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SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 11-K
ANNUAL REPORT
Pursuant to Section 15 (d)
of the Securities Exchange Act of 1934
for the year ended December 31, 2000
AMERICAN HOME PRODUCTS CORPORATION SAVINGS PLAN - PUERTO RICO
(Full title of the Plan)
AMERICAN HOME PRODUCTS CORPORATION
(Name of Issuer of the securities held pursuant to the Plan)
Five Giralda Farms
Madison, New Jersey 07940
(Address of principal executive office)
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SIGNATURE
---------
Pursuant to the requirements of the Securities Exchange Act of 1934, the
registrant has duly caused this annual report to be signed on its behalf by the
undersigned, thereunto duly authorized.
AMERICAN HOME PRODUCTS CORPORATION
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(Registrant)
By: /s/ Paul J. Jones
------------------------------
Paul J. Jones
Vice President and Comptroller
Date: June 5, 2001
SIGNATURE
---------
Pursuant to the requirements of the Securities Exchange Act of 1934, the
American Home Products Corporation Savings Plan Committee has duly caused this
annual report to be signed on its behalf by the undersigned, thereunto duly
authorized.
AMERICAN HOME PRODUCTS CORPORATION
SAVINGS PLAN - PUERTO RICO
By: /s/ Thomas M. Nee
---------------------------
Thomas M. Nee
Chairman of the American Home
Products Corporation Savings
Plan Committee
Date: June 5, 2001
AMERICAN HOME PRODUCTS CORPORATION
SAVINGS PLAN - PUERTO RICO
FINANCIAL STATEMENTS
AS OF DECEMBER 31, 2000 and 1999
TOGETHER WITH REPORT OF INDEPENDENT PUBLIC ACCOUNTANTS
EMPLOYER IDENTIFICATION NUMBER - 13-2526821
PLAN NUMBER - 060
AMERICAN HOME PRODUCTS CORPORATION
SAVINGS PLAN - PUERTO RICO
DECEMBER 31, 2000 and 1999
INDEX
Page
----
Report of Independent Public Accountants
Statements of Net Assets Applicable to Participants'
Equity as of December 31, 2000 and 1999 1
Statement of Changes in Net Assets Applicable
to Participants' Equity for the Year Ended
December 31, 2000 2
Notes to Financial Statements 3 - 8
Supplemental Schedule:
I. Item 4i - Schedule of Assets Held for
Investment Purposes as of December 31, 2000 Schedule I
Consent of Independent Public Accountants
REPORT OF INDEPENDENT PUBLIC ACCOUNTANTS
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To the Participants and Savings Plan Committee of the American Home Products
Corporation Savings Plan - Puerto Rico:
We have audited the accompanying statements of net assets applicable to
participants' equity of the American Home Products Corporation Savings Plan -
Puerto Rico as of December 31, 2000 and 1999, and the related statement of
changes in net assets applicable to participants' equity for the year ended
December 31, 2000. These financial statements and the supplemental schedule
referred to below are the responsibility of the Plan's management. Our
responsibility is to express an opinion on these financial statements and
schedule based on our audits.
We conducted our audits in accordance with auditing standards generally
accepted in the United States. Those standards require that we plan and perform
the audit to obtain reasonable assurance about whether the financial statements
are free of material misstatement. An audit includes examining, on a test
basis, evidence supporting the amounts and disclosures in the financial
statements. An audit also includes assessing the accounting principles used and
significant estimates made by management, as well as evaluating the overall
financial statement presentation. We believe that our audits provide a
reasonable basis for our opinion.
In our opinion, the financial statements referred to above present fairly, in
all material respects, the net assets applicable to participants' equity of the
American Home Products Corporation Savings Plan - Puerto Rico as of December 31,
2000 and 1999, and the changes in its net assets applicable to participants'
equity for the year ended December 31, 2000, in conformity with accounting
principles generally accepted in the United States.
