-----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, UuwtJIKXDn0Palx7p9lTPzDe/eXox8RK55WHqSJzCrJYE1SFAK1AZ644bfNf4TPg QpwSrOUgruZzSu/FwTCxtg== 0000005187-94-000016.txt : 19940816 0000005187-94-000016.hdr.sgml : 19940816 ACCESSION NUMBER: 0000005187-94-000016 CONFORMED SUBMISSION TYPE: 10-Q PUBLIC DOCUMENT COUNT: 2 CONFORMED PERIOD OF REPORT: 19940630 FILED AS OF DATE: 19940815 FILER: COMPANY DATA: COMPANY CONFORMED NAME: AMERICAN HOME PRODUCTS CORP CENTRAL INDEX KEY: 0000005187 STANDARD INDUSTRIAL CLASSIFICATION: 2834 IRS NUMBER: 132526821 STATE OF INCORPORATION: DE FISCAL YEAR END: 1231 FILING VALUES: FORM TYPE: 10-Q SEC ACT: 1934 Act SEC FILE NUMBER: 001-01225 FILM NUMBER: 94543964 BUSINESS ADDRESS: STREET 1: 5 GIRALDA FARMS CITY: MADISON STATE: NJ ZIP: 07940 BUSINESS PHONE: 201-660-5000 10-Q 1 ====================================================================== SECURITIES AND EXCHANGE COMMISSION WASHINGTON, D.C. 20549 FORM 10-Q QUARTERLY REPORT UNDER SECTION 13 OR 15 (d) OF THE SECURITIES EXCHANGE ACT OF 1934 For Quarter Ended June 30, 1994 Commission File Number 1-1225 AMERICAN HOME PRODUCTS CORPORATION (Exact name of registrant as specified in its charter) Delaware 13-2526821 (State or other jurisdiction of (I.R.S. Employer Identification No.) incorporation or organization) Five Giralda Farms, Madison, N.J. 07940 (Address of principal executive offices) (Zip Code) Registrant's telephone number, including area code (201) 660-5000 Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15 (d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes X No The number of shares of Common Stock outstanding as of the close of business on August 2, 1994: Number of Class Shares Outstanding Common Stock, $.33-1/3 par value 305,666,558 ====================================================================== AMERICAN HOME PRODUCTS CORPORATION AND SUBSIDIARIES INDEX Page No. Part I - Financial Information 2 Item 1. Financial Statements: Consolidated Condensed Balance Sheets - June 30, 1994 and December 31, 1993 3 Consolidated Condensed Statements of Income - Three Months and Six Months Ended June 30, 1994 and 1993 4 Consolidated Condensed Statements of Retained Earnings and Additional Paid-in Capital - Six Months Ended June 30, 1994 and 1993 5 Consolidated Condensed Statements of Cash Flows - Six Months Ended June 30, 1994 and 1993 6 Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations 7-14 Part II - Other Information Item 1. Legal Proceedings 15-16 Item 4. Submission of Matters to a Vote of Security-Holders 17 Item 6. Exhibits and Reports on Form 8-K 18 Signature 19 Exhibit Index Ex-1 Part I - Financial Information AMERICAN HOME PRODUCTS CORPORATION AND SUBSIDIARIES The consolidated condensed financial statements included herein have been prepared by the Company, without audit, pursuant to the rules and regulations of the Securities and Exchange Commission. Certain information and footnote disclosures normally included in financial statements prepared in accordance with generally accepted accounting principles have been condensed or omitted pursuant to such rules and regulations; however, the Company believes that the disclosures are adequate to make the information presented not misleading. In the opinion of management, the financial statements include all adjustments necessary to present fairly the financial position of the Company as of June 30, 1994 and December 31, 1993, the results of its operations for the three months and six months ended June 30, 1994 and 1993 , and its cash flows and the changes in retained earnings and additional paid-in capital for the six months ended June 30, 1994 and 1993. It is suggested that these financial statements and management's discussion and analysis of financial condition and results of operations be read in conjunction with the financial statements and the notes thereto included in the Company's latest annual report on Form 10-K and its first quarter 1994 Form 10-Q. AMERICAN HOME PRODUCTS CORPORATION AND SUBSIDIARIES CONSOLIDATED CONDENSED BALANCE SHEETS (In Thousands Except Per Share Amounts) June 30, Dec. 31, 1994 1993 ---------- ---------- ASSETS Cash and cash equivalents................... $1,645,493 $1,936,834 Marketable securities....................... 260,131 283,449 Accounts receivable less allowances......... 1,609,745 1,389,555 Inventories: Finished goods......................... 