UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, DC 20549
FORM 10-Q
(Mark One)
QUARTERLY REPORT UNDER SECTION 13 OR 15(d)
/ X / OF THE SECURITIES EXCHANGE ACT OF 1934
For the quarter ended March 31, 1994
OR
/ / TRANSITION REPORT PURSUANT TO SECTION 13 OR 15 (d) OF THE
SECURITIES EXCHANGE ACT OF 1934
For the transition period from to
Commission file number 1-3426
American Cyanamid Company
(Exact name of registrant as specified in its charter)
Maine 13-0430890
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
One Cyanamid Plaza
Wayne, New Jersey 07470
(Address of principal executive offices)
(201) 831-2000
(Registrant's telephone number, including area code)
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
Indicate the number of shares outstanding of each of the issuer's classes
of common stock, as of the latest practicable date: 89,754,355 shares of
Common Stock, par value $5 per share, were outstanding at March 31, 1994.
This report, including one exhibit, contains 16 pages numbered
sequentially from this cover page. The exhibit index is located at Page
15.
<PAGE>
<TABLE> Form 10-Q
PART I FINANCIAL INFORMATION
AMERICAN CYANAMID COMPANY AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF OPERATIONS
<CAPTION>
Three months ended
March 31,
1994 1993
(Millions of dollars, except per share amounts)
<S> <C> <C>
Net sales $1,254.8 $1,145.5
Expenses:
Manufacturing cost of sales 506.1 433.1
Selling and advertising 356.4 332.7
Research and development 160.7 143.2
Administrative and general 84.4 69.4
1,107.6 978.4
Earnings from operations 147.2 167.1
Interest and other income, net 21.8 22.5
169.0 189.6
Interest expense 16.0 15.1
Earnings before taxes on income 153.0 174.5
Taxes on income (Note 9) 41.6 56.1
Earnings before minority interests 111.4 118.4
Minority interests 5.3 (3.5)
Earnings from continuing operations 116.7 114.9
Discontinued operations (Notes 2 and 7):
Earnings from operations,
net of taxes of $2.0 - 3.8
Cumulative effect of accounting changes - (219.8)
- (216.0)
Earnings (loss) before cumulative effect
of accounting changes 116.7 (101.1)
Cumulative effect of accounting changes
(Note 7) - (332.6)
Net earnings (loss) $ 116.7 $ (433.7)
Per share of common stock:
Earnings from continuing operations $ 1.30 $ 1.28
Loss from discontinued operations - (2.40)
Earnings (loss) before cumulative effect
of accounting changes 1.30 (1.12)
Cumulative effect of accounting changes - (3.70)
Net earnings (loss) $ 1.30 $ (4.82)
Dividends $ .4375 $ .4125
</TABLE>
See notes to condensed consolidated financial statements.
<PAGE>
<TABLE> Form 10-Q
AMERICAN CYANAMID COMPANY AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
<CAPTION>
March 31, December 31,
1994 1993
(Millions of dollars)
Assets
<S> <C> <C>
Current assets
Cash and cash equivalents $ 323.5 $ 426.1
Marketable securities and time deposits 114.0 101.7
Accounts receivable, less allowance for doubtful
accounts 1,338.6 1,120.1
Inventories 1,039.4 1,027.9
Deferred tax assets 412.1 410.1
Total current assets 3,227.6 3,085.9
Investments and advances 377.7 307.2
Plants, equipment and facilities, at cost 3,143.7 3,106.0
Less accumulated depreciation 1,362.5 1,335.7
Net plant investment 1,781.2 1,770.3
Intangibles resulting from business acquisitions,
net of accumulated amortization 300.6 305.3
Deferred tax assets 306.2 328.5
Other assets 282.6 260.2
$6,275.9 $6,057.4
Liabilities and Shareholders' Equity
Current liabilities
Accounts payable and accrued expenses $1,810.6 $1,860.0
Short-term borrowings 604.7 432.6
Funded debt installments due within one year 136.3 182.9
Income taxes 277.3 254.9
Total current liabilities 2,828.9 2,730.4
Funded debt 354.6 344.3
Deferred tax liabilities 34.3 27.6
Other noncurrent liabilities 1,440.2 1,444.4
Minority interests 131.3 143.7
Shareholders' equity
Common stock 513.6 513.6
Additional paid-in capital 38.4 38.9
Earnings employed in the business 1,525.6 1,448.2
Accumulated translation and other adjustments (46.8) (49.3)
Accumulated net unrealized gains on available-
for-sale securities (Note 8) 43.4 -
Treasury stock, at cost (587.6) (584.4)
Total shareholders' equity 1,486.6 1,367.0
$6,275.9 $6,057.4
</TABLE>
See notes to condensed consolidated financial statements.
