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CYANAM ID ... -.. ...,..** 'll; $ * ... v * -v fe,- vCA.*--' &*'$:-------- " "" ' (i > ** ^ i 4 r * 1j i.* ' '.* -`jsi -i v * t * * _ ^`1"~ Report ofthe BoardofDirectors^"'? ' -: fortheYearEndedDecember 3ih971 l.J --- -'V-UV .> ?!?&. --zj . i Ti? 4v' : : -A .......4 '.S. ,' . A f^tT , Ifffcs^sV1 Fv-i \ ;^js%?:- " Letter to the Shar_e_hold-e. i ' Vjss^vg- * Fv, -6. <? - &_ i_ let's**; t4i."h NKIS*3s' '..- *~fct'VY*Vear=in'Revie* w!?-^ -''"dsar* ^IjZ- J.-~i tPrincIpaflSubsidiaries >.l FINANCIAL HIGHLIGHTS (Dollars in thousands except earnings and dividends per common share) Operating Results 1971 Sales............................................................................................... $1,283,485 Earnings (exclusive of extraordinary gain) before taxes . . . 156,411 Earnings (exclusive of extraordinary gain) after taxes . . . . 94,111 Gain arising from sale of investment in associated companies - Net earnings................................................................................ 94,111 Dividends on common stock paid in cash................................... 59.422 Earnings per share (exclusive of extraordinary gain) . . . . 1.95 Extraordinary gain per share....................................................... Net earnings per share common stock........................................ 1.95 Dividends per share common stock (not restated).................... 1.25 Depreciation and depletion............................................................ 63,615 Expenditures for capital additions............................................. 110.869 Year-End Position Total assets..................................................................................... Funded debt ................................................................................ 213,198 Shareholders' equity...................................................................... 845.525 Shares outstanding at end of year: common stock (excluding treasury shares).............................. 48,360.296 1970* $1,256,57i 160.40' 92.53 5.37 97,9.3; 57.93 13 2.0 59.89 94 > $1,169. 118 803 47,902 Number of shareholders (not restated for 1970)......................... Number of employees................................................................. 111,845 41,385 1970 restated to include the accounts of Shulton, Inc, on a pooling of interests basis and the adoption of equity accounting for investments in associated companies. 118 41 Contributions of Major Segments to Sales and Earnings Sales Earnings (approx.) WSvSiflll -, ^Cyanantld jo %' , :-dfversif5ed,:,c*>r- ^.cpmpanyija growth areas of -and respohsfve'U .. . ..... needs throughout the worfdTc ythe cover,' Cyanairttfs" rtjr,,_ .; markets are depicted, ` clocfe;| , Building & Consumer . ';wfee, beginning at the top lefts? Medical ' Medical, Building* and .Cbh-ci/jp sumer, Agricultural, .Chemical; * - ^ Agricultural .-..and Land DeVelopJt>enl?4iKJ? .: Building,: Chemical r.iya Equity in .>->ty55 Unconsolidated ,823 Companies *-*:!^ =~W 20% 33% 18% 29% 1971 33% 19% 3 18% 20% 1970 21% 35% 12.V^ ^ 16% 1971 18% 34% 18% ,4 <0'i . 17% ''I' -vW^'} 1970 CY0005421 To Our Shareholders: Cyanamid's worldwide sales, appearing on the preceding page, reached another new high in 1971, registering a slight in crease over those of 1970. Earnings rose modestly also. Detailed results by quarters appear in the Financial Review section of this report. There were a numlxT of factors in volved in the earnings rise. In addition to the increase in sales volume, the earnings achieved in our new land development and building business were substantially higher than a year ago. In the fourth quarter we also benefited from the recently enacted investment tax credit and from exchange gains resulting from revaluation of foreign currencies in relation to the dollar. There were adverse factors as well. Among them were lower selling prices than in 1970, principally for some of the antibiotics, and shelf-stock adjustments resulting from the action by the Food and Drug Administration late in the year to decertify Achrocidin tetracyclineantihistamine-analgesic compound. Costs were higher also, with inflationary pres sures penalizing our continued stringent Clifford D. Siverd, President and ChiefExecutive Officer efforts to control expenses. Expenditures for advertising and sales promotion for consumer products were increased, and there were exchange losses resulting from devaluation of several Latin American currencies. Further, interest costs were higher, primarily because of our issuance of $100 million 30-year 7-3/8% debentures, the company's first domestic debt financing sold to the public. The proceeds were used to reduce short-term bank borrowings incurred to finance a portion of our capital expenditures and to aug ment working capital. Finally, tropical storm Doria, which struck New Jersey in late August, resulted in extensive losses at Bound Brook and the Shulton plant in Clifton. Fortunately, these negative fac tors were more than offset by those on the favorable side. During 1971 Cyanamid continued its expansion in the field of consumer products with completion of the Shulton merger in April, and consumer and consumer-promotable products now account for about one-third of total Cyanamid sales. A number of smaller organizations also became a part of the Cyanamid family during the year, as mentioned in the Year in Review section of this report. While aggressively pursuing such further expansion into growth areas of the economy, Cyanamid is not neglecting its program of determined belt-tightening to counter inflationary pressures. Further progress was made during 1971 in staff reductions through organizational con solidations and streamlining of opera tions, and also in withdrawing from marginal business areas and product lines. Formica Corporation completed phasing out its unprofitable industrial laminates business, and the obsolete plants for producing titanium dioxide at Piney River, Virginia, and upgraded phosphate products at Brewster, Florida, were closed. Regular production of certain unprofitable rayon textile prod ucts was discontinued. The small regional Preen floor-wax business was sold. Moves such as these--part of a continuing program--leave Cyanamid free to con centrate its efforts in the established areas in which it chooses to remain and in the CY0005422 new fields into which it has been moving. Capital expenditures were approx imately $111 million in 1971 compared to $94 million in 1970. Along with its business activities, Cyanamid remains fully responsive to its social responsibilities. Its activities in pollution control, minority hiring, and support of educational, health, and wel fare organizations are outlined later in this report. A significant recent development in the antibiotics litigation is the decision on January 24,1972, of the Supreme Court of the United States affirming the reversal by the United States Court of Appeals in New York of the 1967 antitrust conviction of Cyanamid, Pfizer, and Bristol-Myers. While we do not know whether the government will retry this old case, we are extremely gratified over the decision. The year brought a number of impor tant management changes. In April, following the Shulton merger, George L,, Schultz, chairman of the board of Shulton, was elected a Cyanamid director. In July, James G. Affleck and Borden R. Putnam were elected vice presidents, and Richard L. Martino was elected controller. Previously, Dr. Affleck and Mr. Putnam had been general managers of the Agricultural and the Lederle Laboratories Divisions, respectively, and Mr. Martino had been budget director. At the end of the year, Robert C. Swain and Gordon C. Walker, each of whom was an executive vice president, a director, and a member of the Executive Com mittee, with Mr. Walker a member of the Finance Committee also, elected early retirement after long and distinguished careers with Cyanamid. To fill the resulting vacancies, Thomas P. Forbath, a vice president and director, was elected a member of both the Executive and Finance Committees, and Dr. .Affleck and Mr. Putnam were elected directors and members of the Executive Committee. To look ahead, the projections of most economists for 1972 include a rise in consumer spending, continued strength in housing, and marked improvement in the overall U.S. economy, accompanied by some further reduction in the rate of inflation. Cyanamid, with its broad diversification and its streamlined organ ization, is well positioned to take full advantage of such developments. The directors wish to express sincere appreciation to the company's em ployees, shareholders, customers, and suppliers, for whose continued loyalty we are grateful. We face 1972 with con fidence and the years beyond with optimism. For the Board ofDirectors PRESIDENT Wayne, NewJersey February S, 1972 Board of Directors JAMES G. AFFLECK JAMES B. FISK THOMAS P FORBATH ERNEST G. HESSE L. EMERY KATZENBACH IAN K. MACGREGOR THOMAS L. PERKINS BORDEN R. PUTNAM GEORGE W. RUSSELL GEORGE L. SCHULTZ CLIFFORD D. SIVERD NOLAN B. SOMMER Officers CLIFFORD D. SIVERD, President and Chief Executive Officer GEORGE W. RUSSELL. Executive l ife Preside'i NOLAN B. SOMMER. Executive Vice President JAMES G. AFFLECK. Vice President JAMES F. BOURLAND. Vice President THOMAS P. FORBATH, Vice President ERNEST G. HESSE, Vice President BORDEN R. PUTNAM, Vice President THOMAS PTURCHAN, Vice President HAROLD B.G ROSS, Secretary' and General Ctmiv RICHARD L. MARTINO, Controller LEONARD T. MURPHY, Treasurer Finance Committee JAMES B. FISK. Chairman THOMAS P. FORBATH L. EMERY KATZENBACH IAN K. MACGREGOR THOMAS L. PERKINS CLIFFORD D. SIV'ERD (ex-officio) Executive Committee CLIFFORD D. SIVERD, Chairman JAMES G, AFFLECK THOMAS P. FORBATH BORDEN R. PUTNAM GEORGE W. RUSSELL NOLAN B. SOMMER CY0005423 The following pages present the high lights of 1971 in Cyanamid's major market segments. For further information on sales and earnings, see the Financial Review on page 16. The operating divi sions and principal subsidiaries, and their more important product lines, are listed on page 15. Building and Consumer Worldwide Sales ($ millions) 1971 1970 $427 $413 % Total Sales (approx.) 33% 33% Earnings ($ millions - approx. | $ 20 $ 17 % Total Earnings (approx.) 