-----BEGIN PRIVACY-ENHANCED MESSAGE----- Proc-Type: 2001,MIC-CLEAR Originator-Name: keymaster@town.hall.org Originator-Key-Asymmetric: MFkwCgYEVQgBAQICAgADSwAwSAJBALeWW4xDV4i7+b6+UyPn5RtObb1cJ7VkACDq pKb9/DClgTKIm08lCfoilvi9Wl4SODbR1+1waHhiGmeZO8OdgLUCAwEAAQ== MIC-Info: RSA-MD5,RSA, l4hR0u8onVGjHdNK0TVWJ46KePibmejaF/Nx9vyJHud6ncJxBMVa2w3yavl8liWJ 0C2zEHJX41Ixmvugu/ZLDQ== 0000004829-94-000001.txt : 19940404 0000004829-94-000001.hdr.sgml : 19940404 ACCESSION NUMBER: 0000004829-94-000001 CONFORMED SUBMISSION TYPE: 10-K PUBLIC DOCUMENT COUNT: 8 CONFORMED PERIOD OF REPORT: 19931231 FILED AS OF DATE: 19940331 FILER: COMPANY DATA: COMPANY CONFORMED NAME: AMERICAN CYANAMID CO CENTRAL INDEX KEY: 0000004829 STANDARD INDUSTRIAL CLASSIFICATION: 2800 IRS NUMBER: 130430890 STATE OF INCORPORATION: ME FISCAL YEAR END: 1231 FILING VALUES: FORM TYPE: 10-K SEC ACT: 34 SEC FILE NUMBER: 001-03426 FILM NUMBER: 94519438 BUSINESS ADDRESS: STREET 1: 1 CYANAMID PLAZA CITY: WAYNE STATE: NJ ZIP: 07470 BUSINESS PHONE: 2018312000 FORMER COMPANY: FORMER CONFORMED NAME: AMERICAN CYANAMID/ME DATE OF NAME CHANGE: 19930928 FORMER COMPANY: FORMER CONFORMED NAME: CYANAMID DATE OF NAME CHANGE: 19930928 FORMER COMPANY: FORMER CONFORMED NAME: AMERICAN CYANAMID CO DATE OF NAME CHANGE: 19930928 10-K 1 LIVE FILING 10-K -1- UNITED STATES SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549 Form 10-K (Mark One) / x / ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 [FEE REQUIRED] For the fiscal year ended December 31, 1993 OR / / TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 [NO FEE REQUIRED] 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 (Address of principal executive offices) 07470 (Zip Code) Registrant's telephone number, including area code (201) 831-2000 Securities registered pursuant to Section 12(b) of the Act: Name of each exchange on Title of each class which registered Common Stock, par value $5 per share New York Stock Exchange 7 3/8% Sinking Fund Debentures Due 2001 New York Stock Exchange 8 3/8% Sinking Fund Debentures Due 2006 New York Stock Exchange Securities registered pursuant to Section 12(g) of the Act: None (Title of Class) 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 by check mark if disclosure of delinquent filers pursuant to Item 405 of Regulation S-K is not contained herein, and will not be contained, to the best of registrant's knowledge, in definitive proxy or information statements incorporated by reference in Part III of this Form 10-K or any amendment to this Form 10-K. [x] Aggregate market value of voting stock held by non-affiliates of the registrant as of January 31, 1994, based upon the closing price of registrant's common stock ($50.375) on such date as reported on the composite transaction reporting system including transactions on the New York Stock Exchange: $4,522,403,888. Indicate the number of shares outstanding of each of the registrant's classes of common stock, as of January 31, 1994: 89,836,392 shares of Common Stock, par value $5 per share. DOCUMENTS INCORPORATED BY REFERENCE Documents Part of Form 10-K 1. Portions of American Cyanamid Parts I and II Company Annual Report to Shareholders for the year ended December 31, 1993 2. Portions of Proxy Statement dated Part III March 8, 1994 for Annual Meeting of Shareholders of American Cyanamid Company Item 1. Business. GENERAL American Cyanamid Company, a Maine corporation organized in 1907, is a research-based life sciences company which, together with its subsidiaries (collectively "Cyanamid"), discovers and develops medical and agricultural products, and manufactures and markets them throughout the world. Cyanamid operates 17 research laboratories, and its products are sold by its divisions and subsidiaries in more than 135 countries. In December 1993, Cyanamid substantially completed the spin-off of Cytec Industries Inc. ("Cytec"), which encompassed substantially all of Cyanamid's chemicals businesses including plant food, and on January 24, 1994, Cytec common shares were distributed as a taxable dividend to shareholders. Cyanamid retained a $200 million preferred stock interest in Cytec. The chemicals businesses included: chemicals for water treating, paper, mining and oil field applications; building block chemicals, including acrylamide, acrylonitrile, melamine and sulfuric acid; amino resins, sold primarily to the coatings industry for use in paints; specialty materials, including adhesives and composites for the aerospace industry; specialty chemicals, including polymer additives, surfactants and phosphine chemicals; and acrylic fibers. Cytec assumed responsibility for substantially all liabilities (including environmental liabilities and liabilities for post- retirement benefits payable to employees of and retirees from Cyanamid's former chemicals business) and obligations associated with Cyanamid's former chemicals businesses (except for environmental liabilities at one former chemicals plant site - see Item 3), and agreed to indemnify Cyanamid against such liabilities and obligations. The Cytec preferred stock issued to Cyanamid contains various financial covenants designed to ensure that Cytec retains adequate financial strength to discharge the liabilities and obligations against which it is indemnifying Cyanamid. The remedies for breach of these financial covenants include Cyanamid's right of approval of Cytec's capital expenditure plans (thus exercising control over cash outlays) and, in certain cases, the ability by Cyanamid to nominate a majority of the Cytec Board of Directors. A two-member committee of the Cytec Board of Directors oversees environmental matters. Cyanamid's representative on the Cytec Board is one of the members of that committee. The operating results of the chemicals businesses have been accounted for as discontinued operations. Accordingly, the 1993 consolidated financial statements exclude amounts for discontinued operations from items under captions applicable to continuing operations. The 1992 and 1991 consolidated financial statements and Form 10-K information and financial statement schedules have been restated to conform with the 1993 presentation. "Operations By Business Groups and Geographic Areas" on pages 49 through 51 of the American Cyanamid Company Annual Report to Shareholders for the year ended December 31, 1993 ("Shareholders Report") are incorporated by reference. BUSINESS GROUPS Medical. Medical products encompass LEDERLE branded and generic pharmaceutical products; over-the-counter products including CENTRUM and other multivitamins; LEDERLE-PRAXIS vaccines; DAVIS & GECK surgical sutures, wound management devices and instruments for minimally invasive surgery; STORZ ophthalmic, ear, nose and throat surgical devices, ophthalmic pharmaceuticals and intraocular lenses; and ACUFEX arthroscopic instruments and equipment. On June 1, 1993, Cyanamid and Immunex Corporation, a biopharmaceutical company based in Seattle, Washington, created a new biopharmaceutical company by merging Cyanamid's North American Lederle oncology business with Immunex. Cyanamid also contributed $350 million in cash to the new company, which retained the Immunex name. Cyanamid received 53.5% of the common stock of the new company. See Note 3 to the Consolidated Financial Statements in the Shareholders Report. Immunex's products consist of LEUKINE granulocyte-macrophage colony stimulating factor and Lederle's oncology products: NOVANTRONE mitoxantrone, leucovorin calcium, thiotepa, methotrexate, AMICAR aminocaproic acid and LEVOPROME methotrimeprazine. See Note 3 to the Consolidated Financial Statements in the Shareholders Report for a description of a global, companywide restructuring program, and the charges related thereto, primarily in the medical business, announced in the fourth quarter of 1993. Agricultural. The agricultural business encompasses herbicides, such as the imidazolinone herbicides marketed as SCEPTER, PURSUIT, PURSUIT Plus and SQUADRON for soybeans, PROWL (marketed as STOMP outside the United States) for soybeans, cotton, corn, cereals, tobacco and vegetables, ARSENAL for vegetation control, and ASSERT for wheat and barley; insecticides, such as COUNTER and THIMET; plant growth regulators, such as CYCOCEL; animal feed supplements and health products, such as AUREOMYCIN; and, outside of the United States, AVOTAN, CYDECTIN and CYGRO, and animal vaccines. In the fourth quarter of 1993, Cyanamid acquired the crop protection businesses outside of North America of the Royal-Dutch Shell Companies. The acquisition included all of the Shell Companies' crop protection products, including insecticides, such as TORQUE, FASTAC, RIPCORD and CASCADE; fungicides, such as DELAN and ACROBAT; and animal health products. It also included a biosciences research center at Schwabenheim, Germany; a major formulations facility in Genay, France; and other formulations sites around the world. Also in the fourth quarter of 1993, Cyanamid acquired Arthur Webster Pty. Ltd., a privately-held Australian veterinary biologicals company to complement its previous acquisitions of Langford Laboratories and Laboratories Sobrino, S.A. Webster manufactures vaccine products at its bacterial and viral vaccine manufacturing facilities in Sydney, Australia. In recent years, operating earnings of the Agricultural Group have been concentrated in the first half of the year. The acquisitions in 1993 are not expected to result in any material change to this concentration. The sales of imidazolinone herbicide products in the aggregate accounted for approximately 16.1% of the sales of Cyanamid in 1993, and 12.9% in 1992 and 11.9% in 1991, restated to exclude sales of the chemicals business. INTERNATIONAL OPERATIONS AND EXPORT SALES Cyanamid products are produced or marketed in approximately 135 countries. United States export sales were $185.4 million in 1993, $178.5 million in 1992, and $164.8 million in 1991. International operations (exclusive of United States export sales) accounted for approximately 39.8% in 1993, 41.7% in 1992 and 42.0% in 1991 of net sales to unaffiliated customers. Because Cyanamid experienced an operating loss of $51.6 million in 1993 due to one-time, pre-tax charges relating to the Immunex acquisition and the restructuring program (see Note 3 to the Consolidated Financial Statements in the Shareholders Report), the calculation of the percentage of operating earnings attributed to international operations ($206.5 million) was not meaningful. International operations accounted for approximately 50.7% and 51.5%, respectively, of operating earnings in 1992 and 1991. International operations are subject to various risks which are not present in domestic operations, including political instability, the possibility of expropriation, restrictions on royalties, dividends and currency remittances, instability of foreign currencies, requirements for governmental approvals for new ventures and local participation in operations such as local equity ownership and workers' councils, and difficulty in obtaining financing for export sales particularly into countries of the former Soviet Union and Eastern Europe. Cyanamid is organizing two joint ventures with Chinese nationals for the manufacture of medical products (mainly vitamins) and animal feed supplements. Special risks in doing business with China arise from current debates under most favored nation trading status under U.S. Trade Laws. DISTRIBUTION Business Group Principal Direct Customers Medical Wholesale and retail drug, food, health and beauty aid and mass merchandiser outlets, managed health care companies, hospitals, physicians, governmental agencies and ambulatory surgery centers. Agricultural Manufacturers of finished products, whole- salers, retailers, farmers and governmental agencies. RESEARCH, PATENTS AND TRADEMARKS Cyanamid maintains 17 research laboratories, located in the United States, the United Kingdom, Germany, France, Australia, Canada, Japan, Italy, Brazil, Spain and the Philippines. Costs for research and process development in 1993, 1992 and 1991 totaled approximately $595.6 million, $530.7 million and $456.2 million, respectively. Cyanamid owns or is licensed under many patents and trademarks for a variety of products and processes. Cyanamid's important imidazolinone herbicide products (including SCEPTER and PURSUIT) are covered by composition of matter and process patents. Many of Cyanamid's important medical products (including ORIMUNE poliomyelitis vaccine) are not covered by composition of matter patents and hence are at greater risk from generic competition than those products which are so covered. Cyanamid believes that in the aggregate its rights under patents, trademarks, and licenses are significant to its operations, but that no single patent, trademark or license, or any group thereof, is individually material to Cyanamid, other than the patents covering the imidazolinone herbicides. EMPLOYEES As of December 31, 1993, Cyanamid had approximately 26,550 employees worldwide, of whom approximately 27% are hourly paid. GOVERNMENT REGULATION Regulation of Products. In the United States, the manufacture and sale of medical products for human or animal use are regulated by the Food and Drug Administration ("FDA"). Cyanamid regularly has numerous applications for pharmaceutical products, medical devices, animal health products and animal feed supplements pending before the FDA. Most applications include results of stringent and costly testing procedures. As a result of the governmental investigations relating to CYGRO coccidiostat combinations (see Item 3) FDA review of Cyanamid's animal health products has been subject to the FDA's fraud policy, and the FDA has generally refused to review any of Cyanamid's animal health applications. With the Justice Department investigation now completed, Cyanamid anticipates being able to commence procedures with the FDA designed to remove Cyanamid from the fraud policy. Cyanamid's human pharmaceutical and vaccine businesses have not been affected by this matter. The FDA is continuing to consider possible restriction on the use of sulfamethazine additives (which are sold by Cyanamid in combination with penicillin and tetracycline additives) in animal feed. Reimbursement of expenditures for drugs and medical devices in state and federally funded programs is regulated by state and federal authorities. The federal Vaccine For Children entitlement program signed into law in 1993 as part of the Omnibus Budget Reconciliation Act ("OBRA") is expected to have an adverse effect on the sales and earnings of the vaccines business beginning in the fourth quarter of 1994 because states will be able to purchase vaccines at federal vaccine prices. In addition, increases in the federal vaccine prices will be limited to increases in the Consumer Price Index. OBRA also included provisions which reduced the federal income tax benefits related to manufacturing activities in Puerto Rico. The reduction in these Puerto Rico tax benefits will have an unfavorable impact on Cyanamid's future results of operations. The Clinton administration and certain members of Congress have introduced legislation including various forms of price regulation which may, if enacted into law, have a significant impact on the health care industry. In addition, proposals related to health care alliances, federally mandated spending restrictions, creation of a Medicare rebate program covering prescription drugs, and various tax-law changes, if enacted, may have significant impact on the industry. Cyanamid cannot predict what health care reform measures will be implemented or the impact of any such measures on Cyanamid's future results of operations and cost of doing business. In the United States, the manufacture and sale of pesticides are regulated by the Environmental Protection Agency ("EPA"). Cyanamid regularly has numerous applications for pesticides pending before the EPA. Most applications include results of stringent and costly testing procedures. No new pesticide, and no existing pesticide for a new use, may be manufactured, processed or used without prior notice to the EPA. The EPA advised Cyanamid that a Special Review under the Federal Fungicide, Insecticide and Rodenticide Act may be initiated for two products, COUNTER terbufos and THIMET phorate, primarily on the basis of suspected avian risk. A Special Review proceeding could ultimately result in the cancellation of EPA registrations for both products. Outside the United States, medical products for human or animal use and agricultural chemicals are regulated by various agencies, often by standards which differ from those in the United States. In addition, pharmaceutical prices are controlled in many countries, and many countries such as Italy and Germany are increasingly imposing reimbursement limitations. Environmental Matters. Federal, state and foreign regulations impose stringent requirements for the control and abatement of air and water pollutants and the manufacture, transportation, storage, labeling, handling and disposal of substances designated hazardous. Cyanamid is and has been involved in legal and regulatory proceedings relating to the investigation and cleanup of sites (both its own and third party sites) where hazardous substances have been disposed. In connection with the spin-off of Cytec, Cytec has assumed the environmental liabilities relating to the chemicals businesses, except for the former chemical business site at Bound Brook. This assumption is not binding on third parties, and if Cytec were unable to satisfy these liabilities, they would, in the absence of other circumstances, be enforceable against Cyanamid. For information about pending environmental litigation, see Item 3, "Legal Proceedings". Cyanamid is also conducting, and may in the future be required to conduct, cleanups of its U.S. operating sites, pursuant to the terms of permits required for the sites and other statutes and regulations relating to hazardous substances. Cyanamid has environmental cleanups planned or in progress at several sites outside the United States including the Genay, France formulations facility purchased from Shell. Capital and operating expenditures for environmental protection in 1993 were approximately $7.5 million and $39.4 million, respectively. Capital expenditures for environmental control facilities in 1994 are estimated to be about $19.9 million. Estimates of capital expenditures for environmental control facilities for 1995 have not yet been completed. Item 2. Properties. Cyanamid operates approximately 58 manufacturing, research and distribution facilities throughout the world. Cyanamid adjusts as it deems prudent the productive capacity of its manufacturing facilities. Capital spending, exclusive of acquisitions, in 1993, 1992 and 1991 was approximately $305.5 million, $311.1 million, and $300.2 million, respectively. In 1994, all planned capital expenditures are intended either to provide necessary capacity, to improve the efficiency of production units, to modernize or replace older facilities or to install equipment for protection of the environment. Some of the important United States facilities (all of which are owned by Cyanamid, except as noted), and the business groups served by such facilities, are: Bothell, Washington Medical (Immunex) Bound Brook, New Jersey Medical Carolina, Puerto Rico Medical Clearwater, Florida Medical Danbury, Connecticut Medical Hannibal, Missouri Agricultural Manati, Puerto Rico Medical, Agricultural Mansfield, Massachusetts (leased) Medical Pearl River, New York Medical, Agricultural Princeton, New Jersey Agricultural Sanford, North Carolina Medical Seattle, Washington Medical (Immunex) St. Louis, Missouri Medical Wayne, New Jersey Corporate Headquarters West Henrietta, New York Medical Willow Island, West Virginia Agricultural (leased) Outside the United States, Cyanamid's principal manufacturing facilities are located in Argentina, Australia, Brazil, Canada, France, Germany, Great Britain, Italy, Mexico, Republic of Korea, Spain, Taiwan and Venezuela. Item 3. 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 30, 1994, are 22 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. Plaintiff's time to appeal has not expired. 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. Plaintiffs filed a Petition for a Writ of Certiorari in the Supreme Court of the United States on March 7, 1994, which is pending. Early in 1994, Cyanamid pleaded guilty to a record keeping misdemeanor and paid a small fine related to allegations that a company employee had manipulated data related to CYGRO coccidiostat in combination with other products. The Cyanamid employee involved has been named in an Information by the government in the District of Maryland which charges 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. Cyanamid has been informally advised by the Federal Trade Commission that it has closed its investigation relating to childhood vaccines. 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 December 31, 1993, Cyanamid was a party to, or otherwise involved in, legal proceedings directed at the cleanup of 39 Superfund sites, including the Bound Brook site. As of March 30, 1994, the number of Superfund sites is 40. These 40 sites include certain sites for which Cytec and Cyanamid have agreed to share responsibility. See Note 2 to the Consolidated Financial Statements in the Shareholders Report. 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. The aggregate environmental related accruals were $187.3 and $120.4 at December 31, 1993, and 1992, respectively. The increase in the accrual from 1992 to 1993 relates primarily to the Bound Brook facility and results from the determination of a method and a cost for remediating three lagoons at the Bound Brook site. The cost of cleanups for which Cyanamid remains primarily liable may be in excess of current environmental related accruals. All accruals have been recorded without giving effect to any possible future insurance proceeds. Insurance coverage of various environmental matters are currently being litigated but potential recoveries, if any, are unknown at this time. Cash expenditures often lag by a number of years the period in which an accrual is recorded. 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 their ultimate disposition will not have a material adverse effect upon the consolidated financial position of Cyanamid. Item 4. Submission of Matters to a Vote of Security Holders. No matter was submitted during the fourth quarter of Cyanamid's fiscal year 1993 to a vote of security holders. Item 10 (in part). Executive Officers of the Registrant. Year first elected Name Position to present office Age Albert J. Costello Director (1990), Chairman 1993 58 of the Board (1993), Chief Executive Officer (1993) and Chairman of the Executive Committee Frank V. AtLee Director (1990), President 1993 53 (1993), Chairman of Cyanamid International, and Member of the Executive Committee David R. Bethune Group Vice President and 1992 53 Member of the Executive Committee David Lilley Group Vice President and 1992 47 Member of the Executive Committee William J. Murray Group Vice President and 1992 49 Member of the Executive Committee Larry Ellberger Vice President 1992 46 Terence D. Martin Vice President, 1991 50 Treasurer (1994), Chief Financial Officer (1991), Chairman of the Committee on Investment of Pension Funds and Member of the Executive Committee Joseph S. McAuliffe Vice President and 1993 54 General Counsel William A. Stiller Vice President 1991 42 Paul W. Wood Vice President, External 1990 49 Affairs All of the executive officers of Cyanamid except Mr. Wood have held positions involving executive or management functions with Cyanamid for at least the past five years. Mr. Wood has been employed at Cyanamid since April 1990. Prior thereto, he had been Vice President, Investor Relations, of Squibb Corporation and previously Director, Investor Relations, of Upjohn Company. The Executive Committee is not a committee of Cyanamid's Board of Directors. PART II Item 5. Market for Registrant's Common Equity and Related Shareholder Matters. "Financial Review-Common Stock and Dividends Paid" in the Shareholders Report on page 33 is incorporated by reference. Item 6. Selected Financial Data. "Five-Year Summary" in the Shareholders Report on page 53 is incorporated by reference. The selected financial data should be read in conjunction with the consolidated financial statements. See Item 8. Item 7. Management's Discussion and Analysis of Financial Condition and Results of Operations. "Discussion and Analysis of Financial Condition and Results of Operations" in the Shareholders Report on pages 54 through 58 is incorporated by reference. Item 8. Financial Statements and Supplementary Data. The consolidated financial statements on pages 35 through 51, together with the report thereon of KPMG Peat Marwick dated February 8, 1994, on page 52, and "Financial Review-Quarterly Results" on page 34, of the Shareholders Report, are incorporated by reference. Item 9. Changes In and Disagreements With Accountants on Accounting and Financial Disclosure. None. PART III Item 10 (in part). Directors and Executive Officers of the Registrant. The information set forth on pages 2 through 6 (exclusive of descriptions of committees of the Board of Directors) under "Election of Directors" in the Proxy Statement for the Annual Meeting of Shareholders, dated March 8, 1994, (the "Proxy Statement") is incorporated by reference. The information incorporated by reference hereby is also responsive to the information required by Item 12. See also Item 10 (in part) in Part I of this Report. Item 11. Executive Compensation. The information on pages 14 through 29 of the Proxy Statement, under "Executive Compensation" and "Directors' Compensation", is incorporated by reference. Item 12. Security Ownership of Certain Beneficial Owners and Management. See Item 10. Item 13. Certain Relationships and Related Transactions. None. PART IV Item 14. Exhibits, Financial Statement Schedules, and Reports on Form 8-K. (a) 1. Financial statements (Incorporated by reference. See Item 8.) Independent Auditors' Report Consolidated Statements of Operations Consolidated Statements of Earnings Employed in the Business Consolidated Balance Sheets Consolidated Statements of Cash Flows Notes to Consolidated Financial Statements 2. Financial statement schedules. Independent Auditors' Report Financial Statement Schedules for each of the years in the three-year period ended December 31, 1993: V - Plants, equipment and facilities VI - Accumulated depreciation of plants, equipment and facilities VIII - Valuation and qualifying accounts IX - Short-term borrowings All other schedules have been omitted because they are not applicable or the information required is shown in the consolidated financial statements or notes thereto. 