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Last updated on April 17, 2014 at 14:37 EDT

Perrigo Reports Record First Quarter Revenue And Adjusted Earnings And Raises Full Year Adjusted EPS Guidance

November 7, 2012

ALLEGAN, Mich., Nov. 7, 2012 /PRNewswire/ — Perrigo Company (Nasdaq: PRGO; TASE: PRGO) today announced results for its first quarter ended September 29, 2012.

(Logo: http://photos.prnewswire.com/prnh/20120301/DE62255LOGO )

Perrigo’s Chairman and CEO Joseph C. Papa commented, “We have started fiscal 2013 well, delivering record first quarter revenue and adjusted earnings. We also delivered all-time record adjusted gross and operating margins. Store brand OTC market share continues to grow. Our Consumer Healthcare segment’s revenue grew 9.4% from a record first quarter last year. Our Rx segment continued its excellent performance, which was driven by the acquisition of Paddock Labs, new product sales and strong organic Rx results, combined with our continued focus on quality and R&D. Clearly we are focused on the results from our Nutritionals segment and the team has an action plan in place for the rest of the year. We believe our value proposition continues to resonate well with consumers.”

Refer to Table I at the end of this press release for adjustments in the current year and prior year periods and additional non-GAAP disclosure information. The Company’s reported results are summarized in the attached Condensed Consolidated Statements of Income, Balance Sheets and Cash Flows.

                                     Perrigo Company
                         (in thousands, except per share amounts)
              (see the attached Table I for reconciliation to GAAP numbers)

                         Fiscal 2013                   Fiscal 2012
                        First Quarter                 First Quarter
                            Ended                         Ended               YoY
                                   9/29/2012                     9/24/2011  % Change
                                   ---------                     ---------  --------

     Net
     Sales                          $769,810                      $725,295            6.1%
     Reported
     Net
     Income                         $105,580                       $70,458           49.8%
     Adjusted
     Net
     Income                         $119,467                      $103,320           15.6%
     Reported
     Diluted
     EPS                               $1.12                         $0.75           49.3%
     Adjusted
     Diluted
     EPS                               $1.27                         $1.10           15.5%
     Diluted
     Shares                           94,335                        93,953            0.4%

First Quarter Results

Net sales in the quarter were $770 million, an increase of 6% over the first quarter of fiscal 2012, driven primarily by $28 million attributable to the Paddock Laboratories, Inc. (“Paddock”) and CanAm Care, LLC (“CanAm”) acquisitions and new product sales of $26 million, partially offset by decreases in sales of certain existing products in the Nutritionals and API segments and $5 million due to unfavorable changes in foreign currency exchange rates. Excluding charges as outlined in Table I at the end of this release, first quarter fiscal 2013 adjusted net income increased 16% to $119 million, or $1.27 per share. Reported net income increased 50% to $106 million, or $1.12 per diluted share, due primarily to $0.21 per diluted share in acquisition-related costs in the first quarter of fiscal 2012.

Consumer Healthcare

                                 Consumer Healthcare Segment
                                       (in thousands)
               (see the attached Table II for reconciliation to GAAP numbers)

                           Fiscal 2013                   Fiscal 2012
                          First Quarter                 First Quarter
                              Ended                         Ended               YoY
                                     9/29/2012                     9/24/2011  % Change
                                     ---------                     ---------  --------

     Net
     Sales                            $450,416                      $411,681             9.4%
     Reported
     Gross
     Profit                           $145,835                      $129,358            12.7%
     Adjusted
     Gross
     Profit                           $146,850                      $130,380            12.6%
     Reported
     Operating
     Income                            $79,288                       $69,189            14.6%
     Adjusted
     Operating
     Income                            $81,551                       $71,433            14.2%

     Reported
     Gross
     Margin                               32.4%                         31.4%       +100 bps
     Adjusted
     Gross
     Margin                               32.6%                         31.7%        +90 bps
     Reported
     Operating
     Margin                               17.6%                         16.8%        +80 bps
     Adjusted
     Operating
     Margin                               18.1%                         17.4%        +70 bps

Consumer Healthcare segment net sales increased 9% to $450 million due to an increase in sales of existing products of $36 million (contract, cough/cold and smoking cessation categories), new product sales of $13 million (gastrointestinal, cough/cold and dermatological categories) and $9 million in incremental sales attributable to the acquisition of CanAm. These combined increases were partially offset by a decline of $17 million in sales of existing products (analgesics and feminine hygiene categories) and a decline of $4 million due to discontinued products.

Adjusted gross and operating margins expanded 90 and 70 basis points, respectively, due to new products, product mix and cost controls in the Company’s manufacturing plants.

Nutritionals

                                    Nutritionals Segment
                                       (in thousands)
               (see the attached Table II for reconciliation to GAAP numbers)

                           Fiscal 2013                   Fiscal 2012
                          First Quarter                 First Quarter
                              Ended                         Ended               YoY
                                     9/29/2012                     9/24/2011  % Change
                                     ---------                     ---------  --------

     Net
     Sales                            $103,423                      $119,861           -13.7%
     Reported
     Gross
     Profit                            $25,835                       $29,569           -12.6%
     Adjusted
     Gross
     Profit                            $28,885                       $35,418           -18.4%
     Reported
     Operating
     Income                             $3,883                        $7,241           -46.4%
     Adjusted
     Operating
     Income                            $11,183                       $16,705           -33.1%

     Reported
     Gross
     Margin                               25.0%                         24.7%        +30 bps
     Adjusted
     Gross
     Margin                               27.9%                         29.5%       -160 bps
     Reported
     Operating
     Margin                                3.8%                          6.0%       -220 bps
     Adjusted
     Operating
     Margin                               10.8%                         13.9%       -310 bps

The Nutritionals segment reported first quarter net sales of $103 million, compared with $120 million a year ago as existing product sales declined $20 million, partially offset by new product sales of $3 million (infant formula category). The decrease in sales was due primarily to a decline in existing product sales in the vitamin, minerals and dietary supplements (“VMS”) category driven by increased competition and increased retail shipments of infant formula placed in the fourth quarter of fiscal 2012 in advance of the planned July 1(st) shutdown of the Company’s Vermont Plant to perform an SAP conversion and prepare for the installation of a new packaging line. Reported and adjusted gross profit and margin were impacted by relatively lower volumes in infant formula and VMS, along with increased inventory costs.

