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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
(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
----------------------------------
(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
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
FINANCIAL STATEMENTS
AS OF DECEMBER 31, 2000 AND 1999
TOGETHER WITH REPORT OF INDEPENDENT PUBLIC ACCOUNTANTS
EMPLOYER IDENTIFICATION NUMBER - 13-2526821
PLAN NUMBER - 045
AMERICAN HOME PRODUCTS CORPORATION
SAVINGS PLAN
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
----------------------------------------
To the Participants and Savings Plan Committee of the American Home Products
Corporation Savings Plan:
We have audited the accompanying statements of net assets applicable to
participants' equity of the American Home Products Corporation Savings Plan 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 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 the purpose 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
Statements of Net Assets Applicable to Participants' Equity
As of December 31, 2000 and 1999
December 31,
2000 1999
-------------- --------------
Assets:
Investments, at fair value $2,076,223,888 $1,957,392,047
Loans to Participants 31,199,929 33,779,287
Receivables:
Employer contribution 1,276,810 1,443,453
Participant contribution 4,243,569 4,817,598
Loan repayment 497,117 582,411
Due from brokers for securities sold 15,203,211 0
-------------- --------------
Total receivables 21,220,707 6,843,462
-------------- --------------
Cash and cash equivalents 18,025,990 24,979,751
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Total Assets 2,146,670,514 2,022,994,547
-------------- --------------
Liability:
Due to broker for securities
purchased 0 4,480,221
-------------- --------------
Net Assets Applicable to Participants'
Equity $2,146,670,514 $2,018,514,326
============== ==============
The accompanying notes to financial statements are an integral part of these
statements.
-1-
American Home Products Corporation Savings Plan
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 $234,719,088
Interest 32,454,520
Dividends 48,123,928
--------------
Total investment income 315,297,536
Contributions:
Employer 32,654,096
Participant 115,806,287
--------------
Total contributions 148,460,383
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Rollovers into Plan 12,994,711
--------------
Total additions 476,752,630
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Deductions from net assets attributed to:
Benefits paid to participants 174,285,978
Transfer out of Plan 174,310,464
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Total deductions 348,596,442
--------------
Net additions 128,156,188
Net Assets Applicable to Participants'
Equity:
Beginning of Year 2,018,514,326
--------------
End of Year $2,146,670,514
==============
The accompanying notes to financial statements are an integral part of this
statement.
-2-
AMERICAN HOME PRODUCTS CORPORATION
SAVINGS PLAN
NOTES TO FINANCIAL STATEMENTS
NOTE 1 - PLAN DESCRIPTION
----------------
The following description of the American Home Products Corporation Savings Plan
(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 April 1, 1985. Full or part-time (U.S. paid)
employees of the Company and its participating subsidiaries who 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 Internal Revenue Code (the "Code").
On May 4, 1999, the AHPC Savings Plan Committee (the "Committee") approved that
the AHPC Solgar Union Profit Sharing be merged into the Plan. The balances were
transferred into the Plan on October 1, 1999 and became 100% vested prior to the
transfer.
In connection with the sale of Eurand America on April 1, 1999, the assets
attributable to participants from this business were transferred out of the
Plan.
In connection with the sale of Cyanamid Agricultural Products on June 30, 2000,
the assets attributable to active participants from this business were
transferred out of the Plan effective July 10, 2000 and totaled $174,310,464.
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 Code, salary deferral
contributions, total annual contributions, and the amount of compensation that
can be included for Plan purposes are subject to annual limitations.
-3-
Vesting and Separation From Service
- -----------------------------------
Participants are fully vested at all times in their salary deferral and
after-tax contributions and rollovers 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 the Company matching contributions according to the following
schedule:
Vesting
Years of Continuous Service Percentage
--------------------------- ----------
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 $1,868,252 were used to offset Company matching contributions. As
of December 31, 2000, the amount of forfeitures available to offset future
Company matching contributions totaled $493,553.
Distributions
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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
financial hardship withdrawals if they have an immediate and heavy financial
need, as determined by 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. Participants cannot make a hardship withdrawal of
the earnings on before-tax account balances which were credited to their
accounts on or after January 1, 1988.
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.
-4-
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.
NOTE 2 - ACCOUNTING POLICIES
-------------------
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 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
the Fidelity Management Trust Company (the "Trustee") 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
on 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.
-5-
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.
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 6.62% for 2000 and 6.51% for 1999.
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 that invests 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.
-6-
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.
