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R.P. SCHERER REPORTS SECOND QUARTER FINANCIAL RESULTS

 TROY, Mich., Oct. 28 /PRNewswire/ -- R.P. Scherer Corporation (NYSE: SHR) reported increased sales and earnings for the second quarter and first half of the current fiscal year.
 Earnings from continuing operations for the quarter ended September 30, 1993 were $6.6 million or $.27 per share, an increase of 8% compared to $6.1 million or $.25 per share, for the same period last year. For the six months, the Company reported earnings per share of $.63, compared to $.60 a year ago.
 In commenting on these results, a Scherer spokesperson said, "the second quarter's earnings reflect a negative impact of the strengthened U.S. dollar, a continued difficult environment in Germany, as well as costs associated with the recently acquired Pharmagel operations." The negative effect of these factors was $.05 per share compared to last year's second quarter.
 Sales and Backlog
 -----------------
 Sales were $105.2 million for the second fiscal quarter ended September 30, 1993, representing an 8 percent increase over the second quarter last year. At constant exchange rates, the sales increase would have been 19 percent. Sales backlogs worldwide were $112.4 million as of September 30, 1993, up 5% from a year ago as measured in constant dollars.
 The second quarter sales reflect continued strength of the U.S. operations and the inclusion of $5 million of sales from Pharmagel (acquired July 1993), offset by lower sales in Germany.
 Operating Income
 ----------------
 The Company earned operating income of $18 million in the second fiscal quarter, representing a decrease of 14 percent (4 percent in constant dollars) compared with operating income for the same period of last year. The operating margin at 17.1 percent of sales compares with 21.3 percent for the quarter ended September 30, 1992.
 The reported second quarter decrease in consolidated operating income reflects a continuing difficult environment in Germany, as well as the impact of the higher value of the U.S. dollar in comparison with the sameperiod last year. In addition, the quarter's operating margins reflect the impact of a significant sales mix shift with the lower- margin health and nutritional market representing a comparatively higher percentage of total sales. Largely as a result of recently published findings suggesting a beneficial impact of certain anti-oxidants (Vitamin E, beta-carotene), sales in this market for the just completed quarter were up 24 percent from a year ago.
 In commenting on the prospects of Scherer's 51 percent owned operation in Germany, the Company said that, "the economic and industry situations in Germany, although stabilizing, remain difficult. We are planning further steps to adjust our cost structure in this operation with the objective of protecting margins. The exact speed and extent of the near term recovery in this market remains difficult to accurately predict."
 Research and development expense grew by 4 percent in rt?ed terms, and 17 percent in constant dollars, reflecting the Company's continued investment in new technologies. During the just completed quarter, revenues from the Company's Zydis(R) technology increased by 55 percent. For the first six months of the current fiscal year, this technology provided revenue increases of 46 percent and operating income improvement of 338 percent.
 Selling and administrative expenses at $14.4 million increased by 6 percent from the previous year, primarily due to the acquisition of Pharmagel.
 Net Income and Earnings per Share
 ---------------------------------
 Net income for the second quarter was $6.6 million and includes reduced interest expense and a lower tax rate compared with the same period a year ago. Earnings per share of $.27 represent an 8 percent improvement compared with the $.25 in reported earnings per share a year ago (before an accounting change and loss from discontinued operations in the prior year).
 The decline in income of the Company's German subsidiary and the stronger U.S. dollar had the combined effect of reducing reported earnings by an approximate $.03 per share this quarter compared to the same quarter a year ago. In addition, earnings for the second quarter ended September 30, 1993 include an approximate $.02 per share net loss from the inclusion of Pharmagel, reflecting primarily interest expense on debt used to fund the acquisition and low operating income due to Pharmagel's regular plant shut-downs and costs associated with the integration of Pharmagel into Scherer.
