ICN Reports 30% Decline in Profit, Says It Will Release Spinoff Proposal

ICN Pharmaceuticals Inc. said Wednesday it would release a review of its operations within 90 days, including a proposed spinoff of two units, as it reported a 30% decline in quarterly profit.

Shares of the Costa Mesa-based company jumped $1.05, or 11%, to $10.30 on the New York Stock Exchange.

Investors are anxious to hear a reorganization plan for ICN, including the spinoff of the company’s international business and the remaining 83% of its Ribapharm unit. Interim Chief Executive Robert O’Leary is trying to improve the company’s operations after replacing former CEO Milan Panic in June.

“We are reviewing all the products, as well as the geographic areas we’re doing business in, and we will be making decisions to refocus our business,” O’Leary said. “There have been some missteps here, but the underlying business has tremendous upside.”

ICN reported second-quarter earnings of $16.3 million, or 19 cents a share, down 30% from $23.3 million, or 28 cents, in the year-ago quarter.

The results were roughly in line with Wall Street estimates, which were slashed last month from 44 cents a share after the company warned of the earnings shortfall.

Sales rose 16% to $237 million, while selling and administrative costs rose 30% to $97.5 million.

ICN began a program to reduce overloaded wholesaler drug inventories during the quarter and is cutting general and administrative costs, O’Leary said.

ICN, whose shares have dropped 69% this year, hired investment bank Goldman Sachs Group Inc. and an unnamed consulting firm last month to review its business, provide financial advice and evaluate its spinoff plans.

* Watson Pharmaceuticals Inc. reported a decline in second-quarter earnings on slower sales and higher spending to develop branded drugs, but the results topped analyst estimates.

The company also said its experimental patch for overactive bladder, Oxytrol, could receive marketing approval in the second quarter of next year, after being rejected by the Food and Drug Administration earlier this year.

Corona-based Watson said net income, including one-time items, fell 9.5% to $50 million, or 56 cents a share. Operating earnings were $44.1 million, or 41 cents, 2 cents higher than analysts’ average estimate.

Revenue was virtually flat at $300 million. Sales of generic drugs fell 21% to $135 million as Watson lost exclusive rights to sell copies of Bristol-Myers Squibb Co.’s anti-anxiety drug Buspar. Sales of Watson’s branded medicines rose 25% to $156 million.

The company also said it expects 2002 profit of $1.60 to $1.70 a share, compared with the consensus estimate of $1.59.

* Clorox Co. reported profit slightly ahead of forecasts for its fiscal fourth quarter and said it expects to beat analysts’ estimates for the current quarter and fiscal 2003.

The Oakland-based consumer products company posted net income of $145 million, or 63 cents a share, 2 cents better than analysts expected. In the year-ago quarter, Clorox had operating earnings of $107 million, or 45 cents, excluding a $21-million charge for writing down the value of its Brazilian business and other one-time items. Sales rose 3% to $1.14 billion.

For 2003, Clorox said it expects a percentage rise in the low double digits in earnings per share over the $1.92 posted in 2002, or at least $2.11. It anticipates earnings of 50 cents to 52 cents a share in the first quarter.

Analysts were expecting $2.07 a share for the year and 49 cents for the quarter.