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SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 10-K
ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
For the fiscal year ended Commission file number
December 31, 1993 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
incorporation or organization) Identification Number)
Five Giralda Farms, Madison, NJ 07940-0874
(Address of Principal Executive Offices) (Zip Code)
Registrant's telephone number, including area code (201) 660-5000
Securities registered pursuant to Section 12(b) of the Act:
Name of Each Exchange On
Title of Each Class Which Registered
$2 Convertible Preferred
Stock, $2.50 par value New York Stock Exchange
Common Stock, $.33 - 1/3 par value New York Stock Exchange
6 - 7/8% Notes due April 15, 1997 New York Stock Exchange
Indicate by check mark whether the registrant (1) has filed
all reports required to be filed by Section 13 or 15(d) of the
Securities Exchange Act of 1934 during the preceding 12 months
(or for such shorter period that the registrant was required
to file such reports), and (2) has been subject to such filing
requirements for the past 90 days.
Yes X No
Indicate by check mark if disclosure of delinquent filers pursuant
to Item 405 of Regulation S-K is not contained herein, and will not
be contained, to the best of registrant's knowledge, in definitive
proxy or information statements incorporated by reference in Part
III of this Form 10-K or any amendment to this Form 10-K.
State the aggregate market value of the voting stock held by
nonaffiliates of the registrant. (The aggregate market value
shall be computed by reference to the price at which the stock
was sold, or the average bid and asked prices of such stock,
as of a specified date within 60 days prior to the date of
filing).
Aggregate market value at March 1, 1994 - $18,564,584,755
Indicate the number of shares outstanding of each of the
registrant's classes of common stock, as of the latest
practicable date (applicable only to corporate registrants).
Outstanding at
March 1, 1994
Common Stock, $.33 - 1/3 par value 310,035,743
Documents incorporated by reference: list hereunder the following
documents if incorporated by reference and the part of the
Form 10-K into which the document is incorporated: (1) any annual
report to security holders; (2) any proxy or information
statements; and (3) any prospectus filed pursuant to Rule 424(b) or
(c) under the Securities Act of 1933 (the listed documents
should be clearly described for identification purposes).
(1) 1993 Annual Report to Shareholders - In Parts I, II and IV
(2) Proxy Statement filed March 17, 1994 - In Parts III and IV
(3) 1993 Genetics Institute, Inc. Annual Report to Shareholders -
In Part I
PART I
ITEM 1. DESCRIPTION OF BUSINESS
General
American Home Products Corporation (the "Company"), a
Delaware corporation organized in 1926, is a leading
manufacturer and marketer of health care products (in-
cluding pharmaceuticals, consumer health care products,
medical supplies and diagnostic products) and food
products. Unless stated to the contrary, or unless the
context otherwise requires, references to the Company
in this report include American Home Products Corporation,
its divisions and subsidiaries.
Information relating to acquisitions and certain
other transactions is set forth in Note 2 of the Notes
to Consolidated Financial Statements in the Company's
1993 Annual Report to Shareholders, and is incorporated
herein by reference.
Industry Segments
Financial information, by geographic location and by the
industry segments of the Company, for the three years ended
December 31, 1993 is set forth on page 38 of the Company's
1993 Annual Report to Shareholders and is incorporated herein
by reference.
The Company is not dependent on any single or major group of
customers for its sales. The Company currently manufactures,
distributes and sells a diversified line of products in two
business segments(*):
1. HEALTH CARE PRODUCTS -
Pharmaceuticals - This sector includes a wide variety of
ethical pharmaceuticals and biological products for human
and veterinary use which are promoted and sold worldwide
primarily to wholesalers, pharmacies, hospitals and doctors.
Some of these sales are made through large buying groups
representing certain of these customers. Principal product
categories for human use include female health care products,
infant nutritionals, cardiovascular and metabolic disease
therapies, mental health products, anti-inflammatory
products, anti-infectives and vaccines. Principal veterinary
product categories include vaccine products, antibiotics and
analgesics. The Company manufactures these products in the
United States and Puerto Rico, and in eighteen foreign
countries.
*The product designations appearing in differentiated type
herein are trademarks.
Except for the female health care category, no single
category of products accounted for more than 10% of Health
Care Products segment sales in 1993. Within the female
health care category, no single product or line of products
accounted for more than 10% of Health Care Products segment
sales in 1993. The operating income from the female health
care category in the aggregate, and PREMARIN, individually,
accounted for more than 10% of the Company's consolidated
operating income before and after taxes.
Consumer health care - The Company's over-the-counter
health care products include analgesics, cough/cold/allergy
remedies, hemorrhoidal and asthma relief items, oral health
care and in-home diagnostic test products. These products
are generally sold to wholesalers and retailers, and are
primarily promoted to consumers through advertising. These
products are manufactured in the United States and Puerto
Rico, and in seven foreign countries.
No single consumer health care product or line of products
accounted for more than 10% of Health Care Products segment
sales in 1993.
Medical supplies and diagnostic products - Principal
products in this segment include medical supplies, medical
and diagnostic instrumentation, disposable laparoscopic and
endoscopic surgical instruments and other hospital products
which are promoted and sold principally to doctors, hospi-
tals, other health care institutions and wholesalers. Buying
groups also represent certain of these customers. In addi-
tion to the United States, these products are manufactured
in five foreign countries.
No single product or line of products in this sector
accounted for more than 10% of Health Care Products
segment sales in 1993.
Further information regarding the principal products in
the Health Care Products segment and the principal markets
served therein is included in the text on pages 13 through
23 of the Company's 1993 Annual Report to Shareholders,
which is incorporated herein by reference.
2. FOOD PRODUCTS -
Products in this segment include prepared pastas and
specialty food, condiments, snack products, and jams, which
are promoted to consumers through advertising and generally
sold directly to wholesalers and retailers.
Product line sales in 1993 under the CHEF BOYARDEE trademark
exceeded 10% of Food Products segment sales but did not
exceed 10% of total consolidated sales.
Further information regarding the principal products in
the Food Products segment and the principal markets served
therein is included on page 24 of the Company's 1993 Annual
Report to Shareholders, which is incorporated herein by
reference.
