-----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, SeHd4FzT6s2MOKfDt+E6BGDecIlJrZ8Cdt6uVLsY2uI1d+2wZ2Of6ZnGLFAYE7+D 286R5fQJua+o0bMFyO0RrQ== 0000004829-94-000009.txt : 19940823 0000004829-94-000009.hdr.sgml : 19940823 ACCESSION NUMBER: 0000004829-94-000009 CONFORMED SUBMISSION TYPE: 10-Q PUBLIC DOCUMENT COUNT: 4 CONFORMED PERIOD OF REPORT: 19940630 FILED AS OF DATE: 19940815 DATE AS OF CHANGE: 19940822 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-Q SEC ACT: 1934 Act SEC FILE NUMBER: 001-03426 FILM NUMBER: 94544530 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-Q 1 UNITED STATES SECURITIES AND EXCHANGE COMMISSION WASHINGTON, DC 20549 FORM 10-Q (Mark One) QUARTERLY REPORT UNDER SECTION 13 OR 15(d) / X / OF THE SECURITIES EXCHANGE ACT OF 1934 For the quarter ended June 30, 1994 OR / / TRANSITION REPORT PURSUANT TO SECTION 13 OR 15 (d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the transition period from to Commission file number 1-3426 American Cyanamid Company (Exact name of registrant as specified in its charter) Maine 13-0430890 State or other jurisdiction of (I.R.S. Employer incorporation or organization) Identification No.) One Cyanamid Plaza Wayne, New Jersey 07470 (Address of principal executive offices) (201) 831-2000 (Registrant's telephone number, including area code) Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes X No Indicate the number of shares outstanding of each of the issuer's classes of common stock, as of the latest practicable date: 89,803,336 shares of Common Stock, par value $5 per share, were outstanding at June 30, 1994. This report, including three exhibits, contains 33 pages numbered sequentially from this cover page. The exhibit index is located at Page 18. PAGE Form 10-Q PART I FINANCIAL INFORMATION AMERICAN CYANAMID COMPANY AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF OPERATIONS Three months ended Six months ended June 30, June 30, 1994 1993 1994 1993 (Millions of dollars, except per share amounts) Net sales $1,499.8 $1,246.5 $2,754.6 $2,392.0 Expenses: Manufacturing cost of sales 622.3 482.2 1,128.4 915.3 Selling and advertising 359.3 329.9 715.7 662.6 Research and development 164.6 137.3 325.3 280.5 Administrative and general 87.1 76.8 171.5 146.2 Acquired in-process research and development (Note 3) - 383.6 - 383.6 1,233.3 1,409.8 2,340.9 2,388.2 Earnings (loss) from operations 266.5 (163.3) 413.7 3.8 Interest and other income (charges), net (2.0) 12.6 19.8 35.1 264.5 (150.7) 433.5 38.9 Interest expense 16.2 18.0 32.2 33.1 Earnings (loss) before taxes on income 248.3 (168.7) 401.3 5.8 Taxes on income (Note 9) 68.1 64.8 109.7 120.9 Earnings (loss) before minority interests 180.2 (233.5) 291.6 (115.1) Minority interests 4.9 (1.4) 10.2 (4.9) Earnings (loss) from continuing operations 185.1 (234.9) 301.8 (120.0) Discontinued operations (Notes 2 and 7): Earnings from operations, net of taxes of $3.2 and $5.2, respectively - 6.2 - 10.0 Cumulative effect of accounting changes - - - (219.8) - 6.2 - (209.8) Earnings (loss) before cumulative effect of accounting changes 185.1 (228.7) 301.8 (329.8) Cumulative effect of accounting changes (Note 7) - - - (332.6) Net earnings (loss) $ 185.1 $ (228.7) $ 301.8 $ (662.4) Per share of common stock: Earnings (loss) from continuing operations $ 2.06 $ (2.61) $ 3.36 $ (1.33) Earnings (loss) from discontinued operations - 0.07 - (2.33) Earnings (loss) before cumulative effect of accounting changes 2.06 (2.54) 3.36 (3.66) Cumulative effect of accounting changes - - - (3.70) Net earnings (loss) $ 2.06 $ (2.54) $ 3.36 $ (7.36) Dividends $ .4625 $ .4375 $ .9000 $ .8500
See Notes to Condensed Consolidated Financial Statements. PAGE Form 10-Q AMERICAN CYANAMID COMPANY AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS June 30, December 31, 1994 1993 (Millions of dollars) Assets Current assets Cash and cash equivalents $298.0 $426.1 Marketable securities and time deposits 179.3 101.7 Accounts receivable, less allowance for doubtful accounts 1,389.4 1,120.1 Inventories 1,008.2 1,027.9 Deferred tax assets 409.9 410.1 Total current assets 3,284.8 3,085.9 Investments and advances 363.2 307.2 Plants, equipment and facilities, at cost 3,212.13,106.0 Less accumulated depreciation 1,411.0 1,335.7 Net plant investment 1,801.1 1,770.3 Intangibles resulting from business acquisitions, net of accumulated amortization 295.6 305.3 Deferred tax assets 309.7 328.5 Other assets 259.3 260.2 $6,313.7 $6,057.4 Liabilities and Shareholders' Equity Current liabilities Accounts payable and accrued expenses $1,898.9 $1,860.0 Short-term borrowings 422.4 432.6 Funded debt installments due within one year 102.6 182.9 Income taxes 292.3 254.9 Total current liabilities 2,716.2 2,730.4 Funded debt 338.7 344.3 Deferred tax liabilities 36.2 27.6 Other noncurrent liabilities 1,451.2 1,444.4 Minority interests 129.9 143.7 Shareholders' equity Common stock 513.6 513.6 Additional paid-in capital 38.1 38.9 Earnings employed in the business 1,669.2 1,448.2 Accumulated translation and other adjustments (32.8) (49.3) Accumulated net unrealized gains on available- for-sale securities (Note 8) 38.7 - Treasury stock, at cost (585.3) (584.4) Total shareholders' equity 1,641.5 1,367.0 $6,313.7 $6,057.4
See Notes to Condensed Consolidated Financial Statements. PAGE Form 10-Q
