================================================================================
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 11-K
ANNUAL REPORT
Pursuant to Section 15 (d)
of the Securities Exchange Act of 1934
for the year ended December 31, 1999
AMERICAN HOME PRODUCTS CORPORATION SAVINGS PLAN
(Full title of the Plan)
AMERICAN HOME PRODUCTS CORPORATION
(Name of Issuer of the securities held pursuant to the Plan)
Five Giralda Farms
Madison, New Jersey 07940
(Address of principal executive office)
==============================================================================
<PAGE>
SIGNATURE
---------
Pursuant to the requirements of the Securities Exchange Act of 1934, the
registrant has duly caused this annual 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
Date: June 21, 2000
<PAGE>
SIGNATURE
---------
Pursuant to the requirements of the Securities Exchange Act of 1934, the
American Home Products Corporation Savings Plan Committee has duly caused this
annual report to be signed on its behalf by the undersigned, thereunto duly
authorized.
AMERICAN HOME PRODUCTS CORPORATION
SAVINGS PLAN
By: /s/ Thomas M . Nee
------------------
Thomas M. Nee
Chairman of the American Home
Products Corporation Savings
Plan Committee
Date: June 21, 2000
<PAGE>
AMERICAN HOME PRODUCTS CORPORATION
SAVINGS PLAN
FINANCIAL STATEMENTS
AS OF DECEMBER 31, 1999 AND 1998
TOGETHER WITH REPORT OF INDEPENDENT PUBLIC ACCOUNTANTS
EMPLOYER IDENTIFICATION NUMBER - 13-2526821
PLAN NUMBER - 045
<PAGE>
AMERICAN HOME PRODUCTS CORPORATION
SAVINGS PLAN
DECEMBER 31, 1999 AND 1998
INDEX
Page
----
Report of Independent Public Accountants
Statements of Net Assets Applicable to Participants'
Equity as of December 31, 1999 and 1998 1
Statement of Changes in Net Assets Applicable
to Participants' Equity for the Year Ended
December 31, 1999 2
Notes to Financial Statements 3 - 8
Supplemental Schedules:
I. Item 4i - Schedule of Assets Held for
Investment Purposes as of December 31, 1999 Schedule I
II. Item 4j - Schedule of Reportable Transactions
For the Year Ended December 31, 1999 Schedule II
Consent of Independent Public Accountants
<PAGE>
REPORT OF INDEPENDENT PUBLIC ACCOUNTANTS
----------------------------------------
To the Participants and Savings Plan Committee of the American Home Products
Corporation Savings Plan:
We have audited the accompanying statements of net assets applicable to
participants' equity of the American Home Products Corporation Savings Plan as
of December 31, 1999 and 1998, and the related statement of changes in net
assets applicable to participants' equity for the year ended December 31, 1999.
These financial statements and the supplemental schedules referred to below are
the responsibility of the Plan's management. Our responsibility is to express an
opinion on these financial statements and schedules based on our audits.
We conducted our audits in accordance with auditing standards generally accepted
in the United States. Those standards require that we plan and perform the audit
to obtain reasonable assurance about whether the financial statements are free
of material misstatement. An audit includes examining, on a test basis, evidence
supporting the amounts and disclosures in the financial statements. An audit
also includes assessing the accounting principles used and significant estimates
made by management, as well as evaluating the overall financial statement
presentation. We believe that our audits provide a reasonable basis for our
opinion.
In our opinion, the financial statements referred to above present fairly, in
all material respects, the net assets applicable to participants' equity of the
American Home Products Corporation Savings Plan as of December 31, 1999 and
1998, and the changes in its net assets applicable to participants' equity for
the year ended December 31, 1999, in conformity with accounting principles
generally accepted in the United States.
Our audits were performed for the purpose of forming an opinion on the basic
financial statements taken as a whole. The supplemental schedules of assets held
for investment purposes and reportable transactions are presented for the
purpose of additional analysis and are not a required part of the basic
financial statements but are supplementary information required by the
Department of Labor's Rules and Regulations for Reporting and Disclosure under
the Employee Retirement Income Security Act of 1974. The supplemental schedules
have been subjected to the auditing procedures applied in the audits of the
basic financial statements and, in our opinion, are fairly stated in all
material respects in relation to the basic financial statements taken as a
whole.