21% 18% inwiainTi iipiwiii ~m -wniwicisit. This segment includes the principal Cyanamid products promoted directly to the consumer. The year 1971 was marked by the addition of Shullon cosmetics and toiletries to Cyanamid's other consumer and consumer-promotable products-- Knit apparel with Creslan acrylic fibers, and auto tires made with polyester and rayon yams are marketsfor Cyanamidfibers. Breck Basic texturizing shampoo, Breck One dandruff shampoo, and Breck Basic Silk 'it Hold conditioner; introduced in 1971 complement the established line of. Breck hair-care products. Breck hair-care preparations, house hold products, Formica brand lam inates, Sanitas and Wallclad vinylcoated wall coverings and other specialty building products, and Creslan and IRC fibers. Sales of Cyanamid's building and con sumer products were higher in 1971 than in 1970, and despite price erosion for some of the fibers and the increased expenditures for advertising and sales promotion for the Breck and Shulton lines, earnings rose substantially for this business group. Consumer Products:The growth in sales of the Breck hair-care preparations in 1971 resulted from continued customer accept ance of established products and the successful introduction of new products. Among the established products, all three of Breck's major product groups-- its line of shampoos for dry, normal, and oily hair, Breck creme rinse, and the line of Miss Breck hair sprays --enjoyed year-to-year sales increases. In addition, Breck moved aggressively into two new areas of the shampoo busi ness. One was cosmetic shampoos, which Breck entered with Breck Basic tex turizing shampoo, introduced nationally in mid-1971, and the other was the antidandruff field, in which Breck One dandruff shampoo was launched in the fall of the year. Both products were well received. Breck Basic Silk 'n Hold condi tioner, introduced early in the year, was developed to supplement Breck's two other conditioners--Breck Basic texturizer and Breck Satin conditioner-- thereby giving Breck conditioning products for various hair types and problems. A new Breck plant at Fort Madison, Iowa, began operating in May and was fully on stream by the fall of the year. The new facility, supplementing production from the plant in West Springfield, Massachusetts, is providing improved service to customers in the West and Midwest while reducing distribution costs. Sales of Shulton products in 1971 were also higher than in 1970. Old Spice men's toiletries, the most important of Shulton's established brands, showed good strength, reflecting in part an excellent trade response to an innovative CY0005424 Christmas gift program. Gift sets in this popular line were packaged in boxes decorated with reproductions of authentic nineteenth-century maritime prints, and retail stores were offered Old Spice after-shave lotion in a selection of gift decanters in unique designs based on maritime themes. Shulton continued to make excellent progress with its distribution of imported French perfumes. For the Nina Ricci fragrances, of which L'Air du Temps is the most popular, and the Carven Ma Griffe perfume, sales rose more than 20% above the 1970 levels. An equally distinguished group of luxurious men's products, the Pierre Cardin collection of grooming aids, was successfully introduced in the fall of the year in a limited number of prestige stores. Initial consumer reaction has encouraged Shulton to expand distribu tion to other fine fashion stores in 1972. Overseas, Oriental Spice fragrance, a higher-priced men's brand, was intro duced nationally in Great Britain and Canada after successful test-marketing, and early results from regional distribu tion in Australia were promising. In Japan, w>here Shulton has marketed a group of Old Spice specialty hair products for men, fine sales growth was achieved last year. Sales of Cyanamid's household prod ucts were higher in 1971 than the year before, with Pine-Sol cleaner-disinfectant-deodorizer maintaining its No. 1 dollar position in the liquid-cleaner market for the second consecutive year. The consumer-products market has grown increasingly competitive, and during 1971 sales support for the Breck, The popular line of Old Spice men's toiletries, with other toiletries, cosmetics, and fragrances marketed worldwide by Shulton, Inc., joined Cvanamid's growing list of consumer products. In household products. Pine-Sol cleanerdisinfectant-deodorizer led all domestic liquid cleaners in dollar sales for the second straight vear. Shulton, and household products was stepped up substantially. Breck's sales effort was increased through significant enlargement of its sales force. To main tain its contact with the rapidlv devel oping youth market, Breck continued to share sponsorship of America's Junior Miss Pageant, including a network television program and a national hair styling contest developed by Breck as an adjunct to the pageant. For the past three years, and at an accelerated pace in 1971, Cyanamid has sponsored consumer panels in which groups of women are brought together for free-wheeling discussion of contemporary issues and product preferences. These panel discussions have been held in many sections of the country, and they have been widely reported in the press. The program provides the consumer-products personnel with valuable information on consumer attitudes. Cyanamid knows of no other company which conducts a con tinuing program of this nature. Formica Corporation: Despite Formica Corporation's withdrawal from its un profitable industrial laminates business, total 1971 sales of the products it markets were slightly higher than in 1970. There was a significant year-to-year increase in U.S. sales of Formica brand laminates 4 CY0005425 and panel products, reflecting the in crease in home building anti ronuxielmg as the year progressed. The market reception of Formica's new textured, deep-etched, and embossed laminates, introduced early in the year, was excel lent.The development ol new installation techniques for moisture-resistant paneling for high-humidity areas added substantia! impetus to sales of panel products late in the year. Sales of Sanitas* and Wallclad vinylcoated wall coverings as well as of Fiat plumbing products also reflected the strong recovery in home building. A new plant for the Sanitas and Wallclad prod ucts at Hughes!own, Pennsylvania, placed in operation late in 1970. was expanded in 1971, and this made it jxassible to take advantage of the demand for new designs offered in these lines. Outside the United States, there was a substantial increase in sales of Formica products in Canada, and sales in Latin America rose also. Fibers: Despite generally depressed tex tile market conditions and a rapid rise in imports, the physical volume of Creslan acrylic fibers shipped in 1971 reached the highest level in the company's history. Prices declined, however, and dollar sales of these fibers were about the same in 1971 as in 1970. Included among the factors respon sible for the gain in shipments were new carpet fibers which enabled our customers to capitalize on new'styling opportunities while also meeting recent government flammability requirements. The recently completed carpet application facility in the Santa Rosa plant at Pensacola, Florida, played a prominent role in the development of these new fibers. During the year Cyanamid also intro duced a new range of acrylic fibers especially designed for the knitting industry. These new fibers permit piece dyeing and cross-piece-dyeing of knit apparel fabrics and have stimulated Formica's Silver Slate, a new metallic laminate which was introduced in 1971, is designedforfeatureapplications in home building and remodeling. development of a wide variety of new fabrics and garments for the growing youth market. An additional production line in the Santa Rosa plant was completed late in the year, bringing production capacity for Creslan acrylic fibers to 120 million pounds per year. Sales of the IRC polyester and rayon fibers in 1971 were about the same as in 1970 despite the phasing out of certain unprofitable rayon textile lines. Sales of the fibers still in the line, notably poly ester and rayon tire yarn, showed a sub stantial year-to-year rise. Increased production capacity for polyester tire yarn at Painesville, Ohio, was brought on stream in the latter part of 1971. Expanded production of Sanitas and Wallclad vinvl-coated wall coverings helped meet demand for new designs like Clarissa. CY0005426 5 Medical Worldwide Sales !$ millions) 1971 1970 $256 $243 % Total Sales (approx.) 20% 19% Earnings IS millions--approx.) $ 33 $ 31 % Total Earnings (approx.) 35% 34% Cyanamid's major medical products are the well-known Lederle pharma ceuticals and biologicals and the Davis & Geek surgical sutures and hospital specialties. Worldwide medical sales in 1971 were well above those of 1970 both in the United States and abroad, with the in- Emergency shipments of Lederle pharma ceuticals last year included drugs needed to treat 10,000 West Coast military personnel. Minocin minocycline, a fourth-generation antibiotic, was introduced in the U.S. and abroad in 1971, after 10 years of development. Above, a doctor discusses activity of the new highpotency medicine against various disease-causing organisms, with Lederle sales representative. creases distributed generally among most of the major product lines except the antibiotics. Significant increases in physical volume of antibiotics were not sufficient to make up for price reductions in several major countries. Dollar sales therefore showed a slight decline. As a result of the increased volume, medical earnings in 1971 were also higher than in 1970 despite year-to-year price declines for some of the products in this segment and the shelf-stock adjustments mentioned later in this section. During 1971 two new medical products which promise to achieve major impor tance were introduced in the United States and selected markets abroad. One of these was Minocin minocycline, a high-potency semisynthetic antibiotic developed by Lederle over a ten-year period. This represents the fourth gen eration of broad-spectrum antibiotics developed by Lederle, beginning with Aureomycin chlortetracycline. Nationwide marketing of Minocin began in the United States in October, and the acceptance by the medical pro fession was excellent. The initial Food and Drug Administration approval was for uses essentially the same as those for which other tetracycline products are employed, but prior to marketing, the FDA approved addition to the official package insert of information regarding the effectiveness of Minocin, in the lab oratory, against strains of disease-causing organisms, including certain strains of staphylococci which have developed resistance to the tetracyclines previously available. The FDA is reviewing additional data on clinical experiences with Minocin which we believe will support still broader claims for the use and effectiveness of this product in treating patients. Minocin was introduced in Canada and Australia during the second quarter of the year, and in Mexico, Brazil. Switzer land, Panama, and Japan in subsequent months. As in the United States, accep tance was excellent. The other promising new product line was Dexon polyglycolic acid sutures, the first fully absorbable synthetic sutures ever developed. They were introduced in the United States and Canada in Feb ruary, in Germany in July, and in Aus tralia during the fourth quarter. They had previously been marketed in England beginning in July 1970. Acceptance has been good in all these markets, and it is believed that Dexon sutures should permit Davis & Geek to increase its share of the sutures market. 6 CY0005427 Among the established products, the year brought further increases in sales of Myambutol ethambutol. Cyanantid's anti-tuberculosis drug, both in the United States and abroad. A new production unit was completed in Brazil at the end of 1971, and production capacity for this and other products was doubled earlier in the year at the Lederle Novalis plant at Oullins, near Lyon, France. Mention has been made in previous reports of moves by the Food and Drug Administration to decertify combination drug products offered by a number of drug companies, thereby removing such Designedfor maximum odor control, this unique S4-miltion waste-treatment facihtx at Lederle Laboratories in Pearl River, New York, is scheduledfor completion in 1972. products from the U.S. market. Four Lederle products which contributed less objections to their moves against these wasstilluncertain. In November, however, than 5% to sales and earnings in 1971 are involved. Feeling that the FDA actions products. At the end of 1971, the outcome of the the FDA published an order for decerti fication of the largest-selling of the four were not soundly based, Cyanamid filed FDA actions on three of these products products on December 17,1971 -- Achrocidin tetracycline-antihistamine- Testing the vacuum in sealed packages of Dexon wholly synthetic absorbable sutures is part of KXT/c inspection process performed by employees at Davis & Geek's Danbury, Connecticut, plant. analgesic compound. Applications to the courts for stays of the FDA order on Achrocidin were finally denied on December 22,1971, despite the fact that the product had been in satis factory use by thousands of physicians for more than fifteen years. Since its intro duction, more than 55,000,000 prescrip tions have been written for it, and the FDA itself has certified both the safety and effectiveness of 897 successive Achrocidin production batches. With decertification having become final, Lederle took the steps necessary to comply with the FDA order. Resulting shelf-stock adjustments have been charged against 1971 earnings. The net impact on U.S. sales and earnings for 1972 and sub sequent years cannot be predicted since increased prescription of Achromycin tetracycline or other Lederle antibiotics could to some extent cushion the effects of decertification. CY0005428 7 Agricultural Worldwide Sales IS millions) J971 1970 S228 S229 % Total Sales (approx.) 