<PAGE> 1
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UNITED STATES OF AMERICA
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D. C. 20549
FORM 10-Q
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[X] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
FOR THE QUARTERLY PERIOD ENDED: OCTOBER 2, 1999
---------------
OR
[ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
FOR THE TRANSITION PERIOD FROM TO
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COMMISSION FILE NUMBER 0-19725
PERRIGO COMPANY
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(EXACT NAME OF REGISTRANT AS SPECIFIED IN ITS CHARTER)
MICHIGAN 38-2799573
- ------------------------------- -------------------
(STATE OR OTHER JURISDICTION OF (I.R.S. EMPLOYER
INCORPORATION OR ORGANIZATION) IDENTIFICATION NO.)
515 EASTERN AVENUE
ALLEGAN, MICHIGAN 49010
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(ADDRESS OF PRINCIPAL (ZIP CODE)
EXECUTIVE OFFICES)
(616) 673-8451
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(REGISTRANT'S TELEPHONE NUMBER, INCLUDING AREA CODE)
NOT APPLICABLE
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(FORMER NAME, FORMER ADDRESS AND FORMER FISCAL YEAR,
IF CHANGED SINCE LAST REPORT)
Indicate by check mark whether the registrant (1) has filed all reports required
to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during
the preceding 12 months, and (2) has been subject to such filing requirements
for the past 90 days.
YES X NO
--- ---
Indicate the number of shares outstanding of each of the issuer's classes of
common stock, as of the latest practicable date.
<TABLE>
<CAPTION>
OUTSTANDING AT
CLASS OF COMMON STOCK NOVEMBER 4, 1999
--------------------- ---------------------
<S> <C>
WITHOUT PAR 73,345,540 SHARES
</TABLE>
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PERRIGO COMPANY AND SUBSIDIARIES
FORM 10-Q
INDEX
<TABLE>
<CAPTION>
PAGE
NUMBER
------
<S> <C>
PART I. FINANCIAL INFORMATION
Item 1. Financial Statements (Unaudited)
Condensed consolidated statements of income -- For the quarters
ended October 2, 1999 and October 3, 1998 3
Condensed consolidated balance sheets -- October 2, 1999
and July 3, 1999 4
Condensed consolidated statements of cash flows -- For the quarters
ended October 2, 1999 and October 3, 1998 5
Notes to condensed consolidated financial statements-- October 2, 1999 6
Item 2. Management's Discussion and Analysis of Financial Condition
and Results of Operations 10
Item 3. Quantitative and Qualitative Disclosures About Market Risks 14
PART II. OTHER INFORMATION
Item 6. Exhibits and Reports on Form 8-K 15
SIGNATURES 17
</TABLE>
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PERRIGO COMPANY
CONDENSED CONSOLIDATED STATEMENTS OF INCOME
(In thousands, except per share amounts)
(Unaudited)
<TABLE>
<CAPTION>
Quarter Ended
---------------------
October 2, October 3,
1999 1998
--------- ---------
<S> <C> <C>
Net sales $ 209,365 $ 212,298
Cost of sales 159,169 176,993
--------- ---------
Gross profit 50,196 35,305
--------- ---------
Operating expenses
Distribution 4,998 7,779
Research and development 3,517 3,606
Selling and administrative 23,867 37,007
Unusual litigation -- 988
--------- ---------
32,382 49,380
--------- ---------
Operating income (loss) 17,814 (14,075)
Interest and other expense 2,462 3,217
--------- ---------
Income (loss) before income taxes 15,352 (17,292)
Income tax expense (benefit) 5,327 (4,916)
--------- ---------
Net income (loss) $ 10,025 $ (12,376)
========= =========
Basic earnings (loss) per share $ 0.14 $ (0.17)
========= =========
Diluted earnings (loss) per share $ 0.14 $ (0.17)
========= =========
</TABLE>
See accompanying notes to condensed consolidated financial statements.