3. Exhibits. (3) A - Restated Articles of Incorporation of Registrant as amended through April 20, 1987 are incorporated by reference to Exhibit (3) A of Registrant's Annual Report on Form 10-K for the year ended December 31, 1987. B - By-Laws of Registrant as amended through March 10, 1987 are incorporated by reference to Exhibit (3)D of Registrant's Annual Report on Form 10-K for the year ended December 31, 1986. (4) A - Form of Rights Agreement, dated as of March 10, 1986, between American Cyanamid Company and The Chase Manhattan Bank, N.A., which includes as Exhibit A thereto the Form of Certificate of Designation, Rights and Preferences of Series A Junior Participating Preferred Stock of Registrant, and as Exhibit B thereto the Form of Rights Certificate, is incorporated by reference to Exhibit 1 to the Preferred Stock Purchase Rights Registration Statement on Form 8-A filed by Registrant on March 18, 1986. B - Amendment No. 1, dated April 30, 1986 to Rights Agreement is incorporated by reference to Form 8 filed by Registrant on May 1, 1986. C - Amendment No. 2, dated May 18, 1987 to Rights Agreement is incorporated by reference to Form 8 filed by Registrant on May 19, 1987. D - Letter Agreement, dated March 2, 1992, appointing Mellon Bank, N.A. as successor Rights Agent under the Rights Agreement is incorporated by reference to Exhibit (4)B of Registrant's Quarterly Report on Form 10-Q for the quarter ended June 30, 1992. E - See Exhibits (3)A, (3)B, (4)A, (4)B, (4)C and (4)D for rights of holders of Common Stock. F - No instrument defining the rights of the holders of any long-term debt of Registrant or any subsidiary authorizes issuance of debt securities of 10% or more of the total assets of the Registrant and its subsidiaries on a consolidated basis. Accordingly, Registrant agrees, in lieu of filing any such instruments, to provide copies thereof to the Securities and Exchange Commission upon its request, as contemplated by paragraph (b) (4) (iii) of Item 601 of Regulation S-K. (10) A - Executive Compensation Plans and Arrangements 1 1977 Employees Stock Plan of Registrant, as amended through August 20, 1985, is incorporated by reference to Exhibit (10)B of Registrant's Annual Report on Form 10-K for the year ended December 31, 1988. 2 Amendments to the 1977 Employees Stock Plan of Registrant, adopted as of April 21, 1987 and April 19, 1988, are incorporated by reference to Exhibit (10)C of Registrant's Annual Report on Form 10-K for the year ended December 31, 1988. 3 Amendment to the 1977 Employees Stock Plan of Registrant, adopted as of April 17, 1989, is incorporated by reference to Exhibit (10)C of the Registrant's Annual Report on Form 10-K for the year ended December 31, 1990. 4 Amendment to the 1977 Employees Stock Plan of Registrant, adopted as of April 20, 1992 is incorporated by reference to Exhibit (10)B of Registrant's Quarterly Report on Form 10-Q for the quarter ended June 30, 1992. 5 1984 Employees Stock Plan of Registrant, as amended through April 17, 1990, is incorporated by reference to Exhibit (10)D of the Registrant's Annual Report on Form 10-K for the year ended December 31, 1990. 6 Amendment to the 1984 Employees Stock Plan of Registrant, adopted as of April 20, 1992, is incorporated by reference to Exhibit (10)C of Registrant's Quarterly Report on Form 10-Q for the quarter ended June 30, 1992. 7 1992 Employees Stock Plan of Registrant, adopted as of April 20, 1992, is incorporated by reference to Exhibit (10)A of Registrant's Quarterly Report on Form 10-Q for the quarter ended June 30, 1992. 8 Incentive Compensation Plan of Registrant, as amended through December 21, 1993. 9 Form of Agreement under the Incentive Compensation Plan of Registrant, adopted as of August 20, 1985, is incorporated by reference to Exhibit (10)G of the Registrant's Annual Report on Form 10-K for the year ended December 31, 1985. 10 Form of Amendment to Agreement under the Incentive Compensation Plan of Registrant, adopted as of April 19, 1988, is incorporated by reference to Exhibit (10)H of Registrant's Annual Report on Form 10-K for the year ended December 31, 1988. 11 Executive Income Continuity Plan of Registrant, as amended through August 16, 1993. 12 Amendment to the 1977 Employees Stock Plan, the 1984 Employees Stock Plan, the Executive Income Continuity Plan, the Supplemental Employees Retirement Plan and the Agreements under the Incentive Compensation Plan (Exhibits (10)F and (10)G hereto) of Registrant, adopted as of December 20, 1988, is incorporated by reference to Exhibit (10)J of Registrant's Annual Report on Form 10-K for the year ended December 31, 1988. 13 Supplemental Employees Retirement Plan of Registrant, as amended through February 21, 1989, is incorporated by reference to Exhibit (10)K of Registrant's Annual Report on Form 10-K for the year ended December 31, 1988. 14 Supplemental Employees Retirement Plan Trust Agreement, between the Registrant and Morgan Guaranty Trust Company of New York, dated September 19, 1989, is incorporated by reference to Exhibit (10)K of Registrant's Annual Report on Form 10-K for the year ended December 31, 1989. 15 ERISA Excess Retirement Plan of Registrant, adopted as of February 21, 1989, is incorporated by reference to Exhibit (10)N of Registrant's Annual Report on Form 10-K for the year ended December 31, 1988. 16 ERISA Excess Retirement Plan Trust Agreement, between the Registrant and Morgan Guaranty Trust Company of New York, dated September 19, 1989, is incorporated by reference to Exhibit (10)M of Registrant's Annual Report on Form 10-K for the year ended December 31, 1989. 17 Compensation Taxation Equalization Plan of Registrant, adopted as of February 21, 1989, is incorporated by reference to Exhibit (10)P of Registrant's Annual Report on Form 10-K for the year ended December 31, 1988. 18 Restricted and Deferred Stock Plan for Non-Employee Directors of Registrant, adopted as of April 18, 1988, is incorporated by reference to Exhibit (10)Q of Registrant's Annual Report on Form 10-K for the year ended December 31, 1988. 19 Amendment to the Restricted and Deferred Stock Plan for Non-Employee Directors of Registrant, adopted as of April 20, 1992, is incorporated by reference to Exhibit (10)E of Registrant's Quarterly Report on Form 10-Q for the quarter ended June 30, 1992. 20 Key Management Group Personal Excess Liability Insurance Policy made available by the Registrant to key management personnel, is incorporated by reference to Exhibit (10)R of Registrant's Annual Report on Form 10-K for the year ended December 31, 1988. 21 Form of agreement for deferral of directors' compensation is incorporated by reference to Exhibit (10)E to Registrant's Annual Report on Form 10-K for the year ended December 31, 1980. 22 Form of minimum pension guarantee given to certain executive officers is incorporated by reference to Exhibit (10)M of Registrant's Annual Report on Form 10-K for the year ended December 31, 1985. 23 Non-Employee Directors Retirement Plan, adopted as of April 18, 1989 and amended as of January 1, 1991, is incorporated by reference to Exhibit (10)S of the Registrant's Annual Report on Form 10-K for the year ended December 31, 1990. 24 Non-Employee Directors Retirement Plan Trust Agreement, between the Registrant and Morgan Guaranty Trust Company of New York, dated September 19, 1989, is incorporated by reference to Exhibit (10)T of Registrant's Annual Report on Form 10-K for the year ended December 31, 1989. 25 Supplemental Retirement Plan for Existing Retirees, adopted as of August 16, 1988, is incorporated by reference to Exhibit (10)U of Registrant's Annual Report on Form 10-K for the year ended December 31, 1989. 26 Form of Trust Agreement to the Supplemental Retirement Plan for Existing Retirees, adopted as of August 16, 1988, is incorporated by reference to Exhibit (10)V of Registrant's Annual Report on Form 10-K for the year ended December 31, 1989. 27 Employment Agreement of T. D. Martin, signed October 17, 1988. (13) Annual Report to Shareholders for the year ended December 31, 1993. Except for those portions thereof which are expressly incorporated by reference in this Annual Report on Form 10-K, such Annual Report to Shareholders is furnished for the information of the Commission and is not deemed "filed" as part of this Annual Report on Form 10-K. (21) Subsidiaries of Registrant. (23) Consent of KPMG Peat Marwick. (24) A-K Powers of Attorney of F. V. AtLee, D. M. Culver, A. R. Dragone, R. Halstead, A. J. Levine, P. W. MacAvoy, V. T. Marchesi, T. D. Martin, G. J. Sella, Jr., M. Tanenbaum and A. Wexler. (b) No reports on Form 8-K were filed during the last quarter of the period covered by this report. Undertaking For the purposes of complying with the amendments to the rules governing Form S-8 (effective July 13, 1990) under the Securities Act of 1933, the undersigned registrant hereby undertakes as follows, which undertaking shall be incorporated by reference into registrant's Registration Statements on Form S-8 Nos. 2-61193, 2-76933, 2-95992, 33-34218, 33-50242 and 33-60140. Insofar as indemnification for liabilities arising under the Securities Act of 1933 may be permitted to directors, officers and controlling persons of the registrant pursuant to the foregoing provisions, or otherwise, the registrant has been advised that in the opinion of the Securities and Exchange Commission such indemnification is against public policy as expressed in the Securities Act of 1933 and is, therefore, unenforceable. In the event that a claim for indemnification against such liabilities (other than the payment by the registrant of expenses incurred or paid by a director, officer or controlling person of the registrant in the successful defense of any action, suit or proceeding) is asserted by such director, officer or controlling person in connection with the securities being registered, the registrant will, unless in the opinion of its counsel the matter has been settled by controlling precedent, submit to a court of appropriate jurisdiction the question whether such indemnification by it is against public policy as expressed in the Act and will be governed by the final adjudication of such issue. SIGNATURES Pursuant to the requirement of Section 13 or 15(d) 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) DATE: March 30, 1994 By A. J. Costello A. J. Costello Chairman and Chief Executive Officer Pursuant to the requirements of the Securities Exchange Act of 1934, this report has been signed below by the following persons in the capacities and on the dates indicated. DATE: March 30, 1994 A. J. Costello A. J. Costello Chairman and Chief Executive Officer (Principal Executive Officer and Director) F. V. AtLee, Director D. M. Culver, Director A. R. Dragone, Director DATE: March 30, 1994 R. Halstead, Director By R. T. Ritter (Attorney-in A. J. Levine, Director Fact) P. W. MacAvoy, Director V. T. Marchesi, Director T. D. Martin, Vice President (Principal Financial Officer) R. T. Ritter, Controller (Principal Accounting Officer) G. J. Sella, Jr., Director M. Tanenbaum, Director A. Wexler, Director Item 14 (a) 2 INDEPENDENT AUDITORS' REPORT The Board of Directors and Shareholders American Cyanamid Company: Under date of February 8, 1994, we reported on the consolidated balance sheets of American Cyanamid Company and subsidiaries as of December 31, 1993 and 1992 and the related consolidated statements of operations, earnings employed in the business, and cash flows for each of the years in the three-year period ended December 31, 1993, as contained in the 1993 annual report to shareholders. These consolidated financial statements and our report thereon are incorporated by reference in the annual report on Form 10-K for the year 1993. In connection with our audits of the aforementioned consolidated financial statements, we also have audited the related financial statement schedules as listed in Item 14(a)2 of the accompanying Form 10- K. These financial statement schedules are the responsibility of the Company's management. Our responsibility is to express an opinion on these financial statement schedules based on our audits. In our opinion, such financial statement schedules, when considered in relation to the basic consolidated financial statements taken as a whole, present fairly, in all material respects, the information set forth therein. As discussed in Note 1 to the consolidated financial statements, the company adopted the provisions of the Financial Accounting Standards Board's Statement of Financial Accounting Standards No. 106, "Employers' Accounting for Postretirement Benefits Other Than Pensions", and No. 109, "Accounting for Income Taxes", effective January 1, 1993. KPMG Peat Marwick KPMG Peat Marwick Short Hills, New Jersey February 8, 1994 Item 14 (a) 2
AMERICAN CYANAMID COMPANY AND SUBSIDIARIES SCHEDULE V < PLANTS, EQUIPMENT AND FACILITIES Year ended December 31, 1993 (Millions of dollars) Other Changes Add (Deduct) Balance Additions Sales and Translation Balance Classification January 1, 1993 at Cost(3) Retirements Adjustments Other(1) December 31, 1993 Land $ 68.8 $ 10.0 $ - $ (2.0) $ 59.3 $ 136.1 Buildings 743.7 78.4 9.4 (10.3) 77.0 879.4 Machinery and equipment 1,683.2 223.3 90.7 (30.9) 103.2 1,888.1 Construction in progress 214.2 (6.2) - (4.8) (.8) 202.4 $2,709.9 $305.5 $100.1 $(48.0) $238.7 $3,106.0
ACCUMULATED DEPRECIATION OF SCHEDULE VI PLANTS, EQUIPMENT AND FACILITIES Year ended December 31, 1993 (Millions of dollars) Additions Other Changes charged to Add (Deduct) Balance costs and Sales and Translation Balance Classification January 1, 1993 Expenses(2) Retirements Adjustments Other(1) December 31, 1993 Land $ .9 $ - $ - $ - $ - - $ .9 Buildings 165.8 28.1 7.7 (3.8) 28.5 210.9 Machinery and equipment 980.1 158.8 88.1 (15.3) 88.4 1,123.9 $1,146.8 $186.9 $ 95.8 $(19.1) $116.9 $1,335.7 (1) Other changes principally resulted from business acquisitions, disposals of businesses, salvage credits, dismantlement charges and reclassifications. (2) The method of depreciation is disclosed in Note 1 to the Consolidated Financial Statements. In view of the variety of plants, equipment and facilities, it is not considered practicable to list the rates used in determining depreciation expense. However, the aggregate charge for depreciation was equivalent to 7.2% of the average amount of depreciable plants, equipment and facilities. (3) Additions to construction in progress represent the net result of cash expenditures and transfers from construction in progress.
PAGE
AMERICAN CYANAMID COMPANY AND SUBSIDIARIES SCHEDULE V PLANTS, EQUIPMENT AND FACILITIES Year ended December 31, 1992 (Millions of dollars) Other Changes Add (Deduct) Balance Additions Sales and Translation Balance Classification January 1, 1992 at Cost Retirements Adjustments Other(1) December 31, 1992 Land $ 63.5 $ 4.1 $ .3 $ (.1) $ 1.6 $ 68.8 Buildings 679.1 76.5 10.1 (9.3) 7.5 743.7 Machinery and equipment 1,586.2 186.9 50.1 (28.0) (11.8) 1,683.2 Construction in progress 180.5 43.6 - (8.0) (1.9) 214.2 $2,509.3 $311.1 $ 60.5 $(45.4) $(4.6) $2,709.9
ACCUMULATED DEPRECIATION OF SCHEDULE VI PLANTS, EQUIPMENT AND FACILITIES Year ended December 31, 1992 (Millions of dollars) Additions Other Changes charged to Add (Deduct) Balance costs and Sales and Translation Balance Classification January 1, 1992 Expenses(2) Retirements Adjustments Other(1) December 31, 1992 Land $ .9 $ - $ - $ - $ - $ .9 Buildings 156.4 24.7 10.2 (2.1) (3.0) 165.8 Machinery and equipment 901.8 147.4 47.2 (15.7) (6.2) 980.1 $1,059.1 $172.1 $ 57.4 $(17.8) $(9.2) $1,146.8 (1) Other changes principally resulted from business acquisitions, disposals of businesses, salvage credits, dismantlement charges and reclassifications. (2) The method of depreciation is disclosed in Note 1 to the Consolidated Financial Statements. In view of the variety of plants, equipment and facilities, it is not considered practicable to list the rates used in determining deprecitation expense. However, the aggregate charge for depreciation was equivalent to 7.4% of the average amount of depreciable plants, equipment and facilities.
AMERICAN CYANAMID COMPANY AND SUBSIDIARIES SCHEDULE V
PLANTS, EQUIPMENT AND FACILITIES Year ended December 31, 1991 (Millions of dollars) Other Changes Add (Deduct) Balance Additions Sales and Translation Balance Classification January 1, 1990 at Cost(3) Retirements Adjustments Other(1) December 31, 1991 Land $ 37.8 $ 25.9 $ 1.2 $ (.6) $ 1.6 $ 63.5 Buildings 582.5 119.9 13.0 (9.5) (.8) 679.1 Machinery and equipment 1,457.2 226.8 63.9 (29.2) (4.7) 1,586.2 Construction in progress 259.9 (72.4) - (3.3) (3.7) 180.5 $2,337.4 $300.2 $ 78.1 $(42.6) $(7.6) $2,509.3
ACCUMULATED DEPRECIATION OF SCHEDULE VI PLANTS, EQUIPMENT AND FACILITIES Year ended December 31, 1991 (Millions of dollars) Additions Other Changes charged to Add (Deduct) Balance costs and Sales and Translation Balance Classification January 1, 1990 Expenses(2) Retirements Adjustments Other(1) December 31, 1991 Land $ .9 $ - $ - $ - $ - $ .9 Buildings 155.3 21.7 12.2 (3.1) (5.3) 156.4 Machinery and equipment 842.7 135.0 52.6 (14.3) (9.0) 901.8 $ 998.9 $156.7 $ 64.8 $(17.4) $(14.3) $1,059.1 (1) Other changes principally resulted from business acquisitions, disposals of businesses, salvage credits, dismantlement charges and reclassifications. (2) The method of depreciation is disclosed in Note 1 to the Consolidated Financial Statements. In view of the variety of plants, equipment and facilities, it is not considered practicable to list the rates used in determining depreciation expense. However, the aggregate charge for depreciation was equivalent to 7.3% of the average amount of depreciable plants, equipment and facilities. (3) Additions to construction in progress represent the net result of cash expenditures and transfers from construction in progress.
Item 14 (a) 2 SCHEDULE VIII
AMERICAN CYANAMID COMPANY AND SUBSIDIARIES VALUATION AND QUALIFYING ACCOUNTS Year ended December 31, 1993 (Millions of dollars) Additions or (deductions) Other Balance charged additions Balance January 1, or (credited) or December 31, Description 1993 to expenses (deductions) 1993 Reserves deducted from related assets: Accounts receivable $33.8 $11.7 ($5.4)(1) $40.1 Total investments and advances and other assets $67.0 $16.6 ($.6) $83.0 Deferred tax assets $33.9 $61.4(2) ($3.7) $91.6 (1) Principally bad debts written off, less recoveries. (2) Principally net operating loss carryforwards assumed in the acquisition of Immunex Corporation.
SCHEDULE VIII
AMERICAN CYANAMID COMPANY AND SUBSIDIARIES VALUATION AND QUALIFYING ACCOUNTS Year ended December 31, 1992 (Millions of dollars) Additions or (deductions) Other Balance charged additions Balance January 1, or (credited) or December 31, Description 1992 to expenses (deductions) 1992 Reserves deducted from related assets: Accounts receivable $30.3 $10.1 $(6.6)(1) $33.8 Total investments and advances and other assets $39.0 $28.0 $ - $67.0 (1) Principally bad debts written off, less recoveries and exchange.
SCHEDULE VIII
AMERICAN CYANAMID COMPANY AND SUBSIDIARIES VALUATION AND QUALIFYING ACCOUNTS Year ended December 31, 1991 (Millions of dollars) Additions or (deductions) Other Balance charged additions Balance January 1, or (credited) or December 31, Description 1991 to expenses (deductions) 1991 Reserves deducted from related assets: Accounts receivable $31.5 $8.8 $(10.0)(1) $30.3 Total investments and advances and other assets $58.0 $9.1 $(28.1)(2) $39.0 (1) Principally bad debts written off, less recoveries. (2) Results mainly from sales of investments with established valuation allowances.
Item 14 (a) 2 SCHEDULE IX
AMERICAN CYANAMID COMPANY AND SUBSIDIARIES SHORT-TERM BORROWINGS Year ended December 31, 1993 (Millions of dollars) Weighted Category of average Maximum Average Weighted aggregate Balance interest rate amount amount average short-term December 31, December 31, outstanding outstanding interest rate borrowings 1993 1993 during 1993(3) during 1993(4) during 1993(5) Bank borrowings(l) $ 66.4 11.3% $ 45.5 $ 34.1 14.8% Commercial paper(2) 366.2 3.4% 430.0 255.0 3.2% $432.6 4.6% $475.5 $289.1 4.6% (1) Bank borrowings are comprised of short-term borrowings principally from foreign banks. The weighted average interest rates do not include the effect of foreign exchange gains attributable to the debt, which tend to offset the higher interest rates in highly inflationary economies. (2) Commercial paper represents short-term domestic borrowings. (3) Represents the maximum aggregate short-term borrowings at any month end during the year. (4) Represents average monthly bank and average daily commercial paper borrowings, as applicable. (5) Calculated by relating appropriate interest expense to monthly average bank and to daily average commercial paper borrowings, as applicable.
PAGE SCHEDULE IX
AMERICAN CYANAMID COMPANY AND SUBSIDIARIES SHORT-TERM BORROWINGS Year ended December 31, 1992 (Millions of dollars) Weighted Category of average Maximum Average Weighted aggregate Balance interest rate amount amount average short-term December 31, December 31, outstanding outstanding interest rate borrowings 1992 1992 during 1992(3) during 1992(4) during 1992(5) Bank borrowings(l) $41.2 13.7% $241.1 $ 71.2 11.5% Commercial paper(2) 33.0 3.6% 175.3 67.3 4.2% $74.2 9.1% $416.4 $138.5 8.0% (1) Bank borrowings are comprised of short-term borrowings principally from foreign banks. The weighted average interest rates do not include the effect of foreign exchange gains attributable to the debt, which tend to offset the higher interest rates in highly inflationary economies. (2) Commercial paper represents short-term domestic borrowings. (3) Represents the maximum aggregate short-term borrowings at any month end during the year. (4) Represents average monthly bank and average daily commercial paper borrowings, as applicable. (5) Calculated by relating appropriate interest expense to monthly average bank and to daily average commercial paper borrowings, as applicable.
SCHEDULE IX AMERICAN CYANAMID COMPANY AND SUBSIDIARIES SHORT-TERM BORROWINGS Year ended December 31, 1991 (Millions of dollars) Weighted Category of average Maximum Average Weighted aggregate Balance interest rate amount amount average short-term December 31, December 31, outstanding outstanding interest rate borrowings 1991 1991 during 1991(3) during 1991(4) during 1991(5) Bank borrowings(l) $ 89.8 12.5% $ 96.5 $ 75.2 14.8% Commercial paper(2) 76.4 5.0% 93.7 62.6 6.1% $166.2 8.7% $190.2 $137.8 10.9% (1) Bank borrowings are comprised of short-term borrowings principally from foreign banks. The weighted average interest rates do not include the effect of foreign exchange gains attributable to the debt, which tend to offset the higher interest rates in highly inflationary economies. (2) Commercial paper represents short-term domestic borrowings. (3) Represents the maximum aggregate short-term borrowings at any month end during the year. (4) Represents average monthly bank and average daily commercial paper borrowings, as applicable. (5) Calculated by relating appropriate interest expense to monthly average bank and to daily average commercial paper borrowings, as applicable.
