Document LKK7VvLXjvBQVLYjw6MDvNKyg

American Cyanamid Company Annual Report 1970 American Cyanamid Company Report of the Board of Directors for the Year Ended December 31,1970 TABLE OF CONTENTS Letter to the Shareholders--pages 1-2 Year In Review --pages 4-16 Divisions and Principal Subsidiaries--page 17 Financial Review, Accountants' Report--pages 18-23 Ten Year Comparative Summary--pages 24-25 Plants, Laboratories and Offices--tacit cover 1970 Sales Contributions of Major Segments to Sales and Earnings 1969 1970 Earnings (approx.) (excludes extraordinary gain) Building & Consumer 1969 Medical Chemical ---------------- Chemical Agricultural Dividends and Other Income ----------------------------- Chemical -------- ----Chemical American Cyanamid Company and Subsidiaries Highlights For the Years Ended December 31,1970 and 1969 Operating Results Sales......................................................... Earnings before income taxes............................... Income taxes......................................................... Net earnings......................................................... Dividends on Common Stock paid in cash . . . Earnings per share Common Stock..................... Dividends per share Common Stock..................... Depreciation and depletion.................................... Expenditures for capital additions.......................... j i 1970 $1,158,439,700 157,925,927* 66,400,000* 91,525,927* 55,378,403 2.04* 1.25 58,513,790 92,671,605 1969 $1,087,097,977 166,870,096 77,000,000 89,870,096 55,107,596 2.02 1.25 54,834,159 95,833,461 Year-End Position Total assets.............................................................. Funded debt......................................................... Shareholders' equity............................................... Shares outstanding at end of year: Common Stock (excluding treasury shares) . . Number of shareholders.......................................... Number of employees..................................................... 1,065,927,628 116,996,355 730,795,990 44,869,954 118,444 38,020 1,000,872,093 118,993,967 690,829,736 44,366,194 122,219 36,325 Including extraordinary gain (less related income tax of $1,900,000) of $4,850,526 or Ilf per share Cover: Cyanamid is a diversified, consumer-oriented company, active in leading growth areas of the economy and responsive to basic human needs throughout the world. CY0005394 To Our Shareholders: Cyanamid's business continued to expand during 1970, and worldwide sales set another record. Sales in 1970 were $1,158,440,000, up 7% from $1,087,098,000 in 1969. Despite the general economic slowdown in the United States, sales increases in those areas of Cyanamid's business less vul nerable to fluctuations in the economy -- medical, consumer, and agricul tural--more than offset the softness in chemicals, acrylic fibers, and build ing products, where the effect of the slowdown was apparent. Higher sales outside the United States and a fibers acquisition completed late in 1969 also contributed to the increase. Including an extraordinary gain of $4,850,000 or 11 per share, 1970 earnings were $91,526,000 or $2.04 per share, compared to $89,870,000 or $2.02 per share in 1969. Without the extraordinary gain, 1970 earnings were $86,676,000 or $1.93 per share. The extraordinary gain resulted from the sale of Cyanamid's 49% in terest in Southern Minerals Corpora tion, Southern Pipeline Corporation, and Southern Petroleum Corporation. In the comparison with 1969, earn ings for 1970, before the extraordi nary gain, benefited from the higher volume and lower income taxes. These benefits were more than offset, how ever, by lower profit margins, higher interest expense, and larger promo tional expenses on new products. Productivity continues to lag behind the inflationary increases in salary, Clifford D. Siverd, President and Chief Executive Officer wage, and employee benefit costs and higher transportation expenses. More over, despite firming in some product lines, selling prices overall were some what lower than a year ago, especially for fibers, building products, medical products, and some agricultural prod ucts overseas. In some areas of busi ness the pressure on profit margins became more pronounced in the third and fourth quarters. During the year, Cyanamid con tinued its expansion into new highgrowth business areas. In December, agreement for merger was reached between Cyanamid and Shulton, Inc., with the Shulton common stockhold ers to receive 0.96 share of Cyanamid common stock in exchange for each common share of Shulton. The merger is expected to become effective in the spring of 1971. With this move, Cyanamid enters the field of cosmet ics and toiletries. In September the company entered the business of residential construc tion and community development when The Ervin Company, a devel oper of residential communities in the Southeast with headquarters at Char lotte, North Carolina, became a part of the Cyanamid organization. In November, Sunstate Builders, Inc., a residential developer in the Tampa, Florida, area, was acquired. Other acquisitions were Farmer Electric Products Co., Inc., and Chem Lab Corporation. Farmer Electric is a CY0005395 manufacturer of photoelectric and re lated industrial-control products em ployed in equipment marketed by Cyanamid's Decision Making Systems Department. Chem Lab Corporation is a small company which owns two clinical and diagnostic laboratories. Capital expenditures in 1970, pri marily for new and enlarged produc tion facilities and for acquisitions, were approximately $93 million, as compared with $96 million in 1969. Along with the year's moves toward expansion and modernization, Cyanamid intensified its continuing exami nation of its many existing businesses. Some of these have grown mature, and in cases where the company has found it possible to maintain its market position with less marketing and technical effort than previously expended, this effort is being reduced. In some other businesses, profitability or growth prospects have declined, and moves have been made for orderly de-emphasis or, in extreme cases, elimination. Thus Cyanamid's inter est in the Southern group of companies was sold, as already mentioned; For mica Corporation began phasing out of its relatively small and unprofitable industrial plastic laminates business; and plans were announced to close a small and obsolete titanium dioxide plant at Piney River, Virginia, in June 1971. The objective of such moves is to assure optimum use of Cyanamid's resources, and these steps have been 2 accompanied by further streamlining of the company's organization. The Plastics Division was merged with the Industrial Chemicals Division, effec tive January 1, 1971, to form the new Industrial Chemicals and Plastics Division. With the general concern over social and environmental problems mounting rapidly, Cyanamid con tinued its efforts to aid in their solu tion. Capital expenditures for pollution control during the year were approxi mately $5,500,000, bringing the cumulative total of such expenditures to approximately $50,000,000 to date. The annual cost of operating Cy anamid's pollution-control facilities, manned by a work force equivalent to 250 full-time employees, is approxi mately $10,000,000. During 1970 the company stepped up its efforts in the recruiting of em ployees from minority groups, and it made significant progress both in hir ing candidates from the ranks of the disadvantaged and in improving the retention rate for such employees. The company hopes for further prog ress in these areas during 1971, but the economic slowdown is making such progress increasingly difficult. We record with regret the death on September 13 of Burton F. Bowman, vice president. At the time of his death, Mr. Bowman, who had joined Cyanamid in 1954 and served the company with distinction in a num ber of key assignments, had opera tional responsibility for the Consumer Products and Fibers Divisions and for directing the functions of Cyanamid with respect to Formica Corporation. These responsibilities were assumed by George W. Russell, executive vice president. To look ahead, the prospects for the U. S. economy in 1971 are still uncer tain. While there are some signs that the pace of inflation may be abating to some extent, the costs of doing busi ness remain under strong upward pressure. Furthermore, the softness in chemicals, fibers, and building prod ucts has continued into 1971. How ever, many economists are cautiously optimistic that the second half of the year will bring the resumption of at least modest growth in the economy. When the turnaround in the economy materializes, Cyanamid, with its broad diversification and its many strengths, is in an excellent position to benefit. As always, our greatest asset is our people. For their competence and ded ication, we are grateful. For the Board of Directors PRESIDENT Wayne, New Jersey February 9, 1971 CY0005396 Members of the Executive Committee are (left to right): Dr. Robert C. Swain, Ex ecutive Vice President; Dr. Nolan B. Sommer, Executive Vice President; Mr. Siverd, Committee Chairman; George W. Russell, Executive Vice President; and Gordon C. Walker, Executive Vice President. Vice Presidents and Directors Thomas P. Forbath (left) and Ernest G. Hesse Vice Presidents Dr. James F. Bourland (left) and Thomas P. Turchan BOARD OF DIRECTORS JAMES B. FISK THOMAS P. FORBATH ERNEST G. HESSE L. EMERY KATZENBACH LAN K. MAC GREGOR THOMAS L. PERKINS GEORGE W. RUSSELL CLIFFORD D. SIVERD NOLAN B. SOMMER ROBERT C. SWAIN GORDON C. WALKER OFFICERS CLIFFORD D. SIVERD, President and Chief Executive Officer GEORGE W. RUSSELL, Executive Vice President NOLAN B. SOMMER, Executive Vice President ROBERT C. SWAIN, Executive Vice President GORDON C. WALKER, Executive Vice President JAMES F. BOURLAND, Vice President THOMAS P. FORBATH, Vice President ERNEST G. HESSE, Vice President THOMAS P. TURCHAN, Vice President J. CLIFFORD BLAUVELT, Controller HAROLD B. GROSS, Secretary and General Counsel LEONARD T. MURPHY, Treasurer FINANCE COMMITTEE JAMES B. FISK, Chairman L. EMERY KATZENBACH IAN K. MAC GREGOR THOMAS L. PERKINS CLIFFORD D. SIVERD (ex-officio) GORDON C. WALKER EXECUTIVE COMMITTEE CLIFFORD D. SIVERD, Chairman GEORGE W. RUSSELL NOLAN B. SOMMER ROBERT C. SWAIN GORDON C. WALKER Leonard T. Murphy, Treasurer (left), Harold B. Gross, Secretary and General Counsel (center), and J. Clifford Blauvelt, Controller CY0005397 Year in Review The highlights of 1970 in Cyanaxnid's major market segments are pre sented in the following pages. Fur ther information on sales and earn ings will be found in the Financial Review on page 18. The operating divisions and principal subsidiaries, and their more important product lines, are listed on page 17. Building and Consumer 1970 1969 ' Worldwide Sales {$ millions) ^ $315 $278 % Total Sales (approx.) ,, 27% 26% % Total Earnings {approx.)115% 17% - In recent years, this has been the fastest-growing segment of Cyanamid's business. It includes the princi pal Cyanamid products promoted