ARTHUR ANDERSEN LLP
New York, New York
June 5, 2000
<PAGE>
<TABLE>
American Home Products Corporation Savings Plan
Statements of Net Assets Applicable to Participants' Equity
As of December 31, 1999 and 1998
<CAPTION>
December 31,
1999 1998
-------------- --------------
<S> <C> <C>
Assets:
Investments, at fair value $1,957,392,047 $1,967,030,204
Loans to participants 33,779,287 32,563,873
Receivables:
Employer contribution 1,443,453 1,381,304
Participant contribution 4,817,598 4,595,070
Loan repayments 582,411 603,339
Due from brokers for securities sold 0 9,171,558
-------------- --------------
Total receivables 6,843,462 15,751,271
-------------- --------------
Cash and cash equivalents 24,979,751 11,868,722
-------------- --------------
Total Assets 2,022,994,547 2,027,214,070
-------------- --------------
Liability:
Due to broker for securities
purchased 4,480,221 0
-------------- --------------
Net Assets Applicable to Participants'
Equity $2,018,514,326 $2,027,214,070
============== ==============
The accompanying notes to financial statements are
an integral part of these statements.
</TABLE>
-1-
<PAGE>
<TABLE>
American Home Products Corporation Savings Plan
Statement of Changes in Net Assets Applicable to Participants' Equity
For The Year Ended December 31, 1999
<CAPTION>
Year ended
December 31, 1999
-----------------
<S> <C>
Additions to net assets attributed to:
Investment Loss:
Net depreciation in market value
of investments ($122,666,700)
Interest 32,694,965
Dividends 71,215,574
---------------
Total investment loss (18,756,161)
Contributions:
Employer 33,150,709
Participant 114,703,956
---------------
Total contributions 147,854,665
---------------
Rollovers into Plan 11,126,918
---------------
Total additions 140,225,422
---------------
Deductions from net assets attributed to:
Benefits paid to participants 146,875,417
Transfer out of Plan 2,049,749
---------------
Total deductions 148,925,166
Net deductions (8,699,744)
Net Assets Applicable to Participants'
Equity:
Beginning of Year 2,027,214,070
---------------
End of Year $2,018,514,326
===============
The accompanying notes to financial statements are
an integral part of this statement.
</TABLE>
-2-
<PAGE>
AMERICAN HOME PRODUCTS CORPORATION
SAVINGS PLAN
NOTES TO FINANCIAL STATEMENTS
NOTE 1 - PLAN DESCRIPTION
----------------
The following description of the American Home Products Corporation Savings Plan
(the "Plan") only provides general information. Participants of the Plan should
refer to the Plan Document for a more detailed and complete description of the
Plan's provisions.
General
-------
The Plan, a defined contribution profit-sharing plan, was approved and adopted
by the Board of Directors of American Home Products Corporation ("AHPC" or the
"Company") and became effective on April 1, 1985. Full or part-time (U.S. paid)
employees of the Company and its participating subsidiaries who are not subject
to a collective bargaining agreement ("non-union") are eligible to participate
in the Plan after attaining age 21, as defined in the Plan. The Plan is subject
to the provisions of the Employee Retirement Income Security Act of 1974
("ERISA"), as amended, and the Internal Revenue Code (the "Code").
On May 4, 1999, the AHPC Savings Plan Committee (the "Committee") approved that
the AHPC Solgar Union Profit Sharing be merged into the Plan. The balances were
transferred into the Plan on October 1, 1999 and became 100% vested prior to the
transfer.
In connection with the sale of Eurand America on April 1, 1999, the assets
attributable to participants from this business were transferred out of the
Plan.
Contributions
-------------
Participants may elect to make contributions to the Plan in whole percentages up
to a maximum of 16% of their covered compensation, as defined. Contributions can
be made on a before-tax basis ("salary deferral contributions"), an after-tax
basis ("after-tax contributions"), or a combination of both. AHPC will
contribute an amount equal to 50% of the participant's contributions to the Plan
for contributions up to 6% of the participant's covered compensation.
