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SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 10-Q
QUARTERLY REPORT UNDER SECTION 13 OR 15 (d)
OF THE SECURITIES EXCHANGE ACT OF 1934
For Quarter Ended June 30, 1994 Commission File Number 1-1225
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 (201) 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 August 2, 1994:
Number of
Class Shares Outstanding
Common Stock, $.33-1/3 par value 305,666,558
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<PAGE>
AMERICAN HOME PRODUCTS CORPORATION AND SUBSIDIARIES
INDEX
Page No.
Part I - Financial Information 2
Item 1. Financial Statements:
Consolidated Condensed Balance Sheets -
June 30, 1994 and December 31, 1993 3
Consolidated Condensed Statements of Income -
Three Months and Six Months Ended June 30, 1994
and 1993 4
Consolidated Condensed Statements of Retained
Earnings and Additional Paid-in Capital - Six
Months Ended June 30, 1994 and 1993 5
Consolidated Condensed Statements of Cash Flows -
Six Months Ended June 30, 1994 and 1993 6
Item 2. Management's Discussion and Analysis of
Financial Condition and Results of Operations 7-14
Part II - Other Information
Item 1. Legal Proceedings 15-16
Item 4. Submission of Matters to a Vote of
Security-Holders 17
Item 6. Exhibits and Reports on Form 8-K 18
Signature 19
Exhibit Index Ex-1
<PAGE>
Part I - Financial Information
AMERICAN HOME PRODUCTS CORPORATION AND SUBSIDIARIES
The consolidated condensed financial statements included herein
have been prepared by 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 generally
accepted accounting principles 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 financial statements include all adjustments
necessary to present fairly the financial position of the Company
as of June 30, 1994 and December 31, 1993, the results of its
operations for the three months and six months ended June 30,
1994 and 1993 , and its cash flows and the changes in retained
earnings and additional paid-in capital for the six months ended
June 30, 1994 and 1993. It is suggested that these 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 latest annual report on Form 10-K and its first quarter
1994 Form 10-Q.
<PAGE>
AMERICAN HOME PRODUCTS CORPORATION AND SUBSIDIARIES
CONSOLIDATED CONDENSED BALANCE SHEETS
(In Thousands Except Per Share Amounts)
June 30, Dec. 31,
1994 1993
---------- ----------
ASSETS
Cash and cash equivalents................... $1,645,493 $1,936,834
Marketable securities....................... 260,131 283,449
Accounts receivable less allowances......... 1,609,745 1,389,555
Inventories:
Finished goods......................... 505,085 435,902
Work in process........................ 260,149 219,701
Materials and supplies................. 290,241 303,293
---------- ----------
1,055,475 958,896
Other current assets........................ 287,412 238,950
---------- ----------
Total Current Assets................... 4,858,256 4,807,684
Property, plant and equipment............... 3,578,030 3,460,365
Less accumulated depreciation.......... 1,491,195 1,400,580
---------- ----------
2,086,835 2,059,785
Goodwill.................................... 725,173 716,395
Other assets................................ 103,723 103,489
---------- ----------
Total Assets $7,773,987 $7,687,353
========== ==========
LIABILITIES
Loans payable to banks...................... $ 3,151 $ 4,280
Trade accounts payable...................... 403,490 388,804
Accrued expenses............................ 1,112,313 1,019,923
Accrued federal and foreign taxes........... 195,096 171,404
---------- ----------
Total Current Liabilities.............. 1,714,050 1,584,411
Long-term debt.............................. 861,285 859,278
Accumulated postretirement benefit
obligation............................. 274,191 264,553
Other noncurrent liabilities................ 781,414 903,993
Minority interests.......................... 196,830 198,630
