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Wyeth · 10-Q · For 9/30/01

Filed On 11/14/01 · SEC File 1-01225 · Accession Number 5187-1-500014

  As Of               Filer                 Filing     As/For/On Docs:Pgs

11/14/01  Wyeth                             10-Q        9/30/01    3:47

Quarterly Report · Form 10-Q
Filing Table of Contents

Document/Exhibit                   Description                      Pages   Size 

 1: 10-Q        Quarterly Report                                      33    163K 
 2: EX-3.2      By-Laws                                               12±    54K 
 3: EX-12       Statement re: Computation of Ratios                    2±    11K

10-Q · Quarterly Report
Document Table of Contents

Page	(sequential)	\|	(alphabetic)	Top
			Alternative Formats (RTF, XML, et al.) Consolidated Condensed Financial Statements: Exhibits and Reports on Form 8-K Legal Proceedings Legal Proceedings 26-29 Management's Discussion and Analysis of Financial Condition and Results of Operations 16-25 Quantitative and Qualitative Disclosures about Market Risk
1	1st Page
2	Item 1. Consolidated Condensed Financial Statements:
"	Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations 16-25
"	Item 1. Legal Proceedings 26-29
25	Quantitative and Qualitative Disclosures about Market Risk
27	Item 1. Legal Proceedings
31	Item 6. Exhibits and Reports on Form 8-K

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================================================================================
 UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549

 FORM 10-Q

 QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15 (d)
OF THE SECURITIES EXCHANGE ACT OF 1934

For the quarterly period ended                     Commission file number 1-1225
September 30, 2001                                                  

AMERICAN HOME PRODUCTS CORPORATION
----------------------------------
(Exact name of registrant as specified in its charter)

Delaware                                     13-2526821   
--------                                     ----------   
(State or other jurisdiction of             (I.R.S. Employer Identification No.)
incorporation or organization)                                                  

Five Giralda Farms, Madison, N.J.                     07940             
---------------------------------                     -----             
(Address of principal executive offices)                (Zip Code)              

Registrant's telephone number, including area code (973) 660-5000               

 Indicate by check mark whether the registrant (1) has filed all reports
required to be filed by Section 13 or 15 (d)
 of the Securities Exchange Act of 1934 during the
preceding 12 months (or for such shorter period that the
 registrant was required to file such reports), and (2) has been
 subject to such filing requirements for the past 90 days.

                                          Yes  X        No
                                          ------        --

The number of shares of Common Stock outstanding as of the close of business on 
October 31, 2001:                                                               

                                               Number of
             Class                            Shares Outstanding
---------------------------------              ------------------ 
Common Stock, $0.33-1/3 par value                 1,319,235,172   

================================================================================

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 AMERICAN HOME PRODUCTS CORPORATION AND SUBSIDIARIES

 INDEX

                                                                        Page No.
                                                                        --------

Part I -  Financial Information                                              2  

Item 1.  Consolidated Condensed Financial Statements:       

Consolidated Condensed Balance Sheets -   
                    September 30, 2001 and December 31, 2000               3

       Consolidated Condensed Statements of Operations -
     Three and Nine Months Ended September 30,
                    2001 and 2000                                          4

     Consolidated Condensed Statements of Changes in
    Stockholders' Equity - Nine Months Ended
                    September 30, 2001 and 2000                            5

       Consolidated Condensed Statements of Cash Flows -
                    Nine Months Ended September 30, 2001 and 2000          6

                  Notes to Consolidated Condensed Financial Statements    7-15

Item 2.  Management's Discussion and Analysis of            
                     Financial Condition and Results of Operations       16-25

Part II - Other Information                                                 26  

         Item 1.  Legal Proceedings                                      26-29

        Item 6.  Exhibits and Reports on Form 8-K                         30

Signature                                                                   31  

Exhibit Index                                                              EX-1 

Items other than those listed above have been omitted because they are not      
applicable.                                                                     

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Part I - Financial Information
------------------------------

AMERICAN HOME PRODUCTS CORPORATION AND SUBSIDIARIES                             

The consolidated condensed financial statements included herein have been       
prepared by American Home Products Corporation (the "Company"), without audit,  
pursuant to the rules and regulations of the Securities and Exchange Commission.
Certain information and footnote disclosures normally included in financial     
statements prepared in accordance with accounting principles generally accepted 
in the United States have been condensed or omitted pursuant to such rules and  
regulations; however, the Company believes that the disclosures are adequate to 
make the information presented not misleading. In the opinion of management, the
consolidated condensed financial statements include all adjustments necessary to
present fairly the financial position of the Company as of September 30, 2001   
and December 31, 2000, and the results of its operations, changes in            
stockholders' equity and cash flows for the three months and nine months ended  
September 30, 2001 and 2000. It is suggested that these consolidated condensed  
financial statements and management's discussion and analysis of financial      
condition and results of operations be read in conjunction with the financial   
statements and the notes thereto included in the Company's 2000 Annual Report on
Form 10-K and Quarterly Reports on Form 10-Q for the quarters ended March 31,   
2001 and June 30, 2001.                                                         

In the 2000 fourth quarter, the Company sold a portion of its ownership in      
Immunex Corporation (Immunex) common stock, which reduced the Company's         
ownership interest below 50%. As a result, the financial results of Immunex,    
which previously were consolidated in the financial results of the Company, were
deconsolidated and included in the financial results of the Company on an equity
basis retroactive to January 1, 2000. Accordingly, alliance revenue relating to 
co-promotion agreements between the Company and Immunex was included in         
pharmaceutical net revenue for both the 2001 and 2000 third quarters and first  
nine months. The 2000 third quarter and first nine months financial results were
restated to reflect the deconsolidation of Immunex, which had no effect on      
income from continuing operations.                                              

As of January 1, 2001, the Company early adopted new authoritative accounting   
guidance reflecting certain rebates and sales incentives (i.e., coupons and     
other rebate programs) as reductions of revenues instead of selling and         
marketing expenses. Financial information for all prior periods presented has   
been reclassified to comply with the income statement classification            
requirements of the new guidance.                                               

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                           AMERICAN HOME PRODUCTS CORPORATION AND SUBSIDIARIES                          
                                  CONSOLIDATED CONDENSED BALANCE SHEETS                                 
                                 (In Thousands Except Per Share Amounts)                                


                                                                   September 30,           December 31, 
                                                                       2001                    2000     
                                                                   -------------           ------------ 
                                                                                                        
ASSETS                                                                                                  
Cash and cash equivalents                                             $2,005,109             $2,644,306 
Marketable securities                                                  1,155,920                341,031 
Accounts receivable less allowances                                    2,740,985              2,740,272 
Inventories:                                                                                            
     Finished goods                                                      642,069                585,123 
     Work in progress                                                    701,044                586,656 
     Materials and supplies                                              457,679                359,948 
                                                                   -------------           ------------ 
                                                                       1,800,792              1,531,727 
Other current assets including deferred taxes                          2,210,498              2,923,475 
                                                                   -------------           ------------ 
     Total Current Assets                                              9,913,304             10,180,811 

Property, plant and equipment                                          8,409,821              7,578,233 
     Less accumulated depreciation                                     2,652,275              2,543,409 
                                                                   -------------           ------------ 
                                                                       5,757,546              5,034,824 
Goodwill and other intangibles, net of accumulated                                                      
     amortization                                                      3,907,764              4,052,410 
Other assets including deferred taxes                                  2,711,263              1,824,421 
                                                                   -------------           ------------ 
     Total Assets                                                    $22,289,877            $21,092,466 
                                                                   =============           ============ 

LIABILITIES                                                                                             
Loans payable                                                         $1,553,392                $58,717 
Trade accounts payable                                                   845,182                595,233 
Accrued expenses                                                       4,417,383              8,831,459 
Accrued federal and foreign taxes                                        159,083                256,650 
                                                                   -------------           ------------ 
     Total Current Liabilities                                         6,975,040              9,742,059 

Long-term debt                                                         7,667,007              2,394,790 
Other noncurrent liabilities                                           3,549,609              5,226,495 
Accrued postretirement benefit obligations other than pensions           933,848                911,029 

STOCKHOLDERS' EQUITY                                                                                    
$2.00 convertible preferred stock, par value $2.50 per share                  52                     55 
Common stock, par value $0.33-1/3 per share                              439,392                437,258 
Additional paid-in capital                                             4,138,964              3,952,457 
Accumulated deficit                                                     (650,122)              (899,118)
Accumulated other comprehensive loss                                    (763,913)              (672,559)
                                                                   -------------           ------------ 
     Total Stockholders' Equity                                        3,164,373              2,818,093 
                                                                   -------------           ------------ 
     Total Liabilities and Stockholders' Equity                      $22,289,877            $21,092,466 
                                                                   =============           ============ 

The accompanying notes are an integral part of these consolidated condensed financial statements.       

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                                   AMERICAN HOME PRODUCTS CORPORATION AND SUBSIDIARIES                                   
                                     CONSOLIDATED CONDENSED STATEMENTS OF OPERATIONS                                     
                                         (In Thousands Except Per Share Amounts)                                         


                                                                    Three Months                     Nine Months         
                                                                 Ended September 30,             Ended September 30,     
                                                              --------------------------     --------------------------- 
                                                                 2001            2000           2001             2000    
                                                              ----------      ----------     -----------      ---------- 
                                                                                                                         
Net Revenue                                                   $3,736,250      $3,503,605     $10,401,846      $9,725,672 
                                                              ----------      ----------     -----------      ---------- 
Cost of goods sold                                               879,922         845,259       2,469,566       2,398,293 
Selling, general and administrative expenses                   1,278,108       1,275,512       3,855,031       3,682,669 
Research and development expenses                                473,755         414,177       1,402,277       1,235,168 
Interest expense (income), net                                    40,472         (11,794)         93,965          91,080 
Other income, net                                                (83,281)        (37,853)       (179,145)       (111,316)
Litigation charge                                                950,000              -          950,000              -  
Termination fee                                                       -               -               -       (1,709,380)
                                                              ----------      ----------     -----------      ---------- 

Income from continuing operations before                                                                                 
  federal and foreign taxes                                      197,274       1,018,304       1,810,152       4,139,158 
Provision (benefit) for federal and foreign taxes                (54,798)        256,204         347,530       1,218,315 
                                                              ----------      ----------     -----------      ---------- 
Income from continuing operations                                252,072         762,100       1,462,622       2,920,843 
                                                              ----------      ----------     -----------      ---------- 

Discontinued Operations:                                                                                                 
  Income from operations of agricultural products                                                                        
    business (net of federal and foreign taxes of $57,289)            -               -               -          103,346 
  Loss on disposal of agricultural products business                                                                     
    (including federal and foreign tax charges of $855,248)           -               -               -       (1,572,993)
                                                              ----------      ----------     -----------      ---------- 

Loss from discontinued operations                                     -               -               -       (1,469,647)
                                                              ----------      ----------     -----------      ---------- 

Net Income                                                      $252,072        $762,100      $1,462,622      $1,451,196 
                                                              ==========      ==========     ===========      ========== 

Basic earnings per share from continuing operations                $0.19           $0.58           $1.11           $2.24 
Basic loss per share from discontinued operations                     -               -               -            (1.13)
                                                              ----------      ----------     -----------      ---------- 
Basic earnings per share                                           $0.19           $0.58           $1.11           $1.11 
                                                              ==========      ==========     ===========      ========== 

Diluted earnings per share from continuing operations              $0.19           $0.58           $1.10           $2.21 
Diluted loss per share from discontinued operations                   -               -               -            (1.11)
                                                              ----------      ----------     -----------      ---------- 
Diluted earnings per share                                         $0.19           $0.58           $1.10           $1.10 
                                                              ==========      ==========     ===========      ========== 

Dividends per share of common stock                                $0.23           $0.23           $0.69           $0.69 
                                                              ==========      ==========     ===========      ========== 

The accompanying notes are an integral part of these consolidated condensed financial statements.                        