di rectly to the consumer--Br ec k haircare preparations, the household prod ucts, Cyanamid's fibers, wall cover ings, Fo r mic a brand laminates, and other specialty building products. In this part of the business, the year was marked by the introduction of a number of promising new prod ucts and by the integration into Cyanamid's fibers business of the poly ester and rayon fiber products ac quired with the I.R.C. Fibers Division of Midland-Ross Corporation at the end of 1969. Sales of building and consumer products were higher in 1970 than in 1969 as a result of the acquisition of the I R C fibers. A rise in sales of con sumer products was not sufficient to offset declines for acrylic fibers and the products marketed by For mica Corporation. Earnings declined, chiefly because of lower selling prices for fibers and building products, high er operating costs, and larger expend itures for advertising and promotion of new products. In December, agreement for merger was reached between Cyanamid and Shulton, Inc., a leading international producer and marketer of toiletry, fragrance, and cosmetic products with headquarters in Clifton, New Jersey. Among Shulton's major brand names are Ol d Sp ic e shaving preparations, Ma n -Po w e r deodorants, De s e r t Fl o w e r skin-care and bath prod ucts, Co r n Sil k cosmetics, and Nin a Ric c i and Ca r v e n perfumes and fragrances. The merger of Shulton with a subsidiary of Cyanamid is sub ject to the approval of the Shulton common stockholders and is expected to become effective early in the second quarter of 1971. Holders of Shulton common stock will receive 0.96 share of Cyanamid common stock for each Shulton share. After the merger, the Shulton business will continue to op erate under the Shulton name in its present location and with its present management. In the Breck hair-care line, Fr e s h Ha ir instant shampoo and Br e c k Sa t in hair conditioner were introduced in 1970, Br e c k Ba s ic texturizing shampoo in early 1971. Consumer Products: The year brought a rise in sales of consumer products both in the United States and abroad, and the increase reflects not only new product introductions but also im proved formulating, packaging, and marketing of existing products. In the hair-care product group, Breck's line of shampoos for dry, normal, and oily hair showed a sales gain for the year, aided by packaging in new plastic shatterproof contain ers and adoption of a new formula that conditions hair while both wet and dry. Fr e s h Ha ir instant dry shampoo, introduced nationally dur ing the third quarter, received rapid trade acceptance, with indications that consumer use will make it an important contender in this part of the shampoo market. During the third quarter, Br ec k Sa t in hair conditioner was intro duced as a complement to Br ec k Bas ic hair texturizer, with which Breck virtually created a new hair- 4 CY0005398 care product category two years ago. Br e c k Sa t in , formulated for hair that tends to be dry, brittle, or color-coarse has met with good consumer response. The Miss Br ec k hair sprays showed a significant sales gain for the year, supported by the introduction of a new larger-size package and in creased promotional activity in the youth market. Also, the Br ec k hair color line was broadened during the year with the introduction of three new shades. To aid in meeting the expanded demand and to further improve ser vice to customers in the West and Mid west, construction was begun in the spring on a new Breck plant in Fort Madison, Iowa. Completion is sched uled for mid-1971. The output at Fort Madison will supplement that of the existing plant at West Springfield, Massachusetts. Among the household products, Pin e -So l cleaner-disinfectant-deo dorizer showed a further gain in sales during the year, maintaining its No. 1 dollar sales position in the liquid cleaner category. Fo r mic a Fl o o r Sh in e finish, introduced during the first quarter of the year, met with very good acceptance. Cyanamid's polymer technology was important in the de velopment of Fo r mic a Fl o o r Sh in e , which gives tile, vinyl, linoleum, and other similar types of floors a hard polymer finish that resists scuffs, stains, and spills. As announced previously, Cyanamid had signed an agreement in Octo ber to acquire Elizabeth Arden Sales Corporation. This agreement pre dated an arrangement made by Eli Lilly and Company to buy Arden. Not withstanding completion, in January 1971, of Lilly's acquisition of Arden, Cyanamid's suits for damages and other relief for failure to honor its prior agreement to buy Arden are pro ceeding. Fibers: With the IRC acquisition at the end of 1969, Cyanamid became a multi-fiber producer, and during 1970 it significantly broadened its activities in the textile industry. Fiber products now produced by Cyanamid for the apparel and home furnishings mar kets include Cr e s l a n acrylic fibers Among Cyanamid's products for the home are Pin e -So l liquid cleaner, Fo r mic a Fl o o r Sh in e finish, Cr e s l a n acrylic carpet fiber, and Fo r mic a brand laminates for such applications as kitchen cabinets, tables, walls, and counter tops. 5 CY0005399 Independence was one of 225 designs added to the line of Sa n it a s and Wa l l c l a d vinyl-coated fabric wall coverings during 1970. Knit outerwear and accessories, such as winter-warming scarves and hats, are growth markets for Cr es l an acrylic fibers. and Dy -Lo k solution-dyed rayon yam. In addition, a range of hightenacity rayon and polyester yams is offered for industrial and tire uses. Cyanamid's 1970 sales of acrylic fibers in the U. S. were below those of 1969, with selling prices down signifi cantly. Sales to overseas markets were about the same as a year ago. The principal factor in the domestic sales decline was softness in the carpet market, which reflected the decline in U. S. housing starts and tight money conditions. Prolonged inventory ad justments in the carpet industry af fected sales of all carpet fibers, in cluding the acrylics. In the apparel area, Cr es l an acryl ic fibers in 1970 achieved further penetration of the knit outerwear and accessories markets. Despite generally soft conditions, Cyanamid's 1970 do mestic sales of acrylic fibers to the apparel market exceeded 1969 levels. Cyanamid's customers were as sisted during 1970 in developing new product lines utilizing the unique fea tures of Cr e s l a n carpet fibers which make possible piece-dyed and cross piece-dyed effects. The new carpet application facility installed in the Cr e s l a n fiber plant near Pensacola, Florida, was completed in the fourth quarter of the year and has already assisted in accelerating the develop ment of new fiber products. To meet an expected upturn in con sumption of acrylic fibers, Cyanamid late in 1970 began another sizable ex pansion of the Cr e s l a n fiber plant. The new facilities are scheduled for completion in the latter half of 1971. Cyanamid's sales of fiber products for industrial uses were adversely af fected in 1970 by strikes in the rubber, automobile, and trucking in dustries. Long-term prospects remain favorable, and consistent with longrange plans, polyester tire yarn ca pacity at Painesville, Ohio, is being expanded, with the new facilities scheduled for completion in late 1971 and early 1972. Efforts are being increased to ac celerate introduction of new IRC polyester industrial products now un der development. Formica Corporation: In the United States, sales of the Fo r mic a brand laminates, Sa n it a s and Wa l l c l a d wall coverings, Fia t shower and laundry components, and other spe cialty building products marketed by Formica Corporation were lower in 1970 than in 1969, chiefly because of the slump in new home building, re duced commercial construction, and lower selling prices. Despite the decline in domestic sales, Formica in 1970 broadened its position as a major producer of lami nate-surfaced panel systems. Panel System 202, a moisture-resistant pan eling for areas of high humidity such as bathrooms, met with increasing ac ceptance for residential and commer cial remodeling. In addition, Formica obtained a Class I fire rating on its new Panel System 101, which ex panded the potential of all panel sys tems for use in high-rise buildings as a surfacing for corridor walls, ele vator cars, and the like. During the year, new one-piece Fia t modular tubs and tub-shower combinations were successfully testmarketed in several color selections. These attractive and functional units, the first to employ the technology of thermoforming with Cyanamid's Ac r y l it e acrylic plastic, represent a highly practical new concept in modular bathroom fixtures. Further progress was made in lami nate design with the development of new textured--or "low relief'--threedimensional surfacing for general ap plication in residential and-commer cial construction. Two slate designs introduced in mid-1970 achieved sub stantial sales, and several additional deep-etched, embossed, and debossed designs were introduced early in 1971. To aid in meeting increased de mand for Sa n it a s and Wa l l c l a d wall coverings and to provide manu facturing flexibility, new facilities for production of these materials were installed at Hughestown, Pennsyl vania. The new installation was placed in partial production during the latter half of the year, and it will reach full-scale operation early in 1971. Production at the new location supplements that at Buchanan, New York. During 1970, 225 new designs were added to the Sa n it a s and Wa l l c l a d lines, with a substantial number of additional designs planned for 1971. Late in the year, Formica Corpora tion announced its decision to with draw from the industrial laminates business and to close its Winton Place plant in Cincinnati. The indus- 6 CY0005400 trial business--consisting chiefly of the production and sale of molded components for the textile industry, copper-clad materials used in printed circuitry, and special grades of lami nates for mechanical and chemical applications--accounted for less than 15% of Formica Corporation's total sales and had been unprofitable in recent years. Continued operation of this plant would also have required the installation of pollution-control equipment which could not be econ omically justified. Attempts to sell the industrial operation, in order to keep it a viable enterprise, were unsuccess ful. The decision leaves Formica free to place fuller emphasis on its pri mary objective--the development and marketing of quality products for home building, commercial construc tion, and the furniture industry. Medical 1970 1969 Worldwide Sales ($ millions) $243 $231 % Total Sales (approx.) 21% 21% % Total Earnings (approx.) 