AMERICAN CYANAMID COMPANY AND SUBSIDIARIES CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS Six months ended June 30, 1994 1993 (Millions of dollars) Net cash provided by operating activities of continuing operations $ 265.4 $ 534.5 Net cash provided by operating activities of discontinued operations - 72.4 Net cash provided by operating activities 265.4 606.9 Cash flows provided by (used for) investing activities Additions to plants, equipment and facilities (138.7) (144.1) Available for sale securities: Purchases (258.0) - Sales 162.2 - Maturities 23.0 - Additions to investments - principally marketable securities - (232.8) Reductions to investments - principally marketable securities - 112.6 Acquisitions of businesses, net of cash acquired - (345.4) Net investing activities of discontinued operations - (45.4) Other, net 16.9 3.1 Net cash used for investing activities (194.6) (652.0) Cash flows provided by (used for) financing activities Change in short-term borrowings, net 4.3 319.5 Funded debt additions 67.3 201.4 Funded debt reductions (161.0) (221.8) Purchases of treasury stock (6.2) (15.1) Cash dividends (80.8) (76.5) Cash component of Cytec dividend (26.5) - Other, net 2.8 2.0 Net cash provided by financing activities (200.1) 209.5 Effect of exchange rate changes on cash and cash equivalents 1.2 (1.6) Increase (decrease) in cash and cash equivalents (128.1) 162.8 Cash and cash equivalents, beginning of year 426.1 341.7 Cash and cash equivalents, end of period $ 298.0 $ 504.5
See Notes to Condensed Consolidated Financial Statements. PAGE Form 10-Q NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (Millions of dollars, except per share amounts) (1) The unaudited condensed consolidated financial statement information included herein has been prepared pursuant to the rules and regulations of the Securities and Exchange Commission for reporting on Form 10-Q. Certain information and footnote disclosures normally included in financial statements prepared in accordance with generally accepted accounting principles have been condensed or omitted pursuant to such rules and regulations. The statements should be read in conjunction with the accounting policies and notes to consolidated financial statements in the American Cyanamid Company (Cyanamid or the company) 1993 Annual Report on Form 10-K. In the opinion of management, the financial statement information included herein reflects all adjustments necessary for a fair statement of the information presented as of June 30, 1994, and for the three and six month periods ended June 30, 1994, and 1993. Such adjustments are of a normal, recurring nature. The results of operations for the three and six month periods ended June 30, 1994, are not necessarily indicative of the results to be expected for the full year. As described in Note 8 below, the company adopted Statement of Financial Accounting Standards (SFAS) No. 115, "Accounting for Certain Investments in Debt and Equity Securities", effective January 1, 1994. (2) On August 17, 1993, the company's Board of Directors approved a formal plan to effect the spin-off of Cytec Industries (Cytec), which encompassed substantially all of the company's chemicals business, including plant food, to shareholders. On December 17, 1993, the Board of Directors declared a dividend payable to shareholders of record as of December 28, 1993, at the rate of one share of Cytec common stock for every seven shares of the company's common stock. On January 24, 1994, the Cytec common shares were distributed as a taxable dividend to shareholders. The company retained a $200.0 preferred stock interest in Cytec. In conjunction with the approval of the formal plan to effect the spin- off, the operating results of the chemicals business have been accounted for as discontinued operations since the third quarter of 1993. Accordingly, the three and six month 1993 condensed consolidated financial statements have been restated to exclude amounts for discontinued operations from captions applicable to continuing operations. Net sales of Cyanamid's chemicals business for the three and six month periods ended June 30, 1993, were $260.6 and $516.4, respectively. (3) On June 1, 1993, shareholders of Immunex Corporation (Immunex) approved an agreement to create a new biopharmaceutical company by merging the company's North American Lederle oncology business with Immunex. The company also contributed $350.0 to the new company, which retained the Immunex name, and received 53.5% of the common stock of the new company while Immunex shareholders retained the remaining 46.5%. The acquisition was reflected as a purchase in the accompanying condensed consolidated financial statements. The net assets and operating loss attributable to the equity interest not acquired by the company is included in the caption "Minority interests". PAGE Form 10-Q NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (Millions of dollars, except per share amounts) (Continued) The second quarter and six month 1993 results include a one-time charge of $383.6 related principally to the write-off of acquired in-process research and development resulting from the acquisition of the 53.5% interest in Immunex. There was no significant tax benefit available on this one-time charge. Accordingly, earnings before cumulative effect of accounting changes and net earnings were reduced by $378.4 or $4.21 per share. In the third quarter of 1993, Cyanamid and The Shell Petroleum Company Limited (Shell) signed an agreement pursuant to which the company later acquired substantially all assets and liabilities of the Shell companies' crop protection business outside the United States and Canada. The Shell acquisition, reflected as a purchase in the accompanying condensed consolidated financial statements, was substantially complete by the end of 1993. The total purchase price will aggregate approximately $400.0, when all phases of the acquisition are finalized, plus royalty payments on future product sales. On July 8, 1994, the company announced that it had agreed