Document/Exhibit Description Pages Size
1: 10-K Warner-Lambert 10-K 27 140K
2: EX-10 Exhibit 10(F) 18 53K
3: EX-12 Statement re: Computation of Ratios 1 8K
4: EX-13 Annual or Quarterly Report to Security Holders 36± 144K
5: EX-21 Subsidiaries of the Registrant 4 25K
6: EX-23 Consent of Experts or Counsel 1 6K
7: EX-27 Financial Data Schedule (Pre-XBRL) 1 8K
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SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
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FORM 10-K
(MARK ONE)
[x] ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF
THE SECURITIES EXCHANGE ACT OF 1934
FOR THE FISCAL YEAR ENDED DECEMBER 31, 1995
OR
[ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF
THE SECURITIES EXCHANGE ACT OF 1934
FOR THE TRANSITION PERIOD FROM TO
COMMISSION FILE NUMBER 1-3608
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WARNER-LAMBERT COMPANY
(EXACT NAME OF REGISTRANT AS SPECIFIED IN ITS CHARTER)
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[Enlarge/Download Table]
DELAWARE 201 TABOR ROAD 22-1598912
(STATE OR OTHER JURISDICTION OF MORRIS PLAINS, NEW JERSEY 07950 (I.R.S. EMPLOYER
INCORPORATION OR ORGANIZATION) (ADDRESS OF PRINCIPAL IDENTIFICATION NO.)
EXECUTIVE OFFICES, INCLUDING ZIP CODE)
201-540-2000
(REGISTRANT'S TELEPHONE NUMBER, INCLUDING AREA CODE)
------------------------
SECURITIES REGISTERED PURSUANT TO SECTION 12(b) OF THE ACT:
[Enlarge/Download Table]
NAME OF EACH EXCHANGE ON
TITLE OF EACH CLASS WHICH REGISTERED
--------------------------------------------------------------- ------------------------------------------------
Common Stock (Par Value $1 Per Share) The New York Stock Exchange, Inc.
The Chicago Stock Exchange, Inc.
The Pacific Stock Exchange, Inc.
Rights to Purchase Series A The New York Stock Exchange, Inc.
Participating Cumulative Preferred Stock The Chicago Stock Exchange, Inc.
The Pacific Stock Exchange, Inc.
SECURITIES REGISTERED PURSUANT TO SECTION 12(g) OF THE ACT:
None.
Indicate by check mark whether the registrant (1) has filed all reports
required to be filed by Section 13 or 15(d) of the Securities Exchange Act of
1934 during the preceding 12 months (or for such shorter period that the
registrant was required to file such reports) and (2) has been subject to such
filing requirements for the past 90 days. YES [x] NO [ ].
Indicate by check mark if disclosure of delinquent filers pursuant to Item
405 of Regulation S-K is not contained herein, and will not be contained, to the
best of registrant's knowledge, in definitive proxy or information statements
incorporated by reference in Part III of this Form 10-K or any amendment to this
Form 10-K. [ ]
The aggregate market value of the voting stock held by non-affiliates of
Warner-Lambert Company as of February 22, 1996 was approximately
$13,797,180,851.
The number of shares outstanding of the registrant's Common Stock as of
February 22, 1996 was 135,704,221 shares, Common Stock, par value $1.00 per
share.
DOCUMENTS INCORPORATED BY REFERENCE
Portions of the Warner-Lambert Company Annual Report to Shareholders for
1995 -- Part I, Part II and Part IV.
Portions of the Proxy Statement for Annual Meeting of Stockholders of
Warner-Lambert Company to be held April 23, 1996 -- Part III.
________________________________________________________________________________
PART I
ITEM 1. BUSINESS.
The term 'Warner-Lambert' or the 'Company' refers to Warner-Lambert
Company, a Delaware corporation organized in that state in 1920, and its
consolidated subsidiaries, unless otherwise indicated or unless the context
otherwise requires.
Industry Segments and Geographic Areas. Financial information by industry
segment and geographic area for the years 1995, 1994 and 1993 is presented in
the Warner-Lambert 1995 Annual Report to Shareholders as set forth below.
The summary of Warner-Lambert's industry segments, geographic areas and
related financial information, set forth in Note 20 to the consolidated
financial statements on page 40 of the Warner-Lambert 1995 Annual Report, is
incorporated herein by reference.
All product names appearing in capitalized letters in this report on Form
10-K are registered trademarks of Warner-Lambert, its affiliates, related
companies or licensors. ZANTAC, ZANTAC 75, BECONASE, ZOVIRAX, SUDAFED, ACTIFED,
NEOSPORIN, POLYSPORIN, NIX, BOROFAX and EMPIRIN are registered trademarks of
Glaxo Wellcome plc ('Glaxo Wellcome'), its affiliates or related companies. As
discussed below, Warner-Lambert entered into separate joint ventures with
Wellcome plc ('Wellcome') and Glaxo Holdings plc ('Glaxo') prior to the
acquisition by Glaxo of Wellcome, see 'Item 1. Business -- Business
Segments -- Consumer Health Care Products' below. Glaxo is now known as Glaxo
Wellcome.
BUSINESS SEGMENTS
A detailed description of Warner-Lambert's industry segments is as follows:
Pharmaceutical Products
The principal products of Warner-Lambert in its Pharmaceutical Products
segment are ethical pharmaceuticals, biologicals and capsules.
Ethical Pharmaceuticals and Biologicals: Warner-Lambert manufactures and/or
sells, in the United States and/or internationally, an extensive line of ethical
pharmaceuticals and biologicals under trademarks and trade names such as
PARKE-DAVIS and GOEDECKE. Among these products are analgesics (PONSTAN, PONSTEL,
EASPRIN, VALORON, VALORON-N, VEGANIN and VALTRAN), anesthetics (KETALAR),
anthelmintics (VANQUIN), anticonvulsants (DILANTIN, ZARONTIN and NEURONTIN),
anti-infectives (CHLOROMYCETIN, COLYMYCIN, DORYX, ERYC, MANDELAMINE and OMNICEF
(cefdinir)), antivaricosities (HEPATHROMBIN), anti-viral agents (VIRA-A),
bronchodilators (CHOLEDYL SA), cardiovascular products (NOVADRAL, DILZEM, PROCAN
SR, ACCUPRIL, ACCUZIDE, NITROSTAT and PIMENOL), cognition drugs for treatment of
mild-to-moderate Alzheimer's disease (COGNEX), dermatologics (BEBEN),
prescription hemorrhoidal preparations (ANUSOL HC), hemostatic agents
(THROMBOSTAT), hormonal agents (PITRESSIN), influenza vaccines (FLUOGEN), lipid
regulators (LOPID), oral contraceptives (LOESTRIN), oxytocics (PITOCIN),
psychotherapeutic products (CETAL RETARD, DEMETRIN and NARDIL) and urinary
analgesics (PYRIDIUM).
Warner-Lambert received its first marketing authorization in the world for
OMNICEF in the Philippines in July 1994 and began marketing the product in that
country in January 1995. OMNICEF is a third generation cephalosporin.
PIMENOL (Pirmenol Hydrochloride) was approved by the Ministry of Health in
Japan for the treatment of arrhythmias and was launched in the first quarter of
1995 in co-promotion with Dainippon Pharmaceutical Co., Ltd.
The Company plans to file 8 New Drug Applications ('NDA's') and
supplemental NDA's in 1996. These filings include 3 new chemical entities, all
of which are in late stage development and are anticipated to be commercially
significant. They are atorvastatin, a lipid regulator, troglitazone, an insulin
enhancing medication for Type II diabetes, and cefdinir, an anti-infective.
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Warner-Lambert's pharmaceutical products are promoted for the most part
directly to health care professionals through personal solicitation of doctors
and other professionals by sales representatives with scientific training,
direct mail contact and advertising in professional journals. They are sold
either directly or through wholesalers to government agencies, chain and
independent retail pharmacies, hospitals, clinics, long-term care facilities,
mail order houses and health maintenance organizations. Sales to managed care
entities have become an increasingly large part of Warner-Lambert's domestic
pharmaceutical sales. The Company estimates that more than 50% of pharmaceutical
sales in the United States during 1995 were made to managed care entities
(including government agencies and hospitals). For further discussion of
Warner-Lambert's ethical products, see 'Item 1. Business -- Regulation' below.
Capsules: Warner-Lambert is the leading worldwide producer of empty
hard-gelatin capsules used by pharmaceutical companies for their production of
encapsulated products. These capsules are used by Warner-Lambert or manufactured
by Warner-Lambert according to the specifications of each of its customers and
are sold under such trademarks as CAPSUGEL, CONI-SNAP, SNAP-FIT and Press-
Fit'tm' gelcaps.
Other: In February 1996, Warner-Lambert entered into an agreement to sell
Warner Chilcott Laboratories, its generic drug division. The sale is subject to
receipt of necessary regulatory approvals and is expected to occur before the
end of the first quarter of 1996. The decision to sell the generic drug business
reflects the Company's intention to focus its resources more fully on its core
pharmaceutical, consumer health care products and confectionery businesses.