36% 37% Cyanamid's medical products in clude the well-known Lederle line of pharmaceuticals and biologicals, Da vis & Geek surgical sutures and hospi tal specialties, fine chemicals and pharmaceutical intermediates, and a line of reagents and diagnostic prod ucts for clinical laboratories. The company's medical business was broadened to include the laboratory services themselves this year by acqui sition of a small clinical laboratory. Cyanamid's worldwide medical sales were higher in 1970 than in 1969. While domestic sales were about the same as a year ago, there was a sig nificant sales increase overseas, in part reflecting continued growth in the acceptance of My a mb u t o l ethambutol, the antituberculosis drug in troduced by Cyanamid in 1967. Earnings in the medical segment Lederle pharmaceuticals, color-coded and brightly labeled for easier identification, include St r e s s t a b s 600 nutritional supplement and Ax p e n ampicillin trihydrate for oral suspension, both new in 1970, as well as antibiotics like Ac h r o my c in tetracycline. were somewhat lower than in 1969 as a result of lower selling prices for some of the medical products and con tinued rising costs of doing business. In a major marketing move in midSeptember, the U.S. selling prices of Ac h r o my c in and Ac h r o my c in V tetracycline tablets and capsules were reduced to levels which made these products competitive in price with generic tetracyclines. The price re duction put physicians and pharma cists in a better position to provide patients with Lederle's high-quality Ac h r o my c in products, which have been the standard of the industry CY0005401 De x o n sutures, introduced in England in 1970 and in the U.S. and Canada in 1971, are the first wholly synthetic ab sorbable sutures. since the introduction of the tetra cycline antibiotics. The resulting in crease in unit volume has exceeded expectations. Several new products were intro duced during the year. In July, Dex o n sutures, the first wholly syn thetic sutures which are completely absorbable by the body, were pro duced and made available in England, where they are meeting with excellent acceptance. The strength, absorbabil ity, and reduced tissue irritation of these sutures are expected to favor their use in a wide range of surgical procedures. They were cleared for use in Canada in June, and in November the Food and Drug Administration approved their production and sale in the United States. Introduction in the U. S. and Canada began early in 1971, and the sutures will be made available to physicians in additional markets abroad in succeeding months. Fl u -Imu n e * ultra-purified influen za vaccine was introduced in July. This product substantially reduces possible swelling and tenderness after injection. It is made by a sophisticated process which removes unwanted pro tein material known to cause reac tions in some individuals. St r e s s t a b s 600 nutritional sup plement, formulated to provide the Research on the molecular structure of crystals aided in development of the new broad-spectrum antibiotic, Min o c in minocycline. physician with a new and signifi cantly more potent preparation for combating certain vitamin deficien cies associated with physiologic stress, was introduced in April. This type of stress can accompany convalescence, fractures, wound-healing, and bums. St r es s t abs 600 is a unique formula tion of vitamins C, E, and B complex, and its introduction has resulted in an increased market share for Lederle vitamins. Following appropriate clearances, Lederle's newest broad-spectrum anti biotic, Min o c in minocycline, will be introduced abroad during the first half of 1971. Marketing in the U. S. awaits Food and Drug Administration clearance. Min o c in is distinguished by its activity against certain strains of bacteria which are resistant to other antibiotics. Developed over an eight-year period, this high-potency, semisynthetic tetracycline represents the fourth generation of important broad-spectrum antibiotics discov ered by Lederle, beginning with Au r e o my c in chlortetracycline. Progress was made during the year in broadening Cyanamid's medical business to include electromedical devices and diagnostic and other med ical services. In June, Cyanamid en tered into an agreement to cooperate with ESB Incorporated in the devel opment, manufacture, and sale of electronic cardiac pacers and other electromedical devices, and animal studies with two types of improved pacers are now in progress. In No vember, Cyanamid purchased Chem Lab Corporation, with clinical and diagnostic laboratories in Dade Coun ty, Florida, and Columbus, Ohio. At the end of 1970, the final out come of government moves to de certify a number of Lederle's com bination drug products was still uncertain. Four of these products are considered important in their contri bution to sales--Ac h r o c id in tetra cycline-antihistamine-analgesic com pound, Ac h r o s t a t in tetracycline and nystatin, De c l o s t a t in demeclocycline and nystatin, and Ar is t o min steroid-antihistamine. Many years ago, before marketing of these four products began, each of them was approved by the Food and Drug Administration, and in the years since these approvals were given, many thousands of physicians have pre scribed these products for millions of patients. The moves toward decertification result from a review by the Food and Drug Administration of the efficacy and safety of all prescription phar maceutical products which had been approved by it after 1938 and prior to enactment of the Drug Amendments of 1962. The four Lederle products named above were ruled to lack sub stantial evidence of effectiveness as combinations, even though their prin cipal therapeutic components have been found "effective" by the FDA and no question has been raised as to their safety. Cyanamid feels that the FDA moves with respect to these products are un justified. It has filed objections to the FDA rulings, and the products remain on the market while these objections are under consideration. Should the final outcome be removal of any of them from the market, it is difficult to assess the financial impact on the company, since increased prescription of the individual ingredients would probably result and would to some extent cushion the effects of decer tification. 8 Trademark CY0005402 Agricultural 1970 1969 Worldwide Sales {$ millions) $228 $196 % Total Sales (approx.) 20% 18% % Total Earnings (approx.) 16% 11% Cyanamid's products for agriculture fall into three broad groups: animal industry products, pesticides, and fer tilizers. Specialties are important in both the animal industry and the pesticide groups. Cyanamid's worldwide agricultural sales and earnings in 1970 rose sig nificantly above the levels of 1969, with animal industry products leading the advance in the U. S. Pesticides contributed strongly in both the do mestic and overseas markets. A major part of the animal industry product group consists of medicated feed supplements. Cyanamid's line of these supplements is based largely upon the broad-spectrum antibiotic Au r e o my c in chlortetracycline. The principal product in this line, Au r eo S'P 250 medicated feed premix for swine, continued as the world's lead ing antibiotic feed supplement during 1970, with sales substantially exceed ing last year's record-breaking level. To meet the increasing demand for this and other Au r e o my c in products, a new feed-grade chlortetracycline fermentation unit is being built at Hannibal, Missouri. The new unit, which will come on stream in 1972, will expand Cyanamid's U. S. pro duction capacity for feed-grade Au r e o my c in by more than 25%. It will further augment production ex pansions which have already been accomplished over the past two years at the Willow Island, West Virginia, and Pearl River, New York, plants. Although antibiotic feed supple ments have been in use for nearly two decades, some concern has been ex pressed that their use might lead to the development of antibiotic-resist ant bacteria, thus posing a threat to Animal industry products include Au r eo S*P 250 premix for swine, the world's leading antibiotic feed supplement. 9 CY0005403 Cy t h io n insecticide, one of Cyanamid's non-persistent pesticides, was widely used in mosquito control programs. public health. Extensive research in our laboratories and elsewhere, as well as the experience of livestock and poultry producers with millions of animals, continues to provide assur ance of the safety and effectiveness of these products. During the year a symposium was held by the New York Academy of Sciences at which the 10 available scientific data were exten sively reviewed, and the general con sensus was that there is no firm evidence pointing to any hazard to public health. Modem animal agri culture requires the use of antibioticcontaining feeds in order to make possible economical and abundant meat supplies for a growing world population. Sales of dicalcium phosphate and ground limestone, added to the animal feed line through the acquisition of Sargent Calcium Co. in 1969, showed substantial increases in 1970. To aid in meeting the growing demand, work was begun on new dicalcium phos phate units scheduled for completion in mid-1971 in the Welland plant at Niagara Falls, Ontario, Canada, and in early 1972 at Hannibal, Missouri. Tr a mis o l levamisole hydrochlo ride, a broad-spectrum anthelmintic to control the intestinal parasites of farm animals, captured a significant share of the U. S. cattle anthelmintic market during 1970, the first full year in which this product has been on the domestic market. Food and Drug Ad ministration clearance for use in sheep was obtained late in 1970, and applications have been made for swine clearances. This dewormer has achieved excellent market penetration in Latin America, where Cyanamid in troduced it in 1967. Construction of additional production facilities, sched uled for completion in mid-1971,began last year at Bound Brook, New Jersey. In the important pesticides part of the business, sales rose moderately in the U. S. and substantially abroad. The gain in the U. S. was paced by the further progress of Th ime t soil and systemic insecticide, which achieved record sales in 1970 as a result of its demonstrated performance in con trolling the com rootworm. While rather light insect infestations during the latter part of the year in the U. S. reduced the total usage of many pes ticides, Cy g o n * systemic insecticide and Cy t h io n insecticide, Cyanamid's premium-grade malathion, maintained favorable market posi tions. It should be noted that these are all non-persistent insecticides, and we anticipate that their sales will benefit, both in the U. S. and abroad, from the increasingly stringent restrictions on uses of so-called "hard" insecticides. Expanded and improved facilities for the manufacture of Cy g o n in the Warners plant at Linden, New Jersey, were placed in operation early in the year. Significant improvements are be ing achieved in manufacturing costs, and prices have been reduced in order to further expand the growing mar ket opportunities for this insecticide. Outside the U. S., the principal contributor to the strong sies gain for pesticides was malathion insecti cide. Cy o l a n e systemic insecti cide, used for control of the cotton leafworm in the Middle East, and Cy c o c el