<PAGE>
<PAGE>
<TABLE> Form 10-Q
<CAPTION>
AMERICAN CYANAMID COMPANY AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
Three months ended
March 31,
1994 1993
(Millions of dollars)
<S> <C> <C>
Net cash used for operating activities of
continuing operations $(107.6) $ (1.8)
Net cash provided by operating activities of
discontinued operations - 19.6
Net cash provided by (used for) operating activities (107.6) 17.8
Cash flows provided by (used for) investing activities
Additions to plants, equipment and facilities (69.2) (65.4)
Available for sale securities:
Purchases (130.2) -
Sales 123.9 -
Maturities 5.0 -
Additions to investments -
principally marketable securities - (81.1)
Reductions to investments -
principally marketable securities - 41.6
Net investing activities of discontinued operations - (19.3)
Other, net (2.6) 2.1
Net cash used for investing activities ( 73.1) (122.1)
Cash flows provided by (used for) financing activities
Change in short-term borrowings, net 182.4 133.1
Funded debt additions 59.1 19.8
Funded debt reductions (91.9) (9.4)
Purchases of treasury stock (6.2) (7.9)
Cash dividends (39.3) (37.2)
Cash component of Cytec dividend (26.5) -
Net financing activities of discontinued operations - (.6)
Other, net 1.3 1.2
Net cash provided by financing activities 78.9 99.0
Effect of exchange rate changes on cash
and cash equivalents (.8) (5.5)
Decrease in cash and cash equivalents (102.6) (10.8)
Cash and cash equivalents, beginning of year 426.1 341.7
Cash and cash equivalents, end of period $ 323.5 $ 330.9
</TABLE>
See notes to condensed consolidated financial statements.
PAGE
<PAGE>
Form 10-Q
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(Millions of dollars, except per share amounts)
(1) The unaudited condensed consolidated financial statement
information included herein has been prepared pursuant to
the rules and regulations of the Securities and Exchange
Commission for reporting on Form 10-Q. Certain information
and footnote disclosures normally included in financial
statements prepared in accordance with generally accepted
accounting principles have been condensed or omitted
pursuant to such rules and regulations. The statements
should be read in conjunction with the accounting policies
and notes to consolidated financial statements in the
American Cyanamid Company (Cyanamid or the company) 1993
Annual Report on Form 10-K.
In the opinion of management, the financial statement
information included herein reflects all adjustments
necessary for a fair statement of the information presented
as of March 31, 1994 and for the three month periods ended
March 31, 1994 and 1993. Such adjustments are of a normal,
recurring nature. The results of operations for the three
months ended March 31, 1994 are not necessarily indicative
of the results to be expected for the full year.
As described in Note 8 below, the company adopted Statement
of Financial Accounting Standards (SFAS) No. 115,
"Accounting for Certain Investments in Debt and Equity
Securities", effective January 1, 1994.
(2) On August 17, 1993, the company's Board of Directors
approved a formal plan to effect the spin-off of Cytec
Industries (Cytec), which encompassed substantially all of
the company's chemicals business, including plant food, to
shareholders. On December 17, 1993 the Board of Directors
declared a dividend payable to shareholders of record as of
December 28, 1993, at the rate of one share of Cytec common
stock for every seven shares of the company's common stock.
On January 24, 1994, the Cytec common shares were
distributed as a taxable dividend to shareholders. The
company retained a $200.0 preferred stock interest in Cytec.
In conjunction with the approval of the formal plan to
effect the spin-off, operating results of the chemicals
business have been accounted for as discontinued operations
since the third quarter of 1993. Accordingly, the first
quarter 1993 condensed consolidated financial statements
have been restated to exclude amounts for discontinued
operations from captions applicable to continuing
operations.
