ST. LOUIS, April 20 /PRNewswire/ -- The following statement from C. Ray
Holman, chairman and chief executive officer of Mallinckrodt Inc., is being
released in response to information received today.
"Mallinckrodt is extremely surprised, disappointed and resentful about
CalPERS' (California Public Employees' Retirement System) inclusion of the
company on its list of underperforming companies.
"Our reactions are compounded, ironically, by our release today of record
operating results for our fiscal 1999 third quarter. Earnings per share for
the quarter were up 39 percent over last year, with earnings per share for the
nine months up 44 percent. EPS for all three quarters has been well ahead of
consensus expectations.
"We understand that CalPERS' decision was based on two criteria:
corporate performance and corporate governance. Information used by CalPERS
was either out-of-date or incorrect.
"Mallinckrodt's performance has been adversely affected the last several
years, through June 30, 1998, by two primary factors: corporate
transformation and extreme medical products pricing pressures.
"The company has transformed itself from an industrial mini-conglomerate
to a strategically based healthcare company, sharply focused on products which
sustain breathing, diagnose disease and relieve pain. This transformation has
included significant divestitures and one very large acquisition. This
transformation and the integration of our "new company" penalized near-term
earnings and affected our stock price.
"In the last five years, medical product selling prices have dropped
significantly throughout the industry as a result of managed care, group
purchasing consolidation and global competition. Mallinckrodt has been
affected more than many companies because of our unique product mix.
"CalPERS selected September 30, 1998, as its valuation date. Our stock
hit its low of 19-3/4 at that time. Since that date, our stock has rebounded
as a result of completion of our transformation and three quarters of
excellent operating performance.
"Mallinckrodt is a company with excellent corporate governance, which has
been recognized by others. The company's directors received the first annual
Board of the Year Award for 1995 from the Wharton Business School of the
University of Pennsylvania. In 1997, Business Week included Mallinckrodt in
its list of the 25 best boards. The company follows model corporate
governance practices. CalPERS' assessment included incorrect information
about our board, committees and individual members.
"CalPERS has proposed that Mallinckrodt adopt revised standards for
membership on its board's audit committee. At its regular meeting today,
Mallinckrodt's board, based on the recommendation of its corporate governance
committee, approved the director independence principles of the Blue Ribbon
Committee on the Effectiveness of Corporate Audit Committees, and the current
membership meets those standards. Our organization and compensation committee
has also met those standards for many years.
"In response to CalPERS' requests, Mallinckrodt provided substantial
information to them. Three other officers and I, as CEO, met with CalPERS'
officials to update and correct their information. We also explained in
detail our business strategies and plans for enhanced performance and greater
shareholder value. After this exchange of information, we are even more
surprised to be included on the list.
"It is clear that a major corporate turnaround is well under way and this
is not fully appreciated by CalPERS. We will continue our communications with
them and with other investors and earn their appreciation.
"Mallinckrodt's board, management and employees all are committed to
delivering superior value for our shareholders, and we are confident of our
ability to do so."
SOURCE Mallinckrodt Inc.
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Company News On-Call:
http://www.prnewswire.com/comp/440950.html or fax,
800-758-5804, ext. 440950
CONTACT:
Media, Barbara Abbett, 314-654-5230, or
e-mail, Communications@mkg.com, or Investors, Barbara Gould,
314-654-3190, or e-mail, Invest@mkg.com, both of Mallinckrodt
Inc.
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