plant growth regulant also turned in good performances. Because of changes in market con ditions, sales of parathion insecti cides were discontinued during the year, and it was decided not to rebuild the para-nitrophenol plant at Willow Trademark CY0005404 Island, West Virginia, which pro duced intermediates for parathion and which was severely damaged by an explosion late in 1969. The invest ment in the plant in excess of amounts recovered from insurance was charged against depreciation re serves, and there was consequently lit tle adverse effect on current earnings. For fertilizer products, Cyanamid's worldwide sales for 1970 were well above those of a year ago. Sizable gains in the U. S. and Canada much more than offset a decline in export sales to overseas markets. Unfavor able ocean freight rates combined with worldwide overcapacity have significantly reduced U. S. participa tion in the overseas fertilizer markets. Here at home, favorable weather conditions, coupled with improved grain prices, resulted in a 7% to 8% increase in fertilizer consumption for the year. The increased volume, plus production curtailments in the indus try, improved the fertilizer supply-de mand balance, and the first signs of a turnaround in prices have appeared in the marketplace. Despite the improve ment, however, results from the fertil izer business are still unsatisfactory. Late in the year, Cyanamid entered a new agricultural business area-- commercial farming. Through sub sidiaries, Cyanamid and John Han cock Mutual Life Insurance Company purchased 35,000 acres near Englehard, North Carolina, to be used for the production of feed grain. This land will be cleared at the rate of 7,000 acres per year, so that full crop production will be reached in 1976. It will be operated under the name Mattamuskeet Farms. Chemical 1970 1969 Worldwide Sales ($ millions) $373 $382 % Total Sales (approx.) 32% 35% % Total Earnings (approx.) 21% 25% In chemicals, Cyanamid manufac tures a wide variety of upgraded spe cialty products which it markets to a broad spectrum of industries. Largevolume commodity chemicals are gen erally produced only where needed in significant quantities as raw materials for the specialty products. Worldwide chemical sales in 1970 were somewhat lower than in 1969. li CY0005405 Chemical sales showed a good in crease outside the U. S., but the rise was not sufficient to offset a domestic decline, which reflected the slowdown in the U. S. economy. Earnings in the chemical segment were significantly below the 1969 level. Although selling prices were generally stable, earnings were affec ted by the decline in volume and by greater pressure on profit margins resulting from inflationary increases in the costs of doing business. A number of new or expanded chemical plant facilities, designed to lower manufacturing costs through use of improved production processes and increased throughput, were under construction or completed during 1970. Erection of a large new chlo ride-process titanium dioxide plant at Savannah, Georgia, was completed and the plant was placed in commer cial operation during the fourth quar ter. This facility has provided a sig nificant increase in capacity for Un it a n e titanium dioxide, a white pigment of high opacity, which should permit greater penetration into the paint, paper, printing ink, and plas tics industries. To provide an additional source of raw materials for titanium dioxide. Farmer Electric Products Co., Inc., ac quired in 1970, makes photoelectric con trols which are used by the Decision Making Systems Department. 12 Titanium Enterprises, a joint mining venture with Union Camp Corpora tion, was formed in August. This ven ture will provide Cyanamid with an additional source of titanium minerals from Union Camp's property in north ern Florida and reduce dependence on imported ores for production of titanium dioxide. Engineering of the facilities and mine-site development are now in progress, with initial pro duction scheduled for mid-1972. Also in the pigments area, a major expansion of azo pigment facilities was completed at Bound Brook, New Jersey, late in the year and is now in start-up. This installation will be one of the first of its type to utilize a computer to operate and control the chemical reactors in which the col ored pigments are produced. New facilities at Willow Island, West Virginia, begun early in the year and scheduled for completion in 1971, will allow Cyanamid to continue as the largest U. S. manufacturer of iron blue pigment, used for printing inks and carbon paper. The raw material for iron blue pigment is yellow prus- siate of soda, and new facilities for the manufacture of this material, utilizing a more efficient production process, are being constructed at the Fortier, Louisiana, plant complex to replace obsolete facilities in the War ners plant at Linden, New Jersey. In order to better serve the growing Southern textile industry, construc tion was begun during the year on a large new textile chemicals plant at a new site in Charlotte, North Carolina, to replace an older plant which could not be expanded because of space limitations. A new sales office and distribution center will also be built on the same site. Completion of the combined facilities is scheduled for late 1971 and early 1972. To aid in meeting growing demand, a substantial expansion of manufac turing facilities for rubber accelera tors is under way at the Bound Brook plant and is scheduled for completion by mid-1971. Concurrently, a Claus sulfur-recovery unit is also being in stalled for operation beginning late in 1971 to eliminate hydrogen sulfide emissions from various rubber chemi cals production operations. Several projects were undertaken to further improve Cyanamid's service to the paper industry. New alum plants were put into operation at Escanaba, Michigan, and DeRidder, Louisiana, early in 1970. This in creases the total number of such plants to fourteen. Construction was begun late in the year on expanded production facilities for paper chemi cals, particularly Par ez 630-NC resin, at Kalamazoo, Michigan, to serve Michigan and Wisconsin mar kets. This new resin, which imparts both wet strength and dry strength to paper, continues to experience rapid sales growth. A number of Cyanamid's chemical product groups are important in com bating pollution. One such group is the desulfurization catalysts used by the oil refining industry. These cata lysts make possible the removal of sulfur from various refinery streams and from fuel oil, and they play a significant role in control of sulfur dioxide emissions from oil-burning in stallations. In anticipation of large growth in demand for these products, Cyanamid's production capability is being expanded by installation of a major new facility at Azusa, Califor nia. Facilities for production of these catalysts are also being installed in the Welland plant at Niagara Falls, Ontario, Canada, and planning is well advanced for production in Japan. These expansions follow capacity ad ditions during 1970 in Cyanamid's facilities at Fort Worth, Texas, and Michigan City, Indiana. Another Cyanamid product group with an important role in pollution control is the polyacrylamide floccula ting agents, and construction of a new facility for producing these ma terials is under way in the Warners plant at Linden, New Jersey. Espe cially rapid growth is forecast for them in water and waste treatment owing to increasingly stringent regu lations requiring reduction in stream pollution caused by mining, manufac turing, and municipal wastes. The new plant will begin operations in mid-1971. During the year Cyanamid inten sified its research and development work on catalysts for the reduction of CY0005406 R. G. Keppler, manager of the Refinery Chemicals Department, holds sample of Cyanamid auto exhaust catalysts. Plants producing other catalysts are undergoing expansion. pollution from automobile exhausts. The company has considerable back ground and technology in this area, and there are strong indications that the market for such catalysts could become very substantial over the next few years. Cyanamid is hopeful that it will be able to capture a significant share of this business. In June Cyanamid acquired Farmer Electric Products Co., Inc., of Natick, Massachusetts. This company pro duces a line of photoelectric controls, magnetic proximity devices, and con trol logic modules which are used ex tensively in the materials-handling systems sold by the Decision Making Systems Department. Cyanamid es tablished this department two years ago to design and market luminescerbased systems for the control of auto mated industrial operations and for use as peripheral equipment in elec tronic data processing. Late in the year, the company an nounced plans to close its titanium dioxide plant at Piney River, Virginia, in June 1971. The plant, which is small and obsolete, is no longer eco nomic. Moreover, local ore reserves are dwindling, and substantial capital expenditures for environmental con trols would have been required if op eration of the plant were continued. International Cyanamid's 1970 sales outside the United States and Canada again reached record levels. Sales in these international markets, exclusive of sales by associated companies, were $229,132,000, up 11% from the 1969 level. These sales in 1970 accounted for 20% of the Cyanamid total. As previously mentioned, medical products, agricultural products, and chemicals were all important contrib utors to the sales increase in the international markets. Among the medical products, My a mb u t o l ethambutol met with further acceptance by the medical profession for the treat ment of tuberculosis. In the agricul tural group, pesticides made a strong showing, and sales of Rip e r c o l tetramisole, the antiparasitic veteri nary drug, broadened in Latin Amer ica with the introduction of the injec table form for cattle in additional markets. Riper c o l is marketed in the United States under the Tr a mis o l trademark. The availability of Cyana mid's manufacturing facilities in the Netherlands for acrylamide and var ious specialties was a factor in the sales gain for chemicals. An important additional part of Cyanamid's activities overseas is con ducted through several associated companies in which Cyanamid's in terest is from 40% to 50%. In 1970, total sales of these companies were ap proximately $124,000,000, as com pared with $121,000,000 in 1969. The operating earnings from the international business in 1970 were higher than in 1969. However, total earnings in 1969 were higher because of a non-recurring payment in settle ment of certain foreign patent litiga tion which was received in that year. During 1970 Cyanamid completed a new Veterinary Research Center at Porto Alegre, Brazil. Work at the new center will be devoted to developing anti-tick and other health products for animals in tropical areas. The in stallation was inaugurated in August at an open house for more than 500 Brazilian veterinarians. In the fourth quarter, work began near Madrid, Spain, and