Our audits were performed for the purpose of forming an opinion on the basic
financial statements taken as a whole. The supplemental schedule of assets held
for investment purposes is presented for purposes of additional analysis and is
not a required part of the basic financial statements but is supplementary
information required by the Department of Labor's Rules and Regulations for
Reporting and Disclosure under the Employee Retirement Income Security Act of
1974. The supplemental schedule has been subjected to the auditing procedures
applied in the audits of the basic financial statements and, in our opinion, is
fairly stated in all material respects in relation to the basic financial
statements taken as a whole.
ARTHUR ANDERSEN LLP
New York, New York
June 5, 2001
American Home Products Corporation Savings Plan - Puerto Rico
Statements of Net Assets Applicable to Participants' Equity
As of December 31, 2000 and 1999
December 31,
2000 1999
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Assets:
Investments, at fair value $45,777,371 $40,086,702
Loans to participants 5,377,825 5,166,908
Receivables:
Employer contribution 91,547 102,179
Participant contribution 280,540 323,540
Loan repayment 107,017 138,741
Due from broker for securities sold 445,259 1,822
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Total receivables 924,363 566,282
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Cash and cash equivalents 666,284 823,715
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Net Assets Applicable to Participants' Equity $52,745,843 $46,643,607
=========== ===========
The accompanying notes to financial statements are an integral part of these
statements.
- 1 -
American Home Products Corporation Savings Plan - Puerto Rico
Statement of Changes in Net Assets Applicable to Participants' Equity
For The Year Ended December 31, 2000
Additions to net assets attributed to:
Investment Income:
Net appreciation in market value
of investments $5,593,203
Interest 1,047,278
Dividends 983,191
-----------
Total investment income 7,623,672
Contributions:
Employer 1,947,291
Participant 6,168,304
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Total contributions 8,115,595
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Total additions 15,739,267
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Deductions from net assets attributed to:
Benefits paid to participants 5,759,380
Transfer out of Plan 3,877,651
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Total deductions 9,637,031
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Net additions 6,102,236
Net Assets Applicable to Participants'
Equity:
Beginning of Year 46,643,607
-----------
End of Year $52,745,843
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The accompanying notes to financial statements are an integral part of this
statement.
- 2 -
AMERICAN HOME PRODUCTS CORPORATION
SAVINGS PLAN - PUERTO RICO
NOTES TO FINANCIAL STATEMENTS
NOTE 1 - PLAN DESCRIPTION
----------------
The following description of the American Home Products Corporation Savings Plan
- - Puerto Rico (the "Plan") only provides general information. Participants of
the Plan should refer to the Plan Document for a more detailed and complete
description of the Plan's provisions.
General
- -------
The Plan, a defined profit sharing contribution plan, was approved and adopted
by the Board of Directors of American Home Products Corporation ("AHPC" or the
"Company") and became effective on January 1, 1993. Full or part-time employees
of the Company and its participating subsidiaries who reside in Puerto Rico and
are not subject to a collective bargaining agreement ("non-union") are eligible
to participate in the Plan after attaining age 21, as defined in the Plan. The
Plan is subject to the provisions of the Employee Retirement Income Security Act
of 1974 ("ERISA"), as amended, and the Puerto Rico Internal Revenue Code (the
"PR Code").
In connection with the sale of the Cyanamid Agricultural Products business on
June 30, 2000, the assets attributable to active participants from this business
were transferred out of the Plan effective July 31, 2000 and totaled $3,877,651.
Contributions
- -------------
Participants may elect to make contributions to the Plan in whole percentages up
to a maximum of 16% of their covered compensation, as defined. Contributions can
be made on a before-tax basis ("salary deferral contributions"), an after-tax
basis ("after-tax contributions"), or a combination of both. AHPC will
contribute an amount equal to 50% of the participant's contributions to the Plan
for contributions up to 6% of the participant's covered compensation.
Participants direct the investment of their contributions into various
investment options offered by the Plan. Under the PR Code, total annual salary
deferral contributions that can be included for Plan purposes are subject to
annual limitations.