STOCKHOLDERS' EQUITY
$2 convertible preferred stock,
par value $2.50 per share.............. 97 100
Common stock, par value $.33-1/3 per share.. 102,265 103,442
Additional paid-in capital.................. 1,008,277 1,014,911
Retained earnings........................... 2,927,729 2,884,244
Currency translation adjustments............ (92,151) (126,209)
---------- ----------
Total Stockholders' Equity............. 3,946,217 3,876,488
---------- ----------
$7,773,987 $7,687,353
========== ==========
<PAGE>
AMERICAN HOME PRODUCTS CORPORATION AND SUBSIDIARIES
CONSOLIDATED CONDENSED STATEMENTS OF INCOME
(In Thousands Except Per Share Amounts)
Three Months Six Months
Ended June 30, Ended June 30,
1994 1993 1994 1993
---------- ---------- ---------- ----------
Net sales................. $1,977,853 $1,909,416 $4,121,898 $4,020,431
---------- ---------- ---------- ----------
Cost of goods sold........ 627,895 650,671 1,285,360 1,311,263
Selling, admin., and
general expenses........ 738,475 700,549 1,471,157 1,443,285
Research and development
expenses................ 179,915 161,141 352,819 311,770
Restructuring charge...... 173,697 -- 173,697 --
Other (income) exp., net.. (60,965) 5,813 (57,472) 13,497
---------- ---------- ---------- ----------
Income before federal and
foreign taxes........... 318,836 391,242 896,337 940,616
Provision for taxes....... 18,855 103,752 180,556 251,617
---------- ---------- ---------- ----------
Net income................ $ 299,981 $ 287,490 $ 715,781 $ 688,999
========== ========== ========== ==========
Net income per share of
common stock............ $ 0.98 $ 0.93 $ 2.32 $ 2.22
========== ========== ========== ==========
Dividends per share of
common stock............ $ 0.73 $ 0.71 $ 1.46 $ 1.42
========== ========== ========== ==========
Average number of common
shares and common share
equivalents of preferred
stock outstanding during
the period used in the
computation of net income
per share................ 307,349 309,917 308,618 310,933
<PAGE>
AMERICAN HOME PRODUCTS CORPORATION AND SUBSIDIARIES
CONSOLIDATED CONDENSED STATEMENTS OF RETAINED EARNINGS
AND ADDITIONAL PAID-IN CAPITAL
(In Thousands)
Six Months Ended June 30,
RETAINED EARNINGS 1994 1993
---------- ----------
Balance, beginning of period $2,884,244 $2,547,719
Add: Net income 715,781 688,999
---------- ----------
3,600,025 3,236,718
---------- ----------
Less: Cash dividends declared 450,553 441,712
Cost of treasury stock acquired
less amounts charged to capital 213,320 241,609
Other 8,423 -
---------- ----------
672,296 683,321
---------- ----------
Balance, end of period $2,927,729 $2,553,397
========== ==========
ADDITIONAL PAID-IN CAPITAL
Balance, beginning of period $1,014,911 $ 953,155
Add: Excess over par value of common
stock issued 24,376 55,439
Less: Cost of treasury stock acquired,
less amounts charged to retained
earnings 31,010 31,009
---------- ----------
Balance, end of period $1,008,277 $ 977,585
========== ==========
<PAGE>
AMERICAN HOME PRODUCTS CORPORATION AND SUBSIDIARIES
CONSOLIDATED CONDENSED STATEMENTS OF CASH FLOWS
(In Thousands)
Six Months Ended June 30,
1994 1993
---------- ----------
Operating Activities
- --------------------
Net income................................... $ 715,781 $ 688,999
Adjustments to reconcile net income to net
cash provided from operating activities:
Depreciation and amortization.............. 128,018 120,014
Deferred income taxes...................... (110,750) 57,625
Restructuring charge....................... 173,697 --
Changes in working capital, net............ (387,049) (196,941)
Other items, net........................... (110,726) (20,008)
---------- ----------
Net cash provided from operating activities.. 408,971 649,689
---------- ----------
Investing Activities
- --------------------
Purchases of property, plant and equipment... (190,655) (234,655)
Acquisition of businesses for cash, net
