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FORM 11-K
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON D.C. 20549
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(Mark One)
[X] ANNUAL REPORT PURSUANT TO SECTION 15(d) OF THE SECURITIES EXCHANGE ACT OF
1934 [FEE REQUIRED]
For the year ended: December 31, 2006
OR
[ ] TRANSITION REPORT PURSUANT TO SECTION 15(d) OF THE SECURITIES EXCHANGE ACT
OF 1934 [NO FEE REQUIRED]
For the transition period from ________ to ________
Commission file number 0-19725
A. Full title of the plan and the address of the plan, if different from
that of the issuer named below:
Perrigo Company Profit-Sharing and Investment Plan
B. Name of the issuer of the securities held pursuant to the plan and the
address of its principal executive office:
Perrigo Company
515 Eastern Avenue
Allegan, MI 49010
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SIGNATURES
The Plan. Pursuant to the requirements of the Securities Exchange Act of 1934,
the trustees (or other persons who administer the employee benefit plan) have
duly caused this annual report to be signed on its behalf by the undersigned
hereunto duly authorized.
Perrigo Company Profit-Sharing and
Investment Plan
(Name of Plan)
Date: June 29, 2007 /s/ Judy L. Brown
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Judy L. Brown
Executive Vice President and Chief
Financial Officer
Perrigo Company
PERRIGO COMPANY
PROFIT-SHARING AND
INVESTMENT PLAN
FINANCIAL STATEMENTS AND SCHEDULE
For The Years Ended December 31, 2006 and 2005
PERRIGO COMPANY
PROFIT-SHARING AND INVESTMENT PLAN
CONTENTS
REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM 3
FINANCIAL STATEMENTS
Statements of Net Assets Available for Benefits as of December 31,
2006 and 2005 4
Statements of Changes in Net Assets Available for Benefits for the
Years Ended December 31, 2006 and 2005 5
Notes to Financial Statements 6-11
SUPPLEMENTAL SCHEDULE
Schedule H, Line 4i - Schedule of Assets (Held at End of Year) as of
December 31, 2006 12
2
REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM
Board of Directors
Perrigo Company
Allegan, Michigan
We have audited the accompanying statements of net assets available for benefits
of Perrigo Company Profit-Sharing and Investment Plan as of December 31, 2006
and 2005, and the related statements of changes in net assets available for
benefits for the years then ended. These financial statements are the
responsibility of the Plan Administrator. Our responsibility is to express an
opinion on these financial statements based on our audits.
We conducted our audits in accordance with the standards of the Public Company
Accounting Oversight Board (United States). Those standards require that we plan
and perform an audit to obtain reasonable assurance about whether the financial
statements are free of material misstatement. An audit includes consideration of
internal control over financial reporting as a basis for designing audit
procedures that are appropriate in the circumstances, but not for the purpose of
expressing an opinion on the effectiveness of the Company's internal control
over financial reporting. Accordingly, we express no such opinion. An audit also
includes examining, on a test basis, evidence supporting the amounts and
disclosures in the financial statements, assessing the accounting principles
used and significant estimates made by management, as well as evaluating the
overall financial statement presentation. We believe that our audits provide a
reasonable basis for our opinion.
In our opinion, the financial statements referred to above present fairly, in
all material respects, the net assets available for benefits of Perrigo Company
Profit-Sharing and Investment Plan as of December 31, 2006 and 2005, and the
changes in net assets available for benefits for the years then ended, in
conformity with accounting principles generally accepted in the United States of
America.
Our audits were made for the purpose of forming an opinion on the financial
statements taken as a whole. The supplemental schedule of assets (held at end of
year) as of December 31, 2006 is presented for the purpose of additional
analysis and is not a required part of the basic financial statements, but is
supplementary information required by the Department of Labor's Rules and
Regulations for Reporting and Disclosure under the Employee Retirement Income
Security Act of 1974. This supplemental schedule is the responsibility of the
Plan Administrator. The supplemental schedule has been subjected to the auditing
procedures applied in the audits of the basic financial statements, and, in our
opinion, is fairly stated in all material respects in relation to the basic
financial statements taken as a whole.
