ST. LOUIS, Oct. 19 /PRNewswire/ -- Mallinckrodt Inc. (NYSE: MKG) today
reported first quarter earnings from continuing operations of $38 million, or
53 cents per share on a diluted basis. This is an increase of 19 percent and
23 percent, respectively, from the $32 million, or 43 cents per share reported
for the first quarter of fiscal 1999. Net earnings in last fiscal year's
first quarter included $23 million, or 31 cents per share, from the after-tax
gain realized on the sale of the industrial chemicals business included in
discontinued operations.
Cash earnings per share, defined as earnings per share from continuing
operations plus amortization, were 83 cents per share in fiscal 2000's first
quarter.
Mallinckrodt's Chairman and CEO C. Ray Holman said, "We are off to a good
start in fiscal 2000 and have now exceeded Wall Street expectations for five
consecutive quarters. Our first quarter performance should provide increased
confidence in our ability to deliver $2.60 per share for fiscal 2000. Pulse
oximetry, radiopharmaceuticals and pharmaceuticals continue to show strong
sales growth. The improvement in profitability is driven by strong volume
growth in our more profitable businesses, new product introductions in the
alternate care business, and continuous productivity improvement through
strategic cost management."
Mallinckrodt's net sales in this fiscal year's first quarter were
$614 million, 4 percent higher than the $592 million reported in the first
quarter of fiscal 1999. Excluding sales from businesses divested, sales
growth was 5 percent with volume up 6 percent offset by a 1 percentage point
decline in pricing. Sales to customers outside the United States accounted
for $196 million, or 32 percent of total company sales.
Business Overview
Mallinckrodt's Respiratory segment reported first-quarter sales of
$263 million, up 3 percent over the $256 million reported in the first quarter
of fiscal 1999. Excluding sales from businesses divested last year, sales
growth was 5 percent. Components of the 5 percent growth were 4 percent
volume growth led by strong growth of 13 percent in pulse oximetry, flat
pricing, and 1 percentage point from the impact of foreign currency changes.
Respiratory operating earnings were $32 million, compared with $22 million in
the same quarter last year. The 43 percent increase in earnings reflects the
strong performance of pulse oximetry and the continuing benefits from our
successful integration of Nellcor Puritan Bennett.
The Pharmaceuticals segment reported first-quarter sales of $169 million,
11 percent higher than the $152 million recorded in the first quarter of
fiscal 1999. Sales volume grew 12 percent while pricing decreased 1 percent.
Pharmaceuticals operating earnings were $24 million, an 18 percent increase
over the $21 million reported in the comparable period last year. Strong
sales growth of bulk analgesic pharmaceuticals contributed to the earnings
improvement.
The Imaging segment reported first-quarter sales of $182 million, a
1 percent decrease compared with $184 million in the first quarter last year.
Sales volume declined 1 percent over fiscal 1999 due to lower x-ray contrast
media sales and sale of the diagnostic catheter business. Pricing remained
flat as a result of higher pricing in radiopharmaceuticals offset by a
decrease in x-ray contrast media pricing. Operating earnings declined to
$23 million, compared with $31 million last year due primarily to lower sales
of x-ray contrast media.
"During the first quarter, we repurchased 1.1 million shares of stock,"
said Michael A. Rocca, senior vice president and chief financial officer of
Mallinckrodt. "We believe our stock is substantially undervalued, and we will
continue our share repurchase program."
Based in St. Louis, Mo., Mallinckrodt Inc. has three healthcare segments
-- Respiratory, Imaging and Pharmaceuticals. The company operates in more
than 100 countries and had fiscal 1999 net sales of $2.6 billion. The
Mallinckrodt web site address is http://www.mallinckrodt.com.
This news release contains forward-looking statements that involve risks
and uncertainties. These statements are based on current expectations; actual
results may differ materially. Among the factors that could cause actual
results to differ materially from those projected are the following: the
effect of business and economic conditions; the impact of competitive products
and continued pressure on prices realized by the company for its products;
constraints on supplies of raw materials used in manufacturing certain of the
company's products; capacity constraints limiting the production of certain
products; difficulties or delays in the development, production, testing, and
marketing of products; difficulties or delays in receiving required
governmental or regulatory approvals; market acceptance issues, including the
failure of products to generate anticipated sales levels; difficulties in
rationalizing acquired businesses and in realizing related cost savings and
other benefits; the effects of and changes in trade, monetary and fiscal
policies, laws and regulations; foreign exchange rates and fluctuations in
those rates; the costs and effects of legal and administrative proceedings,
including environmental proceedings and patent disputes involving the company;
difficulties or delays in addressing "Year 2000" problems in the company's
operations, or the inability of a major supplier or customer to continue
operations due to such problems; and the risk factors reported from time to
time in the company's SEC reports. The company undertakes no obligation to
update any forward-looking statements as a result of future events or
developments.
MALLINCKRODT INC.
CONSOLIDATED STATEMENTS OF OPERATIONS
(In millions, except share and per share amounts)
Three Months Ended
September 30,
1999 1998
Net sales $614.1 $591.9
Operating costs and expenses:
Cost of goods sold 337.1 318.3
Selling, general and administrative expenses 170.4 173.1
Research and development expenses 33.1 33.9
Total operating costs and expenses 540.6 525.3
Operating earnings 73.5 66.6
Interest and other nonoperating income, net 1.2 .9
Interest expense (19.3) (20.6)
Earnings from continuing operations before
income taxes 55.4 46.9
Income tax provision 17.7 15.2
Earnings from continuing operations 37.7 31.7
Discontinued operations 22.6
Net earnings 37.7 54.3
Preferred stock dividends (.1) (.1)
Available for common shareholders $37.6 $54.2
Basic earnings per common share:
Earnings from continuing operations $.53 $.43
Discontinued operations .31
Net earnings $.53 $.74
Average common shares 70,434,766 72,917,133
Diluted earnings per common share:
Earnings from continuing operations $.53 $.43
Discontinued operations .31
Net earnings $.53 $.74
Average common shares 70,879,832 73,003,899
Actual shares outstanding at end of period 69,809,556 71,519,074
(See accompanying notes to financial results.)