UNITED STATES SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549 Form 10-K (Mark One) / x / ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 [FEE REQUIRED] For the fiscal year ended December 31, 1993 OR / /TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 [NO FEE REQUIRED] 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 (Address of principal executive offices) 07470 (Zip Code) Registrant's telephone number, including area code (201) 831-2000 Securities registered pursuant to Section 12(b) of the Act: Name of each exchange on Title of each class which registered Common Stock, par value $5 per share New York Stock Exchange 7 3/8% Sinking Fund Debentures Due 2001 New York Stock Exchange 8 3/8% Sinking Fund Debentures Due 2006 New York Stock Exchange Securities registered pursuant to Section 12(g) of the Act: None (Title of Class) EXHIBITS INDEX TO EXHIBITS (3) A - Restated Articles of Incorporation of Registrant as amended through April 20, 1987 are incorporated by reference to Exhibit (3) A of Registrant's Annual Report on Form 10-K for the year ended December 31, 1987. B - By-Laws of Registrant as amended through March 10, 1987 are incorporated by reference to Exhibit (3)D of Registrant's Annual Report on Form 10-K for the year ended December 31, 1986. (4) A - Form of Rights Agreement, dated as of March 10, 1986, between American Cyanamid Company and The Chase Manhattan Bank, N.A., which includes as Exhibit A thereto the Form of Certificate of Designation, Rights and Preferences of Series A Junior Participating Preferred Stock of Registrant, and as Exhibit B thereto the Form of Rights Certificate, is incorporated by reference to Exhibit 1 to the Preferred Stock Purchase Rights Registration Statement on Form 8-A filed by Registrant on March 18, 1986. B - Amendment No. 1, dated April 30, 1986 to Rights Agreement is incorporated by reference to Form 8 filed by Registrant on May 1, 1986. C - Amendment No. 2, dated May 18, 1987 to Rights Agreement is incorporated by reference to Form 8 filed by Registrant on May 19, 1987. D - Letter Agreement, dated March 2, 1992, appointing Mellon Bank, N.A. as successor Rights Agent under the Rights Agreement is incorporated by reference to Exhibit (4)B of Registrant's Quarterly Report on Form 10-Q for the quarter ended June 30, 1992. E - See Exhibits (3)A, (3)B, (4)A, (4)B, (4)C and (4)D for rights of holders of Common Stock. F - No instrument defining the rights of the holders of any long-term debt of Registrant or any subsidiary authorizes issuance of debt securities of 10% or more of the total assets of the Registrant and its subsidiaries on a consolidated basis. Accordingly, Registrant agrees, in lieu of filing any such instruments, to provide copies thereof to the Securities and Exchange Commission upon its request, as contemplated by paragraph (b) (4) (iii) of Item 601 of Regulation S-K. (10) A - Executive Compensation Plans and Arrangements 1 1977 Employees Stock Plan of Registrant, as amended through August 20, 1985, is incorporated by reference to Exhibit (10)B of Registrant's Annual Report on Form 10-K for the year ended December 31, 1988. 2 Amendments to the 1977 Employees Stock Plan of Registrant, adopted as of April 21, 1987 and April 19, 1988, are incorporated by reference to Exhibit (10)C of Registrant's Annual Report on Form 10-K for the year ended December 31, 1988. 3 Amendment to the 1977 Employees Stock Plan of Registrant, adopted as of April 17, 1989, is incorporated by reference to Exhibit (10)C of the Registrant's Annual Report on Form 10-K for the year ended December 31, 1990. 4 Amendment to the 1977 Employees Stock Plan of Registrant, adopted as of April 20, 1992 is incorporated by reference to Exhibit (10)B of Registrant's Quarterly Report on Form 10-Q for the quarter ended June 30, 1992. 5 1984 Employees Stock Plan of Registrant, as amended through April 17, 1990, is incorporated by reference to Exhibit (10)D of the Registrant's Annual Report on Form 10-K for the year ended December 31, 1990. 6 Amendment to the 1984 Employees Stock Plan of Registrant, adopted as of April 20, 1992, is incorporated by reference to Exhibit (10)C of Registrant's Quarterly Report on Form 10-Q for the quarter ended June 30, 1992. 7 1992 Employees Stock Plan of Registrant, adopted as of April 20, 1992, is incorporated by reference to Exhibit (10)A of Registrant's Quarterly Report on Form 10-Q for the quarter ended June 30, 1992. 8 Incentive Compensation Plan of Registrant, as amended through December 21, 1993. 9 Form of Agreement under the Incentive Compensation Plan of Registrant, adopted as of August 20, 1985, is incorporated by reference to Exhibit (10)G of the Registrant's Annual Report on Form 10-K for the year ended December 31, 1985. 10 Form of Amendment to Agreement under the Incentive Compensation Plan of Registrant, adopted as of April 19, 1988, is incorporated by reference to Exhibit (10)H of Registrant's Annual Report on Form 10-K for the year ended December 31, 1988. 11 Executive Income Continuity Plan of Registrant, as amended through August 16, 1993. 12 Amendment to the 1977 Employees Stock Plan, the 1984 Employees Stock Plan, the Executive Income Continuity Plan, the Supplemental Employees Retirement Plan and the Agreements under the Incentive Compensation Plan (Exhibits (10)F and (10)G hereto) of Registrant, adopted as of December 20, 1988, is incorporated by reference to Exhibit (10)J of Registrant's Annual Report on Form 10-K for the year ended December 31, 1988. 13 Supplemental Employees Retirement Plan of Registrant, as amended through February 21, 1989, is incorporated by reference to Exhibit (10)K of Registrant's Annual Report on Form 10-K for the year ended December 31, 1988. 14 Supplemental Employees Retirement Plan Trust Agreement, between the Registrant and Morgan Guaranty Trust Company of New York, dated September 19, 1989, is incorporated by reference to Exhibit (10)K of Registrant's Annual Report on Form 10-K for the year ended December 31, 1989. 15 ERISA Excess Retirement Plan of Registrant, adopted as of February 21, 1989, is incorporated by reference to Exhibit (10)N of Registrant's Annual Report on Form 10-K for the year ended December 31, 1988. 16 ERISA Excess Retirement Plan Trust Agreement, between the Registrant and Morgan Guaranty Trust Company of New York, dated September 19, 1989, is incorporated by reference to Exhibit (10)M of Registrant's Annual Report on Form 10-K for the year ended December 31, 1989. 17 Compensation Taxation Equalization Plan of Registrant, adopted as of February 21, 1989, is incorporated by reference to Exhibit (10)P of Registrant's Annual Report on Form 10-K for the year ended December 31, 1988. 18 Restricted and Deferred Stock Plan for Non-Employee Directors of Registrant, adopted as of April 18, 1988, is incorporated by reference to Exhibit (10)Q of Registrant's Annual Report on Form 10-K for the year ended December 31, 1988. 19 Amendment to the Restricted and Deferred Stock Plan for Non-Employee Directors of Registrant, adopted as of April 20, 1992, is incorporated by reference to Exhibit (10)E of Registrant's Quarterly Report on Form 10-Q for the quarter ended June 30, 1992. 20 Key Management Group Personal Excess Liability Insurance Policy made available by the Registrant to key management personnel, is incorporated by reference to Exhibit (10)R of Registrant's Annual Report on Form 10-K for the year ended December 31, 1988. 21 Form of agreement for deferral of directors' compensation is incorporated by reference to Exhibit (10)E to Registrant's Annual Report on Form 10-K for the year ended December 31, 1980. 22 Form of minimum pension guarantee given to certain executive officers is incorporated by reference to Exhibit (10)M of Registrant's Annual Report on Form 10-K for the year ended December 31, 1985. 23 Non-Employee Directors Retirement Plan, adopted as of April 18, 1989 and amended as of January 1, 1991, is incorporated by reference to Exhibit (10)S of the Registrant's Annual Report on Form 10-K for the year ended December 31, 1990. 24 Non-Employee Directors Retirement Plan Trust Agreement, between the Registrant and Morgan Guaranty Trust Company of New York, dated September 19, 1989, is incorporated by reference to Exhibit (10)T of Registrant's Annual Report on Form 10-K for the year ended December 31, 1989. 25 Supplemental Retirement Plan for Existing Retirees, adopted as of August 16, 1988, is incorporated by reference to Exhibit (10)U of Registrant's Annual Report on Form 10-K for the year ended December 31, 1989. 26 Form of Trust Agreement to the Supplemental Retirement Plan for Existing Retirees, adopted as of August 16, 1988, is incorporated by reference to Exhibit (10)V of Registrant's Annual Report on Form 10-K for the year ended December 31, 1989. 27 Employment Agreement of T. D. Martin, signed October 17, 1988. (13) Annual Report to Shareholders for the year ended December 31, 1993. Except for those portions thereof which are expressly incorporated by reference in this Annual Report on Form 10-K, such Annual Report to Shareholders is furnished for the information of the Commission and is not deemed "filed" as part of this Annual Report on Form 10-K. (21) Subsidiaries of Registrant. (23) Consent of KPMG Peat Marwick. (24) A-K Powers of Attorney of F. V. AtLee, D. M. Culver, A. R. Dragone, R. Halstead, A. J. Levine, P. W. MacAvoy, V. T. Marchesi, T. D. Martin, G. J. Sella, Jr., M. Tanenbaum and A. Wexler. EX-10.A8 2 INCENTIVE COMPENSATION PLAN INCENTIVE COMPENSATION PLAN OF AMERICAN CYANAMID COMPANY (As amended through December 21, 1993) 1. Definitions. For the purposes of this Plan, unless the context otherwise requires, the following terms have the meanings respec- tively indicated: (a) "Average Common Stock Equity", when used with respect to a particular fiscal year, means an amount equal to the sum of (i) the aggregate stated or par value of the average net number of shares of common stock of the Company outstanding during such year and (ii) the average capital surplus and the average earned surplus (earnings employed in the business) of the Company and subsidiaries on a consolidated basis for such year. (b) "Beneficiary", when used with respect to a particular Participant, means one or more persons or entities (including a trust or estate) designated by such Participant, at any time or from time to time in such manner as the Committee shall determine, to receive any payment hereunder at or after such Participant's death. If, at the time when any amount on account of any one or more of the Participant's allotments or awards shall become payable at or after the death of such Participant, there shall not be in existence any person or entity so designated, then "Beneficiary" means the estate of such Participant. (c) "Board of Directors" and "Board" mean the Board of Directors of the Company. (d) "Common Stock Account" means the account established in the name of a Participant, as specified in Paragraph 6, into which Deferred Stock Awards are deferred. (e) "Company" means American Cyanamid Company, a corpo- ration of the State of Maine. (f) "Compensation Committee" and "the Committee" mean the committee provided for in Paragraph 2. (g) "Consolidated Net Income", when used with respect to a particular fiscal year, means (i) the net earnings of the Company and subsidiaries, as reported in their earnings state- ments in the Company's annual report to stockholders, as certified by the independent accountants who shall have exam- ined the consolidated financial statements of the Company and subsidiaries for such fiscal year, plus (ii) any Incentive Compensation Amount (minus any related decrease in taxes on income) included as an item of expense in such earnings state- ments, minus (iii) six (6%) percent of Average Common Stock Equity during such year, and minus (iv) an amount equal to the dividends required to be paid with respect to such year in accordance with the terms of any then outstanding preferred stock of the Company. (h) "Current Allotment" means an allotment made pursuant to Paragraph 3(a). (i) "Deferred Cash Account" means the account established in the name of a Participant, as specified in Paragraph 6, into which Deferred Cash Awards are deferred. (j) "Deferred Cash Award" means the amount of any Current Allotment made pursuant to Paragraph 3(a) or Performance Allotment made pursuant to Paragraph 3(b) which is to be credited to a Deferred Cash Account and paid in the future in cash pursuant to Paragraph 9. (k) "Deferred Stock Award" means the amount of any Current Allotment made pursuant to Paragraph 3(a) or Performance Allotment or Performance Share Allotment made pursuant to Para- graph 3(b) which is to be credited to a Common Stock Account and paid in common stock of the Company in the future pursuant to Paragraph 9. (l) "Dividend Equivalent" means an amount equal to any dividend, other than a dividend in common stock of the Company, which would have been paid with respect to common stock credit- ed to the account of a Participant in a Common Stock Account if such common stock had actually been issued to such Partici- pant on the record date for such dividend. (m) "Eligible Employee", when used with respect to a particular fiscal year, means a person who shall have been an employee of the Company or any of its subsidiary or affiliated companies (including officers of the Company) at any time during such fiscal year and who shall have been at such a salary level during such fiscal year as shall be determined by the Committee with respect to such fiscal year as necessary for eligibility for grants of allotments under the Plan. (n) "Incentive Compensation Amount", when used with respect to a particular fiscal year, means the amount which the Committee shall determine shall be available for allotment as incentive compensation under the Plan from the earnings of the Company and subsidiaries for such fiscal year; provided, however, that such amount shall not be in excess of eleven (11%) percent of Consolidated Net Income for such year; and provided further, however, that the Committee, in fixing the Incentive Compensation Amount with respect to a particular fiscal year, may, but shall not be obligated to, adjust Consol- idated Net Income upward or downward to eliminate, in whole or in part, the effects of any item deemed by the Committee in its discretion to be extraordinary or unusual, whether or not so classified under generally accepted accounting principles (including, without limitation, adjustments to record the cumulative adjustments or one-time costs associated with the effects of changes in accounting methods or standards or associated with the effects of acquisitions or divestitures) or other items deemed by the Committee not to be reflective of those earnings results on which incentive compensation should be based. In the event of such adjustment, the calculation of Average Common Stock Equity with respect to such fiscal year (and subsequent fiscal years if the Committee specifically so determines) may be adjusted by the Committee to the extent deemed by it to be appropriate consistent with such adjustment to Consolidated Net Income. (o) "Incentive Compensation Plan" and "the Plan" mean this incentive compensation plan of the Company. (p) "Interest Equivalent" means an amount equivalent to interest on the amount credited to any Deferred Cash Account, at a rate (not in excess of the "prime" rate announced from time to time by Morgan Guaranty Trust Company of New York or its successor or such other bank as the Committee may designate from time to time), calculated in the manner, and accrued, compounded and credited at the times, specified in rules and regulations of general application established by the Commit- tee. (q) "Participant" means a person to whom an allotment shall have been made pursuant to Paragraphs 3(a) or 3(b), not including, however, any person to whom an allotment shall have been made pursuant to Paragraph 3(c). (r) "Performance Allotment" means an allotment designated as such and denominated in cash, made pursuant to Paragraph 3(b), with respect to which the criteria for payment are established pursuant to Paragraph 5. (s) "Performance Period", when used with respect to any particular Performance Allotment or Performance Share Allot- ment, means such number of consecutive fiscal years as shall be determined by the Committee, the first year of which shall be the fiscal year with respect to which such Performance Allotment or Performance Share Allotment is made. (t) "Performance Share Allotment" means an allotment designated as such and denominated in shares of common stock of the Company, made to Participants pursuant to Paragraph 3(b), with respect to which the criteria for award are estab- lished pursuant to Paragraph 5. (u) "Restricted Stock" means shares of common stock of the Company paid to a Participant in accordance with Paragraph 10 and as to which the terms and conditions giving rise to the possibility of forfeiture of such shares have not yet lapsed. 2. Administration of the Plan. The Plan shall be administered by the Compensation Committee, consisting of such number of members of the Board, but not less than two (2), as shall be appointed by the Board and shall serve at the pleasure of the Board. Membership on the Committee shall be restricted to Directors who are not eligible to participate in the Plan and who were not, during the one year prior to service on the Committee, or during such service, granted or awarded equity securities pursuant to the Plan or any other plan of the Company or any of its affiliates other than a plan (a) which (i) either (A) states the amount and prices of securities to be awarded to designated officers and directors or categories of officers and directors, though not necessarily to others who may participate in the Plan, and specifies the timing of the awards to officers and directors, or (B) sets forth a formula that determines the amount, price and timing, using objective criteria such as earnings of the Company, value of the securities, years of service, job classification, and compensation level; and (ii) provides that the foregoing provisions shall not be amended more than once every six months, other than to comport with changes in the Internal Revenue Code of 1986, as amended (the "Code"), the Employee Retire- ment Income Security Act of 1974, as amended ("ERISA"), or the respective rules thereunder; or (b) under which such director may elect to receive an annual retainer fee in either cash or in an equivalent amount of securities, or partly in cash and partly in securities. All expenses of administering the Plan, including reasonable compensation to the members of the Committee, shall be borne by the Company. 3. Determination of Allotments or Shares. (a) As soon as practicable after the Committee shall have determined the Incentive Compensation Amount with respect to any fiscal year, Current Allotments may be awarded as follows: (i) the Committee may allot, with respect to such fiscal year, such portion, if any, of such Incentive Compensation Amount (plus any carry-over from prior years in accordance with Paragraph 4(c)), in such amounts as in its absolute discretion it shall deem proper, to and among a group comprising all Eligible Employees who shall occupy or shall have occupied the position of Chairman of the Board, Chief Executive Officer, Vice Chairman, President, Vice President, Treasurer, Controller or Secretary of the Company, or shall be or shall have been a member of the Board of Directors, at the time of such allotment or at any time during such fiscal year; and (ii) the Chief Executive Officer of the Company or, in the absence or inability of the Chief Executive Officer to act, the Committee may allot, with respect to such fiscal year, such further portion, if any, of such Incentive Compensation Amount (plus any carry-over from prior years in accordance with Paragraph 4(c)), in such amounts as the Chief Executive Officer or the Committee, as the case may be, in their respective absolute discretion, shall from time to time direct, to and among other Eligible Employ- ees. (b) At any time prior to January 1 of the final year of the Performance Period of Performance Allotments or Performance Share Allotments relating to a particular fiscal year, such Performance Allotments or Performance Share Allotments may be awarded as follows: (i) the Committee may make such Performance Allotments or Performance Share Allotments, in such respective amounts or numbers of shares of common stock of the Company as in its absolute discretion it shall deem proper, to and among a group comprising all Eligible Employees who shall occupy or shall have occupied the position of Chairman of the Board, Chief Executive Offi- cer, Vice Chairman, President, Vice President, Treasurer, Controller or Secretary of the Company, or shall be or shall have been a member of the Board of Directors, at the time of such action or at any time during such fiscal year; and (ii) the Chief Executive Officer of the Company or, in the absence or inability of the Chief Executive Officer to act, the Committee may make such Performance Allotments or Performance Share Allotments, in such respective amounts or numbers of shares of common stock of the Company as the Chief Executive Officer or the Committee, as the case may be, in their respective absolute discre- tion, shall from time to time direct, to and among other Eligible Employees. (c) If an Eligible Employee with respect to a particular fiscal year shall die prior to the making of the allotments with respect to such fiscal year, the Committee or the Chief Executive Officer of the Company, as the case may be, in the absolute discretion of the Chief Executive Officer or Committee may, but is in nowise required to, designate one or more relatives by blood, marriage or adoption of such Eligible Employee as eligible for an allotment in respect of such fiscal year, in which case such allotment shall be made pursuant to Paragraph 3(a). Any such allotment shall be paid in cash and may be paid in one or more installments over a period not in excess of ten years, in each case as the Committee or the Chief Executive Officer of the Company, as the case may be, may, in their respective absolute discretion, determine. 4. Charges Against Incentive Compensation Amount. (a) Neither Interest Equivalents, Dividend Equivalents nor dividends on Restricted Stock, whether paid currently or accrued as part of the Deferred Cash Account or the Common Stock Account, shall be charged against the Incentive Compen- sation Amount for any fiscal year. (b) Current Allotments for any particular fiscal year and Performance Allotments or Performance Share Allotments to the extent that amounts relating to any portion of a Performance Period are chargeable to the Incentive Compensation Amount for such fiscal year as determined by the Committee pursuant to rules and regulations of general application, shall be charged, first, against the Incentive Compensation Amount for such fiscal year and, second, against any unutilized amounts from Incentive Compensation Amounts for prior fiscal years as provided in Paragraph 4(c), commencing with the earliest of such prior years, in the following order of priority: (i) Current Allotments; and (ii) Performance Allotments or Performance Share Allotments. If the Incentive Compensation Amount for such fiscal year plus all such unutilized amounts from Incentive Compensation Amounts for prior fiscal years shall be insufficient to provide in full for the charges with respect to such Current Allotments and Performance Allotments or Performance Share Allotments, first such Performance Allotments or Performance Share Allotments, and second (after all charges with respect to such Performance Allotments or Performance Share Allotments shall have been eliminated) such Current Allotments, shall be reduced in the same proportion as the amount available for such allotments bears to the aggregate amount of all such allotments. (c) The Incentive Compensation Amount for any fiscal year, to the extent not utilized for such year, may, in the discre- tion of the Committee, be carried forward and added to the Incentive Compensation Amount for any of the five (5) succeed- ing fiscal years. 5. Payment of Allotments. (a) Except to the extent deferred pursuant to Paragraph 6 or paid pursuant to Paragraph 10, Current Allotments shall be paid in full in cash as soon as practicable after such allotments shall have been made. (b) Except to the extent deferred pursuant to Paragraph 6 or paid pursuant to Paragraph 10, Performance Allotments shall be paid in full in cash and Performance Share Allotments in common stock, to the extent they become payable pursuant to Paragraph 5(c), as soon as practicable after the end of the applicable Performance Period and after the amount payable with respect to such Performance Allotments or Performance Share Allotments shall have been determined. (c) With respect to each Performance Allotment or Per- formance Share Allotment, the Performance Period and the criteria which must be achieved before such Performance Allot- ment or Performance Share Allotment may be paid in whole or in part shall be determined according to rules and regulations of general application which shall be established by the Committee in its absolute discretion; provided, however, that at any time within the Performance Period the Committee may change the criteria that must be achieved for payment in whole or in part of such Performance Allotment or Performance Share Allotment, and the Committee (with respect to Eligible Employees who, at the time in question, occupy one of the positions specified in Paragraph 3(b)(i)) and the Committee or the Chief Executive Officer (with respect to all other Eligible Employees) may increase or decrease the amount of any Performance Allotment or Performance Share Allotment granted to any Eligible Employee pursuant to Paragraph 3(b) by such amount as, in the sole discretion of the Chief Executive Officer or the Committee, as the case may be, they may deem appropriate. Performance Allotments or Performance Share Allotments shall be paid only if, and to the extent that, the criteria established by the Committee and set forth in said rules and regulations are achieved. (d) If a Participant, prior to the end of the Performance Period with respect to any Performance Allotment or Performance Share Allotment, shall cease to be an employee for any reason, the Company's obligation to make any payment of any such Performance Allotment or Performance Share Allotment to such Participant or his Beneficiary shall forthwith terminate, except as may otherwise be provided in the Committee's rules of general application or except as may otherwise be determined by the Committee in its sole discretion. 6. Deferred Stock and Cash Awards. The Committee, pursuant to its rules and regulations of general application may permit or require all or any portion of a Current Allotment or Performance Allotment to be deferred in the form of (i) a Deferred Stock Award, (ii) a Deferred Cash Award, or (iii) any combination of Deferred Stock Award or Deferred Cash Award and may permit or require all or any portion of a Performance Share Allotment to be deferred in the form of a Deferred Stock Award. Any portion of a Current Allotment deferred as a Deferred Stock Award or a Deferred Cash Award shall be credited, respectively, to the Participant's Common Stock Account or Deferred Cash Account on the date that the award of the Current Allotment is made. Portions of Performance Allotments deferred as a Deferred Stock Award or Deferred Cash Award shall be credited, respectively, to the Common Stock Account or Deferred Cash Account on the date on which the amount payable with respect to such Perfor- mance Allotment is determined. Portions of Performance Share Allotments deferred as a Deferred Stock Award shall be credited to the Participant's Common Stock Account on the date on which the amount payable with respect to such Performance Share Allotment is determined. The Common Stock Account and Deferred Cash Account shall each be maintained on the books of the Company, but actual funds and common stock shall not be maintained in such accounts. 7. Credits to Common Stock Accounts for Performance Allotments and Performance Share Allotments. (a) The number of shares of common stock (including fractional shares) to be credited to a Participant's Common Stock Account with respect to such Participant's Deferred Stock Award based on Performance Allotments will be determined by dividing the Deferred Stock Award by the average closing price of the common stock as reported on the New York Stock Exchange Consolidated Tape for the first twenty of the twenty-five trading days immediately preceding the date on which the amount to be deferred is determined. The number of shares of common stock (including fractional shares) to be credited to a Par- ticipant's Common Stock Account with respect to such Partici- pant's Deferred Stock Award based on Performance Share Allot- ments will be the number of shares and fractional shares of which such Performance Share Allotment is comprised. (b) The shares of common stock (including fractional shares) credited to a Participant's Common Stock Account will bear Dividend Equivalents from the date on which the Deferred Stock Award is credited to the Common Stock Account, as provid- ed in Paragraph 6, to and including the date, determined as provided in Paragraph 9(a) or Paragraph 9(c), on which the amount credited to such Participant in the Common Stock Account shall be deemed to have been paid to such Participant or such Participant's Beneficiary. Such Dividend Equivalents, unless paid currently as provided in Paragraph 9(e), will be credited to such Participant's account as additional common stock. The number of shares of common stock (including fractional shares) to be credited to a Participant's Common Stock Account with respect to that Participant's Dividend Equivalents will be determined by dividing the Dividend Equivalents by the closing price of the common stock on the New York Stock Exchange Consolidated Tape for the day on which the related dividend is paid. (c) If any dividend is paid on the common stock of the Company other than in cash or common stock, the Committee shall, for the purposes of Paragraphs 7(b) and 9(e), determine the fair market value in cash of such dividend, and such determination of the Committee shall be conclusive. (d) Payments in common stock of the Company under the Plan shall be made either from treasury stock or previously unissued common stock. The Company shall be under no obligation to acquire the common stock in which any payment in respect of a Deferred Stock Award is to be made, or to authorize the issu- ance of such shares, at any time prior to the date on which such payment shall be due. (e) If, after the date of the Deferred Stock Award, but prior to complete payment of any Deferred Stock Award as deter- mined pursuant to Paragraph 9(a) or Paragraph 9(c), the number of issued shares of common stock of the Company shall be in- creased by a stock dividend, split-up or other change, or shall be decreased by a combination or other change, the number of shares of common stock in such Participant's Common Stock Account, or the unpaid portion thereof, shall be increased or decreased, as the case may be, so as to give effect to the extent practicable to such stock dividend, split-up, combina- tion or other change. 