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Perrigo Reports Record Third Quarter
Date:5/7/2009

ALLEGAN, Mich., May 7 /PRNewswire-FirstCall/ --

  • Fiscal third quarter revenue from continuing operations increased $25 million, or 5%, to $506 million as compared to $481 million this quarter a year ago

  • Fiscal third quarter earnings from continuing operations were a record $0.50 per share

  • Consumer Healthcare fiscal third quarter revenue increased by $46 million or 12%

  • Company revises adjusted full year fiscal 2009 income from continuing operations guidance to be in a range of $1.80 to $1.90 per share from previously announced $1.75 to $1.90

  • The Israel Consumer Products business has been classified as discontinued operations and a sales process has commenced

Perrigo Company (Nasdaq: PRGO; TASE) today announced results for its fiscal year 2009 third quarter and nine months that ended March 28, 2009.

                                  Perrigo Company
       (from continuing operations, in thousands, except per share amounts)

                              Third Quarter         Nine Months
                             2009      2008       2009       2008
                             ----      ----       ----       ----
    Net Sales             $505,902  $480,640 $1,498,653 $1,255,639
    Reported Income        $46,469   $40,230   $108,818   $108,037
    Adjusted Income        $46,999   $44,527   $127,710   $112,334
    Reported Diluted EPS     $0.50     $0.42      $1.16      $1.14
    Adjusted Diluted EPS     $0.50     $0.47      $1.36      $1.18
    Diluted Shares          93,153    94,955     93,747     95,115

Third Quarter Results

Net sales from continuing operations for the third quarter of fiscal 2009 were $505.9 million, an increase of 5%. Reported income from continuing operations was $46.5 million, or $0.50 per share, compared with $40.2 million, or $0.42 per share, a year ago, an increase of 16%. Excluding charges as outlined in Table II at the end of this release, third quarter fiscal 2009 adjusted income from continuing operations was $47.0 million, or $0.50 per share.

(Refer to Table II at the end of this press release for additional adjustments in the current year period and additional non-GAAP disclosure information.)

As part of management's strategic review of its portfolio of businesses, in March 2009, the Company committed to a plan to sell its Israel Consumer Products business. The results of this business are reflected in the condensed consolidated financial statements as discontinued operations for all periods presented. The Company has engaged the investment banking firms of William Blair and Poalim Capital Markets to assist in this sale process, which is expected to be completed within one year.

Perrigo's Chairman and CEO Joseph C. Papa stated, "I am very pleased with our record third quarter sales and earnings. In this quarter, the over-the-counter category fell 3% versus third quarter last year and the national brand category fell more than 7%, while Perrigo Consumer Healthcare grew 12%. We were able to achieve this growth rate despite the fact that we are comparing the results to the launches of Omeprazole and Cetirizine at this time last year. More consumers than ever are realizing the value that store brands have to offer."

Nine Months Results

Net sales from continuing operations for the first nine months of fiscal 2009 were $1,498.7 million, an increase of 19% over fiscal 2008. The increase was driven by the Consumer Healthcare segment and included $203.7 million of consolidated new product sales. Reported gross profit of $432.1 million was an increase of 13% over fiscal 2008, driven by the Consumer Healthcare segment. The year-to-date reported gross profit percentage in fiscal 2009 was 28.8%, down from 30.5% last year. Reported operating expenses were $240.4 million, an increase of 5% over fiscal 2008. However, as a percentage of net sales, operating expenses were 16.0%, down from 18.2% in fiscal 2008. Reported income from continuing operations was $108.8 million, relatively flat over fiscal 2008.

Consumer Healthcare

Consumer Healthcare segment net sales in the third quarter were $419.1 million compared with $373.0 million in the third quarter last year, an increase of $46.1 million or 12%. The increase resulted from approximately $39.2 million of sales from the acquisitions of JB Labs, Unico, Diba and Brunel, and $31.4 million from sales of new and existing products in the gastrointestinal, cough/cold, smoking cessation and nutrition categories. These increases were partially offset by the impact of unfavorable changes in foreign currency exchange rates of $12.4 million and the absence of the U.K.'s Vitamins, Minerals, and Supplements (VMS) business's sales of $9.8 million.