Sources and Availability of Raw Materials
Generally, raw materials and packaging supplies are purchased
in the open market from various outside vendors. The loss of
any one source of supply would not have a material adverse
effect on the Company's financial position or results of
operations.
Patents and Trademarks
The Company owns, has applications pending for, and is
licensed under many patents relating to a wide variety of
products. The Company believes that its patents and licenses
are important to its business, but no one patent or license
(or group of related patents or licenses) currently is of
material importance in relation to its business as a whole.
In the pharmaceuticals area, substantially all of the
Company's major products are no longer patent protected. The
oral contraceptive brand TRIPHASIL lost its patent protection
in the United States in May 1993 as did SECTRAL and
CORDARONE. The non-steroidal anti-inflammatory ("NSAID")
LODINE remains under patent protection in the United States
until early 1997. Other prescription products, such as the
cardiovasculars INDERAL LA and INDERIDE LA remain patent
protected until early 1996. EFFEXOR, a recently approved
antidepressant, will have patent protection into 2007.
Sales in the consumer health care and medical supplies and
diagnostic products businesses are largely supported by the
Company's trademarks and brand names, as are food product
sales. These trademarks and brand names are a significant
part of the Company's business and have a perpetual life as
long as they remain in use. See the Competition section of
this Annual Report regarding generic and store brands
competition in the consumer health care business.
Seasonality
Sales of consumer health care products are affected by
seasonal demand for cold/flu season products. On a
comparable basis, second quarter results have historically
been lower than results in other quarters due primarily to
the lower demand for cold/flu season products.
Competition
Each of the industry segments in which the Company is
engaged is highly competitive. The Health Care Products
segment faces competitive pressures in the United States
from branded and generic forms of both prescription
and non-prescription products, as well as new product
introductions. For prescription products, the growth of
generic substitutes is further promoted by legislation,
regulation and various incentives enacted and promulgated
in both the public and private sectors. The growth of
managed care organizations, such as health maintenance
organizations ("HMOs") and pharmaceutical benefit management
companies, has resulted in further competitive pressures on
health care products.
While naturally sourced PREMARIN no longer has patent pro-
tection, it is not presently subject to generic competition
in the United States. The Company cannot presently predict
the timing of regulatory approval of generic conjugated
estrogens products and their potential impact on the market.
However, the FDA has issued a bioequivalence guidance to
facilitate the development of such generic products. While
it is very likely that some generic companies are attempting
to develop and obtain approval of such products, information
on the status of drugs (including generic drugs) under FDA's
approval processes is not publicly available prior to
approval being obtained. In addition, PREMARIN has been
subject to increased competition from certain synthetic
estrogen products (though not conjugated estrogens products)
that have been approved for many of the same uses as
PREMARIN.
The growth of consumer health care generic and store brands
continued to impact some of the Company's branded product
line categories in 1993.
The debate regarding U.S. health care reform and its
uncertainty continued during 1993. The proposals by the
Clinton Administration have been formalized and were
presented to Congress in October 1993. Other health care
reform proposals from members of Congress are being
introduced with varied agendas on issues such as Medicaid and
Medicare rebates, price controls, governmental alliances and
other matters. Similarly, in international markets, health
care spending is subject to increasing governmental scrutiny,
much of which is focused on pharmaceutical prices. While we
cannot predict the impact proposed health care legislation
will have on the Company's worldwide results of operations,
we believe the pharmaceutical industry will continue to play
a very positive role in helping to contain global health care
costs through the development of innovative products.
However, it is expected that global market forces will
continue to constrain price growth regardless of the outcome
of health care reform.
A federal law that became effective in January 1991 requires
drug manufacturers to pay rebates to state Medicaid programs,
in order for their products to be eligible for federal
matching funds under the Social Security Act. Additionally,
a number of states are, or may be, pursuing similar
initiatives for rebates to Pharmaceutical Assistance to the
Elderly programs and other strategies, to contain the cost of
pharmaceutical products. Federal and state rebate programs
as well as infant nutritional products rebates under the
federally sponsored Women, Infants and Children program are
expected to continue.
Other significant competitive factors in the Health Care
Products segment are scientific and technological advances,
product quality, price and effective communication of product
information to physicians, pharmacists, hospitals and trade
customers. Competition is particularly severe in the
hospital supply industry, principally in the needle and
syringe business and in the generic hospital injectable
products business.
In the Food Products segment, product quality, price and
relevance to contemporary family needs are important
competitive factors.
Advertising and promotional expenditures are significant
costs to the Company, and are necessary to effectively
communicate information concerning the Company's products to
health professionals, to the trade and to consumers.
Research and Development
Worldwide research and development activities are focused on
developing and bringing to market new drugs to treat and/or
prevent some of the most serious health care problems. The
Company employs over 5,600 professionals worldwide who are
committed to this effort. Research and development expend-
itures totaled $662,689,000 in 1993, $552,450,000 in 1992
and $430,519,000 in 1991, with approximately 85% of these
expenditures in the ethical pharmaceutical area. The Company
received FDA approval in 1993 for EFFEXOR, ORUVAIL and LODINE
400 mg tablets.
The Company's Wyeth-Ayerst Laboratories Division currently
has three New Drug Applications ("NDA") filed with the FDA
for review and 23 active Investigational New Drug
applications pending. In addition, in 1993 a NDA to switch a
lower dose of ORUDIS to a non-prescription status was filed.
During 1993, several major collaborative research and
development arrangements continued with other pharmaceutical
and biotechnology companies. Research and development
projects continued at Genetics Institute, Inc. and at the
Company's other health care operations. It is not
anticipated, however, that the products from these
activities will contribute significantly to revenues and
operating profit in the near future. The extent, if any, of
subsequent contributions cannot presently be predicted.