Participants direct the investment of their contributions into various
investment options offered by the Plan. Under the Code, salary deferral
contributions, total annual contributions, and the amount of compensation that
can be included for Plan purposes are subject to annual limitations.
-3-
<PAGE>
Vesting and Separation From Service
-----------------------------------
Participants are fully vested at all times in their salary deferral and
after-tax contributions and rollovers plus actual earnings thereon. A
participant is also fully vested in Company matching contributions if the
participant has at least five years of continuous service, as defined. If
participants have less than five years of continuous service, such participants
become vested in the matching contribution according to the following schedule:
Vesting
Years of Continuous Service Percentage
--------------------------- ----------
1 year completed 0%
2 years completed 25%
3 years completed 50%
4 years completed 75%
5 years completed 100%
Regardless of the number of years of continuous service, participants shall be
fully vested in their matching contribution account upon reaching age 65 or upon
death, if earlier.
The non-vested portion of the matching contribution is forfeited and becomes
available to satisfy future Company matching contributions, if employment is
terminated prior to full vesting. During 1999, forfeitures of $859,989 were used
to offset Company contributions. As of December 31, 1999, the amount of
forfeitures available to offset future Company contributions totaled $560,500.
Distributions
-------------
Participants are entitled to withdraw all or any portion of their after-tax
contributions. Participants may make full or partial withdrawals of funds in any
of their accounts upon attaining age 59 1/2 or for financial hardship, as
defined in the Plan Document, before that age. Participants may qualify for
financial hardship withdrawals if they have an immediate and heavy financial
need, as determined by the Committee. Participants are limited to one
non-hardship and one hardship withdrawal each year, provided they have no other
funds that are readily available to meet that need. Participants cannot make a
hardship withdrawal of the earnings on before-tax account balances which were
credited to their accounts on or after January 1, 1988.
Upon termination of employment, participants are entitled to a lump-sum
distribution of their vested account balance. An election can be made to defer
the distribution if the participant's account balance is greater than $5,000 and
the participant is less than 70 1/2 years of age.
-4-
<PAGE>
Loans
-----
Employees who have a vested account balance of at least $2,000 may borrow from
the vested portion of their account, subject to certain maximum amounts.
Participants in the Plan may borrow up to 50% of their vested account balances.
Each loan is secured by the borrower's vested interest in their account balance.
Participants may have outstanding up to two general purpose loans and one loan
to acquire or construct a principal residence. All loans must be repaid within 5
years except for those used to acquire or construct a principal residence, which
must be repaid within 15 years. Defaults on participants' loans during the year
are treated as withdrawals and are fully taxable to the participants. The
interest rate charged on outstanding loans provides a return commensurate with a
market rate, or such other rate as permitted by government regulations.
Amendments to the Plan
----------------------
Effective July 1, 1999, the Committee amended the Plan to accept rollovers of
lump-sum distributions from the AHPC Retirement Plan - U.S. The Plan will also
provide for pre-approved withdrawals for retirees and eliminate the Plan's final
distribution administrative requirement at age 70 1/2. Also, the Plan was
amended to allow pre-approved withdrawals for active employees with respect to
after-tax savings and for distributions after age 59 1/2.
NOTE 2 - ACCOUNTING POLICIES
-------------------
Basis of Accounting
-------------------
The accompanying financial statements are prepared on the accrual basis of
accounting.
Investment Valuation
--------------------
AHPC's common stock is recorded at fair market value at December 31, 1999 and
1998. Shares in the Fidelity Funds and the MAS Value Portfolio are recorded at
fair market value, which is based on their published net asset value at December
31, 1999 and 1998. The investment contracts comprising the Interest Income Fund
are recorded at contract value based upon information provided by the Fidelity
Management Trust Company (the "Trustee") which approximates market value (see
also NOTE 3).
Investment transactions are recorded on a trade date basis. Net realized gains
and losses on investments are determined, for accounting purposes, on a moving
weighted average basis as of the trade date and are included in net depreciation
on investments in the Statement of Changes in Net Assets Applicable to
Participants' Equity.