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                                      AMERICAN HOME PRODUCTS CORPORATION AND SUBSIDIARIES                                    
                             CONSOLIDATED CONDENSED STATEMENTS OF CHANGES IN STOCKHOLDERS' EQUITY                            
                                            (In Thousands Except Per Share Amounts)                                          

Nine Months Ended September 30, 2001:                                                                                        
                                          $2.00                                                 Accumulated                  
                                       Convertible                Additional                       Other            Total    
                                        Preferred       Common     Paid-in      Accumulated    Comprehensive    Stockholders'
                                          Stock         Stock      Capital        Deficit          Loss             Equity   
                                       -----------    ---------   ----------    -----------    -------------    -------------
                                                                                                                             
Balance at January 1, 2001                    $55      $437,258   $3,952,457     ($899,118)       ($672,559)      $2,818,093 

Net income                                                                       1,462,622                         1,462,622 
Currency translation adjustments                                                                    (98,909)         (98,909)
Unrealized gains on derivative                                                                                               
     contracts                                                                                        2,700            2,700 
Unrealized gains on marketable                                                                                               
     securities                                                                                       4,855            4,855 
                                                                                                                ------------ 
     Comprehensive income                                                                                          1,371,268 
                                                                                                                ------------ 

Cash dividends declared(a)                                                      (1,210,741)                       (1,210,741)
Common stock issued for stock options                     2,022      165,504                                         167,526 
Conversion of preferred stock                                                                                                
     and other exchanges                       (3)          112       21,003        (2,885)                           18,227 
                                       ----------     ---------   ----------    ----------     ------------     ------------ 
Balance at September 30, 2001                 $52      $439,392   $4,138,964     ($650,122)       ($763,913)      $3,164,373 
                                       ==========     =========   ==========    ==========     ============     ============ 

Nine Months Ended September 30, 2000:                                                                                        
                                          $2.00                                                 Accumulated                  
                                       Convertible                Additional                       Other            Total    
                                        Preferred       Common     Paid-in       Retained      Comprehensive    Stockholders'
                                          Stock         Stock      Capital       Earnings          Loss             Equity   
                                       -----------    ---------   -----------   -----------    -------------    -------------
Balance at January 1, 2000                    $61     $434,639    $3,392,705    $3,000,827        ($613,485)      $6,214,747 

Net income                                                                       1,451,196                         1,451,196 
Currency translation adjustments                                                                    (76,413)         (76,413)
Unrealized gains on marketable                                                                                               
     securities                                                                                      13,519           13,519 
                                                                                                                ------------ 
     Comprehensive income                                                                                          1,388,302 
                                                                                                                ------------ 

Cash dividends declared(b)                                                      (1,200,723)                       (1,200,723)
Common stock acquired for treasury                      (2,472)      (16,316)     (374,289)                         (393,077)
Common stock issued for stock options                    3,610       298,624                                         302,234 
Conversion of preferred stock                                                                                                
     and other exchanges                       (5)         121        26,692        (5,179)                           21,629 
                                       ----------     --------    ----------    ----------     ------------      ----------- 
Balance at September 30, 2000                 $56     $435,898    $3,701,705    $2,871,832        ($676,379)      $6,333,112 
                                       ==========     ========    ==========    ==========     ============      =========== 

(a)  Includes the common stock cash dividend of $0.23 per share ($303,181 in the aggregate) declared on September 20, 2001   
     and payable on December 1, 2001.                                                                                        

(b)  Includes the common stock cash dividend of $0.23 per share ($303,874 in the aggregate) and preferred stock cash         
     dividend of $0.50 per share ($11 in the aggregate) declared on September 21, 2000 and payable on December 1, 2000.      

The accompanying notes are an integral part of these consolidated condensed financial statements.                            

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                           AMERICAN HOME PRODUCTS CORPORATION AND SUBSIDIARIES                         
                             CONSOLIDATED CONDENSED STATEMENTS OF CASH FLOWS                           
                                             (In Thousands)                                            

                                                                                   Nine Months         
                                                                               Ended September 30,     
                                                                           --------------------------- 
                                                                              2001             2000    
                                                                           ----------       ---------- 
Operating Activities                                                                                   
--------------------                                                                                   
                                                                                                       
Income from continuing operations                                          $1,462,622       $2,920,843 
Adjustments to reconcile income from continuing operations to net cash                                 
provided from (used for) operating activities of continuing operations:                                
   Litigation charge                                                          950,000               -  
   Gains on sales of assets                                                  (141,360)        (186,832)
   Depreciation and amortization                                              433,173          384,064 
   Deferred income taxes                                                       70,482          704,575 
   Changes in working capital, net                                           (559,322)          (5,834)
   Diet drug litigation payments                                           (6,886,646)      (2,242,816)
   Deconsolidation of Immunex                                                      -          (236,768)
   Other items, net                                                          (205,017)        (145,263)
                                                                           ----------       ---------- 
Net cash provided from (used for) continuing operations                    (4,876,068)       1,191,969 
Net cash provided from discontinued operations                                     -            82,196 
                                                                           ----------       ---------- 
Net cash provided from (used for) operating activities                     (4,876,068)       1,274,165 
                                                                           ----------       ---------- 

Investing Activities                                                                                   
--------------------                                                                                   
Purchases of property, plant and equipment                                 (1,274,654)        (890,567)
Proceeds from sale of the agricultural products business                           -         3,800,000 
Proceeds from sales of assets                                                 308,862          214,475 
Proceeds from sales and maturities of marketable securities                   195,300          320,292 
Purchases of marketable securities                                         (1,010,189)        (500,357)
                                                                           ----------       ---------- 
Net cash provided from (used for) investing activities                     (1,780,681)       2,943,843 
                                                                           ----------       ---------- 

Financing Activities                                                                                   
--------------------                                                                                   
Net proceeds from (repayments of) debt                                      6,770,322       (2,017,501)
Dividends paid                                                               (907,560)        (896,838)
Exercises of stock options                                                    167,526          302,234 
Purchases of common stock for treasury                                             -          (393,077)
                                                                           ----------       ---------- 
Net cash provided from (used for) financing activities                      6,030,288       (3,005,182)
                                                                           ----------       ---------- 
Effect of exchange rate changes on cash balances                              (12,736)         (24,391)
                                                                           ----------       ---------- 
Increase (decrease) in cash and cash equivalents                             (639,197)       1,188,435 
Cash and cash equivalents, beginning of period                              2,644,306        1,892,715 
                                                                           ----------       ---------- 
Cash and cash equivalents, end of period                                   $2,005,109       $3,081,150 
                                                                           ==========       ========== 

Supplemental Information                                                                               
------------------------                                                                               
Interest payments                                                            $269,756         $312,009 
Income tax payments, net of refunds                                           367,964          693,275 

The accompanying notes are an integral part of these consolidated condensed financial statements.      

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 AMERICAN HOME PRODUCTS CORPORATION AND SUBSIDIARIES

NOTES TO CONSOLIDATED CONDENSED FINANCIAL STATEMENTS

Note 1.   Credit Facilities and Term Debt Financing                             
-----------------------------------------                   

 In addition to the Company's existing $2,000.0 million credit
      facility, in March 2001 the Company obtained new credit facilities
  totaling $6,000.0 million. The new credit facilities include a
        $3,000.0 million, 364-day credit facility (which supports borrowings
        under the commercial paper program). Any borrowings under the credit
        facility that are outstanding upon its termination in March 2002 are
      extendible for an additional year. The portion of commercial paper
       outstanding at September 30, 2001 supported by the $3,000.0 million
      credit facility was classified as long-term debt since the Company
        intends, and has the ability, to refinance these obligations through
         the issuance of additional commercial paper or through the use of its
   $3,000.0 million credit facility as described above. The credit
 facility contains substantially identical financial and other
  covenants, representations, warranties, conditions and default
          provisions as the Company's existing $2,000.0 million credit facility,
        which terminates on July 31, 2002. Since the $2,000.0 million credit
facility terminates in less than one year, commercial paper 
    outstanding of $1,519.2 million, supported by this facility, was
         classified as current debt in Loans payable as of September 30, 2001.

       In addition, the new credit facilities included a $3,000.0 million,
   364-day bridge facility, which facility was terminated when the
          Company issued $3,000.0 million of Senior Notes (the "Notes") on March
     30, 2001. On March 30, 2001, the Company issued three tranches of
        Notes in a transaction exempt from registration under the Securities
          Act of 1933, as amended (the "Securities Act"), pursuant to Rule 144A,
as follows:                                                 

o   $500.0 million 5.875% Notes due March 15, 2004
 o   $1,000.0 million 6.25% Notes due March 15, 2006
 o   $1,500.0 million 6.70% Notes due March 15, 2011

  In connection with the Notes, the Company filed a Registration
     Statement on Form S-4 with the Securities and Exchange Commission
          (SEC) on April 27, 2001 in order to offer the holders of the Notes the
ability to exchange the outstanding Notes for new notes with
     substantially identical terms, but which are registered under the
     Securities Act. The Company's Registration Statement was declared
          effective by the SEC on May 8, 2001. As of June 15, 2001, the date the
          offer to exchange the Notes concluded, substantially all the Notes had
         been exchanged for the new notes registered under the Securities Act.