505,085 435,902 Work in process........................ 260,149 219,701 Materials and supplies................. 290,241 303,293 ---------- ---------- 1,055,475 958,896 Other current assets........................ 287,412 238,950 ---------- ---------- Total Current Assets................... 4,858,256 4,807,684 Property, plant and equipment............... 3,578,030 3,460,365 Less accumulated depreciation.......... 1,491,195 1,400,580 ---------- ---------- 2,086,835 2,059,785 Goodwill.................................... 725,173 716,395 Other assets................................ 103,723 103,489 ---------- ---------- Total Assets $7,773,987 $7,687,353 ========== ========== LIABILITIES Loans payable to banks...................... $ 3,151 $ 4,280 Trade accounts payable...................... 403,490 388,804 Accrued expenses............................ 1,112,313 1,019,923 Accrued federal and foreign taxes........... 195,096 171,404 ---------- ---------- Total Current Liabilities.............. 1,714,050 1,584,411 Long-term debt.............................. 861,285 859,278 Accumulated postretirement benefit obligation............................. 274,191 264,553 Other noncurrent liabilities................ 781,414 903,993 Minority interests.......................... 196,830 198,630 STOCKHOLDERS' EQUITY $2 convertible preferred stock, par value $2.50 per share.............. 97 100 Common stock, par value $.33-1/3 per share.. 102,265 103,442 Additional paid-in capital.................. 1,008,277 1,014,911 Retained earnings........................... 2,927,729 2,884,244 Currency translation adjustments............ (92,151) (126,209) ---------- ---------- Total Stockholders' Equity............. 3,946,217 3,876,488 ---------- ---------- $7,773,987 $7,687,353 ========== ========== AMERICAN HOME PRODUCTS CORPORATION AND SUBSIDIARIES CONSOLIDATED CONDENSED STATEMENTS OF INCOME (In Thousands Except Per Share Amounts) Three Months Six Months Ended June 30, Ended June 30, 1994 1993 1994 1993 ---------- ---------- ---------- ---------- Net sales................. $1,977,853 $1,909,416 $4,121,898 $4,020,431 ---------- ---------- ---------- ---------- Cost of goods sold........ 627,895 650,671 1,285,360 1,311,263 Selling, admin., and general expenses........ 738,475 700,549 1,471,157 1,443,285 Research and development expenses................ 179,915 161,141 352,819 311,770 Restructuring charge...... 173,697 -- 173,697 -- Other (income) exp., net.. (60,965) 5,813 (57,472) 13,497 ---------- ---------- ---------- ---------- Income before federal and foreign taxes........... 318,836 391,242 896,337 940,616 Provision for taxes....... 18,855 103,752 180,556 251,617 ---------- ---------- ---------- ---------- Net income................ $ 299,981 $ 287,490 $ 715,781 $ 688,999 ========== ========== ========== ========== Net income per share of common stock............ $ 0.98 $ 0.93 $ 2.32 $ 2.22 ========== ========== ========== ========== Dividends per share of common stock............ $ 0.73 $ 0.71 $ 1.46 $ 1.42 ========== ========== ========== ========== Average number of common shares and common share equivalents of preferred stock outstanding during the period used in the computation of net income per share................ 307,349 309,917 308,618 310,933 AMERICAN HOME PRODUCTS CORPORATION AND SUBSIDIARIES CONSOLIDATED CONDENSED STATEMENTS OF RETAINED EARNINGS AND ADDITIONAL PAID-IN CAPITAL (In Thousands) Six Months Ended June 30, RETAINED EARNINGS 1994 1993 ---------- ---------- Balance, beginning of period $2,884,244 $2,547,719 Add: Net income 715,781 688,999 ---------- ---------- 3,600,025 3,236,718 ---------- ---------- Less: Cash dividends declared 450,553 441,712 Cost of treasury stock acquired less amounts charged to capital 213,320 241,609 Other 8,423 - ---------- ---------- 672,296 683,321 ---------- ---------- Balance, end of period $2,927,729 $2,553,397 ========== ========== ADDITIONAL PAID-IN CAPITAL Balance, beginning of period $1,014,911 $ 953,155 Add: Excess over par value of common stock issued 24,376 55,439 Less: Cost of treasury stock acquired, less amounts charged to retained earnings 31,010 31,009 ---------- ---------- Balance, end of period $1,008,277 $ 977,585 ========== ========== AMERICAN HOME PRODUCTS CORPORATION AND SUBSIDIARIES CONSOLIDATED CONDENSED STATEMENTS OF CASH FLOWS (In Thousands) Six Months Ended June 30, 1994 1993 ---------- ---------- Operating Activities - -------------------- Net income................................... $ 715,781 $ 688,999 Adjustments to reconcile net income to net cash provided from operating activities: Depreciation and amortization.............. 