MALLINCKRODT INC.
CONSOLIDATED BALANCE SHEETS
(In millions)
September 30, June 30,
1999 1999
Assets
Current assets:
Cash and cash equivalents $26.3 $32.7
Trade receivables, less allowances of $20.4
at September 30 and $17.9 at June 30 459.4 490.9
Inventories 547.4 530.3
Deferred income taxes 78.0 54.7
Other current assets 59.6 61.3
Total current assets 1,170.7 1,169.9
Investments and other noncurrent assets,
less allowances of $9.5 at September 30 and
$8.6 at June 30 81.3 67.2
Property, plant and equipment, net 856.5 870.7
Goodwill and other intangible assets, net 1,527.3 1,545.3
Deferred income taxes 4.4 4.3
Total assets $3,640.2 $3,657.4
Liabilities and Shareholders' Equity
Current liabilities:
Short-term debt $411.9 $383.8
Accounts payable 188.8 221.2
Accrued liabilities 419.9 459.5
Income taxes payable 118.8 77.3
Deferred income taxes .9 1.2
Total current liabilities 1,140.3 1,143.0
Long-term debt, less current maturities 742.4 742.5
Deferred income taxes 359.9 363.0
Postretirement benefits 167.8 166.5
Other noncurrent liabilities and deferred
credits 163.0 182.0
Total liabilities 2,573.4 2,597.0
Total shareholders' equity 1,066.8 1,060.4
Total liabilities and shareholders' equity $3,640.2 $3,657.4
(See accompanying notes to financial results.)
MALLINCKRODT INC.
NOTES TO INTERIM FINANCIAL RESULTS
Mallinckrodt Inc. and its subsidiaries, collectively, are called the
"Company" or "Mallinckrodt." All references to years are to fiscal years
ended June 30 unless otherwise stated. Certain amounts in the prior year were
reclassified to conform to the current year presentation. All earnings per
share amounts are calculated on a diluted basis unless otherwise stated.
(a) The Company's subsidiary Puritan-Bennett Corporation (Puritan-
Bennett) is a defendant in an action that was filed on August 29,
1997 and is currently pending in the U.S. District Court for the
District of New Mexico. This case relates to a 1996 Asset Purchase
Agreement (Agreement) whereby Puritan-Bennett agreed to purchase
certain assets of New Mexico Steel. The purchase price of the assets
was $1.2 million. Said purchase price was to be adjusted upward or
downward based upon post-closing schedules of inventory, accounts
receivable and office equipment to be provided by Puritan-Bennett.
Plaintiff alleges that Puritan-Bennett breached the Agreement by
failing to deliver the post-closing schedules in a timely manner. On
September 23, 1999, a jury returned a verdict against Puritan-Bennett
and in favor of New Mexico Steel in the amount of $.4 million in
compensatory and $5.0 million in punitive damages. With the advice
of counsel, the Company believes that the verdict is not supported by
the law or the facts of the case and is a product of passion and
prejudice on the part of the jury. Based upon all the facts
available to management, the Company believes that it is possible but
not probable that the jury verdict will be upheld on appeal. The
Company intends to vigorously challenge this verdict in post-trial
motions with the trial court, and on appeal if necessary.
(b) In June 1998, the Company committed to the sale of the remaining
chemical additives business of the catalyst and chemical additives
division, and closing of the sale occurred on July 31, 1998. The
transaction resulted in a $37.0 million gain on sale, $22.6 million
net of taxes recorded in the quarter ended September 30, 1998. The
gain on sale, net of tax, was included in discontinued operations for
the quarter ended September 30, 1998. Earnings from operations were
zero for the one month of operations in 1999.
MALLINCKRODT INC.
BUSINESS PROFILE
(Dollars in millions)
Three Months Ended September 30,
%
1999 1998 Change
Net sales
Respiratory $263.1 $256.2 3
Imaging 182.2 183.6 (1)
Pharmaceuticals 168.8 152.1 11
$614.1 $591.9 4
Operating earnings
Respiratory $32.1 $22.4 43
Imaging 23.0 30.7 (25)
Pharmaceuticals 24.2 20.5 18
79.3 73.6 8
Corporate expense (5.8) (7.0) 17
$73.5 $66.6 10
Selected cash flow information
Depreciation $33.9 $28.8
Amortization 21.3 20.9
Capital expenditures (23.6) (27.3)
Issuance of common stock 1.0 .3
Acquisition of treasury stock (37.6) (42.5)
Dividends paid (11.6) (12.0)
For more information, contact: media, Barbara Abbett, 314-654-5230, or
E-mail, barbara.abbett@mkg.com, or Investors, Barbara Gould, 314-654-3190, or
E-mail, Invest@mkg.com, both of Mallinckrodt.
SOURCE Mallinckrodt Inc.
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Related links:
http://www.mallinckrodt.com
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, barbara.abbett@mkg.com, or Investors, Barbara Gould,
314-654-3190, or E-mail, Invest@mkg.com, both of Mallinckrodt
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