Vesting and Separation From Service
- -----------------------------------
Participants are fully vested at all times in their salary deferral and
after-tax contributions plus actual earnings thereon. A participant is also
fully vested in Company matching contributions if the participant has at least
five years of continuous service, as defined. If participants have less than
five years of continuous service, such participants become vested in their
Company matching contributions according to the following schedule:
- 3 -
Vesting
Years of Continuous Service Percentage
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1 year completed 0%
2 years completed 25%
3 years completed 50%
4 years completed 75%
5 years completed 100%
Regardless of the number of years of continuous service, participants shall be
fully vested in their Company matching contributions account upon reaching age
65 or upon death, if earlier. If employment is terminated prior to full vesting,
the non-vested portion of the Company matching contributions is forfeited and
becomes available to satisfy future Company matching contributions. During 2000,
forfeitures of $60,205 were used to offset Company matching contributions. As of
December 31, 2000, the amount of forfeitures available to offset future Company
matching contributions totaled $14,565.
Distributions
- -------------
Participants are entitled to withdraw all or any portion of their after-tax
contributions. Participants may make full or partial withdrawals of funds in any
of their accounts upon attaining age 59 1/2 or for financial hardship, as
defined in the Plan Document, before that age. Participants may qualify for
hardship withdrawals if they have an immediate and heavy financial need, as
determined by the AHPC Savings Plan Committee - Puerto Rico (the "Committee").
Participants are limited to one non-hardship and one hardship withdrawal each
year. Participants may make hardship withdrawals provided they have no other
funds that are readily available to meet that need.
Upon termination of employment, participants are entitled to a lump-sum
distribution of their vested account balance. An election can be made to defer
the distribution if the participant's account balance is greater than $5,000 and
if the participant is less than 70 1/2 years of age.
Loans
- -----
Employees who have a vested account balance of at least $2,000 may borrow from
the vested portion of their account, subject to certain maximum amounts.
Participants in the Plan may borrow up to 50% of their vested account balances.
Each loan is secured by the borrower's vested interest in their account balance.
Participants may have outstanding up to two general purpose loans and one loan
to acquire or construct a principal residence. All loans must be repaid within 5
years except for those used to acquire or construct a principal residence, which
must be repaid within 15 years. Defaults on participants' loans during the year
are treated as withdrawals and are fully taxable to the participants. The
interest rate charged on loans provides a return commensurate with a market
rate, or such other rate as permitted by government regulations as of the date
of the loan agreement.
- 4 -
NOTE 2 - ACCOUNTING POLICIES
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Basis of Accounting
- -------------------
The accompanying financial statements are prepared on the accrual basis of
accounting.
Investment Valuation
- --------------------
AHPC's common stock fund is recorded at the fair market value at December 31,
2000 and 1999. Shares in the Fidelity Funds and the MAS Value Portfolio are
recorded at fair market value, which is based on their published net asset value
at December 31, 2000 and 1999. The investment contracts comprising the Interest
Income Fund are recorded at contract value based upon information provided by
Fidelity Management Trust Company which approximates fair market value (see also
NOTE 3).
Investment transactions are recorded on a trade date basis. Net realized gains
and losses on investments are determined, for accounting purposes, on a moving
weighted average basis as of the trade date and are included in net appreciation
of investments in the Statement of Changes in Net Assets Applicable to
Participants' Equity. The net change in the difference between cost and current
market value of investments held is reflected in net appreciation in market
value of investments in the Statement of Changes in Net Assets Applicable to
Participants' Equity.
Administrative Costs
- --------------------
All costs and expenses of administering the Plan are paid by AHPC.
Use of Estimates
- ----------------
The financial statements have been prepared in accordance with accounting
principles generally accepted in the United States and necessarily include
amounts based on judgements and estimates made by management. Actual results
could differ from those estimates.
NOTE 3 - INVESTMENT ELECTIONS
--------------------
Participants can elect to invest amounts credited to their account in any of
eight investment funds and transfer amounts between funds at any time during the
year. Investment elections must be made in multiples of 10%. Transfers between
funds must be made in whole percentages and/or in an amount of at least $250.