Operating income and margin were impacted by higher combined research and development and distribution, selling, general and administration expenses as a percent to net sales, though they were lower on a dollar basis, year-over-year.

Rx Pharmaceuticals

                                 Rx Pharmaceuticals Segment
                                       (in thousands)
               (see the attached Table II for reconciliation to GAAP numbers)

                           Fiscal 2013                   Fiscal 2012
                          First Quarter                 First Quarter
                              Ended                         Ended               YoY
                                     9/29/2012                     9/24/2011  % Change
                                     ---------                     ---------  --------

     Net
     Sales                            $162,942                      $127,627            27.7%
     Reported
     Gross
     Profit                            $86,684                       $41,460           109.1%
     Adjusted
     Gross
     Profit                            $95,086                       $75,992            25.1%
     Reported
     Operating
     Income                            $68,504                       $24,485           179.8%
     Adjusted
     Operating
     Income                            $76,906                       $58,673            31.1%

     Reported
     Gross
     Margin                               53.2%                         32.5%     +2,070 bps
     Adjusted
     Gross
     Margin                               58.4%                         59.5%       -110 bps
     Reported
     Operating
     Margin                               42.0%                         19.2%     +2,280 bps
     Adjusted
     Operating
     Margin                               47.2%                         46.0%       +120 bps

The Rx Pharmaceuticals segment first quarter net sales increased 28% to $163 million due primarily to incremental net sales of $19 million from the July 26, 2011 Paddock acquisition, new product sales of $8 million and improved pricing on select products.

Year-over-year percent changes in reported gross profit and operating income were impacted by the absence of a one-time charge of $27 million to cost of sales as a result of the step-up of inventory value related to the Paddock acquisition in the first quarter of fiscal 2012.

API

                                        API Segment
                                       (in thousands)
               (see the attached Table II for reconciliation to GAAP numbers)

                                       Fiscal 2013                 Fiscal 2012
                                      First Quarter               First Quarter
                                          Ended                       Ended              YoY
                                                9/29/2012                   9/24/2011  % Change
                                                ---------                   ---------  --------

     Net
     Sales                                        $36,419                     $47,644           -23.6%
     Reported
     Gross
     Profit                                       $21,360                     $21,608            -1.1%
     Adjusted
     Gross
     Profit                                       $21,823                     $22,129            -1.4%
     Reported
     Operating
     Income                                       $13,319                     $14,215            -6.3%
     Adjusted
     Operating
     Income                                       $13,782                     $14,736            -6.5%

     Reported
     Gross
     Margin                                          58.7%                       45.4%     +1,330 bps
     Adjusted
     Gross
     Margin                                          59.9%                       46.4%     +1,350 bps
     Reported
     Operating
     Margin                                          36.6%                       29.8%       +680 bps
     Adjusted
     Operating
     Margin                                          37.8%                       30.9%       +690 bps

The API segment’s net sales declined by 24% to $36 million due primarily to a decrease in existing product sales of approximately $17 million as a result of increased competition and pricing pressures on select products, along with a negative impact of $2 million due to changes in foreign currency, partially offset by $7 million related to the launch of a customer’s product with 180-day exclusivity status.

Gross and operating margins were positively impacted by the product launch referred to above.

Other

The Other category reported decreased first quarter net sales of approximately $17 million, compared with $18 million a year ago, due primarily to the impact of unfavorable changes in foreign currency exchange rates.

Adjusted operating income was approximately $1 million, representing an increase in adjusted operating margin of 100 basis points from last year due to product mix.

Guidance

Chairman, President and CEO Joseph C. Papa concluded, “The strength of our diversified business model was evident this quarter. Margin expansion remains a top priority for the Company and we continue to make ROIC positive investments in operations and products. As we look forward to the rest of fiscal 2013, we continue to expect strong new product launches and further conversion of consumers to store brand.”

The Company expects fiscal 2013 reported earnings to be between $4.71 and $4.91 per diluted share as compared to $4.18 in fiscal 2012. Excluding the charges outlined in Table III at the end of this release, the Company expects fiscal 2013 adjusted earnings to be between $5.45 and $5.65 per diluted share as compared to $4.99 in fiscal 2012 reflecting the acquisition of Sergeant’s Pet Care Products, Inc., the realization of tax benefits and continued execution of the core businesses. This new range implies a year-over-year growth rate in adjusted earnings of 9% to 13% over fiscal 2012′s adjusted earnings from continuing operations per diluted share.

The conference call will be available live via webcast to interested parties on the Perrigo website http://perrigo.investorroom.com/events-webcasts or by phone at 877-248-9413, International 973-582-2737, and reference ID# 46994711. A taped replay of the call will be available beginning at approximately 2:00 p.m. (ET) Wednesday, November 7, 2012 until midnight Friday, November 23, 2012. To listen to the replay, dial 855-859-2056, International 404-537-3406, and use access code 46994711.