Regulation
The Company's various health care and food products are
subject to regulation by government agencies throughout the
world. The primary emphasis of these requirements is to
assure the safety and effectiveness of the Company's
products. In the United States, the FDA, under the federal
Food, Drug and Cosmetic Act (the "Act"), including several
recent amendments to the Act, regulates the Company's human
and animal pharmaceuticals, consumer health care, medical
supplies and diagnostic products and food products
businesses. FDA's powers include the imposition of criminal
and civil sanctions against companies, including seizures of
regulated products and criminal sanctions against
individuals. To facilitate compliance, the Company from time
to time may institute voluntary compliance actions such as
product recalls when it believes it advisable to do so. In
addition, many states have similar regulatory requirements.
Most of the Company's pharmaceutical products, and an
increasing number of its consumer health care products, are
regulated under the FDA's new drug approval processes, which
mandate pre-market approval of all new drugs. Such require-
ments continue to increase the amount of time, testing and
documentation needed for approval, resulting in a corres-
ponding increase in the cost of new product introductions.
FDA has exercised its enforcement powers more aggressively in
recent years, increasing both the number and intensity of its
factory inspections. The Company's pharmaceutical business
is also affected by the Controlled Substances Act,
administered by the Drug Enforcement Administration, which
regulates strictly all narcotic and habit-forming drug
substances. The Company devotes significant resources to
dealing with the extensive federal and state regulatory
requirements applicable to its products.
With respect to the Company's food products, the Nutrition
Labeling and Education Act of 1990 and FDA regulations issued
thereunder will, in the future, affect the consumer
nutritional information and any health claims appearing on
the labels of the Company's food products.
Environmental
Certain of the Company's operations are affected by a variety
of federal, state and local environmental protection laws and
regulations and the Company has, in a number of instances,
been notified of its potential responsibility relating to the
generation, storage, treatment and disposal of hazardous
waste. In addition, the Company has been advised that it
may be a responsible party in several sites on the National
Priority List created by the Comprehensive Environmental
Response, Compensation, and Liability Act ("CERCLA").
(See Item 3. Legal Proceedings.) The Company provides for
the estimated costs of remediation for all known environ-
mental liabilities.
Employees
At the end of 1993, the Company had 51,399 employees world-
wide, with 29,028 employed in the United States including
Puerto Rico.
Financial Information about the Company's Foreign and
Domestic Operations
Financial information about foreign and domestic operations
for the three years ended December 31, 1993, as set forth on
page 38 of the Company's 1993 Annual Report to Shareholders,
is incorporated herein by reference.
ITEM 2. PROPERTIES
In the fourth quarter of 1993, the Company relocated its
executive offices and the headquarters for its domestic
consumer health care and food products businesses to a new
facility in Giralda Farms, Madison, New Jersey. The former
headquarters facility, a 31-story office building located at
685 Third Avenue, New York, New York, is being marketed for
sale or lease.
The Company's domestic and international pharmaceutical
operations and its international consumer health care
business are headquartered in three executive/administrative
buildings in Radnor and St. Davids, Pennsylvania. Sherwood,
the Company's principal medical supplies and diagnostic
operation, maintains its headquarters in St. Louis, Missouri.
The following are the principal domestic manufacturing plants
(M) and research laboratories (R) of the Company's operating
units:
Floor Area
INDUSTRY SEGMENT (Sq. Ft.)
Health Care Products:
Deland, Florida (M) 342,000
Fort Dodge, Iowa (M,R) 498,000
Andover, Massachusetts (M,R) 270,000
Cambridge, Massachusetts (M,R) 220,000
Mason, Michigan (M) 299,000
Norfolk, Nebraska (M) 204,000
Hammonton, New Jersey (M,R) 467,000
Monmouth Junction, New Jersey (R) 285,000
Rouses Point, New York (M,R) 833,000
Malvern, Pennsylvania (M) 816,000
Marietta, Pennsylvania (M,R) 225,000
Radnor, Pennsylvania (R) 418,000
West Chester, Pennsylvania (M) 421,000
Guayama, Puerto Rico (M) 1,079,000
Georgia, Vermont (M) 288,000
Richmond, Virginia (M) 273,000
Richmond, Virginia (M) 321,000
Food Products:
Vacaville, California (M,R) 527,000
Milton, Pennsylvania (M,R) 1,020,000
Fort Worth, Texas (M) 205,000
All of the above properties are owned except the land
and a 757,000 sq. ft. facility in Guayama, Puerto Rico, which
are under lease expiring in 2007 with options for renewal and
purchase, 105,000 sq. ft. facility in Georgia, Vermont which
is under lease expiring in 2006, and 177,000 sq. ft.
in Cambridge, Massachusetts, which is under leases expiring
in 1999 and 2009. The Company also owns or leases a number
of other smaller properties in the United States which are
used for manufacturing, warehousing and office space.
During 1993, the Company's St. Joseph, Missouri manufacturing
facility (224,000 sq. ft.) was severely damaged by floods.
Production from this facility was shifted to other plants and
this facility was closed.
In addition to the domestic properties, foreign subsidiaries
and affiliates of the Company, which generally own their
properties, have manufacturing facilities in nineteen
countries outside the United States, the principal facilities
of which are located in Ireland, Italy, Germany, Brazil,
Mexico and the United Kingdom.
ITEM 3. LEGAL PROCEEDINGS
The Company is involved in various legal proceedings,
including product liability suits 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, has determined to discontinue
funding of these cases. If this decision is 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.
The Company is self-insured against ordinary product
liability risks and, other than for the years 1986 to 1988,
has liability coverage in excess of certain limits from
various insurance carriers.
As discussed in Item 1, the Company is a party to a number of
proceedings brought under CERCLA and similar state laws.
These proceedings seek to require the owners or operators of
facilities at which hazardous wastes are alleged to have been
disposed, transporters of waste to the sites and generators
of hazardous waste disposed of at the sites, to clean up the
sites or to reimburse the government for cleanup costs.
Although joint and several liability is alleged in these
cases where multiple entities have been named as responsible
parties, these proceedings are frequently resolved on the
basis of the quantity of hazardous waste disposed of at the
site by the generator. The Company's potential liability
varies greatly from site to site. For some sites, the
potential liability is de minimis and, for others, the final
costs of cleanup have not yet been determined.
In 1992, the New York Department of Environmental
Conservation imposed a $750,000 penalty on the Company
relating to air emissions at a New York State facility.
