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Warner, AHP 1Q on target
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April 19, 2000: 11:36 a.m. ET
Warner-Lambert operating profits beat Street; American Home meets Street
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NEW YORK (CNNfn) - Drug maker Warner-Lambert Co. beat first-quarter estimates with a 35 percent gain in income from operations, although costs from the break-up of its proposed deal with American Home Products Corp. resulted in a net loss.
Separately, American Home Products (AHP) reported a slight decline in first-quarter profits before gains related to the merger termination fee, but still managed to meet analysts' expectations.
AHP and Warner called off their proposed merger when Warner opted to accept an offer from Pfizer Inc. (PFE: Research, Estimates) instead, resulting in a $1.8 billion after-tax charge for its break-up fee.
Warner also took a $91 million after-tax charge for the withdrawal of its diabetes drug Rezulin, which was reportedly linked to fatal liver failure in some patients.
 Those charges resulted in a net loss of $1.4 billion, or $1.61 a diluted share. But excluding those charges, the company reported operating income of $516 million, or 58 cents a diluted share. Analysts surveyed by earnings tracker First Call forecast the company would earn 56 cents a share in the period. A year earlier, the company earned $382 million, or 43 cents a diluted share.
Revenue gained 13 percent to $3.4 billion from $3 billion. The company said revenue would have increased 15 percent without the impact of currency fluctuations. In its core pharmaceutical segment, sales rose 19 percent to $2.2 billion, and would have risen 22 percent at constant exchange rates. Domestic sales in the segment were even stronger, up 26 percent to $1.5 billion.
Pharmaceutical products lift AHP
Factoring out gains from the break-up fee and a loss from discontinued operations, AHP (AHP: Research, Estimates) posted first-quarter earnings of $634.9 million, or 48 cents per share, up 18 percent from the $538.1 million, or 40 cents per share, it earned a year earlier.
Including the $1.8 billion termination fee and a loss from the company's agricultural products business, which BASF Aktiengesellschaft agreed to buy in late March, AHP actually recorded net income of $276.4 million, or 21 cents per share, well below the $654.9 million, or 49 cents, it earned a year earlier.
 A majority of the company's growth came from its pharmaceutical division, where worldwide sales jumped 16 percent during the first quarter, primarily due to higher sales of Prevnar, a vaccine that prevents children's bacterial diseases, Meningitec, a meningitis vaccine, and ReFracto, which treats hemophilia A.
However, sales of the company's Lodine products, which treat arthritis, were lower due to increased competition from generic products.
Sales of the company's consumer health care products, which includes such well-known brands as Advil and Robitussin, increased a more moderate 6 percent, due primarily to higher sales of nutritional supplements.
AHP's overall revenue climbed 14 percent to $3.34 billion.
Shares of Warner-Lambert (WLA: Research, Estimates) gained 2-5/8 to 110-1/8 Wednesday morning while AHP shares gained 1-5/8 to 58. 
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American Home Products
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