Net sales of Cyanamid's chemicals business for the three
month period ended March 31, 1993 were $255.8.
(3) On June 1, 1993 shareholders of Immunex Corporation
(Immunex) approved an agreement to create a new
biopharmaceutical company by merging the company's North
American Lederle oncology business with Immunex. The
company also contributed $350.0 to the new company, which
retained the Immunex name, and received 53.5% of the common
stock of the new company while Immunex shareholders retained
the remaining 46.5%. The acquisition was reflected as a
purchase in the accompanying condensed consolidated
financial statements. The net assets and operating loss
attributable to the equity interest not acquired by the
company is included in the caption "Minority interests".
PAGE
<PAGE>
Form 10-Q
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(Millions of dollars, except per share amounts)
(Continued)
In the third quarter of 1993, Cyanamid and The Shell
Petroleum Company Limited (Shell) signed an agreement
pursuant to which the company later acquired substantially
all assets and liabilities of the Shell companies' crop
protection business outside of North America. The Shell
acquisition, reflected as a purchase in the accompanying
condensed consolidated financial statements, was
substantially complete by the end of 1993. The total
purchase price will aggregate approximately $400.0, when all
phases of the acquisition are finalized, plus royalty
payments on future product sales.
(4) In the fourth quarter of 1993, the company commenced a
global, companywide restructuring program, which is expected
to be accomplished over three years. The restructuring
includes a reduction in the company's workforce, primarily
in the medical business, and other cost-cutting measures
designed to meet increasingly competitive market conditions
and government health care reform efforts in the United
States and Europe. The total workforce reduction is
projected to be at least 2,500 positions and will take place
over three years. About half of the reduction will take
place in the United States; the balance will be overseas.
The facilities affected include Pearl River, New York and
multiple locations overseas. A pre-tax charge of $207.9 for
these costs was reflected in the company's operating results
for the fourth quarter of 1993.
The major components of this charge were $132.7 for
severance and related outplacement costs to reduce the
company's workforce; $22.1 to curtail and consolidate
certain product lines; $17.6 to reduce to estimated
realizable amounts the carrying value of certain assets
related to manufacturing operations to be discontinued as
part of the restructuring program; and $35.5 for other
restructuring measures including the writeoff of certain
intangibles, plant decommissioning expenses and certain
contract terminations. After allowing for tax benefits of
$74.5, the restructuring provision reduced earnings from
continuing operations and net earnings by $133.4, or $1.48
per share. Total cash outflows associated with the
restructuring, primarily severance related, are projected to
be approximately $150.0, are expected to be concentrated in
the earlier periods of the restructuring program, and will
be funded by cash flows provided by operating activities.
The company anticipates that efficiencies related to the
restructuring, primarily reduced labor and related benefits
costs, will be phased in over the next several years. The
estimated annual benefit of the efficiencies, when fully
realized, continues to be approximately $100.0 on an after-
tax basis.
Since implementation of the restructuring program, the
restructuring accruals have decreased by approximately $27.3
due primarily to cash expenditures related to severance
costs and non-cash charges to curtail and consolidate
certain product lines.
(5) Earnings per share of common stock are based on the average
number of shares outstanding. The average shares
outstanding for the three month periods ended March 31, 1994
and 1993 were 89,818,321 and 90,054,494, respectively.
PAGE
<PAGE>
Form 10-Q
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(Millions of dollars, except per share amounts)
(Continued)
(6) Components of inventories at March 31, 1994 and December 31,
1993 were as follows:
March 31, December 31,
1994 1993
Finished goods $ 582.4 $ 599.3
Work in progress 264.1 250.4
Raw materials and supplies 312.5 276.8
1,159.0 1,126.5
Less reduction to LIFO cost (119.6) (98.6)
$1,039.4 $1,027.9
(7) Effective January 1, 1993, the company adopted SFAS No. 106,
"Employers' Accounting for Postretirement Benefits Other
Than Pensions," which requires the accrual of retiree
benefit costs over the active service period of employees to
the date of full eligibility for these benefits. The
aggregate initial accumulated postretirement benefit
obligation at January 1, 1993, was $565.4, net of deferred
income tax effects of $355.6, or $6.28 per share. The
company elected to record this obligation, measured as of
November 30, 1992, as a one-time cumulative charge to
earnings. In connection with the spin-off of Cytec, the
portion of the cumulative effect of this accounting change
applicable to the chemicals business was reflected in
discontinued operations. Accordingly, there were charges of
$335.0, net of deferred income tax effects of $210.7, or
$3.72 per share to continuing operations and $230.4, net of
deferred income tax effects of $144.9, or $2.56 per share to
discontinued operations. There was no impact on cash flow
as the company plans to continue to fund the obligation as
the claims are paid.