Reported operating income was $62.3 million, compared with $51.7 million a year ago, largely driven by a favorable mix of products sold both domestically and internationally, gross margins from sales by Unico and the absence of a $2.9 million charge to cost of sales related to the step-up in value of inventory acquired in the Galpharm acquisition that was recognized in fiscal 2008. Adjusted operating income was $63.0 million, an increase of 15% compared to a year ago.

For the first nine months of fiscal year 2009, Consumer Healthcare net sales increased 28% or $270.3 million compared to fiscal 2008. The increase resulted primarily from sales of new and existing products of approximately $212.7 million, primarily in the gastrointestinal, cough/cold, nutrition, smoking cessation and analgesic categories. The increase was also driven by $109.8 million of sales from JB Labs, Unico, Galpharm, Brunel and Diba. These combined increases were partially offset by the absence of the U.K.'s VMS business's sales of $25.7 million and the impact of unfavorable changes in foreign currency exchange rates of $22.4 million.

On February 20, 2009, the Company announced that it began shipping over-the-counter (OTC) Ibuprofen and Diphenhydramine Citrate Tablets, 200/38 mg (Ibuprofen PM). The product is being marketed under store brand labels and is comparable to Wyeth Consumer Healthcare's Advil(R) PM tablets, 200/38 mg, indicated as a pain reliever (NSAID)/nighttime sleep-aid. Estimated brand sales for the product for the 12 months ended December 21, 2008 were $71 million.

Rx Pharmaceuticals

The Rx Pharmaceutical segment third quarter net sales were $41.7 million compared with $49.2 million a year ago. The decrease was due primarily to the absence of the fiscal 2008 receipt of a one-time cash payment of $8.5 million from a customer in lieu of expected future minimum royalty payments, as agreed upon in a license termination agreement. Net sales were also negatively impacted by a $2.2 million reduction in non-product revenue, as well as continued pricing pressures on certain existing products in the portfolio. These decreases were partially offset by $5.1 million of increased sales volumes on other products in the portfolio.

For the first nine months of fiscal year 2009, net sales for the Rx Pharmaceutical segment decreased 6% compared to fiscal 2008. The decrease was due primarily to the aforementioned one-time cash payment of $8.5 million. The decrease in net sales was also due to an $8.2 million reduction in non-product revenue, as well as pricing pressures due to continued competition in the marketplace for generic drugs. These decreases were partially offset by new product sales of approximately $11.0 million, along with an increase in sales volumes on the Company's existing portfolio of products of approximately $7.0 million.

On March 17, 2009, the Company announced that its partner Cobrek Pharmaceuticals, Inc. (Cobrek) had filed an Abbreviated New Drug Application (ANDA) for Clindamycin Phosphate Foam 1%, a generic version of Evoclin(R) Foam 1%. The Company believes that Cobrek is the first to file an ANDA with a Paragraph IV certification against Evoclin(R). Evoclin(R) (clindamycin phosphate) Foam 1% is a topical antibiotic indicated for topical application in the treatment of acne vulgaris, and had sales of approximately $44 million for the 12 months ended January 2009, as measured by Wolters Kluwer Health.

API

The API segment reported third quarter net sales of $31.0 million compared with $37.8 million a year ago. The decrease was due primarily to the absence of a one-time $4.9 million accrual reversal related to a long standing customer contract negotiation recognized in fiscal 2008, along with approximately $2.0 million resulting from unfavorable changes in foreign currency exchange rates. Operating income was $4.3 million, compared with $6.0 million last year, reflecting the aforementioned accrual reversal, as well as unfavorable foreign currency exchange rate changes, partially offset by favorable contributions from new products, pricing improvements and lower operating expenses.