Consumer Health Care Products
The principal products of Warner-Lambert in its Consumer Health Care
Products segment are over-the-counter health care products, shaving products and
pet care products.
Over-the-Counter Products: In December 1993, Warner-Lambert signed separate
agreements with Wellcome and Glaxo (which acquired Wellcome in 1995 and is
referred to as 'Glaxo Wellcome') governing the establishment of joint ventures
in various countries to develop and market a broad range of nonprescription
consumer health care products.
On December 18, 1995, Warner-Lambert signed a letter of intent to purchase
Glaxo Wellcome's interests in the Warner Wellcome over-the-counter joint venture
operations and related assets for a purchase price of $1.05 billion and to
restructure Warner-Lambert's joint venture arrangements with Glaxo Wellcome with
respect to the marketing of certain Glaxo Wellcome prescription drugs which
become over-the-counter products. This restructured joint venture will also
include Wellcome's over-the-counter switch products. The wholly-owned
over-the-counter business of Warner-Lambert, which will include the products
originally contributed by Wellcome to the Warner Wellcome joint venture
operations as described below (other than ZOVIRAX products), will be referred to
as Warner-Lambert Consumer Healthcare. The transactions are subject to
negotiation and completion of a final agreement and the receipt of necessary
regulatory approvals. During the negotiation period, Warner-Lambert will retain
its rights under the original Warner Wellcome joint venture agreement, including
those rights related to the Wellcome acquisition by Glaxo.
Warner-Lambert's joint venture agreement with Wellcome, prior to Wellcome's
acquisition by Glaxo, called for both companies to contribute to the joint
venture operations (referred to herein as the 'Warner Wellcome' joint venture
operations) current and future over-the-counter products (excluding HALLS and
ROLAIDS products). Joint venture operations formed pursuant to a global
principles agreement began in the United States and Canada in January 1994, in
Australia, New Zealand and certain countries in Europe in June 1994 and in
Germany in November 1994. Warner-Lambert or its affiliates are the managing
partners of the Warner Wellcome joint venture operations, with day-to-day
operating responsibility.
Warner-Lambert and Glaxo Wellcome receive approximately 70 percent and 30
percent, respectively, of the profits generated by the current products of the
Warner Wellcome joint venture operations in the United States. Profits on
current products marketed through the Warner Wellcome joint venture are shared
equally between Warner-Lambert and Glaxo Wellcome in Canada, Australia,
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New Zealand and the European countries where joint venture operations have been
established. During the negotiation period for the transactions described above,
the provisions of the existing agreements relating to profit sharing will
continue.
ZOVIRAX cold sore cream has been approved for over-the-counter use and is
being sold over-the-counter in a number of countries in Europe. ZOVIRAX cold
sore cream, previously marketed through the Warner Wellcome joint venture
operations, will be marketed, upon completion of the transactions described
above, under the terms of the over-the-counter switch joint venture operations
between Warner-Lambert and Glaxo Wellcome.
A NDA for the conversion to over-the-counter use of the oral form of
ZOVIRAX as a genital herpes medication was filed with the U.S. Food and Drug
Administration ('FDA') in August 1993. The FDA's Antiviral Drugs and
Nonprescription Drugs Advisory Committee has recommended that the current
submission for conversion of ZOVIRAX to over-the-counter form not be approved.
At this time, the Company cannot predict whether Glaxo Wellcome will continue to
pursue approval.
Warner-Lambert and Glaxo, prior to its acquisition of Wellcome, formed a
joint venture in the United States, which commenced operations in December 1993
(referred to herein as the 'Glaxo Warner-Lambert' joint venture operations or
organization). The Glaxo Warner-Lambert joint venture operations will develop,
seek approval of and market over-the-counter versions of certain Glaxo Wellcome
prescription drugs in the United States, including ZANTAC, Glaxo Wellcome's
pharmaceutical product for ulcer treatment, for sale as an over-the-counter
product for the treatment of episodic heartburn. Additional joint ventures are
expected to be formed with Glaxo Wellcome in other major markets, excluding
Japan.
In the United Kingdom, Warner Wellcome is currently marketing ZANTAC 75, an
over-the-counter treatment for episodic heartburn and BECONASE, an
over-the-counter allergy nasal spray manufactured by Glaxo Wellcome.
Warner-Lambert shares in the profits generated by these brands.
Direction of the Glaxo Warner-Lambert joint venture operations is provided
by management committee representatives from each company. Day-to-day operations
are the responsibility of Warner-Lambert, and the joint venture operations'
over-the-counter products will be sold by Warner-Lambert's consumer health care
products sales and marketing organization, which in most countries is the Warner
Wellcome organization and, following completion of the transactions described
above, will be a Warner-Lambert organization. Warner-Lambert and Glaxo Wellcome
share development costs, profits and voting control equally, with Glaxo Wellcome
receiving a royalty on sales by the Glaxo Warner-Lambert joint venture
operations of certain current over-the-counter versions of Glaxo Wellcome
prescription drugs.
On September 30, 1994, Glaxo submitted a NDA to the FDA for the sale in the
United States of a product for the treatment of episodic heartburn called ZANTAC
75. On December 19, 1995, ZANTAC 75 received marketing clearance from the FDA.
Warner Wellcome Products: In each country where a Warner Wellcome joint
venture has been established, Warner Wellcome sells a line of over-the-counter
pharmaceutical and health care products, which may include antacids (GELUSIL),
dermatological products (LUBRIDERM, LUBRIDERM Body Bar, LUBRIDERM Loofa Bar,
LUBRIDERM Seriously Sensitive, LUBRIDERM Moisture Recovery, ROSKEN SKIN REPAIR,
CORN HUSKERS and LISTEREX), topical antibiotic ointments (NEOSPORIN and
POLYSPORIN), cold and sinus preparations (SUDAFED, SINUTAB, SINUTAB NON-DRYING,
SUDAFED NON-DRYING and ACTIFED), antihistamines and allergy products (ACTIFED
Allergy, SUDAFED PLUS, BENADRYL, BENADRYL-D, BENADRYL Cold, BENADRYL CHEWABLES,
BENADRYL Allergy/Sinus/Headache and BENADRYL Dye-Free), hemorrhoidal
preparations (ANUSOL, ANUSOL HC-1 and TUCKS), vaginal moisturizers (REPLENS),
laxatives (AGORAL), cough syrups/suppressants (BENYLIN, BENYLIN-DM, BENYLIN
DECONGESTANT, BENYLIN EXPECTORANT and BENYLIN PEDIATRIC), vitamins (MYADEC),
antipruritics (CALADRYL, BENADRYL spray, cream, gel and stick and STINGOSE),
rubbing alcohol (LAVACOL), hydrogen peroxide (PROXACOL), self-diagnostic early
pregnancy test kits (e.p.t'r'), oral antiseptics (LISTERINE, COOL MINT LISTERINE
and FRESHBURST LISTERINE), mouthwash/dental rinses (LISTERMINT), toothpaste
(COOLMINT LISTERINE),
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effervescent denture cleaning tablets and denture cleanser pastes (EFFERDENT,
EFFERDENT PLUS and FRESH 'N BRITE), denture adhesives (EFFERGRIP), head lice
treatments (NIX), diaper rash preparations (BOROFAX) and analgesics (EMPIRIN).
SUDAFED, ACTIFED, ACTIFED Allergy, SUDAFED PLUS, NEOSPORIN, POLYSPORIN, NIX,
BOROFAX and EMPIRIN were contributed by Wellcome to the Warner Wellcome joint
venture operations. Upon completion of the purchase by Warner-Lambert of Glaxo
Wellcome's interests in the Warner Wellcome joint venture operations,
Warner-Lambert Consumer Healthcare will sell each of those products contributed
by Wellcome in those countries which were included in the original Warner
Wellcome joint venture operations.
Other Over-the-Counter Products: In addition to the Warner Wellcome
products named above, Warner-Lambert manufactures and/or sells, in the United
States and/or internationally, a line of antacids (ROLAIDS and Extra Strength
ROLAIDS), cough tablets (HALLS, HALLS Juniors, HALLS-PLUS and Sugar Free HALLS)
and throat drops (CELESTIAL SEASONINGS SOOTHERS and HALLS Vitamin C).
Furthermore, certain products named as Warner Wellcome products above (except
for products that were contributed by Wellcome to the joint venture operations)
are manufactured and/or sold by Warner-Lambert or its affiliates in countries
where Warner Wellcome joint venture operations have not been established.
Over-the-counter products are promoted principally through consumer
advertising and promotional programs and some are promoted directly to health
care professionals. They are sold principally to drug wholesalers, chain and
retail pharmacies, chain and independent food stores, mass merchandisers,
physician supply houses and hospitals.
