off of in-process research
           and development                          8,252               -
          Depreciation and amortization            41,997            42,155
          Share-based compensation                  6,530             7,274
          Deferred income taxes                    12,749            (2,707)
        Sub-total                                 124,554           105,860

        Changes in operating assets and liabilities

          Accounts receivable                      (8,616)           (8,701)
          Inventories                              (4,224)            1,201
          Accounts payable                        (19,254)           19,180
          Payroll and related taxes               (10,151)            5,928
          Accrued customer programs                (9,040)            4,354
          Accrued liabilities                       2,968           (12,358)
          Accrued income taxes                      3,008           (17,480)
          Other                                    (5,084)           12,648
        Sub-total                                 (50,393)            4,772
            Net cash from operating activities     74,161           110,632


     Cash Flows (For) From Investing Activities
        Purchases of securities                  (228,341)          (29,134)
        Proceeds from sales of securities         198,530            39,384
        Additions to property and equipment       (30,133)          (18,672)
        Proceeds from sale of property
         and equipment                              2,613               -
        Acquisition of assets                     (59,538)              -
            Net cash for investing activities    (116,869)           (8,422)

     Cash (For) From Financing Activities
        Borrowings (repayments) of
         short-term debt, net                     (16,293)            1,543
        Borrowings of long-term debt              130,000            15,000
        Repayments of long-term debt              (30,000)          (75,000)
        Tax effect of stock transactions              (30)             (762)
        Issuance of common stock                    5,347             5,223
        Repurchases of common stock               (20,919)          (20,488)
        Cash dividends                            (12,281)          (11,660)
            Net cash (for) from financing
             activities                            55,824           (86,144)

            Net increase in cash and cash
             equivalents                           13,116            16,066
     Cash and cash equivalents,
      beginning of period                          19,018            16,707
     Effect of exchange rate changes on cash        2,739            (3,605)
     Cash and cash equivalents, end of period     $34,873           $29,168

     Supplemental Disclosures of Cash Flow Information
       Cash paid/received during the period for:
           Interest paid                          $25,547           $27,093
           Interest received                      $15,119           $15,870
           Income taxes paid                       $8,500           $40,106
           Income taxes refunded                   $8,443            $5,239



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

                                    Third Quarter          Fiscal Year
                                   2007      2006       2007        2006
  Segment Sales
   Consumer Healthcare           $262,277  $238,594    $780,033    $735,916
   Rx Pharmaceuticals              34,025    30,237      93,710      87,976
   API                             30,095    30,250      88,507      83,904
   Other                           35,891    33,240     110,882     103,956
         Total                   $362,288  $332,321  $1,073,132  $1,011,752

  Segment Operating Income (Loss)
   Consumer Healthcare            $21,578   $20,434     $56,098     $65,196
   Rx Pharmaceuticals               7,448     4,260      16,921      13,396
   API                              4,002     7,969      14,589      21,100
   Other                            1,105       747       6,745         877
   Unallocated expenses            (2,350)   (3,055)    (10,471)    (10,176)
   Write-off of in-process R&D     (8,252)      -        (8,252)        -
         Total                    $23,531   $30,355     $75,630     $90,393



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

                                   Third Quarter          Fiscal Year
                                   2007      2006       2007        2006

  Net sales                      $362,288  $332,321  $1,073,132  $1,011,752

  Reported gross profit          $100,209   $97,278    $293,151    $289,764
   Inventory step-up                  -         -           -         4,762
  Adjusted gross profit          $100,209   $97,278    $293,151    $294,526
  Adjusted gross profit %           27.7%     29.3%       27.3%       29.1%

  Reported operating income
   (loss)                         $23,531   $30,355     $75,630     $90,393
   Inventory step-up                   -         -           -         4,762
   Perrigo operational
    improvements                      306       -           948         -
   Write-off of in-process R&D      8,252       -         8,252         -
  Adjusted operating income       $32,089   $30,355     $84,830     $95,155

  Reported net income (loss)      $17,056   $20,861     $55,026     $59,138
   Inventory step-up (1)              -         -           -         3,714
   Gain on sale of equity
    investment (2)                    -         -           -        (2,939)
   Perrigo operational
    improvements (3)                  199       -           616         -
   Write-off of in-process R&D (4)  4,827       -         4,827         -
  Adjusted net income             $22,082   $20,861     $60,470     $59,913

  Diluted earnings (loss) per share
   Reported                         $0.18     $0.22       $0.59       $0.63
   Adjusted                         $0.24     $0.22       $0.65       $0.64

  Diluted weighted average
   shares outstanding              93,298    94,044      93,604      94,143

  (1) Net of taxes at 22%
  (2) Net of taxes at 37%
  (3) Net of taxes at 35%
  (4) Net of taxes at 41.5%



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

                                        Third Quarter       Year-To-Date
                                       2007      2006      2007      2006
     Consumer Healthcare
     Net sales                       $262,277  $238,594  $780,033  $735,916

     Reported gross profit            $59,233   $60,166  $174,780  $182,539
      Inventory step-up                   -         -         -         318
     Adjusted gross profit            $59,233   $60,166  $174,780  $182,857
     Adjusted gross profit %            22.6%     25.2%     22.4%     24.8%

     Reported operating income        $21,578   $20,434   $56,098   $65,196
      Inventory step-up                   -         -         -         318
      Perrigo operational improvements    306       -         948       -
     Adjusted operating income        $21,884   $20,434   $57,046   $65,514

     API
     Net sales                        $30,095   $30,250   $88,507   $83,904

     Reported gross profit            $12,499   $14,310   $38,463   $39,111
      Inventory step-up                   -         -         -       1,747
     Adjusted gross profit            $12,499   $14,310   $38,463   $40,858
     Adjusted gross profit %            41.5%     47.3%     43.5%     48.7%

     Reported operating income         $4,002    $7,969   $14,589   $21,100
      Inventory step-up                   -         -         -       1,747
     Adjusted operating income         $4,002    $7,969   $14,589   $22,847

     Other
     Net sales                        $35,891   $33,240  $110,882  $103,956

     Reported gross profit            $12,346   $11,258   $38,603   $33,353
      Inventory step-up                   -         -         -       2,697
     Adjusted gross profit            $12,346   $11,258   $38,603   $36,050
     Adjusted gross profit %            34.4%     33.9%     34.8%     34.7%

     Reported operating income         $1,105      $747    $6,745      $877
      Inventory step-up                   -         -         -       2,697
     Adjusted operating income         $1,105      $747    $6,745    $3,574

     Unallocated
     Reported operating loss         $(10,602)  $(3,055) $(18,723) $(10,176)
      Write-off of in-process R&D       8,252       -       8,252       -
     Adjusted operating income (loss) $(2,350)  $(3,055) $(10,471) $(10,176)

FCMN Contact: pblain@perrigo.com

SOURCE: Perrigo Company

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

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