in principle to sell its Davis & Geck wound management business to its European joint venture partner, B. Braun Melsungen AG of Germany, for proceeds of ap- proximately $220.0 which include an intermediate term dividend- paying preferred stock investment in the combined B. Braun and Davis & Geck business. The Company also will enter into a multi-year manufac- turing agreement with B. Braun and will continue to own and operate its major suture plant in Manati, Puerto Rico. The sale is subject to the finalization of definitive agreements and required government approvals. The Company and B. Braun currently are partners in joint venture wound management companies in Germany, Portugal and Spain. Davis & Geck has operations in 60 countries, and had 1993 sales of approximately $300.0. (4) In the fourth quarter of 1993, the company commenced a global, companywide restructuring program, which is expected to be accomplished over three years. The restructuring includes a reduction in the company's workforce, primarily in the medical business, and other cost- cutting measures designed to meet increasingly competitive market conditions and government health care reform efforts in the United States and Europe. The total workforce reduction is projected to be at least 2,500 positions. About half of the reduction will take place in the United States; the balance will be overseas. The facilities affected include Pearl River, New York and multiple locations overseas. A pre-tax charge of $207.9 for these costs was reflected in the company's operating results for the fourth quarter of 1993. The major components of this charge were $132.7 for severance and related outplacement costs to reduce the company's workforce; $22.1 to curtail and consolidate certain product lines; $17.6 to reduce to estimated realizable amounts the carrying value of certain assets related to manufacturing operations to be discontinued as part of the restructuring program; and $35.5 for other restructuring measures including the write-off of certain intangibles, plant decommissioning expenses and certain contract terminations. After allowing for tax benefits of $74.5, the restructuring provision reduced earnings from continuing operations and net earnings by $133.4, or $1.48 per share. PAGE Form 10-Q NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (Millions of dollars, except per share amounts) (Continued) Total cash outflows associated with the restructuring, primarily severance related, are projected to be approximately $150.0, are expected to be concentrated in the earlier periods of the restructuring program, and will be funded by cash flows provided by operating activities. The company anticipates that efficiencies related to the restructuring, primarily reduced labor and related benefits costs, will be phased in over the next several years. The estimated annual benefit of the efficiencies, when fully realized, continues to be approximately $100.0 on an after-tax basis. Since implementation of the restructuring program, the restructuring accruals have decreased by approximately $34.0 due primarily to cash expenditures related to severance costs and non-cash charges to curtail and consolidate certain product lines. In addition, approximately 1,500 employees have been terminated through involuntary and voluntary measures since inception of the program. (5) Earnings per share of common stock are based on the average number of shares outstanding. The average shares outstanding for the three month periods ended June 30, 1994, and 1993, were 89,805,584 and 89,977,620, respectively. (6) Components of inventories at June 30, 1994, and December 31, 1993 were as follows: June 30, December 31, 1994 1993 Finished goods $ 517.1 $ 599.3 Work in progress 274.6 250.4 Raw materials and supplies 336.1 276.8 1,127.8 1,126.5 Less reduction to LIFO cost (119.6) (98.6) $1,008.2 $1,027.9 (7) Effective January 1, 1993, the company adopted SFAS No. 106, "Employers' Accounting for Postretirement Benefits Other Than Pensions," which requires the accrual of retiree benefit costs over the active service period of employees to the date of full eligibility for these benefits. The aggregate initial accumulated postretirement benefit obligation at January 1, 1993, was $565.4, net of deferred income tax effects of $355.6, or $6.28 per share. The company elected to record this obligation, measured as of November 30, 1992, as a one-time cumulative charge to earnings. In connection with the spin-off of Cytec, the portion of the cumulative effect of this accounting change applicable to the chemicals business was reflected in discontinued operations. Accordingly, there were charges of $335.0, net of deferred income tax effects of $210.7, or $3.72 per share, to continuing operations and $230.4, net of deferred income tax effects of $144.9, or $2.56 per share, to discontinued operations. There was no impact on cash flow as the company plans to continue to fund the obligation as the claims are paid. PAGE Form 10-Q NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (Millions of dollars, except per share amounts) (Continued) Also effective January 1, 1993, the company adopted SFAS No. 109, "Accounting for Income Taxes." It requires an asset and liability approach for financial accounting and reporting for income taxes. The aggregate cumulative effect of this accounting change was a one-time gain of $13.0, or $.14 per share. In connection with the spin-off of Cytec, the portion of the cumulative effect of this accounting change applicable to the chemicals business was reflected in discontinued operations. Accordingly, there were gains of $2.4, or $.02 per share, to continuing operations