Shaving Products: Warner-Lambert manufactures and sells razors and blades,
both domestically and internationally. Shaving products are manufactured and
marketed under the SCHICK and other trademarks worldwide and the WILKINSON SWORD
trademark in Europe, the United States and Canada. Permanent (nondisposable)
products marketed under the SCHICK trademark include TRACER/FX, SCHICK
PROTECTOR, SUPER II, SUPER II PLUS, ULTREX PLUS, SILK EFFECTS, SLIM TWIN,
ADVANTAGE, PERSONAL TOUCH and INJECTOR PLUS CHROMIUM. Disposable twin blade
products marketed under the SCHICK trademark include SCHICK DISPOSABLE, SLIM
TWIN, PERSONAL TOUCH and ULTREX DISPOSABLE. Products marketed under the
WILKINSON SWORD trademark include nondisposable systems such as PROTECTOR, FX
PERFORMER, PROFILE, SYSTEM II, DUPLO and LADY PROTECTOR, and disposable products
that include COLOURS, PRONTO, RETRACTOR, RETRACTOR TWIN and EXTRA II.
Warner-Lambert's shaving products are promoted principally through consumer
advertising and promotional programs. They are distributed directly to
wholesalers for sale to smaller retailers, drugstores, pharmacies and to retail
outlets, including pharmacies, food stores, variety stores, mass merchandisers
and other miscellaneous outlets.
Pet Care Products: Warner-Lambert manufactures and/or sells various
products on a worldwide basis for ornamental fish and for reptiles and other
small pets, as well as books relating to various pets, under various trademarks
including TETRA, TETRA POND, TETRA PRESS, TETRA TERRAFAUNA, HILENA, ZOOMEDICA
FRICKINGER and TETRA SECONDNATURE. In addition, Warner-Lambert manufactures
and/or distributes aquarium products (including power filters and replacement
cartridges, air pumps, heaters, plastic plants and other accessories) that are
marketed largely under the WHISPER and SECONDNATURE trademarks. These pet care
products are promoted to consumers through cooperative advertising and to
retailers through direct promotion and advertising in trade publications. They
are sold to wholesalers for sale to smaller retailers and directly to larger
chain stores and retailers, in each case for ultimate sale to consumers.
Other: In the third quarter of 1995, Warner-Lambert sold the assets of its
PRO toothbrush business in order to refocus its resources on its core
pharmaceutical, consumer health care products and confectionery businesses.
During 1996 the Company plans to sell other non-strategic businesses and
undervalued and non-productive assets in order to permit the Company to invest
more heavily in its core businesses.
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Confectionery Products
The principal products of Warner-Lambert in its Confectionery Products
segment are chewing gums and breath mints.
Warner-Lambert manufactures and/or sells, in the United States and/or
internationally, a broad line of chewing gums and breath mints. Among these
products are slab chewing gums (TRIDENT, DENTYNE and DENTYNE Sugarfree), chunk
bubble gums (BUBBLICIOUS and BUBBLICIOUS MONDO), center-filled gums (BUBBALOO
and FRESHEN-UP), candy-coated gums (CHICLETS, CHICLETS TINY SIZE and CLORETS)
and stick gums (CLORETS, CINN*A*BURST, MINT*A*BURST and FRUIT*A*BURST). The
breath mint line includes CERTS, Sugarfree CERTS, CERTS Cool Mint Drops'tm' and
CLORETS. In addition, the Company sells several specialty candies. The specialty
candies line includes a line of hard candies called FRUIT WAVES that is sold
under the OCEAN SPRAY trademark and also those sold under the SAILA and
Koldt'tm' trademarks.
Warner-Lambert's confectionery products are promoted directly to the
consumer primarily through consumer advertising and in-store promotion programs.
They are sold directly to chain and independent food stores, chain pharmacies
and mass merchandisers or through candy and tobacco wholesalers and to other
miscellaneous outlets which in turn sell to consumers.
INTERNATIONAL OPERATIONS
Although Warner-Lambert has globalized most of its organization on a
segment basis, Warner-Lambert's international businesses are carried on
principally through subsidiaries and branches, which are generally staffed and
managed by citizens of the countries in which they operate. Approximately 25,000
of Warner-Lambert's employees are located outside the United States and Puerto
Rico and only a small number of such employees are U.S. citizens. Certain of the
products described above are manufactured and marketed solely in the United
States and certain other products are manufactured and marketed solely in one or
more foreign countries.
International sales to unaffiliated customers in 1995 amounted to
approximately 57% of the Company's worldwide sales. International sales do not
include sales of products exported from the United States, which sales represent
less than 1% of total U.S. sales. The seven largest markets with respect to the
distribution of Warner-Lambert products sold outside the United States during
1995 were Japan, Germany, the United Kingdom, France, Canada, Brazil and Italy.
Sales in these markets accounted for approximately 62% of Warner-Lambert's
international sales, with no one country accounting for more than 18% of
international sales.
In 1994, Warner-Lambert announced its intention to construct and operate,
through a joint venture with a Chinese partner, a manufacturing facility in
Guangzhou, China. This facility will produce confectionery products which will
be sold in China and exported. The Company now estimates that its initial
investment in the joint venture through the end of 1996 will be approximately
$35 million. The construction of this facility is on schedule and completion and
commission of the plant is expected by December 1996.
In accordance with customary market conditions, sales made outside the
United States are generally made on longer terms of payment than would be
customary in the United States. In addition, international operations are
subject to certain risks inherent in carrying on business abroad, including
possible nationalization, expropriation and other governmental action, as well
as fluctuations in currency exchange rates. The likelihood of such occurrences
varies from country to country and is not predictable. However, the Company
believes that its geographic diversity minimizes exposure to currency
fluctuations resulting in one or more foreign countries. The devaluation of the
Mexican peso in December 1994 resulted in an adverse impact on the Company's
sales of $137 million in 1995.
RESTRUCTURING
In November 1993, Warner-Lambert announced a program covering the
rationalization of manufacturing facilities, principally in North America,
including the eventual closing of seven plants, an organizational restructuring
and related workforce reductions of approximately 2,800 positions over the
5
next several years. For further discussion of Warner-Lambert's restructuring,
see 'Management's Discussion and Analysis -- Costs and Expenses' and Note 3 to
the consolidated financial statements, contained in Warner-Lambert's 1995 Annual
Report and incorporated herein by reference.
COMPETITION
Most markets in which Warner-Lambert is engaged are highly competitive and
characterized by substantial expenditures in the advertising and promotion of
new and existing products. In addition, there is intense competition in research
and development in all of Warner-Lambert's industry segments. No material part
of the business of any of Warner-Lambert's industry segments is dependent upon
one or a few customers.
MATERIALS AND SUPPLIES
Warner-Lambert's products, in general, are produced and packaged at its own
facilities. Other than certain Warner Wellcome products manufactured by Glaxo
Wellcome, certain pet products and certain other products, relatively few items
are manufactured in whole or in part by outside suppliers. Raw materials and
packaging supplies are purchased from a variety of outside suppliers. Although
the Company, in an effort to achieve cost savings, is consolidating its sources
of supply, the Company does not believe that the loss of any one source of such
materials and supplies would have a material effect on the business of any of
Warner-Lambert's industry segments. Warner-Lambert seeks to protect against
fluctuating costs and to assure availability of raw materials and packaging
supplies by, among other things, locating alternative sources of supply and, in
some instances, making selective advance purchases.
TRADEMARKS AND PATENTS
Warner-Lambert's major trademarks are protected by registration in the
United States and other countries where its products are marketed.
Warner-Lambert believes these trademarks are important to the marketing of the
related products and acts to protect them from infringement. Warner-Lambert owns
many patents and has many patent applications pending in the patent offices of
the United States and other countries. Although a number of products and product
lines have patent protection that is significant in the marketing of such
products, the management of Warner-Lambert does not consider that any single
patent or related group of patents is material to Warner-Lambert's business as a
whole or any of its industry segments. Warner-Lambert anticipates, however, that
patents on certain future products, such as atorvastatin and troglitazone, may
become material to Warner-Lambert's business as a whole if such products are
approved.
Legislation enacted during 1994 in the United States in order to implement
the General Agreement on Tariffs and Trade has changed the term of U.S. patents
filed after June 8, 1995 and has lengthened the term of some granted patents and
pending applications existing on June 8, 1995. It is not clear what the impact
of this legislation on Warner-Lambert will be.
RESEARCH AND DEVELOPMENT
Warner-Lambert employs over 2,000 scientific and technical personnel in
research and development activities at various research facilities located in
the United States and in foreign countries. Warner-Lambert invested
approximately $501 million in research and development in 1995, compared with
$456 million in 1994 and $465 million in 1993. Approximately 81% of
Warner-Lambert's 1995 research and development spending was related to
pharmaceutical products. Warner-Lambert believes research and development
activities are essential to its business and intends to continue such
activities.
EMPLOYEES
At December 31, 1995, approximately 37,000 people were employed by
Warner-Lambert throughout the world.
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REGULATION
Warner-Lambert's business is subject to varying degrees of governmental
regulation in the countries in which it manufactures and distributes products.