The net change in the difference between cost and current market value of
investments held is reflected in net depreciation on investments in the
Statement of Changes in Net Assets Applicable to Participants' Equity.
-5-
<PAGE>
Administrative Costs
--------------------
All costs and expenses of administering the Plan are paid by AHPC.
Use of Estimates
----------------
The financial statements have been prepared in accordance with accounting
principles generally accepted in the United States and necessarily include
amounts based on judgements and estimates made by management.
Reclassifications
-----------------
Certain reclassifications have been made to the December 31, 1998 financial
statements to conform with the December 31, 1999 presentation.
NOTE 3 - INVESTMENT ELECTIONS
--------------------
Participants can elect to invest amounts credited to their account in any of
eight investment funds and transfer amounts between funds at any time during the
year. Investment elections must be made in multiples of 10%. Transfers between
funds must be made in whole percentages and/or in an amount of at least $250.
The eight investment options are as follows:
Interest Income Fund - consists primarily of contracts issued by life
insurance companies which pay a specified rate of interest for a fixed
period of time and repay principal at maturity. The fund and its contracts
are not guaranteed by the Company or any other institution. However, the
Committee has established guidelines that provide that contracts be placed
with companies rated Aa3 or higher by Moody's and AA- or higher by
Standard & Poor's. The interest rate payable to Plan participants in this
fund will be a rate which reflects a blend of the total investments made
by the fund. During 1998, the Company began investing in a collective
trust. The purpose of the collective trust is to provide for the
collective investment of assets of participating tax qualified pension and
profit sharing plans and related trusts in guaranteed investment contracts
and readily marketable assets. The average blended interest rate
attributable to the contracts in the interest income fund approximated
6.51% for 1999 and 6.63% for 1998.
AHPC Common Stock Fund - consists primarily of AHPC common stock.
Purchases and sales of AHPC common stock are made in the open market.
Participants have full voting rights for equivalent shares purchased at
their direction under the Plan.
Fidelity Magellan Fund - consists of shares in a mutual fund managed by
Fidelity Management & Research Company that seeks long-term capital
appreciation by actively managing investments in the stocks of companies
with above average growth potential.
-6-
<PAGE>
Fidelity Balanced Fund - consists of shares in a mutual fund managed by
Fidelity Management & Research Company that invests in high yielding
securities, including common stocks, preferred stocks and bonds, with at
least 25% of the fund's assets in fixed income senior securities.
Fidelity International Growth & Income Fund - consists of shares in a
mutual fund managed by Fidelity Management & Research Company that seeks
long-term growth and current income by investing in assets, of which at
least 65% are in securities of issuers that have their principal business
activities outside of the United States.
Fidelity Spartan U.S. Equity Index Fund - consists of shares in a mutual
fund managed by Fidelity Management & Research Company that seeks to
provide investment results that correspond to the total return performance
of the stocks of companies that make up the Standard & Poor's 500 Index.
Fidelity Low-Priced Stock Fund - consists of shares in a mutual fund
managed by Fidelity Management & Research Company, that invests primarily
in domestic and international small capitalization equities.
MAS Value Portfolio - consists of shares in a mutual fund managed by
Miller Anderson & Sherrerd which seeks long-term returns by investing in
stocks of large and mid-sized companies.
NOTE 4 - MANAGEMENT OF THE PLAN
----------------------
The Plan is administered by the Committee, which was appointed by the Board of
Directors of AHPC. Fidelity Management Trust Company was appointed by the
Committee as Trustee, recordkeeper, and custodian, and is a party-in-interest to
the Plan.
NOTE 5 - FEDERAL INCOME TAX STATUS
-------------------------
The Plan obtained its latest determination letter on November 29, 1995, in which
the Internal Revenue Service stated that the Plan, as amended effective December
22, 1994, was in compliance with the applicable requirements of the Code. The
Plan has been amended since receiving the determination letter. However, the
plan administrator believes that the Plan, as currently designed, is being
operated in compliance with the applicable requirements of the Code.