of cash acquired........................... (22,238) (67,500)
Proceeds/(purchases) of marketable
securities, net............................ 14,895 (16,215)
Purchases of other assets.................... (5,550) (3,118)
Proceeds from sales of other assets.......... 170,964 6,804
---------- ----------
Net cash used for investing activities....... (32,584) (314,684)
---------- ----------
Financing Activities
- --------------------
Dividends paid............................... (450,553) (441,670)
Net proceeds of debt......................... -- 247,756
Purchases of treasury stock.................. (245,729) (274,102)
Exercise of stock options.................... 20,612 46,854
---------- ----------
Net cash used for financing activities....... (675,670) (421,162)
---------- ----------
Effects of exchange rates on cash balances... 7,942 (17,240)
---------- ----------
Decrease in cash and cash equivalents........ (291,341) (103,397)
Cash and cash equivalents, beginning
of period.................................. 1,936,834 1,692,761
---------- ----------
Cash and cash equivalents, end of period..... $1,645,493 $1,589,364
========== ==========
Supplemental Information
- ------------------------
Interest payments $ 33,790 $ 24,829
Income tax payments 295,898 227,620
<PAGE>
Results of Operations
Net sales for the 1994 second quarter of $1.98 billion increased
4% from the corresponding 1993 period. Six months net sales of
$4.12 billion increased 3% from prior year levels. Health care
products segment sales were 2% higher in the 1994 second quarter
and first half. Food product sales increased 13% for the second
quarter and 10% for the first six months of 1994. The negative
impact of foreign exchange rates on consolidated worldwide net
sales was approximately 1% for the second quarter and first six
months of 1994.
Three Months % Six Months %
($ in Millions) Ended June 30, Inc Ended June 30, Inc
Net Sales to Customers 1994 1993 (Decr) 1994 1993 (Decr)
- ---------------------- -------- -------- ---- -------- -------- ----
Health Care Products
Pharmaceuticals $1,170.3 $1,117.5 +5% $2,443.1 $2,374.0 +3%
Consumer Health Care 344.2 354.5 -3% 788.2 803.0 -2%
Medical Supplies and
Diagnostics 214.7 217.3 -1% 430.4 425.0 +1%
-------- -------- -------- --------
Total Health Care 1,729.2 1,689.3 +2% 3,661.7 3,602.0 +2%
Food Products 248.7 220.1 +13% 460.2 418.4 +10%
-------- -------- -------- --------
Consolidated Net
Sales $1,977.9 $1,909.4 +4% $4,121.9 $4,020.4 +3%
======== ======== ======== ========
Worldwide pharmaceutical sales increased 5% for the 1994 second
quarter and were 3% higher for the first six months of 1994.
Excluding the effects of foreign exchange rate fluctuations, 1994
worldwide pharmaceutical sales would have increased 6% for the
second quarter and 4% for the first six months. U.S.
pharmaceutical sales increased 4% for the 1994 second quarter due
primarily to unit volume growth. This volume growth was led by
Premarin, anti-inflammatory products and the veterinary product
line and was offset, in part, by lower unit sales of infant
nutritionals, Norplant, oral contraceptives and cardiovascular
products.
<PAGE>
First half sales increased 3% with unit volume growth generating
the majority of the increase. These unit increases were mainly
due to the initial sell-in of Effexor, increased sales of
Premarin and anti-inflammatory products, and to a lesser extent,
increases in cardiovascular and veterinary products and Factor
VIII. These increases were offset, in part, by lower unit sales
of Norplant, infant nutritional products and oral contraceptives.
Foreign pharmaceutical sales increased 6% for the 1994 second
quarter and 2% for the first six months due primarily to unit
volume growth in nutritional products and Premarin. Excluding
the effects of foreign exchange rate fluctuations, foreign
pharmaceutical sales would have increased 9% in the second
quarter and 6% for the first six months.