In the United States, the food, drug and cosmetic industries are subject to
regulation by various federal, state and local agencies with respect to product
safety and effectiveness, manufacturing and advertising and labeling.
Accordingly, from time to time, with respect to particular products under
review, such agencies may require Warner-Lambert to address safety, efficacy,
manufacturing and/or regulatory issues, to conduct additional testing or to
modify its advertising and/or labeling.
During the third quarter of 1993, a consent decree with the FDA was entered
into by Warner-Lambert and two of its principal officers, covering issues
related to manufacturing and quality practices and procedures. The decree is a
court-approved agreement that primarily requires Warner-Lambert to certify that
laboratory and/or manufacturing facilities in the United States and Puerto Rico
are in compliance with current Good Manufacturing Practices established by the
FDA. Under the terms of the decree, the manufacture and distribution of some
products was temporarily suspended pending completion of certain certification
activities. Relevant facility and laboratory certifications have been obtained
in all U.S. and Puerto Rico plants. Warner-Lambert's manufacturing facilities in
the mainland United States and Puerto Rico have now resumed full operations.
Although there are several prescription products which have not yet returned to
the market or which have been withdrawn, most of those pharmaceutical products
which the Company intends to continue manufacturing and/or marketing have
returned to full manufacture and/or distribution. The terms of the consent
decree are applicable until at least August 1998.
The FDA's Application Integrity Policy ('AIP') was applied to
Warner-Lambert's Fajardo and Vega Baja, Puerto Rico facilities in September
1992, due to discrepancies found in data generated at those facilities. Pursuant
to the AIP, Warner-Lambert, through independent experts in pharmaceutical
manufacturing, has conducted validity assessments of certain FDA filings made
with respect to certain products manufactured or to be manufactured at its
facilities in Vega Baja and Fajardo, Puerto Rico. The FDA has deferred
substantive scientific reviews of pending NDA's and Abbreviated New Drug
Applications ('ANDA's') for products to be manufactured at these facilities
(including the oral contraceptive ESTROSTEP), and for some supplements to NDA's
or ANDA's for products currently manufactured at these facilities, while the
Company is subject to the AIP. The FDA did not suspend review of two drugs,
COGNEX (tacrine) and NEURONTIN (gabapentin), discussed above under the caption
'Item 1. Business Segments -- Pharmaceutical Products', both of which obtained
United States marketing approval in 1993. Warner-Lambert has pledged full
cooperation, has actively worked with the FDA and continues to engage in
discussions with the FDA in order to resolve all issues relating to the AIP. In
1994 and 1995, Warner-Lambert filed all the expert validity assessments that had
not yet been filed. The Company also submitted a Corrective Action Operating
Plan to the FDA in December 1994, which outlines corrective actions which have
been or will be implemented in response to the validity assessments. By letter
dated September 22, 1995, the FDA stated that it had completed its review of the
Vega Baja, Puerto Rico pharmaceutical facility and confirmed that the facility
is no longer subject to the AIP. The FDA has completed its inspection of the
Fajardo, Puerto Rico facility. It is not possible to predict when or whether the
AIP will be lifted with respect to the Fajardo facility or whether the FDA will
take additional action.
On October 31, 1995, the Drug Enforcement Administration (the 'DEA')
published a proposed rule which would bring certain of the Company's
over-the-counter pharmaceutical products containing pseudoephedrine
hydrochloride under the chemical control provisions of the Controlled Substances
Act through the revocation of an exemption for listed chemicals lawfully
marketed under the Food, Drug and Cosmetic Act. In addition, in March 1996
legislation was introduced in the U.S. Senate to remove such legal drug
exemption for single ingredient pseudoephedrine products. The rule and
legislation, if enacted in their present forms, would among other things impose
new regulatory restrictions on persons handling such products including
recordkeeping and reporting of certain transactions to the DEA. The Company is
concerned that such restrictions could induce pharmacies and other retail
outlets which carry such products to keep such products 'behind the counter' or
no longer to carry such products. The Company has opposed the rule and
legislation in their present forms. While it is not possible to
7
predict with certainty whether the rule or legislation will be finalized or
enacted, as the case may be, in their present forms, Warner-Lambert believes
that neither would have a material adverse effect on Warner-Lambert's financial
position, liquidity, cash flow or results of operations for any year.
Regulatory requirements concerning the research and development of drug
products have increased in complexity and scope in recent years. This has
resulted in a substantial increase in the time and expense required to bring new
products to market. At the same time, the FDA requirements for approval of
generic drugs (drugs containing the same active chemical as an innovator's
product) have been reduced as a result of the adoption of abbreviated new drug
approval procedures for most generic drugs. Generic versions of many of
Warner-Lambert's products in the Pharmaceutical Products segment are being
marketed in the United States, and generic substitution legislation, which
permits a pharmacist to substitute a generic version of a drug for the one
prescribed, has been enacted in some form in all states. These factors have
resulted in increased competition from generic manufacturers in the market for
ethical products.
The regulatory agencies under whose purview Warner-Lambert operates have
administrative and legal powers that may subject Warner-Lambert and its products
to seizure actions, product recalls and other civil and criminal actions. They
may also subject the industry to emergency regulatory requirements.
Warner-Lambert's policy is to comply fully with all regulatory requirements. It
is impossible to predict, however, what effect, if any, these matters or any
pending or future legislation, regulations or governmental actions may have on
the conduct of Warner-Lambert's business in the future.
In most of the foreign countries where Warner-Lambert does business, it is
subject to a regulatory and legislative climate similar to or more restrictive
than that described above. The Company cannot predict whether or what type of
measures will be encountered in the future.
ENVIRONMENT
Warner-Lambert is responsible for compliance with a number of environmental
laws and regulations. Warner-Lambert maintains control systems designed to
assure compliance in all material respects with environmental laws and
regulations, including environmental policies and maintenance of a worldwide
audit program.
Warner-Lambert is involved in various administrative or judicial
proceedings related to environmental actions initiated by the Environmental
Protection Agency under the Comprehensive Environmental Response, Compensation
and Liability Act (also known as Superfund) or by state authorities under
similar state legislation, or by third parties. For some of the sites, other
parties (defined as potentially responsible parties) may be jointly and
severally responsible, along with Warner-Lambert, to pay remediation and other
related expenses. For other sites, for example, those sites which Warner-Lambert
currently owns or previously owned, Warner-Lambert may be the sole party
responsible for clean-up costs. While it is not possible to predict with
certainty the outcome of such matters or the total cost of remediation,
Warner-Lambert believes it is unlikely that their ultimate disposition will have
a material adverse effect on Warner-Lambert's financial position, liquidity,
cash flow or results of operations for any year. Actions with respect to
environmental programs and compliance result in operating expenses and capital
expenditures. Warner-Lambert's capital expenditures with respect to
environmental programs and compliance in 1995 were not, and in 1996 are not
expected to be, material to the business of Warner-Lambert.
For additional information relating to environmental matters, see 'Item 3.
Legal Proceedings' and Note 19 to the consolidated financial statements on page
39 of the Warner-Lambert 1995 Annual Report, incorporated herein by reference.
ITEM 2. PROPERTIES.
The executive offices of Warner-Lambert are located in Morris Plains, New
Jersey. In the United States, including Puerto Rico, Warner-Lambert owns
facilities aggregating approximately 6,993,000 square feet and leases facilities
having an aggregate of approximately 394,000 square feet.
8
Warner-Lambert's U.S. manufacturing plants are located in Lititz,
Pennsylvania (pharmaceuticals and consumer health care products); Rockford,
Illinois (confectionery products); Rochester, Michigan (pharmaceuticals);
Holland, Michigan (pharmaceuticals); Morris Plains, New Jersey (pharmaceuticals
and consumer health care products); Greenwood, South Carolina (capsules);
Milford, Connecticut (razors and blades); Oakland, New Jersey (pet care
products); and Blacksburg, Virginia (pet care products). Warner-Lambert Inc., a
wholly-owned subsidiary of Warner-Lambert operating in Puerto Rico, has plants
located in Fajardo (pharmaceuticals); and Vega Baja (pharmaceuticals, consumer
health care and confectionery products).
In the United States, Warner-Lambert currently distributes its various
products through its manufacturing plants and two primary distribution centers
located in Lititz, Pennsylvania and Elk Grove, Illinois. Principal U.S. research
facilities are located in Ann Arbor, Michigan (pharmaceuticals) and Morris
Plains, New Jersey (pharmaceuticals, consumer health care and confectionery
products).
Internationally, Warner-Lambert owns, leases or operates, through its
subsidiaries or branches, 70 production facilities in 35 countries. Principal
international manufacturing plants are located in Germany, the United Kingdom,
Belgium, Italy, Canada, Mexico, Hong Kong, Japan, Ireland, Spain, France,
Brazil, Colombia and Australia. Principal international research facilities are
located in Germany, Japan, the United Kingdom and Canada.