   Interest on the Notes is payable semi-annually, on March 15 and
September 15, and is subject to adjustment under certain    
       circumstances. The Company entered into two $750.0 million notional
        amount interest rate swaps (or "the swaps") relating to the $1,500.0
          million 6.70% Notes. The interest rate swaps are contracts under which
      the Company converted the fixed rate on the $1,500.0 million 6.70%
      Notes to a floating rate of interest (the LIBOR swap rate) for the
         term of the swap agreements, which is the same term as the underlying
      debt. The interest rate swaps function as fair value hedges of the
          risk of changes in the fair value of the Notes attributable to changes
in the benchmark interest rate (the LIBOR swap rate).       

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 AMERICAN HOME PRODUCTS CORPORATION AND SUBSIDIARIES

NOTES TO CONSOLIDATED CONDENSED FINANCIAL STATEMENTS

  Any proceeds from commercial paper supported by the new credit
        facilities and the proceeds from the issuance of the Notes are being
used for the Company's general corporate and working capital
      requirements, including payments related to the REDUX and PONDIMIN
diet drug litigation.                                       

Note 2.   Discontinued Operations                                               
-----------------------                                     

          On March 20, 2000, the Company signed a definitive agreement with BASF
        Aktiengesellschaft (BASF) to sell the agricultural products business
      which manufactures, distributes and sells crop protection and pest
        control products worldwide. On June 30, 2000, the sale was completed
          and BASF paid the Company $3,800.0 million in cash and assumed certain
         debt. As a result, the Company recorded an after-tax loss on the sale
       of this business of $1,573.0 million or $1.19 per share-diluted and
         reflected this business as a discontinued operation in the 2000 first
quarter.                                                    

Note 3.   Contingencies and Litigation Settlement                               
---------------------------------------                     

   The Company is involved in various legal proceedings, including
      product liability and environmental matters of a nature considered
    normal to its business. It is the Company's policy to accrue for
   amounts related to these legal matters if it is probable that a
      liability has been incurred and an amount is reasonably estimable.

        On August 16, 2001, the United States Court of Appeals for the Third
Circuit dismissed the appeal of the last remaining appellant
       challenging the District Court's approval of the REDUX and PONDIMIN
     diet drug litigation nationwide, class action settlement (or "the
    settlement"). Any petition to the United States Supreme Court to
     challenge the approval of the settlement must be filed by January
         2002. In the absence of, or following a denial of, any such petition,
the settlement would become final.                          

 In the 2001 third quarter, the Company recorded an additional
          litigation charge of $950.0 million ($615.0 million after-tax or $0.46
          per share-diluted) in connection with the REDUX and PONDIMIN diet drug
litigation. The charge covered the following:               

      o    additional anticipated funding requirements for the
                  nationwide, class action settlement and estimated costs to
                 resolve the claims of any members of the settlement class
                  who in the future may exercise an intermediate or back-end
opt out right;                          
         o    additional administrative and litigation expenses; and
          o    additional costs anticipated with the resolution of the
            claims of the remaining initial opt outs and primary
pulmonary hypertension claimants.       

       In the 2000 fourth quarter, the Company recorded a $7,500.0 million
    litigation charge for the diet drug litigation, and recorded the
       initial litigation charge of $4,750.0 million, net of insurance, in
the 1999 third quarter.                                     

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 AMERICAN HOME PRODUCTS CORPORATION AND SUBSIDIARIES

NOTES TO CONSOLIDATED CONDENSED FINANCIAL STATEMENTS

        During the 2001 first nine months, payments to the nationwide, class
       action settlement funds, individual settlement payments, legal fees
   and other costs totaling $6,886.6 million were paid and applied
      against the litigation accrual. As of September 30, 2001, $2,228.9
million of the litigation accrual remained.                 

    In the opinion of the Company, although the outcome of any legal
          proceedings cannot be predicted with certainty, the ultimate liability
         of the Company in connection with its legal proceedings will not have
     a material adverse effect on the Company's financial position but
       could be material to the results of operations or cash flows in any
one accounting period.                                      

Note 4.   Restructuring Program                                                 
---------------------                                       

In December 1998, the Company recorded a special charge for 
    restructuring and related asset impairments of $321.2 million to
        recognize costs of the reorganization of its worldwide supply chains
   and U.S. distribution systems, and the globalization of certain
   business units. The restructuring will ultimately result in the
     elimination of approximately 3,900 positions worldwide offset, in
         part, by 1,000 newly created positions in the same functions at other
       locations. At September 30, 2001, approximately 3,700 positions had
          been eliminated, and two distribution centers owned by the Company and
         a leased distribution center had been closed. The Company anticipates
         closing a total of 14 manufacturing plants; eight were closed in 2000
         and two were closed during the first nine months of 2001. The Company
   currently anticipates closing the remaining facilities in 2002,
assuming no further delays in regulatory approvals.         

The activity in the restructuring accruals was as follows:  

                                                                [Download Table]

                                              Personnel  Other Closure/         
(In thousands)                                  Costs      Exit Costs    Total  
--------------------------------------------  ---------  -------------- --------

                                                                                
Restructuring accruals at December 31, 2000     $6,249      $59,635     $65,884 
Cash expenditures                               (9,520)     (11,494)    (21,014)
Redistributions                                 14,000      (14,000)         -  
                                              ---------  -------------- --------
Restructuring accruals at September 30, 2001   $10,729      $34,141     $44,870 
                                              =========  ============== ========

   During the 2001 second quarter, the Company made redistribution
   adjustments between categories to increase accrual balances for
          personnel costs by $14.0 million and decrease other closure/exit costs
        by $14.0 million. These redistributions were necessary due to higher
      than expected enhanced pension benefits and outplacement costs for
          non-U.S. employees, updated forecasts of employees within the affected
     facilities, and lower than expected other closure/exit costs. The
     original scope of the restructuring program remains substantially
unchanged.                                                  

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 AMERICAN HOME PRODUCTS CORPORATION AND SUBSIDIARIES

NOTES TO CONSOLIDATED CONDENSED FINANCIAL STATEMENTS

Note 5.   Derivative Instruments and Foreign Currency Risk Management Programs  
        --------------------------------------------------------------------

     As of January 1, 2001, the Company adopted Statement of Financial
        Accounting Standards (SFAS) Nos. 133 and 138, which require that all
     derivative financial instruments be measured at fair value and be
         recognized as assets or liabilities on the balance sheet with changes
        in the fair value of the derivatives recognized in either net income
         (loss) or accumulated other comprehensive income (loss), depending on
         the designated purpose of the derivative. The impact on the Company's
     financial results, upon the adoption of these pronouncements, was
immaterial.                                                 

      On the date that the Company enters into a derivative contract, it
    designates the derivative as: (1) a hedge of the fair value of a
      recognized asset or liability (fair value hedge), (2) a hedge of a
          forecasted transaction or the variability of cash flows that are to be
       received or paid in connection with a recognized asset or liability
     (cash flow hedge), (3) a foreign currency fair value or cash flow
   hedge (foreign currency hedge) or (4) an instrument that is not
       designated for hedge accounting treatment. For derivative contracts
   that are designated and qualify as fair value hedges (including
     foreign currency fair value hedges), the derivative instrument is
       marked-to-market with gains and losses recognized in current period
        earnings to offset the respective losses and gains recognized on the
         underlying exposure. For derivative contracts that are designated and
     qualify as cash flow hedges (including foreign currency cash flow
         hedges), the effective portion of gains and losses on these contracts
         are reported as a component of accumulated other comprehensive income
       (loss) and reclassified into earnings in the same period the hedged
        transaction affects earnings. Any hedge ineffectiveness on cash flow
          hedges is immediately recognized in earnings. In certain circumstances
        the Company enters into derivative contracts that are not designated
      as hedging instruments. These derivative contracts are recorded at
 fair value with the gain or loss recognized in current period
      earnings. The Company does not hold any derivative instruments for
trading purposes.                                           

       The Company currently engages in two primary programs to manage its
        exposure to foreign currency risk, as well as interest rate swaps to
     manage its exposure to interest rate fluctuations. The derivative
  contracts outstanding as of September 30, 2001 are as follows:

         1. Short-term foreign exchange forward/currency swap contracts to
              manage foreign currency balance sheet exposures. These contracts
              do not have a hedging designation and are recorded at fair value
             with any gains or losses recognized in current period earnings.
       For the nine months ended September 30, 2001, the Company
               recorded a gain of $17.8 million in Other income, net relating to
              gains and losses on these foreign exchange forward/currency swap
            contracts. The $17.8 million consists of gains and losses from
             contracts settled during the 2001 first nine months, as well as
            contracts outstanding at September 30, 2001 that are marked to
fair value.                                       

          2.   Cash flow  hedging  program  to cover  currency  risk  related to
               intercompany  inventory sales  denominated in foreign  currencies
               through the purchase of primarily  foreign  currency put options.
               As of September 30, 2001,  $4.4 million ($2.7 million  after-tax)
               of gains  relating to the cash flow hedging  program was included
in Accumulated other                              

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 AMERICAN HOME PRODUCTS CORPORATION AND SUBSIDIARIES

NOTES TO CONSOLIDATED CONDENSED FINANCIAL STATEMENTS

               comprehensive loss with the corresponding asset recorded in Other
               current assets including deferred taxes. The gains in Accumulated
              other comprehensive loss will be reclassified into the statement
              of operations when the intercompany inventory is sold to a third
             party. As such, the Company anticipates recognizing these gains
            during the next six months. The Company also purchases foreign
              currency put options outside of the cash flow hedging program to
        protect additional intercompany inventory sales. These put
           options do not have a hedging designation and are recorded at
              fair value with all gains or losses recognized in current period
           earnings immediately. For the nine months ended September 30,
           2001, the Company has recorded gains of $0.6 million in Other
         income, net relating to these foreign currency put options.
             Option contracts outstanding as of September 30, 2001 expire no
later than March 25, 2002.                        

            3. Fair value interest rate swaps to manage interest rate exposures.
          The Company strives to achieve an acceptable balance between
               fixed- and floating-rate debt and has entered into effective fair
              value interest rate swaps on its $1,500.0 million 6.70% Notes to
               maintain that balance on total debt. The fair value interest rate
             swaps converted a portion of the Company's fixed-rate debt into
          floating-rate debt. Interest expense on the $1,500.0 million
              6.70% Notes is adjusted to include the payments made or received
            under the interest rate swap agreements. The fair value of the
       swaps relating to the $1,500.0 million 6.70% Notes, as of
            September 30, 2001, was an asset of $73.9 million and has been
        recorded in Other assets including deferred taxes with the
             corresponding adjustment recorded to the underlying 6.70% Notes
in Long-term debt.                                

