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ICN Pharmaceuticals, Inc.
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Following is the text of a press release issued by ICN Pharmaceuticals,
Inc. on May 2, 2002:
ICN PHARMACEUTICALS REPORTS FIRST QUARTER RECORD
REVENUES--RECORD OPERATING INCOME--RECORD NET
INCOME--RECORD EARNINGS PER SHARE
COSTA MESA, Calif., May 2, 2002 -- ICN Pharmaceuticals, Inc. (NYSE: ICN)
today reported that first quarter revenues were a record $245.7 million
compared to $199.0 million in 2001, an increase of 23 percent.
Operating income in the first quarter was a record $65.8 million compared
to $41.2 million, an increase of 60 percent.
Net income was a record $33.7 million compared to $21.0 million in the
first quarter of 2001, an increase of 60 percent. Earnings per share for
the first quarter were $0.40, compared to $0.26, an increase of 54 percent.
Net income included a benefit of $3.5 million from the cumulative effect of
change in accounting principle. The Company is currently evaluating its
remaining goodwill. First quarter 2002 results also included increases of
$11.1 million in provision for income taxes, $3.5 million in research and
development costs, and $2.4 million in interest expenses.
Milan Panic, ICN's chairman and chief executive officer, commented,
"Results for the first quarter continue to demonstrate the strength of our
operations. In almost every measure of performance in the first quarter, we
exceeded expectations and set new records. Our strong performance, coupled
with our promise kept to restructure ICN, underscores our commitment to
building value for all of our shareholders. These results were not achieved
by accident. They are the direct result of the hard work of our employees,
led by an experienced management team and independent board."
ICN AMERICAS
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North America
Total North American Pharmaceutical sales were $46.9 million in the first
quarter of 2002, compared to $42.3 million, an 11 percent increase.
Operating income was $16.6 million compared to $18.3 million, a decrease of
9 percent, partially due to increased selling and advertising expenses.
Results for the first quarter of 2002 benefited from Librax sales, which
were $8.9 million higher in the first quarter of 2002 compared to the same
period a year ago.
During the first quarter of 2002, ICN received clearance from the U.S. Food
and Drug Administration (FDA) to market the NLite System(TM) for the
treatment of wrinkles in general. Previously, the FDA cleared NLite
System(TM) for the treatment of periocular (around the eyes) wrinkles only.
In February 2002, ICN acquired CoolTouch Corporation, a pioneer in the
development of non-invasive laser systems for periorbital and periocular
wrinkle treatment and hair removal. The acquisition solidifies ICN's
position as a leading comprehensive dermatology company offering specialty
physicians three advanced modalities: laser devices, cosmetics and
pharmaceuticals for the improvement and maintenance of healthier looking
skin.
Latin America
Latin American sales were a record $29.5 million in the 2002 first quarter
compared to $26.1 million, a 13 percent increase. Operating income was a
record $9.0 million compared to $8.2 million, up 11 percent. Results in the
first quarter benefited from strong sales of Bedoyecta, which increased
from $5.2 million in the first quarter of 2001 to $6.8 million in the 2002
first quarter.
ICN INTERNATIONAL
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ICN International, headquartered in Basel, Switzerland, includes the
company's operations in Western and Central Europe, Eastern Europe, and
Asia, Africa and Australia (AAA). ICN has assembled a team of experienced
executives that were recruited in the last several months from industry
giants, such as Roche, Novartis and Johnson & Johnson, to lead the
international expansion.
Western Europe
Sales in Western Europe were a record $54.9 million in the first quarter of
2002, compared to $52.5 million, an increase of 4 percent. Operating income
in the region was a record $8.6 million versus $4.3 million, an increase of
99 percent.
Western European results benefited from improvements in the gross profit
margin through efficiencies achieved in manufacturing plants, as well as
new product introductions acquired in the past few quarters.
The company launched Catrix, its wound-healing product, in Portugal in the
first quarter. The company also received approval from the Portuguese
Health Authorities to market Nuclosina, which it expects to launch in the
second quarter.
Eastern Europe
Eastern European sales were $29.8 million compared to $24.4 million in the
first quarter of 2001, an increase of 22 percent. The Eastern European
region reported operating income of $1.9 million, compared to an operating
loss of $2.2 million. Results benefited from the sale of higher-margin
products and improvements in the distribution system.
Asia, Australia, Africa
Sales in Asia, Australia and Africa (AAA) were $11.8 million compared to
$10.6 million, an increase of 11 percent. The region posted an operating
profit of $1.4 million compared to $1.3 million. Results in the first
quarter benefited from a significant improvement in the gross margin as a
result of growth in higher-margin products, partially offset by higher
operating expenses related to the transition of AAA management to Basel,
Switzerland.
The Board of Directors of ICN International has held two meetings in Basel
in 2002, once in January and once in April.
RESEARCH AND DEVELOPMENT
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Research and development expenses increased 55 percent to $9.9 million in
the first quarter of 2002, compared to $6.4 million in the same period last
year.
The company noted that as a result of its increased R&D efforts, an
Investigational New Drug Application (IND) had been filed in December 2001
for Viramidine(TM), a nucleoside analog, which was endorsed by the FDA in
the first quarter of 2002. Phase I trials to address the safety and
pharmacokinetics of Viramidine(TM) were initiated in subjects with chronic
hepatitis C late in the first quarter.
The company is also developing a compound for the treatment of chronic
hepatitis B in-licensed to expand the antiviral pipeline.