NOTE 6 - PLAN TERMINATION
----------------
Although it has not expressed any intention to do so, the Company has the right
under the Plan to discontinue its contributions at any time and to terminate the
Plan subject to the provisions of ERISA. In the event of Plan termination,
participants will become 100% vested in their Company contribution accounts and
are entitled to full distribution of such amounts.
-7-
<PAGE>
NOTE 7 - INVESTMENTS
-----------
The fair market value of individual investments that represent 5% or more of the
Plan's total net assets are as follows:
1999 1998
---- ----
AHPC Common Stock, 13,805,731 and
12,000,689 shares, respectively $544,470,548 $675,971,089
Fidelity Magellan Fund $279,012,224 $193,011,303
Fidelity Balanced Fund $158,402,635 $155,613,787
Fidelity Spartan U.S. Equity Index Fund $442,357,983 $380,335,155
During 1999, the Plan's investments (including gains and losses on investments
bought and sold, as well as held during the year) appreciated (depreciated) in
value by ($122,666,700) as follows:
Mutual Funds $105,783,435
Common Stock (228,450,135)
-------------
Total ($122,666,700)
=============
NOTE 8 - SUBSEQUENT EVENTS
-----------------
On March 21, 2000, the Company announced that it signed a definitive agreement
with BASF Aktiengesellschaft for the sale of the Cyanamid Agricultural Products
business. Under this agreement, account balances of active employees of the
Agricultural business would be transferred out of the Plan.
-8-
<PAGE>
<TABLE>
Schedule I
American Home Products Corporation Savings Plan
Schedule H Item 4i - Schedule of Assets Held for Investment Purposes
As of December 31, 1999
Employer Identification Number - 13-2526821
Plan Number - 045
<CAPTION>
(d) Cost/
(c) Description of Contract (e) Current
(a&b) Identity of Issuer Investment Value Value
------------------------ ----------------------- ------------- ------------
<S> <C> <C> <C>
Group Annuity and Investment Contracts:
---------------------------------------
Allstate Life Insurance GIC 6.30% Due 9/15/00 $6,495,170 $6,495,170
GIC 6.75% Due 3/15/01 31,325,457 31,325,457
American International GIC 5.53% Due 12/15/00 20,448,786 20,448,786
Life
John Hancock Mutual Life GIC 7.05% Due 9/28/01 24,351,295 24,351,295
Insurance GIC 5.80% Due 2/18/03 21,746,029 21,746,029
GIC 6.05% Due 12/15/04 16,138,202 16,138,202
Massachussetts Mutual GIC 6.82% Due 9/15/03 17,218,402 17,218,402
Life Insurance
Metropolitan Life GIC 6.38% Due 6/15/00 23,283,459 23,283,459
Insurance GIC 7.00% Due 12/15/02 23,354,635 23,354,635
Monumental Life Insurance GIC 6.74% Due 6/15/00 29,675,520 29,675,520
GIC 6.10% Due 3/15/01 8,895,832 8,895,832
GIC 6.56% Due 6/16/03 22,065,030 22,065,030
New York Life Insurance GIC 7.10% Due 12/15/05 30,084,686 30,084,686
Pacific Mutual Life GIC 6.06% Due 6/30/01 15,077,867 15,077,867
Insurance GIC 7.05% Due 6/14/02 12,363,002 12,363,002
GIC 6.73% Due 9/15/02 29,976,297 29,976,297
Principal Mutual Life GIC 6.40% Due 3/31/00 34,678,382 34,678,382
Insurance GIC 5.65% Due 4/25/00 20,542,877 20,542,877
Security Life of Denver GIC 7.05% Due 6/14/02 17,874,730 17,874,730
Transamerica Life and GIC 6.24% Due 9/15/00 20,358,058 20,358,058
Annuity --------------------------
Total Group Annuity and Other
Investment Contracts $425,953,716 $425,953,716
===========================
The accompanying notes to financial statements are
an integral part of this schedule.