From its beginnings as a packager of generic home remedies in 1887, Perrigo Company, based in Allegan, Michigan, has grown to become a leading global provider of quality, affordable healthcare products. The Company develops, manufactures and distributes over-the-counter (“OTC”) and generic prescription (“Rx”) pharmaceuticals, nutritional products and active pharmaceutical ingredients (“API”) and is the world’s largest manufacturer of OTC pharmaceutical products for the store brand market. Perrigo’s mission is to offer uncompromised “quality, affordable healthcare products”, and it does so across a wide variety of product categories primarily in the United States, United Kingdom, Mexico, Israel and Australia, as well as certain other markets throughout the world, including Canada, China and Latin America. 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 June 30, 2012, 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)

                                             First Quarter
                                             -------------
                                              2013                2012
                                              ----                ----

    Net sales                             $769,810            $725,295
    Cost of sales                          484,541             497,716
                                           -------             -------
    Gross profit                           285,269             227,579
                                           -------             -------

    Operating expenses
    Distribution                            10,767              10,264
    Research and development                27,395              19,638
    Selling and administration              90,534              96,125
    Total operating expenses               128,696             126,027
                                           -------             -------

    Operating income                       156,573             101,552

    Interest, net                           15,853              12,570
    Other (income) expense, net                (62)                229
                                               ---                 ---
    Income before income taxes             140,782              88,753

    Income tax expense                      35,202              18,295
                                            ------              ------
    Net income                            $105,580             $70,458
                                          ========             =======

    Earnings per share
    Basic earnings per share                 $1.13               $0.76
    Diluted earnings per share               $1.12               $0.75

    Weighted average shares outstanding
    Basic                                   93,607              92,900
    Diluted                                 94,335              93,953

    Dividends declared per share             $0.08               $0.07

    See accompanying notes to condensed consolidated financial statements.

                                                                                       PERRIGO COMPANY
                                                                  CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME
                                                                                       (in thousands)
                                                                                         (unaudited)

                                                                                                                                First Quarter
                                                                                                                                -------------
                                                                                                                                         2013     2012
                                                                                                                                         ----     ----
    Net Income                                                                                                                       $105,580  $70,458
    Other comprehensive income (loss):
    Change in fair value of derivative financial instruments, net of tax                                                                1,462   (7,796)
    Foreign currency translation adjustments                                                                                            5,424  (52,960)
    Post-retirement liability adjustments, net of tax                                                                                     (41)     (17)
    Other comprehensive income (loss), net of tax                                                                                       6,845  (60,773)
    Comprehensive income                                                                                                             $112,425   $9,685
                                                                                                                                     ========   ======

                                                         See accompanying notes to condensed consolidated financial statements.

                                                                                               PERRIGO COMPANY
                                                                                    CONDENSED CONSOLIDATED BALANCE SHEETS
                                                                                                (in thousands)
                                                                                                 (unaudited)

                                                                                                        September 29,                    June 30,             September 24,
                                                                                                                                   2012                 2012                      2011
                                                                                                                                   ----                 ----                      ----
    Assets
    Current assets
    Cash and cash equivalents                                                                                                  $631,993             $602,489                  $116,615
    Accounts receivable, net                                                                                                    584,008              572,582                   521,263
    Inventories                                                                                                                 598,825              547,455                   563,257
    Current deferred income taxes                                                                                                45,781               45,738                    50,276
    Income taxes refundable                                                                                                       4,252                1,047                     8,891
    Prepaid expenses and other current assets                                                                                    35,872               26,610                    38,789
    Total current assets                                                                                                      1,900,731            1,795,921                 1,299,091

    Property and equipment                                                                                                    1,135,502            1,118,837                 1,037,270
    Less accumulated depreciation                                                                                              (555,241)            (540,487)                 (504,389)
                                                                                                                               --------             --------                  --------
                                                                                                                                580,261              578,350                   532,881

    Goodwill and other indefinite-lived intangible assets                                                                       822,359              820,122                   812,924
    Other intangible assets, net                                                                                                711,104              729,253                   771,677
    Non-current deferred income taxes                                                                                            14,627               13,444                    13,479
    Other non-current assets                                                                                                     88,348               86,957                    84,035
                                                                                                                             $4,117,430           $4,024,047                $3,514,087
                                                                                                                             ==========           ==========                ==========

    Liabilities and Shareholders' Equity
    Current liabilities
    Accounts payable                                                                                                           $306,972             $317,341                  $303,549
    Short-term debt                                                                                                               1,609                   90                     3,750
    Payroll and related taxes                                                                                                    57,864               89,934                    72,106
    Accrued customer programs                                                                                                   122,495              116,055                   112,592
    Accrued liabilities                                                                                                          79,756               76,406                    83,374
    Accrued income taxes                                                                                                         21,228               12,905                     6,677
    Current portion of long-term debt                                                                                            40,000               40,000                    40,000
    Total current liabilities                                                                                                   629,924              652,731                   622,048

    Non-current liabilities
    Long-term debt, less current portion                                                                                      1,329,827            1,329,235                 1,155,787
    Non-current deferred income taxes                                                                                            26,297               24,126                     9,604
    Other non-current liabilities                                                                                               166,064              165,310                   182,207
    Total non-current liabilities                                                                                             1,522,188            1,518,671                 1,347,598

    Shareholders' Equity
    Controlling interest:
    Preferred stock, without par value, 10,000 shares authorized                                                                      -                    -                         -
    Common stock, without par value, 200,000 shares authorized                                                                  512,658              504,708                   478,035
    Accumulated other comprehensive income                                                                                       46,249               39,404                    66,277
    Retained earnings                                                                                                         1,404,977            1,306,925                   998,256
                                                                                                                              1,963,884            1,851,037                 1,542,568
    Noncontrolling interest                                                                                                       1,434                1,608                     1,873
    Total shareholders' equity                                                                                                1,965,318            1,852,645                 1,544,441
                                                                                                                             $4,117,430           $4,024,047                $3,514,087
                                                                                                                             ==========           ==========                ==========

    Supplemental Disclosures of Balance Sheet Information
    Allowance for doubtful accounts                                                                                              $2,224               $2,556                    $9,617
    Working capital                                                                                                          $1,270,807           $1,143,190                  $677,043
    Preferred stock, shares issued and outstanding                                                                                    -                    -                         -
    Common stock, shares issued and outstanding                                                                                  93,840               93,484                    93,189

                                                                 See accompanying notes to condensed consolidated financial statements.