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PERRIGO COMPANY
CONDENSED CONSOLIDATED BALANCE SHEETS
(In thousands)
<TABLE>
<CAPTION>
October 2, July 3,
1999 1999
----------- --------
ASSETS (Unaudited)
<S> <C> <C>
Current assets
Cash and cash equivalents $ 1,264 $ 1,695
Accounts receivable, net of allowances of $3,225 and
$3,281, respectively 128,778 89,123
Inventories 190,454 197,437
Prepaid expenses and other current assets 9,968 7,811
Current deferred income taxes 27,100 33,476
Assets held for sale 19,430 53,045
--------- ---------
Total current assets 376,994 382,587
Property and equipment 329,997 325,444
Less accumulated depreciation 131,693 125,782
--------- ---------
198,304 199,662
Goodwill, net of accumulated amortization of $10,405 and
$10,121, respectively 19,050 19,334
Other 15,180 14,275
--------- ---------
$ 609,528 $ 615,858
========= =========
LIABILITIES AND SHAREHOLDERS' EQUITY
Current liabilities
Accounts payable $ 73,229 $ 68,240
Notes payable 6,952 6,694
Payrolls and related taxes 13,733 18,166
Accrued expenses 38,726 34,787
Income taxes 2,924 4,983
Current installments on long-term debt -- 300
--------- ---------
Total current liabilities 135,564 133,170
Deferred income taxes 15,229 14,674
Long-term debt, less current installments 115,374 135,026
Minority interest 677 569
Shareholders' equity
Preferred stock, without par value, 10,000 shares authorized,
none issued -- --
Common stock, without par value, 200,000 shares authorized,
73,346 and 73,301 issued, respectively 102,087 102,030
Unearned compensation (36) (53)
Accumulated other comprehensive income 602 436
Retained earnings 240,031 230,006
--------- ---------
Total shareholders' equity 342,684 332,419
--------- ---------
$ 609,528 $ 615,858
========= =========
</TABLE>
See accompanying notes to condensed consolidated financial statements.
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PERRIGO COMPANY
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(In thousands)
(Unaudited)
<TABLE>
<CAPTION>
Quarter Ended
-----------------------
October 2, October 3,
1999 1998
--------- ----------
<S> <C> <C>
Cash Flows From (For) Operating Activities:
Net income (loss) $ 10,025 $(12,376)
Depreciation and amortization 5,433 5,624
Write-off of Russian investment -- 14,177
-------- --------
15,458 7,425
Accounts receivable (39,689) (11,778)
Inventories 6,983 (26,233)
Current and deferred income taxes 4,872 (3,865)
Assets held for sale 2,429 5,417
Accounts payable 4,989 17,740
Other (2,341) (3,922)
-------- --------
Net cash for operating activities (7,299) (15,216)
-------- --------
Cash Flows From (For) Investing Activities:
Additions to property and equipment (3,766) (15,273)
Proceeds from sale of assets held for sale 31,186 --
Other -- (5,122)
-------- --------
Net cash from (for) investing activities 27,420 (20,395)
-------- --------
Cash Flows From (For) Financing Activities:
Borrowings of long-term debt -- 52,381
Repayments of long-term debt (19,652) --
Repayments of short-term debt (42) (720)
Issuance of common stock 57 44
Repurchase of common stock -- (14,820)
Other (915) --
-------- --------
Net cash (for) from financing activities (20,552) 36,885
-------- --------
Net (Decrease) Increase in Cash and Cash Equivale (431) 1,274
Cash and Cash Equivalents, at Beginning of Period 1,695 1,496
-------- --------
Cash and Cash Equivalents, at End of Period $ 1,264 $ 2,770
======== ========
Supplemental Disclosures of Cash Flow Information:
Interest paid $ 1,956 $ 1,677
Income taxes paid $ 500 $ 282
</TABLE>
See accompanying notes to condensed consolidated financial statements.
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PERRIGO COMPANY
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
OCTOBER 2, 1999
(IN THOUSANDS)
NOTE A - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
BASIS OF PRESENTATION
The accompanying unaudited condensed consolidated financial statements
have been prepared in accordance with generally accepted accounting principles
for interim financial information and with the instructions to Article 10 of
Regulation S-X. Accordingly, they do not include all of the information and
footnotes required by generally accepted accounting principles for complete
financial statements. In the opinion of management, all adjustments (consisting
of normal recurring accruals and other adjustments) considered necessary for a
fair presentation have been included.