       Refer to the "Quantitative and Qualitative Disclosures about Market
Risk" section on pages 24 and 25 for further discussion and 
    disclosures relating to the Company's derivative instruments and
foreign currency risk management programs.                  

Note 6.   Company Data by Operating Segment                                     
---------------------------------                           

        The Company has three reportable segments: Pharmaceuticals, Consumer
         Health Care and Corporate. The Company's Pharmaceuticals and Consumer
         Health Care reportable segments are strategic business units that are
    managed separately because they manufacture, distribute and sell
  distinct products and provide services which require different
technologies and marketing strategies.                      

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NOTES TO CONSOLIDATED CONDENSED FINANCIAL STATEMENTS

                                       Net Revenue (1)
                                       -----------------------------------------
                                      Three Months           Nine Months
          ($ in millions)              Ended September 30,   Ended September 30,
                                       -------------------   -------------------
        Operating Segment              2001       2000        2001      2000
          --------------------         --------   --------   ---------  --------
          Pharmaceuticals (2)          $3,110.1   $2,856.3    $8,683.4  $7,982.6
          Consumer Health Care            626.1      647.3     1,718.4   1,743.1
                                       --------   --------   ---------  --------

          Total                        $3,736.2   $3,503.6   $10,401.8  $9,725.7
                                       ========   ========   =========  ========

                                       Income from Continuing Operations
                                      Before Taxes (3)
                                       -----------------------------------------
                                     Three Months          Nine Months
          ($ in millions)              Ended September 30,   Ended September 30,
                                       -------------------   -------------------
        Operating Segment              2001       2000        2001      2000
          --------------------         --------   --------   ---------  --------
          Pharmaceuticals              $1,035.1     $862.6    $2,551.8  $2,155.6
          Consumer Health Care            182.5      198.3       418.6     425.7
                                       --------   --------   ---------  --------
                                        1,217.6    1,060.9     2,970.4   2,581.3
          Corporate (4)                (1,020.3)     (42.6)   (1,160.2)  1,557.9
                                       --------   --------   ---------  --------
          Total                          $197.3   $1,018.3    $1,810.2  $4,139.2
                                       ========   ========   =========  ========

        (1)  The Company early adopted new authoritative accounting guidance
        as of January 1, 2001 reflecting certain rebates and sales
     incentives (i.e., coupons and other rebate programs) as
               reductions of revenues instead of selling and marketing expenses.
            Financial information for all prior periods presented has been
             reclassified to comply with the income statement classification
              requirements of the new guidance. These reclassifications had no
               effect on net revenue growth rates between the periods presented.

     (2)  Effective January 1, 2000, the financial results of Immunex,
               which previously were consolidated in the results of the Company,
              were deconsolidated and included in the financial results of the
       Company on an equity basis. As a result, alliance revenue
         relating to co-promotion agreements between the Company and
              Immunex was included in pharmaceutical net revenue for both 2001
    and 2000. The 2000 third quarter and first nine months
    pharmaceutical net revenue was restated to reflect the
deconsolidation.                                  

          (3)  The third quarter results included goodwill amortization for 2001
         and 2000 as follows: Pharmaceuticals - $34.3 and $36.5, and
 Consumer Health Care - $5.9 and $8.0, respectively.

              The first nine months results included goodwill amortization for
            2001 and 2000 as follows: Pharmaceuticals - $103.0 and $112.1,
       and Consumer Health Care - $17.8 and $24.0, respectively.

     (4)  Corporate expenses for the 2001 third quarter and first nine
       months included an additional litigation charge of $950.0
              relating to the litigation brought against the Company regarding
             the use of the diet drugs REDUX or PONDIMIN. The charge related
to the Pharmaceuticals operating segment.         

               Corporate expenses for the 2000 first nine months included income
              of $1,709.4 resulting from the receipt of a $1,800.0 termination
             fee provided for under the merger agreement with Warner-Lambert
   Company offset, in part, by certain related expenses.

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NOTES TO CONSOLIDATED CONDENSED FINANCIAL STATEMENTS

Note 7.   Earnings per Share                                                    
------------------                                          

         The following table sets forth the computations of basic earnings per
share and diluted earnings per share:                       

                                                        [Enlarge/Download Table]

                                                                 Three Months               Nine Months       
                                                              Ended September 30,       Ended September 30,   
                                                            -----------------------  ------------------------ 
(In thousands except per share amounts)                       2001          2000        2001          2000    
----------------------------------------------------------  ---------     ---------  ----------    ---------- 
                                                                                                              

Income from continuing operations less preferred dividends   $252,072      $762,088  $1,462,590    $2,920,808 
Loss from discontinued operations                                 -             -           -      (1,469,647)
                                                            ---------     ---------  ----------    ---------- 
Net income less preferred dividends                          $252,072      $762,088  $1,462,590    $1,451,161 
Denominator:                                                                                                  
  Average number of common shares outstanding               1,318,359     1,305,478   1,316,091     1,304,915 
                                                            ---------     ---------  ----------    ---------- 

Basic earnings per share from continuing operations             $0.19         $0.58       $1.11         $2.24 
Basic loss per share from discontinued operations                 -             -           -           (1.13)
                                                            ---------     ---------  ----------    ---------- 
Basic earnings per share                                        $0.19         $0.58       $1.11         $1.11 
                                                            =========     =========  ==========    ========== 

Income from continuing operations                            $252,072      $762,100  $1,462,622    $2,920,843 
Loss from discontinued operations                                 -             -           -      (1,469,647)
                                                            ---------     ---------  ----------    ---------- 
Net income                                                   $252,072      $762,100  $1,462,622    $1,451,196 
Denominator:                                                                                                  
  Average number of common shares outstanding               1,318,359     1,305,478   1,316,091     1,304,915 
  Common share equivalents of outstanding stock                                                               
    options and deferred contingent common stock awards        13,183        15,523      14,010        15,786 
                                                            ---------     ---------  ----------    ---------- 
Total shares                                                1,331,542     1,321,001   1,330,101     1,320,701 
                                                            =========     =========  ==========    ========== 

Diluted earnings per share from continuing operations           $0.19         $0.58       $1.10         $2.21 
Diluted loss per share from discontinued operations               -             -           -           (1.11)
                                                            ---------     ---------  ----------    ---------- 
Diluted earnings per share                                      $0.19         $0.58       $1.10         $1.10 
                                                            =========     =========  ==========    ========== 

Note 8.   Accumulated Other Comprehensive Loss                                  
------------------------------------                        

       Accumulated other comprehensive loss consists of changes in foreign
    currency translation adjustments, unrealized gains on derivative
 contracts, and unrealized gains on marketable securities. The
    following table sets forth the changes in each component and the
         applicable tax effect, if any. Reclassification adjustments represent
   items that are included in net income in the current period but
     previously were reported in Accumulated other comprehensive loss.

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NOTES TO CONSOLIDATED CONDENSED FINANCIAL STATEMENTS

                                                        [Enlarge/Download Table]

                                                      Nine Months Ended September 30, 2001
                                                      ------------------------------------
(In thousands)                                          Pre-tax       Tax       After Tax 
----------------------------------------------------   ---------    -------     --------- 
                                                                                          

Foreign currency translation adjustments               ($98,909)        -        ($98,909)
                                                       --------     -------     --------- 
Unrealized gains on derivative contracts:                                                 
  Unrealized holding gains arising during the period     24,287       8,682        15,605 
  Less: reclassification adjustments for gains                                            
    realized in net income                               19,854       6,949        12,905 
                                                       --------     -------     --------- 
  Net unrealized gains on derivative contracts            4,433       1,733         2,700 

Unrealized gains on marketable securities                 4,855         -           4,855 
                                                       --------     -------     --------- 
Other comprehensive loss                               ($89,621)     $1,733      ($91,354)
                                                       ========     =======     ========= 

        Foreign currency translation adjustments are not recorded net-of-tax
because such adjustments relate to permanent investments in 
international subsidiaries.                                 

Note 9.   Recently Issued Accounting Standards                                  
------------------------------------                        

 In July 2001, the Financial Accounting Standards Board issued
        Statement Nos. 141 and 142. The new standards require the following:

        o    SFAS No. 141, Business Combinations, requires that all business
               combinations initiated after June 30, 2001 be accounted for using
            the purchase method; the pooling method of accounting has been
             eliminated. SFAS No. 141 supersedes Accounting Principles Board
              (APB) Opinion No. 16, Business Combinations, but does not change
               many of the provisions of APB Opinion No. 16, including the basic
principles of the purchase method.                

     o    SFAS No. 142, Goodwill and Other Intangibles, supersedes APB
             Opinion No. 17, Intangible Assets, and addresses how intangible
            assets that are acquired individually or with a group of other
               assets should be accounted for in financial statements upon their
              acquisition. The statement also addresses how goodwill and other
      intangibles should be accounted for after they have been
        initially recognized in the financial statements. With the
            adoption of SFAS No. 142, goodwill is no longer amortized over
             its estimated useful life, but is subject to at least an annual
            assessment for impairment by applying a fair-value-based test.
        The Company will adopt SFAS No. 142 as of January 1, 2002.

     In accordance with the adoption of SFAS No. 142, as of January 1,
2002, the Company will cease amortizing goodwill and other  
     intangibles, which will result in estimated lower annual Selling,
       general and administrative expenses of approximately $161.0 million
         ($153.0 million after-tax or $0.12 per share-diluted). The Company is
 currently assessing the impact the adoption of the additional
    requirements of SFAS No. 142 may have on its financial position,
results of operations and cash flows.                       