Worldwide consumer health care sales decreased 3% for the 1994
second quarter and 2% for the first half. U.S. sales of consumer
health care products decreased 2% for the second quarter and 4%
for the first half due primarily to lower unit sales of
cough/cold and family planning products offset, in part, by
increases in sales of lip care, hemorrhoidal relief and analgesic
products. Foreign consumer health care sales decreased 4% for
the second quarter due primarily to lower sales of oral health
care products in Brazil and lower unit sales of sleep-aid and
analgesic products in Germany and increased 1% for the first half
of 1994 due primarily to unit volume increases in cough/cold
products in certain Latin American markets. Excluding the
effects of foreign exchange, international consumer health care
sales would have decreased 2% for the second quarter and
increased 3% for the first half of 1994.
Worldwide medical supplies and diagnostic products sales
decreased 1% for the second quarter and increased 1% for the
first six months of 1994. U.S. sales decreased 3% for the 1994
second quarter as volume increases in needles and syringes,
tympanic thermometry and surgical devices were more than offset
by lower sales from Corometrics Medical System, Inc. which was
sold in May 1994. First half U.S. sales were approximately equal
to year ago levels as volume increases in needles and syringes,
surgical devices and tympanic thermometry products, were offset
by lower sales from Corometrics. Excluding the results of
Corometrics, sales increases for this segment would have been 5%
for the second quarter and first half of 1994.
<PAGE>
Foreign sales increased 6% for the second quarter and 7% for the
first half due primarily to volume increases in the tube and
catheter product lines in Germany and Japan.
Food products sales increased 13% for the 1994 second quarter and
10% for the first half due primarily to increases in unit sales
of canned pasta products, Polaner and Pam. The successful
introduction of the Sesame Street line of nutritional pasta for
children contributed to these sales increases.
The tables below present comparative net sales for the second
quarter and first six months of 1994 by geographic segment. The
second quarter and first half results for the Canada and Latin
America and Europe and Africa segments were adversely impacted by
unfavorable foreign exchange rate fluctuations. Excluding the
effects of the rate fluctuations, sales in Canada and Latin
America would have approximated 1993 levels for the 1994 second
quarter and would have increased 5% for the first half and sales
in Europe and Africa would have increased 9% for the second
quarter and 6% for the first six months. The Asia and Australia
segment was favorably impacted by foreign exchange rates which
contributed $2.9 million and $4.9 million to sales in the 1994
second quarter and first half, respectively.
Three Months %
($ in Millions) Ended June 30, Inc
Net Sales 1994 1993 (Decr)
- --------- -------- -------- ------
U.S. $1,294.4 $1,249.1 +4%
Canada and Latin America 220.3 226.4 -3%
Europe and Africa 320.2 305.0 +5%
Asia and Australia 143.0 128.9 +11%
-------- --------
Consolidated Net Sales $1,977.9 $1,909.4 +4%
======== ========
Six Months %
($ in Millions) Ended June 30, Inc
Net Sales 1994 1993 (Decr)
- --------- -------- -------- -----
U.S. $2,788.9 $2,718.1 +3%
Canada and Latin America 451.4 445.3 +1%
Europe and Africa 613.3 601.6 +2%
Asia and Australia 268.3 255.4 +5%
-------- --------
Consolidated Net Sales $4,121.9 $4,020.4 +3%
======== ========
<PAGE>
Cost of goods sold, as a percentage of net sales, decreased 2.4%
from 1993 levels for the second quarter and 1.4% for the first
six months due primarily to lower royalty expenses, certain non-
recurring product recall expenses incurred in 1993 and a more
favorable product mix.
Selling, administrative and general expenses, as a percentage of
net sales, increased 0.6% from 1993 levels in the second quarter
and decreased 0.2% for the first half. The increase in the
second quarter was due primarily to higher marketing and selling
expenses. First half increases in marketing and selling
expenses were offset by the reduction in the first quarter of
certain legal reserves.
Research and development expenses increased $19 million for the
second quarter or 12% over prior year levels to $180 million, and
increased $41 million or 13% over prior year levels to $353
million for the first six months of 1994. Included in this
research and development were Genetics Institute, Inc.
expenditures of approximately $28 million for the second quarter
and $54 million for the first six months of 1994, net of
collaborative revenues.