18% 18% Earnings |S millions -approx.| S 15 S 16 % Total Earnings (approx.) 16% 17% Cyanamid's agricultural product line consists of three major groups: animal industry products, pesticides, and ferti lizers. The animal industry group includes both feed supplements and veterinary pharmaceutical products. Cyanamid's worldwide agricultural sales in 1971 were about the same as in the year before despite a decline in the United States from the historic high in 1970. Domestic fertilizer sales, how ever, showed improvement. In markets abroad, sales of agricultural products, except for fertilizers, were higher than a year ago. Earnings for 1971 were somewhat below those of 1970, chiefly because of . reduced volume and decreased selling prices for selected animal feed supple ments and pesticides in the U.S. and a number of agricultural products abroad. The chief factors in the decline in domestic sales were the low prices for hogs and poultry coupled with high prices of grains used for feed. The re sulting pinch in profit margins discour aged growers and feeders from using formulated feeds, including those incor porating Cyanamid's medicated additives. Reductions in the selling prices of some of the additives were made late in the second quarter and again late in November. An improvement in sales of animal feed supplements as a group was expe rienced in the fourth quarter, and this trend is expected to continue into 1972. In anticipation of increasing demand for feed-grade Aureomycin chlortetracycline, construction of a new fermen tation unit to produce this product was begun at Hannibal, Missouri, early in 1971. The plant is scheduled to come on stream in mid-1972. Also under construction at Hannibal is a unit for production of Cyphos* dical cium phosphate, used as a mineral feed supplement, which should be completed early in 1972. Another unit for Cyphos was completed late in 1971 in the Welland plant near Niagara Falls, Ontario. Veterinary pharmaceutical products established record sales in 1971, although the increase was not sufficient to offset the decline in animal feed supplements. The leader of the veterinary pharmaceu tical group is Tramisol levamisole, a broad-spectrum dewormer for farm animals, which has captured a significant share of the market in the U.S. and in several countries overseas. Approvals received during the year from the Food and Drug Administration covering im portant new dosage forms should further broaden the U.S. market forTramisol. New facilities for its production were completed during the year at Bound Brook, New Jersey. Also in the veterinary pharmaceutical group, Warbex famphur, a systemic insecticide against cattle grubs, enjovs the No. 1 position as a pour-on formu lation and established new domestic sales records' A line of professional pharma ceutical products sold exclusively to veterinarians was introduced in the second half of the year with substantial success. In Latin America, sale of Tramisol under the name Ripercol L levamisole was begun during 1971 in Argentina and Brazil. Ripercol L is replacing the less active tetramisole initially sold in Latin America and is strengthening Cyanamid's Now approved in convenient pellet form for incorporation in feeds, Tramisol levamisole broad-spectrum dewormer led Cyanamid's animal health products to a recordyear and increased its own share ofthe United States market. 8 Trademark CY0OO5429 leadership in animal dewormers in that region. Domestic sales of pesticides in 1971 declined slightly from those of 1970 owing to light insect infestations. How ever, Cyanamid's malathion insecticide was selected by the U.S. Department of Agriculture and by Mexican authorities for control of mosquitoes responsible for the outbreak of Venezuelan equine encephalomyelitis in Mexico, Texas, and Louisiana. The quantity of malathion used in these areas was substantial, and the program was highly effective. Sales of Thimet* soil and systemic insecticide for use on corn and sorghum reached record levels in the U.S. Light incidence of plant disease led to reduced use of Cyprex1 fruit fungicide. New manufacturing facilities for Cygon* systemic insecticide previously installed in the Warners plant at Linden, New Jersey, resulted in reduced manufacturing costs making possible a price reduction which should ultimately broaden the market. There was a vear-to-vear rise in the sales of Cyanamid's pesticides abroad. Included in 1971 were a shipment of 1000 metric tons of Cygon insecticide to the Soviet Union for use on cotton and a major sale of Cyolane1 systemic insecticide to treat cotton fields in the Middle East. All Cyanamid's pesticides are nonpersistent. Because of this and their consequent lack of long-term effect on wildlife, they have generally found favor with conservationists. Concern for the physical environment is a major consid eration in Cyanamid's research to develop new pesticide products. In Cyanamid's fertilizer business, there was a decline in sales abroad, and while 1971 brought significant domestic im provement, with higher volume and some relief from the extremely depressed selling prices of the past few years, results still do not afford a satisfactory return on investment. Customers get details on Cygon systemic insecticide at Avoca, Iowa, farm service center, one ofthe 123 United States outletsfor the company's agriculturalproducts. Medicatedfeed additives, Aureo S-P 25<f premix for swine and Aureo S 700*premix for cattle, promote safe, effective livestockgrowth, and more meatfor growing world population. As reported at the annual shareholders meeting last April, production of phos phate fertilizer chemicals in Cyanamid's obsolete plant at Brewster, Florida, was terminated in the second quarter, and a partnership of Cyanamid and KerrMcGee Corporation was formed to mine phosphate rock and have it processed to upgraded phosphate products at other locations. Cyanamid and Kerr-McGee are marketing their respective shares of these products independently. The arrangement provides Cyanamid with modern production facilities with a minimum of capital investment and should improve the company's eamings in the fertilizer business. Trademark CY0005430 9 Chemical Worldwide Sales ($ millions) 1971 1970 $372 $372 % Total Sales {approx.) 29% 30% Earnings |S millions--approx.) $ 12 $ 17 % Total Earnings (approx.) 12% 18% Cyanamid manufactures a broad variety of upgraded specialty and proprietary chemical products which it markets to a wide range of industries. Large-volume commodity chemicals are usually pro duced only where they are needed captively as raw materials for the up graded products. Worldwide chemical sales in 1971 were about the same as in 1970. A small rise in sales outside the U.S. approximately counterbalanced a slight domestic decline which reflected the continuing sluggish performance of the U.S. economy. Chemical earnings were significantly lower than in 1970. There was some deteri oration in selling prices, and production costs rose as a result of higher charges for labor, energy, freight, packaging, and depreciation. In addition, flood losses associated with tropical storm Doria were especially severe in the chemical segment. The selling price deterioration was particularly marked in the case of tita nium dioxide, and the costs of purchased ores for titanium dioxide production increased also. However, some improve ment in the selling price of titanium dioxide was realized in the fourth quarter. In addition, Titanium Enterprises, Cyanamid's joint venture with Union Camp Corporation for the production of titanium ores in northern Florida, is scheduled to begin operation in the second quarter of 1972, and this should have a beneficial effect on future tita nium dioxide production costs. Most economists predict a pronounced improvement in U.S. industrial output for 1972, and if this comes to pass it should have a favorable impact on Cyanamid's chemical business. To take advantage of the projected increase in demand, and to aid in reducing produc tion costs, Cyanamid in 1971 continued its program of expanding and modern izing its chemical manufacturing facil ities. Among the more important of such modernization and expansion projects were these: Construction of a large new melamine unit was completed late in the year in the Fortier plant at New Orleans, Louisiana, and the unit is in the initial stages of start-up. Also in the Fortier plant, new facilities were started up for production of yellow prussiate of soda, replacing older facilities in the Warners plant at Linden, New Jersey. New and larger facilities for the manu facture of rubber accelerators were placed in operation during the vear at Bound Brook. New Jersey. Major expansions and improvements were made in facilities'to produce phthalocyanine and azo pigments at the same location, and in facilities to produce iron blue pigments at Willow Island, West Virginia. A new textile chemical plant and dis tribution center were constructed at Charlotte, North Carolina, replacing facilities at a nearby site which was too small to provide room for expansion. Paper resin facilities were installed at Escanaba and Kalamazoo in Michigan, and design of new paper resin facilities was begun in the Fortier plant and at Mobile, Alabama. Expanded polyester resin facilities were installed at Azusa, California. In a move to strengthen the plastics additives business, the purchase from MacGregor Lead Co. of its operations in the manufacture and sale of heat stabil izers for polyvinyl chloride w as completed in June. Outside the United States, new xanthate facilities were started up in the Welland plant near Niagara Falls, Ontario, and engineering was completed on new units for the production of mining chemicals in Australia and South Africa. In Mexico, a rubber chemicals plant under construc tion at Altamira, Tampico, by Cyanaquim, S.A. de C.V., in which Cyanamid's inter est is 40%, was started up at the year-end and will be in commercial production during the first quarter of 1972. In addition to the foregoing projects, Aerial view shows nearly completed textile chemicals plant and distribution center built in Charlotte, North Carolina, in 1971, to replace smallerfacilities. 