For the first nine months of fiscal year 2009, net sales decreased 13% compared to fiscal 2008. This decrease was due primarily to a decline of approximately $16.7 million in sales of three key products, the absence of the one-time $4.9 million accrual reversal mentioned above and approximately $1.0 million resulting from unfavorable changes in foreign currency exchange rates. These decreases were partially offset by a $5.3 million increase in the sales mix of existing products, along with new product sales of approximately $3.2 million.

Other

Continuing operations for the Other category, consisting of the Israel Pharmaceutical and Diagnostic Products operating segment, reported third quarter net sales of $14.1 million, compared with $20.6 million a year ago. Operating income was $2.7 million, up from $1.4 million last year. The increase in operating income was due primarily to operating expenses for fiscal 2009 decreasing by 30% compared to fiscal 2008. The decrease was due primarily to lower employee-related expenses and slightly favorable changes in the foreign exchange rate.

For the first nine months of fiscal 2009, net sales decreased $5.6 million or 9%, compared to fiscal 2008. The decrease was driven primarily by a $7.6 million impact related to a change in a customer contract. In addition, sales in the diagnostic product line decreased by approximately $2.4 million. These decreases were partially offset by changes in foreign currency exchange rates, along with increased sales due to changes in the sales mix of existing products in the remaining portfolio.

Guidance

Chairman and CEO Joseph C. Papa concluded, "We are now expecting adjusted fiscal 2009 earnings from continuing operations to be between $1.80 and $1.90 per share, which implies a year over year growth rate of adjusted earnings from continuing operations of 15% to 22% over fiscal 2008. This is revised from our previous guidance of $1.75 to $1.90 per share, excluding charges outlined in Table III at the end of this release. Looking ahead, we believe Perrigo is well positioned to continue to add value to its customers and shareholders."

Perrigo will host a conference call to discuss fiscal 2009 third quarter results at 10:00 a.m. (ET) on Thursday, May 7. The conference call and presentation slides will be available live via webcast to interested parties on the Perrigo website http://www.perrigo.com or by phone 877-248-9413, International 973-582-2737 and reference ID# 95095054. A taped replay of the call will be available beginning at approximately 2:00 p.m. (ET) Thursday, May 7, until midnight Friday, May 15, 2009. To listen to the replay, call 800-642-1687, International 706-645-9291, access code 95095054.

Perrigo Company is a leading global healthcare supplier that develops, manufactures and distributes OTC and generic prescription pharmaceuticals, nutritional products, active pharmaceutical ingredients (API) and pharmaceutical and medical diagnostic products. The Company is the world's largest manufacturer of OTC pharmaceutical products for the store brand market. The Company's primary markets and locations of manufacturing and logistics operations are the United States, Israel, Mexico and the United Kingdom. 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 28, 2008, as well as the Company's subsequent filings with the Securities and Exchange Commission, may cause actual results, performance or achievements to differ materially from those expressed or implied by these forward-looking statements. The forward-looking statements in this press release are made only as of the date hereof, and unless otherwise required by applicable securities laws, the Company disclaims any intention or obligation to update or revise any forward-looking statements, whether as a result of new information, future events or otherwise.

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

                                     Third Quarter         Year-to-Date
                                     -------------         ------------
                                     2009      2008        2009       2008
                                     ----      ----        ----       ----

      Net sales                    $505,902  $480,640  $1,498,653 $1,255,639
      Cost of sales                 356,310   330,337   1,066,509    873,004
                                    -------   -------   ---------    -------
      Gross profit                  149,592   150,303     432,144    382,635
                                    -------   -------     -------    -------

      Operating expenses
         Distribution                 6,167     6,525      18,513     18,450
         Research and
          development                17,890    19,160      56,036     51,623
         Selling and
          administration             53,638    61,470     165,533    154,949
                                     ------    ------     -------    -------
            Subtotal                 77,695    87,155     240,082    225,022
                                     ------    ------     -------    -------
         Write-off of
          in-process
          research and
          development                     -     2,786         279      2,786
         Restructuring                    -       348           -        348
                                        ---       ---         ---        ---
            Total                    77,695    90,289     240,361    228,156
                                     ------    ------     -------    -------