128,018 120,014 Deferred income taxes...................... (110,750) 57,625 Restructuring charge....................... 173,697 -- Changes in working capital, net............ (387,049) (196,941) Other items, net........................... (110,726) (20,008) ---------- ---------- Net cash provided from operating activities.. 408,971 649,689 ---------- ---------- Investing Activities - -------------------- Purchases of property, plant and equipment... (190,655) (234,655) Acquisition of businesses for cash, net of cash acquired........................... (22,238) (67,500) Proceeds/(purchases) of marketable securities, net............................ 14,895 (16,215) Purchases of other assets.................... (5,550) (3,118) Proceeds from sales of other assets.......... 170,964 6,804 ---------- ---------- Net cash used for investing activities....... (32,584) (314,684) ---------- ---------- Financing Activities - -------------------- Dividends paid............................... (450,553) (441,670) Net proceeds of debt......................... -- 247,756 Purchases of treasury stock.................. (245,729) (274,102) Exercise of stock options.................... 20,612 46,854 ---------- ---------- Net cash used for financing activities....... (675,670) (421,162) ---------- ---------- Effects of exchange rates on cash balances... 7,942 (17,240) ---------- ---------- Decrease in cash and cash equivalents........ (291,341) (103,397) Cash and cash equivalents, beginning of period.................................. 1,936,834 1,692,761 ---------- ---------- Cash and cash equivalents, end of period..... $1,645,493 $1,589,364 ========== ========== Supplemental Information - ------------------------ Interest payments $ 33,790 $ 24,829 Income tax payments 295,898 227,620 Results of Operations Net sales for the 1994 second quarter of $1.98 billion increased 4% from the corresponding 1993 period. Six months net sales of $4.12 billion increased 3% from prior year levels. Health care products segment sales were 2% higher in the 1994 second quarter and first half. Food product sales increased 13% for the second quarter and 10% for the first six months of 1994. The negative impact of foreign exchange rates on consolidated worldwide net sales was approximately 1% for the second quarter and first six months of 1994. Three Months % Six Months % ($ in Millions) Ended June 30, Inc Ended June 30, Inc Net Sales to Customers 1994 1993 (Decr) 1994 1993 (Decr) - ---------------------- -------- -------- ---- -------- -------- ---- Health Care Products Pharmaceuticals $1,170.3 $1,117.5 +5% $2,443.1 $2,374.0 +3% Consumer Health Care 344.2 354.5 -3% 788.2 803.0 -2% Medical Supplies and Diagnostics 214.7 217.3 -1% 430.4 425.0 +1% -------- -------- -------- -------- Total Health Care 1,729.2 1,689.3 +2% 3,661.7 3,602.0 +2% Food Products 248.7 220.1 +13% 460.2 418.4 +10% -------- -------- -------- -------- Consolidated Net Sales $1,977.9 $1,909.4 +4% $4,121.9 $4,020.4 +3% ======== ======== ======== ======== Worldwide pharmaceutical sales increased 5% for the 1994 second quarter and were 3% higher for the first six months of 1994. Excluding the effects of foreign exchange rate fluctuations, 1994 worldwide pharmaceutical sales would have increased 6% for the second quarter and 4% for the first six months. U.S. pharmaceutical sales increased 4% for the 1994 second quarter due primarily to unit volume growth. This volume growth was led by Premarin, anti-inflammatory products and the veterinary product line and was offset, in part, by lower unit sales of infant nutritionals, Norplant, oral contraceptives and cardiovascular products. First half sales increased 3% with unit volume growth generating the majority of the increase. These unit increases were mainly due to the initial sell-in of Effexor, increased sales of Premarin and anti-inflammatory products, and to a lesser extent, increases in cardiovascular and veterinary products and Factor VIII. These increases were offset, in part, by lower unit sales of Norplant, infant nutritional products and oral