Unusual Items:
Restructuring Charge
In the second quarter of 1994, the Company recorded a $174
million charge for the cost of implementing two restructuring
programs related primarily to the U.S. pharmaceutical and
consumer health care businesses. The first program, announced in
April 1994, involved the consolidation of the manufacturing,
distribution and quality control functions for the U.S.
pharmaceutical and consumer health care businesses and will
result in the elimination of excess production capacity and
associated workforce, primarily through the closure of the
Company's manufacturing facility in Hammonton, New Jersey. The
second program addressed the organizational effectiveness of the
Company's U.S. pharmaceutical division and will result in further
workforce reductions. In total, approximately 2,000 jobs in the
domestic pharmaceutical and consumer health care businesses will
<PAGE>
be eliminated as a result of these programs. These
restructurings are intended to lower costs in response to
pressure to reduce health care costs, and to enable the Company
to continue to expand its pharmaceutical and biotechnology
research and development.
Asset Sales
In May 1994, the Company sold Corometrics Medical Systems, Inc.,
a manufacturer of perinatal monitoring systems, to Marquette
Electronics, Inc. for $74 million, exclusive of certain lease
receivables of approximately $37 million. Also in May, the
Company sold Agri-Bio Corporation, a manufacturer of a medicated
feed additive for the poultry industry, for $40 million to
Hoffmann-La Roche Inc. In addition, the Company sold its former
corporate headquarters facility in New York City for $50 million.
Other (income) expense, net, for the second quarter and first
half of 1994 includes the aggregate gain of approximately $76
million from these sales.
Income Taxes
The Company's effective tax rate was 5.9% for the second quarter
and 20.1% for the first six months of 1994 compared to 26.5% for
the 1993 second quarter and 26.8% for the six month period. The
lower rates in 1994 are due to the reduction of certain tax
accruals which were no longer deemed necessary in the quarter.
The effective tax rate is expected to be approximately 28% for
the balance of the year.
The restructuring charge, the gain on asset sales and the tax
adjustment, in the aggregate, had no effect on the Company's 1994
earnings per share.
<PAGE>
Income Before Taxes - Segment Data
Three Months % Six Months %
($ in Millions) Ended June 30, Inc Ended June 30, Inc
Income Before Taxes 1994 1993 (Decr) 1994 1993 (Decr)
- ------------------- ------ ------ ------ ------ ------ ------
Health Care Products $228.1 $363.0 -37% $770.4 $901.5 -15%
Food Products 30.0 28.3 +6% 50.7 48.7 +4%
Corporate 60.7 (.1) -- 75.2 (9.6) --
------ ------ ------ ------
Consolidated Income
Before Taxes $318.8 $391.2 -19% $896.3 $940.6 -5%
====== ====== ====== ======
Three Months % Six Months %
($ in Millions) Ended June 30, Inc Ended June 30, Inc
Income Before Taxes 1994 1993 (Decr) 1994 1993 (Decr)
- ------------------- ------ ------ ------ ------ ------ ------
United States $153.2 $248.3 -38% $585.2 $660.2 -11%
Canada and Latin
America 60.7 57.7 +5% 126.3 104.7 +21%
Europe and Africa 77.7 60.3 +29% 136.4 126.0 +8%
Asia and Australia 27.2 24.9 +9% 48.4 49.7 -3%
------ ------ ------ ------
Consolidated Income
Before Taxes $318.8 $391.2 -19% $896.3 $940.6 -5%
====== ====== ====== ======
Health Care Reform and Competition
The debate regarding U.S. health care reform and its uncertainty
continued during the first half of 1994. While the Company
cannot predict with certainty the nature of these reforms and the
impact they might have on its domestic business, market
competition has put pressures on pricing and operating results.
These trends are expected to continue throughout the remainder of
1994.