The Company changed its fiscal year end from June 30 to the 52 or
53-week period that ends on the Saturday closest to June 30, effective for
fiscal year 1999. After the transition year of fiscal year 1999, the Company's
quarters will each be comprised of 13 weeks and end on a Saturday, except in
certain years when the Company will have one quarter comprised of 14 weeks.
During fiscal year 1999, the first quarter included the period from July 1
through October 3, 1998. The second through fourth quarters were comprised of 13
weeks ending on January 1, April 3, and July 3, 1999, respectively.
Operating results for the quarter ended October 2, 1999 are not
necessarily indicative of the results that may be expected for the year ending
July 1, 2000. The unaudited condensed consolidated financial statements should
be read in conjunction with the consolidated financial statements and footnotes
thereto included in the Company's annual report on Form 10-K for the year ended
July 3, 1999.
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EARNINGS PER SHARE
A reconciliation of the numerators and denominators used in the "basic"
and "diluted" Earnings per Share ("EPS") calculations follows:
<TABLE>
<CAPTION>
Quarter Ended
---------------------------
October 2, October 3,
1999 1998
---------- ----------
<S> <C> <C>
Numerator:
Net income (loss) used for both "basic"
and "diluted" EPS calculation $ 10,025 $(12,376)
======== ========
Denominator:
Weighted average shares outstanding
for the period - used for "basic"
EPS calculation 73,327 73,429
Dilutive effect of stock options 201 --
-------- --------
Weighted average shares outstanding
for the period - used for "diluted"
EPS calculation 73,528 73,429
======== ========
</TABLE>
The effect of stock options of 333 shares was not included for the
quarter ended October 3, 1998 because to do so would have been antidilutive.
COMPREHENSIVE INCOME
Comprehensive income is comprised of all changes in shareholders'
equity during the period other than from transactions with shareholders.
Comprehensive income consists of the following:
<TABLE>
<CAPTION>
Quarter Ended
-------------------------
October 2, October 3,
1999 1998
---------- ----------
<S> <C> <C>
Net income (loss) $ 10,025 $(12,376)
Other comprehensive income:
Foreign currency translation adjustments 17 --
Unrealized gain on investments 149 --
-------- --------
Comprehensive income (loss) $ 10,191 $(12,376)
======== ========
</TABLE>
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<PAGE> 8
NOTE B - INVENTORIES
The components of inventories consist of the following:
<TABLE>
<CAPTION>
October 2, July 3,
1999 1999
---------- ---------
<S> <C> <C>
Finished goods $ 88,194 $ 85,267
Work in process 71,616 79,104
Raw materials 30,644 33,066
--------- ---------
$ 190,454 $ 197,437
========= =========
</TABLE>
NOTE C - LONG-TERM BORROWING AND CREDIT ARRANGEMENTS
In connection with the sale of the personal care business, the Company
paid off its obligation of $1,440 to the Industrial Development Board of
Rutherford County, Tennessee.
NOTE D - RESTRUCTURING AND REDESIGN COSTS
The personal care business was sold in August 1999. Proceeds from the
sale were $32,200 and are subject to post-closing adjustment. No gain or loss
was recorded for this sale in the first quarter of fiscal year 2000. The first
quarter of fiscal year 2000 reflects one month of the personal care business.
Net sales for the personal care business were $17,778 and $48,461 for the first
quarter of fiscal year 2000 and 1999, respectively. The Company does not
maintain operating income information by its three main product lines, however,
based on the incremental approach, the Company estimates that pre-tax operating
income for the first quarter of fiscal year 2000 was $1,000 and pre-tax
operating loss including plant inefficiencies was $2,000 for the first quarter
of fiscal year 1999. The effect of suspending depreciation was $700 and $4,000
for the first quarter of fiscal year 2000 and 1999, respectively.
For the first quarter of fiscal year 2000, $471 was paid primarily
related to professional fees and transitional costs associated with the sale of
the personal care business. These costs were charged against a reserve
established in fiscal year 1998. The 1998 restructuring reserve balance was
$1,699 at October 2, 1999.
Assets held for sale decreased to $19,430 at October 2, 1999 primarily
due to the sale of the personal care business and the change in the underlying
assets during the quarter. Assets held for sale at October 2, 1999 is comprised
of the LaVergne, Tennessee logistics facility which is anticipated to be sold in
fiscal year 2000.