8. Credits to Deferred Cash Accounts. Amounts credited to a Participant's Deferred Cash Account will bear Interest Equivalents from the date on which the Deferred Cash Award is credited to the Deferred Cash Account, as provided in Paragraph 6, to and including the date, determined as provided in Paragraph 9(a) or Paragraph 9(c), on which the amount credited to such Participant in the Deferred Cash Account shall have been deemed to have been paid to such Participant or his Beneficiary. Such Interest Equivalents, unless paid currently as provided in Paragraph 9(e), will be credit- ed to such Participant's Deferred Cash Account. 9. Payments from Common Stock Accounts and Deferred Cash Accounts. (a) Subject to the provisions set forth in Paragraph 9(c), payment of the total amount credited to the name of a Partic- ipant in a Common Stock Account or a Deferred Cash Account shall be made to the Participant or, in case of death of the Participant prior to the commencement of payments on account of such total amount, to the Participant's Beneficiary, in sixty (60) quarterly installments commencing the first day of the calendar quarter, or as soon thereafter as shall be practi- cable, following the date on which such Participant shall cease, by reason of death or otherwise, to be an employee. The amount of each payment shall be the amount credited to such Participant in the Common Stock Account Or Deferred Cash Account, as the case may be, multiplied by a factor, the numerator of which is one (1) and the denominator of which is the number of quarterly installments remaining to be paid under this paragraph. If the aggregate number of shares of common stock in which the total amount credited to a Common Stock Account shall be payable shall not be divisible into whole shares by the applicable number of installments, each install- ment except the last shall consist of the nearest number of whole shares into which such aggregate number of shares shall be divisible by the applicable number of installments. The last installment shall consist of the total amount of whole shares of common stock remaining credited to such account and any fractional share shall be paid in cash. (b) In case of the death of a Participant after the commencement of payments to such Participant on account of the total amount in the Participant's Common Stock Account or Deferred Cash Account, the then remaining unpaid portion thereof shall continue to be paid in installments, at such times and in such manner as if such Participant were living, to the Beneficiary of such Participant. (c) With respect to the total amount in a Common Stock Account or Deferred Cash Account, or the then remaining unpaid portion thereof, which shall be payable to any Participant who shall no longer be an employee of the Company or one of its subsidiary or affiliated companies or to the Beneficiary of any Participant, the Committee shall possess absolute discretion to accelerate the time of payment of such total amount or remaining unpaid portion, in whole or in part, as the case may be, to any extent that, in its absolute discretion, it shall deem equitable or desirable under the circumstances. In addition, the Committee shall possess absolute discretion to accelerate to any extent such total amount or remaining unpaid portion, even while a Participant remains an employee, if there occurs financial hardship or any other event which the Commit- tee deems, in its absolute discretion, to constitute an ex- traordinary circumstance. (d) Notwithstanding anything in the previous paragraphs of this Paragraph 9, no shares of common stock shall be trans- ferred to any Participant who is an officer or director at the time of transfer, less than six months after such shares have been credited to the Common Stock Account of such Participant. (e) The Committee may establish procedures pursuant to which Dividend Equivalents or Interest Equivalents or both may be paid in cash to a Participant or the Beneficiary of such Participant at the time such amounts accrue, rather than being deferred in a Common Stock Account or Deferred Cash Account. 10. Restricted Stock. (a) The Committee, pursuant to its rules and regulations of general application, may require or permit all or any portion of a Current Allotment, a Performance Allotment or Performance Share Allotment to be paid in the form of Restrict- ed Stock. The number of whole shares of common stock to be paid to a Participant as Restricted Stock will be determined by dividing the portion of a Participant's Current Allotment or Performance Allotment or Performance Share Allotment to be paid as Restricted Stock by the average closing price of the common stock as reported on the New York Stock Exchange Consol- idated Tape for the first twenty of the twenty-five trading days immediately preceding the date on which the amount of such allotment to be paid as Restricted Stock is determined. The value of any fractional share will be paid to such Participant in cash. (b) The Committee shall determine, with respect to each issue of Restricted Stock a Restricted period of not less than one year during which the Restricted Stock may not be trans- ferred or encumbered by the Participant or his Beneficiary. In addition, the Committee shall determine all conditions (such as, but not limited to, continued employment with the Company or one of its subsidiary or affiliated companies) to the lapsing of restrictions with respect to such grant, and shall provide for the forfeiture of such shares if all such terms and conditions are not met. The Committee may, however, waive any forfeiture on any basis which it deems appropriate in connec- tion with terminations resulting from death, disability or retirement or involving, in the Committee's sole discretion, other exceptional circumstances. The Committee's determination as to whether a forfeiture has occurred or may be waived shall be conclusive. (c) During the restricted period and until such time as the Restricted Shares are forfeited, the Participant or the Beneficiary of such Participant shall be entitled to vote the shares as a stockholder of the Company and to receive all dividends in respect of such shares. At the end of the re- stricted period, if the Restricted Shares have not been for- feited, the restrictions shall lapse. 11. Certain Provisions Relating to Participation. (a) No Participant or any person claiming under or through him shall have any right or interest, whether vested or other- wise, in the Plan or in any allotment, award or account hereun- der, contingent or otherwise, or in any Dividend Equivalents, unless and until all the terms, conditions and provisions of the Plan that affect such Participant or such other person shall have been complied with as specified herein. Nothing contained in the Plan shall require the Company to segregate or earmark any cash, shares of stock or other property. Neither the adoption of the Plan nor its operation shall in any way affect the right and power of the Company to dismiss or discharge any Participant at any time. (b) No rights under the Plan, contingent or otherwise, shall be assignable or subject to any encumbrance, pledge or charge of any nature, except that a Participant may designate a Beneficiary pursuant to the provisions of the Plan. If any Participant shall attempt to assign any or all of the rights of such Participant under the Plan in violation of the provi- sions of this paragraph, the Company's obligation to make any further payment to such Participant or the Beneficiary of such Participant shall forthwith terminate. If any Beneficiary shall attempt so to assign any or all of the rights of such Beneficiary, the Company's obligation to make any further payment to such Beneficiary shall forthwith terminate. The determination as to whether an event has occurred resulting in a termination or reduction of the Company's obligation in accordance with the foregoing provisions of this paragraph or in accordance with the applicable rules and regulations of the Committee shall be made by the Committee in its absolute discretion, and the decision of the Committee with respect thereto shall be conclusive. (c) By accepting any benefits under the Plan, each Partic- ipant, and each person claiming under or through such Partici- pant, shall be conclusively deemed to have indicated his acceptance and ratification of, and consent to, any action or decision taken or made or to be taken or made under the Plan by the Company, the Board of Directors, the Chief Executive Officer of the Company, or the Committee. (d) If the Company is required to withhold any tax in respect of any interest of a Participant or the Beneficiary of such Participant under this Plan, the Company shall have the right to reduce such interest by an amount sufficient to provide the amount of tax required to be withheld. In lieu of such reduction, however, the Company may permit the Participant or the Beneficiary of such Participant to pay or reimburse the Company for any taxes required to be withheld by the Company in respect of such interest in the Plan. 12. General Provisions. (a) The Committee shall have full power to construe and interpret the Plan. Any action taken or decision made by the Company, the Board of Directors or the Committee, arising out of or in connection with the construction, administration, interpretation or effect of the Plan or of any rules and regulations adopted thereunder, shall lie within its absolute discretion, and shall be conclusive and binding upon all Participants and all persons claiming under or through any Participant. (b) The Board of Directors and the Committee may rely upon any information supplied to them by any officer of the Company or by the Company's independent public accountants, and may rely upon the advice of such accountants or of counsel, in connection with the administration of the Plan, and shall be fully protected in relying upon such information or advice. (c) No member of the Board of Directors or of the Com- mittee shall be liable for any act or failure to act of any other member, or of any officer, agent or employee, of such Board or the Committee, as the case may be, or for any act or failure to act of such member, except on account of that member's own acts done in bad faith. The fact that a member of the Board of Directors shall then be, shall theretofore have been or thereafter may be a Participant shall not disqualify him from voting at any time as a director in favor of or against any amendment or alteration of the Plan, provided that such alteration or amendment shall provide no benefit for directors as such, and provided further that such amendment or alteration shall be of general application. (d) Headings are given to the paragraphs of this Plan solely as a convenience to facilitate reference, and such headings shall not be deemed in any way material or relevant to the construction of any provision of the Plan. (e) If any provision of the Plan would result in a payment of less than a whole share of common stock of the Company to any one or more persons, such payment shall be made in cash on the basis of the then current market value of such common stock. (f) Any communication to the Committee or to the Board of Directors under the Plan shall be deemed to have been delivered as of the date of delivery thereof to the Secretary of the Committee, or to the Secretary of the Company for transmission to the Board of Directors, as the case may be, irrespective of whether the Committee or the Board, as the case may be, shall then be in session. (g) Adoption of the Plan shall not preclude the Company or any of its subsidiary or affiliated companies from adopting further employee benefit or employee compensation plans includ- ing, but not limited to, retirement plans, savings plans, medical plans, disability plans, stock option plans, life insurance plans, incentive plans, or other types of plans, whether similar or dissimilar to the foregoing or to the Plan. 13. Amendment, Alteration or Repeal. The Plan may be amended either by the stockholders of the Company or, if, as and when the Committee shall recommend, but not otherwise, by the Board of Directors provided, however, that this paragraph may not be amended except by the stockholders and other provisions of the Plan may not be amended except by the stockholders so as to increase the maximum amount which may be determined by the Committee to be the Incentive Compensation Amount with respect to any fiscal year or so as to change the provision, in Paragraph 2, as to the eligibility of the member of the Committee. Neither the provisions of this Plan, nor rules and regulations of general application established by the Committee relating to the mandatory deferral of Allotments may be amended more than once in every six months, other than to comport with changes in the Code, ERISA, or the respective rules thereunder. 14. Transitional Provisions. Performance Allotments granted to employees under this Plan with respect to 1984 and preceding years will be charged against the applicable Incentive Compensation Amount hereunder, but will otherwise continue to be subject to this Plan as in effect on April 15, 1984 and the applicable rules and regula- tions of the Committee thereunder. Such rules and regulations may continue to be amended by the Committee to the same extent as if this Plan had continued to be in effect as it was on April 15, 1984. EX-10.A11 3 INCOME CONTINUITY PLAN EXECUTIVE INCOME CONTINUITY PLAN OF AMERICAN CYANAMID COMPANY (As amended through August 16, 1993) 1. Purpose. The purpose of the Executive Income Continuity Plan (this Plan) is to reinforce and encourage the continuing attention, dedication and loyalty of executives in the senior management group of American Cyanamid Company and its subsidiaries without the distraction of concern over the possibility of involun- tary or constructive termination of employment resulting from unforeseen developments, by providing income continuity for a limited period. 2. Definitions. Unless the context otherwise requires, the following terms shall have the meanings respectively indicated: (a) "Board of Directors" shall mean the board of direc- tors of American Cyanamid Company. (b) "Cause" shall mean (A) the willful and continued failure by a member substantially to perform his duties with the Company (other than any such failure resulting from his incapacity due to physical or mental illness), after a demand for substantial performance is delivered to him by the Company which specifically identifies the manner in which the Company believes that he has not substantially performed his duties, or (B) the willful engaging by him in conduct demonstrably injurious to the Company. For purposes of this definition, no act, or failure to act, on the part of a member shall be considered "willful" unless done, or omitted to be done, by him without reasonable belief that his action or omission was in the best interests of the Company and was lawful. (c) A "change in control" shall be deemed to have oc- curred if: (i) any "person," as such term is used in Sections 13(d) and 14(d) of the Securities Exchange Act of 1934, as amended (the "Exchange Act") (other than the Company, any trustee or other fiduciary holding securities under an employ- ee benefit plan of the Company, or any Company owned, directly or indirectly, by the stockholders of the Company in substan- tially the same proportions as their ownership of stock of the Company), is or becomes the "beneficial owner" (as defined in Rule 13d-3 under the Exchange Act), directly or indirectly, of securities of the Company representing 20% or more of the combined voting power of the Company's then outstanding secu- rities; or (ii) there occurs any transaction or action which results in the individuals who at the beginning of a period commencing 24 hours prior to the commencement of the transac- tion were members of the Board of Directors, together with individuals subsequently elected to the Board upon the recom- mendation of a majority of the continuing directors, ceasing to constitute at least a majority thereof; or (iii) the stock- holders or the Board of Directors of the Company approves a definitive agreement to merge or consolidate the Company with or into another corporation (including any such transaction in which the Company is the surviving corporation) or to sell or otherwise dispose of all or substantially all of its assets, or to adopt a plan of liquidation of the Company. (d) "Company" shall mean American Cyanamid Company and, except for the purposes of Paragraph 2(c), shall include any of its subsidiaries which employs members of this Plan. (e) "Compensation Committee" shall mean the Compensation Committee as constituted from time to time of the Board of Directors, or such other entity as shall have similar authori- ty and responsibility. (f) "Date of termination" shall mean (A) if the employ- ment of a member is terminated by his death, the date of his death, (B) if such employment is terminated by his retirement, the date of retirement under the Employees Retirement Plan, (C) if such employment is terminated for disability, upon the expiration of his continuous service credits as determined by the Company, (D) if his employment is terminated by him for good reason, the date specified in the notice of termination, and (E) if his employment is terminated for any other reason, the date on which notice of termination is given; provided that if within 30 days after any notice of termination is given the party receiving such notice notifies the other party that a dispute exists concerning the termination, the date of termination shall be the date on which the dispute is finally determined, either by mutual written agreement of the parties or by a final judgment, order or decree of a court of compe- tent jurisdiction (the time for appeal therefrom having ex- pired and no appeal having been perfected). (g) "Disability" shall mean inability of a member due to sickness or injury to perform the duties pertaining to his occupation with the Company, as determined in accordance with the Long Term Disability Plan and the personnel policies of the Company. (h) "Good reason" shall mean: (A) a change in assignment resulting in the assign- ment to a member of substantially reduced responsibili- ties compared with those assigned to him prior to such change, or any change in his status or position which represents a demotion from his status or position im- mediately prior to such change, except in connection with the termination of his employment because of death or retirement, by the Company for disability or cause, or by him other than for good reason; (B) a reduction in the base salary of a member as the same may be increased from time to time; (C) a failure to continue the Incentive Compensation Plan (or a plan providing substantially similar benefits) as the same may be modified from time to time but in a form not less favorable than as of the date of adoption of this Plan (the "I.C. Plan"), or a failure to continue a member as a participant in the I.C. Plan on a basis consistent with the basis on which the I.C. Plan is ad- ministered as of such date, or a failure to pay to a member any installment of a previous allotment made to him under the I.C. Plan; (D) the relocation of the principal executive offic- es of the Company to a location more than 25 miles from the location of the present executive offices or outside of New Jersey, or requiring a member to be based anywhere other than the principal executive offices (or, if a member is not based at such executive offices, requiring such member to be based at another location) except for required travel on business to an extent substantially consistent with his duties and responsibilities, or in the event of consent to any such relocation of the base location of a member the failure to pay (or provide reim- bursement for) all expenses of such member incurred re- lating to a change of principal residence in accordance with the applicable personnel policies of the Company in effect as of the date of adoption of this Plan; (E) the failure to continue in effect any benefit or compensation plan (including but not limited to the Em- ployees Retirement Plan, the Supplemental Employees Re- tirement Plan, the Long Term Disability Plan, the Person- nel Protection Program, the I.C. Plan, the 1977, 1984 and 1992 Employees Stock Plans, the Employees Savings Plan, pension plan, life insurance plan, health and accident plan, disability or vacation plan in which a member is participating (or plans providing substantially similar benefits)), or the taking of any action which would ad- versely affect participation in or materially reduce benefits under any of such plans, unless such action is required pursuant to law or such action is applied uni- formly to all Members; (F) the failure to obtain the assumption of or an agreement to carry out the terms of this Plan by any successor as contemplated in Section 10; or (G) any purported termination of a member's employ- ment which is not effected pursuant to a notice of termi- nation as herein defined. (i) "Member" shall mean a person who is employed by the Company on a full-time basis and for a regular fixed compensa- tion (other than on a retainer or compensation for temporary employment) and who is included in the membership of this Plan as provided in Section 3. (j) "Notice of termination" shall mean a notice which indicates the specific basis for termination of employment relied upon and shall set forth in reasonable detail the facts and circumstances claimed to provide such basis. (k) "Officers" shall mean the chairman, vice chairman, chief executive officer, president, and all vice presidents elected from time to time by the Board of Directors. (1) "Retirement" shall mean termination of employment in accordance with the provisions of the Employees Retirement Plan; provided, however, that termination of employment by a member before his Normal Retirement Date (as defined in such Plan) for good reason shall not be deemed to be retirement for purposes of this Plan even though such member may be eligible for and elect to receive retirement benefits. The masculine pronoun wherever used herein shall include the feminine except as the context specifically indicates. 3. Membership. All Officers shall be members of this Plan. The Compensation Committee may designate any other employee as a member of this Plan. After an employee becomes a member of this Plan, his membership shall continue until (a) his death or retire- ment, (b) termination of his employment by the Company for disabil- ity or cause, (c) termination of his employment by such member other than for good reason, or (d) termination of his employment which is related to the spin-off of the Company's chemical business in 1993, or any subsequent reorganization, recapitalization, con- solidation, merger, split-up, combination, spin-off, exchange of shares or like event which is designated by the Compensation Com- mittee to fall within this subparagraph (d). 4. Termination of Employment. Each member of this Plan shall be entitled to receive the income continuation payments provided for in Section 5 upon termination of his employment, unless such termination is (a) because of his death or retirement, (b) by the Company for disability or cause, (c) by such member other than for good reason, or (d) related to the spin-off of the Company's chemi- cal business in 1993 or any subsequent reorganization, recapital- ization, consolidation, merger, split-up, combination, spin-off, exchange or like event which is designated by the Compensation Committee to fall within this subparagraph (d). 5. Income Continuation. Subject to the provisions of Section 7, upon termination of the employment of a member pursuant to Section 4 who is one of the Officers or who is age 50 or over and has at least 10 years of service with the Company, the Company shall pay to him the sum of twice his annual base salary at the rate in effect at the time notice of termination is given plus twice his annual target award (excluding performance allotments or any long term incentive) under the I.C. Plan based on such rate, in equal monthly installments over a period of 24 months following the date of termination, on the first day of each month commencing with the first day of the first month after such date. Subject to the provisions of Section 7, upon termination of the employment of any other member pursuant to Section 4 who has at least 10 years of service with the Company and is at least age 40 but less than age 50, the Company shall pay to him his annual target award (excluding performance allotments any long term incentive) under the I.C. Plan based on the rate in effect at the time notice is given, in equal monthly installments over a period of 12 months following the date of termination, plus his monthly base salary at such rate for the following number of months: Age Months 40 12 41 13 42 14 43 15 44 16 45 17 46 18 47 19 48 20 49 22 in equal monthly installments over the number of months equal to the number of months of base salary to which such Member is enti- tled. All payments shall be made on the first day of each month commencing with the first day of the first month after such date. Notwithstanding the foregoing, (i) no payment shall be made with respect to any period beyond the date of a member's 65th birthday, (ii) no payment shall be made with respect to any period beyond the date of a member's 60th birthday, or such earlier date of retire- ment as shall have been determined by the Compensation Committee or the Executive Committee under the Supplemental Employees Retirement Plan, if such member is also, at the date of termination of his employment, a member of the Supplemental Employees Retirement Plan, and (iii) there shall be deducted from any payments required here- under any payments made with respect to any required notice period under any employment agreement between a member and the Company. 6. Other Payments. Subject to the provisions of Section 7, upon termination of the employment of a member pursuant to Section 4, the Company shall, in addition to the payments provided for in Section 5, pay to him: (a) all relocation payments described in Section 2(h)(D) and all legal fees and expenses incurred by him as a result of such termination (including all such fees and expenses, if any, incurred in contesting or disputing any such termination or in seeking to obtain or enforce any right or benefit pro- vided by this Plan or in connection with any tax audit or proceeding to the extent attributable to the application of Section 4999 of the Internal Revenue Code of 1986 to any payment or benefit provided hereunder); and (b) during the period of two years following the date of termination, all reasonable expenses incurred by him in seek- ing comparable employment with another employer to the extent not otherwise reimbursed to him, including, without limita- tion, the fees and expenses of a reputable outplacement organization, and reasonable travel, telephone and office expenses. 7. Competitive Employment. The Company, at its option, may discontinue any payments being made to any member pursuant to Section 5 or Section 6 if such member engages in the operation or management of any business in the United States of America, whether as owner, stockholder, partner, officer, consultant, employee or otherwise, which at such time is in competition with any business of the Company in any field with which such member was involved during the last two years of his employment by the Company. Owner- ship by such member of five percent or less of the shares of stock of any company listed on a national securities exchange or having at least 100 stockholders shall not make such member a "stockhold- er" within the meaning of that term as used in this Section. 8. Maintenance of Plans. The Company shall maintain in full force and effect, for the continued benefit of each member entitled to receive payments pursuant to Section 5, for two years following the date of his termination, all employee benefit plans and pro- grams or arrangements (including Comprehensive Medical and Dental Insurance, Group Life Insurance, and Financial Planning and Tax Preparation and Counseling Services) in which he was entitled to participate at the time the notice of termination was given subject to approved plan amendments, provided that his continued participa- tion is permitted under the general terms and provisions of such plans and programs. 9. No Mitigation. No member shall be required to mitigate the amount of any payment provided for under this Plan by seeking other employment or otherwise, nor shall the amount of any payment so provided for be reduced by any compensation earned by any member as the result of employment by another employer, by retirement benefits or by offset against any amount claimed to be owed by him to the Company. 10. Successors. The Company will require any successor (whether direct or indirect, by purchase, merger, consolidation or otherwise) to all or substantially all of the business and assets of the Company, by a written agreement, to expressly assume and agree to carry out the provisions of this Plan in the same manner and to the same extent that the Company would be required to carry them out if no such succession had occurred. 11. Notice. Any notice expressly provided for under this Plan shall be in writing, shall be given either manually or by mail, telegram, telex, telefax or cable, and shall be deemed suffi- ciently given, if and when received by the Company at its offices at One Cyanamid Plaza, Wayne, New Jersey 07470 Attention: Secre- tary, or by any member at his address on the records of the Compa- ny, or if and when mailed by registered mail, postage prepaid, return receipt requested, addressed to the Company or the member to be notified at such address. Either the Company or any member may, by notice to the other, change its address for receiving notices. 