Document X7oxEjn6akOe2vXpD4mRLaEZy

BUILDING AND CONSUMER MEDICAL Cyanamid is a diversified pharmaceutical and consumer-oriented company, active in leading growth areas of the economy and responsive to basic human needs throughout the world. CYANAMID AGRICULTURAL CHEMICAL LAND DEVELOPMENT AND BUILDING N9488 American Cyanamid Company Report of the Board of Directors for the Year Ended December 31,1972 Table of Contents Letter to the Shareholders 1-2 Year in Review 3-15 Financial Review, Accountants' Report 16-22 Ten-Year Comparative Summary 23 Divisions and Principal Subsidiaries 24 Directors and Officers 25 Plants, Laboratories and Offices back cover FINANCIAL HIGHLIGHTS (Dollars in thousands except earnings and dividends per common share) Operating Results Sales ............................................................... Earnings before income taxes........................ Income taxes ................................................. Net earnings................................................... Dividends on common stock paid in cash ... Net earnings per share common stock........ Dividends per share common stock................ Depreciation and depletion............................ Additions to plants, equipment and facilities 1972 $1,358,852 184,180 75,400 108,780 60,376 2.24 1.25 68,350 72,174 1971 $1,283,485 156,411 62,300 94,111 59,422 1.95 1.25 63,615 110,869 Year-End Position Total assets ................................................... Funded debt................................................................................. Shareholders' equity .................................................................... Shares outstanding at end of year: common stock(excluding treasury shares) ............................ $1,388,806 236,579 897,509 48,732,844 $1,281,238 213,198 845,525 48,360,296 Number of shareholders.............................................................. Number of employees.................................................................. 104,652 41,380 111,845 41,385 Contributions of Major Segments to Sales and Earnings Sales Earnings (approx.) Building & Consumer 1972 1972 1971 1971 CY0005449 To Our Shareholders I am pleased to report that Cyanamid's 1972 worldwide sales and earnings, shown on the opposite page, reached all-time highs. Our earnings have now broken out of the plateau of the previous six years to a new earnings base. This has been achieved in spite of net selling price declines for our products since 1966 of more than $115 million. All four of our major market segments --building and consumer, medical, agri cultural, and chemical--contributed to the sales increase in 1972, and record highs were achieved for sales and earnings in markets outside the United States. These foreign sales accounted for 28% of total company sales, indicating the growth and maturity of Cyanamid operations abroad and their importance to the company. In addition, sales of our land development and building business, which are not consolidated with the rest of Cyanamid's, showed a substantial rise over 1971, although earnings were below those of the previous year. Detailed results by quarters appear in the Financial Review section of this report. Included in the 1972 earnings of $2.24 per share was a gain amounting to 8 per share which resulted from the sale of two wholly owned subsidiaries dis cussed more fully on page 11 of this report. Even with this 8 excluded, the year's earnings were $2.16 per share, up 11 % from $1.95 in 1971 and above the previous high of $2.13 in 1966, when fewer shares were outstanding. Earnings for the fourth quarter of 1972 were $28,794,000 or 590 per share, as compared to $27,325,000 or 560 per share for the same period of 1971. Fourthquarter sales were $341,262,000, up 3% from $330,283,000 a year earlier. In this year-to-year comparison of the fourthquarter performance, it should be noted that Cyanamid's 1971 quarter was favorably affected by exchange gains resulting from revaluation of foreign currencies. For the year 1972 as a whole, the most important factor in the rise of operating earnings above those of 1971 was the higher sales volume. This more than off set increased operating expenses and continued selling price erosion. Year-toyear price declines totaled more than $15 million, with the declines occurring chiefly in Formica brand laminated plastics, some antibiotics, and medicated animal feed supplements. Cyanamid's important acquisitions of 1970 and 1971 deserve particular men tion. While the contribution to our 1972 earnings made by Ervin Industries, Inc., our land development and building sub sidiary, was less than in 1971, we regard this business as having a high potential for future earnings growth. Shulton, acquired in 1971, again made a positive contribution to our total 1972 earnings, but its dilution of our per-share earnings has not yet been overcome. As a result of significant marketing gains in several major product lines and the elim ination of some less important products, we believe that Shulton now provides us with an excellent base on which to build. In recent years, our building and consumer segment (Formica, Fibers, Consumer Products, and Shulton) has grown faster than the rest of Cyanamid, as a result of acquisitions as well as internal growth. Our medical segment, of major importance for two decades, remains a substantial contributor. In combination, these two segments now account for more than half our total sales and earnings. In view of this change in the character of our business, we should now be viewed primarily as a world wide, diversified, pharmaceutical and consumer-oriented company, rather than as a chemical company. Clifford D. Siverd, Chairman of the Board and Chief Executive Officer We see attractive and profitable growth prospects throughout Cyanamid in bus inesses highly diverse in character and worldwide in scope. In many of these businesses we have already achieved leadership--by strength in research, by new product introduction, and by com petitiveness in price, customer service, and marketing effort. In these we will maintain market leadership. In those businesses where we have not yet achieved a leading position but where we feel that we have real growth potential, we will intensify our competitive drives. In businesses where greater competitive effort would yield only minor returns, we will maintain our present posture. In a few areas failing to meet our standards of profitability and growth, we will phase out our operations in order to redeploy our re sources in businesses promising greater reward, just as we have in the past. Cyanamid's long-term goals are to generate rewarding profits for its share holders and at the same time to make substantial contributions to social welfare and progress. Our earnings progress will reflect contributions to health, safety, human dignity, and the quality of our environment throughout the world. We consider a positive social contribution the best way to assure the continued customer loyalty, public acceptance, and CY0005450 To Our Shareholders (continued) freedom from undue governmental restraints needed to assure profitable growth. I have been Cyanamid's president and chief executive officer since September 1967. In Octpber 1972, the board of directors elected me chairman and chief executive officer and named Dr. James G. Affleck president of the company, with primary responsibility for administering Cyanamid's present businesses. This will give me more time to implement strategy and long-range plans which will acceler ate the company's future expansion. Effective January 1,1973, in order to better reflect their management func tions, the following vice presidents of the company were designated senior vice presidents: J. F. Bourland. T. P. Forbath, B. R. Putnam, G. W. Russell, and N. B. Sommer. Effective on the same date, the titles of the general manager and the assistant general manager of each oper ating division were changed, respectively, to president and vice president. The latter titles are more appropriate to the size and importance of the businesses carried on by the divisions. See page 24 for a list of the operating divisions and their presidents. Ernest G. Hesse, a vice president and director, retired in August, after 26 years of loyal and distinguished service to Cyanamid. The record results of 1972 are now history. The point of real significance is that our 1972 per-share earnings have broken out of the plateau of recent years. Having achieved this, we are optimistic for the future. We are sincerely grateful for the continued loyalty of the company's employees, shareholders, customers, and suppliers. For the Board of Directors CHAIRMAN AND CHIEF EXECUTIVE OFFICER Wayne, New Jersey February 6, 1973 Cyanamid's Major Markets, 1963-1972 - 1400 - 1300 - 1200 - 1100 - 1000 - 900 - 800 - 700 - 600 - 500 Building & 3&||| Consumer B Medical - 400 - 300 29% - 200 35% - 100 1963 '64 '65 '66 '67 '68 '69 '70 *71 72 'Agricultural _vjiij Chemical Associated Companies Land Development and Building Unconsolidated Sales Real Estate Subsidiaries (in millions of dollars) 70 71 '72 2 CY0005451 Equity i Earning The highlights of 1972 in Cyanamid's major market segments, as well as its unconsolidated land development and building business, are given in the follow ing pages, Additional information on sales and earnings appears in the Financial Review on page 16. Page 24 contains a list of Cyanamid's operating divisions and principal subsidiaries and their more important product lines. Building and Consumer 1972 1971 Worldwide Sales ($ millions) $442 $427 % Total Sales (approx.) 32% 33% Earnings ($ millions--approx.) $ 23 $ 20 % Total Earnings (approx.) 