Also effective January 1, 1993, the company adopted SFAS No.
109, "Accounting for Income Taxes." It requires an asset
and liability approach for financial accounting and
reporting for income taxes. The aggregate cumulative effect
of this accounting change was a one-time gain of $13.0, or
$.14 per share. In connection with the spin-off of Cytec,
the portion of the cumulative effect of this accounting
change applicable to the chemicals business was reflected in
discontinued operations. Accordingly, there were gains of
$2.4 or $.02 per share to continuing operations and $10.6 or
$.12 per share to discontinued operations.
(8) Effective January 1, 1994, the company adopted SFAS No. 115
"Accounting for Certain Investments in Debt and Equity
Securities". Management determines the appropriate
classification of securities at the time of purchase and
reevaluates such designation as of each balance sheet date.
Debt securities are classified as held-to-maturity when the
company has the positive intent and ability to hold the
securities to maturity. Held-to-maturity securities are
recorded at amortized cost. Debt and equity securities not
classified as held-to-maturity are classified as available-
for-sale. Available-for-sale securities are recorded at
fair value, with unrealized gains and losses, net of tax,
reported in a separate component of shareholders' equity.
Realized gains and losses and declines in value judged to be
other-than-temporary are included in the consolidated
statement of operations. The cost of securities sold is
based on the specific identification method for debt
securities and average cost for equity securities.
PAGE
<PAGE>
Form 10-Q
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(Millions of dollars, except per share amounts)
(Continued)
The following is a summary of available-for-sale and held-
to-maturity securities as of January 1, 1994:
Gross Gross
Amortized Unrealized Unrealized Fair
Cost Gains Losses Value
Available-for-sale:
U.S. Government debt $ 57.5 $ 1.9 $ .7 $ 58.7
Corporate & other debt 310.2 .4 .1 310.5
Total debt securities 367.7 2.3 .8 369.2
Equity securities 36.3 89.0 2.4 122.9
404.0 91.3 3.2 492.1
Held-to-maturity:
Corporate & other debt
securities 237.0 - - 237.0
Total available-for-sale
and held-to-maturity
securities $641.0 $91.3 $3.2 $729.1
The fair value of available-for-sale and held-to-maturity
securities includes $275.6 of cash equivalents and excludes
equity method investments of $34.0 and equity securities,
with a cost basis of $9.5, which do not have a readily
determinable fair value. Marketable securities and
investments and advances at January 1, 1994 were $497.0.
The adjustment for unrealized net gains on available-for-
sale securities included as a separate component of
shareholders' equity as of January 1, 1994 was $53.3, net of
deferred income tax effects of $34.8.
The amortized cost and estimated fair value of debt
securities at January 1, 1994, by contractual maturity, are
shown below. Expected maturities may differ from
contractual maturities because the issuers of the securities
may have the right to prepay obligations without prepayment
penalties.
Amortized Fair
Cost Value
Available-for-Sale
Due in one year or less $ 70.3 $ 70.4
Due after one year through five years 48.6 48.9
Due after five years 248.8 249.9
$367.7 $369.2
Held-to-Maturity
Due in one year or less $237.0 $237.0
(9) The company records income tax expense based upon an
estimated full year effective income tax rate. The
company's effective income tax rate decreased to 27.2% in
the first quarter of 1994 compared to 32.1% in the same
quarter last year. The decrease was due primarily to a
change in the mix of income among taxing jurisdictions. The
effective income tax rate in the first quarter of 1993 did
not anticipate the effects of certain items, primarily a
change in the mix of income among taxing jurisdictions and
the passage in the United States of the Omnibus Budget
reconciliation Act of 1993.