 R.P. Scherer Corporation, a leading international developer and manufacturer of drug delivery systems, is the world's largest producer of soft gelatin capsules ("softgels"). The Company is currently developing and commercializing advanced drug delivery systems, including SCHERERSOL(TM), ZYDIS(R) and PULSINCAP(R) technologies. The Company's proprietary drug delivery systems improve the efficacy of drugs by regulating the dosage, rate of absorption and place of release. The Company operates a global network of 18 facilities in 11 countries.
 R.P. SCHERER CORPORATION AND SUBSIDIARY
 Summary of Financial Results
 (In Thousands, Except Per Share Data)
 Three Months
 Ended September 30,
 --------- ---------
 Percent
 SUMMARY FINANCIAL INFORMATION: 1993 1992 Chg.
 ------------------------------ --------- --------- ---
 Net Sales $105,179 $97,671 8
 ========= =========
 Operating Income $17,958 $20,850 -14
 ========= =========
 Operating Margin exclusive of Research
 and Development Expenses (percent) 20.0 24.4
 ========= =========
 Net Income from Continuing Operations $ 6,557 $6,059
 ========= =========
 Net Income from Continuing Operations
 per Common Share $0.27 $0.25 8
 ========= =========
 SUMMARY INCOME STATEMENT DATA:
 -----------------------------
 Net Sales $105,179 $97,671
 Cost of Sales 69,715 60,284
 Selling and Administrative Expenses 14,402 13,552
 Research and Development Expenses 3,104 2,985
 --------- ---------
 Operating Income 17,958 20,850
 Interest Expense 6,027 7,372
 Interest Earned and Other (364) (1,250)
 --------- ---------
 Income from Continuing Operations before
 Income Taxes and Minority Interests 12,295 14,728
 Income Taxes 3,602 5,848
 Minority Interests 2,136 2,821
 --------- ---------
 Income from Continuing Operations 6,557 6,059
 Loss from Discontinued Operation -- (647)
 --------- ---------
 Net Income $6,557 $5,412
 ========= =========
 Per Common Share:
 Income before Other Items $0.27 $0.25
 Loss from Discontinued Operation --- (0.03)
 --------- ---------
 Net Income $0.27 $0.22
 ========= =========
 Average Number of Common Shares 24,208 24,243
 R.P. Scherer Corporation and Subsidiary
 Summary of Financial Results
 (In Thousands, Except Per Share Data)
 Six Months
 Ended September 30,
 ------------------
 Percent
 SUMMARY FINANCIAL INFORMATION: 1993 1992 Chg.
 ------------------------------ -------- --------- ---
 Net Sales $213,633 $201,024 6
 ========= =========
 Operating Income $41,226 $47,241 -13
 ========= =========
 Operating Margin exclusive of Research
 and Development Expenses (percent) 22.2 26.2
 ========= =========
 Net Income from Continuing Operations
 before Accounting Change $15,153 $14,447
 ========= =========
 Net Income per Common Share from
 Continuing Operations before
 Accounting Change $0.63 $0.60 5
 ========= =========
 SUMMARY INCOME STATEMENT DATA:
 ------------------------------
 Net Sales $213,633 $201,024
 Cost of Sales 137,461 120,557
 Selling and Administrative Expenses 28,734 27,865
 Research and Development Expenses 6,212 5,361
 --------- ---------
 Operating Income 41,226 47,241
 Interest Expense 11,727 14,104
 Interest Earned and Other (954) (2,241)
 --------- ---------
 Income from Continuing Operations before
 Income Taxes, Minority Interests
 and Accounting Change 30,453 35,378
 Income Taxes 10,050 13,822
 Minority Interests 5,250 7,109
 --------- ---------
 Income from Continuing Operations
 before Accounting Change 15,153 14,447
 Loss from Discontinued Operation --- (647)
 Cumulative Effect of Accounting Change --- 974
 --------- ---------
 Net Income $15,153 $14,774
 ========= =========
 Per Common Share:
 Income before Other Items $0.63 $0.60
 Loss from Discontinued Operation --- (0.03)
 Accounting Change --- 0.04
 --------- ---------
 Net Income $0.63 $0.61
 ========= =========
 Average Number of Common Shares 24,191 24,189
 -0- 10/28/93
 /CONTACT: Ms. Nicole Williams, Executive VP & CFO of R.P. Scherer, 313-649-0900/
 (SHR)


CO: R.P. Scherer Corporation ST: Michigan IN: MTC SU: ERN

JG -- DE026 -- 7995 10/28/93 13:59 EDT
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Date:Oct 28, 1993
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