12. Funding. All payments provided for under this Plan for members (including those who have retired) shall not be funded, but shall become fully vested and nonforfeitable upon the termination of a member's employment other than (a) because of his death or retirement, (b) by the Company for disability or cause, or (c) by him other than for good reason, and shall be paid by the Company as and when they become due as provided herein. 13. Amendment and Termination. The Board of Directors by resolution may at any time or from time to time amend or terminate this Plan; provided, however, that no such amendment or termination may adversely affect any accrued or vested benefits hereunder; and, provided further, that after a change in control, this Plan may not be amended without the consent of all persons who were members as of the date of such change in control (including those who have re- tired). 14. Governing Law. This Plan, and the rights and obligations of the Company and the members hereunder, shall be construed and governed in accordance with the law of the State of New Jersey. EX-10.A27 4 EMPLOYMENT AGREEMENT - T. D. MARTIN EMPLOYMENT AGREEMENT THIS AGREEMENT, made as of the 17 day of October ,l988 between AMERICAN CYANAMID COMPANY, a corporation organized and existing under the laws of the State of Maine, with its executive offices at Wayne, New Jersey (hereinafter referred to as the "COMPANY"), and TERENCE D. MARTIN residing at 41 Terrace Drive, Hastings-on-Hudson, NY10706 (hereinafter called the "EMPLOYEE"), Social Security No. 562- 58-1983 W I T N E S S E T H: In consideration of the EMPLOYEE'S employment (reemployment/continuing employment) by the COMPANY and of the covenants hereinafter set forth, it is mutually agreed as follows: 1. EMPLOYEE'S REPRESENTATIONS. The EMPLOYEE represents that all statements made in or with respect to this Application for Employment are true and correct, that the EMPLOYEE has disclosed any and all limitations affecting employment with the COMPANY contained in any written agreement with any other employer, and that the EMPLOYEE is not prohibited by any other agreement from performing services for the COMPANY. 2. EMPLOYEE'S SERVICES The EMPLOYEE shall faithfully and to the best of EMPLOYEE'S ability devote all of the EMPLOYEE'S working time exclusively to the performance of such services for the COMPANY as may be assigned to EMPLOYEE. The EMPLOYEE shall have an assigned headquarters at such place as the COMPANY from time to time may direct. The EMPLOYEE shall not, for remuneration of profit, directly or indirectly render any service to, or undertake any employment for, any other person, firm or corporation, whether in an advisory or consulting capacity or otherwise, without first obtaining the written consent of an officer of the COMPANY or of the director or president (or authorized representative) of the division to which the EMPLOYEE is then assigned. 3. SALARY. The COMPANY shall pay to the EMPLOYEE, in full payment for the services performed by the EMPLOYEE, the base salary of $15,833.34 per Month. The COMPANY reserves the right, at any time and from time to time, to adjust the base salary of the EMPLOYEE (and also to pay or not to pay any bonus or other special remuneration) without changing the other provisions of this Agreement, provided that the base salary of the EMPLOYEE shall not be reduced to a rate less than that specified above. 4. REIMBURSEMENT OF EXPENSES. The COMPANY shall reimburse the EMPLOYEE, in accordance with policies and practices of the COMPANY then in effect, for (a)expenses of moving in connection with a COMPANY-directed change of the EMPLOYEE'S headquarters under circumstances reasonably requiring a change of residence, and (b) travel, entertainment and other business expenses. 5. DURATION OF EMPLOYMENT. The EMPLOYEE'S employment hereunder shall commence and shall continue until the earlier of the EMPLOYEE'S death or retirement date under any applicable retirement plan then in effect, subject to the right of either the EMPLOYEE or the COMPANY to terminate the employment by written notice given in accordance with the following schedules: (a) With respect to employees while classified as "non-exempt employees" under the wage and hour provisions of the Federal Fair Labor Standards Act-- Length of Continuous Employment (determined as of the date of notice) Required Notice Period Less than 6 months 1 day At least 6 months 2 weeks for employees paid on a weekly or biweekly basis; one-half month for employees paid on a monthly or semimonthly basis. PAGE 1 (b) With respect to employees while classified as "exempt employees" under the wage and hour provisions of the Federal Fair Labor Standards Act-- Required Notice Period 1 month In the event of such notice of termination, the EMPLOYEE shall remain for all or any part of the required notice period if so requested by the COMPANY, but the COMPANY reserves the right at anytime to pay to EMPLOYEE the EMPLOYEE'S full base salary (in one or more installments) for or during the required notice period and to terminate the employment immediately or at any time during such notice period. Notwithstanding the foregoing, the COMPANY shall have the right, by written notice to the EMPLOYEE but without any required notice period, to terminate the EMPLOYEE'S employment at any time in the event of default or nonperformance by the EMPLOYEE of any of the provisions of this Agreement. 6. RESTRICTION ON COMPETITIVE EMPLOYMENT. For the period of twelve months immediately after termination of employment with the COMPANY, the EMPLOYEE shall not engage in any work or other activity--whether as owner, stockholder, partner, officer, consultant, employee or otherwise- - -involving a product or process similar to the product or process on which the EMPLOYEE worked for the COMPANY (or any of its subsidiary or affiliated companies) at any time during the period of two years immediately prior to termination of employment, if such work or other activity is then competitive with that of the COMPANY (or any of its subsidiary or affiliated companies), provided that this restriction shall not apply if the EMPLOYEE has disclosed to the COMPANY in writing all the known facts relating to such work or activity and has received a release in writing from an officer of the COMPANY to engage in such work or activity. However, if the COMPANY refuses to grant such a written release and if the EMPLOYEE is unable to obtain employment consistent with his qualifications and experience solely because of such refusal, then in that event the COMPANY shall make payments to the EMPLOYEE at the rate of EMPLOYEE'S base salary at termination of employment for each month that the EMPLOYEE has certified that EMPLOYEE has been unable for such reason to secure such employment, provided that the obligation of the COMPANY to make such payments shall cease upon whichever is the first to occur of (a) the date the EMPLOYEE shall obtain employment, (b) the date on which the COMPANY shall grant a written release to the EMPLOYEE, or (c) the expiration of twelve months following the termination of employment; and provided further that no such payment shall be made for any month for which any payment is made by the COMPANY to the EMPLOYEE under any other provision of this Agreement. Ownership by the EMPLOYEE of five per cent or less of the outstanding shares of stock of any company either (i) listed on a national securities exchange or (ii) having at least 100 stockholders shall not make the EMPLOYEE a "stockholder" with in the meaning of that term as used in this paragraph. Nothing int his paragraph shall limit the rights or remedies of the COMPANY arising directly or indirectly from such competitive employment including. without limitation, claims based upon breach of fiduciary duty, misappropriation, or theft of confidential information. 7. Confidential Information. The EMPLOYEE understands that in the performance of services here under EMPLOYEE may originate or obtain knowledge of "confidential information", as hereinafter defined, relating to the business of the COMPANY (or of any of its subsidiary or affiliated companies). As used herein, "confidential information" means any information (including, without limitation, any formula, pattern, device, plan, process, or compilation of information) which (i) is, or is designed to be, used in the business of the COMPANY (or of any of its subsidiary or affiliated companies) or results from its or their research and/ or development activities, (ii) is private or confidential in that it is not generally known or available to the public and, (iii) gives the COMPANY (or any of its subsidiary or affiliated companies) an opportunity to obtain an advantage over competitors who do not know or use it. The EMPLOYEE shall not, without the written consent of an officer of the COMPANY, either during the term of his employment or thereafter, (a) use or disclose any such confidential information outside the COMPANY (or any of its subsidiary or affiliated companies), (b) publish any article with respect thereto, or (c) except in the performance of his services hereunder, remove or aid in the removal from the premises of the COMPANY any such confidential information or any property or material which relates thereto. The provisions of this paragraph shall survive the termination of this Agreement. PAGE 2 8. INVENTIONS. (a) The EMPLOYEE shall promptly disclose to the COMPANY any and all inventions, discoveries, developments, improvements, machines, appliances, processes, products, or the like, whether or not patentable, (all of which are referred to herein as"inventions") which the EMPLOYEE may invent, conceive, produce, or reduce to practice, either solely or jointly with others, at any time (whether or not during working hours) during employment hereunder, or during such period thereafter (not exceeding one year) for which the COMPANY shall have notified the EMPLOYEE in writing, prior to the termination of employment, that it will continue to pay the EMPLOYEE amounts equivalent to EMPLOYEE'S then base salary, provided said payments are made or tendered. (b) All such inventions which in any way relate to the goods or materials produced, sold or used by the COMPANY (or by any of its subsidiary or affiliated companies), or to any methods, processes or apparatus used in connection with the production or treatment of such goods or materials, or in either case which are or may be or may become capable of use in the business of the COMPANY (or of any of its subsidiary or affiliated companies), shall at all times and for all purposes be regarded as acquired and held by the EMPLOYEE in a fiduciary capacity for, and solely for the benefit of, the COMPANY. (c) With respect to all such inventions, the EMPLOYEE shall: (i) treat all information with respect thereto as confidential information within the meaning of, and subject to, paragraph 7 of this Agreement; (ii) keep complete and accurate records thereof, which records shall be the property of the COMPANY; (iii) execute any application for letters patent of the United States and any and all other countries covering such inventions, and give to the COMPANY, its attorneys and solicitors all reasonable and requested assistance in preparing such application; (iv) from time to time, upon the request and at the expense of the COMPANY, but without charge for services beyond the payments herein provided for, execute all assignments or other instruments required to transfer and assign to the COMPANY (or as it may direct) all inventions, and all patents and applications for patents covering such inventions or otherwise required to protect the rights and interests of the COMPANY; (v) testify in any proceedings or litigation as to all such inventions; and (vi) in case the COMPANY shall desire to keep secret any such invention, or shall for any reason decide not to have letters patent applied for thereon, refrain from applying for letters patent thereon. Payments at reasonable hourly rates shall be made by the COMPANY to the EMPLOYEE for time actually spent by the EMPLOYEE in the foregoing activities at the request of the COMPANY, if such activities occur after termination of employment and after expiration of any post employment period for which any payment is made by the COMPANY to the EMPLOYEE under any other provision of this Agreement. (d) No termination of employment or of this Agreement shall release the EMPLOYEE or EMPLOYEE'S heirs or legal representatives from the foregoing obligations as to such inventions. 9. EMPLOYEE BENEFITS. Nothing in this Agreement shall be construed to limit the EMPLOYEE'S participation in any insurance plan, medical plan, retirement plan, or other employee benefit arrangement to which EMPLOYEE would otherwise be entitled, in accordance with the prevailing policies and practices of the COMPANY then in effect, in the absence of this Agreement. 10. ASSIGNABILITY. This Agreement shall enure to the benefit of any assignee of the COMPANY, and the EMPLOYEE specifically agrees on demand to execute any and all necessary documents in connection therewith. 11. NOTICES. Any notice expressly provided for under this Agreement shall be in writing, shall be given either manually or by mail, telex, telegram, radiogram or cable, and shall be deemed sufficiently given if and when received by the party to be notified at its address first set forth above or if and when mailed by registered mail, postage prepaid, addressed to such party at such address. Either party may, by notice to the other, change its address for receiving such notices. PAGE 3 12. ENTIRE AGREEMENT. This Agreement supersedes all previous contracts for personal services between the COMPANY and the EMPLOYEE, provided that neither party is relieved from any obligations to the other arising under any such previous contract while it was in force. This Agreement constitutes the entire understanding between the parties hereto with reference to the subject matter hereof and shall not be changed or modified except by a written instrument signed by both parties. The headings of the paragraphs in this Agreement are inserted for convenience only and shall not be deemed to constitute a part hereof or affect the interpretation of any provision. * * * IN WITNESS WHEREOF the COMPANY has caused this Agreement to be executed in duplicate by a proper and duly authorized representative thereof, and the EMPLOYEE has signed this Agreement in duplicate, as of the day and year first above written. PENSION DIFFERENTIAL. Provided that the EMPLOYEE is in the employment of the COMPANY when the EMPLOYEE reaches the age of 60, upon termination of employment AMERICAN CYANAMID COMPANY thereafter, the COMPANY will pay the EMPLOYEE an amount equal to the amount, if BY R.L. Martino any, by which the pension of the EMPLOYEE shall be entitled to receive from its Employees Retirement Plan and any other Title__________________ defined benefit Retirement Plan of the Vice President COMPANY or any of its subsidiaries is less than 40~ of the EMPLOYEE's Average Earnings (as defined in the Employees Retirement Plan) during the three years T. D. Martin (EMPLOYEE) out of the final 10 years of the EMPLOYEE's employment during which such earnings are the highest, provided that the EMPLOYEE shall make the election provided in the Retirement Plan to have the EMPLOYEE's pension commence immediately upon retirement. The EMPLOYEE will be designated a member of the Income Continuity Plan of the Company. In the event of the termination of the employment of the EMPLOYEE under circumstances entitling the EMPLOYEE to the income continuity payments specified in Section 4 of the Income Continuity Plan, the COMPANY will pay the EMPLOYEE the sum of twice his annual base salary at the rate in effect at the time "notice of termination", as defined in the Income Continuity Plan, is given plus twice his ann~ target award (excluding performance allotments) under the Income Continuity Plan, as defined in the Income Continuity Plan, based on such rate, in equal monthly installments over a period of 24 months following the date of termination, as defined in the Income Continuity Plan, less any amounts payable to the EMPLOYEE under the Income Continuity Plan or under any plan to whose membership the EMPLOYEE may be elected in lieu of the Income Continuity Plan prior to any deductions from such amount contemplated by Section 4 of the Income Continuity Plan or by any analogous provision of any plan to whose membership the EMPLOYEE may be elected in lieu of the Income Continuity Plan. In the event that payments to the EMPLOYEE under the Income Continuity Plan or under any plan to whose membership of which the EMPLOYEE may be elected in lieu of the Income Continuity Plan are terminated pursuant to, respectively, Section 6 of the Income Continuity Plan or any analogous provision of such other plan, the obligations of the COMPANY under this paragraph shall cease simultaneously. PAGE 4 EX-13 5 ANNUAL REPORT TO SHAREHOLDERS EXHIBIT 13 Financial Review American Cyanamid Company and Subsidiaries Operating Results The company's consolidated net sales in 1993 were $4.28 billion, an increase of 2% from the restated $4.19 billion achieved in 1992. Net sales in 1992 were 10% higher than the restated $3.82 billion reported in 1991. The loss from continuing operations in 1993 was $163.7 million, compared to restated earnings of $349.6 million achieved in 1992, which were up 6% from the restated $328.8 million reported in 1991. The loss from continuing operations in 1993 was $1.82 per share, compared to restated earnings of $3.85 per share in 1992, which were up 9% from the restated $3.53 per share in 1991. The loss from continuing operations in 1993 includes one-time, after-tax charges of $378.4 million, or $4.21 per share, related to the Immunex acquisition and $133.4 million, or $1.48 per share, related to a global, companywide restructuring. See Note 3 to the Consolidated Financial Statements. The net loss for 1993 was $1,118.5 million compared to net earnings of $395.1 million in 1992, which were 10% above the $358.8 million in 1991. The net loss in 1993 was $12.44 per share compared to earnings of $4.35 per share in 1992, which were 13% higher than the $3.85 per share in 1991. The net loss in 1993 includes a $622.2 million, or $6.92 per share, net loss from discontinued operations, one-time, after-tax charges of $378.4 million, or $4.21 per share, related to the Immunex acquisition and $133.4 million, or $1.48 per share, related to a global, companywide restructuring, and a $332.6 million, or $3.70 per share, after-tax charge for the cumulative effect of accounting changes. See Notes 2, 3, 9 and 12, respectively, to the Consolidated Financial Statements. Common Stock and Dividends Paid Reported high and low market prices on the New York Stock Exchange Composite Listing and cash dividends paid per share of common stock by quarter for 1993 and 1992 were: 1993 1992
Market Price Dividends Market Price Dividends Quarter High Low Paid High Low Paid First.................... $58 1/4 $46 $ .4125 $66 3/8 $56 1/4 $ .3750 Second................... 54 1/4 49 1/4 .4375 64 3/4 53 .4125 Third.................... 56 3/8 46 1/2 .4375 62 5/8 54 1/4 .4125 Fourth................... 59 1/4 49 3/8 .4375 59 1/4 52 1/8 .4125 $1.7250 $1.6125
In the fourth quarter of 1993, the Board of Directors approved the spin-off of the company's chemicals business, Cytec Industries Inc. (Cytec), to shareholders through the distribution of all outstanding shares of Cytec common stock. The dividend was paid at the rate of one share of Cytec common stock for every seven shares of the company's common stock. The reduction in the company's shareholders' equity due to the Cytec dividend was approximately $.59 per share. See Note 2 to the Consolidated Financial Statements. As of February 18, 1994, the most recent record date, there were 41,704 record holders of the company's common stock. PAGE Financial Review American Cyanamid Company and Subsidiaries Quarterly Results Quarterly results for 1993 and 1992 were as follows:
(Millions of dollars except per share amounts) 1993 Per Share of Common Stock Earnings Earnings (Loss) From Net (Loss) From Net Net Gross Continuing Discontinued Earnings Continuing Earnings Quarter(1) Sales Profit(2) Operations(3) Operations (Loss)(3)(4) Operations(3) (Loss)(3)(4) First.....$1,145.6 $ 712.4 $ 115.0 $(216.1) $ (433.7) $ 1.28 $ (4.82) Second.... 1,246.4 764.2 (235.0) 6.3 (228.7) (2.61) (2.54) Third..... 899.4 557.0 49.6 (412.4) (362.8) .55 (4.04) Fourth.... 985.4 610.3 (93.3) - (93.3) (1.04) (1.04) Total.....$4,276.8 $2,643.9 $(163.7) $(622.2) $(1,118.5) $(1.82) $(12.44) 1992 First.....$1,104.4 $ 700.7 $103.7 $11.1 $114.8 $1.14 $1.25 Second.... 1,201.5 756.3 134.2 13.3 147.5 1.47 1.62 Third..... 933.3 573.8 53.1 7.8 60.9 .59 .68 Fourth.... 954.6 595.2 58.6 13.3 71.9 .65 .80 Total.....$4,193.8 $2,626.0 $349.6 $45.5 $395.1 $3.85 $4.35 (1)The quarterly financial information has been revised to reflect discontinued operations separately. See Note 2 to the Consolidated Financial Statements. (2)Gross profit is derived by subtracting manufacturing cost of sales from net sales. (3)Loss from continuing operations, net loss and related per share data in 1993 include one-time, after-tax charges of $378.4, or $4.21 per share, related to the Immunex acquisition in the second quarter and $133.4, or $1.48 per share, related to a global, companywide restructuring provision in the fourth quarter. See Note 3 to the Consolidated Financial Statements. (4)Net loss and related per share data in 1993 include a one-time, after-tax charge of $332.6, or $3.70 per share, for the cumulative effect of accounting changes in the first quarter. See Notes 9 and 12 to the Consolidated Financial Statements.
PAGE Consolidated Statements of Operations American Cyanamid Company and Subsidiaries
(Millions of dollars except per share amounts) Years ended December 31, 1993 1992 1991 Net sales........................................... $ 4,276.8 $4,193.8 $3,820.5 Expenses: Manufacturing cost of sales....................... 1,632.9 1,567.8 1,472.5 Selling and advertising........................... 1,306.8 1,290.3 1,138.3 Research and development.......................... 595.6 530.7 456.2 Administrative and general........................ 300.5 270.0 244.2 Acquired in-process research and development (Note 3)............................ 383.6 - - Restructuring (Note 3)............................ 207.9 - - 4,427.3 3,658.8 3,311.2 Earnings (loss) from operations..................... (150.5) 535.0 509.3 Interest and other income, net...................... 100.7 76.6 52.8 (49.8) 611.6 562.1 Interest expense.................................... 62.4 58.8 53.8 Earnings (loss) before taxes on income.............. (112.2) 552.8 508.3 Taxes on income (Note 9)............................ 42.6 195.6 163.0 Earnings (loss) before minority interests........... (154.8) 357.2 345.3 Minority interests.................................. (8.9) (7.6) (16.5) Earnings (loss) from continuing operations.......... (163.7) 349.6 328.8 Discontinued operations (Notes 2, 8, 9 and 12): Earnings (loss) from operations, net of taxes..... (75.6) 45.5 30.0 Loss on distribution, net of taxes of $44.2....... (326.8) - - Cumulative effect of accounting changes, net of taxes of $144.9.......................... (219.8) - - (622.2) 45.5 30.0 Earnings (loss) before cumulative effect of accounting changes................................ (785.9) 395.1 358.8 Cumulative effect of accounting changes (Notes 9 and 12).................................. (332.6) - - Net earnings (loss)................................. $(1,118.5) $ 395.1 $ 358.8 Per share of common stock (Note 1): Earnings (loss) from continuing operations ......... $ (1.82) $ 3.85 $ 3.53 Earnings (loss) from discontinued operations........ (6.92) .50 .32 Earnings (loss) before cumulative effect of accounting changes................................ (8.74) 4.35 3.85 Cumulative effect of accounting changes............. (3.70) - - Net earnings (loss)................................. $ (12.44) $ 4.35 $ 3.85 Consolidated Statements of Earnings Employed in the Business (Millions of dollars except per share amounts) Years ended December 31, 1993 1992 1991 Earnings employed in the business at beginning of year.............................. $ 2,767.2 $2,518.4 $2,295.9 Net earnings (loss)............................... (1,118.5) 395.1 358.8 Cash dividends of $1.7250 per share in 1993, $1.6125 per share in 1992 and $1.4625 per share in 1991......................................... (155.0) (146.3) (136.3) Distribution of Cytec Industries Inc. common shares (Note 2)................................. (45.5) - - Earnings employed in the business at end of year.................................... $ 1,448.2 $2,767.2 $2,518.4 See accompanying Notes to Consolidated Financial Statements.
Consolidated Balance Sheets American Cyanamid Company and Subsidiaries
(Millions of dollars except per share amounts) Assets December 31, 1993 1992 Current assets Cash and cash equivalents.................................... $ 426.1 $ 341.7 Marketable securities and time deposits, at cost............. 101.7 125.9 Accounts receivable, less allowance for doubtful accounts of $40.1 in 1993 and $33.8 in 1992......................... 1,120.1 959.1 Inventories (Note 4)......................................... 1,027.9 782.0 Deferred tax assets.......................................... 410.1 - Total current assets....................................... 3,085.9 2,208.7 Investments and advances....................................... 307.2 171.8 Plants, equipment and facilities, at cost (Note 5)............. 3,106.0 2,709.9 Less accumulated depreciation................................ 1,335.7 1,146.8 Net plant investment....................................... 1,770.3 1,563.1 Intangibles resulting from business acquisitions, net of accumulated amortization.............................. 305.3 185.1 Deferred tax assets............................................ 328.5 - Other assets................................................... 260.2 309.0 Net assets held for distribution............................... - 628.8 $6,057.4 $5,066.5 Liabilities and Shareholders' Equity Current liabilities Accounts payable and accrued expenses........................ $1,860.0 $1,078.4 Short-term borrowings, including commercial paper of $366.2 in 1993 and $33.0 in 1992........................... 432.6 74.2 Funded debt installments due within one year................. 182.9 191.5 Income taxes................................................. 254.9 26.1 Total current liabilities.................................. 2,730.4 1,370.2 Funded debt (Note 6)........................................... 344.3 408.3 Deferred tax liabilities....................................... 27.6 6.8 Other noncurrent liabilities................................... 1,444.4 511.4 Minority interests............................................. 143.7 48.7 Shareholders' equity (Note 7) Common stock-par value $5 per share Authorized-200,000,000 Issued-102,725,106 in 1993 and 102,719,665 in 1992......... 513.6 513.6 Additional paid-in capital................................... 38.9 39.9 Earnings employed in the business............................ 1,448.2 2,767.2 Accumulated translation and other adjustments................ (49.3) (28.5) Treasury stock, at cost...................................... (584.4) (571.1) Total shareholders' equity................................. 1,367.0 2,721.1 $6,057.4 $5,066.5 Contingent Liabilities and Commitments (Notes 2, 3 and 8) See accompanying Notes to Consolidated Financial Statements.
PAGE Consolidated Statements of Cash Flows American Cyanamid Company and Subsidiaries
(Millions of dollars) Years Ended December 31, 1993 1992 1991 Cash flows provided by (used for) operating activities Earnings (loss) from continuing operations.................. $(163.7) $ 349.6 $ 328.8 Adjustments to reconcile earnings (loss) from continuing operations to net cash provided by operating activities: Acquired in-process research and development (Note 3)..... 378.4 - - Restructuring (Note 3).................................... 133.4 - - Depreciation and amortization............................. 218.8 198.1 176.7 Other, net................................................ (55.2) 36.9 28.4 Changes in assets and liabilities, net of effects from acquisitions/dispositions of businesses: Accounts receivable..................................... (112.2) (131.6) 28.2 Inventories............................................. (76.2) (111.4) 26.1 Accounts payable and accrued expenses................... 272.1 113.0 14.1 Income taxes............................................ 115.4 15.5 (28.6) Other assets and liabilities............................ 123.1 10.0 (56.7) Net cash provided by operating activities of continuing operations................................ 833.9 480.1 517.0 Net cash provided by operating activities of discontinued operations.............................. 62.4 139.8 149.7 Net cash provided by operating activities................... 896.3 619.9 666.7 Cash flows provided by (used for) investing activities Additions to plants, equipment and facilities............... (305.5) (311.1) (300.2) Acquisitions of businesses, net of cash acquired............ (554.5) - (2.3) Additions to investments-principally marketable securities.. (467.1) (517.0) (167.9) Reductions to investments-principally marketable securities. 588.9 378.0 192.1 Net investing activities of discontinued operations......... (119.4) (54.2) (76.5) Other, net.................................................. (4.1) (3.2) 5.5 Net cash used for investing activities...................... (861.7) (507.5) (349.3) Cash flows provided by (used for) financing activities Change in short-term borrowings, net........................ 353.7 (78.8) 13.3 Funded debt: Additions................................................. 209.5 291.3 32.2 Reductions................................................ (285.5) (59.7) (92.2) Purchases of treasury stock................................. (22.3) (105.1) (152.0) Cash dividends.............................................. (155.0) (146.3) (136.3) Cash component of Cytec dividend........................... (41.6) - - Net financing activities of discontinued operations......... (.5) .7 - Other, net.................................................. 6.5 8.4 24.6 Net cash provided by (used for) financing activities........ 64.8 (89.5) (310.4) Effect of exchange rate changes on cash..................... (15.0) (9.4) (9.7) Increase (decrease) in cash and cash equivalents............ 84.4 13.5 (2.7) Cash and cash equivalents, beginning of year................ 341.7 328.2 330.9 Cash and cash equivalents, end of year...................... $ 426.1 $ 341.7 $ 328.2 See accompanying Notes to Consolidated Financial Statements.