</TABLE>
<PAGE>
<TABLE>
Schedule I
(Continued)
American Home Products Corporation Savings Plan
Schedule H Item 4i - Schedule of Assets Held for Investment Purposes
As of December 31, 1999
Employer Identification Number - 13-2526821
Plan Number - 045
<CAPTION>
(d) Cost/
(c) Description of Contract (e) Current
(a&b) Identity of Issuer Investment Value Value
------------------------ ----------------------- ------------- ------------
<S> <C> <C> <C>
Collective Trust:
-----------------
SEI Financial Management 5.98% $8,571,124 $8,571,124
=========== ============
American Home Products*
Corporation Common Stock 13,805,731 shares $599,829,661 $544,470,548
--------------------------
============ ============
Mutual Funds:
Fidelity Management Trust Magellan Fund
Company* 2,042,100 shares $209,490,317 $279,012,224
============ ============
Fidelity Management Trust Balanced Fund
Company* 10,312,671 shares $151,232,206 $158,402,635
============ ============
Fidelity Management Trust International Growth &
Company* Income Fund
2,223,075 shares $47,874,443 $66,914,558
============ ============
Fidelity Management Trust Spartan U.S. Equity
Company* Index Fund
8,492,186 shares $255,814,554 $442,357,983
============ ============
Fidelity Management Trust Low-Priced Stock
Company* Fund
959,468 shares $23,020,296 $21,722,362
============ ===========
Miller Anderson & Sherrerd MAS Value Portfolio
824,681 shares $13,275,504 $9,986,897
============ ===========
Loans Receivable:
-----------------
Loans to Plan Participants Rates ranging from
6.5% to 11%
Due through 2015 $33,779,287 $33,779,287
============ ===========
* Represents a party-in-interest to the Plan.
The accompanying notes to financial statements are
an integral part of this schedule.
</TABLE>
<PAGE>
<TABLE>
Schedule II
American Home Products Corporation Savings Plan
Schedule H Item 4j - Schedule of Reportable Transactions (a)
For the Year Ended December 31, 1999
Employer Identification Number - 13-2526821
Plan Number - 045
<CAPTION>
(h) CURRENT
(f)EXPENSES VALUE OF
(c) INCURRED ASSET ON
(a&b) IDENTITY OF PARTY INVOLVED PURCHASE (d) SELLING (e) LEASE WITH (g) COST OF TRANSACTION (i) NET GAIN OR
AND DESCRIPTION OF ASSET PRICE PRICE RENTALS TRANSACTION ASSET DATE LOSS
------------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C>
BANK OF BOSTON
27 PURCHASES $123,741,113 $0 $0 $0 $123,741,113 $123,741,113 $0
27 SALES $0 $123,741,113 $0 $0 $123,741,113 $123,741,113 $0
JOHN HANCOCK MUTUAL
19 SALES $0 $112,561,453 $0 $0 $112,561,453 $112,561,453 $0
SEI FINANCIAL
MANAGEMENT
22 PURCHASES $113,800,000 $0 $0 $0 $113,800,000 $113,800,000 $0
36 SALES $0 $126,480,229 $0 $0 $126,480,229 $126,480,229 $0
FIDELITY INSTITUTIONAL MONEY
MARKET FUND
228 PURCHASES $633,194,177 $0 $0 $0 $633,194,177 $633,194,177 $0
243 SALES $0 $647,047,176 $0 $0 $647,047,176 $647,047,176 $0
(a) Reportable transactions are those purchases and sales of the same security which, individually or in the aggregate, exceed 5%
of the total Plan net assets as of the beginning of the Plan year.
The accompanying notes to financial statements are an integral part of this schedule.
</TABLE>
<PAGE>
CONSENT OF INDEPENDENT PUBLIC ACCOUNTANTS
-----------------------------------------
As independent public accountants, we hereby consent to the incorporation of our
report included in this Form 11-K into the American Home Products Corporation
previously filed Form S-3 Registration Statements Nos. 33-45324 and 33-57339 and
Form S-8 Registration Statements Nos. 2-96127, 33-24068, 33-41434, 33-53733,
33-55449, 33-45970, 33-14458, 33-50149, 33-55456, 333-15509, and 333-76939.
ARTHUR ANDERSEN LLP
New York, New York
June 21, 2000
