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Executive Summary

MALLINCKRODT MEDICAL EXECS ADVANCE TO TOP IMCERA SPOTS: C. RAY HOLMAN, 50, moves up from president of the medical products subsidiary to president and chief executive officer of the full corporation, replacing M. Blake Ingle. IMCERA board Chairman George Kennedy announced the changes "effectively immediately" on Dec. 10. The company says that the topside change and two related changes at the drug and animal products subsidiaries are tied to "a recent lag in performance by [the] Pitman-Moore animal health care operating unit." In addition to the promotion of Holman, two other executives from Mallinckrodt Medical are taking on expanded responsibilities in the IMCERA shakeup. Mallinckrodt Medical Senior VP William Mercer, 44, is assuming the top operating post at Pitman-Moore, succeeding Boyd Wainscott "who also resigned." Another Mallinckrodt senior VP, Robert Moussa, was named to take over Holman's position at the top of the medical business. The Mallinckrodt Specialty Chemicals business will continue to be run by Mack Nichols. The management changes are sudden. As recently as late October, Ingle was appearing at an Oppenheimer Health Care Conference and reporting "ongoing net sales" up 17.6% through the first quarter of fiscal 1993 with earnings up 22.1%. At that point, the company declared that 1993 "was off to a good start" and that the company appeared on track to its frequently-stated mid-decade goals of 20% compound annual earnings per share growth and "improvement in return on invested capital to 15%." The growth of the animal health business, however, has been running behind the rest of the business. In fiscal 1992, for example, Pitman-Moore sales were up 3% to $642 mil. and operating earnings were down 7% to $69 mil. The company attributed $8 mil. of the drop in earnings to "temporary suspension of sales and shutdown of production of animal pharmaceuticals" in Kansas City. The company noted that Pitman-Moore results for full fiscal 1993 are likely to be below last year. IMCERA Chairman Kennedy expressed impatience with the continuing performance trends at Pitman-Moore. In the announcement of management changes, he declared that Pitman-Moore results have "lagged" behind "expectations compared with our two other operating companies." Maintaining that the downturn at Pitman- Moore has "been more pronounced recently," Kennedy said pointedly that the resignations and new appointments "are intended to correct that situation." He asserted that "these assets have to contribute their fair share to our objective of continuing to enhance shareholder value." In the last several years, IMCERA has worked to create an image with the financial community of a predictable growth firm. IMCERA execs have laced their frequent presentations to financial conferences with aggressive predictions. For example, two years ago, the company was forecasting that Pitman-Moore would be a $1 bil. company by 1994. To give its projections more weight, the company has described a very open perform-or-out management style. In its recent annual report, IMCERA Chairman Kennedy said that the board has "encouraged creativity but...required responsibility." In the same vein, Wainscott, one of the recently resigned execs, is quoted in the current issue of the financial magazine Fortune as saying: "We have a very strong delegation of authority here, but you'd damned well better do what you say you're going to do." The article, forward-dated Dec. 14, 1992 is ironically entitled "The Payoff From Peer Pressure." Holman, Mercer and Moussa are all veterans of the Mallinckrodt business from the period prior to its 1986 acquisition by IMCERA (formerly International Minerals & Chemicals). Holman started his career at Mallinckrodt as an assistant controller in 1976 and rose through financial positions until he was named group vice president of hospital and laboratory products in 1983. Mercer is a 15-year veteran of Mallinckrodt, with six years of experience at the begining of his career as a production and plant manager. Moussa has been with Mallinckrodt since 1978. His background is in the international/European side of the business.

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