      Operating income               71,897    60,014     191,783    154,479
      Interest, net                   6,966     3,686      20,465     12,009
      Other (income)
       expense, net                   1,160       353       2,565       (905)
      Investment impairment               -         -      15,104          -
                                     ------    ------      ------     ------

      Income from continuing
       operations before
            income taxes             63,771    55,975     153,649    143,375
      Income tax expense             17,302    15,745      44,831     35,338
                                     ------    ------      ------     ------
      Income from
       continuing
       operations                    46,469    40,230     108,818    108,037
      Income (loss) from
       discontinued
       operations, net
            of tax                     (572)     (263)         30        238
                                       ----      ----          --        ---
      Net income                    $45,897   $39,967    $108,848   $108,275
                                    =======   =======    ========   ========

      Earnings (loss) per
       share
         Basic
            Continuing
             operations               $0.51     $0.43       $1.18      $1.16
            Discontinued
             operations               (0.01)     0.00        0.00       0.00
                                      -----      ----        ----       ----
            Basic
             earnings per
             share                    $0.50     $0.43       $1.18      $1.16
         Diluted
            Continuing
             operations               $0.50     $0.42       $1.16      $1.14
            Discontinued
             operations               (0.01)     0.00        0.00       0.00
                                      -----      ----        ----       ----
            Diluted
             earnings per
             share                    $0.49     $0.42       $1.16      $1.14

      Weighted average
       shares outstanding
         Basic                       91,967    92,854      92,251     93,127
         Diluted                     93,153    94,955      93,747     95,115

      Dividends
       declared per
       share                         $0.055    $0.050      $0.160     $0.145



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

                                         March 28,   June 28,    March 29,
                                           2009        2008        2008
                                           ----        ----        ----
    Assets
    Current assets
       Cash and cash equivalents          $197,817    $318,599     $64,113
       Investment securities                     5         560         725
       Accounts receivable, net            331,307     317,875     347,058
       Inventories                         383,010     374,782     335,905
       Current deferred income taxes        40,447      42,241      36,631
       Income taxes refundable              12,191      12,841       6,412
       Prepaid expenses and
        other current assets                26,904      36,951      18,634
       Current assets of
        discontinued operations             45,796      58,968      48,100
                                            ------      ------      ------
              Total current assets       1,037,477   1,162,817     857,578

    Property and equipment                 724,242     719,593     685,323
       Less accumulated depreciation      (385,780)   (381,053)   (366,048)
                                          --------    --------    --------
                                           338,462     338,540     319,275

    Restricted cash                        400,000     400,000     400,000
    Goodwill and other indefinite-
     lived intangible assets               249,960     287,112     269,608
    Other intangible assets                208,093     220,724     222,346
    Non-current deferred income taxes       70,610      73,726      50,128
    Other non-current assets                45,101      63,914      49,937
    Non-current assets of
     discontinued operations                22,181      34,202      30,241
                                            ------      ------      ------
                                        $2,371,884  $2,581,035  $2,199,113
                                        ==========  ==========  ==========

    Liabilities and
     Shareholders' Equity
    Current liabilities
       Accounts payable                   $232,875    $235,922    $216,030
       Notes payable                             -           -      10,169
       Payroll and related taxes            51,949      70,977      49,910
       Accrued customer programs            52,789      53,419      45,537
       Accrued liabilities                  49,435      55,055      38,162
       Current deferred income taxes        16,120      24,493      18,864
       Current portion of
        long-term debt                      15,869      20,095      17,598
       Current liabilities of
        discontinued operations             18,975      31,659      21,493
                                            ------      ------      ------
              Total current
               liabilities                 438,012     491,620     417,763

    Non-current liabilities
       Long-term debt, less
        current portion                    875,000     895,095     697,598
       Non-current
        deferred income
        taxes                              133,955     138,158     111,483
       Other non-current liabilities        74,770     112,396     102,472
       Non-current liabilities of
        discontinued operations              9,391      10,051       9,233
                                             -----      ------       -----
              Total non-
               current
               liabilities               1,093,116   1,155,700     920,786