The Company appealed the amount of the penalty to the
Supreme Court of New York, claiming that the maximum
penalty permitted under New York law is $97,000. The
Supreme Court affirmed the penalty and an appeal to the
Appellate Division of the New York Supreme Court, Third
Department, is pending.
The United States Environmental Protection Agency ("USEPA")
filed an action against Ekco Housewares ("Ekco"), a former
subsidiary of the Company, in the U.S. District Court for the
Northern District of Ohio alleging violation of federal and
state financial assurance regulations in connection with the
required closure of a lagoon at Ekco's Massillon, Ohio
facility. AHPC assumed the defense of the action pursuant to
an indemnification agreement. On January 28, 1994, the court
entered judgment against Ekco in the amount of $4,606,000,
concluding that Ekco had violated regulations governing the
posting of financial assurance for closure, post-closure and
liability coverage. An appeal will be filed and pursued
vigorously, with judgment stayed during the pendency of the
appeal.
The Company has been involved in various antitrust suits and
government investigations relating to its marketing and sale
of infant formula. The antitrust lawsuits, which were
commenced in various federal and state courts, allege in
general that the Company conspired with one or more of its
competitors to fix prices of infant formula and to monopolize
the market for infant formula products. The Company has
settled most of the cases as well as a Federal Trade
Commission proceeding. Each of these settlements was entered
into by the Company in order to avoid the burden and expense
of protracted litigation and did not involve any admission of
wrongdoing by the Company. The Company is currently a
defendant in litigation brought in federal court by the
State of Louisiana and in purported class actions in Alabama
and Texas (under the Texas Deceptive Trade Practices Act)
state courts on behalf of indirect purchasers of infant
formula in those states. In addition to the Federal Trade
Commission, the government agencies that have been conducting
investigations of pricing and marketing practices in the
infant formula industry include three state attorneys
general. The Company has been advised that two other state
attorneys general have terminated their investigations of
the Company without any action. In addition, the Bureau of
Competition Policy in Canada is conducting an investigation
of infant formula pricing and marketing practices in Canada.
On October 14, 1993, Rite Aid Corporation, Revco D.S. Inc.
and other retail drug chains and retail pharmacies filed an
action in the U.S. District Court for the Middle District of
Pennsylvania against the Company, other pharmaceutical
manufacturers and a pharmacy benefit management company.
The complaint alleges that the Company and other defendants
provided discriminatory price and promotional allowances to
managed care organizations and others in violation of the
Robinson-Patman Act. The complaint further alleges collusive
conduct among the defendants related to the alleged
discriminatory pricing in violation of the Sherman Antitrust
Act as well as certain other violations of common law
principles of unfair competition. Subsequently, numerous
other cases, many of which are purported class actions
brought on behalf of retail pharmacies and retail drug and
grocery chains, were filed in various federal courts and in
various California state courts against the Company as well
as other pharmaceutical manufacturers and wholesalers. These
cases make one or more similar allegations of violations of
federal or state antitrust or unfair competition laws. All
of the federal actions have been consolidated for pretrial
purposes in the U.S. District Court for the Northern District
of Illinois. The above actions seek treble damages,
injunctive and other relief.
For information concerning certain litigation involving
Genetics Institute, Inc., see Part I, Item 3 of Genetics
Institute, Inc's. Annual Report on Form 10-K for the fiscal
year ended November 30, 1993, which Item is incorporated
herein by reference.
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
None.
EXECUTIVE OFFICERS OF THE REGISTRANT AS OF MARCH 24, 1994
Each officer is elected to hold office until his successor is chosen
or until his earlier removal or resignation. None of the executive
officers is related to another:
Elected to
Name Age Offices and Positions Office
John R. Stafford 56 Chairman of the Board, December 1986
President and Chief Executive
Officer, Chairman of Executive,
Finance and Operations
Committees
Business Experience: 1989 to date, Chairman
of the Board, President
and Chief Executive
Officer (President to May
1990 and from February 1994)
Robert G. Blount 55 Executive Vice President, August 1987
Director, Member of Finance
and Operations Committees
Business Experience: 1989 to date, Executive Vice
President
Stanley F. Barshay 54 Senior Vice President August 1987
Member of Finance and Oper-
ations Committees
Business Experience: 1989 to date, Senior
Vice President
Joseph R. Bock 64 Senior Vice President February 1990
Member of Finance and
Operations Committees
Business Experience: 1989 to February 1990, Vice
President - Industrial Relations
February 1990 to date, Senior
Vice President
Elected to
Name Age Offices and Positions Office
Louis L. Hoynes, Jr. 58 Senior Vice President and November 1990
General Counsel
Member of Finance and
Operations Committees
Business Experience: 1989 to 1990, Partner,
Willkie Farr & Gallagher
November 1990 to date, Senior
Vice President and General
Counsel
Joseph J. Carr 51 Senior Vice President May 1993
Member of Finance and Oper-
ations Committees
Business Experience: To November 1989, Executive
Vice President - Operations,
Wyeth-Ayerst Laboratories
Division
November 1989 to April 1991,
Vice President
April 1991 to May 1993, Group
Vice President
May 1993 to date, Senior Vice
President
Fred Hassan 48 Senior Vice President May 1993
Member of Finance and Oper-
ations Committees
Business Experience: February 1989 to March 1993,
President of Wyeth-Ayerst
Laboratories Division
March 1993 to May 1993,
Group Vice President,
May 1993 to date, Senior Vice
President
John R. Considine 43 Vice President - Finance February 1992
Member of Finance and Oper-
ations Committees
Business Experience: To February 1989, Vice President
and Comptroller
February 1989 to February 1992,
Vice President and Treasurer
February 1992 to date, Vice
President - Finance
Elected to
Name Age Offices and Positions Office
Thomas M. Nee 54 Vice President - Taxes May 1986
Member of Finance Committee
Business Experience: 1989 to date, Vice President -
Taxes
PART II
ITEM 5. MARKET FOR THE REGISTRANT'S COMMON STOCK AND RELATED
SHAREHOLDER MATTERS
The New York Stock Exchange is the principal market on which
the Company's common stock is traded. Tables showing the
high and low sales price for the stock, as reported in the
consolidated transaction reporting system, and the dividends
paid per common share for each quarterly period during the
past two years, as shown on page 40 of the Company's 1993
Annual Report to Shareholders, are incorporated herein by
reference.