/s/ BDO SEIDMAN, LLP
Grand Rapids, Michigan
June 22, 2007
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PERRIGO COMPANY
PROFIT-SHARING AND INVESTMENT PLAN
STATEMENTS OF NET ASSETS AVAILABLE FOR BENEFITS
December 31, 2006 2005
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Investments, at fair value (Note 2)
Putnam Money Market Fund $ 15,432,578* $ 11,969,499*
Mutual funds:
Van Kampen Growth and Income Fund 27,991,528* 23,920,852*
Dodge & Cox Balanced Fund 23,307,151* 18,022,892*
Putnam Vista Fund 19,924,356* 18,422,563*
Harbor Capital Appreciation Fund 17,790,632* 7,702,509
MSDW Institutional Small Company Growth Class B 17,433,943* 15,665,008*
Putnam International Equity Fund 13,176,367* 8,856,111*
Pimco Total Return Institutional 12,140,847* 9,696,924*
Neuberger Berman Genesis Trust 10,755,753* 9,693,501*
Harbor International Fund 9,087,530 3,503,240
Calamos Growth Fund 3,602,625 3,417,586
ABN AMRO Growth Fund Class N -- 6,793,016
Common/collective trust:
Putnam S & P 500 Fund 14,226,662* 10,953,004*
Perrigo Company common stock 11,192,492* 10,607,899*
Participant loans 4,709,444 4,143,438
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Total investments 200,771,908 163,368,042
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Receivables
Employer contributions 177,943 75,244
Employee contributions 82,403 --
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Total receivables 260,346 75,244
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NET ASSETS AVAILABLE FOR BENEFITS $201,032,254 $163,443,286
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See accompanying notes to financial statements.
* Represents 5% or more of net assets available for benefits.
4
PERRIGO COMPANY
PROFIT-SHARING AND INVESTMENT PLAN
STATEMENTS OF CHANGES IN NET ASSETS AVAILABLE FOR BENEFITS
Year ended December 31, 2006 2005
----------------------- ------------ ------------
ADDITIONS
Contributions:
Participant $ 9,068,981 $ 7,775,215
Employer 7,613,586 7,175,957
Investment income:
Interest income from cash equivalents and
participant loans 960,376 556,726
Net gain from mutual funds 15,966,839 11,393,878
Net gain from common/collective trust 1,830,982 487,837
Net gain (loss) from Perrigo Company
common stock 1,638,087 (1,548,244)
Dividends from Perrigo Company common stock 114,181 113,639
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Total additions 37,193,032 25,955,008
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DEDUCTIONS
Distribution of benefits to participants 10,203,528 9,413,597
Administrative fees 11,735 13,603
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Total deductions 10,215,263 9,427,200
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Transfer in from other plan (Note 7) 10,611,199 --
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Net increase 37,588,968 16,527,808
NET ASSETS AVAILABLE FOR BENEFITS, beginning of year 163,443,286 146,915,478
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NET ASSETS AVAILABLE FOR BENEFITS, end of year $201,032,254 $163,443,286
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See accompanying notes to financial statements.
5
PERRIGO COMPANY
PROFIT-SHARING AND INVESTMENT PLAN
NOTES TO FINANCIAL STATEMENTS
1. PLAN DESCRIPTION
The following description of the Perrigo Company Profit-Sharing and
Investment Plan (formerly the L. Perrigo Investment Plan and Trust) (Plan)
provides only general information. Participants should refer to the Plan
agreement or Plan summary for a more complete description of the Plan's
provisions.
GENERAL
The Plan is a defined contribution plan in which substantially all
employees of Perrigo Company, Perrigo Company of South Carolina, Perrigo
Sales Company, Perrigo Research and Development, Perrigo Pharmaceuticals,
Perrigo International, Inc. and Perrigo New York, Inc. (Company) are
eligible to participate. The employees of Perrigo New York were formerly
part of the Clay-Park Labs, Inc. 401(k) Plan and transferred to the Plan
effective July 1, 2006 (see Note 7). As of September 1, 2005, the minimum
term of service for employees to participate in the Plan is one month of
service which means a consecutive 30-day period of employment beginning
with the Employee's date of hire. Prior to September 1, 2005 the
eligibility requirement was a consecutive four-month period of employment.
Plan entry dates are at the beginning of each payroll period after the
minimum term requirements are satisfied.
The Plan has automatic enrollment. Under this enrollment, 2% of
participant's compensation will automatically be deferred into the Plan.
The 2% automatic deferral amount is invested in the Putnam Money Market
Fund. The participant has the option to withdraw from the Plan within 30
days after participant eligibility is met, or choose to increase the
deferral percentage. For employees hired after September 1, 2005, the Plan
increases the automatic enrollment percentage by 1% in each of the
following two years to bring the total deferral amount to at least 4%. The
Plan is subject to the provisions of the Employee Retirement Income
Security Act of 1974 (ERISA). The Plan is administered by an administrative
committee (Committee).
CONTRIBUTIONS
A participant may contribute to the Plan annually an amount not less than
1% and not more than 50% of his or her compensation, up to the dollar limit
set by the federal government (for 2006, the limit is $15,000).