and $10.6, or $.12 per share, to discontinued operations. (8) Effective January 1, 1994, the company adopted SFAS No. 115 "Accounting for Certain Investments in Debt and Equity Securities". Management determines the appropriate classification of securities at the time of purchase and reevaluates such designation as of each balance sheet date. Debt securities are classified as held-to-maturity when the company has the positive intent and ability to hold the securities to maturity. Held-to-maturity securities are recorded at amortized cost. Debt and equity securities not classified as held-to-maturity are classified as available-for-sale. Available-for-sale securities are recorded at fair value, with unrealized gains and losses, net of tax, reported in a separate component of shareholders' equity. Realized gains and losses are included in the consolidated statement of operations. The cost of securities sold is based on the specific identification method for debt securities and average cost for equity securities. The following is a summary of available-for-sale and held-to-maturity securities as of January 1, 1994: Gross Gross Amortized Unrealized Unrealized Fair Cost Gains Losses Value Available-for-sale: U.S. Government debt $ 57.5 $ 1.9 $ .7 $ 58.7 Corporate & other debt 310.2 .4 .1 310.5 Total debt securities 367.7 2.3 .8 369.2 Equity securities 36.3 89.0 2.4 122.9 404.0 91.3 3.2 492.1 Held-to-maturity: Corporate & other debt securities 237.0 - - 237.0 Total available-for-sale and held-to-maturity securities $641.0 $91.3 $3.2 $729.1 The fair value of available-for-sale and held-to-maturity securities includes $275.6 of cash equivalents and excludes equity method investments of $34.0 and equity securities, with a cost basis of $9.5, which do not have a readily determinable fair value. Marketable securities and investments and advances at January 1, 1994, were $497.0. The adjustment for unrealized net gains on available-for-sale securities included as a separate component of shareholders' equity asof January 1, 1994, was $53.3, net of deferred income tax effects of $34.8. PAGE Form 10-Q NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (Millions of dollars, except per share amounts) (Continued) The amortized cost and estimated fair value of debt securities at January 1, 1994, by contractual maturity, are shown below. Expected maturities may differ from contractual maturities because the issuers of the securities may have the right to prepay obligations without prepayment penalties. Amortized Fair Cost Value Available-for-Sale Due in one year or less $ 70.3 $ 70.4 Due after one year through five years 48.6 48.9 Due after five years 248.8 249.9 $367.7 $369.2 Held-to-Maturity Due in one year or less $237.0 $237.0 (9) The company records income tax expense based upon an estimated full year effective income tax rate. The company's effective income tax rate decreased in the second quarter and first six months of 1994 compared to the same periods last year. 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 income tax rate. Excluding the effect of the Immunex charge, the effective income tax rate decreased due primarily to a change in the mix of income among taxing jurisdictions. The effective income tax rate in the second quarter and first six months of 1993 did not anticipate the effects of certain items, primarily a change in the mix of income among taxing jurisdictions and the passage in the United States of the Omnibus Budget Reconciliation Act of 1993. (10) Cash payments during the six months ended June 30, 1994, and 1993, included interest (net of amounts capitalized) of $37.2 and $29.5 and income taxes of $63.3 and $86.0, respectively. (11) On August 9, 1994, American Home Products Corporation offered to purchase all of the outstanding shares of common stock of Cyanamid for 95 dollars cash per share. The stock purchase offer is contingent upon various significant conditions. The offer, or any provisions of it, may be modified or revoked at any time. Cyanamid urged all its shareholders to take no action on the tender offer until Cyanamid's board of directors has reviewed the offer and issued a recommendation to shareholders. (12) Certain legal proceedings to which the company is a party are discussed in Part II, Item 1 of this report. PAGE Form 10-Q DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS Financial Condition - At June 30, 1994, aggregate debt financing was $863.7 million, equal to approximately 33% of total debt and equity including minority interests. The corresponding amounts at December 31, 1993, were $959.8 million and 39%, respectively. For detailed information concerning discontinued operations, the Immunex and Shell acquisitions, cumulative effect of accounting changes, and income taxes, refer to Notes 2, 3, 7 and 9, respectively, to the condensed consolidated financial statements. Second Quarter Results of Operations Consolidated net sales for the second quarter of 1994 were $1,499.8 million, an increase of 20.3% compared with $1,246.5 million in the second quarter of 1993. The increase was due primarily to international sales of Agricultural products acquired from Shell and higher domestic sales of PURSUIT herbicide. Earnings from continuing operations in the second quarter of 1994 were $185.1 million, or $2.06 per share, compared to a loss of $234.9 million, or $2.61 per share, reported in the second quarter of 1993. Second quarter 1993 results included a one-time charge of $378.4 million, or $4.21 per share, related to the Immunex acquisition. Net earnings in the second quarter of 1994 were $185.1 million, or $2.06 per share, compared to a net loss of $228.7 million, or $2.54 per share, reported in the second quarter of 1993. Second quarter 1993 results included a one-time, net charge of $378.4 million, or $4.21 per share, related to the Immunex acquisition, and net earnings from discontinued operations of $6.2, or $.07 per share. Interest and other income (charges), net decreased in the second quarter of 1994 compared to the same period a year ago due primarily to lower interest income and amortization charges related to certain Shell and Immunex acquisition costs. Sales of the Medical Group increased in the second quarter of 1994 compared to the same period a year ago. The results reflect increased worldwide sales of consumer health products and increased domestic sales of generic pharmaceuticals and oncology products. Worldwide sales of CENTRUM and domestic sales of CENTRUM SILVER multivitamin/multimineral supplements increased in the second quarter of 1994 versus the same period a year ago. Increased domestic sales of generic pharmaceuticals were due primarily to the introduction of several new products in the last half of 1993 and early 1994. Domestic sales of oncology products were higher in the second quarter of 1994 compared to the same period last year due to the Immunex acquisition in June 1993. Lower sales of HIBTITER Haemophilus b conjugate vaccine in the second quarter of 1994 compared to the same period last year were mostly offset by higher domestic sales of TETRAMUNE, a childhood combination vaccine of HIBTITER and TRI-IMMUNOL. Introductory worldwide sales of ZOSYN injectable antibiotic, marketed as TAZOCIN in international markets, were offset by lower domestic sales of SUPRAX cefixime and international sales of NICHOLIN citicoline. Medical Group operating earnings increased in the second quarter of 1994 versus the comparable period in 1993. The increase was due to a one-time charge in the second quarter of 1993 related to the Immunex acquisition which resulted in a Medical Group operating loss for the second quarter of 1993. Exclusive of this one-time charge in the second quarter of 1993, Medical Group operating earnings declined in the second quarter of 1994 versus the comparable period in 1993. The impact of increased sales volume in the second quarter of 1994 compared to last year was offset by an Immunex operating loss, due primarily to research and development expenditures, and continued price erosion in domestic pharmaceutical products. All brand names appearing in capital letters are registered trademarks or trademarks owned by or licensed to the company. PAGE Form 10-Q DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS (Continued) Worldwide sales of the Agricultural Group increased in the second quarter of 1994 versus the same period a year ago. The increase was led by worldwide sales gains in crop protection chemicals, primarily international sales of products acquired from Shell and higher domestic sales of PURSUIT herbicide. The purchase of the Shell companies' international crop protection business was substantially complete by the end of 1993. International sales of products acquired from Shell include DELAN and SAPROL in the fungicide area; AZODRIN, CASCADE, FASTAC, RIPCORD, and TORQUE in the insecticide/acaricide area; and BLADEX and SUFFIX in the herbicide area. Due to favorable weather conditions and early planting in the United States in the second quarter of 1994, some sales of PURSUIT herbicide that would have been expected to occur in the third quarter of this year shifted to the second quarter. Sales of the Group's animal health and nutrition products increased in the second quarter of 1994 versus the same period last year due to sales of products acquired from Shell and the acquisition of an Australian veterinary biologicals company in November 1993. Agricultural Group operating earnings were higher in the second quarter of 1994 as compared to the same period a year ago due to the impact of international sales of products acquired from Shell and higher domestic sales of crop protection chemicals. Earnings before taxes on income for the second quarter of 1994 and 1993 include exchange losses of $3.1 million and $4.3 million, respectively. The exchange losses were generated primarily by operations in hyperinflationary economies, principally in Latin America. Year To Date Results of Operations Consolidated net sales from continuing operations for the first six months of 1994 were $2,754.6 million, an increase of 15.2% compared with $2,392.0 million in the first six months of 1993. The increase was due primarily to international sales of products acquired from Shell and higher domestic sales of PURSUIT herbicide. Earnings from continuing operations for the first six months of 1994 were $301.8 million, or $3.36 per share, compared to a loss of $120.0 million, or $1.33 per share, reported for the first six months of 1993. 