10 CY0005431 One of the largest suppliers of chemicals to the paper industry, Cyanamid pro vides man v additives which make today s commercialpaper products more useful, such as strong-uihen-uiet paper towels. quarter of 1971. This will strengthen Cyanamid's worldwide marketing posi tion in flocculants and specialty chemicals. At Andersonville, Georgia, a new calciner is being constructed to prepare bauxitic ore for the manufacture of alum, used principally by municipalities for treatment of potable water and by the paper industry. As steps are being taken to reduce the use of lead in gasoline and the presence of sulfur in petroleum-derived fuels, demand continues strong for reforming and desulfurization catalysts, of which Cyanamid is a leading producer. A new unit for production of desulfurization catalysts was put on stream during 1971 in the Welland plant near Niagara Falls, Ontario, and another such unit at Azusa, California, is scheduled for completion in the first half of 1972. Another desulfur ization catalyst plant at Gosport, England, is being expanded, and design engineer ing is nearing completion for a similar plant to be built by an associated company in Japan. Early in January 1972 funds were appropriated for expansion of the reforming catalyst facilities at Willow Island, West Virginia. Cyanamid's research and development program on exhaust-gas catalysts was continued in cooperation with major automobile manufacturers. there were expansions of facilities both here and abroad for manufacture of a number of Cyanamid chemicals useful in pollution control. At the Warners plant at Linden, New Jersev, new and expanded equipment was installed for production of acrylamide polymers widely used as flocculants for treating industrial and municipal wastes and for effluent control in the mining and paper industries. Plans are under way for expansion of acryla mide monomer production by a new and improved process. The acquisition of BTI Chemicals Limited, a British producer of acrylamide polymers, by Cyanamid of Great Britain Limited was announced during the final Framed by product silos and steelgirders, worker at Fortier plant. New Orleans, adjusts product collectorfor new melamine unit placed in start-up late in 1971. 11 CY0005432 Land Development and Building Sales and earnings of Cyanamid's land development and building subsidiaries in 1971 were substantially higher than in 1970. These subsidiaries, whose sales are not consolidated with the rest of Cyanamid's, but whose earnings are accounted for on an equity basis, include The Ervin Company, with headquarters in Charlotte, North Carolina, which manages the group, and Sunstate Builders, Inc., of Tampa, Florida--both of which became part of the Cyanamid family in 1970. Two additional acquisi tions in this group, Edmund J. Bennett Associates of Rockville, Maryland, and Recreational areas like this one in Atlanta enhance the value of Ervin communities. In Charlotte, Mr. Siverd talks with Ervin Pres ident Calvin J. Harris, in front of Providence Square apartment complex developed by Ervin. Croyder, Irvin & Co., Inc. of Potomac, Maryland, were made in the last quarter of 1971, both for stock on a pooling-ofinterests basis. With these moves Cyanamid is now engaged in land devel opment and building activities in a geo graphical crescent along the Eastern seaboard extending from Maryland to Florida. Sales and revenues of the entire land development and building group in 1971 were $121,297,000, more than double $46,663,000 in 1970. Earnings were $4,755,000, compared to $2,487,000 the year before. The acquisitions of the Bennett and the Croyder, Irvin organizations, just men tioned, will provide Ervin with a strong base for expansion in the Washington and Baltimore areas, one of the fastestgrowing housing markets in the country. The Bennett firm has been active in the Washington area for a number of years and holds some sixteen national and local awards for the design of its projects. It is currently building townhouses and apart ments in the new towns of Reston, Vir ginia, and Columbia, Maryland, in addi tion to its activities in Rockville. Croyder, Irvin, a dynamic young organization which has been active only since 1966, has achieved excellent sales and earnings growth within the quality single-family segment of the housing market. Ervin's advances during 1971 were made on a number of fronts. The company maintained a strong sales pace in its more than thirty subdivisions while signif icantly increasing its involvement in major planned community development projects. Twenty-five apartment projects, ranging in size from 100 to 400 units each, were under construction. Work pro ceeded on office buildings in Charlotte and Tampa, as well as on several shoppingcenter complexes. Three subsidized housing projects were under construc tion, with several others in the final stages of government approval. In Florida, Sunstate Builders opened two important projects in late 1971: Carrollwood Village, a totally planned 800-acre community in the northern suburbs of Tampa, and the 1000-unit Cove Cay condominium project in Clear water, facing Tampa Bay. International The figures already given for Cyanamid's sales in each of its major market segments include its sales outside the United States and Canada, which in 1971 reached another record level. Sales in these inter national markets, excluding sales of associated companies, 40%- to 50%-owned, were $271,388,000, up 5% from 1970. International sales in 1971 contributed 21% of the Cyanamid total. 12 CY0005433 All {our of Cyanamid's major business segments contributed to this rise, with im proved sales in all regions, and especially in Latin America. This performance was achieved despite a five-month strike by the Cyanamid sales force in the Philip pines, disruption of business by civil war in East Pakistan followed by war between India and Pakistan, and a general slow down in business in Europe. A significant additional part of Cyanamid's business in these interna tional markets is conducted through several associated companies in which Cyanamid's interest is from 40% to 50%. Total 1971 sales of these companies, which are not consolidated with the rest of Cyanamid's, were approximately $137,000,000, compared to $135,000,000 in 1970. Operating earnings from Cyanamid's international business in 1971, including its equity in the earnings of the associated companies, were higher than in 1970. The highlights of 1971 in Cyanamid's international business have already been mentioned in the reviews of the company's major market segments. Canada Cyanamid's sales in Canada were higher in 1971 than in 1970, with improved per formances in all major parts of the business. A notable gain was achieved in sales of building products, and the suc cessful introductions of the Dexon syn thetic absorbable sutures in February and Minocin minocycline in June con tributed to the improvement in sales of medical products. As mentioned earlier, a new unit began production of Cyphos* feed-grade dical cium phosphate in the Welland plant near Niagara Falls, Ontario. At the same location, new facilities to produce xanthates for the mining industry and desulfurization catalysts for the petroleum industry were in start-up at the year-end. As planned, closing of two of the three calcium carbide furnaces in the Niagara Falls plant was completed in August. Domestic Associated Companies Sales of Jefferson Chemical Company, Inc., owned jointly with Texaco Inc., showed a small year-to-year rise in 1971. Operating earnings, however, declined substantially. Vigorous cost-reduction programs implemented early in the year did not fully offset the effects of lower selling prices and the rising costs of labor, materials, and energy. Looking toward a projected upturn in the U.S. economy in 1972, capacity for ethylene oxide adducts was expanded; the propylene oxide unit was modernized and expanded; and construction commenced on a new polymeric isocyanate facility. Arizona Chemical Company, owned jointly with International Paper Com pany, showed year-to-year increases in both sales and earnings in 1971. Construc tion of a terpene resin plant, started in 1970, was finished in the first half of 1971 and start-up was accomplished with a minimum of problems. With the avail ability of production from this plant and Arizona's basic position in raw materials, recurring shortages of terpene resins should no longer be a problem to the . users of these materials. Public Affairs and Employee Relations Cyanamid continues to discharge its obligations as a corporate citizen. In the area of pollution control, the company has two broad objectives. The first of these is to minimize the impact of its own operations on the environment. The company has employed advanced pollu tion-control technology in its manufac turing processes for many years, beginning well before the state of the environment became a matter of general concern. Cyanamid's cumulative capital expenditures for pollution-control equip ment through 1970 were approximately $50 million, and during 1971 such expen ditures amounted to approximately $8 million more. The cost of operating Cyanamid's pollution-control facilities and of the company's pollution-control research during 1971 was more than $10 million. The company's other objective in the Trademark Indian farmer in cotton field receives instruc tions on use of Cycocetplant growth regulant H. F. Bliss, Jr., right, and W. A. liffers, left, Cyanamid International, leave Soviet trade agency in Moscow, during a trip to develop Eastern Europe market strategyinterior of 1313 subway car in Argentina was modernised with Formica decorative laminates. 13 CY0005434 pollution-control area is to develop and supply products for sale and use in pollution-control programs, and some of the highlights of Cyanamid's accomplish ments in this field during 1971 are mentioned in preceding sections of this report. Cyanamid again made awards during the year to colleges and universities with which it maintains close relations, and it continued its support of health and welfare organizations, especially in communities where it carries on its operations. In the area of minority hiring, every Cyanamid location has a program of affirmative action in the employment of members of minority groups, and in addition the company in 1968 set itself the goal of hiring 500 men and women from the ranks of the disadvantaged by the middle of 1971. The sluggishness of the economy last year impeded progress under these programs, but the company's efforts in these areas continue undiminished. During the year Cyanamid partic ipated in the program sponsored by government and private industry to help banks owned by minority groups by depositing a portion of monthly with holding and social security tax payments in minority-owned banks located in communities where Cyanamid has operations. In the area of labor relations, negotia tions were completed during 1971 with 21 U.S. local unions. The year brought no significant work interruptions at any Cyanamid locations inside or outside the U.S. except for the five-month work stoppage of sales and office workers in the Philippines, already mentioned. As to the safety record in Cyanamid installations, we report with regret that the number of disabling injuries per million man-hours worked rose to 1.52 in 1971 from 1.35 in 1970. However, the comparable figure for all companies be longing to the Manufacturing Chemists Association was 3.85 for 1970, and for all U.S. manufacturing companies it was 8.87. As to the severity of the Cyanamid accidents, there were 405 days lost per million man-hours worked in 1971, as compared to 360 in 1970, and there were three fatalities during 1971, as compared to two in 1970. Litigation Antibiotics Litigation: As noted in the president's letter to shareholders, on January 24,1972, the U.S. Supreme Court affirmed the decision of the U.S. Court of Appeals in New York reversing the 1967 antitrust conviction of the company and two other drug companies and ordering a new trial. The 154 treble-damage suits against the three defendant companies and two other drug companies which grew out of the government's antitrust charges are in various stages of settlement or litigation. During 1971, the settlement of 66 of these suits, involving the claims of almost all states, counties, cities, consumers, wholesalers, and retailers, for approx imately $85 million (of which Cyanamid's share was approximately $34 million) and the separate settlement of 27 