21% 21% Worldwide sales of building and con sumer products were higher in 1972 than in 1971, with the principal contributors to the sales increase being the specialty building products marketed by Formica Corporation and Creslan acrylic and I R C polyester fibers. Sales of the Breck hair-care preparations and the household products were about the same as a year ago, as were sales of the Shulton cosmetics and toiletries. Shulton's sales performance was affected by the elimination of some of the less important products from its line. Despite price declines for Formica brand laminated plastics and increased expenditures for advertising and sales promotion for Shulton, 1972 earnings for the building and consumer segment rose. The principal contributors to the earnings increase were fibers, Breck hair-care preparations, and Formica brand products. Joining the well-known line ol Breck hair-care products in 1972 were, top, Breck creme rinse spray and Breck Basic hair spray with protein texturizers. Shulton products include the Nina Ricci L'Air du Temps fragrance with familiar Lalique crystal dove, above left, popular Old Spice men's toiletries, sold in London department store, above right, and complete line of Pierre Cardin toiletries tor men. CY0005452 Formica Corporation: Domestic sales of Formica brand laminates and panel products set new highs in 1972, reflecting the continued strength of home building and remodeling. The market showed enthusiasm for Formica's new dimensionally surfaced laminates. The Formica brand line of textured, deep-etched, and embossed laminates achieved substantial sales volume. Throughout the year, design presenta tions to various furniture and fixture manufacturers were made which resulted in additional business with these increas ingly important market segments. Creslan acrylic fibers are used in hand-knitting yarns and colorful knit apparel, above, and in recently introduced printed carpets, below. Panel products made an increased contribution to Formica's overall sales. Expansion of wholesale distribution and market exposure of Formica's moistureresistant wall-paneling added impetus to sales for use in such high-humidity areas as bathrooms. Sales of Sanitas and Wallclad vinyl-coated wall coverings also increased. In markets abroad, sales of Formica products in Canada rose sharply, as did sales in Latin America. During the year a new printing facility was completed to support Cyanamid de Mexico's produc tion of Formica decorative laminates. A significant contribution to earnings in this area was made also by an associated company, Formica International Limited, and its subsidiaries, which manufacture and market Formica laminates in coun tries outside the Western Hemisphere. Agreement in principle has been reached with Powers Regulator Company of Skokie, Illinois, for the acquisition for cash by Powers of Cyanamid's Fiat facili ties in the United States and Canada, subject to final approval of both com panies. Fiat manufactures and sells a line of laundry and bathroom fixtures. Fibers: Sales in 1972 established new highs for both Creslan acrylic fibers and I R C polyester yarns for tire and industrial applications. For Creslan fibers, apparel sales were strong throughout the year, with impor tant gains continuing in the knitwear and hand-knitting yarn markets. The addition of major new accounts contributed to this performance. Creslan carpet fiber sales were slightly lower than in 1971. We are encouraged, however, by our new, highly resilient acrylic carpet fiber and by the increased use of Creslan in the growing, luxurious plush carpet constructions. Sales of acrylic fibers into other home-furnishings markets increased during 1972. The expansion completed during 1971 at the acrylic fibers plant near Pensa cola, Florida, provided increased produc tion of Cyanamid's newer acrylic fibers to meet the higher market demands in 1972. For I R C, the additional polyester production facilities completed late in 1971 enabled us to meet increased cus tomer requirements in 1972 and put us in Increased television advertising and new container sizes helped to pro mote these household products. a position to satisfy increased demands projected for 1973.1 R C discontinued rayon production during the fourth quarter of 1972, as scheduled, and many of the end-use requirements for rayon are now being satisfied by I R C polyester yarns. The effect on earnings of the discontinuance of rayon production was minor. Fiber sales and profitability outside the United States were bolstered by the continued growth of a40%-owned associated companyrCyanenka, S.A., the leading supplier of acrylic fibers in Spain. Cyanenka serves a market that shows a steadily increasing demand for high quality home furnishings and apparel made from acrylics. Production capacity has been increased several times since Cyanenka was organized in 1966. Consumer Products: Breck maintained its position as one of the leaders in the At new training center in Sao Paulo, Brazilian workers learn correct techniques for applica tion and use of Formica decorative laminates. CY0005453 hair-care field in 1972. While Breck haircare preparations as a group failed to achieve a year-to-year sales gain, there was a substantial rise for Breck's Gold Formula line of shampoos. This was sig nificant, since this Breck line continued to outpace the overall growth of the shampoo market. Sales of Breck hair sprays also showed increases. Among the household products, sales of Pine-Sol liquid cleaner rose substan tially, and despite growing competition it maintained its top dollar position in the U.S. liquid cleaner market for the third consecutive year. Aggressive advertising and promotion were continued for both Breck and household products, with major brands receiving top attention. Commercial mes sages were carried on a wide variety of television programs, including many of the most popular shows on the major networks. Balancing its television adver tising, Breck continued its famous Breck Girl pastel series in the most widely read women's magazines. Shulton: Worldwide sales of Shulton cosmetics and toiletries in 1972 showed a small year-to-year increase. However, worldwide sales of Shulton's most impor tant products, Old Spice after-shave lotion and cologne, ran well ah ead of the 1971 level. Distribution of fine fragrances through Shulton's subsidiary, Jacqueline Cochran, Inc., has become an excellent growth area for Shulton. In 1972, as in each of the past several years, sales of Nina Ricci* perfumes climbed sharply, and this brand has now achieved one of the leading positions in its field. Bigarade*, a new, light Nina Ricci fragrance created in Paris, was launched in the United States during 1972, and response is most encouraging. In addition, first-year national sales of the Pierre Cardin* col lection of prestige grooming aids for men exceeded expectations. The announcement by the Food and Drug Administration in September banning all further manufacture and shipment of over-the-counter drugs and cosmetics containing more than 0.1 % of hexachlorophene affected a number of Shulton products, particularly deodor "Quatramatic" wood grain stylings, new colors and patterns tor counter and table tops, above, and dimensional laminates like the "Bronze Tableau" pattern, left, were introduced by Formica in 1972. "Triumphe," right, is a new Hocked design from Sanitas and Walidad vinyl-coated wall coverings. ants, antiperspirants, and Christmas gift sets. Shulton had already developed new product formulations without hexachloro phene and had initiated production of them. However, its stock of these new formulations was insufficient to meet retailer demand, and the resulting sales and inventory losses, plus some rework ing costs, adversely affected Shulton's earnings. Operating economies within Shulton were accomplished in a variety of ways. One was the elimination of some marginal products from Shulton's extremely broad line, thus making possible inventory reductions, more efficient production runs, and greater stress on Shulton's more important products. In addition, there has been a consolidation of Shulton's manufacturing facilities. `Trademark CY0005454 5 Medical 1972 1971 Worldwide Sales ($ millions) $273 $256 % Total Sales (approx.) 20% 20% Earnings ($ millions--approx.) S 33 $ 33 % Total Earnings (approx.) 30% 35% U.S. sales of medical products in 1972 were about the same as in 1971. In mar kets abroad, medical sales increased substantially. Even though there were selling price declines for some anti biotics, worldwide medical earnings were approximately the same as in 1971. In the United States, most major prod uct groups contributed to the sales increase, but total sales of antibiotics were down owing to the loss of Achrocidin tetracycline-antihistamineanalgesic compound, an important combination drug product removed from the U.S. market by order of the Food and Drug Administration in December, 1971. However, 1972 sales of Lederle's other broad-spectrum antibiotics were higher than the year before, with Minocin minocycline, introduced during the fourth quarter of 1971, an important contributor. There was also a year-to-year sales gain for Achromycin tetracycline resulting from new marketing approaches instituted at the beginning of 1972. The year 1972 marked the twenty-fifth since Lederle introduced the first of the broad-spectrum antibiotics, Aureomycin chlortetracycline, initially marketed in 1948. Minocin represents the fourth major Intravenous preparation of Minocin minocycline tor hospital use, top, was one of two new dosage forms ap proved by the FDA for the fourth in the series of broad-spectrum anti biotics from Lederle research. Demand for Myambutol ethambutol in places such as Taiwan, left center, increased worldwide sales of the anti-TB drug. Diagnostic test kits, right center, and several new steroids and hematinics, left foreground, were added to the established Lederle product line. CY0005455 product resulting from Lederle's quartercentury of effort in this field. Late in 1972 the Food and Drug Administration approved two important new dosage forms of Minocin, an intra venous preparation and a syrup, an action which is expected to increase the market penetration of this latest of the semi-synthetic broad-spectrum anti biotics. In addition, the FDA approved additional claims for Minocin for treat ment of syphilis and for treatment of human carriers of the organism which causes meningococcal meningitis. These approvals are expected to further broaden its use. Overseas, Minocin sales showed sig nificant gains in the first full year this new antibiotic was on the market. Additional sales increases are anticipated in 1973 as Minocin moves closer to full potential with its introduction in several new major markets in Europe. Lederle's line of vitamins and hematinics and its steroid products also enjoyed sales gains, with both groups strengthened by introduction of several new products. The Food and Drug Administration has recently been directed by court order to observe a timetable in completing im plementation of its Drug Efficacy Study. An estimate of the final effect upon the Lederle products affected cannot now be made. As previously reported, among the products involved, four have been considered most immediately impor tant. Sales of Achrocidin, removed from the market in 1971, were by far the largest of the group. The three presently remaining on the market are Achrostatin tetracycline and nystatin, Declostatin demeclocycline and nystatin, and Aristomin steroid-antihistamine. New studies have been submitted to the FDA by Lederle with respect to Achrostatin and Declostatin, and protocols for further study are being designed for Aristomin. In the field of Davis & Geek's surgical products, there has been a continuing ac cumulation of successful clinical experi ence with Dexon, the only synthetic absorbable sutures commercially avail able. The result was a sizable increase in 1972 U.S. sales of Dexon over those of the introductory year 1971. Many large hospitals, including major teaching insti tutions, significantly broadened their usage of Dexon in 1972. To aid in the U.S. marketing of Dexon, the domestic sales force is being sig nificantly expanded and supplied with increased technical support and promo tional material. Research and testing programs are now under way to further broaden the use of