- 5 -
The eight investment options are as follows:
Interest Income Fund - consists primarily of investment contracts issued by
life insurance companies which pay a specified rate of interest for a fixed
period of time and repay principal at maturity. The fund and its investment
contracts are guaranteed by the issuing insurance carrier, but not by the
Company or any federal agency. However, the Committee has established
guidelines that provide that investment contracts be placed with companies
rated Aa3 or higher by Moody's and AA- or higher by Standard & Poor's. The
interest rate payable to Plan participants in this fund will be a rate which
reflects a blend of the total investments made by the fund. The average
blended interest rate attributable to these contracts approximated 6.53% and
6.49% for 2000 and 1999, respectively.
AHPC Common Stock Fund - consists primarily of AHPC common stock. Purchases
and sales of AHPC common stock are made in the open market. Participants
have full voting rights for equivalent shares purchased at their direction
under the Plan.
Fidelity Magellan Fund - consists of shares in a mutual fund managed by
Fidelity Management & Research Company that seeks long-term capital
appreciation by actively managing investments in the stocks of companies
with above average growth potential.
Fidelity Balanced Fund - consists of shares in a mutual fund managed by
Fidelity Management & Research Company, which is invested in high yielding
securities, including common stocks, preferred stocks and bonds, with at
least 25% of the fund's assets in fixed income senior securities.
Fidelity International Growth & Income Fund - consists of shares in a mutual
fund managed by Fidelity Management & Research Company that seeks long-term
growth and current income by investing in assets, of which at least 65% are
in securities of issuers that have their principal business activities
outside of the United States.
Fidelity Spartan U.S. Equity Index Fund - consists of shares in a mutual
fund managed by Fidelity Management & Research Company that seeks to provide
investment results that correspond to the total return performance of the
stocks of companies that make up the Standard & Poor's 500 Index.
Fidelity Low-Priced Stock Fund - consists of shares in a mutual fund managed
by Fidelity Management & Research Company that invests primarily in domestic
and international small capitalization equities.
MAS Value Portfolio - consists of shares in a mutual fund managed by Miller
Anderson & Sherrerd which seeks long-term returns by investing in stocks of
large and mid-sized companies.
- 6 -
NOTE 4 - MANAGEMENT OF THE PLAN
----------------------
The Plan is administered by the Committee, which was appointed by the Board of
Directors of AHPC. Banco Popular de Puerto Rico is the Plan's trustee. Fidelity
Management Trust Company was appointed by the Committee as recordkeeper and
custodian, and is a party-in-interest to the Plan.
NOTE 5 - INCOME TAX STATUS
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Puerto Rico
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The Plan is designed to be a qualified profit-sharing plan under Section 165(a)
of the Puerto Rico Income Tax Act of 1954 (the "Act") and the trust established
under the Plan is intended to be tax-exempt under Section 165(a) of the Act. The
Company has obtained from the Puerto Rico Treasury Department a favorable
determination letter that covers all plan amendments through January 1, 1996.
The Plan has been amended since receiving the determination letter. However, the
Plan administrator believes that the Plan and the trust meet the requirements of
the Act. The principal income tax consequences of participation in the Plan are
discussed in the Summary Plan Description and the Plan Prospectus.
Federal Income Tax Status
- -------------------------
The Plan does not constitute a qualified profit-sharing plan under the
provisions of Section 401(a) of the Internal Revenue Code (the "Code") and the
"cash and deferred arrangement" incorporated in the Plan is not intended to
qualify under Section 401(k) of the Code. Pursuant to Section 1022(i)(1) of
ERISA, however, the trust established thereunder is exempt from Federal income
tax under Section 501(a) of the Code. An individual who is a bona fide resident
of Puerto Rico during the entire taxable year will not be subject to any Federal
income tax on income derived from sources within Puerto Rico. Additional Federal
income tax consequences are set forth in the Summary Plan Description.
NOTE 6 - PLAN TERMINATION
----------------
Although it has not expressed any intention to do so, the Company has the right
under the Plan to discontinue its contributions at any time and to terminate the
Plan subject to the provisions of ERISA. In the event of Plan termination,
participants will become 100% vested in their Company contribution accounts and
are entitled to full distribution of such amounts.