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

                                                                                                                                                     First Quarter
                                                                                                                                                     -------------
                                                                                                                                                                       2013      2012
                                                                                                                                                                       ----      ----
    Cash Flows (For) From Operating Activities
    Net income                                                                                                                                                     $105,580   $70,458
    Adjustments to derive cash flows
    Gain on sale of pipeline development projects                                                                                                                         -    (3,500)
    Depreciation and amortization                                                                                                                                    33,424    34,720
    Share-based compensation                                                                                                                                          4,772     3,935
    Income tax benefit from exercise of stock options                                                                                                                 2,068     2,125
    Excess tax benefit of stock transactions                                                                                                                        (13,342)  (10,578)
    Deferred income taxes                                                                                                                                            (3,483)   (3,084)
    Subtotal                                                                                                                                                        129,019    94,076
                                                                                                                                                                    -------    ------

    Changes in operating assets and liabilities, net of business acquisition
    Accounts receivable                                                                                                                                              (6,682)    8,581
    Inventories                                                                                                                                                     (48,110)   (7,156)
    Accounts payable                                                                                                                                                (12,574)  (47,249)
    Payroll and related taxes                                                                                                                                       (32,298)  (10,681)
    Accrued customer programs                                                                                                                                         6,440    (5,708)
    Accrued liabilities                                                                                                                                               2,713    17,678
    Accrued income taxes                                                                                                                                             15,674      (878)
    Other                                                                                                                                                            (9,327)    5,484
    Subtotal                                                                                                                                                        (84,164)  (39,929)
    Net cash from operating activities                                                                                                                               44,855    54,147
                                                                                                                                                                     ------    ------

    Cash Flows (For) From Investing Activities
    Acquisition of business, net of cash acquired                                                                                                                         -  (547,052)
    Proceeds from sale of intangible assets and pipeline development projects                                                                                             -    10,500
    Additions to property and equipment                                                                                                                             (14,804)  (18,953)
    Other                                                                                                                                                                 -      (250)
                                                                                                                                                                        ---      ----
    Net cash for investing activities                                                                                                                               (14,804) (555,755)
                                                                                                                                                                    -------  --------

    Cash Flows (For) From Financing Activities
    Borrowings of short-term debt, net                                                                                                                                1,519       980
    Net borrowings under accounts receivable securitization program                                                                                                       -    55,000
    Borrowings of long-term debt                                                                                                                                        592   250,787
    Deferred financing fees                                                                                                                                               -    (2,468)
    Excess tax benefit of stock transactions                                                                                                                         13,342    10,578
    Issuance of common stock                                                                                                                                          4,063     5,884
    Repurchase of common stock                                                                                                                                      (12,159)   (7,899)
    Cash dividends                                                                                                                                                   (7,528)   (6,535)
    Net cash (for) from financing activities                                                                                                                           (171)  306,327
                                                                                                                                                                       ----   -------

    Effect of exchange rate changes on cash                                                                                                                            (376)    1,792
    Net increase (decrease) in cash and cash equivalents                                                                                                             29,504  (193,489)

    Cash and cash equivalents, beginning of period                                                                                                                  602,489   310,104
    Cash and cash equivalents, end of period                                                                                                                       $631,993  $116,615
                                                                                                                                                                   ========  ========

    Supplemental Disclosures of Cash Flow Information
    Cash paid/received during the period for:
    Interest paid                                                                                                                                                    $2,096    $3,240
    Interest received                                                                                                                                                $1,276    $1,127
    Income taxes paid                                                                                                                                               $20,514    $9,151
    Income taxes refunded                                                                                                                                              $526      $768

                                                                              See accompanying notes to condensed consolidated financial statements.

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

                                                                                    Three Months Ended
                                                                                    ------------------
    Consolidated                                            September 29, 2012                                                           September 24, 2011                                    % Change
                                                            ------------------                                                           ------------------                                    --------
                                                            GAAP                                      Non-GAAP Adjustments                       As Adjusted                                 GAAP                 Non-GAAP Adjustments                As Adjusted           GAAP      As Adjusted
                                                            ----                                      --------------------                       -----------                                 ----                 --------------------                -----------           ----      -----------
    Net sales                                                             $769,810                            $                  -                                 $769,810                             $725,295           $                 -                    $725,295        6 %              6 %
    Cost of sales                                                          484,541                                          13,323 (a)                              471,218                              497,716                        42,362  (a,d)              455,354       -3 %              3 %
                                                                           -------                                          ------                                  -------                              -------                        ------                     -------
    Gross profit                                                           285,269                                          13,323                                  298,592                              227,579                        42,362                     269,941       25 %             11 %