For the first quarter of fiscal year 2000, $637 was paid primarily for
severance and outplacement costs related to the 1999 restructuring. These costs
were charged against a reserve established in fiscal year 1999. The 1999
restructuring reserve balance was $1,818 at October 2, 1999.
-8-
<PAGE> 9
NOTE E - COMMITMENTS AND CONTINGENCIES
In July 1994 the Company was served a "summons with notice" alleging
breach of fiduciary duties by its officers in connection with their purchase of
the Company from the former owner in April 1988. In February 1995 a complaint
was filed seeking unspecified damages. In June 1998 the United States District
Court for the Western District of Michigan dismissed, at the close of the
plaintiff's case, the action filed by the former owner. In July 1998 the former
owner filed an appeal. As of this date, the Court has not ruled on the appeal.
On August 4, 1999, the Company filed a civil antitrust lawsuit in the
U.S. District Court for the Western District of Michigan against a group of
vitamin raw material suppliers alleging the defendants conspired to fix the
prices of vitamin raw materials sold to the Company. The relief sought includes
money damages and a permanent injunction enjoining defendants from future
violations of antitrust laws.
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<PAGE> 10
MANAGEMENT'S DISCUSSION AND ANALYSIS
OF RESULTS OF OPERATIONS AND FINANCIAL CONDITION
FIRST QUARTER OF FISCAL YEARS 2000 AND 1999
(IN THOUSANDS)
RESULTS OF OPERATIONS
FIRST QUARTER OF FISCAL YEARS 2000 AND 1999
RESTRUCTURING UPDATE
The personal care business was sold in August 1999. Proceeds from the
sale were $32,200 and are subject to post-closing adjustment. No gain or loss
was recorded for this sale in the first quarter of fiscal year 2000. The first
quarter of fiscal year 2000 reflects one month of the personal care business.
Net sales for the personal care business were $17,778 and $48,461 for the first
quarter of fiscal year 2000 and 1999, respectively. The Company does not
maintain operating income information by its three main product lines, however,
based on the incremental approach, the Company estimates that pre-tax operating
income for the first quarter of fiscal year 2000 was $1,000 and pre-tax
operating loss including plant inefficiencies was $3,000 for the first quarter
of fiscal year 1999. The effect of suspending depreciation was $700 and $4,000
for the first quarter of fiscal year 2000 and 1999, respectively.
For the first quarter of fiscal year 2000, $471 was paid primarily
related to professional fees and transitional costs associated with the sale of
the personal care business. These costs were charged against a reserve
established in fiscal year 1998. The 1998 restructuring reserve balance was
$1,699 at October 2, 1999.
Assets held for sale decreased to $19,430 at October 2, 1999 primarily
due to the sale of the personal care business and the change in the underlying
assets during the quarter. Assets held for sale at October 2, 1999 is comprised
of the LaVergne, Tennessee logistics facility which is anticipated to be sold in
fiscal year 2000.
For the first quarter of fiscal year 2000, $637 was paid primarily
related to severance and outplacement costs related to the 1999 restructuring.
These costs were charged against a reserve established in fiscal year 1999. The
1999 restructuring reserve balance was $1,818 at October 2, 1999.
RESULTS OF OPERATIONS
The Company's net sales decreased by $2,933 or 1.4% to $209,365 during
the first quarter of fiscal year 2000, from $212,298 during the first quarter of
fiscal year 1999. The decrease was primarily due to the sale of the personal
care business. Excluding the effect of the personal care business, net sales
increased by $27,750 or 16.9% during the first quarter of fiscal year 2000 to
$191,587 from $163,837 during the first quarter of fiscal year 1999. The
increase was primarily due to an increase in sales to existing customers of
vitamins and sales to existing customers of new products such as the nicotine
transdermal system patch for smoking cessation, an OTC pharmaceutical product.
Net sales for the first quarter of fiscal year 1999 were
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<PAGE> 11
negatively impacted by the Company's conversion to a new software system in
September 1998.