<PAGE>
The Company is not dependent on any patent-protected product or
line of products for a substantial portion of its revenues or
profits. However, PREMARIN, the Company's estrogen replacement
therapy, does contribute significantly to sales and profits. For
further discussion on PREMARIN see Item 1, COMPETITION of the
Company's 1993 Annual Report on Form 10-K.
Liquidity, Financial Condition and Capital Resources
The Company continues to generate positive cash flow from
operating activities. Cash and cash equivalents decreased $291
million in the first half of 1994 to $1.65 billion. Cash flow
from operating activities of approximately $409 million, proceeds
of approximately $171 million from sales of assets as well as
available cash reserves were used principally for dividend
payments of $451 million, common share repurchases of $246
million and capital expenditures of $191 million.
The Company repurchased 4,119,000 shares of common stock during
the first half of 1994. On July 28, 1994, the Board of Directors
authorized the repurchase of an additional 10 million shares of
the Company's common stock, subject to price and market
conditions. A program to repurchase 10 million shares originally
announced on June 25, 1992 is nearing completion.
Capital expenditures included the expansion of the Company's
Wyeth-Ayerst R&D facilities in New Jersey and Pennsylvania,
facilities expansion projects at Genetics Institute, the
construction of the Quinton Instrument Company's new headquarters
building in Washington and continued strategic investments in
manufacturing/distribution facilities worldwide.
On August 10, 1994, the Company commenced a tender offer for all
of the outstanding shares of common stock of American Cyanamid
Company ("ACC") for $95 per share in cash, subject to certain
conditions (the "Offer"). The amount of funds required to
acquire all of the ACC shares at the Offer price and to pay
related fees and expenses is approximately $9.2 billion, which is
intended to be financed with a combination of bank borrowings and
the Company's general corporate funds. On August 9, 1994, the
Company entered into a commitment letter with Chemical Securities
Inc. and Chemical Bank under which, subject to certain
<PAGE>
conditions, Chemical Securities Inc. agreed to use its "best
efforts" to form a syndicate of financial institutions to provide
a $9.0 billion bank credit facility. Further, Chemical Bank has
agreed to provide up to $1.2 billion of such facility. The
facility would be used to finance the acquisition of ACC, to
replace the Company's existing $1.0 billion bank credit facility
(under which there are no amounts outstanding) and for general
corporate purposes, including commercial paper back-up. Further
information concerning the Offer and the proposed financing is
set forth in a filing with the Securities and Exchange Commission
on Schedule 14D-1.
The Company has been notified by one rating agency that its
current commercial paper rating, and by two rating agencies that
its current long-term debt rating may be lowered if the Company
is successful in this acquisition. Management is confident that
the cash flows from the combined businesses will be adequate to
repay both the principal and interest on the acquisition
financing and, further, to allow the Company to continue to fund
its operations, pay dividends and maintain its ongoing programs
of capital expenditures, without restricting its ability to make
further acquisitions as may be appropriate.
<PAGE>
Part II - Other Information
Item 1. Legal Proceedings
The Company is involved in various legal proceedings of
a nature considered normal to its business.
There are approximately 1,700 cases pending,
predominantly in the United Kingdom, based primarily on
alleged dependence on the tranquilizer ATIVAN.
Substantially all of the cases in the United Kingdom
have been supported by governmental legal aid funding.
The Legal Aid Board in England, where more than 1,100
cases are pending, had determined to discontinue
funding of these cases, although the Board has recently
indicated that it will reconsider that decision in
light of procedural arguments raised by plaintiffs. If
this decision is confirmed upon reconsideration and
upheld on appeal, these cases will be dismissed and the
other legally-aided cases in Scotland and Northern
Ireland (approximately 340 cases) may be discontinued
as well.
A class of women who have suffered injuries allegedly
as a result of the removal of Norplant, the Company's
implantable contraceptive product, has been certified
in Doe v. Wyeth-Ayerst Laboratories, a class action
pending in the Circuit Court of Illinois for Cook
County. The Company is seeking reconsideration of the
certification order on the grounds that the
individualized issues raised by claims arising out of
Norplant insertions preclude class treatment. Another
class action seeking recovery for the same injuries,
Johnson v. Wyeth-Ayerst Laboratories, has been filed in
the 160th Judicial District Court for Dallas County,
Texas, although a class has not been certified to date.