Dexon in surgery. We have set our sights on obtaining a sig nificant increase in Davis & Geek's share of the worldwide sutures market, and we are making the capital investment and marketing effort necessary to achieve this. Outside the United States, Davis & Geek sales rose considerably, largely because of increased sales of Dexon sutures, mostly in European markets. During the year Dexon was introduced in all major distributor markets in Europe. An additional factor was growing accept ance in the United Kingdom and Ger many as surgeons became more familiar with the distinct advantages of Dexon. Ground was broken in Puerto Rico during the fourth quarter of 1972 for a major new plant to produce Dexon. A fully integrated facility, it will be an impor tant factor in the supply of worldwide Dexon suture requirements, supplement ing other extensive suture-producing facilities in the United States and abroad. The new plant will cost over $10 million and will be the first built exclusively for the production of Dexon. The year brought further increases in sales of Cyanamid's antituberculosis drug, Myambutol ethambutol, both in the U.S. and abroad, with high demand in those countries where tuberculosis still is a major health problem. To aid in meet ing local demands, production units were completed in Venezuela and Taiwan. The addition of Lederle products to the Lederle Novalis line in France has enabled that subsidiary to begin making important contributions to international performance. Full-scale marketing of Minocin and Dexon resulted insubstantial increases in medical sales in Germany. Lederle Japan, an associated company, also continued to maintain its high sales level during the year, particularly after Minocin was approved for use under the government health insurance program. During the year our medical research effort was further expanded. There has been a significant change in the general profile of disease problems. The lengthening of the life span resulting from the progress which has been made in the treatment and prevention of infectious disease problems has resulted in a shift to the challenges posed by the chronic and degenerative diseases, which usually require long-term therapy. Lederle's present research emphasis reflects this. We are looking for the kind of drugs that will help prolong life and make the added years more produc tive and meaningful. Progress is being made with the new research approaches required in seeking agents effective in these types of disease. A number of promising products are now under investigation although many are still some distance from the market. Lederle President Robert A. Schoellhorn, right, and Governor Luis A. Ferr& inaug urate the groundbreaking ceremonies held in October, 1972, tor a major new plant to produce Dexon synthetic absorb able sutures, in Manati, Puerto Rico. CY0005456 Agricultural i 1972 1971 Worldwide Sales ($ millions) $256 $228 % Total Sales (approx.) 19% 18% Earnings ($ millions-approx.) $ 23 $ 15 % Total Earnings (approx.) 21% 16% Agricultural products in 1972 showed higher year-to-year increases in world wide sales and earnings than any of the other three major segments of Cyanamid's business. Gains were strong both in the United States and abroad. Domestic sales of animal industry products substantially exceeded those of 1971. The principal gains were made in animal health products, paced by Tramisol levamisole, Cyanamid's broadspectrum dewormer for cattle and swine. Tramisol, the only dewormer effective against the lungworm, a widespread infection in these animals, has a broader spectrum than any competing product. Two new dosage forms were introduced during 1972: a feed form for cattle and swine, and a drinking-water preparation for swine. The line of professional veterinary pharmaceuticals, introduced late in 1971, continued its success with veterinarians. In December the U.S. Food and Drug Administration approved Robenz robenidine, a new high-potency coccidiostat active against an unusually wide spectrum of microscopic intestinal para sites, known as coccidia, which cause growth-impairment and even death in poultry. Marketing began in January 1973 in the United States, where the total market for coccidiostats is about $28 million. This product was introduced during 1972 in a number of important foreign Agricultural products helping to in crease the world's food supply and protect the environment include, from top, Robenz robenidine, a new highpotency poultry coccidiostat; Abate larvicide, used in mosquito control programs in the Middle East; nonpersistent Cygon systemic insecti cide for tomatoes and other vege table crops; Tramisol levamisole broad-spectrum dewormer, available in new dosage forms; and medicated feed additives for preventing disease and promoting growth in livestock. CY0005457 markets, where it met with excellent reception. The overseas market for coccidiostats is about the same size as in the U.S. Following the first futlyearof marketing in the United Kingdom, it is estimated that robenidine, sold under the Cycostat trademark, is now being fed to 50% of the broilers being raised there commercially. Cycostat also has been well accepted in Brazil, Argentina, Ireland, Spain, and the Middle East. Registrations by national health boards indicate robenidine will be available in all major poultry-producing nations by the end of 1973. A rapid expansion of global sales is expected. Ajiigh level of demand continued for Payzone nitrovin, a non-antibiotic growth promoter sold in many countries outside the United States. Marketing efforts have been concentrated in Europe, and more than half the broilers being raised for consumption there are now receiving Payzone in their diets. Payzone has also been effective in promoting more rapid weight increase in swine. Following extensive field trials, Payzone was registered for the swine market in the United Kingdom, Sweden, and France during 1972 with gratifying initial sales. Registrations have been completed in other major swine markets and additional product launches are scheduled for 1973. In the important medicated animalfeed-supplement business, domestic physical volume was higher than in 1971, but dollar sales were lower because of lower selling prices. A new unit for pro duction of feed-grade Aureomycin chlortetracycline was completed during the year at Hannibal, Missouri, to enable Cyanamid to meet future increases pro jected in the demand for medicated feed supplements. A new plant for production of Cyphos* feed phosphates was com pleted during 1972 at the same location to support the continued rise in domestic sales of these feed minerals, and produc tion from the new Cyphos plant com pleted at the end of 1971 in the Welland plant near Niagara Falls, Ontario, con tributed to an increase in 1972 Canadian sales of agricultural products. A pending policy statement and pro posed new regulations by the U.S. Food and Drug Administration are expected to require additional research to demon- strate again the safety of diseasepreventive levels of antibiotics and sulfonamides used in feeds for livestock and poultry. However, the results of twenty-five years of research already available in scientific literature support the belief that there is no hazard to humans or animals in the continued use of these products in animal feeds--a belief further supported by a recent statement made by a special committee of the Agricultural Research Institute, a unit of the National Research Council of the National Academy of Sciences. Domestic shipments of pesticides in pounds were higher than in 1971, but dollar sales were about the same in both years because of changes in the product mix. Market-share increases were achieved for Cythion insecticide `The Premium Grade Maiathion'*, Thimetsoil and systemic insecticide, and Cygon* systemic insecticide. This increased acceptance reflected concern over the impact of certain competitive insecticides on the environment because of their persistence or toxicity. Sales of pesticides overseas were above those of the previous year. Large quantities of Cyolane and Cytrolane insecticides were shipped to the Middle East for use by cotton farmers. Maiathion ULV was in heavy demand in public health programs. Large quantities were used, for example, to control malaria in Iran and to prevent a recurrence of equine encephalitis in Latin America. And because of its safety, maiathion is used frequently in combination products formulated locally, particularly in Latin American countries. Although major federal pesticide legis lation enacted in 1972 will increase the time and expense required to develop and market new insecticides, fungicides, and herbicides, Cyanamid is increasing its research effort in the plant industry field, both in the U.S. and abroad. If the world's food supply is to be increased to meet the needs of the rapidly growing world population, development of envi ronmentally acceptable chemicals for controlling plant pests and diseases and for regulating plant growth must be continued. In Cyanamid's view, research in this field, while difficult, can be rewarding. Overseas, the new Cyanamid agricul tural experiment station at Los Bafios, The Philippines, began operation in 1972. Potential new plant products and pes ticides are being tested there on crops and insects indigenous to tropical and subtropical climates. Domestic sales of fertilizers were higher than in 1971. Prices strengthened throughout the year, although price con trols limited the degree of improvement. A worldwide shortage of phosphate fertilizers created high demand in export markets, resulting in prices con siderably higher than those permitted domestically, and sales of these products increased abroad. Brewster Phosphates, the partnership with Kerr-McGee Corporation formed during 1971, is functioning well and is providing the economic advantages anticipated from its formation. On August 8,1972, the company announced that negotiations were under way with C F Industries, Inc., a major farm cooperative organization, for the sale of our U.S. retail and wholesale plant food business. In the course of these negotiations the decision was made to sell separately the 120 retail Farm Service Centers to a number of other buyers. We expect to complete the disposition of all of these units during the first quarter of 1973. On January 29,1973, the company decided to continue operation of the wholesale portion of the business, and accordingly negotiations with C F Indus tries were terminated. New production units tor Cyphos phosphates, a mineral nutrient used in animal feeds, and for feed-grade Aureomycin chlortetracycline were completed at Hannibal, Mo., in 1972. 'Trademark 9 CY0005458 Chemical 1972 1971 Worldwide Sales ($ millions) $388 $372 % Total Sales (approx.) 29% 29% Earnings ($ millions--approx.) $ 19* $ 12 % Total Earnings (approx.) 