in Catania, Italy, on the relocation and expansion 13 CY0005407 of production facilities for medical and agricultural products. In Lyon, France, facilities are under construc tion for expanded production of medi cal products. Also in the fourth quarter, to meet rising demand, Cyanenka S. A. of Barcelona, Spain, an associated com pany owned 40% by Cyanamid, be gan construction of facilities to in crease its productive capacity for acrylic fibers. The expansion is the third since Cyanenka began produc tion in 1967. The new facilities are scheduled to go on stream during the first half of 1972. A rubber chemicals plant under construction at Altamira, Mexico, by Cyanaquim, S. A. de C. V., another associated company in which Cyanamid's interest is 40%, is expected to be completed early in 1971. Canada Sales in Canada in 1970 were some what higher than in 1969. Strong per formances in the agricultural and medical parts of the business more than offset some softness in fibers and building products. In addition to the expansions of facilities to produce desulfurization catalysts and dicalcium phosphate, mentioned earlier in this Annual Re port, work was begun during the year on construction of a new xanthate unit in the Welland plant at Niagara Falls, Ontario. The new unit, which will use an improved production proc ess, will supply Cyanamid's worldwide requirements of xanthates, used in the mining industry for mineral beneficiation, and it will replace existing units in the Welland plant and in the Warners plant at Linden, New Jersey. As part of a broad program to delete unprofitable business segments, Cyanamid withdrew during 1970 from the manufacture and sale in Canada of molded plastic products and explosives. Cyanamid will con tinue, however, to supply these impor tant industries with raw materials. During the year, a semi-commercial plant for the production of phosphine and phosphine derivatives began op eration in the Welland plant. This installation is developing flame re President C. D. Siverd and Manuel Espinosa Yglesias, President of Banco de Comercio (center), inspect rubber chemicals plant being built by Cyanaquim, S.A. de C.V., near Tampico, Mexico. With them, from left, are R. J. Ephrussi and R. A. Schoellhom, Cyanamid International, and A. Petrinovic, Cyanaquim. tardants and stabilizers for plastics and textiles. It is expected to aid Cyanamid materially in deriving com mercial benefit from many years of research on phosphorus compounds. Residential and Commercial Construction After intensive study, Cyanamid decided that it should enter the resi dential and commercial construction field--a $35-billion industry with ex ceptional growth prospects--and The Ervin Company, a developer of resi dential communities in the Southeast, became a wholly owned subsidiary of Cyanamid in September. Terms in cluded an initial exchange for the Ervin shares of 487,805 shares of Cyanamid common stock plus future payments, contingent upon future earnings of Ervin, of up to the same number of shares of Cyanamid common. In December Cyanamid purchased Sunstate Builders, Inc., a residential developer in the Tampa, Florida, area, for cash. Sunstate is operated under the direction of Ervin. For accounting purposes, the acqui sition of Ervin will be treated as a pooling of interests. The sales of both subsidiaries are unconsolidated, and the earnings are accounted for on an equity basis. The 1970 sales and rev enues of the real estate subsidiaries were $39,455,000, with earnings of $2,299,000. Despite weakness in the home- building industry, Ervin's operating results in 1970 reached record levels, with earnings significantly higher than in 1969. In large measure, Ervin's success over the years has been due to planning for a better residential environment and to im provements in the efficiency of the company's building operations. Cyan amid intends to fully support Ervin's efforts to develop new and better ap proaches to residential development, and hopes to bring the multi-faceted industrial and research capabilities available within Cyanamid to bear on the development of new products and systems which will contribute to the 14 CY000540S efficiency of the building process. In addition, continuing expansion into other geographic areas is planned. Domestic Associated Companies Although sales and earnings of Jefferson Chemical Company, Inc., owned jointly with Texaco Inc., were slightly lower in 1970 than the year before, 1970 brought progress in sev eral areas. A specialty amines unit in the plant at Conroe, Texas, started up smoothly in April and was operating in excess of design capacity within one month. Significant increases were realized in sales of several proprietary urethane polyols used in rigid foam applications. At the Port Neches, Texas, plant a substantial improve ment in ethylene productivity was ac complished by reducing coke forma tion, and this process improvement is being offered for license. Despite the slowdown in the U. S. economy, sales and earnings of Ari zona Chemical Company, owned jointly with International Paper Com pany, rose substantially in 1970. As a part of a continuing program by Arizona to upgrade its raw materials, construction was begun during the year on a 25,000,000-pound-per-year terpene resin unit, scheduled for com pletion in mid-1971, in the plant at Panama City, Florida. Terpene resins, used as tackifiers for pressure-sensi tive tapes, masking tapes, hot-melt coatings and adhesives, laminating adhesives, rubber-solution adhesives, and wax-saturation compounds, are made from chemicals recovered from crude sulfate turpentine, a by-product in the production of kraft pulp. In July, Cyanamid sold its 49% in terest in Southern Minerals Corpora tion, Southern Pipeline Corporation, and Southern Petroleum Corporation. The operations of these companies in the production, transportation, and sale of oil and gas were profitable, but as relatively small independents they had limited opportunities for growth, and it was felt that Cyanamid's re sources and energies could be better employed in other business areas. Classes in job-related educational program at Bound Brook plant are part of a com pany-wide effort to hire, train, and retain disadvantaged men and women. Public Affairs and Employee Relations As society becomes increasingly concerned with the quality of life, corporations are judged by much more than their financial statements. Cyanamid continues to discharge its obligations as a corporate citizen, directing its efforts particularly into those areas in which it can contribute most effectively. One of these areas is pollution con trol, where the company has two broad objectives--minimizing pollu tion in its own operations and devel oping and supplying products useful in the pollution-control programs of others. Preceding sections of this An nual Report contain references to some of the more significant steps toward achieving these objectives taken by Cyanamid during 1970. In its continuing support of higher education, Cyanamid again made awards during the year to colleges and universities with which it main tains close relations, focusing pri marily on departments of chemistry and chemical engineering. In addi tion, the company continued its sup port of health and welfare organiza tions, especially in communities where it carries on its operations. Every Cyanamid location in the U. S. has a program of affirmative action in the hiring of people from minority groups. During the year, recruitment efforts on the campuses of predominantly black colleges and universities were stepped up, and a further increase in these efforts is planned for 1971. In addition, as a participating member of the National Alliance of Businessmen, the company in 1968 set itself the goal of employing, by mid-1971, 500 men and women from the ranks of the disadvantaged. As of June 30, 1970, there were 477 such employees on the payroll--26% over the target for that date, and only 23 employees below the goal for mid1971. As indicated earlier, the eco nomic slowdown in the U. S. is making pursuit of this program in creasingly difficult. Initially, the retention rate among employees hired under this program was disappointing. This rate improved significantly in 1970, reflecting in creased effort in the orientation, basic 15 CY0005409 Land reclamation techniques pioneered by Cyanamid transformed Florida phosphate mine sites into municipal recreational parks and an 18-hole public golf course. education, and counseling of trainees, combined with special training for their supervisory personnel. To all employees, Cyanamid has made clear that safety takes prece dence over production schedules, and it is gratifying that the number of dis abling injuries per million man-hours worked in Cyanamid fell to 1.35 in 1970 from 1.49 in 1969. The com parable figure for all companies be longing to the Manufacturing Chem ists Association was 3.59 for 1969, and for all U. S. manufacturing com panies it was 8.08. The severity of the Cyanamid acci dents declined also. In 1970, there were 360 days lost per million man hours worked, as compared to 799 in 1969, and there were two fatalities in 1970 against six in 1969. Even two fa talities, however, are too many, and it is distressing that there have already been two fatalities in 1971. In the area of labor relations, nego tiations were completed during 1970 with 26 U. S. union locals. The year brought no significant work interrup tions at any Cyanamid location inside or outside the U. S. Litigation During 1970, the U. S. Court of Appeals in New York reversed the 1967 antitrust conviction of the com pany and two other drug companies involving broad-spectrum antibiotics and ordered a new trial. The Govern ment has petitioned the Supreme Court for further review. 