As discussed above under the heading 'Item 1. Business -- International
Operations', Warner-Lambert expects that construction of the confectionery
products manufacturing facility in Guangzhou, China will be completed and
commissioned by December 1996.
In order to achieve its objectives of increased efficiency and a lower cost
of goods sold, Warner-Lambert, over a number of years and at significant cost,
has consolidated many of its plants and facilities around the world. This has
often resulted in the production of pharmaceutical products, consumer health
care products and/or confectionery products at a single facility.
Warner-Lambert's facilities are generally in good operating condition and
repair and at present are adequately utilized within reasonable limits. Leases
are not material to the business of Warner-Lambert taken as a whole.
For information regarding the organizational restructuring and plant
rationalization announced by Warner-Lambert in November 1993, see 'Item 1.
Business -- Restructuring' above.
ITEM 3. LEGAL PROCEEDINGS.
For a discussion of Warner-Lambert's consent decree with the FDA, covering
issues related to compliance with current Good Manufacturing Practices
established by the FDA, and other regulatory matters, see 'Item 1.
Business -- Regulation' above. For additional information relating to
environmental matters see 'Item 1. Business -- Environment' above.
Warner-Lambert and certain present and former employees were served with
subpoenas in 1993 by the U.S. Attorney's office in Maryland, which was
conducting an inquiry relating to compliance with FDA regulations, to produce
records and/or appear before a federal grand jury in Baltimore. On November 28,
1995, Warner-Lambert waived indictment and pled guilty to a one count
information charging failure in 1991 to file certain reports with the FDA of
drug stability failures on distributed batches of the drug DILANTIN.
Warner-Lambert agreed to pay a fine of $10 million. At the same time, Allan H.
Doane, former vice president for corporate quality assurance and environmental
compliance at Warner-Lambert, was indicted by the Maryland grand jury in a five
count indictment alleging conspiracy, distributing adulterated drugs and
obstruction of justice based on conduct in 1991.
In September 1993, Warner-Lambert received a Complaint and Compliance Order
from the Environmental Protection Agency ('EPA') seeking penalties of $268,000
for alleged violations of the Resource Conservation and Recovery Act, Boilers
and Industrial Furnace regulations. Warner-Lambert is contesting the allegations
contained within the Complaint and has entered into negotiations with the EPA in
an attempt to resolve these issues. Although it is too early to predict the
outcome of this action, Warner-Lambert does not at present expect this
litigation to have a material adverse effect on its financial position,
liquidity, cash flow or results of operations.
9
Beginning in late 1993, Warner-Lambert, along with numerous other
pharmaceutical manufacturers and wholesalers, has been sued in a number of state
and federal antitrust lawsuits by retail pharmacies seeking treble damages and
injunctive relief. These actions arise from alleged price discrimination by
which the defendant drug companies, acting alone or in concert, are alleged to
have favored institutions, managed care entities, mail order pharmacies and
other buyers with lower prices for brand name prescription drugs than those
afforded to plaintiff retailers. The federal cases have been consolidated by the
Judicial Panel on Multidistrict Litigation and transferred to the U.S. District
Court for the Northern District of Illinois for pre-trial proceedings.
Warner-Lambert has agreed to settle part of the consolidated federal cases,
specifically, the class action conspiracy lawsuit, for a total of $15.1 million,
to be paid in four equal installments of $3.775 million in February of 1996,
1997, 1998 and 1999, respectively. This settlement is subject to final approval
by the U.S. District Court for the Northern District of Illinois.
The state cases pending in California have been coordinated in the Superior
Court of California, County of San Francisco. Warner-Lambert has also been named
as a defendant in actions in state courts in Alabama, Minnesota and Wisconsin
brought by classes of pharmacies, each arising from the same allegations of
price discrimination. In addition, the Company is named in class action
complaints in the states of Alabama, Arizona, Colorado, Maine, Michigan, New
York and Washington, brought by classes of consumers who purchased brand name
prescription drugs at retail pharmacies. These cases also arise from the same
allegations of price discrimination. Warner-Lambert believes that these actions
are without merit and will defend itself vigorously. Although it is too early to
predict the outcome of the remaining actions, Warner-Lambert does not at present
expect this litigation to have a material adverse effect on its financial
position, liquidity, cash flow or results of operations.
In November 1994, Warner-Lambert received a civil enforcement action letter
and draft complaint from the Department of Justice (the 'Department') alleging
violation of the Clean Water Act with regard to the operation of the wastewater
treatment plant at its Vega Baja, Puerto Rico facility. Warner-Lambert is
negotiating a resolution of this matter with the Department and is continuing to
work with the EPA, Region II, to maintain the facility's compliance with the
Clean Water Act. The Company cannot predict the outcome of this matter at this
time.
In addition, Warner-Lambert has received an inquiry from the Environmental
Crimes Section of the Department relating to compliance with the Clean Water Act
and the discharge permit issued to the facility. The Company is cooperating
fully with this inquiry and cannot predict its outcome at this time.
Warner-Lambert Inc., a wholly-owned subsidiary of Warner-Lambert, has been
named as a defendant in class actions filed in Puerto Rico Superior Court by
current and former employees from the Vega Baja, Carolina and Fajardo plants, as
well as Kelly Services temporary employees assigned to those plants. The
lawsuits seek monetary relief for alleged violations of local statutes and
decrees relating to meal period payments, minimum wage, overtime and vacation
pay. Warner-Lambert believes that these actions are without merit and will
defend these actions vigorously. Although it is too early to predict the outcome
of these actions, Warner-Lambert does not at present expect these lawsuits to
have a material adverse effect on its financial position, liquidity, cash flow
or results of operations.
ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS.
Not Applicable.
10
EXECUTIVE OFFICERS OF THE REGISTRANT
Information with respect to the executive officers of Warner-Lambert as of
March 1, 1996 is set forth below:
[Enlarge/Download Table]
POSITIONS AND PRINCIPAL OCCUPATIONS
OFFICES HELD AND EMPLOYMENT
NAME AGE WITH REGISTRANT DURING PAST 5 YEARS
----------------------------------------- --- ---------------------- ----------------------------------
Melvin R. Goodes......................... 60 Chairman of the Board Chairman of the Board and Chief
and Chief Executive Executive Officer (since August
Officer; Director 1991) President and Chief
Operating Officer (July
1985 -- July 1991)
Lodewijk J. R. de Vink................... 51 President and Chief President and Chief Operating
Operating Officer; Officer (since August 1991);
Director Executive Vice President and
President, U.S. Operations
(April 1990 -- July 1991)
John F. Walsh............................ 53 Executive Vice Executive Vice President (since
President January 1991); President,
Consumer Healthcare Sector
(since December 1994);
President, Consumer Products
Sector (January 1992 -- December
1994); President, International
Operations (March
1990 -- December 1991)
Ernest J. Larini......................... 53 Vice President and Vice President and Chief Financial
Chief Financial Officer (since November 1992);
Officer Vice President, Financial
Administration (June
1992 -- October 1992); Vice
President and Controller (May
1990 -- May 1992)
J. Frank Lazo............................ 48 Vice President Vice President (since April 1990);
President, Confectionery Sector
(since December 1994);
President, Latin America/Asia/
Australia/Middle East/
Africa Group (January
1992 -- December 1994);
President, Latin
America/Asia/Australia Group
(July 1991 -- December 1991);
President, Canada/Latin America
Group (April 1990 -- July 1991)
John S. Craig............................ 44 Vice President Vice President (since January
1996); President, American
Chicle Group (since July 1995);
President and Chief Executive
Officer, Lender's Bagel Bakery
division of Kraft Foods, Inc.