18% 12% Includes $4,051.000 resulting from gain on sale of Farmer Electric Products Co., Inc., and Control Print Corporation. Sales of chemicals showed a year-toyear rise in 1972 both in the U.S. and abroad. This growth would have been substantially greater except that some marginal product lines were eliminated, with greater concentration placed on high-technology specialty products. The year-to-year increase in earnings for 1972 resulted from higher volume coupled with stringent programs of costcontrol. The comparison year, 1971, included a flood loss in excess of insur ance proceeds of approximately $1.7 million. The domestic sales increase, reflecting the strengthening of the U.S. economy, was spread over many product lines. Sales volumes of both titanium dioxide and colored pigments in 1972 reached record levels. Demand for titanium dioxide was strong, with resulting firm prices and occasional product shortages. Cyanamid's plastics business showed an outstanding recovery from the depressed levels of 1971. Sales of Acrylite cast acrylic sheet, molding compounds, polyester resins, and coat ing resins all registered excellent gains. Shipments of mining chemicals rose, and sales of water-treating chemicals showed sizable growth as Cyanamid New chemical plants were completed at Andersonvllle, top, tor processing bauxitic ore used in making alum, and Azusa, left center, where hydrotreat ing and desulfurization catalysts are produced. Increased emphasis on in dustrial safety stimulated demand for safety hats, ear protectors, and other safety devices made by Glendale Opti cal Co., Inc. Dredge and floating wet mill, left, are part of ioint venture with Union Camp Corporation in northern Florida lor titanium ore production. CY0005459 continued to capitalize upon its basic position in flocculating polymers for water- and waste-treatment. Sales of rubber chemicals, specialty elastomers, and plastics additives rose also. Sales of catalysts to the U.S. petroleum industry declined substantially as a result of the lull in new refinery construction-- a lull which will apparently persist throughout 1973. Fortunately, the domes tic decline was offset in part by increased sales of refinery catalysts abroad. Sales of adhesives and honeycomb core to the U.S. aerospace industry declined also. As part of Cyanamid's program of withdrawing from businesses failing to meet its standards of profitability and growth, U.S. sale of dynamite and blast ing caps was discontinued in April. However, Cyanamid continues with the sale of ammonium nitrate in various forms for industrial explosives use. As part of the same program, Cyanamid announced the phasing out of the Decision Making Systems Depart ment. Two wholly owned subsidiaries which formed part of this department were sold--Farmer Electric Products Co., Inc., and Control Print Corporation. The gain on these sales amounted to $4,051,000 or 8e per share. A number of new chemical production facilities were completed or under con struction during 1972. Among the more important, construction was begun at Willow Island, West Virginia, on an installation to produce beta-naphthol and certain of its derivatives, used principally as intermediates in the manufacture of dyes, pigments, and rubber chemicals. Cyanamid is the only manufacturer of beta-naphthol in the United States. Operation of the new melamine unit in the Fortier plant at New Orleans, Louisi ana, made it possible to close small, obsolete melamine units at Wallingford, Connecticut, and in the Welland plant near Niagara Falls, Ontario. Melamine, which was pioneered by Cyanamid, is used for manufacture of resins for a wide variety of applications. During 1972 Cyanamid strengthened its position as a leading worldwide sup plier of acrylamide, which it likewise pioneered. Acrylamide is used to manu facture products important in paper manufacture and in water purification and waste treatment. The increasing emphasis by industry and government on pollution control is enlarging the market for our water and waste treatment products. Construction of a new muitimilliondollar acrylamide monomer unit at Fortier, using new catalytic technology developed by Cyanamid, was announced in June. Overseas, ground was broken for a new polyacrylamide fiocculant plant near Melbourne, Australia, and the plant was in operation before the end of the year. In addition, construction of another polyacrylamide fiocculant unit was begun at Witbank, South Africa, that will be capable of supplying all of the polyacryl amide flocculants required by the mining, paper, sugar, and water-treating indus tries in both South Africa and South West Africa. These new facilities supplement existing units at Warners, New Jersey, and Bradford, England. Construction of a new desulfurization and hydrotreating catalyst plant was completed in Azusa, California, and an associated company began construction of another such plant at Tahara, Japan. An expansion of capacity for reforming catalyst production is nearing comple tion at Willow Island, West Virginia. These units, with Cyanamid's two other catalyst plants in the U.S., one in Canada, one in England, and one owned by an associ ated company in Holland, will assure Cyanamid's ability to meet the rapidly growing needs of the petroleum industry as it moves to meet the energy require ments of the 1970's. New equipment was placed in opera tion at Azusa to produce polyester resins. The new capacity will be required to meet increased demand for these resins in leisure vehicles and boats as well as in furniture and housing. Construction was begun at Charlotte, Storm window replacement and patio doors are growing safety glazing applications tor shatter-resistant Acrylite cast acrylic sheet. North Carolina, on a multimillion-dollar plant to produce glyoxal by an improved new process. Most of the output will be used captively in the manufacture of durable-press finishes for textiles and a variety of other resins. Titanium Enterprises, Cyanamid's joint venture with Union Camp Corporation for the production of titanium ores in northern Florida, achieved its scheduled start-up date and initial shipments of ore arrived at Cyanamid's titanium dioxide plant at Savannah, Georgia, in July. The operation is still experiencing start-up difficulties normally associated with an installation of this size and complexity. The active research and development program on automobile-exhaust catalysts which Cyanamid has carried on for more than ten years was continued, supple mented in 1972 by a joint development program with Japan Catalytic Chemical Industries. J.C.C.I. has demonstrated a very high degree of research compe tence in the area of catalysts, and the combination of Cyanamid and J.C.C.I. technologies will accelerate progress in this field. Should catalysts be required in 1974 for 1975-model automobiles, we have the unique capability to supply up to ten million pounds per year from existing facilities beginning in 1973. CY0005460 11 Land Development and Building Sales of Cyanamid's land development and building subsidiaries, under the management of Ervin Industries, Inc., were $161,432,000 in 1972, about 33% higher than $121,297,000 in 1971. Ervin's earnings, however, were lower than in 1971--$3,475,000 in 1972 as compared with $4,755,000 a year ago. While this performance involved no dilution of Cyanamid's per-share earnings, it was below expectations. Sales of these land development and building subsidiaries are not consoli dated with the rest of Cyanamid's, since Ervin's real estate operations differ sig nificantly in nature from Cyanamid's other activities. In keeping with practices in its field, Ervin operates with a high ratio of debt to equity and manages its own borrowings with the traditional real estate lending institutions. Cyanamid does not guarantee the Ervin loans. Among the factors adversely affecting Ervin's 1972 earnings were lower lot sales and construction delays, particularly in the multifamily and residential areas. In addition, Ervin's activities, to a greater extent than in the past, were channeled into a few, new, large planned-unitdevelopment projects--totally planned communities accommodating residential, commercial, and recreational properties to provide for optimal use of the land. Such projects produce only minor earn ings in their early stages. The land development and building business is still a new one for Cyanamid, but one which we consider desirable to be in, both now and in the future. We are Ervin Industries' Southeast Division covers a broad cross-section ol real estate projects. Pictured, clockwise trom top lett, are a modern office building and a luxury rental apartment unit, The Lake, both located in Char lotte; Raintree, an award-winning planned community in Matthews, North Carolina; Polynesian-style Tega Cay, a recreational community on Lake Wylie in South Carolina; outdoor sports facilities at Ervin communities. CY0005461 Townhouse condominiums relied a new living style at Carrollwood Village, a $75-million totally planned community in Tampa, which is being developed by Sunstate Builders, Inc., lor Ervin's Florida Division. managing Ervin for sustained growth by keeping its operations concentrated in a few key market areas, and by estab lishing an effective planning and reporting structure. Operations in the Washington and Baltimore markets showed strong growth in 1972, and the year ended with Ervin one of the largest building operators in the area. In metropolitan Washington, awards for architectural quality and value were won in the categories of town houses, single-family traditional, and single-family contemporary styling. During the year, work began on major planned-unit-development projects in Norfolk and Richmond, and work con tinued on such projects in Charlotte and Tampa. The Raintree project in Charlotte has received one national and four state awards for architectural excellence and land planning. September brought the opening of the first phase of Carrollwood Village, a $75-million totally planned community in Tampa. This project represents the largest venture in community develop ment to date by Cyanamid's land devel opment and building subsidiaries. When ^ complete, it will encompass some 1800 y acres and 5000 homes. Some homes in the first phase, which will include 2500 k families, are now occupied. Construction features midrise condominiums, town k houses, cluster houses, garden villas, L and conventional single-family homes. The project will include an office park, of which a portion is already occupied, a shopping center, extensive recreational areas, and space for schools. Spacious, single-lamily home in Montgomery County, Maryland, was built by Croyder, Irvin & Co., part oI Ervin's Mid-Atlantic Division, which also includes Edmund J. Bennett Associates, a developer ol townhouse and garden apartment communities lor the "new towns" ol Reston, Virginia, and Columbia, Maryland. 