    Shareholders' equity
       Preferred stock, without par
        value, 10,000 shares authorized          -           -           -
       Common stock, without par value,
        200,000 shares authorized          448,589     488,537     498,002
       Accumulated other
        comprehensive income                 8,111     155,184      95,398
       Retained earnings                   384,056     289,994     267,164
                                           -------     -------     -------
              Total
               shareholders'
               equity                      840,756     933,715     860,564
                                           -------     -------     -------
                                        $2,371,884  $2,581,035  $2,199,113
                                        ==========  ==========  ==========

    Supplemental Disclosures of
     Balance Sheet Information
       Allowance for doubtful accounts      $9,750      $7,511      $7,419
       Working capital from
        continuing operations             $572,644    $643,888    $413,208
       Preferred stock, shares issued            -           -           -
       Common stock, shares issued          92,171      93,311      93,380



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

                                                 Year-To-Date
                                                 ------------
                                                2009      2008
                                                ----      ----
      Cash Flows From (For)
       Operating Activities
         Net income                            $108,848  $108,275
         Adjustments to derive cash flows
            Write-off of in-process
             research and development               279     2,786
            Depreciation and amortization        50,906    50,822
            Asset impairments                    16,704         -
            Share-based compensation              7,322     6,457
            Income tax benefit from
             exercise of stock options           (2,673)    3,245
            Excess tax benefit of
             stock transactions                  (2,970)   (8,253)
            Deferred income taxes                   811     1,846
                                                    ---     -----
         Sub-total                              179,227   165,178
                                                -------   -------


         Changes in operating assets
          and liabilities, net of
          asset and business
          acquisitions and
          restructuring
            Accounts receivable                  (6,053)  (71,497)
            Inventories                          (9,007)  (37,314)
            Income taxes refundable             (10,617)   (4,684)
            Accounts payable                     (4,219)   52,513
            Payroll and related taxes           (21,258)    6,958
            Accrued customer programs              (580)   (2,445)
            Accrued liabilities                 (16,907)  (14,771)
            Accrued income taxes                 19,726    20,342
            Other                               (28,729)   17,969
                                                -------    ------
         Sub-total                              (77,644)  (32,929)
                                                -------   -------
               Net cash from
                operating
                activities                      101,583   132,249
                                                -------   -------

      Cash Flows (For) From
       Investing Activities
         Purchase of securities                       -  (170,552)
         Proceeds from sales of securities            -   201,436
         Cash acquired in asset exchange          2,115         -
         Acquisitions of
          businesses, net of cash
          acquired                              (88,248)  (87,130)
         Acquisition of intangible assets        (1,000)  (12,401)
         Additions to
          property and
          equipment                             (32,020)  (26,022)
                                                -------   -------
               Net cash for
                investing
                activities                     (119,153)  (94,669)
                                               --------   -------

      Cash Flows (For) From
       Financing Activities
         Repayments of short-term debt, net     (13,736)   (1,607)
         Borrowings of long-term debt                 -   140,000
         Repayments of long-term debt           (31,380)  (95,801)
         Excess tax benefit of
          stock transactions                      2,970     8,253
         Issuance of common stock                 9,434    26,097
         Repurchase of common stock             (62,347)  (58,979)
         Cash dividends                         (14,786)  (13,551)
                                                -------   -------
               Net cash (for) from
                financing activities           (109,845)    4,412
                                               --------     -----

      Effect of exchange
       rate changes on cash                       6,632    (7,895)
                                                  -----    ------
              Net increase (decrease) in
               cash and cash equivalents       (120,783)   34,097

      Cash and cash equivalents of continuing
       operations, beginning of period          318,599    30,301
      Cash balance of discontinued
       operations, beginning of period                5         4
                                                  -----    ------
      Cash and cash
       equivalents, end of
       period                                   197,821    64,402
             Less cash balance of
              discontinued operations, end of
              period                                 (4)     (289)
                                                     --      ----
      Cash and cash equivalents of
       continuing operations, end of period    $197,817   $64,113
                                               ========   =======

