==============================================================================
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 - PUERTO RICO
(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 - PUERTO RICO
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 - PUERTO RICO
FINANCIAL STATEMENTS
AS OF DECEMBER 31, 1999 and 1998
TOGETHER WITH REPORT OF INDEPENDENT PUBLIC ACCOUNTANTS
EMPLOYER IDENTIFICATION NUMBER - 13-2526821
PLAN NUMBER - 060
<PAGE>
AMERICAN HOME PRODUCTS CORPORATION
SAVINGS PLAN - PUERTO RICO
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 - Puerto Rico:
We have audited the accompanying statements of net assets applicable to
participants' equity of the American Home Products Corporation Savings Plan -
Puerto Rico 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 - Puerto Rico 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 purposes
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 - Puerto Rico
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 $40,086,702 $39,800,164
Loans to participants 5,166,908 4,201,952
Receivables:
Employer contribution 102,179 94,592
Participant contribution 323,540 284,131
Loan repayments 138,741 117,497
Due from broker for securities sold 1,822 107,516
----------- -----------
Total receivables 566,282 603,736
----------- -----------
Cash and cash equivalents 823,715 555,315
----------- -----------
Net Assets Applicable to Participants'
Equity $46,643,607 $45,161,167
=========== ===========
The accompanying notes to financial statements are
an integral part of these statements.
</TABLE>
- 1 -
<PAGE>
<TABLE>
American Home Products Corporation Savings Plan - Puerto Rico
Statement of Changes in Net Assets Applicable for 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 ($3,384,240)
Interest 886,457
Dividends 1,511,132
------------
Total investment loss (986,651)
Contributions:
Employer 1,914,717
Participant 5,959,090
------------
Total contributions 7,873,807
------------
Total additions 6,887,156
------------
Deductions from net assets attributed to:
Benefits paid to participants 5,404,716
------------
Net additions 1,482,440
Net Assets Applicable to Participants'
Equity:
Beginning of Year 45,161,167
------------
End of Year $46,643,607
============
The accompanying notes to financial statements are
an integral part of this statement.
</TABLE>
- 2 -
<PAGE>
AMERICAN HOME PRODUCTS CORPORATION
SAVINGS PLAN - PUERTO RICO
NOTES TO FINANCIAL STATEMENTS
NOTE 1 - PLAN DESCRIPTION
----------------
The following description of the American Home Products Corporation Savings Plan
- Puerto Rico (the "Plan") only provides general information. Participants
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 January 1, 1993. Full or part-time employees
of the Company and its participating subsidiaries who reside in Puerto Rico and
are not a member of a recognized collective bargaining agreement unit are
eligible to participate in the Plan after attaining age 21, as defined in the
Plan Document. The Plan is subject to the provisions of the Employee Retirement
Income Security Act of 1974 ("ERISA"), as amended, and the Puerto Rico Internal
Revenue Code (the "PR Code").
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 first 6% of the participant's covered
compensation to the Plan. Participants direct the investment of their
contributions into various investment options offered by the Plan. Under the PR
Code, salary deferral contributions that can be included for Plan purposes are
subject to annual limitations.
Vesting and Separation From Service
-----------------------------------
Participants are fully vested at all times in their salary deferral and
after-tax contributions. 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 their matching contributions according to the
following schedule:
- 3 -
<PAGE>
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 their 65th
birthday 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 $12,488 were used
to offset Company contributions. As of December 31, 1999, the amount of
forfeitures available to offset future Company contributions totaled $24,201.
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
hardship withdrawals if they have an immediate and heavy financial need, as
determined by the AHPC Savings Plan Committee - Puerto Rico (the "Committee"),
and have no other funds that are readily available to meet that need.
Participants are limited to one hardship and one non-hardship withdrawal each
year.
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
if the participant is less than 70 1/2 years of age.
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.
- 4 -
<PAGE>
Amendments to the Plan
----------------------
Effective July 1, 1999, the Committee amended the Plan 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 fund is recorded at the 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 supplied by
Fidelity Management Trust Company 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
of 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 of investments in the
Statement of Changes in Net Assets Applicable to Participants' Equity.
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.
Reclassification
----------------
Certain reclassifications have been made to the December 31, 1998 financial
statements to conform with the December 31, 1999 presentation.
- 5 -
<PAGE>
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.
The average blended interest rate attributable to these contracts
approximated 6.49% and 6.59% for 1999 and 1998, respectively.
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.
Fidelity Balanced Fund - consists of shares in a mutual fund managed by
Fidelity Management & Research Company, which is invested 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.
- 6 -
<PAGE>
NOTE 4 - MANAGEMENT OF THE PLAN
----------------------
The Plan is administered by the Committee, which was appointed by the Board of
Directors of AHPC. Banco Popular de Puerto Rico is the Plan's trustee. Fidelity
Management Trust Company is the recordkeeper of the participant accounts,
custodian of the Plan's assets, and is a party-in-interest to the Plan.