8 I Activities Outside the United States The figures already given for Cyanamid's sales in its major market segments include its sales outside the United States, which in 1972 reached another record high. Such sales abroad were $385,814,000 in 1972, up 12% from 1971. These sales in 1972 represented 28% of the Cyanamid total. There were strong sales gains in Europe and Canada, with increases for Latin America and the Far East also. Europe continues to be the most important area of Cyanamid's activities overseas, and a number of factors con tributed to growth there in 1972. New product introductions in the medical and agricultural areas contributed signifi cantly and are indicators of the growing sophistication of Cyanamid's overseas operations. With increasing frequency, major new products are being first intro duced in markets abroad. Recent examples are the Dexon suture, robenidine coccidiostat, and Payzone* nitrovin, the non-antibiotic growth promoter for animals, which were launched initially in Europe. Another factor was the rise in sales in Eastern Europe, where positive results are beginning to accrue from earlier marketing groundwork in that area. A significant additional part of Cyanamid's business abroad is con ducted through several associated com panies in which our interest is from 40% to 50%. Total 1972 sales of such compa nies, which are not consolidated with the rest of Cyanamid's, were $181,000,000 as compared to $151,000,000 in 1971. 13 CY0005462 Activities Outside the United States (continued) Operating earnings from Cyanamid's business abroad, including its equity in the earnings of the associated compa nies, were higher than in 1971. The profit margin on Cyanamid's sales outside the United States is now higher than on its domestic sales, primarily because of a favorable product mix. In addition to the new overseas plants already discussed, during 1972 con struction was completed to modernize and consolidate plant and management facilities, and to increase production capacity, by Cyanamid subsidiaries in England, Spain, and Italy. Domestic Associated Companies Jefferson Chemical Company, Inc., owned jointly with Texaco Inc., achieved record sales in 1972. In spite of the higher sales and continuing cost-reduction pro grams, however, operating earnings were down from 1971. This decline resulted primarily from unusual operating diffi culties and an explosion at the Port Neches, Texas, plant. Jefferson's recently modernized propylene oxide unit performed well, and capacity for producing polyols for flex ible urethane foam was expanded. Con struction of a polymeric isocyanate unit was completed and undergoing start-up at the end of 1972. With this new facility, Montreal International Airport contains the largest single application ol Formica Panel System 202 in Canada, custom-made at Cyanamid ol Canada's St. Jean, Que., plant. Chairman of the Board C. D. Siverd and local ollicials break ground lor mining chemicals and polyacrylamide llocculant plant in Derrimut, Australia. Jefferson will be able to supply a broad line of chemicals to the urethane industry. Arizona Chemical Company, owned jointly with International Paper Company, showed year-to-year increases in both sales and earnings. The terpene resins plant completed in 1971 was in operation in 1972, and sales development is pro gressing on a number of types of these resins. Plans were announced during 1972 for a new unit to be built at Panama City, Florida, in 1973 for the continuous production of crude tall oil. The new unit will not only be more efficient than the existing installation, but it will eliminate an air- and water-pollution problem as well. Public Affairs and Employee Relations Cyanamid remains fully aware of its obli gations as a corporate citizen and dis charges them conscientiously. In order to minimize the impact of its own opera tions on the environment, Cyanamid has, in the past, made capital expenditures for pollution-control equipment through 1971 amounting on a cumulative basis to approximately $58 million, and during 1972 such expenditures were approxi mately $11 million more. The costs of operating this equipment and of Cyanamid's 1972 pollution-control research were $11 million. The standards imposed by law for air and water quality are becoming increas ingly stringent. The importance of a healthy environment is apparent to everyone. However, the costs incurred by industry in meeting these environmentalquality standards are mounting steadily, and it is essential that those responsible for setting such standards make certa in in each case that the benefits that can reasonably be expected justify the costs involved. Among the larger pollution-control installations completed or under con struction in 1972 were a $4-million waste-treatment unit installed in the plant of the Lederle Laboratories Division at Pearl River, New York, a $5-million waste-treatment system to be completed in 1973 at Wallingford, Connecticut, and a $4.3-million facility to provide complete secondary treatment at Willow Island, West Virginia. As a logical extension of such pro grams, the company made an initial grant during 1972 for establishment of an American CyanamidjDompany Profes sorship in Environmental Studies at Princeton University. This move will pro mote a heightened awareness of the problems of environmental control, and-- it is hoped--new and better solutions of them. As in the past, the company continued to develop and market products useful in the pollution-control efforts of others. Examples are Cyanamid's non-persistent insecticides, polyacrylamide flocculants for water purification and waste treat ment, catalysts used in producing lowsulfur refinery streams and low-sulfur fuel oil for power plants and other indus trial installations, and reforming catalysts for manufacture of high-octane motor fuel without the use of lead additives. In charitable contributions, Cyanamid continued its awards to colleges and uni versities with which it enjoys close rela tions, including colleges for minority groups, and it maintained its support of health and welfare organizations, partic ularly those in communities in which it carries on its operations. CY0005463 In minority hiring, Cyanamid has broadened its programs to place increased stress on hiring professional, office and clerical, and sales personnel in addition to plant operating and maintenance staffs. As for labor relations, negotiations were completed during 1972 with 34 U.S. union locals. There were no significant work interruptions at our major plants, although there were stoppages in the plant of Springfield Gravure Corporation at Springfield, Ohio, and in the Shulton plant atMoosic, Pennsylvania. Cyanamid also responded quickly and played a leading role in shaping indus try's reaction to the Burke-Hartke Bill which would limit imports into the United States and curb the international opera Frequent eltluenl measurements are part of environmental controls tor new waste treatment facility at Hannibal, Mo., plant. tions of U.S. companies. The tax pro posals of the bill would increase the effective tax rate on foreign earnings to more than 70%, thereby threatening the existence of U.S. foreign business activ ities. Such proposals will probably be taken up again by Congress in 1973. Despite continued emphasis on employee safety, the number of disabling injuries per million man-hours worked in Cyanamid installations rose to 2.30 in 1972 from 1.52 in 1971. There was an increase in the severity of accidents also, with 616 days lost per million man hours worked in 1972 compared to 405 in 1971, and fourfatalities in 1972 compared to three in 1971. In the face of these increases, we find little satisfaction in the knowledge that Cyanamid's safey record is better than that of many other industrial concerns. Employees are our most important resource, and preventing injury and ill ness among them is our highest priority and their paramount concern. This goal will receive additional attention at all levels of Cyanamid management, from senior executives to supervisors. Antibiotics Litigation Early in 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 in the case, which involves broad-spectrum antibiotics. This newtrial has been set for April. The 155 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. Ninety-three of these suits, involving the claims of almost all states, counties, cities, consumers, wholesalers, and retailers, and all private hospitals and Blue Cross plans, have, as previously reported, been settled for approximately $117,500,000 (of which Cyanamid's share was approximately $47,000,000). These settlements were for substantially less than the amounts claimed by plaintiffs' counsel. Escrow deposits covering these settlements have been charged against the $54,000,000 accrual made by the company as of September 30,1969, to cover its share of the settlement pro posals, plus certain legal expenses. This accrual, less the related tax reduction, was charged against earnings of appro priate prior years. A few miscellaneous cases have been settled or dismissed outside of the main settlement agree ments and the relatively small amounts paid were also charged against the accrual. The principal plaintiffs and classes represented in the 50 other pending 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 insur ance organizations which allegedly reimbursed individuals, purchasers of animal feed and veterinary products, competitors, the U.S. Government, and the governments of Vietnam and the Philippines. These actions are being vigorously defended by the company and the other defendants and have been assigned for trial to a single judge. A 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 mil lion dollars. Due to the uncertainty neces sarily inherent in litigated matters of this sort, the eventual cost of this litigation to the company, and its disposition, cannot be accurately predicted, and therefore the company has not accrued any additional amounts with respect thereto despite the magnitude of the amounts claimed and the possibility that large amounts may eventually be paid. Any additional amounts which may become payable by the com pany with respect to these claims would be charged against earnings of appropri ate prior years (generally prior to 1966), following the accounting practices rec ommended 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. 15 CY0OO5464 .V A ,VX American Cyanamid Company and Subsidiaries Financial Review Sales volume -- Consolidated sales in 1972 were $1,358,852,000 compared with $1,283,485,000 in 1971. Comparative quar terly sales for the two years were: Quarter First Second Third Fourth 1972 Amounts % of in thousands total $ 323,601 365,005 328,984 341,262 24 27 24 25 $1,358,852 100% 1971 Amounts in thousands $ 307,407 339,867 305,928 330,283 $1,283,485 % of total 24 26 24 26 100% Earnings -- Pre-tax earnings for 1972 were $184,180,000 com pared with $156,411,000 in the previous year. After provision for Federal and foreign income taxes of $75,400,000, con solidated earnings for 1972 were $108,780,000 compared with $94,111,000 in 1971. Earnings in 1972 include an after-tax gain of $4,051,000 or 8e per share (5e in the second quarter and 3 in the third quarter) from the sale of two wholly owned subsidiaries -- Farmer Electric Products Co. Inc., and Control Print Corporation. Provision for Federal and foreign taxes has been reduced by the amount of the current investment tax credit which has benefited earnings by 7e per share in 1972 and 3e per share in 1971. Per share earnings for 1972 were $2.24 compared to $1.95 in 1971 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 quarter for the two years are: Quarter 1972 Amounts Per In thousands share 1971 Amounts Per in thousands share First Second Third Fourth $ 24,721 30,927 24,338 28,794 $108,780 $ .51 .64 .50 .59 $2.24 $23,000 24,447 19,339 27,325 $94,111 $ .48 .51 .40 .56 $1.95 The average number of shares (excluding treasury shares) outstanding for 1972 was 48,605,765 compared to 48,285,185 for 1971. 