<PAGE>
Form 10-Q
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(Millions of dollars, except per share amounts)
(Continued)
(10) Cash payments during the three months ended March 31, 1994
and 1993 included interest (net of amounts capitalized) of
$12.6 and $8.7 and income taxes of $24.6 and $9.6,
respectively.
(11) Certain legal proceedings to which the company is a party
are discussed in Part II, Item 1 of this report.
PAGE
<PAGE>
Form 10-Q
DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION
AND RESULTS OF OPERATIONS
Financial Condition - At March 31, 1994, aggregate debt financing
was $1,095.6 million, equal to approximately 40% of total debt and
equity including minority interests. The corresponding amounts at
December 31, 1993 were $959.8 million and 39%, respectively. The
company increased its level of debt financing from December 31,
1993 in order to meet working capital requirements.
For detailed information concerning discontinued operations, the
Immunex and Shell acquisitions, cumulative effect of accounting
changes and income taxes, refer to Notes 2, 3, 7 and 9,
respectively, to the condensed consolidated financial statements.
Results of Operations
Consolidated net sales from continuing operations for the first
quarter of 1994 were $1,254.8 million, an increase of 9.5% compared
with $1,145.5 million in the first quarter of 1993.
Earnings from continuing operations in the first quarter of 1994
were $116.7 million, or $1.30 per share, compared to $114.9
million, or $1.28 per share, reported in the first quarter of 1993.
Net earnings in the first quarter of 1994 were $116.7 million, or
$1.30 per share, compared to a net loss of $433.7 million, or $4.82
per share, reported in the first quarter of 1993. The company
incurred a $216.0 million, or $2.40 per share, net loss from
discontinued operations in the first quarter of 1993. The net loss
from discontinued operations, related to the spin-off of Cytec,
included earnings from operations of $3.8 million and a net charge
of $219.8 million for the cumulative effect of accounting changes
applicable to discontinued operations. The company also incurred
a $332.6 million, or $3.70 per share, after-tax charge for the
cumulative effect of accounting changes applicable to continuing
operations.
Sales of the Medical Group were about even in the first quarter of
1994 compared to the same period a year ago with increased domestic
sales of consumer health and oncology products being offset by
lower worldwide sales of ethical pharmaceuticals and domestic sales
of ophthalmic products. Factors affecting sales included continued
generic erosion of off-patent brands, the strengthening of the U.S.
dollar against major European currencies and its effect on the
translation of foreign sales, and government health care reform
efforts in Europe, including cutbacks on state-reimbursed
pharmaceutical purchases. Domestic sales of CENTRUM and CENTRUM
SILVER multivitamin/multimineral supplements increased in the first
quarter of 1994 versus the same period a year ago. Domestic sales
of oncology products were higher in the first quarter of 1994
compared to the same period last year due to the Immunex
acquisition in June 1993. Worldwide sales of the antibiotic
MINOCIN minocycline and the diuretic MAXZIDE
triamterene/hydrochlorothiazide declined in the first quarter of
1994 compared to the same period last year due primarily to
continued generic competition. Domestic sales of the antibiotic
SUPRAX cefixime increased in the
first quarter of 1994 compared to last year. Domestic sales of
Storz ophthalmic products decreased in the first quarter of 1994
compared to the same period a year ago. Lower sales of HIBTITER
Haemophilus b conjugate vaccine and TRI-IMMUNOL diptheria, tetanus
and pertussis vaccine in the first quarter of 1994 compared to the
same period last year were offset by introductory domestic sales of
TETRAMUNE, a childhood combination vaccine of HIBTITER and TRI-
IMMUNOL.
All brand names appearing in capital letters are registered
trademarks or trademarks owned by or licensed to the company.
<PAGE>
Form 10-Q
DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION
AND RESULTS OF OPERATIONS
(Continued)
Medical Group operating earnings declined in the first quarter of
1994 versus the comparable period in 1993. The decrease was due
principally to a shift in product mix toward lower margin products,
continued price erosion in mature products and the strengthening of
the U.S. dollar against major European currencies. In addition, an
Immunex operating loss, due primarily to research and development
expenditures, had a significant negative impact on the Group's
operating earnings. The company acquired a 53.5 percent interest
in Immunex in June 1993.