Participants who are at least 50 years of age by the end of a Plan year,
may elect to make an additional "catch up" contribution salary deferral for
that Plan year (for 2006, the "catch up" limit is $5,000). The Company has
6
PERRIGO COMPANY
PROFIT-SHARING AND INVESTMENT PLAN
NOTES TO FINANCIAL STATEMENTS
agreed to match employee contributions per plan year at the rate of 100% of
the first 2% of employee contributions and 50% of the next 2% of employee
contributions. The minimum term of service for employees to be eligible for
employer matching contributions in the Plan is one year. Amounts credited
to a participant's investment account relating to participant contributions
and employer matching contributions are 100% vested at all times. The
Company has the right under the Plan to discontinue such contributions at
any time.
The Company has agreed to voluntarily contribute such amounts as determined
by the board of directors of the Company. The Employer's voluntary
contribution is allocated based on the ratio of the participant's eligible
compensation to aggregate participants' eligible compensation for the year.
Vesting of the Employer's voluntary contribution begins at 33% when two
years of service are met and then increases at a rate of 33% for each
additional year of service until 100% is reached after four years.
Discretionary contributions in the amounts of $4,123,883 and $4,063,551
were made by the Company in 2006 and 2005, respectively.
PARTICIPANT ACCOUNTS
Participants direct the investment of their contributions, the employer
matching contribution and the Employer's voluntary contribution into
various investment options offered by the Plan. Currently, the Plan offers
mutual funds, a common/collective trust and the Company's common stock as
investment options for plan participants.
PARTICIPANT LOANS
Participants may, with the consent of the Committee, borrow an amount not
to exceed the lesser of 50% of their account balance or $50,000. The amount
must be at least $1,000. The loans are secured by an equivalent amount in
the remaining portion of the participant's salary deferral contribution and
rollover accounts. All loans must be repaid within five years, except for
loans used to acquire or rehabilitate a principal residence, which must be
repaid within ten years. Interest rates ranged from 5.0% to 11.5% on
outstanding loans at December 31, 2006. The loans are repaid ratably
through payroll deductions. The interest earned on participant loans is
allocated to the respective funds, in accordance with participant
elections.
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PERRIGO COMPANY
PROFIT-SHARING AND INVESTMENT PLAN
NOTES TO FINANCIAL STATEMENTS
WITHDRAWALS
A participant may elect to withdraw up to an amount equal to the balance in
the participant's elective contribution account on the allocation date
coinciding with or immediately preceding the date of withdrawal, provided
the Committee determines that: (1) the purpose of the withdrawal is to meet
an immediate and heavy financial need of the participant, (2) the amount of
the withdrawal does not exceed such financial need, (3) the amount of the
withdrawal is not reasonably available from other resources of the
participant, and (4) all available plan loans have been taken. This
hardship withdrawal is subject to 10% federal income tax penalty and the
participant cannot make elective deferrals for 6 months following the
hardship withdrawal.
A participant may also elect to make a similar withdrawal, provided that
participant has reached fifty-nine and one half years of age, even if the
participant is still employed.
PAYMENT OF BENEFITS
Upon termination of service, a participant may elect to receive either a
lump-sum amount equal to the value of the participant's vested account or
installments. Participants may also elect to transfer their account balance
into another qualified retirement plan.
FORFEITURES
Forfeited unvested accounts in the amount of $30,006 and $30,978 in 2006
and 2005, respectively, were reallocated to remaining plan participants.
Forfeitures are applied to participant accounts as an additional employer
discretionary contribution. No additional forfeited amounts remained in the
Plan at December 31, 2006.
ADMINISTRATIVE EXPENSES
The Company pays the administrative costs of the Plan associated with any
professional services provided to the Plan, and the cost of communications
to the participants. Administrative expenses recorded in the Plan represent
trustee fees and other recordkeeping fees paid directly from the Plan to
the Plan's trustee. Loan fees are deducted directly from the participants'
account.
8
PERRIGO COMPANY
PROFIT-SHARING AND INVESTMENT PLAN
NOTES TO FINANCIAL STATEMENTS
2. SIGNIFICANT ACCOUNTING POLICIES
BASIS OF ACCOUNTING
The accompanying financial statements have been prepared under the accrual
method of accounting.
USE OF ESTIMATES
The preparation of financial statements in conformity with generally
accepted accounting principles in the United States of America requires
management to make estimates and assumptions that affect the reported
amounts of net assets and changes therein. Actual results could differ from
those estimates.
RISK AND UNCERTAINTIES
The Plan invests in various investment securities. Investment securities
are exposed to various risks, such as interest rate, market, and credit
risks. Due to the level of risk associated with certain investment
securities, it is at least reasonably possible that changes in the values
of investment securities will occur in the near term and that such changes
could materially affect participant's account balances and the amounts
reported in the financial statements.