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 set tlement or litigation. Sixty-six suits, involving the claims of almost all states, counties, cities, consumers, wholesalers, and retailers, have been settled for approximately $85 million, Cyanamid's share being approximately $34 million. The set tlement sum was placed in escrow by the defendants in October 1969, pur suant to court order implementing the settlement proposal. The settlement was approved as fair and reasonable by the U. S. District Court in New York on June 24, 1970. A few re tailer and wholesaler class members have appealed. The separate settlement proposal of $32.5 million (of which Cyanamid's share is approximately $13 million) for private hospitals and Blue Cross plans has been accepted by all Blue Cross plans and by almost all the pri vate hospitals. The U. S. District Court in New York has scheduled a hearing on February 19,1971, to consider final approval of the settlement. As of September 30, 1969, the com pany had accrued $54 million to cover its share of the settlement proposals, plus certain legal expenses. The ac crual, less an estimated tax benefit of $29.4 million, was charged against earnings of appropriate prior years. The company's share of the escrow deposit referred to above was charged against the accrual. The principal plaintiffs and classes represented in the 61 non-settling cases (some of which allege substan tial amounts of damages) are the states of California, Hawaii, Kansas, North Carolina, Oregon, Utah, and Washington and the consumers they purport to represent, health benefit and insurance organizations which allegedly reimbursed individuals, pur chasers of animal feed and veterinary products, competitors, the U. S. Gov ernment, and the governments of Kuwait and Vietnam. These cases have been assigned for coordinated pre-trial discovery to a single judge, who had indicated that he expects the cases to be ready for trial by Septem ber 1971. Due to the uncertainty necessarily inherent in litigated matters of this sort, the eventual cost of this litiga tion to the company, and its ultimate disposition, cannot be accurately pre dicted. However, the company be lieves, on the basis of information and advice presently available, that any additional liability with respect to this antitrust litigation will not have a material adverse effect upon the consolidated financial position of the company and its subsidiaries. On December 16,1970, the Supreme Court of the State of New York ap proved the settlement of the stock holder's derivative action against cer tain past and present directors and officers alleging breaches of fiduciary duties in connection with the alleged violations of the antitrust laws re ferred to above. The settlement stip ulation acknowledged that after a full investigation plaintiff had found no evidence of any breaches of such duties. A judgment implementing the settlement and dismissing the suit was entered onJanuary4,1971. 16 CY000541O GEORGE w. RUSSELL Executive Vice President Ja me s F. b o u r l a n d Vice President ERNEST G. He s s e Vice President THOMAS P. TURCHAN Vice President Th o ma s p. f o r b a t h Vice President CONSUMER PRODUCTS, Albert L. Munsell, General Manager--Br ec k preparations for care of the hair, Pin e -So l cleaner, disinfectant, deodorizer, Fo r mic a Fl o o r Sh in e finish, and other household maintenance, cleaning and laundering aids. FIBERS, Philip G. Connell, Jr., General Manager--Cr e s l a n acrylic fiber for apparel, home furnishings and industrial applications; filament rayon, filament polyester for tire cord and industrial applications; Dy -Lo k solution-dyed filament rayon for upholstery, drapery and apparel fabrics. FORMICA CORPORATION, Wallace G. Taylor, President and General Manager-- Fo r mic a brand decorative laminates; laminate cabinet surfacing; laminate-clad doors and toilet compartments; laminated furniture vinyl; architectural and residential panel systems; adhesives, laminate cleaner; Fia t shower floors, laundry tubs, toilet compart ments and tub showers; Sa n it a s and Wa l l c l a d vinyl-coated wall coverings from Standard Coated Products. AGRICULTURAL, James G. Affleck, General Manager--animal feed supplements and veterinary products, insecticides, fungicides, herbicides, nitrogen and phosphate fertilizer products, blended fertilizers. LEDERLE LABORATORIES, Borden R. Putnam, General Manager--antibiotics, steroids, biologicals, pharmaceuticals, vitamins and hematinics, vaccines; clinical laboratory diag nostic 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 through subsidiaries and distributors in countries and territories outside the United States and Canada. CYANAMID OF CANADA LIMITED, Ben H. Loper, President--produces or imports and markets in Canada the products of Cyanamid and its subsidiaries. INDUSTRIAL CHEMICALS AND PLASTICS, Howard E. Nehms, General Manager-- industrial products for the paper making industry and mining industry; chemical agents and flocculants 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 coat ings, thermosetting and acrylic molding compounds, high performance bonding agents and adhesives, and Ac r y l it e acrylic sheet. ORGANIC CHEMICALS, Joseph A. Schmidlein, General Manager--catalysts, dyes, elas tomers, intermediates, 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, Un it a n e titanium dioxide. THE ERVIN COMPANY, Calvin J. Harris, President--residential and commercial conStruction. CLIFFORD D. SIVERD, President and Chief Executive Officer ROBERT C. SWAIN, Executive VidePresident PERSONNEL, Clair L. Brandrup, Director CENTRAL RESEARCH, John F. Flagg, Director PUBLIC RELATIONS, John M. Fasoli, Director GORDON C. WALKER, Executive Vice President THOMAS P. FORBATH, Vice President COMMERCIAL DEVELOPMENT, William D. Holland, Director ENGINEERING & CONSTRUCTION, George P. Ferrigni, Director HAROLD B. GROSS, Secretary and General Counsel LAW, James l. Wyer. Director CONTROLLER'S, /. Clifford Blauvelt, Controller PURCHASING,Philip K. Langford, Director TRANSPORTATION & DISTRIBUTION, Gerrit W. Van Schaick, Director TREASURY, Leonard T. Murphy, Treasurer 17 CY0005411 Sales Volume--Consolidated sales in 1970 were $1,158,440,000 compared with $1,087,098,000 in 1969. Com parative quarterly sales for the two years were: Quarter 1970 % of Amount Total First $ 298,701,000 Second 310,324,000 Third 273,698,000 Fourth 275,717,000 26 27 23 24 1969 % of Amount Total $ 270,554,000 286,795,000 264,951,000 264,798,000 25 27 24 24 $1,158,440,000 100% $1,087,098,000 100% Earnings--Pre-tax earnings (exclusive of extraordinary gain) for 1970 were $151,175,401 compared with $166,870,096 in the previous year. After provision for Federal and foreign income taxes of $64,500,000, consolidated earnings (exclusive of extraordinary gain) for 1970 were $86,675,401 compared with $89,870,096 in 1969. Net Earnings for 1970 (including an extraordinary gain of $4,850,526) were $91,525,927. Per share earnings for 1970 amounted to $1.93 (exclusive of extraordinary gain of lltf) and $2.04 (including extraordinary gain) com pared to $2.02 in 1969 based on the average number of shares of common stock (excluding treasury shares) out standing for each year. Comparative earnings with earnings per share by quarters for the two years were: Quarter 1970 Per Amount Share First $26,070,000 $ .59 Second 23,551,000 .53 Third 23,562,000* .51* Fourth 18,343,000 .41 $91,526,000* $2.04* 1969 Per Amount Share $25,049,000 $ .56 23,523,000 .53 21,263,000 .48 20,035,000 .45 $89,870,000 $2.02 * Including extraordinary gain of $4,850,000 or lid per share The average number of shares (excluding treasury shares) outstanding for 1970 was 44,940,271 compared with 44,465,703 in 1969. Provision for Federal and foreign taxes has been re duced by the amount of the current investment tax credit which has benefited both 1970 and 1969 earnings by 4 cents a share. Capital Stock--As of December 31, 1970 there were 45,182,158 shares of common stock outstanding, compared to 44,693,628 shares outstanding at the end of 1969. This includes treasury stock of 312,204 shares at December 31, 1970 and 327,434 shares at December 31, 1969. During the year the company purchased 152,574 shares of its common stock to be used for appropriate corporate purposes. A total of 34,182 shares of common stock held in its treasury was transferred on a restricted basis to em ployee participants in the company's Incentive Compen sation Plan in the form of contingent allotments made in 1970. Another 15,267 shares of common stock were de livered in 1970 to retired participants in said plan. In June 118,355 shares of common stock were used to acquire the net assets of Farmer Electric Products Co., Inc., on a pool ing of interests basis. In September 487,805 shares of common stock were issued for the acquisition of The Ervin Company on a pooling of interests basis, subject to additional payments of up to 487,804 shares of Cyanamid common stock con tingent upon future earnings of Ervin. During the year 725 shares of common stock were issued upon the exer cise of options under the Employees' Stock Option Plan. Dividends paid by Cyanamid in 1970 and 1969 were $1.25 per share, amounting to $55,378,000 and $55,108,000 respectively. Associated Companies--Cyanamid's investment in and advances to companies jointly owned (40% to 50% ) are carried at cost. On July 15, 1970 all of the outstanding stock of Southern Minerals Corporation, Southern Pipe line Company and Southern Petroleum Corporation, 49% of which had been owned by Cyanamid, were sold to the Sun Oil Company, resulting in an extraordinary gain of $4,850,000 or 11 per share. Cyanamid's equity in the 1970 earnings of the jointly owned companies amounted to $11,058,000 and dividends received were $9,680,000. This compares with its equity in 1969 earnings of $9,887,000 and dividends received of $10,351,000. Allocation ol 1970 Revenue Dollar $ .51 Cost of Materials, Services, etc. Wages, Salaries and Employee Benefits Depreciation and Depletion Taxes Earnings Reinvested in the Business Dividends $1.00 CY0005412 American Cyanamid Company and Subsidiaries Year Ended December 31,1970 in Comparison with the Year Ended December 31,1969 NET SALES ....................................................................................................................... Dividends from associated companies, 40% to 50% owned . . . . Equity in net earnings of unconsolidated real estate subsidiaries . . Interest ................................................................................................... Royalties and licenses......................................................................... Other income--net............................................................................... 1970 $1,158,439,700 9,679,653 2,299,185 2,511,114 6,354,270 2,109,808 1969 $1,087,097,977 10,350,836 3,482,967 6,877,286 4,614,458 1,181,393,730 1,112,423,524 . Deduct: Manufacturing cost of sales--less depreciation and depletion . Selling and advertising expenses............................................... Administrative and general expenses.......................................... Depreciation and depletion (Note 3).......................................... Research and process development expenses.......................... Interest charges on funded and other debt............................... Employees' benefits (Note 9).................................................... 632,623,802 195,206,113 58,349,279 58,513,790 46,045,505 8,066,785 31,413,055 577,768,604 175,776,831 57,628,983 54,834,159 44,932,682 6,137,914 28,474,255 1,030,218,329 945,553,428 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)..................................... 