There were 72,422 holders of record of the Company's common
stock as of March 1, 1994.
ITEM 6. SELECTED FINANCIAL DATA
The data with respect to the last five fiscal years,
appearing in the Ten-Year Selected Financial Data presented
on pages 26 and 27 of the Company's 1993 Annual Report to
Shareholders, are incorporated herein by reference.
ITEM 7. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL
CONDITION AND RESULTS OF OPERATIONS
Management's Discussion and Analysis of Financial Condition
and Results of Operations, appearing on pages 41 through 43
of the Company's 1993 Annual Report to Shareholders, is
incorporated herein by reference.
ITEM 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA
The Consolidated Financial Statements and Notes on pages 28
through 38 of the Company's 1993 Annual Report to Share-
holders, the Report of Independent Public Accountants and the
Management Report on Financial Statements on page 39, and
Quarterly Financial Data on page 40, are incorporated herein
by reference.
ITEM 9. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING
AND FINANCIAL DISCLOSURE
None.
PART III
ITEM 10. DIRECTORS AND EXECUTIVE OFFICERS OF THE REGISTRANT
(a) Information relating to the Company's directors is
incorporated herein by reference to pages 3 through 7
and page 24 of a definitive proxy statement filed with the
Securities and Exchange Commission on March 17, 1994
("the 1994 Proxy Statement").
(b) Information relating to the Company's executive officers
as of March 24, 1994 is furnished in Part I hereof under a
separate unnumbered caption ("Executive Officers of the
Registrant").
ITEM 11. EXECUTIVE COMPENSATION
Information relating to executive compensation is in-
corporated herein by reference to pages 11 through 16
of the 1994 Proxy Statement. Information with respect
to compensation of directors is incorporated herein by
reference to pages 8 and 9 of that proxy statement.
Information relating to the Compensation Committee Interlocks
and Insider Participation is incorporated by reference to
pages 23 and 24 of the 1994 Proxy Statement.
ITEM 12. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND
MANAGEMENT
Information relating to security ownership is incorporated by
reference to pages 9 and 10 of the 1994 Proxy Statement.
ITEM 13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
None.
PART IV
ITEM 14. EXHIBITS, FINANCIAL STATEMENT SCHEDULES AND REPORTS
ON FORM 8-K
(a) 1. Financial Statements
The following Consolidated Financial Statements, related
Notes and Report of Independent Public Accountants, included
on pages 28 through 39 of the Company's 1993 Annual Report to
Shareholders, are incorporated herein by reference.
Pages
Consolidated Balance Sheets as of
December 31, 1993 and 1992 28
Consolidated Statements of Income
for the years ended December 31,
1993, 1992 and 1991 29
Consolidated Statements of Retained
Earnings and Additional Paid-in
Capital for the years ended
December 31, 1993, 1992 and 1991 30
Consolidated Statements of Cash Flows
for the years ended December 31, 1993,
1992 and 1991 31
Notes to Consolidated Financial Statements 32-38
Report of Independent Public Accountants 39
(a) 2. Financial Statement Schedules
The following consolidated financial information is included
in Part IV of this report:
Pages
Report of Independent Public Accountants
on Supplemental Schedules IV-6
For the years ended December 31, 1993,
1992 and 1991:
Schedule V - Property, Plant and
Equipment IV-7
Schedule VI - Accumulated Depreciation of
Property, Plant and Equipment IV-8
Schedule VIII - Valuation and Qualifying
Accounts IV-9
ITEM 14. (Continued) Pages
Schedule IX - Short-term Borrowings IV-10
Schedule X - Supplementary Income Statement
Information IV-11
Schedules other than those listed above are omitted because they are
either not applicable or the required information is included through
incorporation by reference to pages 28 through 38 of the Company's 1993
Annual Report to Shareholders.
(a) 3. Exhibits
Exhibit No. Description
(3.1) Restated Certificate of Incorporation, as amended to
date, is incorporated herein by reference to Exhibit
(3.1) of the Registrant's Form 10-K for the year ended
December 31, 1990.
(3.2) By-Laws, as amended to date is incorporated herein by
reference to Exhibit (3.2) of the Registrant's Form
10-K for the year ended December 31, 1992.
(4.1) Indenture, dated as of April 10, 1992, between AHPC and
Chemical Bank (as successor by merger to Manufacturers
Hanover Trust Company), as Trustee, is incorporated by
reference to Registrant's Form 8-A dated August 25,
1992.
(4.2) Supplemental Indenture, dated October 13, 1992, between
AHPC and Chemical Bank (as successor by merger to
Manufacturers Hanover Trust Company) as Trustee,
incorporated by reference to Registrant's Form 10-Q for
the quarter ended September 30, 1992.
(10.1) Credit Agreement dated as of April 29, 1993 among
Registrant, the Lenders Parties thereto and Chemical
Bank.
(10.2) * 1978 Stock Option Plan, as amended to date, is
incorporated herein by reference to Exhibit (10.2) of
the Registrant's Form 10-K for the year ended December
31, 1990.
(10.3) * 1980 Stock Option Plan, as amended to date is
incorporated by reference to Exhibit (10.3) of the
Registrant's Form 10-K for the year ended December 31,
1991.
*Denotes management contract or compensatory plan or
arrangement required to be filed as an exhibit hereto.
ITEM 14. (Continued)
(a) 3. Exhibits
Exhibit No. Description
(10.4) * 1985 Stock Option Plan, as amended to date is
incorporated by reference to Exhibit (10.4) of the
Registrant's Form 10-K for the year ended December 31,
1991.
(10.5) * Management Incentive Plan, as amended to date, is
incorporated herein by reference to Exhibit (10.5) of
the Registrant's Form 10-K for the year ended December
31, 1990.