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 AMERICAN HOME PRODUCTS CORPORATION AND SUBSIDIARIES

NOTES TO CONSOLIDATED CONDENSED FINANCIAL STATEMENTS

  In April 2001, the Emerging Issues Task Force (EITF) reached a
          consensus on Issue No. 00-25, Vendor Income Statement Characterization
          of Consideration Paid to a Reseller of the Vendor's Products. EITF No.
 00-25 requires the cost of certain vendor consideration to be
         classified as a reduction of revenue rather than a marketing expense.
         The Company will adopt the provisions of EITF No. 00-25 as of January
1, 2002. The adoption of EITF No. 00-25 will result in      
         reclassifications of certain marketing expenses to revenues, and will
     have no effect on net income. The Company does not anticipate the
         adoption of this consensus to significantly affect the growth rate of
net revenues.                                               

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 Management's Discussion and Analysis of Financial Condition
 and Results of Operations
 Three Months and Nine Months Ended September 30, 2001

Results of Operations                                                           
---------------------                                                           

Effective January 1, 2000, the financial results of Immunex, which previously   
were consolidated in the financial results of the Company, were deconsolidated  
and included in the financial results of the Company on an equity basis.        
Accordingly, alliance revenue relating to co-promotion agreements between the   
Company and Immunex was included in pharmaceutical net revenue for both the 2001
and 2000 third quarter and first nine months. The 2000 third quarter and first  
nine months financial results were restated to reflect the deconsolidation of   
Immunex, which had no effect on income from continuing operations. In addition, 
the Company early adopted new authoritative accounting guidance as of January 1,
2001 reflecting certain rebates and sales incentives (i.e., coupons and other   
rebate programs) as reductions of revenues instead of selling and marketing     
expenses. Financial information for all prior periods presented has been        
reclassified to comply with the income statement classification requirements of 
the new guidance. These reclassifications had no effect on net revenue growth   
rates between the periods presented.                                            

Worldwide net revenue for the 2001 third quarter and first nine months were both
7% higher compared with prior year levels. The increase in worldwide net revenue
for the 2001 third quarter and first nine months was due primarily to higher    
U.S. sales of human pharmaceuticals. Excluding the negative impact of foreign   
exchange, worldwide net revenue increased 9% for the 2001 third quarter and 10% 
for the 2001 first nine months.                                                 

The following table sets forth worldwide net revenue results by operating       
segment together with the percentage changes from the comparable period in the  
prior year:                                                                     

Net Revenue 
 -------------------------
Three Months
($ in millions)                Ended September 30,                              
                       -------------------------           % Increase/
Operating Segment              2001            2000              (Decrease)     
--------------------        ---------        --------            ----------     
Pharmaceuticals              $3,110.1        $2,856.3                9%         
Consumer Health Care            626.1           647.3               (3%)        
                       ---------        --------            ----------
Total                        $3,736.2        $3,503.6                7%         
                       =========        ========            ==========

Net Revenue 
 -------------------------
Nine Months 
($ in millions)                Ended September 30,                              
                       -------------------------           % Increase/
Operating Segment             2001             2000              (Decrease)     
--------------------        ---------        --------            ----------     
Pharmaceuticals              $8,683.4        $7,982.6                9%         
Consumer Health Care          1,718.4         1,743.1               (1%)        
                       ---------        --------            ----------
Total                       $10,401.8        $9,725.7                7%         
                       =========        ========            ==========

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 Management's Discussion and Analysis of Financial Condition
 and Results of Operations
 Three Months and Nine Months Ended September 30, 2001

Pharmaceuticals                                                                 
---------------                                                                 

Worldwide pharmaceutical net revenue increased 9% for both the 2001 third       
quarter and first nine months due primarily to higher sales of U.S. human       
pharmaceuticals. Excluding the negative impact of foreign exchange, worldwide   
pharmaceutical net revenue increased 11% for the 2001 third quarter and 12% for 
the 2001 first nine months.                                                     

Worldwide human pharmaceutical net revenue increased 9% for both the 2001 third 
quarter and first nine months due primarily to higher sales of PROTONIX (oral   
and intravenous formulas introduced in the second quarter of 2000 and 2001,     
respectively), PREVNAR (introduced in the 2000 first quarter), EFFEXOR XR,      
CORDARONE and alliance revenue offset, in part, by lower sales of MENINGITEC,   
ZIAC (due to generic competition) and generic products (discontinuance of       
certain oral generics). Additionally, sales of PREMARIN products contributed to 
the growth for the 2001 first nine months, but decreased during the 2001 third  
quarter due primarily to timing of sales promotions. Sales of MENINGITEC, the   
Company's meningococcal meningitis vaccine, decreased as compared to the prior  
year, since it was used in 2000 to vaccinate nearly all children and adolescents
in the United Kingdom. The product is currently being launched in ten other     
European countries; however, the Company does not currently anticipate that any 
of these markets, individually, will provide sales volume equivalent to that    
generated in the United Kingdom. Excluding the negative impact of foreign       
exchange, worldwide human pharmaceutical net revenue increased 11% for the 2001 
third quarter and 12% for the 2001 first nine months.                           

Worldwide animal health product net revenue increased 12% for the 2001 third    
quarter and decreased 1% for the 2001 first nine months. The increase in the    
2001 third quarter was due primarily to the domestic launch, in June 2001, of   
ProHeart 6, a new single dose, canine heartworm preventative product that       
provides six months of continuous heartworm protection. For the 2001 first nine 
months, the decline in animal health product net revenue was due primarily to a 
general weakening in the livestock markets globally and continuing concerns     
about foot-and-mouth and mad-cow disease.                                       

Consumer Health Care                                                            
--------------------                                                            

Worldwide consumer health care net revenue decreased 3% for the 2001 third      
quarter and 1% for the 2001 first nine months due primarily to the impact of two
international non-core product divestitures which occurred earlier this year, as
well as lower sales of FLEXAGEN, ADVIL and DIMETAPP offset, in part, by         
increased sales of ROBITUSSIN, CHAP STICK and CENTRUM products. Excluding the   
negative impact of foreign exchange, worldwide consumer health care net revenue 
decreased 2% for the 2001 third quarter and increased 1% for the 2001 first nine
months.                                                                         

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 Management's Discussion and Analysis of Financial Condition
 and Results of Operations
 Three Months and Nine Months Ended September 30, 2001

The following table sets forth, the percentage changes in worldwide net revenue 
by operating segment compared to the prior year, including the effect volume,   
price and foreign exchange had on these percentage changes:                     

                                                        [Enlarge/Download Table]

                              % Increase (Decrease)                         % Increase (Decrease)           
                        Three Months Ended September 30, 2001        Nine Months Ended September 30, 2001   
                      ------------------------------------------  ------------------------------------------
                                          Foreign       Total                         Foreign       Total   
                      Volume    Price    Exchange    Net Revenue  Volume    Price    Exchange    Net Revenue
                      ------    -----    --------    -----------  ------    -----    --------    -----------
Pharmaceuticals                                                                                             
--------------------                                                                                        
                                                                                                            
United States           9%         4%         -             13%     12%        4%         -             16% 
International           8%         -         (6%)            2%      5%        -         (7%)           (2%)
                       ---        ---        ---            ---     ---       ---        ---            --- 
Total                   8%         3%        (2%)            9%      9%        3%        (3%)            9% 
                       ===        ===        ===            ===     ===       ===        ===            === 

Consumer Health Care                                                                                        
--------------------                                                                                        
United States          (4%)        1%         -             (3%)    (1%)       2%         -              1% 
International          (3%)        5%        (5%)           (3%)    (3%)       4%        (7%)           (6%)
                       ---        ---        ---            ---     ---       ---        ---            --- 
Total                  (4%)        2%        (1%)           (3%)    (2%)       3%        (2%)           (1%)
                       ===        ===        ===            ===     ===       ===        ===            === 

Total                                                                                                       
--------------------                                                                                        
United States           6%         4%         -             10%      9%        4%         -             13% 
International           7%         -         (6%)            1%      4%        1%        (8%)           (3%)
                       ---        ---        ---            ---     ---       ---        ---            --- 
Total                   6%         3%        (2%)            7%      7%        3%        (3%)            7% 
                       ===        ===        ===            ===     ===       ===        ===            === 


Cost of goods sold, as a percentage of Net revenue, decreased to 23.6% for the  
2001 third quarter compared to 24.1% for the 2000 third quarter and decreased to
23.7% for the 2001 first nine months compared to 24.7% for the 2000 first nine  
months. These decreases were due primarily to a favorable product mix in the    
pharmaceuticals segment, as well as the effect of increased alliance revenue    
earned in 2001 compared to 2000. There are no costs of goods sold relating to   
alliance revenue and, therefore, any net revenue fluctuations impacted by       
alliance revenue will also impact gross profit.                                 

Selling, general and administrative expenses decreased to 34.2%, as a percentage
of Net revenue, for the 2001 third quarter compared to 36.4% for the 2000 third 
quarter. For the 2001 first nine months, Selling, general and administrative    
expenses, as a percentage of Net revenue, decreased to 37.1% compared to 37.9%  
for the 2000 first nine months. The lower ratio of selling, general and         
administrative expenses resulted from non-recurring launch expenses, primarily  
selling and marketing, related to pharmaceutical product launches in 2000 and   
lower co-promotion expenses relating to ZIAC, due primarily to reduced sales as 
a result of generic competition.                                                

Research and development expenses increased 14% for the 2001 third quarter      
and first nine months due primarily to increased  headcount  and other  research
operating  expenses,  including  higher chemical and material costs, and ongoing
clinical  trials  offset,  in part, by lower costs  resulting from the timing of
payments pursuant to certain pharmaceutical collaborations and lower payments   
under licensing agreements.                                                     

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 Management's Discussion and Analysis of Financial Condition
 and Results of Operations
 Three Months and Nine Months Ended September 30, 2001

The Company had Interest expense, net of $40.5 million for the 2001 third       
quarter compared to Interest income, net of $11.8 million in the 2000 third     
quarter. Interest expense, net increased 3% for the 2001 first nine months. The 
increase in Interest expense, net was due primarily to higher weighted average  
debt outstanding for both the 2001 third quarter and first nine months compared 
with the same periods in the prior year. Weighted average debt outstanding      
during the 2001 and 2000 third quarters was $8,466.0 million and $2,803.2       
million, respectively. Weighted average debt outstanding during the 2001 and    
2000 first nine months was $6,646.0 million and $4,186.4 million, respectively. 
The higher total interest expense resulting from the increased weighted average 
debt outstanding was favorably impacted by higher capitalized interest,         
resulting from additional capital projects, recognized during the 2001 third    
quarter and first nine months compared with the same periods in the prior year, 
as well as lower interest rates on the debt outstanding, primarily commercial   
paper.                                                                          

Other income, net, increased for the 2001 third quarter and first nine months   
due primarily to lower non-recurring charges, including costs incurred in the   
2000 third quarter associated with a consent decree entered into with the U.S.  
Food and Drug Administration (FDA), as well as higher equity income relating to 
the Company's equity investment in Immunex offset, in part, by lower gains on   
the sales of non-strategic assets. Additionally, contributing to increased Other
income, net, for the 2001 first nine months were lower non-recurring charges,   
including payments for access to various pharmaceutical collaborations and costs
related to a product discontinuation in 2000 offset, in part, by an one-time    
insurance recovery of environmental costs in 2000.                              