    Operating expenses
    Distribution                                                            10,767                                               -                                   10,767                               10,264                             -                      10,264        5 %              5 %
    Research and development                                                27,395                                               -                                   27,395                               19,638                        (3,500) (e)                 23,138       39 %             18 %
    Selling and administration                                              90,534                                           7,375 (a,b)                             83,159                               96,125                        13,620  (a,f)               82,505       -6 %              1 %
                                                                            ------                                           -----                                   ------                               ------                        ------                      ------
    Total operating expenses                                               128,696                                           7,375                                  121,321                              126,027                        10,120                     115,907        2 %              5 %

    Operating income                                                       156,573                                          20,698                                  177,271                              101,552                        52,482                     154,034       54 %             15 %
    Interest, net                                                           15,853                                               -                                   15,853                               12,570                             -                      12,570       26 %             26 %
    Other (income) expense, net                                                (62)                                              -                                      (62)                                 229                             -                         229         -                -
                                                                               ---                                             ---                                      ---                                  ---                           ---                         ---
    Income before income taxes                                             140,782                                          20,698                                  161,480                               88,753                        52,482                     141,235       59 %             14 %
    Income tax expense                                                      35,202                                           6,811 (c)                               42,013                               18,295                        19,620  (c)                 37,915       92 %             11 %
                                                                            ------                                           -----                                   ------                               ------                        ------                      ------
    Net income                                                            $105,580                                         $13,887                                 $119,467                              $70,458                       $32,862                    $103,320       50 %             16 %
                                                                          ========                                         =======                                 ========                              =======                       =======                    ========

    Diluted earnings per share                                               $1.12                                                                                    $1.27                                $0.75                                                     $1.10       49 %             15 %

    Diluted weighted average shares outstanding                             94,335                                                                                   94,335                               93,953                                                    93,953

    Selected ratios as a percentage of net sales
    Gross profit                                                             37.1 %                                                                                   38.8 %                               31.4 %                                                    37.2 %
    Operating expenses                                                       16.7 %                                                                                   15.8 %                               17.4 %                                                    16.0 %
    Operating income                                                         20.3 %                                                                                   23.0 %                               14.0 %                                                    21.2 %

    (a) Deal-related amortization
    (b) Acquisition costs of $1,877
    (c) Total tax effect for non-GAAP pre-tax adjustments
    (d) Inventory step-up of $27,179
    (e) Proceeds from sale of pipeline development projects
    (f) Acquisition-related and severance costs of $8,782

                                                                                                                                                                                   Table II
                                                                                                                                                                               PERRIGO COMPANY
                                                                                                                                                                             REPORTABLE SEGMENTS
                                                                                                                                                                     RECONCILIATION OF NON-GAAP MEASURES
                                                                                                                                                                                (in thousands)
                                                                                                                                                                                 (unaudited)

                                                                                                Three Months Ended
                                                                                                ------------------
    Consumer Healthcare                                                 September 29, 2012                                                            September 24, 2011                                       % Change
                                                                        ------------------                                                            ------------------                                       --------
                                                                        GAAP                                     Non-GAAP Adjustments                        As Adjusted                                     GAAP                 Non-GAAP Adjustments                As Adjusted           GAAP       As Adjusted
                                                                        ----                                     --------------------                        -----------                                     ----                 --------------------                -----------           ----       -----------
    Net sales                                                                       $450,416                              $                -                                $450,416                                    $411,681           $                 -                    $411,681         9 %               9 %
    Cost of sales                                                                    304,581                                           1,015 (a)                             303,566                                     282,323                         1,022  (a)                281,301         8 %               8 %
                                                                                     -------                                           -----                                 -------                                     -------                         -----                     -------
    Gross profit                                                                     145,835                                           1,015                                 146,850                                     129,358                         1,022                     130,380        13 %              13 %
    Operating expenses                                                                66,547                                           1,248 (a)                              65,299                                      60,169                         1,222  (a)                 58,947        11 %              11 %
                                                                                      ------                                           -----                                  ------                                      ------                         -----                      ------
    Operating income                                                                 $79,288                                          $2,263                                 $81,551                                     $69,189                        $2,244                     $71,433        15 %              14 %
                                                                                     =======                                          ======                                 =======                                     =======                        ======                     =======

    Selected ratios as a percentage of net sales
    Gross profit                                                                       32.4 %                                                                                  32.6 %                                      31.4 %                                                    31.7 %
    Operating expenses                                                                 14.8 %                                                                                  14.5 %                                      14.6 %                                                    14.3 %
    Operating income                                                                   17.6 %                                                                                  18.1 %                                      16.8 %                                                    17.4 %

                                                                                              Three Months Ended
                                                                                              ------------------
    Nutritionals                                                      September 29, 2012                                                         September 24, 2011                                      % Change
                                                                      ------------------                                                         ------------------                                      --------
                                                                        GAAP                                     Non-GAAP Adjustments                        As Adjusted                                     GAAP                 Non-GAAP Adjustments                As Adjusted           GAAP       As Adjusted
                                                                        ----                                     --------------------                        -----------                                     ----                 --------------------                -----------           ----       -----------
    Net sales                                                                       $103,423                              $                -                                $103,423                                    $119,861           $                 -                    $119,861       -14 %             -14 %
    Cost of sales                                                                     77,588                                           3,050 (a)                              74,538                                      90,292                         5,849  (a)                 84,443       -14 %             -12 %
                                                                                      ------                                           -----                                  ------                                      ------                         -----                      ------
    Gross profit                                                                      25,835                                           3,050                                  28,885                                      29,569                         5,849                      35,418       -13 %             -18 %
    Operating expenses                                                                21,952                                           4,250 (a)                              17,702                                      22,328                         3,615  (a)                 18,713        -2 %              -5 %
                                                                                      ------                                           -----                                  ------                                      ------                         -----                      ------
    Operating income                                                                  $3,883                                          $7,300                                 $11,183                                      $7,241                        $9,464                     $16,705       -46 %             -33 %
                                                                                      ======                                          ======                                 =======                                      ======                        ======                     =======

