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Canonsburg, Pa.-Based Mylan's Shares Get Boost on Profits Expectation

Posted on: Tuesday, 12 July 2005, 00:00 CDT

Jul. 12--Shares of Mylan Laboratories advanced yesterday after the Canonsburg generic drug maker said it would report higher-than-expected profits for its recently concluded fiscal first quarter.

Meanwhile, Mylan and its top attorney are being sued by the trustee for DKW Law Group over their actions in the months before the prominent Downtown law firm sought bankruptcy protection two years ago.

Mylan announced before markets opened yesterday that net income for the quarter ended June 30 would total 14 to 16 cents per share. Excluding restructuring and other items, Mylan expects to earn 24 cents to 26 cents per share vs. the 19 cents per share analysts were expecting.

Mylan shares traded as high as $20 yesterday before closing at $19.67, up 26 cents.

On the legal front, Natalie Lutz Cardiello, DKW's trustee, wants to recover more than $500,000 from the Canonsburg generic drug maker. She's claims Mylan coerced then financially troubled DKW to accept far less than what it had billed the company in March 2003 for legal services the firm provided.

Cardiello said the Mylan executive driving the hard bargain was Stuart A. Williams, who left DKW in February 2002 to become Mylan's chief legal officer.

Cardiello also is seeking to recover an unspecified amount from Williams, a former DKW partner who received monthly payments of $50,000 for a year after he left the firm.

The two actions -- the Mylan settlement and the payments to Williams -- contributed to financial problems that forced DKW to seek bankruptcy protection in June 2003, Cardiello alleges. The firm emerged from bankruptcy five months later.

Cardiello hopes to generate more cash for DKW's creditors by suing Mylan and Williams. She also is challenging about $650,000 in payments made to nine other creditors 90 days before DKW sought bankruptcy protection.

"This appears to be an opportunistic act where the trustee sued just about any one with whom the firm had a significant business relationship," said Mylan spokesman Patrick Fitzgerald.

Fitzgerald said the billing dispute was resolved over two years ago and that DKW still does work for Mylan.

The company did not disclose payments to DKW in a proxy statement filed prior to its shareholders meeting last summer. In 2002 and early 2003, when Williams was still associated with the firm, Mylan disclosed it paid DKW $6.3 million during the fiscal year ended March 2003.

Williams could not be reached for comment. He and Senior Vice President Patricia A. Sunseri stepped down as directors of Mylan last week, departures the company says will make its board more independent.

Cardiello sued Mylan and Williams separately in U.S. Bankruptcy Court, Downtown, on June 30, two years to the date DKW went into bankruptcy.

According to the lawsuit against Mylan, the drug company was DKW's largest client.

When DKW sent a March 2003 bill for nearly $1.5 million, Williams told his former firm that Mylan wouldn't pay more than $750,000, and that the only way DKW would get the money would be by agreeing to accept it as payment in full. DKW's pressing need for cash forced it to take the terms instead of challenging Mylan's position in court, the lawsuit states.

DKW officials agreed to pay, through the monthly payments, $600,000 to Williams for remaining associated with the firm even after he left -- more than other former attorneys received when they left the firm, according to Cardiello. She said DKW also repaid the loan Williams took out to purchase his partnership interest in the firm.

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MYL,

Source: Pittsburgh Post-Gazette

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