of these suits, involving claims of private hos pitals and Blue Cross plans, for $32.5 million (of which Cyanamid's share was approximately $13 million) became final. These settlements were for substantially less than the amounts claimed by plain tiffs' counsel. Cyanamid's share of these settlements has been placed in escrow. These escrow deptosits have been charged against the $54 million accrual made by the company as of September 30,1969, to cover its share of the settlement propiosals, plus certain legal expanses. This accrual, less the related tax reduction, was charged against earnings of appro priate prior years. Also during 1971 a few miscellaneous cases were settled or dismissed outside of the main settlement agreements. Amounts p>aid in these settlements (which were relatively small) were also charged against the accrual. The principal plaintiffs and classes represented in the 49 other p>ending cases are the states of California, Hawaii, Kansas, North Carolina, Oregon, Utah, and Washington and the consumers and governmental subdivisions they purport to represent, health benefit and insurance organizations which allegedly reimbursed individuals, purchasers of animal feed and veterinary products, competitors, the U.S. Government, and the govern ment of Vietnam. These actions are being vigorously defended by the company and the other defendants and have been assigned for trial to a single judge; trial of some of these actions was scheduled to begin on September 15, 1971, but was p>ostp>oned. A new trial date has not yet been set. While the complaints in these actions generally do not specify the amounts of damages claimed, the com pany presently understands, on the basis of allegations in a few complaints which do specify such amounts and assertions made by the plaintiffs during the last half of 1971, that the claims in these actions against all the defendants may aggregate several hundred million dollars. Due to the uncertainty necessarily inherent in litigated matters of this sort, the eventual cost of this litigation to the company, and its disposition, cannot be accurately pre dicted, and therefore the company has not accrued any additional amounts with respiect thereto despite the magnitude of the amounts claimed and the possibility that large amounts may eventually be ptaid. Any additional amounts which may become payable by the company with respect to these claims would be charged against earnings of appropriate prior years (generally prior to 1966), following the accounting practices recom mended by the American Institute of Certified Public Accountants. However, the company believes, on the basis of information and advice presently avail able, that any additional liability with respect to this antitrust litigation will be substantially less than the amounts claimed and will not have a material adverse effect upon the consolidated financial position of the company and its subsidiaries. Elizabeth Arden Litigation: In December Cyanamid settled and discontinued, for a cash payment by Nedra Liquidation Corp. (formerly Elizabeth Arden Sales Corporation), the legal proceedings brought in 1970 against that corporation, which were reptorted in the 1970 Annual Report. At the same time, related pro ceedings against the executors under the will of Elizabeth Arden, Eli Lilly and Company, and Goldman, Sachs fc Co. and one of its partners were terminated with out any payment by them. These pro ceedings arose out of the claim by Cyanamid that Nedra's sale of Elizabeth Arden to Eli Lilly and Company was contrary to an earlier agreement to sell Elizabeth Arden to Cyanamid. 14 CY0005435 i-ptrt-.Vng Divisions and Principal Subsidiaries GEORGE W. RUSSELL Executive Vice President Consumer Products, Albert L. Munsell, General Manager-- Breck preparations for care of the hair; Pine-Sol' cleaner-disinfectant-deodorizer; Formica Floor Shine finish; and other household main tenance and cleaning aids. Shulton, Inc., Albert L. Munsell. President-Old Spice men's toiletries; Man-Power deodorants; Desert Flower fragrances, skin-care and toiletry products; Cornsilk cosmetics; Flowing Velvet skin lotions; imported Nina Ricci and Carven perfumes for women; Pierre Cardin toiletries for men. Eisele hospital-medical supplies. JAMES G. AFFLECK Vice President JAMES F. BOURLAND Vice President ERNEST G. HESSE Vice president BORDEN R. PUTNAM Vice President THOMAS P. TURCHAN Vice President Fibers, Philip G. Connell, Jr., General Manager--Creslan acrylic fiber for apparel, home furnishings and industrial applications; filament rayon, filament polyester for tire cord and industrial applications. Cyanamid of Canada Limited, Ben H. Loper, President -- produces for sale in Canada and for export and also imports and markets in Canada the products of Cyanamid and its subsidiaries. Agricultural, J. Clifford Blauvelt, General Manager--animal feed supplements and veterinary prod ucts, insecticides, fungicides, herbicides, nitrogen and phosphate fertilizer products, blended fertilizers. Lederle Laboratories, Robert A. Schoellhom, General Manager--antibiotics, steroids, biologicals, pharmaceuticals, vitamins and hematinics, vaccines; clinical laboratory diagnostic aids; fine chemicals and bulk pharmaceuticals; Davis & Geek surgical sutures and hospital specialties, including dressings, germicides and scrub sponges; clinical laboratories. Cyanamid International, Harry F. Bliss, Jr., Managing Director--produces or imports and markets the company's products, except for Consumer and Shulton products, through subsidiaries and distrib utors in countries and territories outside the United States and Canada. Formica Corporation, Wallace G. Taylor, President and General Manager--Formica brand decorative laminates; laminate cabinet surfacing; laminate-clad doors and toilet compartments; laminated furni ture vinyl; architectural and residential panel systems; adhesives, laminate cleaner; Fiat shower floors, laundry tubs, toilet compartments and tubshowers; Sanitas and Wallclad vinyl-coated wall coverings from Standard Coated Products. The Ervin Company, Calvin J. Harris, President--land development and building in 16 cities in Southeastern United States; operations include land development, single- and multi-family housing, condominiums, offices and shopping centers; affiliated companies include Sunstate Builders, Edmund J. Bennett Associates, and Croyder, Irvin &: Co., Inc. Industrial Chemicals and Pl8StlCS, Howard E. Nehms, General Manager-- industrial products for the paper making industry and mining industry; flocculants and related chemical agents for industrial and municipal water and waste treatment. Chemical products for the chemical process industry; heavy chemicals, surfactants, acrylamide, acrylonitrile, melamine and specialty monomers; explosives. Plastics and resins for coatings, thermosetting and acrylic molding compounds, high performance bonding agents and adhesives, and Acrylite acrylic sheet. Organic Chemicals, Joseph A. Schmidlein, General Manager--catalysts, dyes, elastomers, inter mediates, plastic additives, refinery chemicals, rubber chemicals, textile chemicals, textile resins, industrial safety equipment from Glendale Optical Co., Inc. Pigments, John Ludden, Jr., General Manager-- inorganic and organic chemical colors, Unitane titanium dioxide. Service Divisions CLIFFORD D. SIVERD, President and ChiefExecutive Officer Public Relations, John M. Fasoli, Director NOLAN B. SOMMER, Executive Vice President Washington Office, Don A. Goodall, Washington Corporate Representative JAMES G. AFFLECK, Vice President Central Research, John F. Flagg, Director Engineering tc Construction, George P. Ferrigni, Director Personnel, Clair L. Brandrup, Director THOMAS P. FORBATH, Vice President Commercial Development, William D. Holland, Director Controller's, Richard L. Martino, Controller Treasury, Leonard T. Murphy, Treasurer HAROLD B. GROSS, Secretary and General Counsel Law, James J. Wyer, Director BORDEN R. PUTNAM, Vice President Purchasing, Philip K Langford Director Transportation & Distribution, Gerrit W. Van Schaick, Director CY0005436 15 f:n a Information below related to saies and earnings includes the combined results of American Cyanamid Company and Shulton, Inc. for 1971 and 1970. Sales Volume -- Consolidated sales in 1971 were $1,283,- 485,000 compared with $1,256,570,000 in 1970. Comparative quarterly sales for the two years were: Quarter First Second Third Fourth 1971 Amounts in thousands $ 307,407 339,867 305,928 330,283 $1,283,485 % of Total 24 26 24 26 100% 1970 Amounts in thousands $ 314,590 328,798 304,104 309,078 $1,256,570 % of Total 25 26 24 25 100% Earnings -- Pre-tax earnings for 1971 were $156,411,000 compared with $ 160,409,000 (exclusive of extraordinary gain) in the previous year. After provision for Federal and foreign income taxes of $62,300,000, consolidated earnings for 1971 were $94,111,000, compared with $92,587,000 (exclusive of extraordinary gain) in 1970. Provision for Federal and foreign taxes has been reduced by the amount of the current invest ment tax credit which has benefited earnings by 3? per share in 1971 and 4<t per share in 1970. Per share earnings for 1971 were $1.95 compared to $1.93 (exclusive of extraordinary gain of 11) in 1970 based on the average number of shares of common stock (excluding treasury shares) outstanding for each year. Comparative earnings with earnings per share by quarters for the two years are: 1971 Amounts Quarter in thousands Per Share 1970 Amounts in thousands Per Share First $23,000 $ .48 $28,536 $ .59 Second Third Fourth 24,447 19,339 27,325 .51 22,442 .47 .40 21,992* .46* .56 19,617 .41 $94,111 $1.95 $92,587* $1.93* Excluding extraordinary gain of $5,372,000 or 11 per share. The average number of shares (excluding treasury shares) outstanding for 1971 was 48,285,185 compared to 47,994,355 for 1970 restated. Fourth quarter earnings include exchange gains resulting from revaluation of foreign currencies in relation to the dollar. Such gains are largely offset by losses from devaluations of currencies in Latin America which occurred throughout the year. Capital stock -- As of December 31, 1971 there were 48,- 547,116 shares of common stock outstanding compared to 48,318,301 shares outstanding at the end of 1970. This includes treasury stock of 186,820 shares at December 31, 1971 and 416,119 shares at December 31, 1970. In the Shulton, Inc. merger 3,092,553 shares of the com pany's common stock were issued under the terms of the merger agreement in which each share of common stock of Shulton, Inc. was converted to .96 share and each share of preferred stock of Shulton was converted, to 3 shares of American Cyanamid Company common stock. In May, 195,090 shares of common stock were issued to the former stockholders of The Ervin Company under the acquisi tion agreement of September 1970. In November, 64,687 shares of common stock were issued for the acquisition of Edmund J. Bennett Associates, Inc. on a pooling of interests basis. In December, 109,091 shares of treasury stock were issued for the acquisition of Croyder, Irvin & Co., Inc. on a pooling of interests basis. During the year 17,633 shares of common stock were issued to employees under stock option plans, including 5,005 trea sury shares; and 11,582 treasury shares were issued to retired participants in the Incentive Compensation Plan. Dividends paid in 1971 and 1970 amounted to $59,422,000 and $57,935,000 respectively. Allocation ol 1971 Revenue Dollar Cost of Materials, Services, etc. Wages, Salaries and Employee Benefits Depreciation and Depletion Taxes Earnings Reinvested in the Business Dividends 16 CY0005437 American Cyanamid Company and Subsidiaries ct fcarmngs Years Ended December 31,1971 and 1970 NET SALES ............................................................................................ Equity in net earnings of: Associated companies (Note 3)..................... Unconsolidated real estate subsidiaries (Note 4) Interest................................................................... Royalties and licenses............................................... Other income--net.................................................... Deduct: Manufacturing cost of sales--less depreciation and depletion . . . . Selling and advertising expenses............................................................. Administrative and general expenses........................................................ Depreciation and depletion (Note 5)........................................................ Research and process development expenses......................................... Interest charges on funded and other debt.............................................. Employees' benefits (Note 11)................................................................... e a r n in g s (exclusive of extraordinary gain) b e f o r e t a x e s o n in c o me . Provision for Federal and foreign taxes on income.................................... EARNINGS EXCLUSIVE OF EXTRAORDINARY GAIN.................................................................... Add: Gain arising from sale of an investment in associated companies--less related Federal income taxes ($1,900,000)......................................... NET EARNINGS............................................................................................................................................... Earnings per share of common stock (Note 13): Earnings exclusive of extraordinary gain . Extraordinary gain.......................................... Net earnings............................... 1971 $1,283,484,815 11,047,859 4,754,849 2,975,538 6,894,659 5,177,302 1,314,335,022 1970 $1,256,569,700 11,238,137 2,299,185 2,626,114 7,074,270 3,218,808 1,283,026,214 696,526,202 236,964,160 67,408,221 63,614,630 42,666,759 13,617,193 37,126,378 1,157,923,543 156,411,479 62,300,000 94,111,479 671,747,802 231,157,113 70,123,502 59,892,790 47,044,505 9,320,785 33,331,055 1,122,617,552 160,408,662 67,822,000 92,586,662 -- $ 94,111,479 5,371,554 $ 97,958,216 $1.95 -- $1.95 $1.93 .11 $2.04 See accompanying Notes to Consolidated Financial Statements CY0005438 17 g-- t- r -v s . i j r> ^ American Cyanamid Company and Subsidiaries Consolidated Balance Sheets December 31,1971 and 1970 ASSETS CURRENT ASSETS: Cash in banks and on hand....................................................................................... Marketable securities and time deposits, at cost and accrued interest .... Accounts receivable, less provision for doubtful accounts.................................... Inventories, at lower of cost or market................................................................... TOTAL CURRENT ASSETS........................................................................ 1971 $ 49,281,448 39,398,749 229,300,318 227,959,660 545,940,175 INVESTMENTS AND ADVANCES : Equity in net assets of: Associated companies (Note 3).......................................................................... Unconsolidated real estate subsidiaries (Note 4) ............................................... Other investments and advances............................................................................. TOTAL INVESTMENTS AND ADVANCES . . . .'............................... 59,626,771 23,560,755 16,443,888 99,631,414 PLANTS, EQUIPMENT AND FACILITIES, at COSt: Land, including mining land.................................................................................. Buildings....................................................................................................................... Machinery and equipment....................................................................................... Uncompleted construction and installations............................................................. Less accumulated depreciation and depletion........................................................ NET PLANT INVESTMENT .......................................................................................................... 43,949,817 242,526,964 834,124,715 35,948,263 1,156,549,759 560,625,462 595,924,297 INTANGIBLES RESULTING FROM BUSINESS ACQUISITIONS............................................................ 21,201,585 PREPAID EXPENSES AND DEFERRED CHARGES................................................................... 18,541,018 $1,281,238,489 See accompanying Notes to Consolidated Financial Statements 18 1970 $ 44,753,629 10,746,449 218,390,427 232,449,232 506,339,737 52,977,744 15,755,447 11,886,056 80,619,247 43,884,462 234,568,911 796,598,741 45,636,763 1,120,688,877 570,331,901 550,356,976 19,382,391 12,420,706 $1,169,119,057 CY0005439 LIABILITIES AND SHAREHOLDERS' EQUITY CURRENT LIABILITIES: Accounts payable and accrued expenses................................................................... Short term borrowings. Funded debt installments due within one year.............................................. ..... . Accrual for settlement of litigation............................................................................. Provision for Federal and foreign taxes on income................................................... TOTAL CURRENT LIABILITIES................................................................... FUNDED DEBT NOT DUE WITHIN ONE YEAR (Note 6)................................................... INCENTIVE COMPENSATION CONTINGENTLY PAYABLE (Note 7)............................... in c o me t a x es p a y a b l e in t h e f u t u r e ........................................................................ MINORITY SHAREHOLDERS' EQUITY IN FOREIGN SUBSIDIARIES.................................... 1971 $ 130,471,736 18,794,304 9,623,297 1,755,500 21,051,288 181,696,125 213,198,163 4,592,669 29,800,000 6,426,467 1970 . $ 118,596,834 43,338,914 5,935,841 17,023,688 25,156,565 210,051,842 118,167,783 4,098,813 22,700,000 5,898,849 s h ar eh o l d er s ' eq u it y : Common stock--par value $5 per share (Notes 2,8 and 12) Authorized--60,000,000 shares Outstanding-48,547,116 shares (1970-48,318,301 shares)...................................... Capital surplus............................................................................................................ Earnings employed in the business (Notes 1 and 9).................................... ..... . 242,735,580 34,526,419 573,899,934 851,161,933 241,591,505 37,596,366 541,778,723 820,966,594 Less cost of 186,820 shares of common stock held in treasury (1970--416,119 shares) (Note 10)........................................................ ......... 5,636,868 t o t al s h a r e h o l d e r s ' e q u it y ..................................................................... 845,525,065 $1,281,238,489 12,764,824 808,201,770 $1,169,119,057 See accompanying Notes to Consolidated Financial Statements 19 CY0005440 .-k. .V A VJT / American Cyanamid Company and Subsidiaries Consolidated Statements of Capital Surplus Years Ended Decembers, 1971 and 1970 Balance at beginning of year: 1971 American Cyanamid Company and subsidiaries, as previously reported.......................................................................................................$ 21,087,657 Shulton, Inc. and subsidiaries, adjusted to Cyanamid capitalization........................................................................ 16,508.709 Balance at beginning of year as restated............................................................................. 37,596,366 Add: Market value over par value of Shulton shares issued in payment of 2% stock dividend, prior to merger........................................................ Premium on common stock issued under employees' stock option contracts................................................................................................. Deduct: 1,182.946 371,546 39,150,858 Par value of 195,090 additional shares of common stock issued to former shareholders of The Ervin Company (Note 4).............................................. 975,450 Adjustments arising from poolings of interests............................................................. 3,648,989 4,624,439 Balance at end of year............................................................................................................$ 34,526,419 1970 $ 20,563,114 14,221,269 34,784,383 2,200,357 107,009 37,091,749 (504,617) (504,617) $ 37,596,366 Consolidated Statements of Earnings Employed in the Business Years Ended December 31,1971 and 1970 Balance at beginning of year: 1971 American Cyanamid Company and subsidiaries as previously reported...........................................................................................................$493,496,952 Shulton, Inc. and subsidiaries as adjusted....................................................................... 31,769,595 Adjustment to record investment in associated companies on equity basis................................................................................................................. 16,512,176 Balance at beginning of year as restated............................................................................ 541,778,723 Net earnings for the year...................................................................................................... Deduct: Dividends: Paid by Shulton, Inc. prior to merger Stock........................................................................................................................... Cash........................................................................................................................... Paid by American Cyanamid Company -- $1.25 per share........................................ 94,111,479 635,890,202 1,484,571 653,143 58,768,907 Adjustments arising from poolings of interests............................................................ 1,083,647 61,990,268 Balance at end of year (Notes 1 and 9)................................................................................$573,899,934 See accompanying Notes to Consolidated Financial Statements 20 1970 $456,915,061 32,472,454 14,432,664 503,820,179 97,958,216 601,778,395 2,499,346 2,556,290 55,378,403 (434,367) 59,999,672 $541,778,723 CY0005441 Years ended December 31,1971 and 1970 Net earnings.................................................................................... Items not requiring the use of funds: Depreciation and depletion................................................ Income taxes payable in the future.................................... Excess of earnings over dividends of associated companies and unconsolidated subsidiaries.................................... Funds derived from operations................................................ Increase in funded debt not due within one year . . . Equity arising from issuance of common stock .... Cash dividends on stock.................................................... Additions to plants, equipment and facilities -- net. . . Additions to investments and advances -- net . . . . Increase in prepaid expenses and deferred charges . . . Purchase of treasury stock................................................... All other -- net................................................................... Increase (decrease) in working capital............................... 