(10.6) * Supplemental Executive Retirement Plan is incorporated
herein by reference to Exhibit (10.6) of the
Registrant's Form 10-K for the year ended December 31,
1990.
(10.7) * 1990 Stock Incentive Plan is incorporated herein by
reference to Exhibit (28) of the Registrant's Form S-8
Registration Statement File No. 33-41434 under the
Securities and Exchange Act of 1933, filed June 28,
1991.
(10.8) * 1993 Stock Incentive Plan is incorporated herein by
reference to Exhibit I of the Registrant's Proxy
Statement filed March 17, 1994.
(10.9) * 1994 Restricted Stock Plan for Non-Employee Directors
is incorporated herein by reference to Exhibit II of
the Registrant's Proxy Statement filed March 17, 1994.
(10.10)* Form of Deferred Compensation Agreement.
(10.11)* American Home Products Savings Plan, as amended, is
incorporated herein by reference to Exhibit 99 of the
Registrant's Form S-8 Registration Statement File No.
33-50149 under the Securities and Exchange Act of 1933,
filed September 1, 1993.
(10.12)* American Home Products Corporation Retirement Plan for
Outside Directors, as amended on January 27, 1994.
(10.13) Sixth Amended and Restated Disclosure Statement
Pursuant to Section 1125 of the Bankruptcy Code, dated
March 28, 1988, among A.H. Robins Company,
Incorporated, Registrant and AHP Subsidiary (9)
Corporation is incorporated herein by reference to
Exhibit (2) of Registrant's Form 8-K dated December 15,
1989, filed December 30, 1989.
ITEM 14. (Continued)
(a) 3. Exhibits
Exhibit No. Description
(10.14) Purchase Agreement, dated as of April 6, 1990, between
Reckitt & Colman plc and Registrant is incorporated
herein by reference to Exhibit (2.1) of Registrant's
Form 8-K dated June 29, 1990, filed July 12, 1990.
(10.15) First Amendment, dated as of June 28, 1990, to the
Purchase Agreement is incorporated herein by reference
to Exhibit (2.2) of Registrant's Form 8-K dated June
29, 1990, filed July 12, 1990.
(10.16) Second Amendment, dated as of July 3, 1990, to the
Purchase Agreement is incorporated herein by reference
to Exhibit (2.3) of Registrant's Form 8-K dated June
29, 1990, filed July 12, 1990.
(10.17) Agreement and Plan of Merger dated as of September
19, 1991 among Genetics Institute, Inc. ("G.I."),
Registrant, AHP Biotech Holdings, Inc. and AHP Merger
Subsidiary Corporation, is incorporated herein by
reference to Exhibit (I) of Registrant's Schedule 13D
dated January 24, 1992 filed with respect to the common
stock of G.I. ("Schedule 13D").
(10.18) Depositary Agreement dated as of January 16, 1992 among
Registrant, AHP Biotech Holdings, Inc., G.I. and The
First National Bank of Boston, as Depositary, is
incorporated herein by reference to Exhibit (II) of the
Registrant's Schedule 13D.
(10.19) Governance Agreement dated as of January 16, 1992 among
Registrant, AHP Biotech Holdings, Inc. and G.I., is
incorporated herein by reference to Exhibit (III) of
the Registrant's Schedule 13D.
(11) Calculation of per share earnings as reported in
Note 10 to Consolidated Financial Statements on page 37
of the Company's 1993 Annual Report to Shareholders is
incorporated herein by reference.
(13) 1993 Annual Report to Shareholders. Such report,
except for those portions thereof which are expressly
incorporated by reference herein, is furnished solely
for the information of the Commission and is not to be
deemed "filed" as part of this filing.
(21) Subsidiaries of the Registrant.
ITEM 14. (Continued)
(a) 3. Exhibits
Exhibit No. Description
(23) Consent of Independent Public Accountants relating to
their report dated January 18, 1994, consenting to the
incorporation thereof in Registration Statements on
Form S-3 (File No. 33-45324) and on Form S-8 (File No.,
33-24068, 33-41434, 33-50149 and 33-55456) by reference
to the Form 10-K of the Registrant filed for the year
ended December 31, 1993.
(99) Part I Item 3 of Genetics Institute, Inc.'s Annual
Report on Form 10-K (SEC File No. 0-14587) for the year
ended November 30, 1993 is incorporated herein by
reference.
(b) Reports on Form 8-K
No reports on Form 8-K were filed during the fourth quarter of
the year ended December 31, 1993.
REPORT OF INDEPENDENT PUBLIC ACCOUNTANTS
To American Home Products Corporation:
We have audited in accordance with generally accepted auditing
standards, the consolidated financial statements included in American
Home Products Corporation's Annual Report to Shareholders incorporated
by reference in this Form 10-K, and have issued our report thereon dated
January 18, 1994. Our audit was made for the purpose of forming an
opinion on those statements taken as a whole. The schedules listed in
the accompanying index are the responsibility of the Company's
management and are presented for purposes of complying with the
Securities and Exchange Commission's rules and are not part of the basic
financial statements. These schedules have been subjected to the
auditing procedures applied in the audit of the basic financial
statements and, in our opinion, fairly state in all material respects
the financial data required to be set forth therein in relation to the
basic financial statements taken as a whole.
ARTHUR ANDERSEN & CO.