The Company understands that similar actions have been
filed in other jurisdictions but have not yet been
served upon the Company. The Company also is a
defendant in approximately 25 other individual lawsuits
seeking damages for injuries allegedly caused by
Norplant.
As described in the Company's Annual Report on Form
10-K for the year ended December 31, 1993, the Company
has been involved in the Brand Name Prescription Drug
Antitrust Litigation which has been consolidated for
pretrial purposes in the U.S. District Court for the
Northern District of Illinois (MDL 997). Additional
complaints with similar allegations, which have been
<PAGE>
filed against the Company, other manufacturers of
pharmaceutical products and wholesalers, have also been
consolidated in this action. Among these cases is an
Alabama case brought on behalf of a purported class of
consumers who purchased prescription drugs in the State
of Alabama. Additionally, complaints were filed in
Alabama state courts under Alabama law on behalf of an
alleged class of retail pharmacies. A complaint was
also filed under state law in California state court on
behalf of a purported class of consumers who purchased
prescription drugs in California. In Wisconsin, a
complaint was filed against the Company and other
pharmaceutical companies alleging violations of a
Wisconsin state uniform pricing statute.
Following an appeal by the Company from a judgment
affirming a penalty imposed by the New York Department
of Environmental Conservation in 1992, the Appellate
Division of the Supreme Court of New York, Third
Department, has issued an order reducing the amount of
the penalty from $750,000 to $97,000.
On August 9, 1994, the Company commenced an action in
the U.S. District Court for the District of Maine
against American Cyanamid Company ("ACC") and certain
members of its Board of Directors in connection with
the tender offer commenced by the Company. The action
seeks declaratory and injunctive relief against
enforcement of certain anti-takeover provisions of the
Maine Business Corporation Act, ACC's articles of
incorporation and its by-laws. Further information
concerning this litigation is set forth in the
Company's Statement on Schedule 14D-1 relating to the
Offer, which Statement is incorporated in this Form
10-Q by reference.
Other significant legal proceedings are described in
the Company's Annual Report on Form 10-K for the year
ended December 31, 1993.
In the opinion of the Company, although the outcome of
any litigation cannot be predicted with certainty, the
ultimate liability of the Company in connection with
pending litigation and other matters described above
will not have a material adverse effect on the
Company's financial position or results of operations.
<PAGE>
Item 4. Submission of Matters to a vote of Security-Holders
(a) The matters described under item 4(c) below were
submitted to a vote of security-holders, through
the solicitation of proxies pursuant to Regulation
14 under the Securities Exchange Act, at the
Annual Meeting of Stockholers held on April 20,
1994 (the "Annual Meeting").
(b) Not applicable.
(c) The following describes the matters voted upon at
the Annual Meeting and sets forth the number of
votes cast for, against or withheld and the number
of abstentions as to each such matter.
(i) Election of directors:
Nominee For Withheld
Clifford L. Alexander, Jr. 249,238,617 1,693,637
Frank A. Bennack, Jr. 249,545,655 1,386,599
K. Roald Bergethon 249,124,175 1,808,079
Robert G. Blount 249,548,752 1,383,502
John W. Culligan 249,178,658 1,753,596
Robin Chandler Duke 249,357,589 1,574,665
John D. Feerick 249,093,132 1,839,122
Edwin A. Gee 249,273,698 1,658,556
Robert W. Sarnoff 249,125,901 1,806,353
John R. Stafford 249,584,128 1,348,126
John R. Torell III 249,516,787 1,415,467
William Wrigley 249,558,177 1,374,077
(ii) Ratification of the Appointment of Arthur
Andersen & Co., as independent public
accountants for 1994:
For Against Abstain
249,470,011 792,818 665,742
<PAGE>
(iii) Adoption of the 1993 Stock Incentive Plan:
Broker
For Against Abstain Non-Votes
231,005,290 17,153,701 2,766,072 203,067
(iv) Adoption of the 1994 Restricted Stock Plan for
Non-Employee Directors:
Broker
For Against Abstain Non-Votes
226,250,883 21,630,640 3,044,141 203,668
(d) Not applicable.