      Supplemental Disclosures of
       Cash Flow Information
         Cash paid/received
          during the period for:
            Interest paid                       $33,829   $29,102
            Interest received                   $18,872   $15,590
            Income taxes paid                   $60,105   $25,715
            Income taxes refunded                $3,627    $6,560



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

                                   Third Quarter          Year-to-Date
                                   -------------          -------------
                                  2009       2008        2009        2008
                                  ----       ----        ----        ----
    Segment Net Sales
      Consumer Healthcare        $419,148  $373,031  $1,231,761    $961,495
      Rx Pharmaceuticals           41,747    49,231     115,323     122,846
      API                          30,953    37,818      97,062     111,240
      Other                        14,054    20,560      54,507      60,058
                                   ------    ------      ------      ------
        Total                    $505,902  $480,640  $1,498,653  $1,255,639
                                 ========  ========  ==========  ==========

    Segment Operating Income (Loss)
      Consumer Healthcare         $62,278   $51,693    $177,697    $120,549
      Rx Pharmaceuticals            7,982    11,349      16,938      27,160
      API                           4,344     6,024       5,842      16,723
      Other                         2,726     1,368       5,327       6,221
      Unallocated expenses         (5,433)  (10,420)    (14,021)    (16,174)
                                   ------   -------     -------     -------
        Total                     $71,897   $60,014    $191,783    $154,479
                                  =======   =======    ========    ========


      *All information based on continuing operations.



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

                       Third Quarter         Year-to-Date
                       -------------         -------------
                      2009       2008        2009        2008
                      ----       ----        ----        ----

    Net sales        $505,902  $480,640  $1,498,653  $1,255,639

    Reported gross
     profit          $149,592  $150,303    $432,144    $382,635
      Inventory
       step-up -
       Unico                -         -       1,062           -
      Inventory
       step-up -
       Diba               736         -       1,503           -
      Inventory
       step-up - JB
       Labs                 -         -         358           -
      Impairment of
       fixed assets         -         -       1,600           -
      Inventory
       step-up -
       Galpharm             -     2,878           -       2,878
                        -----     -----       -----       -----
    Adjusted gross
     profit          $150,328  $153,181    $436,667    $385,513
                     ========  ========    ========    ========
    Adjusted gross
     profit %            29.7%     31.9%       29.1%       30.7%

    Reported
     operating
     income           $71,897   $60,014    $191,783    $154,479
      Inventory
       step-up -
       Unico                -         -       1,062           -
      Inventory
       step-up -
       Diba               736         -       1,503           -
      Inventory
       step-up - JB
       Labs                 -         -         358           -
      Impairment of
       fixed assets         -         -       1,600           -
      Write-off of
       in-process
       R&D - Diba
       acquisition          -         -         279           -
      Loss on asset
       exchange             -         -         639           -
      Inventory
       step-up -
       Galpharm             -     2,878           -       2,878
      Restructuring         -       348           -         348
      Write-off of
       in-process
       R&D -
       Galpharm
       acquisition          -     2,786           -       2,786
                       ------     -----      ------       -----
    Adjusted
     operating
     income           $72,633   $66,026    $197,224    $160,491
                      =======   =======    ========    ========
    Adjusted
     operating
     income %            14.4%     13.7%       13.2%       12.8%

    Reported income
     from continuing
     operations       $46,469   $40,230    $108,818    $108,037
      Inventory
       step-up -
       Unico (5)            -         -         645           -
      Inventory
       step-up -
       Diba (1)           530         -       1,082           -
      Inventory
       step-up - JB
       Labs (2)             -         -         229           -
      Impairment of
       fixed assets (4)     -         -         992           -
      Write-off of
       in-process
       R&D - Diba
       acquisition (1)      -         -         201           -
      Investment
       impairment (6)       -         -      15,104           -
      Loss on asset
       exchange (6)         -         -         639           -
      Inventory
       step-up -
       Galpharm (1)         -     2,072           -       2,072
      Restructuring (3)     -       219           -         219
      Write-off of
       in-process
       R&D -
       Galpharm
       acquisition (1)      -     2,006           -       2,006
                        -----     -----       -----       -----
    Adjusted income
     from continuing
     operations       $46,999   $44,527    $127,710    $112,334
                      =======   =======    ========    ========