During the first quarter of fiscal year 1999, the Company wrote off
inventory of $1,663, accounts and notes receivable of $10,874 and the balance of
its Russian investment of $1,640 for a total of $14,177 due to the collapse of
the Russian economy. The first quarter fiscal year 1999 income statement
reflects the inventory amount in cost of sales; the accounts and notes
receivable amount in selling and administrative expense; and the investment
amount in other income and expense. The discussion below related to gross
profit, operating expenses and other income and expense excludes the effects of
these charges.
Gross profit increased $13,228 during the first quarter of fiscal year
2000 compared to the same period of fiscal year 1999. The gross profit percent
to net sales was 24.0% for the first quarter of fiscal year 2000 compared to
17.4% for the same period of fiscal year 1999. Excluding the personal care
business, gross profit percent to net sales was 24.8% for the first quarter of
fiscal year 2000 compared to 19.5% for the same period of fiscal year 1999. The
first quarter fiscal year 1999 gross profit dollars and percent to net sales
were negatively impacted by inefficiencies resulting from the Company's
conversion to its new software system. Gross profit as a percent to net sales
for fiscal year 2000 is expected to improve over last year primarily due to
elimination of the one-time software conversion inefficiencies and the reduction
in personal care sales due to the sale of the personal care business.
Operating expenses decreased $6,124 or 15.9% during the first quarter
of fiscal year 2000 compared to the same period in fiscal year 1999. Operating
expenses as a percentage of net sales were 15.5% for the first quarter of fiscal
year 2000 compared to 18.1% for the same period of fiscal year 1999. Operating
expenses consist of distribution, research and development, selling and
administrative and unusual litigation expenses. Distribution expenses decreased
$2,781 or 35.8% from the first quarter of fiscal year 1999 primarily due to the
sale of the personal care business. Distribution expenses were also favorably
impacted in the first quarter of fiscal year 2000 by less expediting of
shipments and lower warehousing costs as the Company benefits from its shift
from leased warehouses to its owned warehouse in Allegan, Michigan. Research and
development expenses were 1.7% of net sales for the first quarters of fiscal
years 2000 and 1999. Research and development expenses for fiscal year 2000 are
anticipated to increase due to the Company's commitment to product introductions
from Rx switches. Selling and administrative expenses decreased $2,266 or 8.7%
from the first quarter of fiscal year 1999 primarily due to the sale of the
personal care business. Selling and administrative expense as a percentage of
net sales was 11.4% in the first quarter of fiscal year 2000 compared to 12.3%
of net sales for the same period in fiscal year 1999. Unusual litigation costs
were zero and $988 for the first quarter of fiscal year 2000 and 1999,
respectively.
Interest and other expense increased $885 from the first quarter of
fiscal year 1999. Interest expense increased $299 to $2,395 during the first
quarter of fiscal year 2000 compared to $2,096 for the same period in fiscal
year 1999 primarily due to higher average interest rates. Other expense was $67
for the first quarter of fiscal year 2000 compared to other income of $519 for
the same period in fiscal year 1999.
The effective tax rate was 34.7% for the first quarter of fiscal year
2000 compared to 28.4% for the same period in fiscal year 1999. The lower
effective tax rate for the first quarter of
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<PAGE> 12
fiscal year 1999 is primarily due to certain non-deductible goodwill related to
the personal care divestiture.
LIQUIDITY AND CAPITAL RESOURCES
During the first quarter of fiscal year 2000, working capital decreased
$7,987 and cash flow for operating activities was $7,299. Accounts receivable
increased $39,689 primarily due to strong sales during the quarter, inventories
decreased $6,983 primarily due to inventory reduction initiatives and accounts
payable increased $4,989 due to seasonal increases.
Capital expenditures were $3,766 for the first quarter of fiscal year
2000. Capital expenditures for fiscal year 2000 are anticipated to be
approximately $25,000 to $30,000 primarily for normal equipment replacement and
productivity enhancements to equipment.
The personal care business was sold during the first quarter of fiscal
year 2000. The proceeds received from the sale during the quarter were $31,186
and were used to fund operations and reduce debt as noted below.
Long-term debt decreased $19,652 during the first quarter of fiscal
year 2000 as the Company paid down on its $200,000 unsecured revolving credit
facility. At October 2, 1999 the Company had $84,626 available on this facility.