New York, New York
January 18, 1994
SCHEDULE V
American Home Products Corporation and Subsidiaries
Schedule V -- Property, Plant and Equipment
For the Years Ended December 31, 1993, 1992 and 1991
(Dollars in thousands)
Column A Column B Column C Column D Column E Column F
Currency
Balance Translation Balance
at Adjustment at
Beginning Additions Retire- Add End of
Classification of Period at Cost ments (Deduct) Period
Year Ended
12/31/93:
Land $79,881 $17,463 $8,186 $217 $89,375
Buildings 1,292,741 218,779 20,310 (17,797) 1,473,413
Machinery and
Equipment 1,460,538 212,716 32,846 (20,872) 1,619,536
Furniture and
Fixtures 223,733 68,954 12,542 (2,104) 278,041
---------- -------- -------- -------- ----------
$3,056,893 $517,912 $73,884 ($40,556) $3,460,365
========== ======== ======== ======== ==========
Year Ended
12/31/92:
Land $61,433 $20,338 $683 ($1,207) $79,881
Buildings 1,076,708 276,776 36,606 (24,137) 1,292,741
Machinery and
Equipment 1,327,571 218,666 63,652 (22,047) 1,460,538
Furniture and
Fixtures 193,520 39,508 6,566 (2,729) 223,733
---------- -------- -------- -------- ----------
$2,659,232 $555,288 $107,507 ($50,120) $3,056,893
========== ======== ======== ======== ==========
Year Ended
12/31/91:
Land $51,787 $11,388 $1,030 ($712) $61,433
Buildings 1,046,677 69,130 26,631 (12,468) 1,076,708
Machinery and
Equipment 1,264,319 123,284 47,231 (12,801) 1,327,571
Furniture and
Fixtures 170,039 34,336 8,734 (2,121) 193,520
---------- -------- ------- -------- ----------
$2,532,822 $238,138 $83,626 ($28,102) $2,659,232
========== ======== ======= ======== ==========
SCHEDULE VI
American Home Products Corporation and Subsidiaries
Schedule VI -- Accumulated Depreciation of
Property, Plant and Equipment
For the Years Ended December 31, 1993, 1992 and 1991
(Dollars in thousands)
Column A Column B Column C Column D Column E Column F
Additions Currency
Balance Charged Translation Balance
at to Costs Adjustment at
Beginning and Retire- Add End of
Description of Period Expenses ments (Deduct) Period
Year Ended
12/31/93:
Buildings $378,776 $50,091 $14,499 ($3,085) $411,283
Machinery and
Equipment 774,893 108,103 29,745 (9,466) 843,785
Furniture and
Fixtures 125,433 32,722 11,457 (1,186) 145,512
---------- -------- ------- -------- ----------
$1,279,102 $190,916 $55,701 ($13,737) $1,400,580
========== ======== ======= ======== ==========
Year Ended
12/31/92:
Buildings $354,574 $49,805 $20,325 ($5,278) $378,776
Machinery and
Equipment 723,762 105,485 43,048 (11,306) 774,893
Furniture and
Fixtures 104,055 28,291 5,424 (1,489) 125,433
---------- -------- ------- -------- ----------
$1,182,391 $183,581 $68,797 ($18,073) $1,279,102
========== ======== ======= ======== ==========
Year Ended
12/31/91:
Buildings $332,841 $34,730 $8,652 ($4,345) $354,574
Machinery and
Equipment 671,207 95,968 36,022 (7,391) 723,762
Furniture and
Fixtures 91,384 22,248 8,293 (1,284) 104,055
---------- -------- ------- -------- ----------
$1,095,432 $152,946 $52,967 ($13,020) $1,182,391
========== ======== ======= ======== ==========
Rates of depreciation range from 2 to 20 percent for buildings, 6 2/3 to
33 1/3 percent for machinery and equipment and 5 to 33 1/3 percent for
furniture and fixtures.
SCHEDULE VIII
American Home Products Corporation and Subsidiaries
Schedule VIII -- Valuation and Qualifying Accounts
For the Years Ended December 31, 1993, 1992 and 1991
(Dollars in thousands)
Column A Column B Column C Column D Column E
Additions
Balance Charged Balance
at to Costs at
Beginning and Deductions End of
Description of Period Expenses (A) Period
Year ended 12/31/93:
Valuation and qualifying accounts -
Allowance for doubtful
accounts $23,702 $7,101 $5,172 $25,631
Allowance for cash discounts 15,203 148,013 142,898 20,318
Allowance for deferred tax
assets 101,324 -- 9,961 91,363
---------- -------- -------- ----------
$140,229 $155,114 $158,031 $137,312
========== ======== ======== ==========
Liability for loss contin-
gencies and additional taxes $511,679 $41,899 $138,050 $415,528
Liability for self-insurance
claims 269,413 38,284 38,302 269,395
Accrued postretirement
benefit obligation 250,355 37,754 23,556 264,553
---------- -------- -------- ----------
$1,031,447 $117,937 $199,908 $949,476
========== ======== ======== ==========
Year ended 12/31/92:
Valuation and qualifying accounts -
Allowance for doubtful
accounts $25,865 $5,147 $7,310 $23,702
Allowance for cash discounts 11,554 132,227 128,578 15,203
Allowance for deferred tax
assets -- 101,324(B) -- 101,324
---------- -------- -------- ----------
$37,419 $238,698 $135,888 $140,229
========== ======== ======== ==========
Liability for loss contin-
gencies and additional taxes $550,734 $90,295 $129,350 $511,679
Liability for self-insurance
claims 258,436 32,129 21,152 269,413
Accrued postretirement
benefit obligation 129,084 121,271(C) -- 250,355
---------- -------- -------- ----------
$938,254 $243,695 $150,502 $1,031,447
========== ======== ======== ==========
cont'd
Column A Column B Column C Column D Column E
Additions
Balance Charged Balance
at to Costs at
Beginning and Deductions End of
Description of Period Expenses (A) Period
Year ended 12/31/91:
Valuation and qualifying accounts -
Allowance for doubtful
accounts $26,591 $7,066 $7,792 $25,865
Allowance for cash discounts 7,657 119,839 115,942 11,554
---------- -------- -------- ----------
$34,248 $126,905 $123,734 $37,419
========== ======== ======== ==========
Liability for loss contin-
gencies and additional taxes $458,628 $157,304 $65,198 $550,734
Liability for self-insurance
claims 268,449 21,984 31,997 258,436
Accrued postretirement
benefit obligation 103,500 25,584 -- 129,084
---------- -------- -------- ----------
$830,577 $204,872 $97,195 $938,254
========== ======== ======== ==========
(A) Represents amounts used for the purposes for which the accounts
were created and reversal of amounts no longer required.
(B) Established upon the adoption of Statement of Financial Accounting
Standards ("SFAS") No. 109, "Accounting for Income Taxes" as
disclosed in Note 9 on pages 36 and 37 of the Company's 1993 Annual
Report to Shareholders.