    Diluted earnings
     per share from
     continuing
     operations
      Reported          $0.50     $0.42       $1.16       $1.14
      Adjusted          $0.50     $0.47       $1.36       $1.18

    Diluted
     weighted
     average shares
     outstanding       93,153    94,955      93,747      95,115

    (1) Net of taxes at 28%
    (2) Net of taxes at 36%
    (3) Net of taxes at 37%
    (4) Net of taxes at 38%
    (5) Net of taxes at 39.3%
    (6) No tax impact

    *All information based on continuing operations.



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

                             Third Quarter        Year-to-Date
                             -------------        -------------
                            2009      2008        2009      2008
                            ----      ----        ----      ----
      Consumer Healthcare
      Net sales           $419,148  $373,031  $1,231,761  $961,495

      Reported gross
       profit             $116,068  $107,819    $340,351  $266,728
        Inventory step-
         up - Unico              -         -       1,062         -
        Inventory step-
         up - Diba             736         -       1,503         -
        Inventory step-
         up - JB Labs            -         -         358         -
        Impairment of
         fixed assets            -         -       1,600         -
        Inventory step-
         up - Galpharm           -     2,878           -     2,878
                             -----     -----       -----     -----
      Adjusted gross
       profit             $116,804  $110,697    $344,874  $269,606
                          ========  ========    ========  ========
      Adjusted gross
       profit %               27.9%     29.7%       28.0%     28.0%

      Reported operating
       expenses            $53,790   $56,126    $162,654  $146,179
        Loss on asset
         exchange                -         -        (639)        -
        Restructuring            -      (348)          -      (348)
                              ----      ----        ----      ----
      Adjusted operating
       expenses            $53,790   $55,778    $162,015  $145,831
                           =======   =======    ========  ========
      Adjusted operating
       expenses %             12.8%     15.0%       13.2%     15.2%

      Reported operating
       income              $62,278   $51,693    $177,697  $120,549
        Inventory step-
         up - Unico              -         -       1,062         -
        Inventory step-
         up - Diba             736         -       1,503         -
        Inventory step-
         up - JB Labs            -         -         358         -
        Impairment of
         fixed assets            -         -       1,600         -
        Loss on asset
         exchange                -         -         639         -
        Inventory step-
         up - Galpharm           -     2,878           -     2,878
        Restructuring            -       348           -       348
                               ---       ---         ---       ---
      Adjusted operating
       income              $63,014   $54,919    $182,859  $123,775
                           =======   =======    ========  ========
      Adjusted operating
       income %               15.0%     14.7%       14.8%     12.9%

      Unallocated
      Reported operating
       loss                $(5,433) $(10,420)   $(14,021) $(16,174)
        Write-off of in-
         process R&D -
         Diba acquisition
                                 -         -         279         -
        Write-off of in-
         process R&D -
         Galpharm
         acquisition             -     2,786           -     2,786
                             -----     -----       -----     -----
      Adjusted operating
       loss                $(5,433)  $(7,634)   $(13,742) $(13,388)
                           =======   =======    ========  ========


      *All information based on continuing operations.



                              Table III
                            2009 GUIDANCE
                RECONCILIATION OF NON-GAAP MEASURES
                             (unaudited)

                                      Full Year
                                Fiscal 2009 Guidance
                                --------------------

      Reported earnings
       per share from
       continuing
       operations range            $1.60 - $1.70
         Loss on asset
          exchange                     $0.007
         Charges
          associated with
          inventory step-
          ups                          $0.021
         Fixed asset
          impairment                   $0.011
         Write-off of in-
          process R&D                  $0.002
         Investment
          impairment                   $0.161
                                       ------
      Adjusted earnings
       per share from
       continuing
       operations range            $1.80 - $1.90
                                  ===============


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SOURCE Perrigo Company
Copyright©2009 PR Newswire.
All rights reserved


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