contraceptives. Foreign pharmaceutical sales increased 6% for the 1994 second quarter and 2% for the first six months due primarily to unit volume growth in nutritional products and Premarin. Excluding the effects of foreign exchange rate fluctuations, foreign pharmaceutical sales would have increased 9% in the second quarter and 6% for the first six months. Worldwide consumer health care sales decreased 3% for the 1994 second quarter and 2% for the first half. U.S. sales of consumer health care products decreased 2% for the second quarter and 4% for the first half due primarily to lower unit sales of cough/cold and family planning products offset, in part, by increases in sales of lip care, hemorrhoidal relief and analgesic products. Foreign consumer health care sales decreased 4% for the second quarter due primarily to lower sales of oral health care products in Brazil and lower unit sales of sleep-aid and analgesic products in Germany and increased 1% for the first half of 1994 due primarily to unit volume increases in cough/cold products in certain Latin American markets. Excluding the effects of foreign exchange, international consumer health care sales would have decreased 2% for the second quarter and increased 3% for the first half of 1994. Worldwide medical supplies and diagnostic products sales decreased 1% for the second quarter and increased 1% for the first six months of 1994. U.S. sales decreased 3% for the 1994 second quarter as volume increases in needles and syringes, tympanic thermometry and surgical devices were more than offset by lower sales from Corometrics Medical System, Inc. which was sold in May 1994. First half U.S. sales were approximately equal to year ago levels as volume increases in needles and syringes, surgical devices and tympanic thermometry products, were offset by lower sales from Corometrics. Excluding the results of Corometrics, sales increases for this segment would have been 5% for the second quarter and first half of 1994. Foreign sales increased 6% for the second quarter and 7% for the first half due primarily to volume increases in the tube and catheter product lines in Germany and Japan. Food products sales increased 13% for the 1994 second quarter and 10% for the first half due primarily to increases in unit sales of canned pasta products, Polaner and Pam. The successful introduction of the Sesame Street line of nutritional pasta for children contributed to these sales increases. The tables below present comparative net sales for the second quarter and first six months of 1994 by geographic segment. The second quarter and first half results for the Canada and Latin America and Europe and Africa segments were adversely impacted by unfavorable foreign exchange rate fluctuations. Excluding the effects of the rate fluctuations, sales in Canada and Latin America would have approximated 1993 levels for the 1994 second quarter and would have increased 5% for the first half and sales in Europe and Africa would have increased 9% for the second quarter and 6% for the first six months. The Asia and Australia segment was favorably impacted by foreign exchange rates which contributed $2.9 million and $4.9 million to sales in the 1994 second quarter and first half, respectively. Three Months % ($ in Millions) Ended June 30, Inc Net Sales 1994 1993 (Decr) - --------- -------- -------- ------ U.S. $1,294.4 $1,249.1 +4% Canada and Latin America 220.3 226.4 -3% Europe and Africa 320.2 305.0 +5% Asia and Australia 143.0 128.9 +11% -------- -------- Consolidated Net Sales $1,977.9 $1,909.4 +4% ======== ======== Six Months % ($ in Millions) Ended June 30, Inc Net Sales 1994 1993 (Decr) - --------- -------- -------- ----- U.S. $2,788.9 $2,718.1 +3% Canada and Latin America 451.4 445.3 +1% Europe and Africa 613.3 601.6 +2% Asia and Australia 268.3 255.4 +5% -------- -------- Consolidated Net Sales $4,121.9 $4,020.4 +3% ======== ======== Cost of goods sold, as a percentage of net sales, decreased 2.4% from 1993 levels for the second quarter and 1.4% for the first six months due primarily to lower royalty expenses, certain non- recurring product recall expenses incurred in 1993 and a more favorable product mix. Selling, administrative and general expenses, as a percentage of net sales, increased 0.6% from 1993 levels in the second quarter and decreased 0.2% for the first half. The increase