1993 six month results included a one-time charge of $378.4 million, or $4.21 per share, related to the Immunex acquisition. Net earnings for the first six months of 1994 were $301.8 million, or $3.36 per share, compared to a net loss of $662.4 million, or $7.36 per share, reported for the first six months of 1993. The six month 1993 net loss included a one- time, net charge of $378.4 million, or $4.21 per share, related to the Immunex acquisition; a $209.8 million, or $2.33 per share, net loss from discontinued operations; and a $332.6 million, or $3.70 per share, net charge for the cumulative effect of accounting changes applicable to continuing operations. The net loss from discontinued operations, related to the spin-off of Cytec, included net earnings from operations of $10.0 million and a net charge of $219.8 million for the cumulative effect of accounting changes applicable to discontinued operations. Interest and other income (charges), net decreased in the first six months of 1994 compared to the same period a year ago due primarily to lower interest income and amortization charges related to certain Shell and Immunex acquisition costs. PAGE Form 10-Q DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS (Continued) Sales of the Medical Group increased in the first six months of 1994 compared to the same period a year ago. The results reflect increased worldwide sales of consumer health products and increased domestic sales of oncology products and generic pharmaceuticals. These increases were partially offset by lower international sales of ethical pharmaceuticals and lower domestic sales of ophthalmic products. Factors affecting international sales included the strengthening of the U.S. dollar against major European currencies in the first half of 1994 compared to the same period last year and its effect on the translation of foreign sales, and government health care reform efforts in Europe, including cutbacks on state-reimbursed pharmaceutical purchases. Worldwide sales of CENTRUM and domestic sales of CENTRUM SILVER multivitamin/multimineral supplements increased in the first six months of 1994 versus the same period a year ago. Domestic sales of oncology products were higher in the first six months of 1994 compared to the same period last year due to the Immunex acquisition in June 1993. Increased domestic sales of standard products were due primarily to the introduction of several new products in late 1993 and early 1994. Lower domestic sales of MINOCIN minocycline and MAXZIDE triamterene/hydrochlorothiazide in the first six months of 1994 compared to the same period last year, due primarily to continued generic competition, were mostly offset by increased domestic sales of SUPRAX cefixime and introductory worldwide sales of ZOSYN injectable antibiotic, marketed as TAZOCIN in international markets. International sales of NICHOLIN citicoline and PIPRACIL piperacillin decreased in the first six months of 1994 compared to last year due primarily to government health care reform efforts in Europe. Lower sales of HIBTITER Haemophilus b conjugate vaccine and TRI-IMMUNOL diphtheria, tetanus and pertussis vaccine in the first six months of 1994 compared to the same period last year were mostly offset by introductory sales of TETRAMUNE, a childhood combination vaccine of HIBTITER and TRI-IMMUNOL. Lower domestic sales of Storz products were due primarily to the disposition of the specialty devices product line in early 1994. Medical Group operating earnings increased in the first six months of 1994 versus the comparable period in 1993. The increase was due to the one-time charge in the second quarter of 1993 related to the Immunex acquisition which resulted in a Medical Group operating loss for the first six months of 1993. Exclusive of this one-time charge in the second quarter of 1993, Medical Group operating earnings declined in the first six months of 1994 versus the comparable period in 1993. The favorable impact of increased sales volume in the first six months of 1994 compared to last year was offset by an Immunex operating loss, due primarily to research and development expenditures, continued price erosion in domestic pharmaceutical products and a shift in product mix toward lower margin products, primarily in the domestic pharmaceutical business. Worldwide sales of the Agricultural Group increased in the first six months of 1994 versus the same period a year ago. The increase was led by worldwide sales gains in crop protection chemicals, primarily sales of products acquired from Shell and higher domestic sales of PURSUIT herbicide. The purchase of the Shell companies' international crop protection business was substantially complete by the end of 1993. International sales of products acquired from Shell include DELAN and SAPROL in the fungicide area; AZODRIN, CASCADE, FASTAC, RIPCORD, and TORQUE in the insecticide/acaricide area; and BLADEX and SUFFIX in the herbicide area. Due to favorable weather conditions and early planting in the United States in the second quarter of 1994, some sales of PURSUIT herbicide that would have been expected to occur in the third quarter of this year shifted to the second quarter. Sales of the Group's animal health and nutrition products increased in the first six months of 1994 versus the same period last year due to sales of products acquired from Shell and the acquisition of an Australian veterinary biologicals company in November 1993. Agricultural Group operating earnings were higher in the first six months of 1994 as compared to the same period a year ago due primarily to the impact of higher domestic sales of crop protection chemicals and sales of products acquired from Shell. PAGE Form 10-Q DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS (Continued) Due to the seasonality of the Agricultural business which is heavily concentrated in the first six months of the year, performance in the first half of 1994 is not indicative of the results to be expected for the full year. As discussed in Note 11 to the condensed consolidated financial statements, on August 9, 1994, a cash tender offer was made to the company's shareholders to purchase all of the outstanding shares of common stock of the company. The company cannot predict the ultimate outcome of this offer or its impact on future results of operations at this time. However, the company anticipates that charges related to the offer, including costs associated with advisory fees, legal fees and stock appreciation