Worldwide sales of the Agricultural Group increased in the first
quarter of 1994 versus the same period a year ago. The increase
was due to sales gains in crop protection chemicals, primarily
sales of products acquired from Shell and higher worldwide sales of
PURSUIT and domestic sales of SCEPTER and SQUADRON herbicides. The
purchase of the Shell companies' international crop protection
business was substantially complete by the end of 1993. Sales of
the Group's animal health and nutrition products increased in the
first quarter of 1994 versus the same period last year due to sales
of products acquired from Shell and the acquisition of an
Australian veterinary biologicals company in November 1993.
Agricultural Group operating earnings were higher in the first
quarter of 1994 as compared to the same period a year ago due
primarily to the impact of higher domestic sales of crop protection
chemicals.
Earnings before taxes on income for the first quarter of 1994 and
1993 include exchange losses of $6.4 million and $3.6 million,
respectively. The exchange losses were generated primarily by
operations in hyperinflationary economies, principally in Latin
America.
All brand names appearing in capital letters are registered
trademarks or trademarks owned by or licensed to the company.
PAGE
<PAGE>
- 12 -
Part II. OTHER INFORMATION
Item 1. Legal Proceedings.
Deductible amounts under Cyanamid's liability insurance
coverage (particularly product and environmental liability) are
such that Cyanamid must regard itself, for practical purposes, as
self-insured with respect to most events. Cyanamid has a
self-insurance program which provides reserves for costs based on
past claims experience.
Cyanamid and its subsidiaries are parties to numerous suits
and claims arising out of the conduct of business, many of which
involve very large damage claims, including claims for punitive
damages. Included among such suits, as of March 31, 1994, are 21
involving personal injury or death allegedly occurring in
connection with administration of Cyanamid's DTP
(diphtheria-tetanus-pertussis) and oral polio vaccines.
In 1990, Cyanamid's supplier of MAXZIDE triamterene/
hydrochlorothiazide filed suit against Cyanamid alleging breach of
a 1984 exclusive licensing agreement and seeking damages and rights
to the MAXZIDE trademarks and trade dress owned by Cyanamid. After
a trial on the merits in Federal District Court, a jury rejected
the supplier's claims. Cyanamid has appealed the dismissal of its
defamation counterclaim and plaintiff has cross-appealed.
In 1991, a suit was filed against Cyanamid alleging patent
infringement by Cyanamid in the sale of HibTITER Haemophilus b
conjugate vaccine in the United States and seeking damages. After
trial on the merits, a district court held that the HibTITER
vaccine did not infringe the patent claims cited by the plaintiffs
and that the cited claims were invalid. The Court of Appeals for
the Federal Circuit on October 6, 1993, affirmed the District
Court's holding that the cited patent claims were not infringed.
Plaintiff's Petition for a Writ of Certiorari was denied by the
Supreme Court of the United States on May 2, 1994.
Early in 1994, Cyanamid pleaded guilty to a record keeping
misdemeanor and paid a small fine related to allegations that a
former Cyanamid employee had manipulated data related to CYGRO
coccidiostat in combination with other products. The employee has
pleaded guilty to a similar offense.
The Federal Trade Commission has subpoenaed information
concerning (i) Cyanamid's opposition to a petition by another
company to the FDA to reclassify sutures and a patent infringement
lawsuit against that company, (ii) sales of childhood vaccines to
governmental purchasers, and (iii) prices charged for certain
agricultural products (which may be similar to a long, moribund but
recently revived investigation by the Attorney General of the State
of Florida). Cyanamid has been advised by the Federal Trade
Commission that it has closed its investigation relating to
childhood vaccines.
<PAGE>
- 13 -
Cyanamid has been named as one of many defendant
pharmaceutical manufacturers and distributors in a number of
federal and state civil antitrust suits alleging that the
defendants conspired to discriminate against retail druggists by
providing lower prices to mail order pharmacies, health maintenance
organizations and similar purchasers.