NOTE 4 - MANAGEMENT OF THE PLAN
----------------------
The Plan is administered by the Committee, which was appointed by the Board of
Directors of AHPC. Fidelity Management Trust Company was appointed by the
Committee as Trustee, recordkeeper, and custodian, and is a party-in-interest to
the Plan.
NOTE 5 - FEDERAL INCOME TAX STATUS
-------------------------
The Plan obtained its latest determination letter on November 29, 1995, in which
the Internal Revenue Service stated that the Plan, as amended effective December
22, 1994, was in compliance with the applicable requirements of the Code. The
Plan has been amended since receiving the determination letter. However, the
plan administrator believes that the Plan, as currently designed, is being
operated in compliance with the applicable requirements of the Code.
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.
NOTE 7 - INVESTMENTS
-----------
The fair market value of individual investments that represent 5% or more of the
Plan's total net assets are as follows:
2000 1999
---- ----
AHPC Common Stock Fund $686,541,905 $544,470,548
Fidelity Spartan U.S. Equity Index Fund $363,088,454 $442,357,983
Fidelity Magellan Fund $287,934,722 $279,012,224
Fidelity Balanced Fund $144,037,045 $158,402,635
-7-
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 $234,719,088 as follows:
AHPC Common Stock Fund $330,691,457
Mutual Funds (95,972,369)
------------
Total $234,719,088
============
-8-
Schedule I
American Home Products Corporation Savings Plan
Schedule H Item 4i - Schedule of Assets Held
for Investment Purposes
As of December 31, 2000
Employer Identification Number - 13-2526821
Plan Number - 045
Identity of Issuer Description of Investment Current Value
- ------------------ ------------------------- --------------
Investment Contracts:
- ---------------------
Allstate Life Insurance GIC 6.75% Due 3/15/02 $33,439,925
American International Life GIC 5.53% Due 12/17/01 14,386,402
Canada Life Insurance GIC 7.20% Due 9/15/05 20,396,268
John Hancock Mutual Life Insurance GIC 7.05% Due 9/28/01 26,068,061
GIC 5.80% Due 2/13/04 23,007,299
GIC 6.05% Due 12/15/04 17,114,565
Massachussetts Mutual Life
Insurance GIC 6.82% Due 9/15/03 16,492,082
Metropolitan Life Insurance GIC 7.00% Due 12/15/02 24,989,457
Monumental Life Insurance GIC 6.10% Due 10/01/01 9,439,628
GIC 6.56% Due 6/15/03 23,512,663
New York Life Insurance GIC 7.10% Due 12/15/05 32,220,451
Pacific Mutual Life Insurance GIC 6.06% Due 6/28/01 15,991,587
GIC 7.05% Due 6/13/02 13,234,594
GIC 6.73% Due 9/14/02 31,993,705
Principal Mutual Life Insurance GIC 6.40% Due 12/17/01 18,449,199
GIC 5.65% Due 12/31/02 16,277,690
Security Life of Denver GIC 7.05% Due 6/15/02 19,135,200
Travelers Insurance GIC 7.40% Due 3/15/05 21,456,040
GIC 7.05% Due 6/15/05 77,780,570
SEI Financial Management Collective Trust 6.47% 28,285,611
------------
Total Investments Comprising
the Interest Income Fund $483,670,997
------------
The accompanying notes to financial statements are an integral part of this
schedule.
Schedule I
(Continued)
American Home Products Corporation Savings Plan
Schedule H Item 4i - Schedule of Assets Held
for Investment Purposes
As of December 31, 2000
Employer Identification Number - 13-2526821
Plan Number - 045
Identity of Issuer Description of Investment Current Value
- ------------------ ------------------------- --------------
American Home Products*
Corporation Common Stock 10,803,946 shares $686,541,905
------------------------ --------------
Mutual Funds:
- -------------
Fidelity Management Trust Company* Magellan Fund
2,413,534 shares $287,934,722
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Fidelity Management Trust Company* Balanced Fund
9,482,359 shares $144,037,045
--------------
Fidelity Management Trust Company* International Growth & Income
Fund
2,922,692 shares $66,403,570
--------------
Fidelity Management Trust Company* Spartan U.S. Equity Index Fund
7,756,642 shares $363,088,454
--------------
Fidelity Management Trust Company* Low-Priced Stock Fund
1,306,989 shares $30,217,607
--------------
Miller Anderson & Sherrerd MAS Value Portfolio
970,839 shares $14,329,588
--------------
Total Investments Per
Statement of Net Assets
Applicable to Participants'
Equity $2,076,223,888
==============
Loans Receivable:
- -----------------
Loans to Plan Participants Rates ranging from 6.5% to 11%
Due through 2015 $31,199,929
==============
* 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