PAGE Notes to Consolidated Financial Statements American Cyanamid Company and Subsidiaries 1. Summary of Accounting Policies (Millions of dollars except per share amounts) Consolidation--The consolidated financial statements include the accounts of American Cyanamid Company and all of its majority-owned subsidiaries (the company). The minority interests separately disclosed herein reflect third- party shareholder interests in majority-owned subsidiaries. All significant intercompany transactions and balances have been eliminated. Subsidiaries operating outside the United States and Canada are included on a fiscal year basis ending November 30. Certain reclassifications have been made to the 1992 and 1991 consolidated financial statements to conform with the 1993 presentation. Currency Translation--For most of the company's international operations, all elements of financial statements are translated into U.S. dollars using current exchange rates, with translation adjustments accumulated in shareholders' equity. For other international operations, certain financial statement amounts are translated at historical exchange rates with all other assets and liabilities translated at current exchange rates. The resultant translation adjustments for these international operations are recorded in results of operations. These international operations are generally in countries with hyperinflationary economies, principally in Latin America. Depreciation and Amortization--Depreciation is provided primarily on a straight-line composite method over the estimated useful lives of various classes of assets. When such depreciable assets are sold or otherwise retired from service, their cost, less amounts realized on sale or salvage, is charged or credited to the accumulated depreciation account. The gain or loss on depreciable assets when sold as part of a discontinued business is recognized currently. Expenditures for maintenance and repairs are charged to current operating expenses. Additions and betterments to either provide necessary capacity, improve the efficiency of production units, modernize or replace older facilities or install equipment for protection of the environment are capitalized. Intangibles resulting from business acquisitions are carried at cost and amortized over a period of up to 40 years unless, in the opinion of management, their lives are limited, or they have sustained a permanent diminution in value, in which case they are either immediately charged to operations or amortized over lesser periods. Cash and Cash Equivalents--Securities with maturities of three months or less when purchased are considered to be cash equivalents. Financial Instruments--The carrying values of the company's financial instruments approximate their current market or estimated fair values, except marketable securities and investments and advances which are discussed in Note 10 to the Consolidated Financial Statements. The following methods and assumptions were used to estimate the fair value of each class of financial instruments: Cash and cash equivalents The carrying amount approximates fair value due to the short-term maturity of these instruments. Marketable securities and investments and advances The fair value of marketable securities and investments and advances held for investment purposes are based on quoted market prices, if available. If a quoted market price is not available, fair value is estimated using quoted market prices for similar securities and investments. continued PAGE Notes to Consolidated Financial Statements American Cyanamid Company and Subsidiaries 1. Summary of Accounting Policies (continued) Short-term borrowings The carrying amount approximates fair value due to the short-term maturity of these instruments. Funded debt The fair value of long-term debt is estimated based on the quoted market prices for the same or similar issues, or on the current rates offered to the company for debt of the same remaining maturities. Foreign currency contracts The carrying amount approximates fair value as all forward foreign exchange contracts are revalued monthly based on current exchange rates, hedge known, firm future commitments and substantially all are less than six months in length. Concentrations of Credit Risk--The company is engaged primarily in the manufacture and sale of a highly diversified line of medical and agricultural products throughout the world. The company performs ongoing credit evaluations of its customers' financial condition and, generally, requires no collateral from its customers. Inventories--Inventories are carried at the lower of cost or market. Cost is determined on the last-in, first-out (LIFO) method for substantially all inventories in the United States with all other inventories determined on the first-in, first-out (FIFO) or average methods. Taxes on Income--Effective January 1, 1993, the company adopted Statement of Financial Accounting Standards (SFAS) No. 109, "Accounting for Income Taxes." It requires an asset and liability approach for financial accounting and reporting for deferred income taxes. Prior to the adoption of SFAS No. 109, deferred income taxes were provided to recognize the effect of timing differences between financial statement and income tax accounting. Postretirement Benefits--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. It was the company's practice to recognize the cost of these benefits as claims were paid prior to the adoption of SFAS No. 106. Earnings Per Share--Earnings per share of common stock is based on the average number of shares outstanding during the year: 89,914,583 in 1993, 90,800,871 in 1992 and 93,206,651 in 1991. The stock options described in Note 7 do not result in a material dilution of earnings per share. 2. Discontinued Operations On August 17, 1993, the company's Board of Directors approved a formal plan to effect the spin-off of Cytec Industries Inc. (Cytec), which encompassed substantially all of the company's chemicals businesses 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. The reduction in the company's shareholders' equity due to the Cytec dividend was approximately $52.9, or $.59 per share. 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. Such stock was issued in three series with varying rights, earns cumulative dividends of approximately $14.6 each year, and includes two continued Notes to Consolidated Financial Statements American Cyanamid Company and Subsidiaries 2. Discontinued Operations (continued) series with mandatory redemption in fifteen years, one of which may be converted into a maximum of 30% of Cytec's common stock. The third series contains various financial covenants designed to preserve Cytec's ability to discharge certain liabilities of Cyanamid which Cytec assumed upon the spin- off. At December 31, 1993, the preferred stock interest is included in investments and advances in the accompanying consolidated balance sheet. In connection 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. Accordingly, the 1993 consolidated financial statements exclude amounts for discontinued operations from captions applicable to continuing operations. The 1992 and 1991 consolidated financial statements have been restated to conform with the 1993 presentation. In anticipation of the spin-off, in the third quarter the company reflected in its results of discontinued operations certain costs related to the disposition or termination of chemicals business operations not assumed by Cytec (primarily the elimination of accumulated translation adjustments); valuation allowances related to assets (primarily deferred tax assets) transferred to Cytec; and other spin-off costs which amounted, in the aggregate, to $326.8 on an after-tax basis. Based upon a comprehensive review of environmental matters completed during the third quarter, Cyanamid recorded a provision for remediation expense of $98.2, net of tax. This provision related to past or current chemicals business operations and was reflected in the operating results of discontinued operations. In conjunction with the spin-off, Cytec assumed substantially all liabilities and obligations related to the chemicals business and agreed to discharge and indemnify the company from future responsibility with regard to such liabilities. Included in the liabilities assumed by Cytec are all or a portion of the environmental liabilities related to the cleanup of 58 superfund sites, postretirement health care benefit obligations of current and future chemicals retirees, and pension obligations along with the related plan assets of active chemicals employees. The company retained the pension obligations and related plan assets of substantially all retired chemicals employees. The company also entered into an agreement with the Pension Benefit Guarantee Corporation (PBGC) to reassume responsibility for the active pension obligations and related plan assets or otherwise settle any underfunding, if the PBGC determines it necessary to terminate the Cytec pension plan and assume its liabilities because of a substantially increased risk of nonpayment. In the opinion of management, Cytec had, at the date of its spin-off from Cyanamid, adequate resources to discharge, in the ordinary course of its continuing operations, all of the assumed liabilities. Net sales of the chemicals business for the period ended December 17, 1993, and the years ended December 31, 1992, and 1991 were $1,028.8, $1,073.7 and $1,165.7, respectively. Earnings (loss) from operations of such business for the period ended December 17, 1993, and the years ended December 31, 1992, and 1991, are net of taxes (benefit) of $(64.7), $16.0 and $19.8, respectively. The net assets held for distribution on December 31, 1992 consist primarily of accounts receivable, inventory, equity in associated companies, plants, equipment and facilities, accounts payable and accrued expenses and other noncurrent liabilities. 3. Acquisitions and Restructuring On June 1, 1993, shareholders of Immunex Corporation approved an agreement to create a new biopharmaceutical company by merging the company's North American Lederle oncology business with Immunex Corporation. The company also continued Notes to Consolidated Financial Statements American Cyanamid Company and Subsidiaries 3. Acquisitions and Restructuring (continued) 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 the Immunex shareholders retained the remaining 46.5%. The company is permitted to increase its ownership of Immunex to 70% through purchases of publicly held stock and is obligated to contribute additional cash or other consideration to the new company if specified minimum sales of products, as defined in the Agreement and Plan of Merger, are not achieved in any year through 1997. A payment for 1993 of approximately $7.0 will be made in 1994. The acquisition was reflected as a purchase in the accompanying consolidated financial statements. Incident to this acquisition, the company acquired the ongoing research and development activities of Immunex resulting in a one-time, pre-tax charge in 1993 of $383.6 related principally to the write-off of these in-process research and development costs. There was no significant tax benefit available on this charge. Accordingly, earnings from continuing operations and net earnings were reduced by $378.4, or $4.21 per share. In the third quarter of 1993, the company and The Shell Petroleum Company Limited signed an agreement pursuant to which the company later acquired substantially all assets and liabilities of the Shell Companies' crop protection businesses outside of North America. The acquisition involved all of the Shell Companies' crop protection products, rights to related intellectual property and all marketing activities. It also included a biosciences research center at Schwabenheim, Germany; a major formulations facility in Genay, France; and other formulations sites around the world. The acquisition, reflected as a purchase in the accompanying consolidated balance sheet, 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. The accompanying consolidated statement of operations includes the results of Immunex, net of minority shareholder interests, from the date of the acquisition. There are no results of operations for the businesses acquired from Shell included herein. Sales of the Shell Companies' crop protection businesses outside of North America in 1993 were estimated to be approximately $600.0. Had both acquisitions been effected at the beginning of the year, the company's operating results on a pro forma basis would not have been materially different. In the fourth quarter of 1993, the company announced 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. A charge of $207.9 for these costs was reflected in the company's operating results. 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 the carrying value of certain assets affected by the restructuring to estimated realizable amounts; and $35.5 for other restructuring measures. 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. PAGE Notes to Consolidated Financial Statements American Cyanamid Company and Subsidiaries 4. Inventories 1993 1992 Finished goods............................. $ 599.3 $408.4 Work in progress........................... 250.4 246.2 Raw materials and supplies................. 276.8 209.7 1,126.5 864.3 Less reduction to LIFO cost................ (98.6) (82.3) $1,027.9 $782.0 At December 31, 1993, and 1992, LIFO inventories comprised approximately 51% and 62%, respectively, of consolidated inventories. It is not practicable to determine the major components of inventory under the dollar value LIFO inventory method. 5. Plants, Equipment and Facilities 1993 1992 Land....................................... $ 136.1 $ 68.8 Buildings.................................. 879.4 743.7 Machinery and equipment.................... 1,888.1 1,683.2 Construction in progress................... 202.4 214.2 $3,106.0 $2,709.9 6. Funded Debt Funded debt, excluding the current portion, is as follows: 1993 1992 Sinking fund debentures 7.375% due 2001.......................... $ 40.0 $ 47.6 8.375% due 2006.......................... 63.9 71.9 Promissory note 8.75% due 1995 to 1998................... - 55.5 7.5% due 1995 to 2000................... 16.4 - Pollution control and industrial revenue bonds 6.8% due 1995 to 2000.................... 18.6 19.3 6.5% due 1995 to 2006.................... 19.7 20.6 8.75% due 2013........................... 18.0 18.0 5.5% to 8.75% due at various dates through 2020........................... 66.9 68.6 Eurosterling bonds 9.61% due 1995 to 1997................... 38.0 63.8 6.5% due 1995........................... 19.0 - Sundry obligations......................... 43.8 43.0 $344.3 $408.3 Annual maturities of funded debt for the four years subsequent to December 31, 1994, are as follows: 1995-$74.5; 1996-$33.4; 1997-$25.9 and 1998-$16.6. The 7.5% promissory note contains a provision to delay interest payments until 1995 resulting in an effective interest rate of 6.86%. continued PAGE Notes to Consolidated Financial Statements American Cyanamid Company and Subsidiaries 6. Funded Debt (continued) During 1993, a subsidiary of the company borrowed 113.0 million pounds sterling (approximately $167.7 million at December 31, 1993) with principal amortization commencing in February 1994 and ending in January 1995. The interest rate on this borrowing was approximately 6.5% at December 31, 1993. The new borrowing was used entirely to finance the repurchase of 113.0 million pounds sterling of previously issued fifteen-year Eurosterling bonds. This portion of the previously issued bonds was included in funded debt installments due within one year at December 31, 1992, due to certain collateral agreements with the purchaser which permitted reacquisition. This transaction did not change the company's overall borrowing position. 7. Shareholders' Equity Authorized Capital--Authorized capital includes 10,000,000 shares of preferred stock with a par value of $1 per share, none of which are outstanding, and 300,000 shares of which are reserved for issuance as Series A Junior Participating Preferred Stock in connection with the Stockholder Rights Plan described elsewhere in this note.
Common Stock Treasury Stock Common Stock and Treasury Stock: Shares Amount Shares Amount Balance at December 31, 1990...................... 102,633,293 $513.2 9,220,230 $(353.1) Purchased....................................... - - 2,519,869 (152.0) Issued pursuant to stock option plans........... 85,966 .4 (590,591) 24.5 Issued pursuant to incentive compensation plan.. - - (55,411) 2.3 Balance at December 31, 1991...................... 102,719,259 513.6 11,094,097 (478.3) Purchased....................................... - - 1,813,663 (105.1) Issued pursuant to stock option plans........... 406 - (232,053) 10.9 Issued pursuant to incentive compensation plan.. - - (30,534) 1.4 Balance at December 31, 1992...................... 102,719,665 513.6 12,645,173 (571.1) Purchased....................................... - - 433,150 (22.3) Issued pursuant to stock option plans........... 5,441 - (176,142) 8.5 Issued pursuant to incentive compensation plan.. - - (11,207) .5 Balance at December 31, 1993...................... 102,725,106 $513.6 12,890,974 $(584.4)
In 1990, the company's Board of Directors approved a share repurchase program. This program authorized the purchase of up to 12 million shares of the company's common stock. The company also is purchasing treasury shares over a period of time to fulfill its obligations under its stock option plans. Common stock excludes 194,208 issued shares held by a subsidiary. Stock Options--Under the company's stock option plans, key employees may be granted ten-year options to purchase common stock at not less than 100% of market value on the date of grant. At December 31, 1993, 8,282,780 shares were reserved for stock options outstanding or available to be granted under various plans. The majority of options are exercisable in cumulative installments of one third of the number of shares commencing one year after date of grant and annually thereafter. In 1992, the company's shareholders approved a new stock option plan to make available 3,000,000 shares of common stock plus an additional annual increment of 1% of the issued shares, with the total number of shares available for the grant of stock options not to exceed 5,000,000 at any time. As options are exercised, the difference between the proceeds and cost of treasury stock or par value of the company's common stock is recorded in additional paid-in capital. continued Notes to Consolidated Financial Statements American Cyanamid Company and Subsidiaries 7. Shareholders' Equity (continued) Selected stock option data is as follows:
1993 1992 1991 Options exercised during year: Number of shares................... 198,414 236,297 714,919 Option price per share............. $17.55-52.50 $13.50-58.25 $ 9.70-52.50 Options outstanding at December 31: Number of shares................... 5,723,992 5,124,409 4,451,548 Option price per share............. $11.08-65.50 $11.08-65.50 $11.08-65.50 Options exercisable at December 31... 3,888,246 3,233,245 2,593,216
Additional Paid-in Capital--Changes in 1993, 1992 and 1991 are attributable to the issuance of shares for stock options exercised net of related tax benefits of $.9, $1.1 and $5.0, respectively. Accumulated Translation and Other Adjustments--Changes in accumulated translation and other adjustments are as follows: 1993 1992 1991 By category: Translation adjustments............ $ 53.6 $38.8 $61.6 Discontinued operations (Note 2)... (40.5) - - Distribution of Cytec Industries Inc. common shares (Note 2)...... 7.4 - - Other, net......................... .3 (.8) .4 Charge to accumulated translation and other adjustments.............. $ 20.8 $38.0 $62.0 Stockholder Rights Plan--Pursuant to a distribution declared by the company's Board of Directors in March 1986, there is included with each outstanding share of Common Stock one half of a Right. The Rights are currently attached to the certificates representing Common Stock and will not be transferable apart from shares of Common Stock until a distribution of the Rights (a Distribution) occurs. A Distribution will occur on the earlier of (i) ten days following the date of public announcement that any person, entity or group has acquired 20% or more of the outstanding shares of Common Stock or (ii) ten days following commencement of a tender offer for 30% or more of the outstanding shares of Common Stock. Prior to Distribution, each full Right entitles the registered holder to purchase one two-hundredth of a share of Series A Junior Participating Preferred Stock at a price of $200, subject to adjustment. After a Distribution has occurred, if, upon a merger in which the company is the surviving corporation, any person acquires 50% of the outstanding shares of Common Stock, or certain other events occur when there is a 20% holder of Common Stock, each holder of a full Right (other than Rights held by an acquiring person) will have the right to receive on exercise four shares of Common Stock at a price equal to 25% of the market price of the Common Stock. Upon the acquisition of the company or more than 50% of its assets, the holder of a full Right will have the right to receive upon exercise common stock of the acquiring party having a value of two times the exercise price of the Right. The Rights are redeemable at a price of $.02 per Right prior to the thirtieth day following an acquisition by any person or group of 20% of the outstanding shares of Common Stock and will expire in March 1996. This description of the Plan is qualified and governed by the terms and conditions of the Rights Agreement, as amended. Notes to Consolidated Financial Statements American Cyanamid Company and Subsidiaries 8. Contingent Liabilities and Commitments Rental expense under property and equipment leases was $45.5 in 1993, $45.2 in 1992 and $41.2 in 1991. Estimated future minimum rental expenses under property and equipment leases that have initial or remaining noncancelable lease terms in excess of one year as of December 31, 1993, are: 1994-$21.7; 1995-$13.3; 1996-$7.6; 1997-$4.8; 1998-$3.3, and later years-$13.5 in the aggregate. In general, the company accounts for leases as operating leases, which in all material respects complies with SFAS No. 13. To protect against fluctuations in foreign currencies related to specific transactions, the company enters into foreign exchange contracts for periods consistent with the underlying transaction exposures. Substantially all of these contracts mature within a six-month period. As of December 31, 1993, the company had contracted to purchase and sell $112.6 and $278.4, respectively, of primarily European currencies. The amounts at December 31, 1992, were $99.1 and $138.3, respectively. Deductible amounts under the company's liability insurance coverage (particularly product and environmental liability) are such that the company must regard itself, for practical purposes, as self-insured with respect to most events. The company has a self-insurance program which provides reserves for costs based on past claims experience. The company is a party 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. As of December 31, 1993, included among such suits were 21 involving personal injury or death allegedly occurring in connection with administration of the company's DTP (diphtheria- tetanus-pertussis) and oral polio vaccines. In 1990, the company's supplier of MAXZIDE triamterene/hydrochlorothiazide filed suit against the company alleging breach of a 1984 exclusive licensing agreement and seeking damages and rights to the MAXZIDE trademarks and trade dress owned by the company. After a trial on the merits in Federal District Court, a jury rejected the supplier's claims. Plaintiff's time to appeal has not expired. In 1991, a suit was filed against the company alleging patent infringement by the company 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. Early in 1994, the company pleaded guilty to a record keeping misdeameanor and paid a small fine related to allegations that a company employee had manipulated data related to Cygro coccidiostat in combination with other products. The settlement does not cover the company employee. The Federal Trade Commission has subpoenaed information concerning (i) the company'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. As of December 31, 1993, the company was a party to, or otherwise involved in, legal proceedings directed at the cleanup of 39 Superfund sites. These sites exclude sites for which full liability was assumed by Cytec upon the spin-off but include certain sites for which there is shared responsibility between the company and Cytec. See Note 2 to the Consolidated Financial Statements. In many cases, future environmental related expenditures cannot be quantified with a reasonable degree of accuracy. The cost of cleanups for which the company remains primarily liable may be in excess of current environmental related accruals. It is the company'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 continued Notes to Consolidated Financial Statements American Cyanamid Company and Subsidiaries 8. Contingent Liabilities and Commitments (continued) proceed, these liabilities are reviewed periodically and adjusted as additional information becomes available. 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. The aggregate environmental related accruals were $187.3 and $120.4 at December 31, 1993, and 1992, respectively. All accruals have been recorded without giving effect to any possible future insurance proceeds. Various environmental matters are currently being litigated and potential insurance recoveries are unknown at this time. Cash expenditures often lag by a number of years the period in which an accrual is recorded. 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 their ultimate disposition will not have a material adverse effect upon the consolidated financial position of the company. 9. Taxes on Income 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 deferred income taxes. The cumulative effect of this accounting change was a one-time gain of $13.0, or $.14 per share. Prior year financial statements have not been restated to apply the provisions of SFAS No. 109. In conjunction with the spin-off of Cytec, the portion of the cumulative effect of this accounting change applicable to the chemicals business is 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. Taxes on income are based on earnings (loss) before taxes on income- continuing operations as follows: 1993 1992 1991 Domestic........................ $(305.8) $232.6 $235.0 Foreign......................... 193.6 320.2 273.3 $(112.2) $552.8 $508.3 The components of the provision (benefit) are: 1993 1992 1991 Current: Federal...................... $ 136.6 $ 43.2 $ 25.5 Foreign...................... 75.7 108.8 92.0 Other........................ 34.0 12.8 11.7 246.3 164.8 129.2 Deferred: Federal...................... (149.6) 23.9 28.8 Foreign and other............ (54.1) 6.9 5.0 (203.7) 30.8 33.8 Total taxes on income........... $ 42.6 $195.6 $163.0 Domestic and foreign earnings before taxes on income-continuing operations include all income derived from continuing operations in the respective U.S. and foreign geographic areas, whereas provisions for taxes on income include all income taxes payable to U.S., foreign and other governments as applicable, regardless of the situs in which the taxable income is generated. continued PAGE Notes to Consolidated Financial Statements American Cyanamid Company and Subsidiaries 9. Taxes on Income (continued) The 1993 provision for income taxes attributable to continuing operations includes a benefit of approximately $16.1, or $.18 per share, related to the change in tax laws and rates included in the Omnibus Budget Reconciliation Act of 1993 (OBRA) signed into law on August 10, 1993. This benefit was due primarily to the remeasuring of the company's domestic net deferred tax assets in accordance with SFAS No. 109 to reflect an increase in the statutory tax rate. Deferred income taxes as of December 31, 1993, reflect the impact of "temporary differences" between amounts of assets and liabilities for financial reporting purposes and such amounts as measured by tax laws. These temporary differences are determined in accordance with SFAS No. 109 and are more inclusive in nature than "timing differences" as determined under previously applicable accounting principles. The temporary differences which give rise to deferred tax assets and liabilities as of December 31, 1993, are as follows: Accumulated depreciation $(90.5) Prepaid pension (55.9) Other (60.7) Gross deferred tax liabilities (207.1) Operating accruals 339.5 Inventory 111.9 Restructuring accruals 139.8 Environmental accruals 77.2 Postretirement obligations 222.0 Net operating loss carryforwards 75.1 Other 27.2 Gross deferred tax assets 992.7 Deferred tax assets valuation allowance (91.6) $694.0 A valuation allowance is provided when it is more likely than not that some portion or all of the deferred tax assets will not be realized. The company has established valuation allowances primarily for net operating loss carryforwards and portions of other deferred tax assets of international operations, principally in Latin America. Based on the company's historical taxable income record, adjusted for significant nonrecurring items such as the gain on the sale of the businesses of the Shulton Group in 1990, management believes it is more likely than not that the company will realize the benefit of the net deferred tax assets existing at December 31, 1993. Further, management believes the existing net deductible temporary differences will reverse during periods in which the company generates net taxable income. There can be no assurance, however, that the company will generate taxable earnings or any specific level of continuing earnings in the future. During 1993, the deferred tax assets valuation allowance increased $57.7 due primarily to acquired Immunex net operating loss carryforwards. The financial reporting basis of investments in certain domestic and foreign subsidiaries exceeds their tax basis. In accordance with SFAS No. 109, a deferred tax liability is not recorded for the excess because the investments are essentially permanent. A reversal of the company's plans to permanently invest in these operations would cause the excess to become taxable. On December 31, 1993, these temporary differences were approximately $453.4. A continued PAGE Notes to Consolidated Financial Statements American Cyanamid Company and Subsidiaries 9. Taxes on Income (continued) determination of the amount of unrecognized deferred tax liability related to these investments is not practicable. The principal components of deferred tax provisions in 1993 include estimated litigation costs not currently deductible for tax purposes, restructuring accruals and operating accruals. One of the principal components of deferred tax provisions in 1992 and 1991 relates to estimated litigation costs not currently deductible for tax purposes. The principal components of deferred tax provisions, other than estimated litigation costs, in 1992 and 1991 are the excess of tax over book expenses for depreciation (1992-$4.4 and 1991-$4.7) and employee benefits (1992-$8.5 and 1991 - $19.6). A reconciliation between the company's effective tax rate and the U.S. federal income tax rate on earnings (loss) from continuing operations is as follows: 1993 1992 1991 Federal income tax rate......... (35.0)% 34.0% 34.0% Immunex acquisition............. 114.8 - - Income subject to other than the federal income tax rate... (64.2) (1.4) (2.6) Net operating losses for which no tax benefit is currently available........... 7.7 .4 1.1 Other, net...................... 14.6 2.4 (.4) Effective tax rate.............. 37.9% 35.4% 32.1% There was no significant tax benefit available on the one-time charge of $383.6 resulting from the Immunex acquisition which significantly increased the 1993 effective tax rate. Other factors affecting the effective tax rate in 1993 compared to 1992 include a change in the mix of income among taxing jurisdictions and the passage of OBRA. Factors affecting the effective tax rate in 1992 compared to 1991 relate primarily to a change in the mix of income among taxing jurisdictions. 10. Other Financial Information Included in accounts payable and accrued expenses at December 31, 1993, and 1992, respectively, are trade payables of $377.0 and $265.8, employee benefits of $190.2 and $92.6, salaries and wages of $98.0 and $113.7, checks outstanding in excess of certain domestic cash balances of $61.2 and $66.1, and environmental related accruals of $15.0 and $10.0. Included in other noncurrent liabilities at December 31, 1993, and 1992, respectively, are environmental related accruals of $172.3 and $110.4, and employee benefits of $292.1 and $129.1. Also included in other noncurrent liabilities at December 31, 1993, is accrued postretirement benefit cost of $545.7. At December 31, 1993, the company had $700.0 of domestic short-term lines of credit available. The revolving credit facilities are divided between a $300.0 facility with a commitment period of one year and a $400.0 facility with a commitment period of three years. Maintenance and repairs were $109.8 in 1993, $107.1 in 1992 and $97.5 in 1991. Taxes other than income and payroll taxes were $19.6 in 1993, $22.1 in 1992 and $21.3 in 1991. Advertising was $345.0 in 1993, $363.8 in 1992 and $339.8 in 1991. Foreign exchange losses were $29.3 in 1993, $30.9 in 1992 and $25.1 in 1991. continued PAGE Notes to Consolidated Financial Statements American Cyanamid Company and Subsidiaries 10. Other Financial Information (continued) Cash payments during the years ended December 31, 1993, 1992 and 1991 included interest (net of amounts capitalized) of $70.6, $55.3, and $50.2 and income taxes of $133.4, $156.9 and $224.9, respectively. Included in consolidated earnings employed in the business at December 31, 1993, and 1992, are undistributed earnings of associated companies of $30.3 and $118.3, and non-U.S. subsidiaries of $481.8 and $592.8, respectively. The estimated carrying and fair values of the company's marketable securities and investments and advances as of December 31 are as follows: 1993 1992 Carrying Fair Carrying Fair Amount Value Amount Value Marketable securities $101.7 $117.6 $125.9 $145.8 Investments and advances 307.2 405.8 171.8 276.3 Total $408.9 $523.4 $297.7 $422.1 11. Retirement Plans The company has various pension plans covering substantially all employees in the United States and Canada and certain employees in foreign countries. Plans covering most employees provide benefits based on years of service and compensation. The company generally makes contributions to the plans at least equal to the amounts accrued for pension expense to the extent such contributions are currently deductible for tax purposes or as required by local employee benefit and tax laws. Total pension expense for 1993, 1992 and 1991 included the components listed in the table below. Net pension expense has not been restated for amounts related to Cytec as no detailed financial information regarding components of net periodic pension cost for Cytec was available. 1993 1992 1991 Service cost - benefits earned during the period. $ 37.6 $ 34.4 $ 30.3 Interest cost on projected benefit obligation.... 128.9 124.7 118.1 Actual return on assets.......................... (215.3) (187.2) (211.9) Net amortization and deferral.................... 89.7 66.4 105.2 Net pension expense.............................. $ 40.9 $ 38.3 $ 41.7 The table below sets forth the combined funded status of U.S. plans at November 30, 1993, and 1992, foreign plans at September 30, 1993, and 1992, and the amounts recognized in the company's consolidated balance sheets at December 31, 1993, and 1992. In connection with the spin-off of Cytec, the company retained the pension obligations and related plan assets associated with substantially all retirees of the chemicals business. Cytec assumed the pension obligations and related plan assets for active chemicals business continued PAGE Notes to Consolidated Financial Statements American Cyanamid Company and Subsidiaries 11. Retirement Plans (continued) employees. The funded status table below reflects only the post spin-off obligations and related plan assets of the company at November 30, 1993.