    Selected ratios as a percentage of net sales
    Gross profit                                                                       25.0 %                                                                                  27.9 %                                      24.7 %                                                    29.5 %
    Operating expenses                                                                 21.2 %                                                                                  17.1 %                                      18.6 %                                                    15.6 %
    Operating income                                                                    3.8 %                                                                                  10.8 %                                       6.0 %                                                    13.9 %

                                                                                              Three Months Ended
                                                                                              ------------------
    Rx Pharmaceuticals                                                September 29, 2012                                                         September 24, 2011                                      % Change
                                                                      ------------------                                                         ------------------                                      --------
                                                                        GAAP                                     Non-GAAP Adjustments                        As Adjusted                                     GAAP                 Non-GAAP Adjustments                As Adjusted           GAAP       As Adjusted
                                                                        ----                                     --------------------                        -----------                                     ----                 --------------------                -----------           ----       -----------
    Net sales                                                                       $162,942                              $                -                                $162,942                                    $127,627           $                 -                    $127,627        28 %              28 %
    Cost of sales                                                                     76,258                                           8,402 (a)                              67,856                                      86,167                        34,532  (a,b)               51,635       -11 %              31 %
                                                                                      ------                                           -----                                  ------                                      ------                        ------                      ------
    Gross profit                                                                      86,684                                           8,402                                  95,086                                      41,460                        34,532                      75,992       109 %              25 %
    Operating expenses                                                                18,180                                               -                                  18,180                                      16,975                          (344) (c,d)               17,319         7 %               5 %
                                                                                      ------                                             ---                                  ------                                      ------                          ----                      ------
    Operating income                                                                 $68,504                                          $8,402                                 $76,906                                     $24,485                       $34,188                     $58,673       180 %              31 %
                                                                                     =======                                          ======                                 =======                                     =======                       =======                     =======

    Selected ratios as a percentage of net sales
    Gross profit                                                                       53.2 %                                                                                  58.4 %                                      32.5 %                                                    59.5 %
    Operating expenses                                                                 11.2 %                                                                                  11.2 %                                      13.3 %                                                    13.6 %
    Operating income                                                                   42.0 %                                                                                  47.2 %                                      19.2 %                                                    46.0 %

    (a) Deal-related amortization
    (b) Inventory step-up of $27,179
    (c) Proceeds of $3,500 from sale of pipeline development projects
    (d) Severance costs of $3,156

                                                                                                                                                                       Table II (Continued)
                                                                                                                                                                          PERRIGO COMPANY
                                                                                                                                                                        REPORTABLE SEGMENTS
                                                                                                                                                                RECONCILIATION OF NON-GAAP MEASURES
                                                                                                                                                                          (in thousands)
                                                                                                                                                                            (unaudited)

                                                                                                Three Months Ended
                                                                                                ------------------
    API                                                                 September 29, 2012                                                         September 24, 2011                                     % Change
                                                                        ------------------                                                         ------------------                                     --------
                                                                        GAAP                                    Non-GAAP Adjustments                      As Adjusted                                   GAAP                Non-GAAP Adjustments          As Adjusted          GAAP       As Adjusted
                                                                        ----                                    --------------------                      -----------                                   ----                --------------------          -----------          ----       -----------
    Net sales                                                                        $36,419                              $             -                                  $36,419                                 $47,644            $             -                 $47,644       -24 %             -24 %
    Cost of sales                                                                     15,059                                          463 (a)                               14,596                                  26,036                        521 (a)              25,515       -42 %             -43 %
                                                                                      ------                                          ---                                   ------                                  ------                        ---                  ------
    Gross profit                                                                      21,360                                          463                                   21,823                                  21,608                        521                  22,129        -1 %              -1 %
    Operating expenses                                                                 8,041                                            -                                    8,041                                   7,393                          -                   7,393         9 %               9 %
                                                                                       -----                                          ---                                    -----                                   -----                        ---                   -----
    Operating income                                                                 $13,319                                         $463                                  $13,782                                 $14,215                       $521                 $14,736        -6 %              -6 %
                                                                                     =======                                         ====                                  =======                                 =======                       ====                 =======

    Selected ratios as a percentage of net sales
    Gross profit                                                                       58.7 %                                                                                59.9 %                                  45.4 %                                             46.4 %
    Operating expenses                                                                 22.1 %                                                                                22.1 %                                  15.5 %                                             15.5 %
    Operating income                                                                   36.6 %                                                                                37.8 %                                  29.8 %                                             30.9 %

                                                                                              Three Months Ended
                                                                                              ------------------
    Other                                                             September 29, 2012                                                      September 24, 2011                                    % Change
                                                                      ------------------                                                      ------------------                                    --------
                                                                        GAAP                                    Non-GAAP Adjustments                      As Adjusted                                   GAAP                Non-GAAP Adjustments          As Adjusted          GAAP       As Adjusted
                                                                        ----                                    --------------------                      -----------                                   ----                --------------------          -----------          ----       -----------
    Net sales                                                                        $16,610                              $             -                                  $16,610                                 $18,482            $             -                 $18,482       -10 %             -10 %
    Cost of sales                                                                     11,055                                          393 (a)                               10,662                                  12,898                        437 (a)              12,461       -14 %             -14 %
                                                                                      ------                                          ---                                   ------                                  ------                        ---                  ------
    Gross profit                                                                       5,555                                          393                                    5,948                                   5,584                        437                   6,021        -1 %              -1 %
    Operating expenses                                                                 5,130                                            -                                    5,130                                   5,299                          -                   5,299        -3 %              -3 %
                                                                                       -----                                          ---                                    -----                                   -----                        ---                   -----
    Operating income                                                                    $425                                         $393                                     $818                                    $285                       $437                    $722        49 %              13 %
                                                                                        ====                                         ====                                     ====                                    ====                       ====                    ====