in the second quarter was due primarily to higher marketing and selling expenses. First half increases in marketing and selling expenses were offset by the reduction in the first quarter of certain legal reserves. Research and development expenses increased $19 million for the second quarter or 12% over prior year levels to $180 million, and increased $41 million or 13% over prior year levels to $353 million for the first six months of 1994. Included in this research and development were Genetics Institute, Inc. expenditures of approximately $28 million for the second quarter and $54 million for the first six months of 1994, net of collaborative revenues. Unusual Items: Restructuring Charge In the second quarter of 1994, the Company recorded a $174 million charge for the cost of implementing two restructuring programs related primarily to the U.S. pharmaceutical and consumer health care businesses. The first program, announced in April 1994, involved the consolidation of the manufacturing, distribution and quality control functions for the U.S. pharmaceutical and consumer health care businesses and will result in the elimination of excess production capacity and associated workforce, primarily through the closure of the Company's manufacturing facility in Hammonton, New Jersey. The second program addressed the organizational effectiveness of the Company's U.S. pharmaceutical division and will result in further workforce reductions. In total, approximately 2,000 jobs in the domestic pharmaceutical and consumer health care businesses will be eliminated as a result of these programs. These restructurings are intended to lower costs in response to pressure to reduce health care costs, and to enable the Company to continue to expand its pharmaceutical and biotechnology research and development. Asset Sales In May 1994, the Company sold Corometrics Medical Systems, Inc., a manufacturer of perinatal monitoring systems, to Marquette Electronics, Inc. for $74 million, exclusive of certain lease receivables of approximately $37 million. Also in May, the Company sold Agri-Bio Corporation, a manufacturer of a medicated feed additive for the poultry industry, for $40 million to Hoffmann-La Roche Inc. In addition, the Company sold its former corporate headquarters facility in New York City for $50 million. Other (income) expense, net, for the second quarter and first half of 1994 includes the aggregate gain of approximately $76 million from these sales. Income Taxes The Company's effective tax rate was 5.9% for the second quarter and 20.1% for the first six months of 1994 compared to 26.5% for the 1993 second quarter and 26.8% for the six month period. The lower rates in 1994 are due to the reduction of certain tax accruals which were no longer deemed necessary in the quarter. The effective tax rate is expected to be approximately 28% for the balance of the year. The restructuring charge, the gain on asset sales and the tax adjustment, in the aggregate, had no effect on the Company's 1994 earnings per share. Income Before Taxes - Segment Data Three Months % Six Months % ($ in Millions) Ended June 30, Inc Ended June 30, Inc Income Before Taxes 1994 1993 (Decr) 1994 1993 (Decr) - ------------------- ------ ------ ------ ------ ------ ------ Health Care Products $228.1 $363.0 -37% $770.4 $901.5 -15% Food Products 30.0 28.3 +6% 50.7 48.7 +4% Corporate 60.7 (.1) -- 75.2 (9.6) -- ------ ------ ------ ------ Consolidated Income Before Taxes $318.8 $391.2 -19% $896.3 $940.6 -5% ====== ====== ====== ====== Three Months % Six Months % ($ in Millions) Ended June 30, Inc Ended June 30, Inc Income Before Taxes 1994 1993 (Decr) 1994 1993 (Decr) - ------------------- ------ ------ ------ ------ ------ ------ United States $153.2 $248.3 -38% $585.2 $660.2 -11% Canada and Latin America 60.7 57.7 +5% 126.3 104.7 +21% Europe and Africa 77.7 60.3 +29% 136.4 126.0 +8% Asia and Australia 27.2 24.9 +9% 48.4 49.7 -3% ------ ------ ------ ------ Consolidated Income Before Taxes $318.8 $391.2 -19% $896.3 $940.6 -5% ====== ====== ====== ====== Health Care Reform and Competition The debate regarding U.S. health care reform and its uncertainty continued during the first half of 1994. While the Company cannot predict with certainty the nature of these reforms and the impact they might have on its domestic business, market competition has put pressures on