(September 1986 -- February
1994)
(table continued on next page)
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(table continued from previous page)
[Enlarge/Download Table]
POSITIONS AND PRINCIPAL OCCUPATIONS
OFFICES HELD AND EMPLOYMENT
NAME AGE WITH REGISTRANT DURING PAST 5 YEARS
----------------------------------------- --- ---------------------- ----------------------------------
Ronald M. Cresswell, Ph.D................ 61 Vice President Vice President (since May 1988);
Chairman, Parke-Davis Research
(since November 1989)
Pedro M. Cuatrecasas, M.D................ 59 Vice President Vice President (since October
1989); President, Parke-Davis
Research (since October 1989)
Raymond M. Fino.......................... 53 Vice President Vice President, Human Resources
(since January 1985)
Philip M. Gross.......................... 54 Vice President Vice President (since January
1990); Vice President, Strategic
Management Processes (since
January 1994); President, Novon
Products Group (January
1990 -- January 1994)
Gregory L. Johnson....................... 49 Vice President and Vice President and General Counsel
General Counsel (since October 1983)
Richard W. Keelty........................ 54 Vice President Vice President (since January
1996); Vice President, Public
Affairs, (since December 1995);
Vice President, Public Relations
(November 1990 -- November 1995)
Joseph E. Lynch.......................... 44 Vice President and Vice President and Controller
Controller (since June 1995); Comptroller,
American Home Products
Corporation (March 1995 -- June
1995); Director, Corporate
Accounting, American Cyanamid
Company (April 1991 -- March
1995); Controller, Latin
American Group, American
Cyanamid Company (March
1988 -- April 1991)
F. Phillip Milhomme...................... 59 Vice President Vice President (since January
1992); President, Confectionery
Products, Europe/Middle
East/Africa (since December
1994); President, Consumer
Products, Europe (January
1992 -- December 1994);
President, Middle
East/Africa/Europe (September
1989 -- December 1991)
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12
(table continued from previous page)
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POSITIONS AND PRINCIPAL OCCUPATIONS
OFFICES HELD AND EMPLOYMENT
NAME AGE WITH REGISTRANT DURING PAST 5 YEARS
----------------------------------------- --- ---------------------- ----------------------------------
S. Morgan Morton......................... 56 Vice President Vice President (since January
1994); President, Warner
Wellcome Consumer Healthcare
U.S.A. (since December 1995);
President, Shaving Products
Group (September 1993 --
December 1995); President,
Schick (January 1992 --
September 1993); President,
Warner-Lambert Canada (January
1988 -- January 1992)
Harold F. Oberkfell...................... 49 Vice President Vice President (since January
1992); President, Latin
America/Asia Sector (since
February 1995); President,
Parke-Davis, North America
(January 1992 -- February 1995);
Vice President, Parke-Davis
Marketing and Sales (July
1986 -- December 1991)
Joseph E. Smith.......................... 56 Vice President Vice President (since January
1994); Chairman, Tetra Group
(since August 1995); President,
Shaving Products Group (since
December 1995); Vice President,
External Relations (January
1994 -- December 1995);
Executive Vice President
(January 1991 -- January 1994);
President, Pharmaceutical Sector
(January 1992 -- January 1994);
President, Parke-Davis Group
(March 1989 -- December 1991)
Fred G. Weiss............................ 54 Vice President Vice President (since August
1982); Vice President, Planning,
Investment and Development
(since August 1983)
Anthony H. Wild, Ph.D.................... 47 Vice President Vice President (since September
1995); President, Parke-Davis,
North America (since February
1995); President,
Schering-Plough-Japan,
Schering-Plough Corporation
(August 1989 -- February 1995)
(table continued on next page)
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(table continued from previous page)
[Enlarge/Download Table]
POSITIONS AND PRINCIPAL OCCUPATIONS
OFFICES HELD AND EMPLOYMENT
NAME AGE WITH REGISTRANT DURING PAST 5 YEARS
----------------------------------------- --- ---------------------- ----------------------------------
William S. Woodson....................... 61 Vice President and Vice President and Treasurer
Treasurer (since December 1991); Vice
President, Finance, Novon
Products Group (September
1990 -- November 1991)
Rae G. Paltiel........................... 49 Secretary Secretary (since February 1986)
All of the above-mentioned officers, with the exception of Mr. Craig, Mr.
Lynch and Dr. Wild, have been employed by Warner-Lambert for the past five
years.
Mr. Craig has been employed by Warner-Lambert since July 1995. Prior to
that time, Mr. Craig had been employed by Kraft Foods, Inc., serving as
President and Chief Executive Officer of Kraft's Lender's Bagel Bakery division
from September 1986 to February 1994. Kraft Foods, Inc., a wholly-owned
subsidiary of Philip Morris Companies Inc., is a multinational producer of
packaged grocery products with sales of approximately $31 billion in 1994.
Mr. Lynch has been employed by Warner-Lambert since June 1995. Prior to
that time and during his last three months with American Cyanamid Company, which
was acquired by American Home Products Corporation in November 1994, Mr. Lynch
performed certain functions of Comptroller at American Home Products Corporation
from March 1995 to June 1995. American Home Products is a multinational health
care and food products company with sales of approximately $9.0 billion in 1994.
From April 1991 to March 1995, Mr. Lynch held the position of Director,
Corporate Accounting, American Cyanamid Company and from March 1988 to April
1991 he served as Controller of American Cyanamid's Latin America Group. Prior
to being acquired by American Home Products Corporation, American Cyanamid
Company was a multinational medical and agricultural products company with sales
of approximately $4.2 billion in 1993.
Dr. Wild has been employed by Warner-Lambert since February 1995. Prior to
that time, Dr. Wild had been employed by Schering-Plough Corporation. From
August 1989 to February 1995, Dr. Wild held the position of President of
Schering-Plough-Japan. Schering-Plough Corporation, a multinational
pharmaceutical company, had sales of approximately $4.7 billion in 1994.
None of the above officers has any family relationship with any Director or
with any other officer. Officers are elected by the Board of Directors for a
term of office lasting until the next annual organizational meeting of the Board
of Directors or until their successors are elected and have qualified. No
officer listed above was appointed pursuant to any arrangement or understanding
between such officer and the Board of Directors or any member or members
thereof.
14
PART II
ITEM 5. MARKET FOR REGISTRANT'S COMMON EQUITY AND RELATED STOCKHOLDER MATTERS.
The principal market on which the Company's stock is traded is the New York
Stock Exchange, but the stock is also listed and traded on the following
domestic and international stock exchanges: Chicago, Pacific, London and Zurich.
Shareholders of record totaled approximately 41,000 as of December 31, 1995.
Cash dividends paid in 1995 totaled $351 million. A dividend of $.65 per share
was paid in each quarter of 1995 for an annual total of $2.60 per share. This
was a 7 percent increase over the prior year total of $2.44 per share, paid in
four quarterly dividends of $.61 per share during 1994. The information set
forth under the caption 'Market Prices of Common Stock and Dividends' on page 42
of the Warner-Lambert 1995 Annual Report is incorporated herein by reference.
ITEM 6. SELECTED FINANCIAL DATA.
The information set forth under the caption 'Five -Year Summary of Selected
Financial Data' on page 26 of the Warner-Lambert 1995 Annual Report is
incorporated herein by reference.
ITEM 7. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS
OF OPERATIONS.
The information set forth under the caption 'Management's Discussion and
Analysis' on pages 43 through 47 of the Warner-Lambert 1995 Annual Report is
incorporated herein by reference and should be read in conjunction with the
consolidated financial statements and the notes thereto contained on pages 27
through 41 of the Warner-Lambert 1995 Annual Report.
ITEM 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA.
The consolidated financial statements of Warner-Lambert and its
subsidiaries, listed in Item 14(a)1 and included in the Warner-Lambert 1995
Annual Report at pages 27 through 40, together with the report thereon of Price
Waterhouse LLP dated January 22, 1996 on page 41 of the Warner-Lambert 1995
Annual Report, and quarterly financial information on page 42 of the
Warner-Lambert 1995 Annual Report, are incorporated herein by reference.
ITEM 9. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND
FINANCIAL DISCLOSURE.
Not Applicable.
15
PART III
ITEM 10. DIRECTORS AND EXECUTIVE OFFICERS OF THE REGISTRANT.
The required information relating to the Warner-Lambert Directors and
nominees is incorporated herein by reference to pages 3 through 9 of the
Warner-Lambert Proxy Statement for the Annual Meeting of Stockholders to be held
on April 23, 1996. Information relating to executive officers of Warner-Lambert
is set forth in Part I of this Form 10-K on pages 11 through 14. Information
relating to compliance with Section 16(a) of the Securities Exchange Act of 1934
is contained in the Proxy Statement, referred to above, at page 11 and such
information is incorporated herein by reference.
ITEM 11. EXECUTIVE COMPENSATION.
Information relating to executive compensation is contained in the Proxy
Statement, referred to above in Item 10, at pages 13 through 26 and such
information is incorporated herein by reference.
ITEM 12. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT.
(a) Information relating to the beneficial ownership of more than five
percent of Warner-Lambert's Common Stock is contained in the Proxy Statement,
referred to above in Item 10, at page 11 and such information is incorporated
herein by reference.
(b) Information relating to security ownership of management is contained
in the Proxy Statement, referred to above in Item 10, at pages 10 through 11 and
such information is incorporated herein by reference.
ITEM 13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS.
Not Applicable.
16
PART IV
ITEM 14. EXHIBITS, FINANCIAL STATEMENT SCHEDULES, AND REPORTS ON FORM 8-K.
(a) 1. ALL FINANCIAL STATEMENTS
The following items are included in Part II of this report through
incorporation by reference to pages 27 through 41 of the Warner-Lambert
1995 Annual Report:
Consolidated Statements of Income for each of the three years in
the period ended December 31, 1995.
Consolidated Statements of Retained Earnings for each of the
three years in the period ended December 31, 1995.
Consolidated Balance Sheets at December 31, 1995 and 1994.
Consolidated Statements of Cash Flows for each of the three years
in the period ended December 31, 1995.
Notes to Consolidated Financial Statements.
Report of Independent Accountants.
2. FINANCIAL STATEMENT SCHEDULE
Included in Part IV of this report:
Report of Independent Accountants on Financial Statement Schedule.