RIBAPHARM
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In April 2002, ICN completed the initial public offering of a 20 percent
interest in Ribapharm, generating gross proceeds of $299 million. The IPO
marks a major milestone in the company's planned restructuring. In
addition, ICN completed the repurchase of all of its outstanding 8 3/4
percent senior notes due 2008. ICN remains committed to distributing its
remaining interest in Ribapharm to ICN shareholders in a tax-free spin-off.
First quarter 2002 royalties for ribavirin totaled $57.0 million, a 107
percent increase over the $27.6 million in royalties in the 2001 first
quarter. The increase is due to the launch by Schering-Plough Corporation
of pegylated interferon alpha 2b/ribavirin combination treatment in October
2001. Schering-Plough markets ICN's ribavirin in the U.S. and Europe under
the brand name Rebetol(R) for use in combination with its Intron(R)A or Peg
Intron(R) to treat chronic hepatitis C. Schering-Plough also launched
Rebetol/Intron(R)A combination therapy in Japan in December 2001.
FINANCIAL METRICS
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Earnings before interest, taxes, depreciation and amortization (EBITDA)
were $84.5 million in the first quarter of 2002, compared with $59.3
million, an increase of 43 percent. The provision for income taxes was
$20.3 million, which reflects an effective tax rate of 40 percent, compared
to $9.3 million, an effective tax rate of 31 percent. The increase in 2002
is primarily attributable to a shift in the mix of earnings to higher-tax
jurisdictions.
Stockholders' equity rose to $853 million at March 31, 2002 versus $811
million at December 31, 2001. ICN's total cash position at March 31, 2002
was $381 million, compared with $328 million at year end. ICN's working
capital position increased to $645 million at March 31, 2002, compared to
$611 million at year end.
ICN is an innovative, research-based global pharmaceutical company that
manufactures, markets and distributes a broad range of prescription and
non- prescription pharmaceuticals, and devices under the ICN brand name.
Its research and new product development focuses on innovative treatments
for dermatology, oncology and hepatology.
Additional information is also available on the Company's website at
http://www.icnpharm.com.
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ICN has filed a preliminary proxy statement relating to ICN's 2002 annual
meeting of stockholders with the Securities and Exchange Commission on
April 29, 2002 and will file with the SEC and forward to ICN stockholders a
definitive proxy statement. ICN stockholders are strongly advised to read
the definitive proxy statement when it becomes available, as it will
contain important information. Stockholders may obtain the preliminary
proxy statement and will be able to obtain the definitive proxy statement,
when available, and any amendments to the proxy statement and other
documents filed by ICN with the SEC for free at the Internet website
maintained by the SEC at www.sec.gov. In addition, ICN will mail the
definitive proxy statement to each stockholder of record on April 9, 2002.
ICN will also make additional copies of the definitive proxy statement and
any amendments to the definitive proxy statement available for free to
ICN's stockholders. Please direct your request for the definitive proxy
statement to Investor Relations, ICN Pharmaceuticals, Inc., 3300 Hyland
Avenue, Costa Mesa, California 92626, telephone (714) 545-0100, extension
3013.
ICN, its executive officers and directors and director nominees may be
deemed to be participants in the solicitation of proxies for ICN's 2002
annual meeting of stockholders. Information regarding these participants is
contained in the preliminary proxy statement filed with the SEC on April
29, 2002.
THE SAFE HARBOR STATEMENT UNDER THE PRIVATE SECURITIES LITIGATION REFORM
ACT OF 1995. This press release contains forward-looking statements that
involve risks and uncertainties, including but not limited to, projections
of future sales, operating income, returns on invested assets, regulatory
approval processes, and other risks detailed from time to time in the
Company's Securities and Exchange Commission filings.
####
Consolidated Condensed Statement of Income for the First Quarter
Ended March 31, 2002 and 2001
Quarter Ended
March 31, %
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In thousands, except per share data 2002 2001 Change
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Product sales $ 188,661 $ 171,419
Royalties 57,001 27,550
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Total revenues 245,662 198,969 23%
Cost of product sales 71,132 69,774
Selling, general , and administrative expenses 91,632 73,419
Research and development costs 9,857 6,372
Amortization of goodwill and intangibles 7,211 8,206
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179,832 157,771
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Income from operations 65,830 41,198 60%
Interest, net 13,158 10,777
Translation and exchange losses, net 2,120 400
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Income before provision for
income taxes and minority interest 50,552 30,021 68%
Provision for income taxes 20,338 9,263
Minority interest 58 (264)
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Income 30,156 21,022 43%
Cumulative effect of change in accounting principle (1) 3,541 -
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Net income $ 33,697 $ 21,022 60%
=============== ===============
BASIC EARNINGS PER COMMON SHARE
Income $ 0.37 $ 0.26 42%
Cumulative effect of change in accounting principle (1) 0.04 -
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Net income $ 0.41 $ 0.26 58%
=============== ===============
Shares used in per share computation 82,274 80,392
=============== ===============
DILUTED EARNINGS PER COMMON SHARE
Income $ 0.36 $ 0.26 38%
Cumulative effect of change in accounting principle (1) 0.04 -
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Net income $ 0.40 $ 0.26 54%
=============== ===============
Shares used in per share computation 84,331 82,304
=============== ===============
(1) In the first quarter of 2002, the Company adopted SFAS No. 142
"Goodwill and Other Intangibles", which resulted in a benefit of
$3,541 for the write-off of unamortized deferred credits relating to
excess of fair value of acquired net assets over cost. The Company is
currently evaluating its remaining goodwill.