pricing and operating results. These trends are expected to continue throughout the remainder of 1994. The Company is not dependent on any patent-protected product or line of products for a substantial portion of its revenues or profits. However, PREMARIN, the Company's estrogen replacement therapy, does contribute significantly to sales and profits. For further discussion on PREMARIN see Item 1, COMPETITION of the Company's 1993 Annual Report on Form 10-K. Liquidity, Financial Condition and Capital Resources The Company continues to generate positive cash flow from operating activities. Cash and cash equivalents decreased $291 million in the first half of 1994 to $1.65 billion. Cash flow from operating activities of approximately $409 million, proceeds of approximately $171 million from sales of assets as well as available cash reserves were used principally for dividend payments of $451 million, common share repurchases of $246 million and capital expenditures of $191 million. The Company repurchased 4,119,000 shares of common stock during the first half of 1994. On July 28, 1994, the Board of Directors authorized the repurchase of an additional 10 million shares of the Company's common stock, subject to price and market conditions. A program to repurchase 10 million shares originally announced on June 25, 1992 is nearing completion. Capital expenditures included the expansion of the Company's Wyeth-Ayerst R&D facilities in New Jersey and Pennsylvania, facilities expansion projects at Genetics Institute, the construction of the Quinton Instrument Company's new headquarters building in Washington and continued strategic investments in manufacturing/distribution facilities worldwide. On August 10, 1994, the Company commenced a tender offer for all of the outstanding shares of common stock of American Cyanamid Company ("ACC") for $95 per share in cash, subject to certain conditions (the "Offer"). The amount of funds required to acquire all of the ACC shares at the Offer price and to pay related fees and expenses is approximately $9.2 billion, which is intended to be financed with a combination of bank borrowings and the Company's general corporate funds. On August 9, 1994, the Company entered into a commitment letter with Chemical Securities Inc. and Chemical Bank under which, subject to certain conditions, Chemical Securities Inc. agreed to use its "best efforts" to form a syndicate of financial institutions to provide a $9.0 billion bank credit facility. Further, Chemical Bank has agreed to provide up to $1.2 billion of such facility. The facility would be used to finance the acquisition of ACC, to replace the Company's existing $1.0 billion bank credit facility (under which there are no amounts outstanding) and for general corporate purposes, including commercial paper back-up. Further information concerning the Offer and the proposed financing is set forth in a filing with the Securities and Exchange Commission on Schedule 14D-1. The Company has been notified by one rating agency that its current commercial paper rating, and by two rating agencies that its current long-term debt rating may be lowered if the Company is successful in this acquisition. Management is confident that the cash flows from the combined businesses will be adequate to repay both the principal and interest on the acquisition financing and, further, to allow the Company to continue to fund its operations, pay dividends and maintain its ongoing programs of capital expenditures, without restricting its ability to make further acquisitions as may be appropriate. Part II - Other Information Item 1. Legal Proceedings The Company is involved in various legal proceedings of a nature considered normal to its business. There are approximately 1,700 cases pending, predominantly in the United Kingdom, based primarily on alleged dependence on the tranquilizer ATIVAN. Substantially all of the cases in the United Kingdom have been supported by governmental legal aid funding. The Legal Aid Board in England, where more than 1,100 cases are pending, had determined to discontinue funding of these cases, although the Board has recently indicated that it will reconsider that decision in light of procedural arguments raised by plaintiffs. If this decision is confirmed upon reconsideration and upheld on appeal, these cases will be dismissed and the other