Schedule II -- Valuation and Qualifying Accounts.
Schedules other than those listed above are omitted because they are
either not applicable or the required information is included through
incorporation by reference to pages 27 through 41 of the Warner-Lambert
1995 Annual Report.
3. EXHIBITS
(3) Articles of Incorporation and By-Laws.
(a) Restated Certificate of Incorporation of Warner-Lambert Company
filed November 10, 1972, as amended to April 24, 1990
(Incorporated by reference to Warner-Lambert's Current Report on
Form 8-K, dated April 24, 1990 (File No. 1-3608)).
(b) By-Laws of Warner-Lambert Company, as amended to October 25, 1988
(Incorporated by reference to Warner-Lambert's Quarterly Report on
Form 10-Q for the quarter ended September 30, 1988 (File No.
1-3608)).
(4) Instruments defining the rights of security holders, including
indentures.
(a) Rights Agreement, dated as of June 28, 1988, and amended as of
June 27, 1989, between Warner-Lambert Company and First Chicago
Trust Company of New York, as Rights Agent (Incorporated by
reference to Warner-Lambert's Registration Statement on Form 8-A,
dated June 28, 1988, as amended by Form 8, dated July 5, 1989
(File No. 1-3608)).
(b) Warner-Lambert agrees to furnish to the Commission, upon request,
a copy of each instrument with respect to issues of long-term
debt of Warner-Lambert. The principal amount of debt issues
authorized under each such instrument does not exceed 10% of the
total assets of Warner-Lambert.
(10) Material contracts.
[Enlarge/Download Table]
(a)* Warner-Lambert Company 1983 Stock Option Plan, as amended to November 26, 1991 (Incorporated
by reference to Warner-Lambert's Form 10-K for the fiscal year ended December 31, 1991).
17
[Enlarge/Download Table]
(b)* Warner-Lambert Company 1987 Stock Option Plan, as amended to November 26, 1991 (Incorporated
by reference to Warner-Lambert's Form 10-K for the fiscal year ended December 31, 1991).
(c)* Warner-Lambert Company 1989 Stock Plan, as amended to November 26, 1991 (Incorporated by
reference to Warner-Lambert's Form 10-K for the fiscal year ended December 31, 1991).
(d)* Warner-Lambert Company 1992 Stock Plan, as amended to September 27, 1994 (Incorporated by
reference to Warner-Lambert's Quarterly Report on Form 10-Q for the quarter ended September
30, 1994).
(e)* Warner-Lambert Company Incentive Compensation Plan, as amended to September 27, 1994
(Incorporated by reference to Warner-Lambert's Quarterly Report on Form 10-Q for the quarter
ended September 30, 1994).
(f)* Warner-Lambert Company Supplemental Pension Income Plan, as amended to November 28, 1995.
(g)* Group Plan Participation by Non-employee Directors (Incorporated by reference to
Warner-Lambert's Form 10-K for the fiscal year ended December 31, 1991).
(h)* Warner-Lambert Company Directors' Retirement Plan, as amended to June 1, 1995 (Incorporated by
reference to Warner-Lambert's Quarterly Report on Form 10-Q for the quarter ended June 30,
1995).
(i)* Warner-Lambert Excess Savings Plan, formerly Warner-Lambert Supplemental Savings Plan, as
amended to October 1, 1994 (Incorporated by reference to Warner-Lambert's Quarterly Report on
Form 10-Q for the quarter ended September 30, 1994).
(j)* Warner-Lambert Company Executive Severance Plan, as amended to September 27, 1994
(Incorporated by reference to Warner-Lambert's Quarterly Report on Form 10-Q for the quarter
ended September 30, 1994).
(k)* Restricted Stock Plan for Directors of Warner-Lambert Company, as amended to January 28, 1992
(Incorporated by reference to Warner-Lambert's Form 10-K for the fiscal year ended December
31, 1991).
(l)* Employment Agreement dated September 24, 1985 between Warner-Lambert Company and Melvin R.
Goodes, Chairman of the Board and Chief Executive Officer, as amended to August 1, 1991
(Incorporated by reference to Warner-Lambert's Quarterly Report on Form 10-Q for the quarter
ended September 30, 1991).
(m)* Employment Agreement effective as of August 1, 1991 between Warner-Lambert Company and
Lodewijk J. R. de Vink, President and Chief Operating Officer (Incorporated by reference to
Warner-Lambert's Quarterly Report on Form 10-Q for the quarter ended September 30, 1991).
(n)* Consulting Agreement, dated as of September 1, 1991, between Warner-Lambert Company and Joseph
D. Williams, Director (Incorporated by reference to Warner-Lambert's Form 10-K for the fiscal
year ended December 31, 1991).
(o)* Consulting Arrangement between Warner-Lambert Company and B. Charles Ames, Director
(Incorporated by reference to Warner-Lambert's Form 10-K for the fiscal year ended December
31, 1991).
(p) Global Principles Agreement, dated as of December 10, 1993, between Warner-Lambert Company and
Glaxo Holdings plc (Incorporated by reference to Warner-Lambert's Form 10-K for the fiscal
year ended December 31, 1993).
(q) Global Principles Agreement, dated December 17, 1993, between Warner-Lambert Company and
Wellcome plc (Incorporated by reference to Warner-Lambert's Form 10-K for the fiscal year
ended December 31, 1993).
(12) Computation of Ratio of Earnings to Fixed Charges.
18
(13) Copy of the Warner-Lambert Company Annual Report for the year ended
December 31, 1995. Such report, except for those portions thereof
which are expressly incorporated by reference herein, is furnished
solely for the information of the Commission and is not to be deemed
'filed' as part of this filing.
(21) Subsidiaries of the registrant.
(23) Consent of Independent Accountants.
(27) Financial Data Schedule (EDGAR filing only).
------------
* Management contract or compensatory plan or arrangement required to be filed
as an exhibit to this Form 10-K pursuant to Item 14(c).
(b) REPORTS ON FORM 8-K
A Current Report on Form 8-K, dated December 19, 1995, was filed with the
Securities and Exchange Commission in connection with the announcement of
Warner-Lambert's signing of a letter of intent (i) to purchase Glaxo
Wellcome plc's interests in the Warner-Wellcome over-the-counter joint
venture operations (formed in 1994 with Wellcome plc) for a purchase price
of $1.05 billion and (ii) to restructure Warner-Lambert's joint venture
arrangements with Glaxo Wellcome to market Glaxo Wellcome's Rx to
over-the-counter switch products, which will include Wellcome's Rx to
over-the-counter products.
Warner-Lambert will furnish to any holder of its securities, upon request
and at a reasonable cost, copies of the Exhibits listed in Item 14.
19
WARNER-LAMBERT COMPANY AND CONSOLIDATED SUBSIDIARIES
REPORT OF INDEPENDENT ACCOUNTANTS ON FINANCIAL STATEMENT SCHEDULE
To the Board of Directors and Shareholders of
WARNER-LAMBERT COMPANY
Our audits of the consolidated financial statements referred to in our
report dated January 22, 1996 appearing on page 41 of the 1995 Annual Report to
Shareholders of Warner-Lambert Company (which report and consolidated financial
statements are incorporated by reference in this Annual Report on Form 10-K)
also included an audit of the Financial Statement Schedule listed in Item 14(a)2
of this Form 10-K. In our opinion, this Financial Statement Schedule presents
fairly, in all material respects, the information set forth therein when read in
conjunction with the related consolidated financial statements.
PRICE WATERHOUSE LLP
4 Headquarters Plaza North
Morristown, New Jersey
January 22, 1996
20
SCHEDULE II
WARNER-LAMBERT COMPANY AND CONSOLIDATED SUBSIDIARIES
VALUATION AND QUALIFYING ACCOUNTS
YEARS ENDED DECEMBER 31, 1995, 1994 AND 1993
[Enlarge/Download Table]
ADDITIONS
BALANCE AT CHARGED TO ADJUSTMENTS TO BALANCE
BEGINNING COSTS AND SHAREHOLDERS' AT END
DESCRIPTION OF YEAR EXPENSES EQUITY DEDUCTIONS OF YEAR
------------------------------------------------- ---------- ---------- -------------- ---------- -------
(DOLLARS IN MILLIONS)
Year ended December 31, 1995:
Allowance for doubtful accounts............. $ 21.8 $ 4.3 $ -- $ 5.4 $20.7
Allowance for deferred tax assets (a)....... 44.6 -- -- 7.6 37.0
Unrealized fair market value adjustment for
'available for sale' securities (b)....... 2.9 -- (11.2) -- (8.3)
---------- ---------- ------- ---------- -------
$ 69.3 $ 4.3 $(11.2) $ 13.0 $49.4
---------- ---------- ------- ---------- -------
---------- ---------- ------- ---------- -------
Year ended December 31, 1994:
Allowance for doubtful accounts............. $ 20.5 $ 4.4 $ -- $ 3.1 $21.8
Allowance for deferred tax assets (c)....... 61.9 14.9 -- 32.2 44.6
Unrealized fair market value adjustment for
'available for sale' securities (b)....... -- -- 2.9 -- 2.9
---------- ---------- ------- ---------- -------
$ 82.4 $ 19.3 $ 2.9 $ 35.3 $69.3
---------- ---------- ------- ---------- -------
---------- ---------- ------- ---------- -------
Year ended December 31, 1993:
Allowance for doubtful accounts............. $ 18.6 $ 2.9 $ -- $ 1.0 $20.5
Allowance for deferred tax assets (d)....... -- 61.9 -- -- 61.9
---------- ---------- ------- ---------- -------
$ 18.6 $ 64.8 $ -- $ 1.0 $82.4
---------- ---------- ------- ---------- -------
---------- ---------- ------- ---------- -------
------------
<FN>
(a) Deductions in 1995 are due to improved profitability in European operations
which resulted in the realization of some deferred tax assets associated
with the 1991 restructuring (see Note 15 to the consolidated financial
statements). Certain prior year amounts have been reclassified to conform
with the current year presentation. As a result, $47.0 of the allowance for
deferred tax assets was netted against the related asset.