rights, may have an unfavorable impact on the company's third quarter 1994 results of operations. Earnings before taxes on income for the first six months 1994 and 1993 include exchange losses of $9.6 million and $7.9 million, respectively. The exchange losses were generated primarily by operations in hyperinflationary economies, principally in Latin America. PAGE Part II. OTHER INFORMATION Item 1. Legal Proceedings. Deductible amounts under Cyanamid's liability insurance coverage (particularly product and environmental liability) are such that Cyanamid must regard itself, for practical purposes, as self-insured with respect to most events. Cyanamid has a self-insurance program which provides reserves for costs based on past claims experience. Cyanamid and its subsidiaries are parties to numerous suits and claims arising out of the conduct of business, many of which involve very large damage claims, including claims for punitive damages. Included among such suits, as of June 30, 1994, are 21 involving personal injury or death allegedly occurring in connection with administration of Cyanamid's DTP (diphtheria-tetanus-pertussis) and oral polio vaccines. In 1990, Cyanamid's supplier of MAXZIDE triamterene/ hydrochlorothiazide filed suit against Cyanamid alleging breach of a 1984 exclusive licensing agreement and seeking damages and rights to the MAXZIDE trademarks and trade dress owned by Cyanamid. After a trial on the merits in Federal District Court, a jury rejected the supplier's claims. Cyanamid has appealed the dismissal of its defamation counterclaim and plaintiff has cross-appealed. 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 and (ii) prices charged for certain agricultural products (which may be similar to a long moribund but recently revived investigation by the Attorney General of the State of Florida). Cyanamid has been 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 June 30, 1994, Cyanamid was a party to, or otherwise involved in, legal proceedings directed at the cleanup of 40 Superfund sites, including the Cyanamid-owned Bound Brook site. In many cases, future environmental related expenditures cannot be quantified with a reasonable degree of accuracy. It is Cyanamid's policy to accrue environmental cleanup costs if it is probable that a liability has been incurred and an amount is reasonably estimable. As assessments and cleanups proceed, these liabilities are reviewed periodically and adjusted as additional information becomes available. Environmental liabilities are inherently unpredictable. The liabilities can change sub- stantially due to such factors as additional information on the nature or extent of contamination, methods of remediation required, and other actions by governmental agencies or private parties. Cash expenditures often lag by a number of years the period in which an accrual is recorded. Insurance coverage of various environmental matters is currently being litigated; potential recoveries, if any, however, are unknown at this time. Thus all environmental related accruals have been recorded without giving effect to any possible future insurance proceeds. The 40 Superfund sites exclude sites for which Cytec Industries Inc., Cyanamid's former chemicals business which was spun- off to Cyanamid's shareholders through a dividend declared in December 1993 and distributed in January 1994, assumed full liability and agreed to indemnify Cyanamid but include certain sites for which there is shared responsibility between Cyanamid and Cytec. Cyanamid has no reason to believe that it has any practical exposure to any of the liabilities against which Cytec has agreed to assume and indemnify Cyanamid. While it is not feasible to predict the outcome of all pending suits and claims, based on the most recent review by management of these matters, management is of the opinion that the ultimate disposition of, or additional provisions for, such suits and claims, will not have a material adverse effect upon the consolidated financial position but could be material to the results of operations in any one accounting period. In connection with the August 2, 1994 proposal by American Home Products Corporation to purchase all the outstanding shares of common stock of Cyanamid, six lawsuits have been filed in the N.J. Superior Court on August 3 and 5, 1994 against Cyanamid and its directors by three law firms on behalf of six individual stockholders. The suits allege that the directors of Cyanamid, in violation of their fiduciary obligations, have failed to encourage acceptance of the American Home offer or to solicit other offers to maximize the value to the stockholders of Cyanamid. On August 9, 1994 American Home Products Corporation announced a cash tender offer for all the outstanding shares of common stock of Cyanamid and filed a suit in the U.S. District Court in Maine seeking (a) to set aside or invalidate certain statutory requirements and Company by-law and charter provisions that govern business combinations and mergers, offers to purchase Cyanamid's stock and the election of directors of Cyanamid, and (b) to enjoin Cyanamid from invoking or enforcing any of such requirements or provisions. The suit also seeks to nullify Cyanamid's stockholder rights plan. Item 4. Submission of Matters to Vote of Security Holders (a) The Annual Meeting of Shareholders of the Company was held on April 18, 1994. (c) (i) A. R. Dragone was elected a director. Votes for -- 69,862,127; votes against or withheld -- 44,409. A. J. Levine was elected a director. Votes for -- 69,894,077; votes against or withheld -- 12,459. A. Wexler was elected a director. Votes for -- 69,888,107; votes against or withheld -- 18,429. (ii) A proposal to amend the company's Restated Articles of Incorporation to permit the company to hold meetings of share- holders within or outside the state of Maine was approved. Votes for -- 71,382,445; votes against or withheld -- 485,627; abstentions and broker non-votes -- 357,313. (iii) A proposal to amend the company's Incentive Compensation Plan to provide for payment of long-term incentive grants in shares of the company's Common Stock was approved. Votes for -- 68,632,242; votes against or withheld -- 3,614,544; abstentions and broker non-votes -- 549,587. (iv) A proposal by a shareholder requesting the company to require confidential treatment of all proxies, ballots and voting tabulations and independent, non-employee tabulators and inspectors of election was approved. Votes for -- 33,243,888; votes against or withheld -- 28,487,058; abstentions and broker non-votes -- 736,958. Item 6. Exhibits and Reports on Form 8-K (a) Exhibit 10. Executive Income Continuity Plan of Registrant, as amended through June 21, 1994. (b) Exhibit 12.1. Ratio of Earnings to Fixed Charges. (c) Exhibit 27. Financial Data Schedule. (d) No reports on Form 8-K were filed for the quarter ended June 30, 1994. A report on Form 8-K as filed on July 19, 1994, pursuant to Item 5 other events, is incorporated by reference. SIGNATURES Pursuant to the requirements of the Securities Exchange Act of 1934, the Registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized. AMERICAN CYANAMID COMPANY (Registrant) By:R. T. Ritter R. T. Ritter Controller and Principal Accounting Officer August 15, 1994 10Q-2QRT.94 UNITED STATES SECURITIES AND EXCHANGE COMMISSION WASHINGTON, DC 20549 FORM 10-Q (Mark One) QUARTERLY REPORT UNDER SECTION 13 OR 15(d) / X / OF THE SECURITIES EXCHANGE ACT OF 1934 For the quarter ended June 30, 1994 OR / / TRANSITION REPORT PURSUANT TO SECTION 13 OR 15 (d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the transition period from to Commission file number 1-3426 American Cyanamid Company (Exact name of registrant as specified in its charter) Maine 13-0430890 State or other jurisdiction of (I.R.S. Employer incorporation or organization) Identification No.) One Cyanamid Plaza Wayne, New Jersey 07470 (Address of principal executive offices) (201) 831-2000 (Registrant's telephone number, including area code) INDEX TO EXHIBITS Page No. (a) Exhibit 10. Executive Income Continuity Plan 19 - 31 (b) Exhibit 12.1. Ratio of Earnings to Fixed Charges 32 (c) Exhibit 27. Financial Data Schedule 33 EX-10 2 EXECUTIVE INCOME CONTINUITY PLAN OF AMERICAN CYANAMID COMPANY (As amended through June 21, 1994) 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. The Compensation Committee may determine the level of income payable to a member, not to exceed the maximum income payable to an Officer as set forth above. 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 re- spect to any period beyond the date of a member's 60th birthday, or such earlier date of retirement 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 Supple- mental Employees Retirement Plan, and (iii) there shall be deducted from any payments required hereunder any payments made with respect to any required notice period under any employment agreement be- tween 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-12 3 - 32 - Exhibit 12.1 AMERICAN CYANAMID COMPANY RATIO OF EARNINGS TO FIXED CHARGES (Millions of dollars, except ratio amounts)
Six Months Year Ended December 31, Ended June 30, 1994 1993 1992 2 1991 2 1990 2 19892 Earnings Earnings (loss) from continuing operations before taxes on income $408.31 $(111.8)3 $555.0 $507.0 $378.04 $394.8 Add: Fixed charges 41.5 82.2 77.9 78.4 114.4 174.0 Less: Capitalized interest (1.7) (4.6) (4.0) (11.0) (13.5) (14.0) Total Earnings (Loss) $448.1 $ (34.2) $628.9 $574.4 $478.9 $554.8 Fixed Charges Interest and debt expenses $ 32.2 $ 62.4 $ 58.8 $ 53.7 $ 88.4 $147.7 Add: Capitalized interest 1.7 4.6 4.0 11.0 13.5 14.0 Add: One-third of rental expense 7.6 15.2 15.1 13.7 12.5 12.3 Total Fixed Charges $ 41.5 $ 82.2 $ 77.9 $ 78.4 $114.4 $174.0 Ratio Of Earnings To Fixed Charges 10.80 * 8.07 7.33 4.19 3.19 * Calculation of the ratio results in an amount that is less than one. The amount of the earnings deficiency for the year ended December 31, 1993 was $116.4.2 1 Due to the seasonality of the agricultural business, which is heavily concentrated in the first six months of the year, performance in the first half of the 1994 is not indicative of the results to be expected for the full year. 2 Restated for discontinued operations related to the spin-off of Cytec Industries, Inc. in 1993. 3 Includes one-time, pre-tax charges of $383.6 related to the acquisition of Immunex Corporation and $207.9 related to a companywide restructuring program. Excluding these charges, the ratio of earnings to fixed charges would have been 6.78. 4 Includes a pre-tax special charge of $97.2 associated primarily with the curtailment and consolidation of certain product lines. Excluding this charge, the ratio of earnings to fixed charges would have been 5.04.
EX-27 4 WARNING: THE EDGAR SYSTEM ENCOUNTERED ERROR(S) WHILE PROCESSING THIS SCHEDULE.
5 THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM THE CONDENSED CONSOLIDATED FINANCIAL STATEMENTS FOR THE SIX MONTH PERIOD ENDED JUNE 30, 1994, AND IS QUALIFIED IN ITS ENTIRETY BY REFERENCE TO SUCH FINANCIAL STATEMENTS. 1,000,000 QTR-2 DEC-31-1994 JUN-30-1994 298.0 179.3 1433.0 43.6 1008.2 3284.8 3212.1 1411.0 6313.7 2716.2 441.3 513.6 0 0 1127.9 6313.7 2754.6 2754.6 1128.4 2340.9 0 3.8 32.2 401.3 109.7 301.8 0 0 0 301.8 3.36 3.36
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