legally-aided cases in Scotland and Northern Ireland (approximately 340 cases) may be discontinued as well. A class of women who have suffered injuries allegedly as a result of the removal of Norplant, the Company's implantable contraceptive product, has been certified in Doe v. Wyeth-Ayerst Laboratories, a class action pending in the Circuit Court of Illinois for Cook County. The Company is seeking reconsideration of the certification order on the grounds that the individualized issues raised by claims arising out of Norplant insertions preclude class treatment. Another class action seeking recovery for the same injuries, Johnson v. Wyeth-Ayerst Laboratories, has been filed in the 160th Judicial District Court for Dallas County, Texas, although a class has not been certified to date. The Company understands that similar actions have been filed in other jurisdictions but have not yet been served upon the Company. The Company also is a defendant in approximately 25 other individual lawsuits seeking damages for injuries allegedly caused by Norplant. As described in the Company's Annual Report on Form 10-K for the year ended December 31, 1993, the Company has been involved in the Brand Name Prescription Drug Antitrust Litigation which has been consolidated for pretrial purposes in the U.S. District Court for the Northern District of Illinois (MDL 997). Additional complaints with similar allegations, which have been filed against the Company, other manufacturers of pharmaceutical products and wholesalers, have also been consolidated in this action. Among these cases is an Alabama case brought on behalf of a purported class of consumers who purchased prescription drugs in the State of Alabama. Additionally, complaints were filed in Alabama state courts under Alabama law on behalf of an alleged class of retail pharmacies. A complaint was also filed under state law in California state court on behalf of a purported class of consumers who purchased prescription drugs in California. In Wisconsin, a complaint was filed against the Company and other pharmaceutical companies alleging violations of a Wisconsin state uniform pricing statute. Following an appeal by the Company from a judgment affirming a penalty imposed by the New York Department of Environmental Conservation in 1992, the Appellate Division of the Supreme Court of New York, Third Department, has issued an order reducing the amount of the penalty from $750,000 to $97,000. On August 9, 1994, the Company commenced an action in the U.S. District Court for the District of Maine against American Cyanamid Company ("ACC") and certain members of its Board of Directors in connection with the tender offer commenced by the Company. The action seeks declaratory and injunctive relief against enforcement of certain anti-takeover provisions of the Maine Business Corporation Act, ACC's articles of incorporation and its by-laws. Further information concerning this litigation is set forth in the Company's Statement on Schedule 14D-1 relating to the Offer, which Statement is incorporated in this Form 10-Q by reference. Other significant legal proceedings are described in the Company's Annual Report on Form 10-K for the year ended December 31, 1993. In the opinion of the Company, although the outcome of any litigation cannot be predicted with certainty, the ultimate liability of the Company in connection with pending litigation and other matters described above will not have a material adverse effect on the Company's financial position or results of operations. Item 4. Submission of Matters to a vote of Security-Holders (a) The matters described under item 4(c) below were submitted to a vote of security-holders, through the solicitation of proxies pursuant to Regulation 14 under the Securities Exchange Act, at the Annual Meeting of Stockholers held on April 20, 1994 (the "Annual Meeting"). (b) Not applicable. (c) The following describes the matters voted upon at the Annual Meeting and sets forth the number of votes cast for, against or withheld and the number of abstentions as to each such matter. (i) Election of directors: Nominee For Withheld Clifford L. Alexander, Jr. 249,238,617 1,693,637 Frank A. Bennack, Jr. 249,545,655 1,386,599 K. Roald Bergethon 249,124,175 1,808,079 Robert G. Blount 249,548,752 1,383,502 John W. Culligan 249,178,658 1,753,596 Robin Chandler Duke 249,357,589 