As of March 31, 1994, Cyanamid was a party to, or otherwise
involved in, legal proceedings directed at the cleanup of 40
Superfund sites, including the Cyanamid-owned Bound Brook site. In
many cases, future environmental related expenditures cannot be
quantified with a reasonable degree of accuracy. It is Cyanamid's
policy to accrue environmental cleanup costs if it is probable that
a liability has been incurred and an amount is reasonably
estimable. As assessments and cleanups proceed, these liabilities
are reviewed periodically and adjusted as additional information
becomes available. Environmental liabilities are inherently
unpredictable. The liabilities can change substantially due to
such factors as additional information on the nature or extent of
contamination, methods of remediation required, and other actions
by governmental agencies or private parties. Cash expenditures
often lag by a number of years the period in which an accrual is
recorded. Insurance coverage of various environmental matters is
currently being litigated; potential recoveries, if any, however,
are unknown at this time. Thus all environmental related accruals
have been recorded without giving effect to any possible future
insurance proceeds. The 40 Superfund sites exclude sites for which
Cytec Industries Inc., Cyanamid's former chemicals business which
was spun-off to Cyanamid's shareholders through a dividend declared
in December 1993 and distributed in January 1994, has agreed to
indemnify Cyanamid. Cyanamid has no reason to believe that it has
any practical exposure to any of the liabilities against which
Cytec has agreed to indemnify Cyanamid.
While it is not feasible to predict the outcome of all pending
suits and claims, based on the most recent review by management of
these matters, management is of the opinion that the ultimate
disposition of, or additional provisions for, such suits and
claims, will not have a material adverse effect upon the
consolidated financial position but could be material to the
results of operations in any one accounting period.
Item 6. Exhibits and Reports on Form 8-K
(a) Exhibit 12.1 Ratio of Earnings to Fixed Charges.
(b) No reports on form 8-K were filed for the quarter ended
March 31, 1994.
<PAGE>
- 14 -
SIGNATURES
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 CYANAMID COMPANY
(Registrant)
By:R. T. Ritter
R. T. Ritter
Controller and
Principal Accounting Officer
May 13, 1994
<PAGE>
- 15 -
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, DC 20549
FORM 10-Q
(Mark One)
QUARTERLY REPORT UNDER SECTION 13 OR 15(d)
/ X / OF THE SECURITIES EXCHANGE ACT OF 1934
For the quarter ended March 31, 1994
OR
/ / TRANSITION REPORT PURSUANT TO SECTION
13 OR 15 (d) OF THE
SECURITIES EXCHANGE ACT OF 1934
For the transition period from to
Commission file number 1-3426
American Cyanamid
Company
(Exact name of registrant as specified in its
charter)
Maine
13-0430890
(State or other jurisdiction of
(I.R.S. Employer
incorporation or organization)
Identification No.)
One Cyanamid Plaza
Wayne, New Jersey
07470
(Address of principal executive
offices)
(201) 831-
2000
(Registrant's telephone number, including
area code)
INDEX TO EXHIBITS
Page No.
(a) Exhibit 12.1 Ratio of Earnings to Fixed Charges. 16
<TABLE>
- 16 -
Exhibit 12.1
AMERICAN CYANAMID COMPANY
RATIO OF EARNINGS TO FIXED CHARGES
(In millions of dollars, except ratio amounts)
<CAPTION>
Three Months Year Ended December 31,
Ended March
1994 1993 1992 1991 1 1990 1 1989 1
<S> <C> <C> <C> <C> <C> <C>
Earnings
Earnings (loss) from continuing
operations before taxes on
income $ 156.2 $(111.8) $555.0 $507.0 $378.0 $394.8
Add:
Fixed charges 20.5 82.2 77.9 78.4 114.4 174.0
Less:
Capitalized interest (0.7) (4.6) (4.0) (11.0) (13.5) (14.0)
Total Earnings (Loss) $ 176.0 $ (34.2) $628.9 $574.4 $478.9 $554.8
Fixed Charges
Interest and debt expenses $ 16.0 $ 62.4 $ 58.8 $ 53.7 $ 88.4 $147.7
Add:
Capitalized interest 0.7 4.6 4.0 11.0 13.5 14.0
Add:
One-third of rental expense 3.8 15.2 15.1 13.7 12.5 12.3
Total Fixed Charges $ 20.5 $ 82.2 $ 77.9 $ 78.4 $114.4 $174.0
Ratio Of Earnings To Fixed Charges 8.59 * 8.07 7.33 4.193 3.19
</TABLE>
* Calculation of the ratio results in an amount that is less than one.
The amount of the earnings deficiency for the year ended December 31, 1993 was
$116.4.2