    Selected ratios as a percentage of net sales
    Gross profit                                                                       33.4 %                                                                                35.8 %                                  30.2 %                                             32.6 %
    Operating expenses                                                                 30.9 %                                                                                30.9 %                                  28.7 %                                             28.7 %
    Operating income                                                                    2.6 %                                                                                 4.9 %                                   1.5 %                                              3.9 %

    (a) Deal-related amortization
    (b) Inventory step-up of $27,179
    (c) Proceeds of $3,500 from sale of pipeline development projects
    (d) Severance costs of $3,156
                                                                                                        Table III
                                                                                                     PERRIGO COMPANY
                                                                                            FY 2013 GUIDANCE AND FY 2012 EPS
                                                                                           RECONCILIATION OF NON-GAAP MEASURES
                                                                                                       (unaudited)

                                                                                                                                    Full Year
                                                                                                                               Fiscal 2013 Guidance
                                                                                                                               --------------------
     FY13 reported diluted EPS range                                                                                                   $4.71 - $4.91
         Deal-related amortization (1)                                                                                                          0.62
         Charge associated with inventory step-up                                                                                               0.11
         Charges associated with acquisition costs                                                                                              0.01
     FY13 adjusted diluted EPS range                                                                                                   $5.45 - $5.65

                                                                                                                                 Fiscal 2012*
                                                                                                                                 -----------
     FY12 reported diluted EPS from continuing operations                                                                                      $4.18
         Deal-related amortization (1)                                                                                                         0.523
         Charge associated with inventory step-up                                                                                              0.181
         Charges associated with acquisition-related and severance costs                                                                       0.062
         Charges associated with restructuring                                                                                                 0.061
         Net charge associated with acquired R&D and proceeds from sale of IPR&D projects                                                      0.012
         Earnings associated with sale of pipeline development projects                                                                       (0.026)
     FY12 adjusted diluted EPS from continuing operations                                                                                      $4.99

      (1)  Amortization of acquired intangible assets related to business combinations and
      asset acquisitions

     *All information based on continuing operations.

                                                                                                                                             Table IV
                                                                                                                                         PERRIGO COMPANY
                                                                                                                                       REPORTABLE SEGMENTS
                                                                                                                               RECONCILIATION OF NON-GAAP MEASURES
                                                                                                                                          (in thousands)
                                                                                                                                           (unaudited)

                                                                                                            Q1 FY12*                          Q2 FY12*                Q3 FY12*           Q4 FY12*           FY 2012*
                                                                                                             -------                          -------                  -------           -------             -------
    Consumer Healthcare
    Net sales                                                                                                        $411,681                               $471,277           $448,848           $483,982           $1,815,788

    Reported gross profit                                                                                            $129,358                               $148,813           $140,417           $153,169             $571,757
    Deal-related amortization(1)                                                                                        1,022                                  1,006              1,010              1,008                4,046
    Adjusted gross profit                                                                                            $130,380                               $149,819           $141,427           $154,177             $575,803
                                                                                                                     ========                               ========           ========           ========             ========
    Adjusted gross profit %                                                                                             31.7%                                  31.8%              31.5%              31.9%                31.7%

    Reported operating expenses                                                                                       $60,169                                $66,563            $61,034            $68,689             $256,455
    Deal-related amortization(1)                                                                                       (1,222)                                (1,214)            (1,411)            (1,419)              (5,266)
    Adjusted operating expenses                                                                                       $58,947                                $65,349            $59,623            $67,270             $251,189
                                                                                                                      =======                                =======            =======            =======             ========
    Adjusted operating expenses %                                                                                       14.3%                                  13.9%              13.3%              13.9%                13.8%

    Reported operating income                                                                                         $69,189                                $82,250            $79,383            $84,480             $315,302
    Deal-related amortization(1)                                                                                        2,244                                  2,220              2,421              2,427                9,312
    Adjusted operating income                                                                                         $71,433                                $84,470            $81,804            $86,907             $324,614
                                                                                                                      =======                                =======            =======            =======             ========
    Adjusted operating income %                                                                                         17.4%                                  17.9%              18.2%              18.0%                17.9%

    Nutritionals
    Net sales                                                                                                        $119,861                               $128,147           $117,683           $135,335             $501,026

    Reported gross profit                                                                                             $29,569                                $28,230            $30,350            $37,196             $125,345
    Deal-related amortization(1)                                                                                        5,849                                  3,022              3,021              3,021               14,913
    Adjusted gross profit                                                                                             $35,418                                $31,252            $33,371            $40,217             $140,258
                                                                                                                      =======                                =======            =======            =======             ========
    Adjusted gross profit %                                                                                             29.5%                                  24.4%              28.4%              29.7%                28.0%

    Reported operating expenses                                                                                       $22,328                                $23,677            $28,505            $25,387              $99,897
    Deal-related amortization(1)                                                                                       (3,615)                                (3,615)            (3,616)            (3,615)             (14,461)
    Restructuring charges                                                                                                   -                                      -             (7,081)            (1,674)              (8,755)
                                                                                                                          ---                                    ---             ------
    Adjusted operating expenses                                                                                       $18,713                                $20,062            $17,808            $20,098              $76,681
                                                                                                                      =======                                =======            =======            =======              =======
    Adjusted operating expenses %                                                                                       15.6%                                  15.7%              15.1%              14.9%                15.3%