During the 2001 third quarter, the Company recorded an additional litigation    
charge of $950.0 million ($615.0 million after-tax or $0.46 per share-diluted)  
in connection with the REDUX and PONDIMIN diet drug litigation (see Note 3 to   
the Consolidated Condensed Financial Statements).                               

The following table sets forth worldwide income from continuing operations      
before taxes by operating segment together with the percentage changes from the 
comparable periods in the prior year:                                           

                                                        [Enlarge/Download Table]

                                              Income from Continuing Operations                         
                                                       Before Taxes (1)                                 
                      ----------------------------------------------------------------------------------
                                   Three Months                                Nine Months              
                                Ended September 30,                         Ended September 30,         
                      ---------------------------------------     --------------------------------------
($ in millions)                                    % Increase                                 % Increase
Operating Segment       2001          2000         (Decrease)       2001          2000        (Decrease)
--------------------  --------      --------       ----------     --------      --------      ----------
                                                                                                        
Pharmaceuticals       $1,035.1        $862.6           20%        $2,551.8      $2,155.6          18%   
Consumer Health Care     182.5         198.3           (8%)          418.6         425.7          (2%)  
                      --------      --------          ----        --------      --------         ----   
                       1,217.6       1,060.9           15%         2,970.4       2,581.3          15%   

Corporate (2)         (1,020.3)        (42.6)           -         (1,160.2)      1,557.9           -    
                      --------      --------          ----        --------      --------         ----   

Total (3)               $197.3      $1,018.3          (81%)       $1,810.2      $4,139.2         (56%)  
                      ========      ========          ====        ========      ========         ====   

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 Management's Discussion and Analysis of Financial Condition
 and Results of Operations
 Three Months and Nine Months Ended September 30, 2001

(1)  The third quarter results included goodwill amortization for 2001 and 2000 
   as follows: Pharmaceuticals - $34.3 and $36.5, and Consumer Health Care -
$5.9 and $8.0, respectively.                                          

   The first nine months results included goodwill amortization for 2001 and
   2000 as follows: Pharmaceuticals - $103.0 and $112.1, and Consumer Health
Care - $17.8 and $24.0, respectively.                                 

(2)  Corporate expenses for the 2001 third quarter and first nine months        
included an additional litigation charge of $950.0 relating to the    
    litigation brought against the Company regarding the use of the diet drugs
REDUX or PONDIMIN. The charge related to the Pharmaceuticals operating
segment.                                                              

Corporate expenses for the 2000 first nine months included income of  
    $1,709.4 resulting from the receipt of a $1,800.0 termination fee provided
     for under the merger agreement with Warner-Lambert Company offset, in part,
by certain related expenses.                                          

    Excluding the additional litigation charge from the 2001 third quarter and
    first nine months results and the termination fee from the 2000 first nine
    months results, Corporate expenses, net increased 65% and 39% for the 2001
third quarter and first nine months, respectively.                    

(3)  Excluding the additional litigation charge from the 2001 third quarter and 
    first nine months results and the termination fee from the 2000 first nine
months results, total income from continuing operations before taxes  
 increased 13% and 14% for the 2001 third quarter and first nine months,
respectively.                                                         

During the 2001 third quarter and first nine months the Company experienced a   
higher growth rate of worldwide pharmaceutical income from continuing operations
before taxes (20% and 18%, respectively) than the growth rate of net revenue (9%
for both periods) due primarily to improved margins relating to the human       
pharmaceutical product mix, lower selling, general and administrative expenses, 
as a percentage of net revenue, higher equity income relating to Immunex and    
2000 other expenses that were non-recurring in 2001, including the consent      
decree discussed earlier offset, in part, by lower gains on the sales of        
non-strategic assets.                                                           

Worldwide consumer health care income from continuing operations before taxes   
decreased 8% for the 2001 third quarter and 2% for the 2001 first nine months.  
The 2001 third quarter and first nine months decrease was due primarily to lower
worldwide consumer health care sales.                                           

Corporate expenses, net, excluding the additional litigation charge, increased  
65% for the 2001 third quarter due primarily to increased interest expense      
offset, in part, by lower general and administrative expenses. Corporate        
expenses, net, excluding the additional litigation charge and Warner-Lambert    
Company termination fee, increased 39% for the 2001 first nine months due       
primarily to lower other income, net relating to a one-time insurance recovery  
of environmental costs received in the 2000 first quarter offset, in part, by   
lower general and administrative expenses in the 2001 first nine months.        

Excluding the additional litigation charge taken in the 2001 third quarter, the 
effective tax rate for continuing operations decreased to 24.4% for the 2001    
third quarter compared with 25.2% for the 2000 third quarter. The effective tax 
rate decreased to 24.7% for the 2001 first nine months compared to 25.5% for the
2000 first nine months (excluding the effect of the 2001 third quarter          
additional litigation charge and 2000 Warner-Lambert Company termination fee).  
The tax rate reduction occurring in the 2001 third quarter and first nine months
was due primarily to an increased benefit from manufacturing in lower taxed     
jurisdictions.                                                                  

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 Management's Discussion and Analysis of Financial Condition
 and Results of Operations
 Three Months and Nine Months Ended September 30, 2001

Consolidated Income and Diluted Earnings Per Share Results                      
----------------------------------------------------------                      

Income and diluted earnings per share from continuing operations for the 2001   
third quarter were $252.1 million and $0.19, respectively. These amounts        
included a charge of $950.0 million ($615.0 million after-tax or $0.46 per      
share-diluted) in connection with the REDUX and PONDIMIN diet drug litigation.  
Excluding the litigation charge, income and diluted earnings per share from     
continuing operations for the 2001 third quarter were $867.1 million and $0.65, 
respectively, compared to $762.1 million and $0.58 in the prior year,           
representing increases of 14% and 12%, respectively. The increases in income and
diluted earnings per share from continuing operations for the 2001 third quarter
were due primarily to additional U.S. sales of human pharmaceuticals, improved  
margins from favorable product mix and higher other income, net offset, in part,
by higher research and development expenses and interest expense.               

Income and diluted earnings per share from continuing operations for the 2001   
first nine months increased 15% and 14%, respectively, to $2,077.6 million and  
$1.56 compared to $1,809.7 million and $1.37, respectively, for the same period 
last year (excluding the 2001 third quarter litigation charge and 2000          
Warner-Lambert Company termination fee received in the 2000 first quarter).     
Income and diluted earnings per share from continuing operations for the 2000   
first nine months included income of $1,111.1 million and $0.84, respectively,  
resulting from the Warner-Lambert Company termination fee. The increases in     
income and diluted earnings per share from continuing operations for the 2001   
first nine months were due primarily to additional U.S. sales of human          
pharmaceuticals, improved margins from favorable product mix and higher other   
income, net offset, in part, by higher selling, general and administrative      
expenses, and research and development expenses.                                

Euro Currency                                                                   
-------------                                                                   

As of January 1, 2001, 12 of the 15 member countries of the European Union      
adopted the Euro as a new common legal currency. However, the legacy currencies 
of the member countries are scheduled to remain legal tender as                 
sub-denominations of the Euro until January 1, 2002 (the transition period).    
Critical areas impacted by the conversion to the Euro have been identified and  
appropriate strategies developed, which are currently being implemented to      
facilitate the adoption of the Euro and to facilitate business transactions     
during the transition period. The costs related to the Euro conversion and      
transition period will not have a material adverse effect on the Company's      
financial position, results of operations or cash flows. However, the conversion
to the Euro may have competitive implications on the Company's pricing and      
marketing strategies, the total impact of which is not known at this time.      

Competition and Manufacturing                                                   
-----------------------------                                                   

The Company operates in the highly competitive pharmaceutical and consumer      
health care industries. The Company is not dependent on any one patent-protected
product or line of products for a substantial portion of its net revenue or     

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 Management's Discussion and Analysis of Financial Condition
 and Results of Operations
 Three Months and Nine Months Ended September 30, 2001

results of operations. PREMARIN, the Company's principal conjugated estrogens   
product manufactured from pregnant mare's urine, and related products PREMPRO   
and PREMPHASE (which are single tablet combinations of the conjugated estrogens 
in PREMARIN and the progestin medroxyprogesterone acetate), are the leaders in  
their categories and contribute significantly to net revenue and results of     
operations. PREMARIN's natural composition is not subject to patent protection  
(although PREMPRO has patent protection). The principal uses of PREMARIN,       
PREMPRO and PREMPHASE are to manage the symptoms of menopause and to prevent    
osteoporosis, a condition involving a loss of bone mass in postmenopausal women.
Estrogen-containing products manufactured by other companies have been marketed 
for many years for the treatment of menopausal symptoms, and several of these   
products also have an approved indication for the prevention of osteoporosis.   
During the past several years, other manufacturers have introduced products for 
the treatment and/or prevention of osteoporosis. New products containing        
different estrogens than those found in PREMPRO and PREMPHASE and having many   
forms of the same indications have also been introduced. Some companies have    
attempted to obtain approval for generic versions of PREMARIN. These products,  
if approved, would be routinely substitutable for PREMARIN and related products 
under many state laws and third-party insurance payer plans. In May 1997, the   
FDA announced that it would not approve certain synthetic estrogen products as  
generic equivalents of PREMARIN given known compositional differences between   
the active ingredient of these products and PREMARIN. Although the FDA has not  
approved any generic equivalent to PREMARIN to date, PREMARIN will continue to  
be subject to competition from existing and new competing estrogen and other    
products for its approved indications and may be subject to generic competition 
from either synthetic or natural conjugated estrogens products in the future. At
least one other company has announced that it is in the process of developing a 
generic version of PREMARIN from the same natural source, and the Company       
currently cannot predict the timing or outcome of these or any other efforts.   

The Company has been experiencing inconsistent results on dissolution testing of
certain dosage forms of PREMARIN and is working with the FDA to resolve this    
issue. Until this issue is resolved, supply shortages of one or more dosage     
strengths may occur. Although these shortages may adversely affect PREMARIN     
sales in one or more accounting periods, the Company believes that, as a result 
of current adequate inventory levels and the Company's enhanced process         
controls, testing protocols and ongoing formulation improvement project, overall
PREMARIN family sales will not be significantly impacted.                       

Liquidity, Financial Condition and Capital Resources                            
----------------------------------------------------                            

The Company used net cash for operating activities totaling $4,876.1 million    
during the 2001 first nine months. Driving the cash outflows were payments of   
$6,886.6 million relating to the diet drug litigation (see Note 3 to the        
Consolidated Condensed Financial Statements) and an increase in inventories of  
$308.3 million due primarily to production planning. These outflows more than   
offset earnings generated during the period.                                    