1971 $ 94,111,479 63,614,630 7,100,000 (10,147,949) 154,678,160 95,030,380 2,782,187 252,490,727 $ 59,422,050 109,181,951 8,864,218 6,120,312 946,041 184,534,572 $ 67,956,155 1970 $ 97,958,216 59,892,790 500,000 (3,856,669) 154,494,337 (826,184) 8,542,484 162,210,637 $ 57,934,693 90,653,008 16,168,812 1,054,770 5,292,946 (394,794) 170,709,435 $ (8,498,798) Increases (decreases) in the components of working capital: Cash and marketable securities......................................... Accounts receivable.............................................................. Inventories............................................................................. Accounts payable and accrued expenses.......................... Short term borrowings......................................................... Funded debt installments due in one year......................... Accrual for settlement of litigation.................................... Provision for income taxes................................................... Increase (decrease) in working capital.............................. $ 33,180,119 10,909,891 (4,489,572) (11,874,902) 24,544,610 (3,687,456) 15,268,188 4,105,277 $ 67,956,155 See accompanying Notes to Consolidated Financial Statements $ (4,373,012) 3,128,005 15,113,099 7,842,650 (17,544,667) (64,038) 959,871 (13,560,706) $ (8,498,798) " - mams' Report THE BOARD OF DIRECTORS AMERICAN CYANAMID COMPANY: We have examined the consolidated balance sheets of American Cyanamid Company and subsidiaries as of December 31, 1971 and 1970 and the related statements of earnings, earnings employed in the business, capital surplus and source and application of funds for the respective years then ended. Our examination was made in accordance with generally accepted auditing standards, and accordingly included such tests of the accounting records and such other auditing procedures as we considered necessary in the circumstances. In our opinion, such consolidated financial statements present fairly the financial position of American Cyanamid Company and subsidiaries at December 31, 1971 and 1970 and the results of their operations and changes in financial position for the respec tive years then ended, in conformity with generally accepted accounting principles applied on a consistent basis. New York, N.Y. February 8, 1972 PEAT, MARWICK, MITCHELL & CO. 21 CY0005442 American Cyanamid Company and Subsidiaries 1. Consolidation Principles The consolidated financial statements include the accounts of American Cyanamid Com pany and subsidiaries, excluding real estate subsidiaries (see Note 4) after the elimination of all significant intercompany transactions and balances. Assets, other than plants and facili ties, and liabilities of the foreign subsidiaries are included in the consolidated balance sheets on the basis of appropriate ex change rates at year-end; foreign plants and facilities are in cluded on the basis of exchange rates prevailing at the time of acquisition. The amounts so included comprise net current assets of $93,500,000 in 1971' ($85,200,000 in 1970) and net other assets, principally plants and facilities, less depreciation, of $69,900,000 in 1971 ($63,800,000 in 1970). Net earnings of foreign subsidiaries included in consolidated earnings amount to $31,100,000 in 1971 ($25,100,000 in 1970). The consoli dated earnings employed in the business include the company's equity in the net undistributed earnings of foreign subsidiaries amounting to $111,300,000 in 1971 ($95,800,000 in 1970). 2. Shuiton Merger In April 1971, the company issued 3,092,553 shares of common stock in connection with a statu tory merger pursuant to which Shuiton, Inc. became a whollyowned subsidiary of the company. The merger constitutes a pooling of interests for accounting purposes and, accordingly, the 1971 financial statements include the accounts of Shuiton for the entire year and the 1970 financial statements have been restated to include the Shuiton accounts. Net sales and net earnings for 1970 were restated to include $98,130,000 and $4,352,777 for Shuiton and $1,158,439,700 and $91,525,927 for the company. Net sales and net earnings for the first quarter of 1971 prior to the merger date were $16,437,000 and $466,500 for Shuiton and $290,969,880 and $22,912,153 for the company. The accounting practices of Shuiton and the fiscal periods of Shulton's foreign subsidiaries have been ad justed to conform with those employed by the company. Such adjustments had no material effect on the restated financial statements. 3. Associated Companies The company adopted in 1971 the equity method of accounting for its investments in associ ated companies (20% to 50% owned). Financial statements for prior years have been restated and the net earnings for 1970 are greater by $2,079,512 than those previously reported under the cost method. 4. Real Estate Operations Under the terms of the Sep tember 1970 acquisition agreement for The Ervin Company, the company issued 195,090 additional shares of common stock to the former shareholders of The Ervin Company during 1971 and is obligated to issue up to 292,714 additional shares based on future earnings of The Ervin Company. Late in 1971 American Cyanamid Company issued 173,778 shares of common stock (including 109,091 treasury shares) in connection with the acquisition of two additional real estate companies, Edmund J. Bennett Associates, Inc. and Croyder, Irvin & Co., Inc. These acquisitions constitute poolings of interests and, accordingly, the following condensed combined financial statements of the real estate subsidiaries include the accounts of these companies for the entire year 1971. The earnings of the newly acquired companies are not material within the accounts of American Cyanamid Company and no adjustment of the 1970 financial statements has been made. However, for comparative purposes, the 1970 statements of the real estate subsidiaries have been restated to include the accounts of Edmund J. Bennett Associates, Inc. and Croyder, Irvin & Co., Inc. The real estate subsidiaries are not consolidated with the accounts of the company. Condensed combined financial state ments are as follows: BALANCE SHEET (In thousands of dollars) Assets: Cash................................................................. Mortgage notes and other receivables . Inventories, properties and equipment, net (substantially all pledged to secure mort gage and other notes payable) .... Other assets...................................................... December 31, 1971 1970 (Restated) $ 3,630 $ 2,487 20,674 8,371 104,193 7,501 72,974 2,714 $135,998 $86,546 Liabilities and shareholder's equity: Liabilities, substantially all mortgage and other notes payable (note)........................... $112,437 $69,072 Shareholder's equity: Common stock and capital surplus . Earnings employed in the business . . . 11,783 11.778 10,451 7,023 Total shareholder's equity........................... 23,561 JLM74 $135,998 $86,546 EARNINGS AND EARNINGS EMPLOYED IN THE BUSINESS Sales and revenues........................................... Costs and operating expenses...................... Earnings before income taxes........................... Income taxes................................................ Years ended December 31. 1971 1970 $121,297 111,825 (Restated) $46,663 42,332 9,472 4,717 4,331 1,844 Net earnings...................................................... Earnings employed in the business at begin ning of year ................................................ 4,755 7,023 2,487 4,536 Earnings employed in the business at end of year................................................................. $ 11,778 $ 7,023 Note--The companies are contingently liable at December 31, 1971 for approximately $47,700,000 of mortgage notes assumed by others arising from sales of real estate. Mortgage and other notes payable mature at various dates through the year 2020 and bear interest rates ranging from 4% to 12%. 5. Depreciation Depreciation is provided on a straight-line composite basis over the estimated remaining useful lives of the assets. 22 CY0005443 6. Funded Debt Funded debt not due within one year is comprised of 3^4% promissory notes due 1977 to 1987 ($75,000.000). 5%r,r guaranteed sinking fund debentures due 1980 of a subsidiary (1971-$16,000,000: 1970--$17.000.000), ~3/&% sinking fund debentures due 2001 ($100,000,000 issued in 1971), 6c/c guaranteed notes due 1973 of a subsidiary (1971 --$4,468,142: 1970--$8,936,284) and sundry obligations (1971 -$17,730,021; 1970--$ 16.060,071 ). 7. Incentive Compensation The accounts include provi sion for incentive compensation to officers and other em ployees. A portion of such amount is not payable currently in cash but is contingently payable in common stock of the com pany after employment terminates; pending allotment of the amount available for 1971, the portion so contingently pay able in common stock is not determinable. The amount con tingently payable in respect of allotments for prior years is $4,592,669. 8. Authorized Capital The authorized capital of the com pany includes 650,000 shares of preferred stock with a par value of $1 per share, none of which is outstanding. 9. Dividend Restrictions The 3^4% promissory notes due 1977 to 1987 contain certain restrictions including restrictions on the payment of dividends. As a result of such restrictions, the amount of earnings employed in the business at December 31, 1971 which may be applied to the payment of cash divi dends is limited to $90,000,000. 10. Treasury Stock From time to time the company has acquired shares of its own common stock which are then avail able to fulfill contingent obligations under the company's In centive Compensation Plan, for stock option plans and for other corporate purposes. During 1971, 11,582 treasury shares were delivered to retired participants of the plan and 5,005 treasury shares were issued to employees under the stock option plan. See Note 4 for other issuances of treasury stock. At December 31, 1971 the company owned and held in its treasury 186,820 shares of common stock. The 416,119 shares of treasury stock shown at December 31, 1970 include 103,915 shares equivalent to Shulton treasury stock on that date. 11. Employees' Benefits Employees' benefits include the cost of pension, group insurance and social security programs. The company and its consolidated subsidiaries have various pension plans covering substantially all their employees, in cluding certain employees in foreign countries. The company's policy generally is to accrue and fund pension costs over the service lives of the covered employees. The total pension ex pense was $7,137,000 for 1971 and $6,049,000 for 1970. 12. Stock Options Under the company's stock option plan key employees may be granted options to purchase, at no less than 100% of market value on the date of grant, a maximum of 1,500,000 shares of common stock. In 1968 and 1969 quali fied stock options were granted exercisable over a period of not more than five years from date of grant and, in 1970 and 1971 non-qualified stock options were granted exercisable over ten years from date of grant, all in cumulative install ments of one-third of the number of shares commencing one year after date of grant and annually thereafter. Details of stock option activity for 1971 and 1970 follow: 1970 Granted Exercised Outstanding at year-end 1971 Granted Exercised Outstanding at year-end Non-qualified Number of shares Price per share 171,880 - *31.00 - 171,630 *31.00 184,395 349,630 (*31.25 \ and 1 *36.00 f *31.00 11 *36to.00 Qualified Number of shares Price per share 725 378,335 *25.75 and *33.50 ' *25.75 to *33.50 -- 15,000 346,585 *33.50 *25.75 and *33.50 At December 31, 1971, options for 398,787 shares were exercisable (249,510 in 1970). In connection with the Shulton merger the company as sumed the obligations under various stock option and pur chase plans of Shulton. At December 31, 1971 there were op tions outstanding to purchase 57,785 shares of Cyanamid's stock at prices from $20.49 to $45.52 per share of which op tions for 23,144 shares were exercisable. Options for 2,633 shares were exercised during the year at an average price of $26.69. 