NOTE 5 - INCOME TAX STATUS
-----------------
Puerto Rico
-----------
The Plan is designed to be a qualified profit-sharing plan under Section 165(a)
of the Puerto Rico Income Tax Act of 1954 (the "Act") and the trust established
under the Plan is intended to be tax-exempt under Section 165(a) of the Act. The
Company has obtained from the Puerto Rico Treasury Department a favorable
determination letter that covers all plan amendments through January 1, 1996.
The Plan has been amended since receiving the determination letter. However, the
Plan administrator believes that the Plan and the trust, meet the requirements
of the Act. The principal income tax consequences of participation in the Plan,
are discussed in the Summary Plan Description and the Plan Prospectus.
Federal Income Tax Status
-------------------------
The Plan does not constitute a qualified profit-sharing plan under the
provisions of Section 401(a) of the Internal Revenue Code (the "Code") and the
"cash and deferred arrangement" incorporated in the Plan is not intended to
qualify under Section 401(k) of the Code. Pursuant to Section 1022(i)(1) of
ERISA, however, the trust established thereunder is exempt from Federal income
tax under Section 501(a) of the Code. An individual who is a bona fide resident
of Puerto Rico during the entire taxable year will not be subject to any Federal
income tax on income derived from sources within Puerto Rico. Additional Federal
income tax consequences are set forth in the Summary Plan Description.
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 Fund, 318,055 and
269,764 shares, respectively $12,543,294 $15,191,085
Fidelity Balanced Fund $5,798,485 $5,212,689
Fidelity Spartan U.S. Equity Index Fund $10,856,231 $9,387,860
Monumental Life Insurance
GIC 6.95% Due 12/15/00 $2,436,930 $2,278,789
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 ($3,384,240) as follows:
Mutual Funds $1,842,222
Common Stock (5,226,462)
-----------
Total ($3,384,240)
===========
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 - Puerto Rico
Schedule H Item 4i - Schedule of Assets Held for Investment Purposes
As of December 31, 1999
Employer Identification Number - 13-2526821
Plan Number - 060
<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:
---------------------------------------
AIG Life Insurance GIC 5.38% Due 12/15/04 $1,026,432 $1,026,432
Allstate Life Insurance GIC 6.55% Due 12/16/02 1,520,872 1,520,872
Monumental Life Insurance GIC 6.95% Due 12/15/00 2,436,930 2,436,930
New York Life Insurance GIC 6.91% Due 12/15/04 405,449 405,449
Transamerica Life and GIC 6.08% Due 12/15/00 1,649,475 1,649,475
Annuity ----------- -----------
Total Group Annuity and Other
Investment Contracts $7,039,158 $7,039,158
=========== ===========
American Home Products
Corporation Common Stock* 318,055 shares $12,672,512 $12,543,294
------------------------ =========== ===========
* 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 I
(Continued)
American Home Products Corporation Savings Plan - Puerto Rico
Schedule H Item 4i - Schedule of Assets Held for Investment Purposes
As of December 31, 1999
Employer Identification Number - 13-2526821
Plan Number - 060
<CAPTION>
(d) Cost/
(c) Description of Contract (e)Current
(a&b) Identity of Issuer Investment Value Value
------------------------ ------------------- ---------- -----------
<S> <C> <C> <C>
Mutual Funds:
-------------
Fidelity Management Trust Magellan Fund
Company* 22,715 shares $2,556,363 $3,103,578
=========== ===========
Fidelity Management Trust Balanced Fund
Company* 377,505 shares $5,668,658 $5,798,485
=========== ===========
Fidelity Management Trust International Growth
Company* & Income Fund
14,975 shares $338,711 $450,768
=========== ===========
Fidelity Management Trust Spartan U.S. Equity
Company* Index Fund
208,412 shares $6,782,171 $10,856,231
=========== ===========
Fidelity Management Trust Low-Priced Stock
Company* Fund
10,001 shares $248,300 $226,424
=========== ===========
Miller Anderson & Sherrerd MAS Value Portfolio
5,678 shares $85,422 $68,764
=========== ===========
Loans Receivable:
Loans to Plan Participants Rates ranging from
8.75% to 10%
Due through 2015 $5,166,908 $5,166,908
=========== ===========
* 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 - Puerto Rico
Schedule H Item 4j- Schedule of Reportable Transactions (a)
For the Year Ended December 31, 1999
Employer Identification Number - 13-2526821
Plan Number - 060
<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>
AIG LIFE INSURANCE
21 PURCHASES $2,812,133 $0 $0 $0 $2,812,133 $2,812,133 $0
18 SALES $0 $2,363,000 $0 $0 $2,363,000 $2,363,000 $0
FIDELITY MANAGEMENT
TRUST COMPANY
INSTITUTIONAL MONEY MARKET FUND
130 PURCHASES $8,307,332 $0 $0 $0 $8,307,332 $8,307,332 $0
191 SALES $0 $8,421,112 $0 $0 $8,421,112 $8,421,112 $0
(a) Reportable transactions are those purchases and sales of the same security which, individually or in the aggregrate
exceed 5% of the total plan net assets as of the beginning of the 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 No.'s 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