The Company used $2,284.8 million of cash for investments in property, plant and
equipment and marketable securities. The capital expenditures made during the   

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 Management's Discussion and Analysis of Financial Condition
 and Results of Operations
 Three Months and Nine Months Ended September 30, 2001

2001 first nine months were consistent with the Company's commitment to expand  
existing manufacturing and research and development facilities worldwide, and   
build new biotechnology facilities. The Company received investment proceeds    
through the sales and maturities of marketable securities and the sales of      
non-strategic assets totaling $504.2 million.                                   

As described in Note 1 to the Consolidated Condensed Financial Statements, the  
Company obtained additional financing totaling $6,000.0 million in March 2001.  
The new financing included a $3,000.0 million, 364-day credit facility (which   
supports borrowings under the commercial paper program). Any borrowings under   
the credit facility that are outstanding upon its termination in 2002 are       
extendible for an additional year. In addition, the Company issued three        
tranches of Notes in a transaction exempt from registration under the Securities
Act, pursuant to Rule 144A, as follows:                                         

o   $500.0 million 5.875% Notes due March 15, 2004                    
o   $1,000.0 million 6.25% Notes due March 15, 2006                   
o   $1,500.0 million 6.70% Notes due March 15, 2011                   

The interest rate payable on each series of Notes is subject to an increase of  
.25 percentage points per level of downgrade in the Company's credit rating by
Moody's or Standard & Poor's. However, the total adjustment to the interest rate
for the series of Notes cannot exceed two percentage points. There is no        
adjustment to the interest rate payable on each series of Notes for the first   
single level downgrade in the Company's credit rating by Standard & Poor's. In  
the case of the $1,500.0 million 6.70% Notes, the interest rate in effect on    
March 15, 2006 for such Notes will, thereafter, become the effective interest   
rate until maturity on March 15, 2011. The Company would incur a total of       
approximately $7.5 million of additional annual interest expense for every .25  
percentage point increase in the interest rate. If Moody's or Standard & Poor's 
subsequently increase the Company's credit rating, the interest rate payable on 
each series of Notes is subject to a decrease of .25 percentage points for each 
level of credit rating increase. The interest rate payable for the series of    
Notes cannot be reduced below the original coupon rate of each series of Notes. 

The $3,000.0 million, 364-day facility is combined with the Company's existing  
$2,000.0 million five-year credit facility (termination date of July 31, 2002)  
to provide $5,000.0 million of credit facilities to support the Company's       
commercial paper program. The Company offers its commercial paper in a very     
liquid market commensurate with its short term credit ratings from Moody's (P2) 
and Standard & Poor's (A1). The net proceeds received from the combined Notes   
and commercial paper supported by the credit facilities totaled $6,770.3        
million. The Company is using the proceeds from the Notes and commercial paper  
supported by the credit facilities for general corporate and working capital    
requirements, including the capital expenditures identified above, and payments 
related to the REDUX and PONDIMIN diet drug litigation.                         

The Company also used cash for financing activities related to dividend payments
of $907.6 million, which was partially offset by $167.5 million of cash provided
by stock option exercises.                                                      

Management remains confident that cash flows from operating activities and      
available financing resources will be adequate to fund the Company's operations,

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 Management's Discussion and Analysis of Financial Condition
 and Results of Operations
 Three Months and Nine Months Ended September 30, 2001

pay opt out settlement payments and fund the nationwide, class action settlement
relating to the REDUX and PONDIMIN diet drug litigation, pay dividends, maintain
the ongoing programs of capital expenditures, and repay both the principal and  
interest on its outstanding obligations, without requiring the disposition of   
any significant strategic core assets or businesses.                            

Quantitative and Qualitative Disclosures about Market Risk                      
----------------------------------------------------------                      

The market risk disclosures appearing in the Company's 2000 Annual Report on    
Form 10-K have not materially changed from December 31, 2000 except as follows: 

     o    In conjunction with the Notes issued by the Company on March 30, 2001,
         the Company entered into interest rate swap agreements related to the
$1,500.0 million 6.70% Notes due March 15, 2011.            
o    The interest rate swap agreements are contracts under which the  
        Company converted the fixed rate of the $1,500.0 million 6.70% Notes
          to a floating rate of interest over the term of the interest rate swap
agreements, which is the same term as the underlying debt.  
    o    The interest rate swap agreements are effective fair value hedges, as
       the terms of the interest rate swaps are the same as the underlying
       debt and therefore the current market interest rate fluctuations on
  the debt will be completely offset by the effectiveness of the
interest rate swap.                                         

At September 30, 2001, the notional/contract amounts, carrying values and fair  
values of the Company's financial instruments were as follows:                  

($ in millions)             Notional/                                 
    Description              Contract Amount     Carrying Value     Fair Value
    ---------------------    ---------------     --------------     ----------
   Forward contracts (1)        $551.6                $4.7              $4.7
   Option contracts (1)          878.0                16.7              16.7
   Interest rate swaps         1,500.0                73.9              73.9
   Outstanding debt (2)        9,149.9             9,220.4           9,336.6

   (1)  If the value of the U.S. dollar were to increase or decrease by 10%,
       in relation to all hedged foreign currencies, the net receivable on
  the forward and option contracts would decrease or increase by
approximately $74.3 million.                                

   (2)  If the interest rates were to increase or decrease by one percentage
   point, the fair value of the outstanding debt would increase or
decrease by approximately $223.8 million.                   

The estimated fair values approximate amounts at which these financial          
instruments could be exchanged in a current transaction between willing parties.
Therefore, fair values are based on estimates using present value and other     
valuation techniques that are significantly affected by the assumptions used    
concerning the amount and timing of estimated future cash flows and discount    
rates that reflect varying degrees of risk. Specifically, the fair value of     
forward contracts and interest rate swaps reflects the present value of the     
future potential gain if settlement were to take place on September 30, 2001;   

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 Management's Discussion and Analysis of Financial Condition
 and Results of Operations
 Three Months and Nine Months Ended September 30, 2001

the fair value of option contracts reflects the present value of future cash    
flows if the contracts were settled on September 30, 2001; and the fair value of
outstanding debt instruments reflects a current yield valuation based on        
observed market prices as of September 30, 2001.                                

ENBREL Supply                                                                   
-------------                                                                   

ENBREL is a biological treatment for juvenile, early stage and moderate to      
severe rheumatoid arthritis. ENBREL was discovered by Immunex and is being      
co-promoted in North America by Immunex and the Company. The Company has        
exclusive marketing rights to ENBREL outside of North America. Although the     
market demand for ENBREL is increasing, the sales growth is currently           
constrained by limits on the existing source of supply. This is anticipated to  
continue until the retrofitting of a Rhode Island facility is completed and     
approved, which is targeted to occur in the second half of 2002. There can be no
assurance, however, that any estimated date will prove to be accurate. If the   
market demand continues to grow, there may be further supply constraints even   
after the Rhode Island facility begins producing ENBREL. The current plan for   
the longer term includes a new manufacturing facility, which is being           
constructed in Ireland.                                                         

Cautionary Statements for Forward-Looking Information                           
-----------------------------------------------------                           

This Form 10-Q, including management's discussion and analysis set forth above, 
contains certain forward-looking statements, including, among other things,     
statements regarding the Company's results of operations, Euro currency,        
competition, liquidity, financial condition and capital resources, PREMARIN,    
ENBREL supply, MENINGITEC sales, foreign currency and interest rate risk, the   
nationwide, class action settlement relating to REDUX and PONDIMIN, and         
additional litigation charges related to REDUX and PONDIMIN including those for 
opt outs. These forward-looking statements are based on current expectations of 
future events that involve risks and uncertainties including, without           
limitation, risks associated with the inherent uncertainty of pharmaceutical    
research, product development, manufacturing, commercialization, economic       
conditions including interest and currency exchange rate fluctuations, the      
impact of competitive or generic products, product liability and other types of 
lawsuits, the impact of legislative and regulatory compliance and obtaining     
approvals, and patents. The Company assumes no obligation to publicly update any
forward-looking statements, whether as a result of new information, future      
events or otherwise. Certain factors which could cause the Company's actual     
results to differ materially from expected and historical results have been     
identified by the Company in Exhibit 99 to the Company's 2000 Annual Report on  
Form 10-K, which exhibit is incorporated herein by reference.                   

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Part II - Other Information 
--------------------------- 

Item 1.   Legal Proceedings                                                     
-----------------                                           

         The Company and its subsidiaries are parties to numerous lawsuits and
        claims arising out of the conduct of its business, including product
      liability and other tort claims, the most significant of which are
      described in the Company's Annual Report on Form 10-K for the year
      ended December 31, 2000 and Quarterly Reports on Form 10-Q for the
periods ended March 31, 2001 and June 30, 2001.             

  The Company continues to resolve the remaining claims of those
     individuals who have opted out of the Company's nationwide, class
    action settlement of the diet drug litigation involving REDUX or
PONDIMIN (see Note 3 to the Consolidated Condensed Financial
Statements).                                                

       On July 10, 2001, the District Court of Jim Wells County, Texas for
      the 79th Judicial District entered a final judgment in the case of
         Lopez v. American Home Products Corporation, et al., No. 99-07-37723.
   The final judgment included $4,821,219 in compensatory damages,
         $3,392,438 in punitive damages and $968,206 in pre-judgment interest,
      for a total of $9,181,863. That judgment has now been vacated, the
case dismissed with prejudice and the matter resolved.      

        On August 28, 2001, the Chancery Division of the New Jersey Superior
        Court, Morris County, dismissed without prejudice Grill v. Stafford,
         et al., (No. MRS-L-164-98, N.J. Sup. Ct., Morris Cty.), a shareholder
    derivative suit against the Company, certain directors, a former
    director and officer of the Company, and certain officers of the
          Company which sought to recover any losses or damages sustained by the
          Company in connection with the withdrawal from the market of REDUX and
     PONDIMIN. The court also denied plaintiffs leave to replead their
         complaint with more particularity. Plaintiffs have filed an appeal of
the dismissal.                                              

     In the litigation involving the Company's DIMETAPP and ROBITUSSIN
         cough/cold products that contained the ingredient phenylpropanolamine
   ("PPA"), two additional putative class actions have been filed.
     Havard, et al. v. SmithKline Beecham, Inc., et al., No. 01-CV-532
  (U.S.D.C., M.D. La.) is a putative nationwide class action for
personal injuries allegedly resulting from the ingestion of 
        PPA-containing products. All federal cases involving PPA claims have
    now been transferred to the United States District Court for the
      Western District of Washington before United States District Judge
      Barbara Jacobs Rothstein. Horne, et al. v. American Home Products,
     Inc., et al., No. 01-CI-06749 (Cir. Ct., Jefferson Cty., KY) is a
          putative statewide class action seeking restitution and other economic
     relief. In addition to these and the previously reported putative
    class actions, there are a total of approximately 145 individual
  personal injury suits against the Company that have been filed
        alleging injury as a result of ingestion of PPA-containing products.
The Company expects                                         

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       that additional PPA cases may be filed in the future against it and
          the other companies that marketed PPA-containing products. The Company
intends to defend all such cases vigorously.                