YEAR 2000 READINESS DISCLOSURE
The Company continues to implement the plan set forth in the Year 2000
Compliance section of the MDA in its annual report on Form 10-K for the year
ended July 3, 1999. The plan involves (1) becoming Year 2000 compliant in all of
its critical software systems, infrastructure systems, manufacturing systems,
security systems and office equipment, (2) developing contingency plans for all
critical systems, (3) reviewing insurance, regulatory and legal implications as
they relate to the year 2000 and (4) determining the year 2000 compliance status
of the Company's key suppliers and customers. The plan has not changed
substantially from July 3, 1999 and its status is summarized below. The Company
is within its timeline for having the plan completed prior to the year 2000.
The Company believes it has completed the identification of IT and
non-IT systems that need to be reviewed for Y2K compliance and has prioritized
each system as "critical", "important" or "non-critical". The following
procedures are being followed for all systems in order to gain assurance that
they are Y2K compliant: (1) Obtain the Y2K compliance status from the
manufacturer. If the system is not considered Y2K compliant by the manufacturer
it will be updated, replaced or eliminated; (2) Test each system to determine
Y2K compliance; and (3) Remediate and retest noncompliant systems until Y2K
compliance is obtained. Critical systems are the highest priority. Important
systems are being tested and remediated as the next priority and non-critical
systems are tested as time permits. Y2K compliance testing of the Company's core
business system, SAP R/3, has revealed no Y2K related problems. Critical systems
requiring remediation are substantially complete. The Company has prepared and
reviewed contingency plans for all critical systems and will continue to review
and refine these plans throughout the fourth quarter of calendar year 1999.
Costs to date specifically to address Y2K
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<PAGE> 13
issues, separate from SAP implementations, have approximated $1,000. Future
costs anticipated to remedy Y2K issues have been budgeted and are not expected
to exceed an additional $1,000. There can be no assurance that the Company will
be able to identify and correct all aspects of the year 2000 problem that affect
it in sufficient time, and if it cannot, the failure could have a material
negative impact on the Company's business, operations or financial condition.
The Company, however, does not currently expect that the year 2000 problem as it
relates to its internal systems will have a material negative impact on the
Company.
The Company is monitoring the insurance, regulatory and legal
implications as they relate to the year 2000. The Company, at this time, does
not anticipate that the costs associated with this review will be material to
the Company's financial condition or results of operations.
The Company's plan to determine the Y2K compliance status of its key
suppliers and customers is substantially complete. All critical customers have
responded satisfactorily. The Company has sent out surveys to all of its current
key suppliers and received substantially all of these surveys. The survey
responses have been rated by the Company to establish the stated level of
compliance by the respondent. While the Company cannot guarantee Y2K compliance
by its key suppliers and customers, and in many cases will be relying on
statements from outside vendors and customers without independent verification,
the surveys received and related follow-ups with certain vendors and customers
have indicated that current key suppliers and customers are aware of the issues
and are working on achieving compliance on or before the year 2000. The Company
has also developed contingency plans to deal with those key suppliers who may
not be Y2K compliant prior to the year 2000. These contingency plans will be
reviewed and refined throughout the fourth quarter of calendar year 1999. If
certain key suppliers or customers are not Y2K compliant and the Company is
unaware of the noncompliance, the Company's results of operations and financial
condition could be significantly negatively impacted. However, at this time the
Company is not aware of any key suppliers or customers who will be significantly
hampered from conducting normal business because of internal Y2K problems.
In addition to the fact that the Company has substantially completed
its assessment, remediation and testing efforts, it has also initiated a Y2K
contingency planning process to identify, reduce and manage risk to our business
and customers from Y2K failures. The contingency planning process is intended to
identify critical systems and services, and develop contingency plans to
document the steps to be taken if they are lost or only partially functional.
While the individual contingency plans vary by facility, the common recurring
theme for a worst case scenario is failure of a critical system or service for 1
or 2 days. Contingency planning by the Company includes such items as adequate
local power generation capability to ensure continuous operation of the most
critical computers and internal voice and data communication systems. The
contingency plans are complete, but will be reviewed and refined throughout the
fourth quarter of calendar year 1999.