(C) Includes the cumulative effect of adopting SFAS No. 106,
"Employers' Accounting for Postretirement Benefits Other Than
Pensions" as disclosed in Note 4 on pages 33, 34 and 35 of the
Company's 1993 Annual Report to Shareholders.
SCHEDULE IX
American Home Products Corporation and Subsidiaries
Schedule IX -- Short-term Borrowings
For the Years Ended December 31, 1993, 1992 and 1991
(Dollars in thousands)
Column A Column B Column C Column D Column E Column F
Average Weighted
Maximum Amount Average
Amount Out- Interest
Category Out- standing Rate
of Weighted standing During During
Aggregate Balance Average During the the
Short-term at End Interest the Period Period
Borrowings Of Period Rate Period (A) (B)
Commercial Paper
1993 $0 -- -- -- --
1992 0 -- $159,500 $17,361 3.2%
1991 0 -- 665,157 214,695 5.9%
(A) Average daily amount outstanding.
(B) Weighted as to principal amount and days outstanding.
SCHEDULE X
American Home Products Corporation and Subsidiaries
Schedule X -- Supplementary Income Statement Information
For the Years Ended December 31, 1993, 1992 and 1991
(Dollars in thousands)
Item Charged to Costs and Expenses
1993 1992 1991
Maintenance and repairs $159,630 $153,001 $142,939
======== ======== ========
Amortization of intangible
assets, pre-operating costs
and similar deferrals (A) * $246,632 *
======== ======== ========
Taxes, other than payroll
and income taxes * * *
======== ======== ========
Royalties $94,475 $97,499 $84,708
======== ======== ========
Advertising costs $613,576 $601,798 $553,641
======== ======== ========
*Less than 1% of sales
(A) Amortization of intangible assets in 1992 reflects the special
charge of $220,000 discussed in Note 2 on page 32 of the Company's
1993 Annual Report to Shareholders.
SIGNATURES
Pursuant to the requirements of Section 13 or 15(d) of the Securities
Exchange Act of 1934, the Registrant has duly caused this Annual Report
to be signed on its behalf by the undersigned, thereunto duly
authorized.
AMERICAN HOME PRODUCTS CORPORATION
(Registrant)
March 24, 1994 By /S/ Robert G. Blount
Robert G. Blount
Executive Vice President
Pursuant to the requirements of the Securities Exchange Act of 1934,
this report has been signed below by the following persons on behalf of
the Registrant and in the capacities and on the dates indicated.
Signatures Title Date
Principal Executive Officer:
/S/ John R. Stafford Chairman, President March 24, 1994
John R. Stafford and Chief Executive
Officer
Principal Financial Officer:
/S/ Robert G. Blount Executive Vice President March 24, 1994
Robert G. Blount and Director
Principal Accounting Officer:
/S/ John R. Considine Vice President - Finance March 24, 1994
John R. Considine
A Majority of Directors:
/S/ Clifford L. Alexander, Jr. Director March 24, 1994
Clifford L. Alexander, Jr.
/S/ Frank A. Bennack, Jr. Director March 24, 1994
Frank A. Bennack, Jr.
/S/ K. Roald Bergethon Director March 24, 1994
K. Roald Bergethon
SIGNATURES (continued)
Signatures Title Date
/S/ John W. Culligan Director March 24, 1994
John W. Culligan
/S/ Robin Chandler Duke Director March 24, 1994
Robin Chandler Duke
/S/ John D. Feerick Director March 24, 1994
John D. Feerick
/S/ Edwin A. Gee Director March 24, 1994
Edwin A. Gee
/S/ William F. Laporte Director March 24, 1994
William F. Laporte
/S/ Robert W. Sarnoff Director March 24, 1994
Robert W. Sarnoff
/S/ John R. Torell III Director March 24, 1994
John R. Torell III
/S/ William Wrigley Director March 24, 1994
William Wrigley
EXHIBIT (21)
SUBSIDIARIES OF THE REGISTRANT
DECEMBER 31, 1993
State or Country of
Name Incorporation
Domestic
AH Investments Ltd. Delaware
A.H. Robins Company, Inc. Virginia
A.H. Robins International Company Nevada
AHP Subsidiary Holding Corporation Delaware
AHP Subsidiary (10) Corporation Delaware
American Home Food Products, Inc. Delaware
Ayerst Laboratories Incorporated New York
Ayerst-Wyeth Pharmaceuticals Inc. Delaware
Corometrics Medical Systems, Inc. Delaware
Genetics Institute, Inc. Delaware
Quinton Instrument Company Washington
Route 24 Holdings, Inc. Delaware
Sherwood Medical Company Delaware
Symbiosis Corp. Florida
Vermont Whey Company Vermont
Viobin Corporation Illinois
Whitehall Laboratories Inc. Delaware
Wyeth-Ayerst International Inc. New York
Wyeth Laboratories Inc. New York
Wyeth Nutritionals Inc. Delaware
Wyeth-Ayerst (Asia) Limited Delaware
Foreign
AHP Holdings B.V. Netherlands
American Drug Corporation Panama
American Home Investments (Hong Kong) Limited Hong Kong
Ayerst International S.A. France
Brenner-EFEKA Pharma G.m.b.H. Germany
Whitehall Italia SpA Italy
Laboratorios Wyeth Whitehall Ltda. Brazil
Much Pharma A.G. Germany
Sherwood Medical Industries Limited England
Sherwood Medical Industries of Ireland Ltd. Ireland
Whitehall Laboratories Limited England
Whitehall-Robins Canada, Inc. Canada
Wyeth (Japan) Corporation Japan
John Wyeth & Brother Limited England
Wyeth-Ayerst Canada, Inc. Canada
Wyeth Hong Kong, Ltd. Hong Kong
Wyeth-Pharma G.m.b.H. Germany
Wyeth Pharmaceuticals Pty. Limited Australia
Wyeth S.A. de C.V. Mexico
Wyeth S.p.A. Italy
Wyeth-Philippines Inc. Philippines
There have been omitted from the above list the names of subsidiaries
which, considered in the aggregate as a single subsidiary, would not
constitute a significant subsidiary.