    Reported operating income                                                                                          $7,241                                 $4,553             $1,845            $11,809              $25,448
    Deal-related amortization(1)                                                                                        9,464                                  6,637              6,637              6,636               29,374
    Restructuring charges                                                                                                   -                                      -              7,081              1,674                8,755
    Adjusted operating income                                                                                         $16,705                                $11,190            $15,563            $20,119              $63,577
                                                                                                                      =======                                =======            =======            =======              =======
    Adjusted operating income %                                                                                         13.9%                                   8.7%              13.2%              14.9%                12.7%

    Rx Pharmaceuticals
    Net sales                                                                                                        $127,627                               $177,196           $155,591           $156,975             $617,389

    Reported gross profit                                                                                             $41,460                                $91,380            $83,331            $72,450             $288,621
    Deal-related amortization(1)                                                                                        7,353                                  7,969              8,574              8,532               32,428
    Inventory step-up                                                                                                  27,179                                      -                  -                  -               27,179
                                                                                                                       ------                                    ---                ---                ---
    Adjusted gross profit                                                                                             $75,992                                $99,349            $91,905            $80,982             $348,228
                                                                                                                      =======                                =======            =======            =======             ========
    Adjusted gross profit %                                                                                             59.5%                                  56.1%              59.1%              51.6%                56.4%

    Reported operating expenses                                                                                       $16,975                                $21,404            $16,076            $20,671              $75,126
    Acquisition-related costs                                                                                          (3,156)                                  (599)                 -                  -               (3,755)
    Earnings associated with sale of IPR&D projects                                                                     3,500                                      -                  -                  -                3,500
    Write-off of in-process R&D                                                                                             -                                      -                  -               (750)                (750)

    Adjusted operating expenses                                                                                       $17,319                                $20,805            $16,076            $19,921              $74,121
                                                                                                                      =======                                =======            =======            =======              =======
    Adjusted operating expenses %                                                                                       13.6%                                  11.7%              10.3%              12.7%                12.0%

    Reported operating income                                                                                         $24,485                                $69,976            $67,255            $51,779             $213,495
    Deal-related amortization(1)                                                                                        7,353                                  7,969              8,574              8,532               32,428
    Inventory step-up                                                                                                  27,179                                      -                  -                  -               27,179
    Acquisition-related costs                                                                                           3,156                                    599                  -                  -                3,755
    Earnings associated with sale of IPR&D projects                                                                    (3,500)                                     -                  -                  -               (3,500)
    Write-off of in-process R&D                                                                                             -                                      -                  -                750                  750
    Adjusted operating income                                                                                         $58,673                                $78,544            $75,829            $61,061             $274,107
                                                                                                                      =======                                =======            =======            =======             ========
    Adjusted operating income %                                                                                         46.0%                                  44.3%              48.7%              38.9%                44.4%

    (1)  Amortization of acquired intangible assets related to business combinations and asset acquisitions

    *All information based on continuing operations.

                                                                                                                         Table IV (Continued)
                                                                                                                           PERRIGO COMPANY
                                                                                                                         REPORTABLE SEGMENTS
                                                                                                                 RECONCILIATION OF NON-GAAP MEASURES
                                                                                                                            (in thousands)
                                                                                                                             (unaudited)

                                                                                            Q1 FY12*                Q2 FY12*                         Q3 FY12*         Q4 FY12*          FY 2012*
                                                                                            -------                 -------                          -------           -------          -------
    API
    Net sales                                                                                            $47,644                $42,751                       $36,952          $38,434           $165,781

    Reported gross profit                                                                                $21,608                $20,150                       $18,676          $25,674            $86,108
       Deal-related amortization (1)                                                                         521                    496                           490              482              1,989
                                                                                                             ---                    ---                                            ---
    Adjusted gross profit                                                                                $22,129                $20,646                       $19,166          $26,156            $88,097
                                                                                                         =======                =======                       =======          =======            =======
    Adjusted gross profit %                                                                                46.4%                  48.3%                         51.9%            68.1%              53.1%

    Reported operating income                                                                            $14,215                $11,692                       $10,462          $17,512            $53,881
       Deal-related amortization (1)                                                                         521                    496                           490              482              1,989
    Adjusted operating income                                                                            $14,736                $12,188                       $10,952          $17,994            $55,870
                                                                                                         =======                =======                       =======          =======            =======
    Adjusted operating income %                                                                            30.9%                  28.5%                         29.6%            46.8%              33.7%

    Other
    Net sales                                                                                            $18,482                $18,798                       $18,943          $17,041            $73,264

    Reported gross profit                                                                                 $5,584                 $6,303                        $6,498           $5,382            $23,767
       Deal-related amortization (1)                                                                         437                    438                           410              403              1,688
    Adjusted gross profit                                                                                 $6,021                 $6,741                        $6,908           $5,785            $25,455
                                                                                                          ======                 ======                        ======           ======            =======
    Adjusted gross profit %                                                                                32.6%                  35.9%                         36.5%            33.9%              34.7%

    Reported operating income (loss)                                                                        $285                   $924                          $846             $(37)            $2,018
       Deal-related amortization (1)                                                                         437                    438                           410              403              1,688
    Adjusted operating income                                                                               $722                 $1,362                        $1,256             $366             $3,706
                                                                                                            ====                 ======                        ======             ====             ======
    Adjusted operating income %                                                                             3.9%                   7.2%                          6.6%             2.1%               5.1%

    (1)  Amortization of acquired intangible assets related to business combinations and asset acquisitions

    *All information based on continuing operations.

SOURCE Perrigo Company


Source: PR Newswire