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<PAGE> 14
CAUTIONARY STATEMENT REGARDING FORWARD-LOOKING INFORMATION AND STATEMENTS
In accordance with the "safe harbor' provisions of the Private
Securities Litigation Reform Act of 1995, please see Perrigo Company's Form 10-K
for the fiscal year ended July 3, 1999, under the heading "Cautionary Note
Regarding Forward-Looking Statements" for a discussion of certain important
factors as they relate to forward-looking statements contained in this quarterly
report.
Item 3. Quantitative and Qualitative Disclosures About Market Risks
The Company has evaluated possible disclosures required under this item
and has determined that no market, interest rate or foreign currency risk exists
that would require disclosure.
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<PAGE> 15
PART II. OTHER INFORMATION
Item 6. Exhibits and Reports on Form 8-K
(a) Exhibits:
Exhibit Number Description
-------------- -----------
2(a) Asset Purchase Agreement, dated August 25,
1999, among Perrigo Company of Tennessee as
Sellers; and Cumberland Swan Holdings, Inc.
as Buyer, incorporated by reference from the
Registrant's Form 10-K filed on October 1,
1999.
3(a) Amended and Restated Articles of
Incorporation of Registrant, incorporated by
reference from Amendment No. 2 to
Registration Statement No. 33-43834 filed by
the Registrant on September 23, 1993.
3(b) Restated Bylaws of Registrant, dated April
10, 1996, incorporated by reference from the
Registrant's Form 8-K filed on April 10,
1996.
4(a) Shareholders' Rights Plan, incorporated by
reference from the Registrant's Form 8-K
filed on April 10, 1996.
10(a) Registrant's Management Incentive Plan,
incorporated by reference from Registration
Statement No. 33-69324 filed by the
Registrant on September 23, 1993.
10(b) Registrant's 1988 Employee Incentive Stock
Option Plan as amended, incorporated by
reference to Exhibit A of the Registrant's
1997 proxy statement.
10(c) Registrant's 1989 Non-Qualified Stock Option
Plan for Directors, as amended, incorporated
by reference from Exhibit B of the
Registrant's 1997 Proxy Statement as amended
at the Annual Meeting of Shareholders on
November 6, 1997.
10(d) Registrant's Restricted Stock Plan for
Directors, dated November 6, 1997,
incorporated by reference from Registrant's
Form 10-K filed on October 6, 1998.
10(e) Credit Agreement, dated September 23, 1999,
between Registrant and Bank One, Michigan,
incorporated by reference from the
Registrant's Form 10-K filed on October 1,
1999.
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<PAGE> 16
10(f) Guaranty Agreement, dated September 23,
1999, between L. Perrigo Company and Perrigo
Company of South Carolina, Inc.,
incorporated by reference from the
Registrant's Form 10-K filed on October 1,
1999.
27 Financial Data Schedule
(b) Reports on Form 8-K
The Company filed a form 8-K on September 9, 1999 that
announced the sale of its personal care business. Cumberland
Swan Holdings, Inc., an investor group located in Nashville,
Tennessee, purchased Perrigo's Smyrna, Tennessee operations.
In addition, the Company stated that in separate transactions
it sold its personal care facilities in California and
Missouri for $9 million. The Company noted that its LaVergne,
Tennessee logistics center was not included in the sale.
Cumberland Swan will operate out of the facility under a lease
agreement until the building is sold separately, at which time
Cumberland Swan will lease from the new owner. The Company
also announced that Craig Hammond, President of Perrigo
International, had left the Company and that Mark Olesnavage,
President of Customer Business Development, assumed
responsibility for the International Department.
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<PAGE> 17
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the
registrant has duly caused this report to be signed on its behalf by the
undersigned thereunto duly authorized.
PERRIGO COMPANY
--------------------------------
(Registrant)
Date: November 9, 1999 /s/ Michael J. Jandernoa
---------------------- --------------------------------
Michael J. Jandernoa
Chairman of the Board and Chief
Executive Officer
Date: November 9, 1999 /s/ Thomas J. Ross
---------------------- --------------------------------
Thomas J. Ross
Vice President Finance -
Principal Accounting and
Financial Officer
-17-
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0
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