Plans for Which Plans for Which Assets Exceed Accumulated Accumulated Benefits Benefits Exceed Assets* 1993 1992 1993 1992 Actuarial present value of benefit obligations: Vested benefit obligation.................. $1,258.7 $1,172.9 $ 66.9 $113.1 Accumulated benefit obligation............. $1,293.6 $1,222.8 $ 84.6 $128.3 Projected benefit obligation............... $1,385.9 $1,374.6 $121.1 $163.6 Plan assets at fair value, primarily listed stocks and bonds.................... 1,412.5 1,445.3 8.3 65.3 Projected benefit obligation (under) over plan assets................................ (26.6) (70.7) 112.8 98.3 Unrecognized net loss ....................... (122.3) (82.4) (23.6) (33.7) Unrecognized prior service cost.............. (13.2) (22.7) (12.4) (10.4) Unrecognized transition asset (obligation)... 41.7 36.4 (14.9) (3.4) Adjustment required to recognize minimum liability.......................... - - 21.5 16.9 (Prepaid) accrued pension cost recognized on balance sheet................ $ (120.4) $ (139.4) $ 83.4 $ 67.7 * Primarily foreign and non-qualified U.S. plans.
The following table sets forth the major assumptions used to determine the above information: 1993 1992 1991 Assumed discount rate............................ 7.5% 8.5% 9.0% Assumed rates for future compensation increases.. 5.0% 6.0% 6.0% Expected long-term rate of return on plan assets. 9.0% 9.0% 9.0% For the company's U.S. employees who became employees of Cytec on January 1, 1994, Cytec assumed the accrued pension obligations and related assets under the Cyanamid Employees Retirement Plan and the related accrued pension obligations under the company's unfunded ERISA Excess and Supplemental Retirement Plans. Cytec agreed with the company to maintain a separate pension plan from which benefits solely attributable to company service will be paid (the "Past Service Retirement Plan"). The accrued benefits under the Past Service Retirement Plan will be frozen and generally will not increase based on service with Cytec. The company agreed to transfer to the Past Service Retirement Plan pension assets as determined pursuant to the Employee Retirement Income Security Act. The funded status of the Past Service Retirement Plan as of the date of the transfer is dependent on the funded status of the company's existing pension plan as well as other factors. See Note 2 to the Consolidated Financial Statements. In connection with the Shell acquisition discussed in Note 3 to the Consolidated Financial Statements, the company has assumed an estimated pension liability of approximately $63.0 associated with a foreign subsidiary of Shell which is reflected within other noncurrent liabilities in the accompanying 1993 consolidated balance sheet. Final actuarial data necessary to comply with the pension disclosure requirements above was not available at year-end. continued PAGE Notes to Consolidated Financial Statements American Cyanamid Company and Subsidiaries 12. Postretirement Benefits In addition to providing pension benefits, the company sponsors a defined benefit health care plan that provides medical and life insurance benefits to retirees who meet minimum age and service requirements. The plan is contributory and contains other cost-sharing features such as deductibles and coinsurance. 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. It was the company's practice to recognize the cost of these benefits as claims were paid prior to 1993. The aggregate initial accumulated postretirement benefit obligation (APBO), which represents that portion of future retiree medical costs related to service already provided by both active and retired employees 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, Cytec assumed the postretirement benefit obligations of all current and future retirees of the chemicals business. See Note 2 to the Consolidated Financial Statements. Consequently, the portion of the cumulative effect of this accounting change applicable to the chemicals business is 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. The effect on continuing operations of adopting this new accounting statement increased 1993 postretirement benefit expense on a pre-tax basis by approximately $21.0. Accordingly, loss from continuing operations and net loss in 1993 include approximately $13.0, or $0.14 per share, of incremental expense on an after-tax basis related to adoption of this new accounting statement. Postretirement benefit expense for 1992 and 1991 of $40.1 and $37.5, respectively, was recorded on a cash basis and has not been restated. There was no impact on cash flow as the company plans to continue to fund the obligation as the claims are paid. Total postretirement benefit expense in 1993 was $89.2 and consisted of service cost of $11.0 and interest cost of $78.2. The charge to continuing operations was $53.2 and consisted of service cost of $7.3 and interest cost of $45.9. During the latter part of 1993, the company approved and announced significant changes to its postretirement defined benefit health care plan. The plan changes consisted primarily of increased retiree contributions, higher annual deductibles, and changes in coordination of benefits with Medicare. Most of the changes are effective beginning February 1, 1994. These plan changes reduced the accumulated postretirement benefit obligation measured at November 30, 1993, and will reduce future postretirement benefit expense compared to 1993. continued PAGE Notes to Consolidated Financial Statements American Cyanamid Company and Subsidiaries 12. Postretirement Benefits (continued) The accrued postretirement benefit cost recognized in the company's consolidated balance sheet at December 31, 1993, includes $30.0 in accounts payable and accrued expenses and $545.7 in other noncurrent liabilities. The following table presents the plan's funded status at November 30, 1993: Expected postretirement benefit obligation $523.4 Accumulated postretirement benefit obligation (APBO): Retirees and surviving spouses $337.4 Fully eligible active plan participants 77.8 Other active plan participants 45.7 Total APBO 460.9 Fair value of plan assets - APBO over fair value of plan assets 460.9 Unrecognized net gain 18.6 Unrecognized negative prior service cost 96.2 Accrued postretirement benefit cost $575.7 Measurement of the accumulated postretirement benefit obligation was based on actuarial assumptions including a discount rate of 7.5% and an average rate of future compensation increases of 5.0% (for life insurance purposes only). The assumed rate of future increases in the per capita cost of health care benefits (health care cost trend rate) is 12.0% in 1994 decreasing evenly over 7 years to 5.0% and remaining at that level thereafter. The health care cost trend rate has a significant effect on the reported amounts of APBO and related expense. For example, increasing the health care cost trend rate by one percentage point in each year would increase the APBO at November 30, 1993, and the 1993 aggregate service and interest cost by approximately $50.9 and $5.0, respectively. 13. Operations by Business Groups and Geographic Areas The following commentary relates to the tables appearing on pages 21 and 22. The company is engaged primarily in the manufacture and sale of a highly diversified line of medical and agricultural products. Sales, at cost, between business groups were immaterial. Intergeographic sales are made at prices which provide reasonable and appropriate returns based upon the respective properties employed and businesses conducted, and applicable eliminations have been applied to the intergeographic transactions. Operating earnings consist of total net sales less operating expenses. In computing operating earnings, none of the following items have been added or deducted: general corporate expenses, interest expense, interest income and taxes on income. 1993 operating earnings of the Medical Group and United States geographic area include a one-time, pre-tax charge of $383.6 related to the Immunex acquisition. See Note 3 to the Consolidated Financial Statements. In 1993, the company announced a restructuring program which is expected to be accomplished over three years. See Note 3 to the Consolidated Financial Statements. A pre-tax charge of $207.9 for these costs was reflected in the company's operating results. On a business group basis, Medical and Agricultural Group operating results include $184.4 and $19.3 of this charge, respectively. The remaining costs were included in general corporate expenses. On a geographic area basis, operating results in the United States, other western hemisphere and eastern hemisphere include $114.4, $6.7 and $82.6 of this charge, respectively. Identifiable assets are those assets used in the company's operations in each business group or geographic area. Corporate assets are primarily cash and cash equivalents, marketable securities, investments and advances, construction in progress, deferred tax assets and prepaid expenses. PAGE Notes to Consolidated Financial Statements American Cyanamid Company and Subsidiaries
(Millions of dollars) Business Groups 1993 1992 1991 Net sales Medical....................................... $2,865.8 $2,893.4 $2,641.9 Agricultural.................................. 1,411.0 1,300.4 1,178.6 $4,276.8 $4,193.8 $3,820.5 Operating earnings (loss) Medical....................................... $ (296.5) $ 396.3 $ 389.6 Agricultural.................................. 244.9 239.4 192.9 (51.6) 635.7 582.5 General corporate expenses...................... (51.7) (75.9) (64.4) Interest expense, net of interest income........ (8.9) (7.0) (9.8) Earnings (loss) before taxes on income - continuing operations......................... $ (112.2) $ 552.8 $ 508.3 Minority interests Medical....................................... $ .5 $ (7.1) $ (11.3) Agricultural.................................. (9.4) ( .5) (5.2) $ (8.9) $ (7.6) $ (16.5) Identifiable assets Medical....................................... $2,438.0 $2,199.2 $1,919.5 Agricultural.................................. 1,455.2 1,052.9 1,022.2 3,893.2 3,252.1 2,941.7 Corporate assets................................ 2,164.2 1,814.4 1,746.9 Total assets.................................... $6,057.4 $5,066.5 $4,688.6 Depreciation and amortization Medical....................................... $ 143.0 $ 124.0 $ 104.1 Agricultural.................................. 66.0 64.4 59.9 Corporate..................................... 9.8 9.7 12.7 $ 218.8 $ 198.1 $ 176.7 Capital additions Medical....................................... $ 184.5 $ 211.2 $ 185.0 Agricultural.................................. 106.5 96.7 101.8 Corporate..................................... 14.5 3.2 13.4 $ 305.5 $ 311.1 $ 300.2
Notes to Consolidated Financial Statements American Cyanamid Company and Subsidiaries
(Millions of dollars) Geographic Areas 1993 1992 1991 Net sales United States................................. $2,572.5 $2,445.1 $2,216.1 Other western hemisphere...................... 415.3 365.5 325.6 Eastern hemisphere............................ 1,289.0 1,383.2 1,278.8 $4,276.8 $4,193.8 $3,820.5 Intergeographic sales United States................................. $ 389.2 $ 336.2 $ 267.7 Other western hemisphere...................... 37.2 30.3 24.7 Eastern hemisphere............................ 37.2 49.7 46.3 Eliminations.................................. (463.6) (416.2) (338.7) - - - Operating earnings (loss) United States................................. $ (258.1) $ 313.2 $ 282.7 Other western hemisphere...................... 62.1 24.6 24.8 Eastern hemisphere............................ 144.4 297.9 275.0 (51.6) 635.7 582.5 General corporate expenses...................... (51.7) (75.9) (64.4) Interest expense, net of investment income...... (8.9) (7.0) (9.8) Earnings before taxes on income-continuing operations.................................... $ (112.2) $ 552.8 $ 508.3 Minority interests United States................................. $ 8.9 $ - $ - Other western hemisphere...................... - - - Eastern hemisphere............................ (17.8) (7.6) (16.5) $ (8.9) $ (7.6) $ (16.5) Identifiable assets United States................................. $2,240.6 $2,160.2 $1,745.6 Other western hemisphere...................... 300.8 289.0 260.4 Eastern hemisphere............................ 1,351.8 802.9 935.7 3,893.2 3,252.1 2,941.7 Corporate assets................................ 2,164.2 1,814.4 1,746.9 Total assets.................................... $6,057.4 $5,066.5 $4,688.6
PAGE Management Statement American Cyanamid Company and Subsidiaries Your management has prepared and is responsible for the accompanying consolidated financial statements. These statements have been prepared in conformity with generally accepted accounting principles appropriate in the circumstances and necessarily include some amounts based on management's estimates and judgments. All financial information in this annual report is consistent with that in the consolidated financial statements. The company maintains a system of internal accounting controls designed to provide reasonable assurance that assets are safeguarded from loss or unauthorized use, that transactions are executed in accordance with management's authorization, and that accounting records may be relied upon for the preparation of financial statements. The concept of reasonable assurance is based upon the premise that the costs of controls should not exceed the benefits derived from them. The system is monitored by a corporate staff of traveling internal auditors. The company's independent auditors, KPMG Peat Marwick, have audited the consolidated financial statements. Their audits were conducted in accordance with generally accepted auditing standards as indicated in their report below. The Audit Committee of the Board of Directors, composed solely of nonmanagement directors, meets periodically with management, the internal auditors and the independent auditors to review internal accounting control, auditing and financial reporting matters. Both the internal auditors and the independent auditors have full and free access to the Audit Committee. Independent Auditors' Report American Cyanamid Company and Subsidiaries The Board of Directors and Shareholders American Cyanamid Company: We have audited the accompanying consolidated balance sheets of American Cyanamid Company and subsidiaries as of December 31, 1993 and 1992, and the related consolidated statements of operations, earnings employed in the business, and cash flows for each of the years in the three-year period ended December 31, 1993. These consolidated financial statements are the responsibility of the company's management. Our responsibility is to express an opinion on these consolidated financial statements based on our audits. We conducted our audits in accordance with generally accepted auditing standards. 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 consolidated financial statements referred to above present fairly, in all material respects, the financial position of American Cyanamid Company and subsidiaries at December 31, 1993 and 1992, and the results of their operations and their cash flows for each of the years in the three-year period ended December 31, 1993, in conformity with generally accepted accounting principles. As discussed in Note 1 to the Consolidated Financial Statements, the company adopted the provisions of the Financial Accounting Standards Board's Statements of Financial Accounting Standards No. 106, "Employers' Accounting for Postretirement Benefits Other Than Pensions," and No. 109, "Accounting for Income Taxes," effective January 1, 1993. KPMG Peat Marwick Short Hills, NJ February 8, 1994 PAGE Five-Year Summary American Cyanamid Company and Subsidiaries
(Dollars in millions except per share amounts) Operations 1993 1992 1991 1990 1989 Net sales..................................... $ 4,277 $4,194 $3,821 $3,380 $3,014 Manufacturing cost of sales................... 1,633 1,568 1,473 1,336 1,134 Selling, advertising, administrative and general..................................... 1,607 1,560 1,383 1,211 1,059 Research and development...................... 596 531 456 420 354 Acquired in-process research and development.. 384 - - - - Restructuring................................. 208 - - - - Interest and other income, net................ 101 77 53 52 79 Interest expense.............................. 62 59 54 88 148 Taxes on income............................... 43 196 163 120 150 Earnings (loss) before minority interests..... (155) 357 345 257 248 Earnings (loss) from continuing operations.... (164) 350 329 240 232 Earnings (loss) from discontinued operations.. (622) 45 30 113 60 Cumulative effect of accounting changes....... (333) - - - - Net earnings (loss)........................... (1,119) 395 359 353 292 Per share of common stock: Earnings (loss) from continuing operations.. (1.82) 3.85 3.53 2.52 2.48 Earnings (loss) from discontinued operations (6.92) .50 .32 1.19 .64 Cumulative effect of accounting changes..... (3.70) - - - - Net earnings (loss)......................... (12.44) 4.35 3.85 3.71 3.12 Cash dividends.............................. 1.7250 1.6125 1.4625 1.35 1.3125 Average number of shares of common stock outstanding (used in calculating earnings per share).................................. 89.9 90.8 93.2 95.1 93.7 Other Data Capital additions............................. $ 306 $ 311 $ 300 $ 298 $ 296 Current assets................................ 3,086 2,209 1,996 2,139 2,118 Current liabilities........................... 2,730 1,370 1,202 1,315 1,571 Working capital............................... 356 839 794 824 547 Plants, equipment and facilities.............. 3,106 2,710 2,509 2,337 2,102 Net plant investment.......................... 1,770 1,563 1,450 1,338 1,188 Total assets.................................. 6,057 5,067 4,689 4,729 4,687 Funded debt................................... 344 408 380 386 457 Shareholders' equity.......................... 1,367 2,721 2,604 2,563 2,321 See accompanying Notes to Consolidated Financial Statements, in particular, Notes 2, 3, 9 and 12.
Discussion and Analysis of Financial Condition and Results of Operations American Cyanamid Company and Subsidiaries Financial Condition Liquidity of a company may be measured by its liquid asset position, its ability to generate funds from operations and its ability to arrange external financing. At December 31, 1993, the company had available for its operations approximately $528 million in cash and cash equivalents, marketable securities and time deposits. This source of liquidity, combined with other assets convertible to cash over a relatively short period of time, provides the company with the capability to satisfy normal cash requirements from its own resources. Net cash flows from operating activities of continuing operations in 1993 totaled about $834 million. This amount, combined with existing cash and cash equivalents and increased short-term borrowings, provided the company with adequate resources for the Immunex and Shell acquisitions, capital expenditures of approximately $306 million, dividend payments to shareholders of approximately $155 million and other cash requirements. In addition to the cash flows from operating activities and liquid assets discussed above, the company has approximately $700 million in unutilized lines of credit in the United States at December 31, 1993. These lines are available to satisfy cash requirements, should such a need arise, or to support commercial paper borrowings, and are supplemented by a variety of other credit facilities maintained by foreign subsidiaries. At December 31, 1993, aggregate debt financing was approximately $960 million, equal to 39% of total debt and equity including minority interests and is comprised of short-term borrowings of approximately $433 million and funded debt, including the portion due within one year, of approximately $527 million. At December 31, 1992, aggregate debt financing was approximately $674 million, equal to 20% of total debt and equity including minority interests. The company increased its level of debt financing from December 31, 1992, in order to meet working capital requirements. The increase in the level of aggregate debt financing as a percentage of total debt and equity including minority interests is due primarily to the reduction in equity caused by the one-time, after-tax charges related to discontinued operations, the Immunex acquisition and the restructuring program, and accounting changes as discussed in Notes 2, 3, 9 and 12 to the Consolidated Financial Statements, respectively, and the increased level of aggregate debt financing. The company believes it is capable of raising substantial amounts of short-term and long-term debt in the United States and other financial markets, if necessary. Based on projected internal cash generation, current levels of liquid assets and the credit capacity to support additional financing, the company expects to continue to be able to competitively finance operating cash requirements and planned capital expenditures for 1994, including the amount already committed at December 31, 1993, of approximately $125 million. All planned capital expenditures are intended either to provide necessary capacity, to improve the efficiency of production units, to modernize or replace older facilities, or to install equipment required for protection of the environment. The company considers its December 31, 1993, financial condition and anticipated 1994 cash flows from operating activities to be of the most significance in assessing its liquidity. Importance also can be attached to prior years' data which evidence an ability to maintain liquidity over a period of time. Data for 1992 and 1991 corresponding to the 1993 data discussed above are readily obtainable from the consolidated financial information included in this annual report. All brand names appearing in bold capital letters are trademarks, registered trademarks or service marks owned by or licensed to the company. Discussion and Analysis of Financial Condition and Results of Operations American Cyanamid Company and Subsidiaries Results of Operations Government health care proposals - The Clinton administration and several members of Congress have proposed various initiatives which may have a significant impact on the health care industry. These initiatives consist primarily of various forms of government mandated managed health care. They include creation of health care alliances, federally mandated spending restrictions, creation of a Medicare rebate program covering prescription drugs, and various tax-law changes. The company cannot predict the outcome of these proposals at this time or the impact on the company's future results of operations. Recently enacted legislation - The Omnibus Budget Reconciliation Act of 1993 (OBRA), signed into law on August 10, 1993, included provisions that are expected to have an adverse effect on the sales and earnings of the biologicals (vaccines) business beginning in the fourth quarter of 1994. It also included provisions which reduced the federal income tax benefits related to manufacturing activities in Puerto Rico. The reduction in these Puerto Rico tax benefits will have an unfavorable impact on the company's future results of operations. Other sections of OBRA contained provisions which will, to a lesser extent, have a favorable impact on the company's future results of operations. Restructuring program - During 1993, the company announced that it had begun 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. A charge of $207.9 million for these costs was reflected in the company's operating results for the fourth quarter. The company anticipates that efficencies related to the restructuring will be phased in over the next several years. The annual benefit of the efficiencies, when realized, is estimated to be approximately $100 million on an after-tax basis. Net sales in 1993 were $4.28 billion, up 2% from $4.l9 billion in 1992. Net sales in 1992 were restated to exclude the sales of the spun-off chemicals business. See Note 2 to the Consolidated Financial Statements for information related to discontinued operations. The loss from continuing operations in 1993 was $163.7 million, or $1.82 per share, compared to restated earnings of $349.6 million, or $3.85 per share, in 1992. The loss from continuing operations in 1993 includes one-time, after-tax charges of $378.4 million, or $4.21 per share, related to the Immunex acquisition and $133.4 million, or $1.48 per share, related to the restructuring. See Note 3 to the Consolidated Financial Statements. The net loss for 1993 was $1.12 billion compared to net earnings of $395.1 million in 1992. The net loss in 1993 was $12.44 per share compared to earnings of $4.35 per share in 1992. The net loss in 1993 includes a $622.2 million, or $6.92 per share, loss from discontinued operations, the one-time, after-tax charges related to the Immunex acquisition and the restructuring program, and a $332.6 million, or $3.70 per share, after-tax charge for the cumulative effect of accounting changes. See Notes 2, 3, 9 and 12, respectively, to the Consolidated Financial Statements. The increase in 1993 sales was attributable to the Agricultural Group which also reported higher operating results. Medical Group sales and operating results were lower compared to 1992. Worldwide sales of the Agricultural Group increased in 1993 compared to a year ago with continuing sales growth of the imidazolinone herbicides, in particular PURSUIT herbicide, leading the continued PAGE Discussion and Analysis of Financial Condition and Results of Operations American Cyanamid Company and Subsidiaries Results of Operations (continued) sales performance. Agricultural Group operating earnings increased in 1993 versus last year due primarily to the impact of higher worldwide sales. Sales of the Medical Group decreased in 1993 compared to last year despite increased worldwide sales of biologicals and ophthalmic products and higher domestic sales of consumer health products. The decrease was due principally to lower worldwide sales of ethical pharmaceuticals. Major factors affecting sales included a strong U.S. dollar and its effect on the translation of foreign sales, lower domestic sales of PROSTEP transdermal nicotine patch in a greatly reduced smoking cessation market compared to large introductory sales last year, and lower customer inventory levels. Exclusive of the one-time, pre-tax charges related to the Immunex acquisition and the restructuring program, Medical Group operating earnings declined in 1993 versus 1992. The decrease was due principally to the strengthening of the U.S. dollar against major European currencies as well as the effects of increased competition and the company's commitment to restrain price increases. Although international sales volume increased in 1993, the company's international businesses experienced decreased sales compared to 1992 due primarily to the strengthening of the U.S. dollar against major European currencies which reduced reported sales in 1993 by approximately 3.5%. Restated net sales in 1992 were $4.19 billion, up 10% from the restated $3.82 billion in 1991. Restated earnings from continuing operations in 1992 were $349.6 million, 6% higher than the restated $328.8 million in 1991. Restated earnings from continuing operations per share increased 9% to $3.85 per share versus the restated $3.53 per share in 1991. Net earnings in 1992 were $395.1 million, 10% higher than the $358.8 million achieved in 1991. Net earnings per share in 1992 increased 13% to $4.35 per share versus $3.85 per share in 1991. The increases in earnings from continuing operations and net earnings in 1992 were attributable, in large part, to increased sales and higher operating results of the Agricultural Group. Medical Group sales and operating results were also higher compared to 1991. The record sales and operating results of the Agricultural Group were due mainly to the continuing sales growth of the imidazolinone herbicides, in particular, PURSUIT herbicide. Higher sales of the Medical Group in 1992 were the result of increased sales of all major product lines, most notably in the ethical and generic pharmaceuticals and medical devices areas. The Medical Group's operating results were higher than in 1991 but were affected by continued generic competition, promotional costs associated with new product launches, costs related to the expansion of the company's pharmaceutical sales force in early 1992 and higher research and development expenditures. During 1992, the company's international businesses experienced increased sales compared to 1991. The effect of translation of foreign subsidiary sales in 1992 compared to 1991 was immaterial. Interest and other income, net in 1993 and 1992 includes income from the sale of land by an overseas subsidiary reported on an installment basis. The sale had no material impact on the company's net earnings or earnings per share in 1992 because of significant local taxes on the transaction. 