      The Company has been served with seven lawsuits, five of which are
  putative class actions, alleging that the cumulative effect of
        thimerosal, a preservative used in certain vaccines manufactured and
         distributed by the Company as well as by other vaccine manufacturers,
        causes severe neurological damage, including autism in children. The
     class actions are Doherty, et al. v. Aventis Pasteur, et al., No.
    325082, Super. Ct., San Francisco Cty., CA (nationwide class for
        medical monitoring, personal injuries and injunctive relief); Demos,
       et al. v. Aventis Pasteur, et al., No. 01-22544CA15, Cir. Ct., Dade
        Cty., FL (nationwide class for medical monitoring, personal injuries
       and injunctive relief against future sales); Cyr, et al. v. Aventis
          Pasteur, Inc., et al., No. 01-C-663, Super. Ct., Hillsborough Cty., NH
        (statewide class for personal injuries and injunctive relief); King,
      et al. v. Aventis Pasteur, Inc., No. 01-CV-1305, U.S.D.C., D. Ore.
       (nationwide class for personal injuries and injunctive relief); and
       Mead v. Aventis Pasteur, Inc., et al., No. 01-CV-1402, U.S.D.C., D.
       Ore. (nationwide class for medical monitoring). The Company expects
          that additional thimerosal cases may be filed in the future against it
         and the other companies that marketed thimerosal-containing products.
The Company intends to defend all such cases vigorously.    

  An agreement has been entered into to settle the Federal Trade
     Commission (FTC) administrative complaint (In Re: Schering-Plough
 Corporation, et al., Docket No. 9297) regarding the Company's
       settlement of a patent infringement litigation with Schering-Plough
Corporation relating to the Company's generic version of    
          Schering-Plough's K-Dur potassium supplement product. The terms of the
settlement are confidential pending approval by the FTC. The
       settlement is not an admission of liability and was entered into to
avoid the costs and risks of litigation.                    

    Following the filing of the administrative complaint by the FTC,
     numerous lawsuits were filed in federal and state courts alleging
         civil claims based on the same conduct alleged by the FTC. Currently,
       the Company is aware of approximately forty such lawsuits that have
      been filed against the Company. Thirty-eight of these lawsuits are
          currently pending in federal court. Twenty-nine of these federal cases
      have been consolidated as part of multidistrict federal litigation
        being conducted in the United States District Court for the District
      of New Jersey (K-Dur Antitrust Litigation, MDL 1419, D. N.J.). The
       remaining federal cases have been or will be subject to requests to
         include them as part of the multidistrict consolidated litigation. In
    two of these cases, plaintiffs allege to be direct purchasers of
         K-Dur, or claim to be assignees of direct purchasers of K-Dur. One of
          these direct purchaser cases is brought as a purported class action on
    behalf of direct purchasers of K-Dur nationwide. In thirty-seven
      cases, plaintiffs claim to be indirect purchasers or end-payors of
       K-Dur or to be bringing suit on behalf of such indirect purchasers;
         these indirect purchaser cases are brought as purported class actions

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     on behalf of various groups of indirect purchasers. Some of these
          cases claim to be brought on behalf of indirect purchasers nationwide,
  while others of these cases purport to be brought on behalf of
      indirect purchasers from specified states or groups of states. One
    case is brought by the Commonwealth of Pennsylvania, through its
         Attorney General, on behalf of all departments, agencies, and bureaus
         of the Commonwealth who purchased K-Dur or reimbursed such purchases.

        Generally, plaintiffs claim that a 1998 settlement agreement between
       the Company and Schering-Plough that resolved a patent infringement
         action unlawfully delayed the market entry of generic competition for
       K-Dur, and that this caused plaintiffs and others to be required to
        pay higher prices for potassium chloride supplements than plaintiffs
  claim they would have paid without the patent case settlement.
          Plaintiffs claim that this settlement restrained trade and constituted
       an agreement to allow Schering to monopolize the potassium chloride
supplement markets.                                         

       Based on these allegations, plaintiffs allege violations of federal
    and state antitrust laws, various other state statutes including
       unfair competition laws and consumer protection statutes, and under
          common law theories such as unjust enrichment. Plaintiffs seek various
       forms of relief including damages in excess of $100 million, treble
          damages, restitution, disgorgement, declaratory and injunctive relief,
and attorneys' fees.                                        

        On August 2, 2001, the United States District Court for the Southern
     District of Ohio granted in part and denied in part the Company's
      motion to dismiss the complaint filed in September 2000 by Duramed
        Pharmaceuticals, Inc. against the Company, alleging that the Company
          violated federal antitrust laws through alleged exclusionary practices
        involving the Company's managed care and pharmacy benefit management
  agreements relating to PREMARIN. Duramed, Inc. v. Wyeth-Ayerst
  Pharmaceuticals, Inc., No. C-1-00-735 (S.D. Ohio). The Company
      believes that its practices did not violate the antitrust laws and
intends to vigorously defend this action.                   

        Following the filing of the Duramed case, five class action lawsuits
          have been filed on behalf of "end-payors" (defined as the last persons
       and entities in the chain of distribution) and direct purchasers in
          federal district court in Ohio, New Jersey, and California state court
       alleging that the Company violated federal and state antitrust laws
     through alleged exclusionary practices involving PREMARIN and the
    Company's contracts with managed care organizations and pharmacy
         benefit managers. Mattoon, et al. v. Wyeth-Ayerst Laboratories, Inc.,
     No. 1-01-CV-447 (W.D. Ohio); Forgue v. Wyeth-Ayerst Laboratories,
Inc., et al., No. 1-01-CV-634 (S.D. Ohio); J.B.D.L. Corp. v.
        Wyeth-Ayerst Laboratories, Inc., et al., No. C-1-01-704 (S.D. Ohio);
        McDermott v. Wyeth-Ayerst Laboratories, Inc., et al., No. 01-CV-4690
        (D.N.J); and Blevins v. Wyeth-Ayerst Laboratories, Inc., et al., No.
       324380 (San Francisco Superior Ct.). The complaints seek injunctive

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      relief, damages, and disgorgement of profits. The Company believes
         that its contracts involving PREMARIN do not violate state or federal
laws and the Company will vigorously defend these lawsuits. 

  On October 5, 2001 the U.S. District Court for the District of
          Columbia entered judgment in favor of the Company in Boca Investerings
          Partnership v. U.S. (No. 97-602, U.S.D.C., D.C.), in which the Company
          challenged the disallowance by the Internal Revenue Service (IRS) of a
       capital loss deduction in 1990 related to a partnership investment.
        The Court ordered the IRS to refund the tax paid, approximately $226
          million, together with interest. The IRS has until December 4, 2001 to
     appeal the decision. Since the decision is subject to appeal, the
       Company has not recognized this anticipated refund in the financial
statements.                                                 

    In the opinion of the Company, although the outcome of any legal
          proceedings cannot be predicted with certainty, the ultimate liability
         of the Company in connection with its legal proceedings will not have
     a material adverse effect on the Company's financial position but
        could be material to the results of operations in any one accounting
period.                                                     

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Item 6.   Exhibits and Reports on Form 8-K                                      
--------------------------------                            

(a)    Exhibits                                             
--------                                      

Exhibit No.  Description                      
-----------  -----------                      

            (3.2)     The Company's By-laws, as amended to date.

                    (12)      Computation of Ratio of Earnings to Fixed Charges.

(b)    Reports on Form 8-K                                  
-------------------                           

None                                          

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 Signature
 ---------

Pursuant to the requirements of the Securities Exchange Act of 1934, the
Registrant has duly caused this report to be signed on its behalf by the
undersigned thereunto duly authorized.                                  

AMERICAN HOME PRODUCTS CORPORATION
----------------------------------
(Registrant)

By /s/ Paul J. Jones
------------------------------
 Paul J. Jones
Vice President and Comptroller
(Duly Authorized Signatory
 and Chief Accounting Officer)

Date: November 14, 2001                                                 

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 Exhibit Index
 -------------

Exhibit No.      Description                                                    
-----------      -----------                                                    

(3.2)          The Company's By-laws, as amended to date.                   

(12)           Computation of Ratio of Earnings to Fixed Charges.           

EX-1

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Dates Referenced Herein and Documents Incorporated By Reference

		Referenced-On Page
This 10-Q Filing	Date	First	Last	Other Filings

	1/1/00	3	17
	3/20/00	9
	6/30/00	9		10-Q, 8-K
	9/21/00	6
	9/30/00	2	6	10-Q
	12/1/00	6
	12/31/00	3	27	10-K405, 11-K
	1/1/01	3	22
	3/30/01	8	25
	3/31/01	3	27	10-Q
	4/27/01	8		S-4, S-8
	5/8/01	8
	6/15/01	8
	6/30/01	3	27	10-Q
	7/10/01	27
	8/2/01	29
	8/16/01	9
	8/28/01	27
	9/20/01	6
For The Period Ended	9/30/01	1	26
	10/5/01	30
	10/31/01	1
Filed On / Filed As Of	11/14/01	32
	12/1/01	6
	12/4/01	30
	1/1/02	15	22
	3/25/02	12
	7/31/02	8	24
	3/15/04	8	24
	3/15/06	8	24	DEF 14A
	3/15/11	8	25

Top				List All Filings

Filing Submission - Alternative Formats (Word / Rich Text, HTML, Plain Text, SGML, XML, et al.)

Wyeth · 10-Q · For 9/30/01

Filed On 11/14/01 · SEC File 1-01225 · Accession Number 5187-1-500014

Quarterly Report · Form 10-QFiling Table of Contents

10-Q · Quarterly ReportDocument Table of Contents

Dates Referenced Herein and Documents Incorporated By Reference

Quarterly Report · Form 10-Q
Filing Table of Contents

10-Q · Quarterly Report
Document Table of Contents