48,547,116 shares outstanding at the end of 1971. This includes treasury stock of 172,284 shares at December 31, 1972 and 186,820 shares at December 31, 1971. In July, 163,370 shares of common stock were issued to the former stockholders of The Ervin Company under the acquisi tion agreement of September 1970. During the year 199,637 shares of common stock were issued to employees under stock option plans, including 4,995 treas ury shares. 11,821 treasury shares were issued to retired participants in the Incentive Compensation Plan and 2,280 treasury shares were acquired. Cash dividends paid in 1972 and 1971 amounted to $60,376,000 and $59,422,000 respectively. Allocation of 1972 Revenue Dollar Earnings Reinvestec in the Business Dividends Depreciation and Depletion Taxes Wages, Salaries and Employee Benefits Cost of Materials. Services, etc. Capital stock -- As of December 31, 1972 there were 48,905,128 shares of common stock outstanding compared to 16 CY0005465 Years Ended December 31,1972 and 1971 NET SALES...................................................................................... Equity in net earnings of: Associated companies ......................................... Unconsolidated real estate subsidiaries (Note 4) Interest........................................................................ Royalties and licenses.............................................., Other income--net of other deductions.................... 1972 1971 (Thousands of Dollars) $1,358,852 $1,283,485 8,759 3,475 5,543 6,606 12,358 1,395,593 11,048 4,755 2,975 6,895 5,177 1,314,335 Deduct: Manufacturing cost of sales--less depreciation and depletion Selling and advertising expenses............................................. Administrative and general expenses....................................... Depreciation and depletion....................................................... Research and process development expenses....................... Interest expense.......................................................................... Employees' benefits (Note 9)................................................... EARNINGS BEFORE TAXES ON INCOME .......................................................... Provision for Federal and foreign taxes on income.................. NET EARNINGS....................................................................................................... 725,872 248,510 67,840 68,350 44,156 15,760 40,925 1,211,413 184,180 75,400 $ 108,780 696,526 236,964 67,408 63,615 42,667 13,617 37,127 1,157,924 156,411 62,300 $ 94,111 Net earnings per share of common stock (Note 11).................... $2.24 See accompanying Statement of Accounting Policies and Notes to Consolidated Financial Statements $1.95 uMenis' 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, 1972 and 1971 and the related statements of earnings, earnings employed in the business, additional paid-in capital and changes in financial position 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, 1972 and 1971 and the results of their operations and changes in financial position for the respective years then ended, in conformity with generally accepted accounting principles applied on a consistent basis. New York, N.Y. February 6, 1973 PEAT, MARWICK, MITCHELL & CO. CY0005466 17 American Cyanamid Company and Subsidiaries December 31,1972 and 1971 CURRENT ASSETS: Cash in banks and on hand.................................................................... Marketable securities and time deposits, at cost and accrued interest (approximates market)....................... Accounts receivable, less allowances for doubtful accounts of $5,839 ($5,640 in 1971) ................................................................................ Inventories ............................................................................................... TOTAL CURRENT ASSETS...................................................................... INVESTMENTS AND ADVANCES: Equity in net assets of: Associated companies...................................................................... Unconsolidated real estate subsidiaries (Note 4)........................... Other investments and advances............................................................ TOTAL INVESTMENTS AND ADVANCES.................................................. PLANTS, EQUIPMENT AND FACILITIES, at COSt (Note 2)......................................... Less accumulated depreciation and depletion............................... NET PLANT INVESTMENT....................................................................... INTANGIBLES RESULTING FROM BUSINESS ACQUISITIONS............................................ PREPAID EXPENSES AND DEFERRED CHARGES................................................................ 1972 1971 (Thousands of Dollars) $ 44,437 $ 49,281 117,164 39,399 234,044 227,841 623,486 229,300 227,960 545,940 58,769 42,536 23,976 125,281 1,176,128 578,381 597,747 19,815 22,477 $1,388,806 59,626 23,561 16,444 99,631 1,156,550 560,626 595,924 21,202 18,541 $1,281,238 CURRENT LIABILITIES: Accounts payable and accrued expenses................................. Short term borrowings.................................................................. Funded debt installments due within one year........................... Federal and foreign income taxes payable................................. TOTAL CURRENT LIABILITIES..................................................... FUNDED DEBT NOT DUE WITHIN ONE YEAR (Note 3)....................................... INCENTIVE COMPENSATION CONTINGENTLY PAYABLE (Note 5).................... INCOME TAXES PAYABLE IN THE FUTURE.............................................................. MINORITY SHAREHOLDERS' EQUITY IN FOREIGN SUBSIDIARIES.......................... SHAREHOLDERS' EQUITY: Common stock--par value $5 per share (Notes 6 and 10) Authorized--60,000,000 shares Outstanding--48,905,128 shares (1971--48,547,116 shares) Additional paid-in capital ........................................................... Earnings employed in the business (Note 7)............................. Less cost of 172,284 shares of common stock held in treasury (1971--186,820 shares) (Note 8).......................... TOTAL SHAREHOLDERS' EQUITY................................................ $ 151,711 11,179 5,412 41,437 209,739 236,579 4,506 33,200 7,273 244,526 38,935 619,304 902,765 5,256 897,509 $1,388,806 See accompanying Statement of Accounting Policies and Notes to Consolidated Financial Statements $ 132,228 18,794 9,623 21,051 181,696 213,198 4,593 29,800 6,426 242,736 34,526 573,900 851,162 5,637 845,525 $1,281,238 18 CY0005467 Consolidated Statements of Additional Paid-in Capital Years Ended December 31,1972 and 1971 Balance at beginning of year................................................................................................. 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: Par value of 163,370 additional shares of common stock issued to former shareholders of The Ervin Company (195,090 in 1971) (Note 4)................... Adjustments arising from poolings of interests.............................................................. Balance at end of year............................................................................................................. 1972 1971 (Thousands of Dollars) $ 34,526 $ 37,596 -- 5,226 39,752 817 -- 817 $ 38,935 ' 1,183 371 39,150 975 3,649 4,624 $ 34,526 Consolidated Statements of Earnings Employed in the Business Years ended December 31,1972 and 1971 1972 1971 (Thousands of Dollars) Balance at beginning of year as previously reported................................. Provision for taxes on earnings of foreign subsidiaries and associates applicable to prior years (Note 1)..................................................... Balance at beginning of year as restated................................................. Net earnings for the year............................................................................ $573,900 3,000 570,900 108,780 $541,779 3,000 538,779 94,111 $679,680 $632,890 Deduct: Dividends: Paid by Shulton, Inc. prior to merger Stock........................................................................................................................................ Cash ........................................................................................................................................ Paid by American CyanamidCompany--$1.25 per share...................................................... Adjustments arising from poolings of interests............................................................................... -- -- 60,376 -- 60,376 1.485 653 58,769 1.083 61,990 Balance at end of year (Note 7)............................................................................................... $619,304 $570,900 See accompanying Statement of Accounting Policies and Notes to Consolidated Financial Statements CY0005468 19 c VA 4V A .VX I D ^ American Cyanamid Company and Subsidiaries Consolidated Statements of Changes in Financial Position /ears Ended December 31,1972 and 1971 SOURCE OF WORKING CAPITAL 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............................. USE OF WORKING CAPITAL Cash dividends on stock............................................................... Additions to plants, equipment and facilities--net........................ Additions to investments and advances--net................................ Increase in prepaid expenses and deferred charges.................. All other--net.................................................................................. INCREASE IN WORKING CAPITAL............................................................. 1972 1971 (Thousands of Dollars) $108,780 $ 94,111 68,350 2,000 (8,378) 170,752 23,381 6,580 200,713 63,615 7,100 (10,148) 154,678 95,030 2,782 252,490 60,376 70,173 17,272 3,936 (547) 151,210 $ 49,503 59,422 109,182 8,864 6,120 946 184,534 $ 67,956 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..................................... Income taxes payable...................................................................... INCREASE IN WORKING CAPITAL............................................................ $ 72,921 4,744 (119) (19,483) 7,615 4,211 (20,386) $ 49,503 $ 33,180 10,910 (4,490) 3,393 24,545 (3,687) 4,105 $ 67,956 See accompanying Statement of Accounting Policies and Notes to Consolidated Financial Statements Statement of Accounting Policies Consolidation --The consolidated financial statements include the accounts of American Cyanamid Company and all sub sidiaries except real estate subsidiaries which-are recorded on an equity basis. All significant intercompany transactions and balances have been eliminated upon consolidation. The equity method of accounting is used for investments in associated companies (20% to 50% owned). Principal associated com panies are listed on the back page of this report. Currency translation -- Assets, other than plants and facilities, and liabilities of foreign subsidiaries are included in the consoli dated balance sheets at official or prevailing rates of exchange at year-end; foreign plants and facilities are included at the exchange rates in effect at the time of acquisition. Income state ment accounts are translated at the average rates of exchange in effect during the year except for depreciation and amortiza tion which are translated at historical exchange rates. Transla tion gains and losses are included in consolidated income. Inventories -- Inventories are carried at the lower of cost (pri marily first-in first-out or average method) or market. Depreciation and amortization -- Depreciation is provided on a straight-line composite method over the estimated remaining useful lives of various classes of assets. Intangibles resulting from business acquisitions are carried at cost and amortized over a period of forty years unless, in the opinion of manage ment, their lives are limited, or they have sustained a perma nent diminution in value in which case they are amortized over appropriate periods. Income taxes -- The provision for Federal income taxes is reduced by the investment tax credit using the flow-through method. Deferred income taxes are provided to recognize the effect of timing differences between financial statement and income tax accounting, principally differences in depreciation methods and rates. Taxes are provided on the earnings of for eign subsidiaries and associates which management antici pates will be transferred to the company, and are not provided on those which the company intends to reinvest in foreign operations. 20 CY0005469 1. Foreign Operations Foreign operations incuded in the consolidated tinancial statements are as follows: 1972 1971 (In thousands of dollars) Net current assets.......................................... $110,000 $ 93,500 Net other assets (principally plants and facilities) .................................................... 87,700 69,900 Net earnings of foreign subsidiaries............ 33,600 31,100 Equity in undistributed earnings of foreign subsidiaries.................................... 122,800 111,300 In accordance with Opinions No. 23 and No. 24 of the Accounting Principles Board, the Company provides for taxes on the undistributed earnings of subsidiaries and associates where the remittance of such earnings is not considered to be indefinitely postponed. Also in accordance with these Opinions, taxes aggregating $3,000,000 relating to prior years earnings of subsidiaries and associates have been charged to earnings employed in the business. At December 31,1972, the Company has no present intention of remitting undistributed earnings of subsidiaries and affiliates aggregating $134,200,000 ($116,900,000 in 1971). 2. Plants, Equipment and Facilities Plants, equipment and facilities are comprised of the following: 1972 1971 (In thousands of dollars) Land, including mining land ...................... $ 44,209 $ 43,950 Buildings ...................................................... 245,407 242,527 Machinery and equipment............................ 860,528 834,125 Uncompleted construction and installations. 25,984 35,948 $1,176,128 $1,156,550 3. Funded Debt A summary of long term debt, excluding the current portion, is as follows: 1972 1971 (In thousands of dollars) 33A% promissory notes due 1977 to 1987... $ 75,000 $ 75,000 5%% guaranteed sinking fund debentures due 1980 of a subsidiary............................ 14,500 16,000 5% % guc ~nteed Swiss franc debentures due 1951 of a subsidiary............................ 26,455 -- 5Vi% pollution control revenue bonds due 1997 .......................................... 9,300 -- 7%% sinking fund debentures due 2001 ... 100,000 100,000 Sundry obligations.......................................... 11,324 22,198 $236,579 $213,198 4. Real Estate Operations Under the terms of the September 1970 acquisition agreement for The Ervin Company, the com pany issued 163,370 additional shares of common stock to the former shareholders of The Ervin Company during 1972 (195,090 in 1971) and is obligated to issue up to 129,344 addi tional shares based on future earnings of The Ervin Company. The real estate subsidiaries,which have been combined into Ervin Industries, Inc. in 1972, are not consolidated with the 971 5f accounts of the company. Condensed consolidated financial statements are as follows: BALANCE SHEET December 31, 1972 1971 Assets: (In thousands of dollars) Cash................................................................ $ 6,533 $ 3,630 Mortgage notes and other receivables.......... 33,709 20,674 Inventories, properties and equipment, net (substantially all pledged to secure mortgage and other notes payable).......... 172,295 104,193 Other assets .................................................. 9,041 7,501 J221J78 $135,998 Liabilities and shareholder's equity: (note) Liabilities, substantially all mongage and other notes payable (note).................. $179,042 $112,437 Notes payable to American Cyanamid Co.: 10% note due January, 1973 (paid) ..... 5,000 -- 7 72% subordinated note due March, 1977 10,000 -- Non-interest bearing notes due May and June, 1977 .............................................. 3,550 3,050 Shareholder's equity: Common stock and additional paid-in capital........................................ 8,733 Earnings employed in the business.......... 15,253 Total shareholder's equity.......................... 23,986 $221,578 8,733 11,778 20,511 $135.998 EARNINGS AND EARNINGS EMPLOYED IN THE BUSINESS Years ended December 31, 1972 1971 Sales and revenues.................................. ........ $161,432 Costs and operating expenses................ ........ 154,422 Earnings before income taxes................ ........ Income taxes.................. ..................... ........ 7,010 3,535 $121,297 111,825 9,472 4,717 Net earnings ............................................ ........ Earnings employed in the business at beginning of year............................ ........ 3,475 11,778 4,755 7,023 Earnings employed in the business at end of year...................................... ........ $ 15,253 $ 11,778 Note--The company is contingently liable at December 31, 1972 for approximately $94,100,000 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%. The company leases and operates certain rental properties under lease agreements expiring at various dates to 1995. Annual rentals on such leases aggregate approxi mately $14,200,000 ($9,400,000 in 1971). 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 above condensed combined financial statements of the real estate subsidiaries include the accounts of these companies for the entire year 1971. CY0005470 21 c i v \ r i o ra American Cyanamid Company and Subsidiaries j J _ -a C; a : r. : (continued) 5. Incentive Compensation The accounts include provision for incentive compensation 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 avail able for 1972, the portion so contingently payable in common stock is not determinable. The amount contingently payable in respect of allotments for prior years is $4,506,000. 6. Authorized Capital 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. Dividend Restrictions The 33/i% 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 employe:;; in the business at December 31, 1972 which may be applied to the payment of cash divi dends is limited to $85,000,000. 8. Treasury Stock At December 31,1972 the company owned and held in its treasury 172,284 shares of common stock com pared to 186,820 shares at December 31, 1971. . From time to time the company has acquired shares of its own common stock which are then available to fulfill contingent obligations under the company's Incentive Compensation Plan, for stock option plans and for other corporate purposes. Dur ing 1972, 11,821 treasury shares were delivered to retired participants of the plan, 4,995 treasury shares were issued to employees under the stock option plan and 2,280 treasury shares were acquired. 9. Employees' Benefits Employees' benefits include the cost of pension, group insurance and social security programs. The company and its consolidated subsidiaries have various pen sion plans covering substantially all their employees, including 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 expense was $9,313,000 for 1972 and $7,137,000 for 1971. 10. Stock Options Under the company's stock option plan key employees may be granted options to purchase common stock at no less than 100% of market value on the date of grant. 1,500,000 shares were originally reserved for stock options. In 1968 and 1969 qualified stock options were granted exercis able over a period of not more than five years from date of grant and, in 1970, 1971 and 1972 non-qualified stock options were granted exercisable over ten years from 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. Details of stock option activity for 1972 and 1971 follow: 1972 Granted Exercised Outstanding at year-end 1971 Granted Exercised Outstanding at year-end Non-qualified Number Price per of shares share 201,350 9,928 530,083 { $35.75 i 10 ( $37.25 ( $31.00 < and ( $31.25 ( $31.00 { ,0 { $37.25 184,395 -- 349,630 ( $31.25 < and 1 $36.00 - ( $31.00 < to $36.00 Qualified Number of shares Price per share -- 159,435 180,345 ( $25.75 < and [ $33.50 ( $25.75 < and $33.50 -- 15,000 346.585 -- $33.50 ( $25.75 < and ' ) $33.50 At December 31, 1972, options for 336,458 shares were exercisable (398,787 in 1971). In connection with the Shulton merger the company assumed the obligations under various stock option and purchase plans of Shulton. At December 31,1972 there were options outstand ing to purchase 20,071 shares of Cyanamid's stock at prices from $20.49 to $45.52 per share of which options for 16,501 shares were exercisable. Options for 30,274 shares were ex ercised during the year (2,633 in 1971) at an average price of $23.51 ($26.69 in 1971). 11. 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; 48,605,765 in 1972 and 48,285,185 in 1971 after giving effect to the shares issued in connection with the poolings of inter ests. The stock options described in Note 10 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. 