The Plan holds investments in the Plan Sponsor's common stock; accordingly
Plan participants' accounts that hold shares of the Plans Sponsor's common
stock are exposed to market risk in the event of a significant decline in
the value of such stock.
RECLASSIFICATION
Certain prior year information has been reclassified to conform to current
year presentation.
INVESTMENT VALUATION AND INCOME RECOGNITION
Investments in mutual funds and Perrigo Company common stock are stated at
fair value, based on quoted market prices. The common/collective trust is
stated at its fair value as determined by the trustee/custodian based upon
quoted market prices of the underlying securities. Participant loans are
stated at cost, which approximates fair value. Investment
9
PERRIGO COMPANY
PROFIT-SHARING AND INVESTMENT PLAN
NOTES TO FINANCIAL STATEMENTS
purchases and sales are recorded on a trade-date basis. Interest is
recorded on an accrual basis. Dividends are recorded on the ex-dividend
date.
PAYMENT OF BENEFITS
Benefits are recorded when paid.
3. ASSETS IN TRUST FUND
Under the terms of the trust agreement with Mercer Trust Company (Mercer),
the custodian manages the trust fund on behalf of the Plan. Mercer has
discretionary investment authority over the investments held in each
investment option made available to participants, except for the
investments in Perrigo Company common stock.
4. RELATED PARTY TRANSACTIONS
Certain Plan investments throughout the year represented shares of various
types of investments that were managed by Mercer. These transactions
qualify as party-in-interest. Administrative fees paid by the Plan to
Mercer amounted to $11,735 and $13,603 in 2006 and 2005, respectively.
5. PLAN TERMINATION
Although it has not expressed any intent to do so, the Employer has the
right to discontinue contributions at any time and to terminate the Plan,
subject to the provisions of ERISA. In the event of termination, all
participants will become fully vested in their accounts.
6. INCOME TAX STATUS
The Plan obtained its latest determination letter on October 3, 2002, in
which the Internal Revenue Service stated that the Plan was in compliance
with the applicable requirements of the Internal Revenue Code (IRC). The
Plan has been amended since receiving the determination letter. However,
the Plan Administrator and the Plan's tax counsel believe that the Plan is
currently designed and being operated in compliance with the applicable
requirements of the IRC. Therefore, no provision for income taxes has been
included in the Plan's financial statements.
10
PERRIGO COMPANY
PROFIT-SHARING AND INVESTMENT PLAN
NOTES TO FINANCIAL STATEMENTS
7. TRANSFER OF PLAN ASSETS
As previously mentioned, the Clay-Park Labs, Inc. 401(k) Plan (Clay-Park
Plan) was merged with the Plan effective July 1, 2006. All assets of the
Clay-Park Plan were transferred into the Plan effective August 7, 2006 and
the Clay-Park Plan was discontinued upon completion of the asset transfer.
11
PERRIGO COMPANY
PROFIT-SHARING AND INVESTMENT PLAN
SCHEDULE H, LINE 4I - SCHEDULE OF ASSETS (HELD AT END OF YEAR)
EIN: 38-2799573
Plan Number: 003
December 31, 2006
(c)
Description of
Investment,
including Shares,
Maturity Date,
(b) Rate of Interest, (e)
Identity of Issuer, Collateral, Par (d) Current
(a) Borrower, Lessor or Similar Party or Maturity Value Cost Value
--- ------------------------------------ ----------------- ---- -----------
Putnam Money Market Fund 15,432,578 shares ** $15,432,578
Mutual funds:
Van Kampen Growth and Income Fund 1,267,302 shares ** 27,991,528
Dodge & Cox Balanced Fund 267,652 shares ** 23,307,151
Putnam Vista Fund 1,769,481 shares ** 19,924,356
Harbor Capital Appreciation Fund 533,452 shares ** 17,790,632
MSDW Institutional Small Company
Growth Class B 1,380,360 shares ** 17,433,943
Putnam International Equity Fund 420,567 shares ** 13,176,367
Pimco Total Return Institutional 1,169,638 shares ** 12,140,847
Neuberger Berman Genesis Trust 225,346 shares ** 10,755,753
Harbor International Fund 146,479 shares ** 9,087,530
Calamos Growth Fund 66,839 shares ** 3,602,625
Common/collective trust:
Putnam S & P 500 Fund 382,746 shares ** 14,226,662
* Perrigo Company common stock 646,965 shares 11,192,492
* Participant loans (5.0% to 11.5%) ** 4,709,444
* A party-in-interest as defined by ERISA.
** The cost of participant-directed investments is not required to be
disclosed.
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