151,175,401 64,500,000 86,675,401 166,870,096 77,000,000 89,870,096 4,850,526 NET EARNINGS........................................................................................................................ $ 91,525,927 $ 89,870,096 Earnings per share of Common Stock: Earnings exclusive of extraordinary gain.......................................... Extraordinary gain.............................................................................. Net Earnings.................................................................... $1.93 .11 $2.04 $2.02 -- $2.02 THE BOARD OF DIRECTORS AMERICAN CYANAMID COMPANY: We have examined the consolidated balance sheet of American Cyanamid Company and subsidiaries as of December 31, 1970 and the related statements of earnings, earnings employed in the business, capital surplus and source and application of funds for the year then ended. Our examination was made in accordance with generally accepted auditing standards, and accordingly included such tests of the accounting records and such other auditing procedures as we considered necessary in the circumstances. In our opinion, the accompanying consolidated financial statements present fairly the financial position of American Cyanamid Company and subsidiaries at December 31, 1970 and the results of their operations for the year then ended, in conformity with generally accepted accounting principles applied on a basis consistent with that of the preceding year. Also, in our opinion, die accompanying consolidated statement of source and application of funds presents fairly the information shown therein. New York, N.Y. February 9,1971 PEAT, MARWICK, MITCHELL & CO. CY0005413 American Cyanamid Company and Subsidiaries December 31,1970 in comparison with December 31,1969 CURRENT ASSETS: Cash in banks and on hand...............................................................$ 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......................................................... INVESTMENTS AND ADVANCES: Associated companies, 40% to 50% owned--at cost (equity in net assets $54,500,000; 1969, $58,200,000) ..................................... Equity in net assets of unconsolidated real estate subsidiaries (Note 2) Other investments and advances......................................................... TOTAL INVESTMENTS AND ADVANCES . ................................ 1970 1969 40,194,334 $ 9,182,171 189,559,911 206,233,986 43,065,515 12,489,575 183,752,002 190,378,133 445,170,402 429,685,225 34,966,447 15,755,447 13,207,383 63,929,277 40,781,287 5,379,815 46,161,102 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......................................................... INTANGIBLES RESULTING FROM BUSINESS ACQUISITIONS.......................... 42,330,462 217,501,911 784,496,891 45,636,763 1,089,966,027 558,654,188 531,311,839 15,118,591 42,170,117 209,112,440 719,304,314 53,858,574 1,024,445,445 523,808,687 500,636,758 15,150,889 PREPAID EXPENSES AND DEFERRED CHARGES.......................................... 10,397,519 9,238,119 $1,065,927,628 $1,000,872,093 20 CY0005414 1970 1969 CURRENT LIABILITIES : Accounts payable and accrued expenses..........................................$ 107,474,205 $ 112,189,526 Short term borrowings......................................................................... 31,710,417 15,421,247 Funded debt installments due within one year..................................... 5,890,929 5,871,803 Accrual for settlement of litigation.................................................... 17,023,688 17,983,559 Provision for Federal and foreign taxes on income.......................... 23,338,382 8,058,573 TOTAL CURRENT LIABILITIES.................................................... 185,437,621 159,524,708 FUNDED DEBT NOT DUE WITHIN ONE YEAR (Note 4)............................... INCENTIVE COMPENSATION CONTINGENTLY PAYABLE (Note 5) . . . . INCOME TAXES PAYABLE IN THE FUTURE.................................................... MINORITY SHAREHOLDERS' EQUITY IN FOREIGN SUBSIDIARIES .... 116,996,355 4,098,813 22,700,000 5,898,849 118,993,967 4,290,194 22,000,000 5,233,488 SHAREHOLDERS' EQUITY: Common Stock--par value $5 per share (Notes 6 and 10) Authorized--60,000,000 shares Outstanding--45,182,158 shares (1969--44,693,628 shares) . . Capital surplus.................................................................................... Earnings employed in the business (Notes 1 and 7).......................... Less cost of 312,204 shares of Common Stock held in treasury (1969--327,434 shares) (Note 8).............................. TOTAL SHAREHOLDERS' EQUITY............................................... 225,910,790 21,087,657 493,496,952 740,495,399 223,468,140 20,563,114 456,915,061 700,946,315 9,699,409 10,116,579 730,795,990 690,829,736 $1,065,927,628 $1,000,872,093 CY0005415 Year Ended December 31,1970 in comparison with the Year Ended December 31, 1969 1970 1969 Balance at beginning of year.................................................... Premium on Common "Stock issued under employees' stock option contracts.................................................................... Adjustment arising from the issuance of Common Stock upon pooling of interests............................................................... $ 20,563,114 $ 20,562,544 19,926 570 504,617 -- Balance at end of year............................................................... $ 21,087,657 $ 20,563,114 Balance at beginning of year............................................................................ Net Earnings for the year................................................................................. Adjustment arising from the issuance of Common Stock upon pooling of interests less amount credited to Capital Surplus .... Deduct : Dividends on Common Stock--$1.25 per share...................................... Adjustments arising from the issuance of treasury stock upon poolings of interests................................................................................. Par value of Common Stock, previously reserved, relating to the net assets acquired in 1963 from John H. Breck, Inc........................... Balance at end of year (Notes 1 and 7)...................................................... $456,915,061 $424,152,106 91,525,927 89,870,096 3,261,620 -- 551,702,608 514,022,202 55,378,403 55,107,596 2,827,253 1,984,545 -- 58,205,656 $493,496,952 15,000 57,107,141 $456,915,061 Consolidated Siai^niv^i ynu ^ ' Year Ended December 31,1970 in Comparison with the Year Ended December 31,1969 s o u r c e Or y xx:: Net earnings........................................................................................................ Charges to earnings not requiring current cash outlays: Depreciation and depletion ............................................................................ Income taxes payable in the future............................................................ Decrease in cash and marketable securities................................................. Decrease (increase) in intangibles resulting from business acquisitions . Increase in current liabilities............................................................................ Par value of Common Stock issued for an acquisition...................................... Treasury stock issued for acquisitions and incentive compensation plan All other--net....................................................................................................... 1970 $ 91,525,927 58,513,790 700,000 6,178,585 32,298 25,912,913 2,439,025 4,925,116 1,436,515 1969 $ 89,870,096 54,834,159 2,700,000 42,013,682 (1,242,686) 1,855,053 -- 3,601,413 (2,001,738) $191,664,169 $191,629,979 Dividends on Common Stock................................................................... Additions to plants, equipment and facilities--net............................... Increase in accounts receivable and inventories.................................... Additions to investments and advances--net.......................................... Increase (decrease) in prepaid expenses and deferred charges . Decrease (increase) in funded debt not due within one year . . . . Accrual for settlement of litigation, less related tax benefits . . . . Purchases of treasury stock............................... ............................... $ 55,378,403 89,188,871 21,663,762 17,768,175 1,159,400 1,997,612 -- 4,507,946 $ 55,107,596 92,082,289 27,401,446 2,520,096 (834,789) (13,784,278) 24,600,000 4,537,619 $191,664,169 $191,629,979 22 CYOOOS416 American Cyanamid Company and Subsidiaries 1. Assets, other than plants and facilities, and liabilities of the foreign subsidiaries are included in the consolidated bal ance sheet on the basis of official or other appropriate exchange rates at December 31, 1970; foreign plants and facilities are included on the basis of exchange rates prevailing at time of acquisition. The amounts so included comprise net current assets of $70,400,000 and net other assets, principally plants and facilities, less depreciation, of $57,400,000. Net earnings of foreign subsidiaries included in consolidated earnings amount to $22,200,000. The consolidated earnings employed in the business include the company's equity in the net undis tributed earnings of foreign subsidiaries amounting to $78,200,000. 2. During 1970 the company issued 606,160 shares of Com mon Stock in connection with the Farmer Electric Products Co., Inc. and The Ervin Company acquisitions and is obli gated to issue up to 487,804 shares based on future earn ings of The Ervin Company. For accounting purposes these acquisitions have been treated as poolings of interests and accordingly the consolidated statement of earnings includes the earnings n* these companies for the entire year. The operations of _ ich companies are not material within the accounts of th> company and no adjustment of the 1969 results has been made to reflect these poolings of interests. In December 1970 the company acquired the capital stock of Sunstate Builders, Inc. for cash. The real estate subsidiaries (Ervin and Sunstate) are not consolidated with the accounts of the company. The con densed combined financial statements of the unconsolidated real estate subsidiaries for the year ended December 31, 1970 are as follows: ASSETS Cash................................................................................ $ 1,767,984 Mortgage notes and other receivables......................... 8,794,265 Inventories, properties and equipment, net (sub stantially all pledged to secure mortgage and other notes payable)............................................. 60,875,169 Other assets................................................................. 3,557,079 $74,994,497 LIABILITIES AND SHAREHOLDER'S EQUITY Liabilities, substantially all mortgage and other notes payable....................................................... Shareholder's equity: Common stock and capital surplus......................... Earnings employed in the business......................... Total shareholder's equity.......................... $59,239,050 10,194,642 5,560,805 15,755,447 $74,994,497 STATEMENT OF EARNINGS AND EARNINGS EMPLOYED IN THE BUSINESS Sales and revenues........................................................... $39,454,933 Cost and operating expenses........................................ 35,509,548 Income before taxes.................................................. 3,945,385 Income taxes............................................................ 