13. Earnings Per Share The computation of earnings per share of common stock is based on the average number of shares (excluding treasury shares) outstanding during the year; 48,285,185 in 1971 and 47,994,355 in 1970 after giving effect to the shares issued in connection with the poolings of interests. The stock options described in Note 12 and the shares contingently issuable in connection with the acquisition of The Ervin Company (Note 4) do not result in dilution of earnings per share. 14. Contingent Liability The company is contingently lia ble as guarantor on loans outstanding of associated companies in the amount of $30,200,000 at December 31, 1971. 15. Litigation Reference is made to the remarks under "Litigation" in the foregoing report of the Board of Directors, with respect to the antibiotics litigation in which the company is involved. 23 CY0005444 c t' .v .a. vr r z_> American Cyanamid Company and Subsidiaries Net Seles Contribution of Major Segments (In millions of dollars) Building & Consumer Medical Agricultural Chemical 19% 27% 16% 38% 24% V 25% l8' 35% 24%| ;;.2*% ' 18% 34% 1962 63 '64 28% 27% 21% 17% 18% 33% 33% '.s' ' '65 '66 29% 31% 20% " 19% 19% 17% 32% 33% 32% 19% 17% 32% 33% .19% 18% 30% $1300 -1200 33% -1100 -1000 20% . SIS 18% -900 -800 -700 -600 -500 --400 -300 29% -200 -100 '67 68 '69 '70 71 Ten-Year Summary oi Financial Statistics 1971 Net Sales........................................................................................................................................... $1,283,485 Earnings before Taxes on Income.................................................................................................. Provision for Taxes on Income....................................................................................................... Net Earnings...................................................................................................................................... Dividends on Common Stock (incl. stock dividends)................................................................... 156,411 62,300 94,111 60,907 Average Number of Common Shares at Dec 31 (excl. treasury shares).................................... Earnings per share of Common Stock............................................................................................. Dividends per share of Common Stock (not restated).............................................................. 48,285 1.95 1.25 Provision for depreciation, amortization and depletion.............................................................. Gross addition to plant facilities (incl. acquisitions except Shulton)......................................... 63,615 110,869 Current Assets................................................................................................................................. Current Liabilities............................................................................................................................ Working Capital............................................................................................................................ 545,940 181,696 364,244 Equity in Associated Companies.................................................................................................. Plants, Equipment and Facilities.................................................................................................. Less accumulated depreciation, amortization and depletion................................................... Net Amount....................................................................................................................... 59,627 1,156,550 560,626 595,924 Funded Debt not due within one year............................................................................................ 213,198 Shareholders' Equity: Preferred Stock............................................................................................................................ Common Stock............................................................................................................................ Capital Surplus............................................................................................................................ -- 242,736 34,526 Earnings employed in the business............................................................................................. 573,900 851,162 Less cost of Common Stock held in treasury............................................................................... 5,637 Total Shareholders' Equity.............................................................................................$ 845,525 Exclusive of extraordinary gain (less related income tax) Note--Information on these pages for the years 1970 to 1962 has been restated to include the accounts of Shulton, Inc., on a pooling of interests basis and the adoption of equity accounting for investments in associated companies. 24 1970 $1,256,570 160,409* 67,822 92,587* 60,434 47,994 1.93* 1.25 59,893 94,352 506,340 210,052 296,288 52,978 1,120,689 570,332 550,357 118,168 241,592 37,596 541,779 820,967 12,765 $ 808,202 CY0005445 1969 $1,187,961 179,889 83,524 96,365 60,754 47,606 2.02 1.25 56,199 98,999 492,472 187,885 304,587 55,214 1,053,843 534,246 519,597 118,994 238,832 34,784 503,820 777,436 12,396 $ 765,040 1968 $1,122,391 173,243 78,163 95,080 59,812 47,664 1.99 1.25 55,650 60,325 497,071 203,282 293,789 54,506 988,441 506,897 481,544 105,210 238,495 31,818 470,209 740,522 9,959 $ 730,563 1967 $1,034,652 129,988 53,257 76,731 58,978 47,430 1.62 1.25 51,929 60,181 436,814 164,889 271,925 49,382 965,901 481,456 484,445 111,015 238,156 29,695 438,111 705,962 11,942 $ 694,020 1966 $1,041,438 170,251 69,206 101,045 59,565 47,385 2.13 1.25 46,608 110,920 438,394 183,689 254,705 46,864 947,276 466,631 480,645 110,573 237,860 28,326 420,358 686,544 13,173 $ 673,371 1965 $945,284 172,765 73,166 99,599 51,400 47,140 2.11 1.07/2 43,713 132,637 456,649 189,448 267,201 42,668 880,840 463,575 417,265 J 02,4.50 1964 $847,372 152,418 65,986 86,432 47,652 46,882 1.84 1.00 40,018 51,170 460,0.58 175,103 284,955 39,190 776,973 443,834 333,139 80,832 (A mounts expressed in thousands) 1963 $774,406 13.5,716 65,506 70,210 43,328 47,029 1.49 .90 38,701 50,911 412,814 150,880 261,934 37,463 742,915 417,851 _325,064 _88j065 1962 $708,736 123,229 59,395 63,834 40,137 45,882 1.39 .85 45,720 37,615 367,699 135,352 232,347 31,989 729,087 407,544 321,543 89,649 237,290 26,559 378,124 641,973 12,981 $628,992 237,006 24,580 332,221 593,807 21,668 $572,139 236,362 21,346 293,441 551,149 16,934 $534,215 3 229,185 15,574 263,266 508,028 9,224 $498,804 25 CY0005446 e American Cyanamid Company and Subsidiaries PRINC.PAL SALES OFFICES IN THE U.S. Akron, Ohio Albuquerque, N.M. Atlanta, Ga. Azusa, Calif. Boston, Mass. Bound Brook, N.J. Buffalo, N.Y. Charlotte, N.C. Chicago, 111. Cincinnati, Ohio Danbury, Conn. Denver, Colo. Des Moines, Iowa Detroit, Mich. El Segundo, Calif. Fairfield, N.J. Falls Church, Va. Findeme, N.J, Grand Rapids, Mich. Greensboro, N.C. Clearwater, Fla. Havre de Grace, Md. Cleveland, Ohio Clifton, N.J. Dallas, Tex. Honolulu, Hawaii Houston, Tex. Indianapolis, Ind. Jacksonville, Fla. Kalamazoo, Mich. Kansas City, Mo. Knoxville, Tenn. La Puente, Calif. Latrobe, Pa. Linden, N.J. Los Angeles, Calif. Louisville, Ky. Memphis, Tenn. Miami, Fla. Milwaukee, Wis. Minneapolis, Minn. Mobile, Ala. Montgomery, Ala. Nashville, Tenn. Natick, Mass. New Castle, Pa. New Orleans, La. New York, N.Y. Oakland, Calif. Oklahoma City, Okla. Omaha, Neb. Pearl River, N.Y. Philadelphia, Pa. Phoenix, Ariz. Pittsburgh, Pa. Plainview, L.I., N.Y. Portland, Ore. Princeton, N.J. Renton (Seattle), Wash. Richmond, Va. St. Louis, Mo. San Francisco, Calif. South Bend, Ind. Springfield, Ohio Tampa, Fla. Tucson, Ariz. Wallingford, Conn. Washington, D.C. Wayne, N.J. Woodbury, L.I., N.Y. PRINCIPAL SALES OFFICES OUTSIDE THE U.S. Auckland, N.Z. Guatemala City, Bangkok, Thailand Guatemala Barcelona, Spain Hato Rey, Puerto Rico Bogota, Colombia Bombay, India Hong Kong Johannesburg, S. Africa Brussels, Belgium Karachi, Pakistan Buenos Aires, Argentina Kinshasa, Zaire (Congo) Caracas, Venezuela Leiden, The Netherlands Catania, Italy Lima, Peru Copenhagen, Denmark London, England Madrid, Spain Makati Rizal, Philippines Managua, Nicaragua Manila, Philippines Melbourne, Australia Mexico D.F., Mexico Milan, Italy Montreal, Canada Munich, Germany Oullins (Lyon), France Paris, France Rio de Janeiro, Brazil Rome, Italy Rotterdam, The Netherlands San Juan, Puerto Rico Sao Paulo, Brazil Seoul, Korea Singapore Stockholm, Sweden Sydney, Australia Taipei, Taiwan Tilbury, Canada Tokyo, Japan Toronto, Canada Vancouver, Canada Zurich, Switzerland PLANTS A t h e J.f Albany, Ga. Alden, Iowa Andersonville, Ga. Azusa, Calif. Benton, Ark. Bound Brook, N.J. Brewster, Fla. Buchanan, N.Y. Charlotte, N.C. Chattanooga, Tenn. Chicago, III. Clifton, N.J. Cloquet, Minn. Columbus, Ohio Coosa Pines, Ala. Damascus, Va. Hannibal, Mo. Danbury, Conn. Havre de Grace, Md. Demopolis, Ala. Hughestown, Pa. DeRidder, La. Jackson, Miss. Edison, N.J. Joliet, 111. Escanaba, Mich. Kalamazoo, Mich. Evendale La Puente, Calif. (Cincinnati), Ohio Longview, Wash. Fairfield, N.J. Madisonville, Ky. Findeme, N.J. Marietta, Ohio Fort Madison, Iowa Mays Landing, N.J. Fort Worth, Tex. Memphis, Tenn. Fortier (New Orleans) La. Miami, Fla. Georgetown, S.C. Michigan City, Ind. Hamilton, Ohio Mobile, Ala. Monticello, Miss. Moosic, Pa. Nashville, Tenn. Natick, Mass. New Castle, Pa. Painesville, Ohio Pearl River, N.Y. Pensacola, Fla. Ferrysburg, Ohio Philadelphia, Pa. Plainview, L.I., N.Y. Plymouth, N.C. Pottsville, Pa. Princeton, N.J. Sanford, Me. San Francisco, Calif. Savannah, Ga. Springfield, Ohio Springhill, La. Stamford, Conn. Sunset/Whitney Ranch (Sierra), Calif. Tarboro, N.C. Wallingford, Conn. Warners, N.J. Weeping Water, Neb. West Springfield, Mass. Willow Island, W.Va. Woodbridge, N.J. Woodbury, L.I., N.Y. PLANTS OUTSIDe tHE U.S. Beachville, Canada Bogota, Colombia Bradford, England Brussels, Belgium Buenos Aires, Argentina (3) Bulsar, India Caracas, Venezuela (3) Cartagena, Colombia Catania, Italy Gosport, England Guadalajara, Mexico Guatemala City, Guatemala Hsinchu, Taiwan Johannesburg, S. Africa Karachi, Pakistan Leiden, The Netherlands Madrid, Spain Managua, Nicaragua Melbourne, Australia Mexico D.F., Mexico (2) Milan, Italy Montreal, Canada Munich, Germany Newcastle, England Niagara Falls, Canada (2) Orillia, Canada Oullins (Lyon), France Rezende, Brazil Rio de Janeiro, Brazil Rotterdam, The Netherlands St. Jean, Canada Sao Paulo, Brazil Sydney, Australia (2) Tilbury, Canada Toronto, Canada Witbank, S. Africa A A L' SEFVICS CENTERS (Bulk blending fertilizer plants) 123 centers in fourteen states in the U.S.; fourteen wholly owned and twenty-one 50% owned in Canada. Bound Brook, N.J. Bradford, England Clifton, N.J. Danbury, Conn. East Paterson, N.J. Evendale, Ohio Findeme, N.J. Gosport, England Los Banos, Philippines Niagara Falls, Canada Painesville, Ohio Pearl River, N.Y. Pensacola, Fla. Porto Alegre, Brazil Princeton, N.J. Stamford, Conn. PRINCIPAL ASSOCIATED COMPANIES (% owned) Arizona Chemical Company (50%) Colfax Laboratories (India) Private Limited (40%) Cyanamid-Ketjen Katalysator N.V. (50%) Cyanaquim, S.A. de C.V. (40%) Cyanenka S.A. (40%) Formica International Limited (40%) Jefferson Chemical Company, Inc. (50%) Lederle (Japan), Ltd. (50%) Sherkat Sahami Cyanamid-KBC (50%) Shulton Africa Ltd. (40%) N.V. Titaandioxydefabriek Tiofine (50%) c i a v a mi c American Cyanamid Company WAYNE, NEW JERSEY 07470 t r a n s f e r a g e n t a n d r e g is t r a r , The Chase Manhattan Bank, N.A., New York, N.Y. 10015 Printed in U.S.A. CY0005447