1993 also includes a one-time credit from a co-marketing agreement related to the launch of a new cardiovascular product. Research and development expenditures have continued to increase each year as part of the company's commitment to provide new products and technologies in growth business areas. continued Discussion and Analysis of Financial Condition and Results of Operations American Cyanamid Company and Subsidiaries Results of Operations (continued) Foreign exchange losses impacted earnings by $29.3 million in 1993, $30.9 million in 1992 and $25.1 million in 1991. The losses were generated primarily by operations in countries with hyperinflationary economies, principally in Latin America. Translation of foreign subsidiary operating statements at reduced foreign currency exchange rates resulting from a strengthening U.S. dollar had an unfavorable effect on consolidated revenues and earnings in 1993 compared to 1992. The effect of translation in 1992 compared to 1991 was not significant. The impact of inflation on the company's results of operations is considered insignificant as the rate of inflation has remained relatively low in recent years. Taxes on income as a percent of earnings (loss) from continuing operations were 37.9% in 1993, 35.4% in 1992, and 32.1% in 1991. Taxes on income and related effective tax rates are discussed further in Note 9 to the Consolidated Financial Statements. 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 deferred income taxes. The aggregate cumulative effect of this accounting change was a one-time gain of $13.0, or $.14 per share. Prior year financial statements have not been restated to apply the provisions of SFAS No. 109. In conjunction with the spin-off of Cytec, the portion of the cumulative effect of this accounting change applicable to the chemicals business is 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. The 1993 provision for income taxes attributable to continuing operations includes a benefit of approximately $16.1, or $.18 per share, related to the change in tax laws and rates included in the Omnibus Budget Reconciliation Act of 1993 (OBRA) signed into law on August 10, 1993. This benefit is due primarily to the remeasuring of the company's domestic net deferred tax assets in accordance with SFAS No. 109 to reflect an increase in the statutory tax rate. Factors affecting the effective tax rate in 1993 compared to 1992 include the one-time charge related to the Immunex acquisition, a change in mix of income among taxing jurisdictions and the passage of OBRA. See Note 9 to the Consolidated Financial Statements. Postretirement benefits other than pensions - 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 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 conjunction with the spin-off of Cytec, the portion of the cumulative effect of this accounting change applicable to the chemicals business is 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. continued Discussion and Analysis of Financial Condition and Results of Operations American Cyanamid Company and Subsidiaries Results of Operations (continued) The effect on continuing operations of adopting this new accounting statement increased 1993 net postretirement benefit expense on a pre-tax basis by approximately $21.0. Accordingly, loss from continuing operations in 1993 includes approximately $13.0, or $.14 per share, of incremental expense on an after-tax basis related to the adoption of this new accounting statement. Postretirement benefit expense for 1992 and 1991, which was recorded on a cash basis, has not been restated. There was no impact on cash flow as the company plans to continue to fund the obligation as the claims are paid. Investments - In May 1993, the Financial Accounting Standards Board (FASB) issued SFAS No. 115, "Accounting for Certain Investments in Debt and Equity Securities," which is effective for fiscal years beginning after December 15, 1993. This Standard is not expected to have a significant effect on the company's consolidated results of operations but is expected to have a favorable effect on the company's financial position. Postemployment benefits - In November 1992, the FASB issued SFAS No. 112, "Employers' Accounting for Postemployment Benefits," which is effective for fiscal years beginning after December 15, 1993. This Standard is not expected to have a significant effect on either the consolidated results of operations or financial position of the company. Business groups' sales and operating earnings, along with certain other financial data, are set forth in Note 13 to the Consolidated Financial Statements and are discussed below. Medical Group sales decreased in 1993 compared to last year despite increased worldwide sales of biologicals and ophthalmic products and higher domestic sales of consumer health products. The decrease was due principally to lower worldwide sales of ethical pharmaceuticals and wound management products. Major factors affecting sales included the strengthening of the U.S. dollar against major European currencies and its effect on the translation of foreign sales, substantially lower domestic sales of PROSTEP transdermal nicotine patch in a greatly reduced smoking cessation market compared to large introductory sales during last year and lower customer inventory levels. Worldwide sales of the antibiotic MINOCIN minocycline and domestic sales of the diuretic MAXZIDE triamterene/hydrochlorothiazide declined in 1993 due to continued generic erosion of these off-patent brands. Worldwide sales of Davis & Geck wound management products were lower due primarily to lower customer inventory levels. Increased international sales of HIBTITER Haemophilus b conjugate vaccine during 1993 were offset by decreased domestic sales of HIBTITER. Domestic sales of TRI-IMMUNOL diphtheria, tetanus, and pertussis vaccine also decreased in 1993 compared to last year. Domestic sales of HIBITITER and TRI-IMMUNOL decreased due primarily to large introductory domestic sales of TETRAMUNE, a childhood combination vaccine of HIBITITER and TRI-IMMUNOL. Domestic sales of CENTRUM and CENTRUM SILVER multivitamin/multimineral supplements and worldwide sales of Storz ophthalmic products increased in 1993 versus a year ago. Exclusive of the one-time, pre-tax charges related to the Immunex acquisition and the restructuring program, Medical Group operating earnings declined in 1993 versus 1992. The decrease was due principally to the strenghtening of the U.S. dollar against major European currencies as well as the effects of increased competition and the company's commitment to restrain price increases. In addition, operating earnings were negatively impacted by a shift in the product mix towards lower margin products. Management expects most of these factors to continue to influence Medical Group operating earnings in 1994. continued PAGE Discussion and Analysis of Financial Condition and Results of Operations American Cyanamid Company and Subsidiaries Results of Operations (continued) Medical Group sales were higher in 1992 compared with those reported in 1991. The 1992 results include higher worldwide sales of all major product lines including biologicals, ethical and generic pharmaceuticals and medical devices. Ethical pharmaceuticals led the sales performance in domestic markets with higher sales of the cardiovascular agent VERELAN verapamil and the antibiotic SUPRAX cefixime. Introductory sales of Lederle's PROSTEP transdermal nicotine patch also contributed to the sales growth in the ethical pharmaceuticals area. Although generic competition continues to adversely affect domestic sales of the antibiotic MINOCIN minocycline, sales growth in key international markets substantially offset the decline in 1992. In both domestic and international markets, the anticancer agents NOVANTRONE mitoxantrone and leucovorin calcium registered sales gains over 1991. In the biologicals area, lower domestic sales of HIBTITER Haemophilus b conjugate vaccine compared to high new indication sales a year earlier were substantially offset by introductory international sales in 1992. Although consumer health products benefited from increased worldwide sales of CENTRUM multivitamins and higher domestic sales of CENTRUM SILVER multivitamins, sales of DYNATRIM diet meal replacement declined significantly. Worldwide sales increased in all three medical device businesses, Davis & Geck wound management products, Storz ophthalmic products and Acufex orthopaedic devices. Contributing to the sales performance were higher international sales of DEXON II absorbable braided sutures and increased worldwide sales of ophthalmic equipment and orthopaedic devices. While the Medical Group's operating earnings were higher in 1992 than 1991, some factors affecting the operating results included continued generic competition, promotional costs associated with several new product launches, costs associated with the expansion of the company's pharmaceutical sales force in early 1992 and higher research and development expenditures. Agricultural Group worldwide sales increased in 1993 compared to a year ago led by higher worldwide sales of crop protection chemicals. Increased worldwide sales of PURSUIT herbicide led the crop protection chemicals sales performance. Higher domestic sales of SCEPTER and SQUADRON herbicides were partially offset by lower worldwide sales of PROWL herbicide, marketed as STOMP in international markets. Sales of the Group's animal health and nutrition products were about even in 1993 versus a year ago. Increased international sales of CYDECTIN moxidectin endectocide were offset by lower domestic sales of AUREOMYCIN chlortetracycline antibiotic feed supplement and decreased international sales of CYGRO anticoccidial. Agricultural Group operating earnings increased in 1993 despite a one-time, pre-tax charge associated with the restructuring. This increase was due mainly to the impact of higher worldwide sales, primarily crop protection chemicals. The acquisition of certain crop protection businesses from the Shell Petroleum Company Limited at the end of 1993 had no impact on Agricultural Group sales, but is expected to have a significant effect on future sales. Agricultural Group sales and operating earnings in 1992 increased significantly over 1991 to record levels. Worldwide sales of crop protection chemicals and animal health and nutrition products increased in 1992 over the previous year. Sales and operating earnings of the Group were higher in 1992 due primarily to increased sales of PURSUIT herbicide, which led the crop protection chemicals sales performance. International sales of SCEPTER herbicide and domestic sales of COUNTER soil insecticide and PURSUIT Plus herbicide also experienced gains over 1991. The increase in international sales of SCEPTER was primarily concentrated in the Latin American markets continued Discussion and Analysis of Financial Condition and Results of Operations American Cyanamid Company and Subsidiaries Results of Operations (continued) which suffered in 1991 from depressed economic conditions. Increased domestic sales of PROWL herbicide, marketed as STOMP in international markets, were offset by lower international sales as a result of poor weather conditions in several major European markets during the growing season. Increased worldwide sales of the family of AUREOMYCIN chlortetracycline antibiotic feed supplements led the sales performance of animal health and nutrition products. International sales of AVOTAN avoparcin and CYGRO coccidiostat also registered gains. EX-21 6 SUBSIDIARIES OF REGISTRANT Subsidiaries of Registrant: EXHIBIT 21 % of Voting Securities Organized Under Owned by Name the Laws of Immediate Parent Acufex Microsurgical, Inc. Massachusetts 100%(1) Arthur Webster (Holdings) Pty. Limited Australia 100%(1) Arthur Webster Pty. Limited Australia 100%(1) Berdan Insurance Company Vermont 100%(1) B. Braun-Dexon GmbH Germany 50%(2) Cyanamid Africa Limited South Africa 100%(1) Cyanamid Agricultural de Puerto Rico, Inc. New Jersey 100%(1) Cyanamid Agro SNC France 100%(1) Cyanamid Australia Pty. Limited Victoria 100%(1) Cyanamid Benelux S.A./N.V. Belgium 100%(1) Cyanamid Benelux B.V. Netherlands 100%(1) Cyanamid Canada Inc. Ontario 100%(1) Cyanamid de Argentina S.A. Delaware 100%(1) Cyanamid de Colombia, S.A. Delaware 100%(1) Cyanamid de Costa Rica, S.A. Costa Rica 100%(1) Cyanamid de Mexico, S.A. de C.V. Mexico 100%(1) Cyanamid de Venezuela, C.A. Venezuela 100%(1) Cyanamid (Far East) Limited Hong Kong 100%(1) Cyanamid Finance B.V. The Netherlands 100%(1) Cyanamid GmbH Germany 100%(1) Cyanamid Ges.mbH Austria 100%(1) Lederle Arzneimittel Beteiligungs GmbH Germany 100%(1) Cyanamid Hellas S.A. Greece 100%(1) Cyanamid Iberica, S.A. Spain 99.75%(1) Cyanamid India Limited India 39.9%(2) Cyanamid Inter-American Corporation Delaware 100%(1) Cyanamid International Corporation Limited Delaware 100%(1) Cyanamid International Sales Corporation U.S. Virgin Islands 100%(1) Cyanamid Italia S.p.A. Italy 70%(1) Cyanamid (Japan) Ltd. Japan 100%(1) Cyanamid-Korea, Inc. Republic of Korea 100%(1) Cyanamid Medical Device Company, Inc. Republic of Korea 100%(1) Cyanamid of Great Britain Limited United Kingdom 100%(1) Cyanamid Aerospace Products Limited United Kingdom 100%(1) Lederle Laboratories United Kingdom 100%(1) Cyanamid Overseas Corporation Delaware 100%(1) Cyanamid (Pakistan) Limited Pakistan 75%(1) Cyanamid Peruana S.A. Peru 100%(1) Cyanamid Philippines, Inc. Philippines 100%(1) Cyanamid (Portugal) Limitada Portugal 100%(1) Cyanamid Quimica do Brasil Ltda. Brazil 100%(1) Cyanamid Taiwan Corporation Republic of China 54.9%(1) Davis & Geck, Inc. New Jersey 100%(1) Dimminaco A.G./S.A./Ltd. Lucerne, Switzerland 100%(1) Immunex Corporation Delaware 53.6%(2) Irbi, S.p.A. Italy 100%(1) Laboratoires Lederle S.A. France 100%(1) Societe des Sutures Chirurgicales Robert et Carriere-Lederle France 100%(1) Laboratorios Sobrino S.A. Spain 98.2%(1) Lederle (Japan), Ltd. Japan 50%(2) Lederle Parenterals, Inc. New Jersey 100%(1) Lederle Piperacillin, Inc. New Jersey 100%(1) Storz Instrument Company Missouri 100%(1) Storz Intraocular Lens Company Delaware 100%(1) Storz Ophthalmics, Inc. Delaware 100%(1) Yuhan-Cyanamid, Inc. South Korea 86%(1) NOTES: (1) The accounts of these subsidiaries in the foregoing table are included in the consolidated financial statements. Pursuant to paragraph (b)(22)(ii) of Item 601 of Regulation S-K, the names of certain subsidiaries included in the consolidated financial statements have been omitted. The unnamed subsidiaries, considered in the aggregate as a single subsidiary, would not constitute a significant subsidiary. (2) The accounts of these companies are not consolidated but are included on the equity basis. EX-23 7 CONSENT OF KMPG PEAT MARWICK Exhibit 23 ACCOUNTANTS' CONSENT The Board of Directors American Cyanamid Company: We consent to incorporation by reference in (1) Post-Effective Amendment No. 4 to Registration Statement (No. 2-61193) on Form S- 8, (2) Post-Effective Amendment No. 2 to Registration Statement (No. 2-76933) on Form S-8, (3) Post-Effective Amendment No. 1 to Registration Statement (No. 2-95992) on Form S-8, (4) Post- Effective Amendment No. 1 to Registration Statement (No. 33-34218) on Form S-8, (5) Registration Statement (No. 33-50242) on Form S-8 and (6) Registration Statement (No. 33-60140) on Form S-8 of American Cyanamid Company of our reports dated February 8, 1994 relating to the consolidated balance sheets of American Cyanamid Company and subsidiaries as of December 31, 1993 and 1992 and the related consolidated statements of operations, earnings employed in the business and cash flows and related financial statement schedules for each of the years in the three-year period ended December 31, 1993, which reports appear or are incorporated by reference in the December 31, 1993 Annual Report on Form 10-K of American Cyanamid Company. Our reports refer to the adoption of the provisions of Statements of Financial Accounting Standards No. 106, "Employers' Accounting for Postretirement Benefits Other Than Pensions", and No. 109, "Accounting for Income Taxes", effective January 1, 1993. KPMG Peat Marwick KPMG Peat Marwick Short Hills, New Jersey March 29, 1994 EX-24 8 POWERS OF ATTORNEY EXHIBIT 24 A POWER OF ATTORNEY KNOW ALL MEN BY THESE PRESENTS, that the undersigned, a director or an officer, or both, of American Cyanamid Company ("Cyanamid"), does hereby make, constitute and appoint J. S. McAuliffe, T. D. Martin and R. T. Ritter, the address of each of which is in care of Cyanamid, One Cyanamid Plaza, Wayne, New Jersey 07470, and each of them, the true and lawful attorney for the undersigned, with full power of substitution and revocation to each for the undersigned, and in the name, place and stead of the undersigned, to sign in any and all capacities and to file or cause to be filed, an annual report on Form 10-K with the Securities and Exchange Commission, pursuant to the Securities Act of 1934, as amended, and any and all amendments to such Form 10-K, hereby giving to each of such attorneys full power to do everything whatsoever required or necessary to be accomplished in and about the premises as fully as the undersigned could do if personally present, hereby ratifying and confirming all that such attorneys or substitutes or any of them shall lawfully do or cause to be done by virtue thereof. IN WITNESS WHEREOF, the undersigned affixed his hand and seal this 28th day of February, 1994. Frank V. AtLee (L.S.) Frank V. AtLee EXHIBIT 24 B POWER OF ATTORNEY KNOW ALL MEN BY THESE PRESENTS, that the undersigned, a director or an officer, or both, of American Cyanamid Company ("Cyanamid"), does hereby make, constitute and appoint J. S. McAuliffe, T. D. Martin and R. T. Ritter, the address of each of which is in care of Cyanamid, One Cyanamid Plaza, Wayne, New Jersey 07470, and each of them, the true and lawful attorney for the undersigned, with full power of substitution and revocation to each for the undersigned, and in the name, place and stead of the undersigned, to sign in any and all capacities and to file or cause to be filed, an annual report on Form 10-K with the Securities and Exchange Commission, pursuant to the Securities Act of 1934, as amended, and any and all amendments to such Form 10-K, hereby giving to each of such attorneys full power to do everything whatsoever required or necessary to be accomplished in and about the premises as fully as the undersigned could do if personally present, hereby ratifying and confirming all that such attorneys or substitutes or any of them shall lawfully do or cause to be done by virtue thereof. IN WITNESS WHEREOF, the undersigned affixed his hand and seal this 28th day of February, 1994. David M. Culver (L.S.) David M. Culver EXHIBIT 24 C POWER OF ATTORNEY KNOW ALL MEN BY THESE PRESENTS, that the undersigned, a director or an officer, or both, of American Cyanamid Company ("Cyanamid"), does hereby make, constitute and appoint J. S. McAuliffe, T. D. Martin and R. T. Ritter, the address of each of which is in care of Cyanamid, One Cyanamid Plaza, Wayne, New Jersey 07470, and each of them, the true and lawful attorney for the undersigned, with full power of substitution and revocation to each for the undersigned, and in the name, place and stead of the undersigned, to sign in any and all capacities and to file or cause to be filed, an annual report on Form 10-K with the Securities and Exchange Commission, pursuant to the Securities Act of 1934, as amended, and any and all amendments to such Form 10-K, hereby giving to each of such attorneys full power to do everything whatsoever required or necessary to be accomplished in and about the premises as fully as the undersigned could do if personally present, hereby ratifying and confirming all that such attorneys or substitutes or any of them shall lawfully do or cause to be done by virtue thereof. IN WITNESS WHEREOF, the undersigned affixed his hand and seal this 28th day of February, 1994. Allan R. Dragone (L.S.) Allan R. Dragone EXHIBIT 24 D POWER OF ATTORNEY KNOW ALL MEN BY THESE PRESENTS, that the undersigned, a director or an officer, or both, of American Cyanamid Company ("Cyanamid"), does hereby make, constitute and appoint J. S. McAuliffe, T. D. Martin and R. T. Ritter, the address of each of which is in care of Cyanamid, One Cyanamid Plaza, Wayne, New Jersey 07470, and each of them, the true and lawful attorney for the undersigned, with full power of substitution and revocation to each for the undersigned, and in the name, place and stead of the undersigned, to sign in any and all capacities and to file or cause to be filed, an annual report on Form 10-K with the Securities and Exchange Commission, pursuant to the Securities Act of 1934, as amended, and any and all amendments to such Form 10-K, hereby giving to each of such attorneys full power to do everything whatsoever required or necessary to be accomplished in and about the premises as fully as the undersigned could do if personally present, hereby ratifying and confirming all that such attorneys or substitutes or any of them shall lawfully do or cause to be done by virtue thereof. IN WITNESS WHEREOF, the undersigned affixed his hand and seal this 28th day of February, 1994. Ronald Halstead (L.S.) Ronald Halstead EXHIBIT 24 E POWER OF ATTORNEY KNOW ALL MEN BY THESE PRESENTS, that the undersigned, a director or an officer, or both, of American Cyanamid Company ("Cyanamid"), does hereby make, constitute and appoint J. S. McAuliffe, T. D. Martin and R. T. Ritter, the address of each of which is in care of Cyanamid, One Cyanamid Plaza, Wayne, New Jersey 07470, and each of them, the true and lawful attorney for the undersigned, with full power of substitution and revocation to each for the undersigned, and in the name, place and stead of the undersigned, to sign in any and all capacities and to file or cause to be filed, an annual report on Form 10-K with the Securities and Exchange Commission, pursuant to the Securities Act of 1934, as amended, and any and all amendments to such Form 10-K, hereby giving to each of such attorneys full power to do everything whatsoever required or necessary to be accomplished in and about the premises as fully as the undersigned could do if personally present, hereby ratifying and confirming all that such attorneys or substitutes or any of them shall lawfully do or cause to be done by virtue thereof. IN WITNESS WHEREOF, the undersigned affixed his hand and seal this 28th day of February, 1994. Arnold J. Levine (L.S.) Arnold J. Levine EXHIBIT 24 F POWER OF ATTORNEY KNOW ALL MEN BY THESE PRESENTS, that the undersigned, a director or an officer, or both, of American Cyanamid Company ("Cyanamid"), does hereby make, constitute and appoint J. S. McAuliffe, T. D. Martin and R. T. Ritter, the address of each of which is in care of Cyanamid, One Cyanamid Plaza, Wayne, New Jersey 07470, and each of them, the true and lawful attorney for the undersigned, with full power of substitution and revocation to each for the undersigned, and in the name, place and stead of the undersigned, to sign in any and all capacities and to file or cause to be filed, an annual report on Form 10-K with the Securities and Exchange Commission, pursuant to the Securities Act of 1934, as amended, and any and all amendments to such Form 10-K, hereby giving to each of such attorneys full power to do everything whatsoever required or necessary to be accomplished in and about the premises as fully as the undersigned could do if personally present, hereby ratifying and confirming all that such attorneys or substitutes or any of them shall lawfully do or cause to be done by virtue thereof. IN WITNESS WHEREOF, the undersigned affixed his hand and seal this 28th day of February, 1994. Paul W. MacAvoy (L.S.) Paul W. MacAvoy EXHIBIT 24 G POWER OF ATTORNEY KNOW ALL MEN BY THESE PRESENTS, that the undersigned, a director or an officer, or both, of American Cyanamid Company ("Cyanamid"), does hereby make, constitute and appoint J. S. McAuliffe, T. D. Martin and R. T. Ritter, the address of each of which is in care of Cyanamid, One Cyanamid Plaza, Wayne, New Jersey 07470, and each of them, the true and lawful attorney for the undersigned, with full power of substitution and revocation to each for the undersigned, and in the name, place and stead of the undersigned, to sign in any and all capacities and to file or cause to be filed, an annual report on Form 10-K with the Securities and Exchange Commission, pursuant to the Securities Act of 1934, as amended, and any and all amendments to such Form 10-K, hereby giving to each of such attorneys full power to do everything whatsoever required or necessary to be accomplished in and about the premises as fully as the undersigned could do if personally present, hereby ratifying and confirming all that such attorneys or substitutes or any of them shall lawfully do or cause to be done by virtue thereof. IN WITNESS WHEREOF, the undersigned affixed his hand and seal this 28th day of February, 1994. Vincent T. Marchesi (L.S.) Vincent T. Marchesi EXHIBIT 24 H POWER OF ATTORNEY KNOW ALL MEN BY THESE PRESENTS, that the undersigned, a director or an officer, or both, of American Cyanamid Company ("Cyanamid"), does hereby make, constitute and appoint J. S. McAuliffe, T. D. Martin and R. T. Ritter, the address of each of which is in care of Cyanamid, One Cyanamid Plaza, Wayne, New Jersey 07470, and each of them, the true and lawful attorney for the undersigned, with full power of substitution and revocation to each for the undersigned, and in the name, place and stead of the undersigned, to sign in any and all capacities and to file or cause to be filed, an annual report on Form 10-K with the Securities and Exchange Commission, pursuant to the Securities Act of 1934, as amended, and any and all amendments to such Form 10-K, hereby giving to each of such attorneys full power to do everything whatsoever required or necessary to be accomplished in and about the premises as fully as the undersigned could do if personally present, hereby ratifying and confirming all that such attorneys or substitutes or any of them shall lawfully do or cause to be done by virtue thereof. IN WITNESS WHEREOF, the undersigned affixed his hand and seal this 28th day of February, 1994. Terence D. Martin (L.S.) Terence D. Martin EXHIBIT 24 I POWER OF ATTORNEY KNOW ALL MEN BY THESE PRESENTS, that the undersigned, a director or an officer, or both, of American Cyanamid Company ("Cyanamid"), does hereby make, constitute and appoint J. S. McAuliffe, T. D. Martin and R. T. Ritter, the address of each of which is in care of Cyanamid, One Cyanamid Plaza, Wayne, New Jersey 07470, and each of them, the true and lawful attorney for the undersigned, with full power of substitution and revocation to each for the undersigned, and in the name, place and stead of the undersigned, to sign in any and all capacities and to file or cause to be filed, an annual report on Form 10-K with the Securities and Exchange Commission, pursuant to the Securities Act of 1934, as amended, and any and all amendments to such Form 10-K, hereby giving to each of such attorneys full power to do everything whatsoever required or necessary to be accomplished in and about the premises as fully as the undersigned could do if personally present, hereby ratifying and confirming all that such attorneys or substitutes or any of them shall lawfully do or cause to be done by virtue thereof. IN WITNESS WHEREOF, the undersigned affixed his hand and seal this 28th day of February, 1994. George J. Sella, Jr. (L.S.) George J. Sella, Jr. EXHIBIT 24 J POWER OF ATTORNEY KNOW ALL MEN BY THESE PRESENTS, that the undersigned, a director or an officer, or both, of American Cyanamid Company ("Cyanamid"), does hereby make, constitute and appoint J. S. McAuliffe, T. D. Martin and R. T. Ritter, the address of each of which is in care of Cyanamid, One Cyanamid Plaza, Wayne, New Jersey 07470, and each of them, the true and lawful attorney for the undersigned, with full power of substitution and revocation to each for the undersigned, and in the name, place and stead of the undersigned, to sign in any and all capacities and to file or cause to be filed, an annual report on Form 10-K with the Securities and Exchange Commission, pursuant to the Securities Act of 1934, as amended, and any and all amendments to such Form 10-K, hereby giving to each of such attorneys full power to do everything whatsoever required or necessary to be accomplished in and about the premises as fully as the undersigned could do if personally present, hereby ratifying and confirming all that such attorneys or substitutes or any of them shall lawfully do or cause to be done by virtue thereof. IN WITNESS WHEREOF, the undersigned affixed his hand and seal this 28th day of February, 1994. Morris Tanenbaum (L.S.) Morris Tanenbaum EXHIBIT 24 K POWER OF ATTORNEY KNOW ALL MEN BY THESE PRESENTS, that the undersigned, a director or an officer, or both, of American Cyanamid Company ("Cyanamid"), does hereby make, constitute and appoint J. S. McAuliffe, T. D. Martin and R. T. Ritter, the address of each of which is in care of Cyanamid, One Cyanamid Plaza, Wayne, New Jersey 07470, and each of them, the true and lawful attorney for the undersigned, with full power of substitution and revocation to each for the undersigned, and in the name, place and stead of the undersigned, to sign in any and all capacities and to file or cause to be filed, an annual report on Form 10-K with the Securities and Exchange Commission, pursuant to the Securities Act of 1934, as amended, and any and all amendments to such Form 10-K, hereby giving to each of such attorneys full power to do everything whatsoever required or necessary to be accomplished in and about the premises as fully as the undersigned could do if personally present, hereby ratifying and confirming all that such attorneys or substitutes or any of them shall lawfully do or cause to be done by virtue thereof. IN WITNESS WHEREOF, the undersigned affixed his hand and seal this 28th day of February, 1994. Anne Wexler (L.S.) Anne Wexler -----END PRIVACY-ENHANCED MESSAGE-----