1,574,665 John D. Feerick 249,093,132 1,839,122 Edwin A. Gee 249,273,698 1,658,556 Robert W. Sarnoff 249,125,901 1,806,353 John R. Stafford 249,584,128 1,348,126 John R. Torell III 249,516,787 1,415,467 William Wrigley 249,558,177 1,374,077 (ii) Ratification of the Appointment of Arthur Andersen & Co., as independent public accountants for 1994: For Against Abstain 249,470,011 792,818 665,742 (iii) Adoption of the 1993 Stock Incentive Plan: Broker For Against Abstain Non-Votes 231,005,290 17,153,701 2,766,072 203,067 (iv) Adoption of the 1994 Restricted Stock Plan for Non-Employee Directors: Broker For Against Abstain Non-Votes 226,250,883 21,630,640 3,044,141 203,668 (d) Not applicable. Item 6. Exhibits and Reports on Form 8-K (a) Exhibits (10) Letters extending the term of the Credit Agreement dated April 29, 1993 among Registrant, the Lenders Parties thereto and Chemical Bank as previously filed in the Company's latest annual report on Form 10-K. (11) Calculation of per share earnings as reported in Part I on Page 4 of this Form 10-Q is incorporated herein by reference. (99) Schedule 14D-1 Tender Offer Statement relating to the tender offer by a subsidiary of the Company for all outstanding shares of American Cyanamid Company at $95 per share, as filed with the Securities and Exchange Commission on August 10, 1994, is incorporated by reference. (b) Reports The Company did not file any reports on Form 8-K during the quarter covered by this report, however, a Form 8-K was filed on August 4, 1994 stating that, on August 2, 1994, American Home Products Corporation transmitted a letter to ACC offering to acquire ACC for $95 per share in cash and issued two press releases in connection therewith. The two press releases were included as Exhibits in the Form 8-K. Signature Pursuant to the requirements of the Securities Exchange Act of 1934, the Registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized. AMERICAN HOME PRODUCTS CORPORATION Registrant By /S/ John R. Considine John R. Considine Vice President - Finance (Duly Authorized Signatory and Chief Accounting Officer) Date: August 15, 1994 EX-10 2 Exhibit Index Regulation S-K Description Exhibit Table of Item No. Exhibit Page No. 10 Extension of Ex-2 termination date for Credit Agreement. AMERICAN HOME PRODUCTS CORPORATION FIVE GIRALDA FARMS, MADISON, NEW JERSEY 07940, (201)660-5000 March 28, 1994 Treasury Ms. Julie Soper Vice President Chemical Bank 270 Park Avenue New York, NY 10017-2070 RE: $1.0 BILLION CREDIT AGREEMENT DATED APRIL 29, 1993 Dear Julie: In connection with the referenced Credit Agreement between American Home Products Corporation and Chemical Bank as Agent, together with the Lenders, please accept this letter as confirmation of our desire to extend the termination date another 364 days as provided in the Agreement under Section 2.18. Attached for your use are several copies of our 1993 Annual Report. Please feel free to distribute these copies to the Lenders together with their notifications. Please feel free to call me (201-660-6432) if you have any questions. Sincerely, /S/ Thomas R. Siegert Thomas R. Siegert Assistant Treasurer cc: S. Parker J. O'Connor CHEMICAL Chemical Bank Julie A. Soper 270 Park Avenue Vice President New York, NY 10017-2070 Banking & Corporate 212/270-1053 Finance Group April 28, 1994 Thomas R. Siegert Assistant Treasurer Director - Capital Markets and Foreign Exchange American Home Products Corporation Five Giralda Farms Madison, NJ 07940 Re: Credit Agreement among American Home Products Corporation, the Lenders Parties thereto, and Chemical Bank, as Agent, Dated as of April 29, 1993 ("Credit Agreement"). All of the lenders except for Westpac Banking Corporation responded affirmative to the extension request dated March 28, 1994. Chemical Bank has acquired Westpac Banking Corporation's $25,000,000 commitment pursuant to section 8.7 (d), effective April 27, 1994. All of the other lenders' commitments remain unchanged. Therefore, pursuant to Section 2.18 under the above- referenced Credit Agreement, the Termination Date has been extended to April 11, 1995. The effective date of this extension is April 12, 1994. It has been a pleasure working with you on this extension. Please feel free to call me if you have any further questions. Yours truly, /S/ Julie A. Soper Julie A. Soper -----END PRIVACY-ENHANCED MESSAGE-----