1,646,200 Net Earnings................................................................. Earnings employed in the business at beginning of year........................................................................... 2,299,185 3,261,620 Earnings employed in thebusiness at end of year $ 5,560,805 a) The companies are contingently liable at December 31, 1970 for approximately $13,000,000 of mortgage notes assumed by others arising from sales of real estate. b) Mortgage and other notes payable mature at various dates through the year 1995 and bear interest at rates ranging from 4% to 12%. 3. Depreciation is provided on a straight-line composite basis over the estimated remaining useful lives of the assets. 4. Funded debt not due within one year is comprised of 3% % promissory notes due 1977 to 1987 ($75,000,000), 5%% guaranteed sinking fund debentures due 1980 of a subsidiary ($17,000,000), 6% guaranteed notes due 1972 to 1973 of a subsidiary ($8,936,284) and sundry obligations ($16,060,071). 5. The accounts for 1970 include provision for incentive com pensation to officers and other employees. A portion of such amount is not payable currently in cash but is contingently payable in Common Stock of the company after employment terminates; pending allotment of the amount available for 1970, the portion so contingently payable in Common Stock is not determinable. The amount contingently payable in re spect of allotments for prior years is $4,098,813. 6. Approximately 3,100,000 shares of common stock would be issued under the proposed merger agreement with Shulton, Inc. The authorized capital of the company includes 650,000 shares of Preferred Stock with a par value of $1 per share, none of which is outstanding. 7. The promissory notes 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, 1970 which may be applied to the payment of cash dividends is limited to $161,000,000. 8. At December 31, 1970 the company owned and held in its treasury 312,204 shares of Common Stock, which are available at the election of the company to fulfill contingent obligations under the company's Incentive Compensation Plan and for other corporate purposes. 9. Employees' benefits include the cost of pension, group in surance and social security programs. The company and its consolidated subsidiaries have various pension plans covering substantially all their employees, including certain employees in foreign countries. The company's policy is to accrue and fund pension costs over the service lives of the covered em ployees. The total pension expense for the year was $5,832,000. 10. Under the company's stock option plan key employees may be granted options to purchase, at not 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 qualified stock options were granted exercisable over a period of not more than five years from date of grant and, in 1970 non-qualified stock options were granted (subject to approval by share holders) exercisable over ten years from the date of grant, all in cumulative installments of one-third of the number of shares commencing one year after date of grant and annually thereafter. At December 31, 1970, qualified stock options to purchase 369,535 shares at $33.50 and 8,800 shares at $25.75 and non qualified stock options to purchase 171,630 shares at $31.00 per share were outstanding, of which 249,510 options were exercisable. During the year options covering 630 shares were exercised at $33.50 and options covering 95 shares were exer cised at $25.75. These options and the shares contingently issuable in connection with the acquisition of The Ervin Com pany do not result in dilution of earnings per share. 11. The company is contingently liable as guarantor on loans outstanding of an associated company in the amount of $28,000,000. 12. 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 CY0005417 American Cyanamid Company and Subsidiaries 1970 1969 Net Sales.............................................................................................................. . $1,158,440 $1,087,098 Earnings before Taxes on Income.................................................................... Provision for Taxes on Income......................................................................... 151,175<> 64,500 166,870 77,000 Net Earnings.................................................................................................... Dividends on Common Stock.............................................................................. 86,675<> 55,378 89,870 55,108 Number of Common Shares at Dec. 31 (excl. treasury shares )<> . . . . Earnings per share of Common Stock<c>.......................................................... Dividends per share of Common Stocks......................................................... 44,870 1.93<> 1.25 44,366 2.02 1.25 Provision for depreciation, amortization and depletion..................................... Gross additions to plant facilities (incl. acquisitions)..................................... 58,514 92,672 54,834 95,833 Current Assets.................................................................................................... Current Liabilities.............................................................................................. 445,170 185,438 429,685 159,525 Working Capital.............................................................................................. 259,732 270,160 Investment in Associated Companies............................................................... 34,966 40,781 Plants, Equipment and Facilities................................................ . 1,089,966 Less accumulated depreciation, amortization and depletion..................... 558,654 1,024,445 523,808 Net Amount......................................................................................... 531,312 500,637 Funded Debt not due within one year............................................................... 116,996 118,994 Shareholders' Equity: Preferred Stock.............................................................................................. Common Stock.............................................................................................. Capital Surplus.............................................................................................. Earnings employed in the business............................................................... 225,911 21,087 493,497 223,468 20,563 456,915 Less cost of Common Stock held in treasury Total Shareholders' Equity .... 740,495 9,699 . $ 730,796 700,946 10,116 $ 690,830 (a) Exclusive of extraordinary gain (less related income tax) (b) Restated--The statistics for the years 1961 through 1968 have been revised to reflect the accrual in 1969 for settlement of litigation in the amount of $54,000,000 less related tax benefits of $29,400,000, which has been applied to years 1954 through 1966. <c) After giving effect to the issuance on April 18, 1966 of one additional share for each share outstanding 24 CY000541e American Cyanamid Company and Subsidiaries PRINCIPAL SALES OFFICES IN THE U.S. Akron, Ohio Albuquerque, N.M. Atlanta, Ga. Bluefield, W.Va. Boston, Mass. Bound Brook, N.J. Buffalo, N.Y. Charlotte, N.C. Chicago, 111. Cincinnati, Ohio Clearwater, Fla. Cleveland, Ohio Dallas, Tex. Danbury, Conn. Davenport, Iowa Denver, Colo. Des Moines, Iowa Detroit, Mich. Fairfield, N.J. Falls Church, Va. Finderne, N.J. Grand Rapids, Mich. Greensboro, N.C. Havre de Grace, Md. Honolulu, Hawaii Houston, Tex. Indianapolis, Ind. Jacksonville, Fla. Kalamazoo, Mich. Kansas City, Mo. 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. Natick, Mass. PRINCIPAL SALES OFFICES OUTSIDE THE U.S. Auckland, N.Z. Bangkok, Thailand Bogota, Colombia Bombay, India Brussels, Belgium Buenos Aires, Argentina Caracas, Venezuela Catania, Italy Copenhagen, Denmark Guatemala City, Guatemala Hong Kong Johannesburg, S. Africa Karachi, Pakistan Kinshasa, Congo Lima, Peru London, England Madrid, Spain Managua, Nicaragua Manila, Philippines Melbourne, Australia Mexico D.F., Mexico Milan, Italy Montreal, Canada Munich, Germany Oullins, France Paris, France PLANTS IN THE U.S. Aberdeen, Md. Albany, Ga. Alden, Iowa AndersonviBe, Ga. Azusa, Calif. Benton, Ark. Bound Brook, NJ. Brewster, Fla. Buchanan, N.Y. Charlotte, N.C. Chattanooga, Tenn. Cloquet, Minn. Columbus, Ohio Coosa Pines, Ala. Damascus, Va. Hughestown, Pa. Danbury, Conn. Jackson, Miss. Demopolis, Ala. Joliet, 111. DeRidder, La. Kalamazoo, Mich. Escanaba, Mich. La Puente, Calif. Evendale ( Cincinnati),Ohio Longview, Wash. Fairfield, N.J. Madisonville, Ky. Finderne, N.J. Marietta, Ohio Fort Worth, Tex. Miami, Fla. Fortier (New Orleans), La. Michigan City, Ind. Georgetown, S.C. Mobile, Ala. Hamilton, Ohio Monticello, Miss. Hannibal, Mo. Natick, Mass. Havre de Grace, Md. New Castle, Pa. New York, N.Y. Oakland, Calif. Oklahoma City, Okla. Omaha, Neb. Pearl River, N.Y. Philadelphia, Pa. Phoenix, Ariz. Pittsburgh, Pa. Plainview, N.Y. Portland, Ore. Princeton, N.J. Renton ( Seattle ), Wash. Richmond, Va. St. Louis, Mo. San Antonio, Tex. San Francisco, Calif. South Bend, Ind. Springfield, Ohio Tampa, Fla. Tulsa, Okla. Washington, D.C. Wayne, N.J. West Hartford, Conn. West Springfield, Mass. Woodbridge, Conn. Woodbury, L.I., N.Y. Rio de Janeiro, Brazil Rome, Italy Rotterdam, The Netherlands San Juan, Puerto Rico Sao Paulo, Brazil Seoul, Korea Stockholm, Sweden Sydney, Australia Taipei, Taiwan Tilbury, Canada Tokyo, Japan Toronto, Canada Vancouver, Canada Zurich, Switzerland Painesville, Ohio Pearl River, N.Y. Pensacola, Fla. Perrysburg, Ohio Philadelphia, Fa. Piney River, Va. Plainview, N.Y. Plymouth, N.C. Pottsville, Pa. Princeton, NJ. Sanford, Me. Savannah, Ga. South Norwalk, Conn. 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 Brussels, Belgium Buenos Aires, Argentina (2) Bulsar, India Caracas, Venezuela (2) Cartagena, Colombia Catania, Italy (2) Gosport, England Guadalajara, Mexico Hsinchu, Taiwan Johannesburg, S. Africa Karachi, Pakistan Madrid, Spain (2) Managua, Nicaragua Melbourne, Australia Mexico D.F., Mexico Milan, Italy Montreal, Canada Munich, Germany Niagara Falls, Canada (2) Orillia, Canada Oullins, France Rezende, Brazil Rio de Janeiro, Brazil Rotterdam, The Netherlands St. Jean, Canada Sao Paulo, Brazil Sydney, Australia Tilbury, Canada Witbank, S. Africa FARM SERVICE CENTERS (Bulk blending fertilizer plants) 125 centers in fourteen states in the U.S.; fourteen wholly owned and twenty-one 50% owned in Canada RESEARCH AND DEVELOPMENT LABORATORIES Bound Brook, N.J. Danbury, Conn. East Paterson, NJ. Evendale, Ohio Finderne, NJ. Niagara Falls, Canada Painesville, Ohio Pearl River, N.Y. Pensacola, Fla. Piney River, Va. Porto Alegre, Brazil Princeton, N.J. Stamford, Conn. Wallingford, Conn. PRINCIPAL ASSOCIATED COMPANIES (40% to 50% owned) Arizona Chemical Company Cyanamid-Ketjen Katalysator N.V. Cyanaquim, S.A. de C.V. Cyanenka S.A. Formica Internationa] Limited Jefferson Chemical Company, Inc. Lederle (Japan), Ltd. Sherkat Sahami Cyanamid-KBC N. V. Titaandioxydefabriek Tiofine C VA .>'.4. M I C t r a n s f e r a g e n t , The Chase Manhattan Bank, N.A. American Cyanamid Company WAYNE, NEW JERSEY 07470 r eg is t r ar , Morgan Guaranty Trust Company of New York Printed in U.S.A. CY0005419