Item 6. Exhibits and Reports on Form 8-K
(a) Exhibits
(10) Letters extending the term of the Credit Agreement
dated April 29, 1993 among Registrant, the Lenders
Parties thereto and Chemical Bank as previously
filed in the Company's latest annual report on
Form 10-K.
(11) Calculation of per share earnings as reported in
Part I on Page 4 of this Form 10-Q is incorporated
herein by reference.
(99) Schedule 14D-1 Tender Offer Statement relating to
the tender offer by a subsidiary of the Company
for all outstanding shares of American Cyanamid
Company at $95 per share, as filed with the
Securities and Exchange Commission on August 10,
1994, is incorporated by reference.
(b) Reports
The Company did not file any reports on Form 8-K
during the quarter covered by this report,
however, a Form 8-K was filed on August 4, 1994
stating that, on August 2, 1994, American Home
Products Corporation transmitted a letter to ACC
offering to acquire ACC for $95 per share in cash
and issued two press releases in connection
therewith. The two press releases were included
as Exhibits in the Form 8-K.
<PAGE>
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/ John R. Considine
John R. Considine
Vice President - Finance
(Duly Authorized Signatory
and Chief Accounting Officer)
Date: August 15, 1994
Exhibit Index
Regulation S-K Description
Exhibit Table of
Item No. Exhibit Page No.
10 Extension of Ex-2
termination
date for Credit
Agreement.
<PAGE>
AMERICAN HOME PRODUCTS CORPORATION
FIVE GIRALDA FARMS, MADISON, NEW JERSEY 07940, (201)660-5000
March 28, 1994
Treasury
Ms. Julie Soper
Vice President
Chemical Bank
270 Park Avenue
New York, NY 10017-2070
RE: $1.0 BILLION CREDIT AGREEMENT DATED APRIL 29, 1993
Dear Julie:
In connection with the referenced Credit Agreement between
American Home Products Corporation and Chemical Bank as Agent,
together with the Lenders, please accept this letter as
confirmation of our desire to extend the termination date another
364 days as provided in the Agreement under Section 2.18.
Attached for your use are several copies of our 1993 Annual
Report. Please feel free to distribute these copies to the
Lenders together with their notifications.
Please feel free to call me (201-660-6432) if you have any
questions.
Sincerely,
/S/ Thomas R. Siegert
Thomas R. Siegert
Assistant Treasurer
cc: S. Parker
J. O'Connor
<PAGE>
CHEMICAL
Chemical Bank Julie A. Soper
270 Park Avenue Vice President
New York, NY 10017-2070 Banking & Corporate
212/270-1053 Finance Group
April 28, 1994
Thomas R. Siegert
Assistant Treasurer
Director - Capital Markets and Foreign Exchange
American Home Products Corporation
Five Giralda Farms
Madison, NJ 07940
Re: Credit Agreement among American Home Products Corporation,
the Lenders Parties thereto, and Chemical Bank, as Agent,
Dated as of April 29, 1993 ("Credit Agreement").
All of the lenders except for Westpac Banking Corporation
responded affirmative to the extension request dated March 28,
1994. Chemical Bank has acquired Westpac Banking Corporation's
$25,000,000 commitment pursuant to section 8.7 (d), effective
April 27, 1994. All of the other lenders' commitments remain
unchanged. Therefore, pursuant to Section 2.18 under the above-
referenced Credit Agreement, the Termination Date has been
extended to April 11, 1995. The effective date of this extension
is April 12, 1994.
It has been a pleasure working with you on this extension.
Please feel free to call me if you have any further questions.
Yours truly,
/S/ Julie A. Soper
Julie A. Soper