12. Shulton Merger In April 1971, the company issued 3,092,553 shares of common stock in connection with a statu tory merger pursuant to which Shulton, Inc. became a wholly owned subsidiary of the company. The merger constituted a pooling of interests for accounting purposes and, accordingly, the 1971 financial statements include the accounts of Shulton for the entire year. 13. Contingent Liability The company is contingently liable as guarantor on loans outstanding of associated companies in the amount of $30,200,000 at December 31, 1972. 14. Litigation Reference is made io the remarks under "Anti biotics Litigation" in the foregoing report of the Board of Direc tors, with respect to the antibiotics litigation in which the company is involved. 22 CYOOD5471 Earning* and Dividends per Sh*r* (adjusted tor stock splits) r'v/sv.. *. IDIy.____ jEnl"B ^.x Vw. " 1963 64 65 66 67 68 69 70 71 72 Vi 1963 64 65 66 67 68 69 70 71 72 Shareholders' Equity (in millions of dollars) -1000 - 900 - 800 - 700 - 600 - 500 - 400 - 300 - 200 - 100 1963 64 65 66 67 68 69 70 71 72 Ten-Year Summary of Financial Statistics (Amounts in millions except earnings and dividends per common share) Net sales..................................... 1972 1,359 Earnings before taxes................. Provision for taxes....................... 184 75 Net earnings................................. Dividends (includes stock)........... 109 60 Earnings per share..................... Dividends per share................... 2.24 1.25 Depreciation and depletion......... Gross additions to plant facilities (includes acquisitions)............. 68 72 Current assets............................. Current liabilities......................... 623 210 Working capital........................... 413 Equity in associated companies . Plants, equipment & facilities at cost..................................... Net depreciated value................. 59 1,176 598 Funded debt not due within one year................................... 237 Shareholders' equity: Common stock......................... Additional paid-in capital .... Earnings employed in the business............................... 245 39 619 1971 1,283 156 62 94 61 1.95 1.25 64 111 546 182 364 60 1,157 596 213 243 35 571 1970 1,257 1969 1,188 161* 68 180 84 93* 96 60 61 1.93* 1.25 2.02 1.25 60 56 94 99 506 493 210 188 296 305 53 55 1,121 550 1,054 520 118 119 242 239 37 35 539 500 Deduct treasury stock............... Total equity................... Average number of shares (excludes treasury shares).... (5) 898 48.6 (6) 843 48.3 (13) 805 48.0 (12) 762 47.6 1968 1,122 173 78 95 60 1.99 1.25 56 60 497 203 294 55 988 482 1967 1,035 130 53 77 59 1.62 1.25 52 60 437 165 272 49 966 484 105 111 239 32 467 (10) 728 238 30 435 (12) 691 47.7 47.4 1966 1965 1964 1963 1,041 945 847 774 170 173 152 136 69 73 66 66 101 100 86 70 60 51 48 43 2.13 1.25 2.11 1.84 1.07 Vi 1.00 1.49 .90 47 44 40 39 111 133 51 51 438 456 460 413 184 189 175 151 254 267 285 262 47 43 39 37 947 881 777 743 481 417 333 325 111 102 81 88 238 237 237 236 28 27 25 21 417 375 329 291 (13) (13) (22) (17) 670 626 569 531 47.4 47.1 46.9 47.0 CY0005472 23 Operating Divisions and Principal Subsidiaries JAMES G. AFFLECK, President JAMES G. AFFLECK, President ERVIN INDUSTRIES, INC., E. Allen Brown, Jr,, 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, Inc., and Ervin Atlantic, Inc. JAMES F. BOURLAND, Senior Vice President AGRICULTURAL, J. Clifford Blauvelt, President Animal feed supplements and veterinary products, insecticides, fungicides, herbicides, nitrogen and phosphate fertilizer products, blended fertilizers. LEDERLE LABORATORIES, Robert A. Schoellhorn, President 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. BORDEN R. PUTNAM, Senior Vice President INDUSTRIAL CHEMICALS AND PLASTICS, Howard E. Nehms, President Industrial products for the paper-making industry and mining in dustry; flocculants and related chemical agents for industrial and municipal water and waste treatment. Chemical products for the chemical process industry; heavy chemicals, surfactants, acryla mide, acrylonitrile, melamine and specialty monomers. Plastics and resins for coatings, thermosetting and acrylic molding com pounds, high performance bonding agents and adhesives, and Acryiite acrylic sheet. ORGANIC CHEMICALS, Ben H. Loper, President Catalysts, dyes, elastomers, intermediates, plastic additives, refin ery chemicals, rubber chemicals, textile chemicals, textile resins; industrial safety equipment from Glendale Optical Co,, Inc. PIGMENTS, John Ludden, Jr,, President Inorganic and organic chemical colors, Unitane titanium dioxide. CHEMICAL RESEARCH, Jason M. Salsbury, Director GEORGE W. RUSSELL, Senior Vice President CONSUMER PRODUCTS, Albert L. Munsell, President Breck preparations for care of the hair; Pine-Sol cleaner-disin fectant-deodorizer; Formica Floor Shine* finish; and other house hold maintenance and cleaning aids. FIBERS, Philip G. Connell, Jr., President Creslan acrylic fiber for apparel, home furnishings and industrial applications; filament polyester for tire cord and industrial appli cations. FORMICA CORPORATION, Wallace G. Taylor, President Formica brand decorative laminates; laminate cabinet surfacing; laminate-clad doors and toilet compartments; architectural and residential panel systems; adhesives; Sanitasand Wallclad vinylcoated wall coverings from Standard Coated Products. SHULTON, INC., Albert L. Munsell, President Old Spice men's toiletries; Desert Flower fragrances, skin-care and toiletry products; Corn Silk cosmetics; Flowing Velvet skin lotions; imported Nina Ricci" and Carven perfumes for women; Pierre Cardin* toiletries for men. Produces and markets Consumer and Shulton products outside the U.S. and Canada. NOLAN B. SOMMER, Senior Vice President CYANAMID OF CANADA LIMITED, Jan-Dlouhy, President Produces for sale in Canada and for export and also imports and markets in Canada the products of Cyanamid and its sub sidiaries. CYANAMID INTERNATIONAL, Harry F. Bliss, Jr,, President Produces or imports and markets Cyanamid's products, except for Consumer and Shulton products, through subsidiaries and distributors in countries and territories outside the United States and Canada. Trademark ----------------------------- Service Divisions--------------------------- CLIFFORD D. SIVERD, Chairman of the Board and Chief Executive Officer THOMAS P. FORBATH, Senior Vice President COMMERCIAL DEVELOPMENT, Kent L. Aldershof, Director CONTROLLER'S, Richard L. Martino, Controller TREASURY, Leonard T. Murphy, Treasurer HAROLD B. GROSS, Secretary and General Counsel LAW, James I. Wyer, Director THOMAS P. TURCHAN, Vice President ENGINEERING & CONSTRUCTION, George P. Ferrigni, Director PERSONNEL, Clair L. Brandrup, Director PURCHASING, Philip K. Langford, Director TRANSPORTATION & DISTRIBUTION, Gerrit W. Van Schaick, Director WASHINGTON OFFICE, Don A. Goodall, Washington Corporate Representative JOHN M. FASOLI, Director, Public Relations 24 CY0005473 Board of Directors JAMES G. AFFLECK JAMES F. BOURLAND JAMES B. FISK THOMAS P. FORBATH L. EMERY KATZENBACH IAN K. MACGREGOR IHOMAS L. PERKINS IIORDEN R. PUTNAM GEORGE W. RUSSELL (iEORGE L. SCHULTZ CLIFFORD D. SIVERD NOLAN B. SOMMER Officers CLIFFORD D. SIVERD, Chairman ol the Board and Chief Executive Otlicer JAMES G. AFFLECK, President JAMES F. BOURLAND, Senior Vice President THOMAS P. FORBATH, Senior Vice President BORDEN R. PUTNAM, Senior Vice President GEORGE W. RUSSELL, Senior Vice President NOLAN B. SOMMER, Senior Vice President THOMAS P. TURCHAN, Vice President HAROLD B. GROSS, Secretary and General Counsel RICHARD L. MARTINO, Controller LEONARD T. MURPHY, Treasurer Finance Committee JAMES B. FISK, Chairman JAMES G. AFFLECK THOMAS P. FORBATH L. EMERY KATZENBACH IAN K. MACGREGOR THOMAS L. PERKINS CLIFFORD D. SIVERD Executive Committee CLIFFORD D. SIVERD, Chairman JAMES G. AFFLECK JAMES F. BOURLAND THOMAS P. FORBATH BORDEN R. PUTNAM GEORGE W. RUSSELL NOLAN B. SOMMER Board of Directors J. B. Fisk Chairman of the Board, Ben Telephone Laboratories, Incorporated T. P. Forbath Sen/or Vice president L. E. Katzenbach Chairman, White, Weld & Co., Incorporated t. K. MacGregor Chairman ot the Board and Chief Executive Officer, American Metal Climax, Inc. T. L. Perkins Counsel to Perkins, Daniels & McCormack, and Chairman of the Trustees. The Duke Endowment B. R. Putnam Senior Vice President G. W. Russell Senior Vice President G. L. Schultz Chairman of the Board, Shulton, Inc. N. B. Sommer Senior Vice President CY0005474 25 American Cyanamid Company and Subsidiaries Akron, Ohio Atlanta, Ga. Azusa, Calif. Boston, Mass. Bound Brook, N.J. Buffalo, N.Y. Charlotte, N.C. Chicago, III. Cincinnati, Ohio Clearwater, Fla. Cleveland, Ohio Clifton, N.J. Dallas, Tex. Danbury, Conn. Denver, Colo. Detroit, Mich. Falls Church, Va. Grand Rapids, Mich. Greensboro, N.C. Havre de Grace, Md. Honolulu, Hawaii Houston, Tex. Indianapolis, Ind. Jacksonville, Fla. Kalamazoo, Mich. Kansas City, Mo. Knoxville, Tenn. La Puente, Calif. Linden, N.J. Los Angeles, Calif. Louisville, Ky. Memphis, Tenn. Miami, Fla. Milwaukee, Wis. Minneapolis, Minn. Mobile, Ala. Montgomery, Ala. Nashville, Tenn. New Orleans, La. New York, N.Y. Oakland, Calif. Oklahoma City, Okla. Omaha, Neb. Painesville, Ohio 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. Salt Lake City, Utah 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. Auckland, N.Z. Bangkok, Thailand Barcelona, Spain Bogota, Colombia Bombay, India Brussels, Belgium Buenos Aires, Argentina Caracas, Venezuela Catania, Italy Copenhagen, Denmark Frankfurt, Germany Gosport, England Guatemala City, Guatemala Hato Rey, Puerto Rico Hong Kong Johannesburg, S. Africa Karachi, Pakistan Kinshasa, Zaire (Congo) Leiden, The Netherlands Lima, Peru 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 Singapore Stockholm, Sweden Sydney, Australia Taipei, Taiwan Tilbury, Canada Tokyo, Japan Toronto, Canada Vancouver, Canada Zurich, Switzerland 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. Danbury, Conn. Demopolis, Ala. DeRidder, La. Escanaba, Mich. Evendale (Cincinnati), Ohio Fort Madison, Iowa Fort Worth, Tex. Fortier (New Orleans), La. Georgetown, S.C. Hamilton, Ohio Hannibal, Mo. Havre de Grace, Md. Hazleton, Pa. Hughestown, Pa. Jackson, Miss. Joliet, III. Kalamazoo, Mich. La Puente, Calif. Longview, Wash. Marietta, Ohio Mays Landing, N.J. Memphis, Tenn. Miami, Fla. Michigan City, Ind. Mobile, Ala. Monticello, Miss. Nashville, Tenn. Painesville, Ohio Pearl River, N.Y. Pensacola, Fla. Perrysburg, Ohio Philadelphia, Pa. Plainview, LI., N.Y. Plymouth, N.C. Sanford, Me. 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. 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 Bound Brook, N.J. Bradford, England Clifton, N.J. Danbury, Conn. Evendale, Ohio Gosport, England Los Bafios, Philippines Niagara Falls, Canada Painesville, Ohio Pearl River, N.Y. Pensacola, Fla. Porto Alegre, Brazil Princeton, N.J. Stamford, Conn. (% owned) Arizona Chemical Company (50%) Cyanamid-Ketjen Katalysator B.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%) TDF Tiofine B.V. (50%) WAYNE, NEW JERSEY 07470 t r an s f er a g e n t an 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. CY0005475