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Acquisition Costs Lead to 4th-Quarter Loss at Watson

February 16, 2001|From Bloomberg News

Watson Pharmaceuticals Inc. said Thursday that it had a fourth-quarter loss because of costs associated with recent acquisitions.

The Corona-based pharmaceuticals maker lost $1.9 million, or 2 cents a share, contrasted with net income of $73.5 million, or 73 cents, a year earlier. Revenue rose 32% to $254.8 million from $193.2 million.

Watson attributed the loss to one-time costs and charges associated with its purchases last year of Makoff R&D Laboratories Inc. and Schein Pharmaceutical Inc.

Watson, which has been trying to expand its brand-name business, got about half its product revenue from more profitable branded drugs, less than some analysts had projected.

Watson said sales of some brand-name products, such as the hypertension drug Dilacor XR, were hurt by increased competition from generic equivalents.

Watson shares fell $1.68 to close at $53.10 on the New York Stock Exchange.

Watson said before charges and gains, profit would have been $32.4 million, or 31 cents a share, down 26% from $43.8 million, or 44 cents, a year earlier.

The latest quarter included a benefit of $3.5 million from an accounting change, the company said. Watson was expected to earn 27 cents a share, the average estimate of analysts polled by First Call/Thomson Financial.

The company declined to provide charges and gains figures on a per-share or after-tax basis.

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Metals processor and distributor Reliance Steel & Aluminum Co. said profit will be less than analysts' forecasts in the first half of this year because of slowing U.S. economic growth.

The Los Angeles-based company also reported that fourth-quarter net income fell nearly 10% to $13.7 million, or 53 cents a share, from $15.1 million, or 54 cents, in the year-earlier period. Sales rose 9.3% to $411.3 million from $374.4 million.

Profit will be less than in the year-earlier period, when Reliance earned $1.18 a share, the company said in a statement. Reliance was expected to earn $1.21 a share in the first half of 2001, the average forecast of seven analysts surveyed by First Call/Thomson Financial.

U.S. manufacturing activity in January was the lowest in almost a decade. Reliance said metals prices have fallen from a year ago, and in the Northwest, orders from rail-car and truck-trailer manufacturers slowed.

Reliance shares fell $2.45, or 8.3%, to close at $27.25 on the NYSE. They have increased 31% over the last year.

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