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ICN Posts Net Income of $13.7 Million in Quarter

The pharmaceutical company's shares rise on the news. Founder defends payments taken when he left.

May 06, 2003|Jerry Hirsch | Times Staff Writer

ICN Pharmaceuticals Inc. of Costa Mesa reported first-quarter net income of $13.7 million Monday, a 63% gain from the same period last year.

ICN shares rose 51 cents on the New York Stock Exchange, to close at $9.28, after the company reported earnings of 16 cents a share, up from 10 cents a share a year ago.

Last year's results, however, were hurt by a $21.8-million charge for a change in the way ICN accounts for goodwill. Without that charge, year-ago earnings would have been $31.1 million.

ICN is under new leadership after company founder Milan Panic resigned under fire last year. The company recently disclosed that Panic collected about $27 million in payments and other benefits when he left ICN.

About $22 million of that resulted from the accelerated vesting of restricted stock and stock option awards to Panic, the company said in a proxy filing April 25. Panic also received $500,000 for a partial year's salary and a $4.5-million cash severance.

Panic defended the payments in an interview Monday, saying that much of what he received came from stock and options he had earned during his long tenure with the firm.

Panic said he still owns about 1.5 million shares of ICN and is the company's largest shareholder.

"I want to see the stock go up," he said. But Panic noted that "Wall Street has not been kind to the company" since he was tossed under pressure from shareholders.

Indeed, ICN's share price has slid 64% from $25.69 on June 18, the day he left.

Graef Crystal, an executive pay analyst, said Panic "has always been paid excessively, so it should be no surprise that he takes another huge wad of cash with him when he leaves."

For example, Crystal noted that Panic collected a $33-million bonus for selling 20% of Ribapharm, an ICN subsidiary, in a public stock offering a year ago. Panic defends that bonus, saying that ICN made a profit of $250 million on the spinoff.

ICN manufactures and distributes pharmaceuticals. Robert W. O'Leary, who replaced Panic as chairman and chief executive, said Monday that his new management team is in place and is scaling back overseas operations to focus on the domestic market.

In its financial report Monday, ICN said that revenue fell 14% to $158.7 million from $185 million in the same period a year earlier. One reason for the decline is ICN's efforts to work down bloated inventories of the company's drugs at wholesalers domestically, O'Leary said.

The pharmaceuticals company also saw royalty payments from sales of ribavirin fall nearly 15% to $48.6 million in the first quarter. Ribavirin is used to treat patients suffering liver disease from hepatitis C and is sold in the U.S. and Europe under the brand name Rebetol.

ICN also is unwinding years of investment in Eastern Europe, where Panic had close ties. A native of Serbia, Panic briefly served as prime minister of Yugoslavia.

In the first quarter, ICN discontinued business operations in Russia and manufacturing in Hungary and the Czech Republic.

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