- 7 -
NOTE 7 - INVESTMENTS
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The fair market value of individual investments that represent 5% or more of the
Plan's total net assets are as follows:
2000 1999
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AHPC Common Stock Fund $14,130,660 $12,543,294
Fidelity Spartan U.S. Equity Index Fund $10,019,749 $10,856,231
Fidelity Balanced Fund $5,137,442 $5,798,485
Travelers Insurance $4,563,817 --
Fidelity Magellan Fund $4,001,439 $3,103,578
Monumental Life Insurance -- $2,436,930
During 2000, the Plan's investments (including gains and losses on investments
bought and sold, as well as held during the year) appreciated (depreciated) in
value by $5,593,203 as follows:
AHPC Common Stock Fund $7,496,080
Mutual Funds (1,902,877)
----------
Total $5,593,203
==========
- 8 -
Schedule I
American Home Products Corporation Savings Plan - Puerto Rico
Schedule H Item 4i - Schedule of Assets Held for Investment Purposes
As of December 31, 2000
Employer Identification Number - 13-2526821
Plan Number - 060
Identity of Issuer Description of Investment Current Value
- ------------------ ------------------------- -------------
Investment Contracts:
- ---------------------
AIG Life Insurance GIC 5.38% Due 12/15/04 $1,081,641
Allstate Life Insurance GIC 6.55% Due 12/16/02 1,520,872
Monumental Life Insurance GIC 6.95% Due 12/17/01 1,303,273
New York Life Insurance GIC 6.91% Due 12/15/04 1,622,192
Transamerica Life and Annuity GIC 6.08% Due 12/16/02 1,166,508
Travelers Insurance GIC 6.51% Due 12/15/06 4,563,817
-----------
Total Investments Comprising
the Interest Income Fund $11,258,303
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American Home Products
Corporation Common Stock* 222,355 shares $14,130,660
------------------------- -----------
* Represents a party-in-interest to the Plan
The accompanying notes to financial statements are an integral part of this
schedule.
Schedule I
(Continued)
American Home Products Corporation Savings Plan - Puerto Rico
Schedule H Item 4i - Schedule of Assets Held for Investment Purposes
As of December 31, 2000
Employer Identification Number - 13-2526821
Plan Number - 060
Identity of Issuer Description of Investment Current Value
- ------------------ ------------------------- -------------
Mutual Funds:
- -------------
Fidelity Management Trust Company* Magellan Fund
33,540 shares $4,001,439
-----------
Fidelity Management Trust Company* Balanced Fund
338,212 shares $5,137,442
-----------
Fidelity Management Trust Company* International Growth & Income
Fund
32,291 shares $733,652
-----------
Fidelity Management Trust Company* Spartan U.S. Equity Index Fund
214,051 shares $10,019,749
-----------
Fidelity Management Trust Company* Low-Priced Stock Fund
14,809 shares $342,383
-----------
Miller Anderson & Sherrerd MAS Value Portfolio
10,416 shares $153,743
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Total Investments Per
Statement of Net Assets
Applicable to Participants'
Equity $45,777,371
===========
Loans Receivable:
- -----------------
Loans to Plan Participants Rates ranging from 8.75% to 10.5%
Due through 2015 $5,377,825
-----------
* Represents a party-in-interest to the Plan
The accompanying notes to financial statements are an integral part of this
schedule.
CONSENT OF INDEPENDENT PUBLIC ACCOUNTANTS
-----------------------------------------
As independent public accountants, we hereby consent to the incorporation of our
report included in this Form 11-K into the American Home Products Corporation
previously filed Form S-3 Registration Statements Nos. 33-45324 and 33-57339,
S-4 Registration Statement No. 333-59642 and Form S-8 Registration Statements
Nos. 2-96127, 33-24068, 33-41434, 33-53733, 33-55449, 33-45970, 33-14458,
33-50149, 33-55456, 333-15509, 333-76939 and 333-59668.
ARTHUR ANDERSEN LLP
New York, New York
June 5, 2001