(b) Reflects fair market value adjustments for 'available for sale' securities
in accordance with Statement of Financial Accounting Standards (SFAS) No.
115, 'Accounting for Certain Investments in Debt and Equity Securities.'
(c) Additions in 1994 primarily represent valuation allowances for foreign
capital loss carryforwards. Deductions in 1994 are primarily due to
improved profitability in European operations which resulted in realization
of some of the deferred tax assets associated with the 1991 restructuring
(see Note 15 to the consolidated financial statements).
(d) The addition of $61.9 reflects $45.0 for the adoption of SFAS No. 109,
'Accounting for Income Taxes,' as of January 1, 1993, and $16.9 for 1993
additions. Valuation allowances as of January 1, 1993 of $45.0 were
primarily related to the potential inability to utilize foreign operating
loss carryforwards and the inability to realize some deferred tax assets
associated with the 1991 restructuring. During 1993, valuation allowances
increased $16.9 principally due to the potential inability to realize
deferred tax assets associated with the 1993 restructuring.
</FN>
21
SIGNATURES
PURSUANT TO THE REQUIREMENTS OF SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934, THE REGISTRANT HAS DULY CAUSED THIS REPORT TO BE SIGNED ON
ITS BEHALF BY THE UNDERSIGNED, THEREUNTO DULY AUTHORIZED.
WARNER-LAMBERT COMPANY
Registrant
Dated as of March 21, 1996 By /s/ MELVIN R. GOODES
...................................
Melvin R. Goodes
Chairman of the Board
and Chief Executive Officer
PURSUANT TO THE REQUIREMENTS OF THE SECURITIES EXCHANGE ACT OF 1934, THIS
REPORT HAS BEEN SIGNED BELOW BY THE FOLLOWING PERSONS ON BEHALF OF THE
REGISTRANT AND IN THE CAPACITIES AND ON THE DATES INDICATED.
[Download Table]
/s/ MELVIN R. GOODES
By ................................................
Melvin R. Goodes
Chairman of the Board
and Chief Executive Officer
(Principal Executive Officer)
and Director
/s/ ERNEST J. LARINI
By ................................................
Ernest J. Larini
Vice President and Chief
Financial Officer
(Principal Financial Officer)
/s/ JOSEPH E. LYNCH
By ................................................
Joseph E. Lynch
Vice President and Controller
(Principal Accounting Officer) March 21, 1996
/s/ B. CHARLES AMES
By ................................................
B. Charles Ames, Director
/s/ ROBERT N. BURT
By ................................................
Robert N. Burt, Director
/s/ DONALD C. CLARK
By ................................................
Donald C. Clark, Director
/s/ LODEWIJK J. R. DE VINK
By ................................................
Lodewijk J. R. de Vink, Director
22
[Download Table]
/s/ JOHN A. GEORGES
By ................................................
John A. Georges, Director
/s/ WILLIAM H. GRAY III
By ................................................
William H. Gray III, Director
/s/ WILLIAM R. HOWELL
By ................................................
William R. Howell, Director
/s/ LASALLE D. LEFFALL, JR.
By ................................................
LaSalle D. Leffall, Jr., M.D., Director
/s/ PATRICIA SHONTZ LONGE
By ................................................
Patricia Shontz Longe, Ph.D., Director March 21, 1996
/s/ ALEX J. MANDL
By ................................................
Alex J. Mandl, Director
/s/ LAWRENCE G. RAWL
By ................................................
Lawrence G. Rawl, Director
/s/ MICHAEL I. SOVERN
By ................................................
Michael I. Sovern, Director
/s/ JOSEPH D. WILLIAMS
By ................................................
Joseph D. Williams, Director
23
STATEMENT OF DIFFERENCES
------------------------
The trademark symbol shall be expressed as 'tm'
The registered trademark symbol shall be expressed as 'r'
EXHIBIT INDEX
[Enlarge/Download Table]
EXHIBIT
NUMBER DESCRIPTION OF DOCUMENT
------ -----------------------
(3) Articles of Incorporation and By-Laws.
(a) Restated Certificate of Incorporation of Warner-Lambert Company filed November 10, 1972, as amended
to April 24, 1990 (Incorporated by reference to Warner-Lambert's Current Report on Form 8-K, dated
April 24, 1990 (File No. 1-3608)).
(b) By-Laws of Warner-Lambert Company, as amended to October 25, 1988 (Incorporated by reference to
Warner-Lambert's Quarterly Report on Form 10-Q for the quarter ended September 30, 1988 (File No.
1-3608)).
(4) Instruments defining the rights of security holders, including indentures.
(a) Rights Agreement, dated as of June 28, 1988, and amended as of June 27, 1989, between
Warner-Lambert Company and First Chicago Trust Company of New York, as Rights Agent (Incorporated
by reference to Warner-Lambert's Registration Statement on Form 8-A, dated June 28, 1988, as
amended by Form 8, dated July 5, 1989 (File No. 1-3608)).
(b) Warner-Lambert agrees to furnish to the Commission, upon request, a copy of each instrument with
respect to issues of long-term debt of Warner-Lambert. The principal amount of debt issues
authorized under each such instrument does not exceed 10% of the total assets of Warner-Lambert.
(10) Material contracts.
(a) Warner-Lambert Company 1983 Stock Option Plan, as amended to November 26, 1991 (Incorporated by
reference to Warner-Lambert's Form 10-K for the fiscal year ended December 31, 1991).
(b) Warner-Lambert Company 1987 Stock Option Plan, as amended to November 26, 1991 (Incorporated by
reference to Warner-Lambert's Form 10-K for the fiscal year ended December 31, 1991).
(c) Warner-Lambert Company 1989 Stock Plan, as amended to November 26, 1991 (Incorporated by reference
to Warner-Lambert's Form 10-K for the fiscal year ended December 31, 1991).
(d) Warner-Lambert Company 1992 Stock Plan, as amended to September 27, 1994 (Incorporated by reference
to Warner-Lambert's Quarterly Report on Form 10-Q for the quarter ended September 30, 1994).
(e) Warner-Lambert Company Incentive Compensation Plan, as amended to September 27, 1994 (Incorporated
by reference to Warner-Lambert's Quarterly Report on Form 10-Q for the quarter ended September 30,
1994).
(f) Warner-Lambert Company Supplemental Pension Income Plan, as amended to November 28, 1995.
(g) Group Plan Participation by Non-employee Directors (Incorporated by reference to Warner-Lambert's
Form 10-K for the fiscal year ended December 31, 1991).
(h) Warner-Lambert Company Directors' Retirement Plan, as amended to June 1, 1995 (Incorporated by
reference to Warner-Lambert's Quarterly Report on Form 10-Q for the quarter ended June 30, 1995).
(i) Warner-Lambert Excess Savings Plan, formerly Warner-Lambert Supplemental Savings Plan, as amended
to October 1, 1994 (Incorporated by reference to Warner-Lambert's Quarterly Report on Form 10-Q for
the quarter ended September 30, 1994).
(j) Warner-Lambert Company Executive Severance Plan, as amended to September 27, 1994 (Incorporated by
reference to Warner-Lambert's Quarterly Report on Form 10-Q for the quarter ended September 30,
1994).
(k) Restricted Stock Plan for Directors of Warner-Lambert Company, as amended to January 28, 1992
(Incorporated by reference to Warner-Lambert's Form 10-K for the fiscal year ended December 31,
1991).
(l) Employment Agreement dated September 24, 1985 between Warner-Lambert Company and Melvin R. Goodes,
Chairman of the Board and Chief Executive Officer, as amended to August 1, 1991 (Incorporated by
reference to Warner-Lambert's Quarterly Report on Form 10-Q for the quarter ended September 30,
1991).
(m) Employment Agreement effective as of August 1, 1991 between Warner-Lambert Company and Lodewijk J.
R. de Vink, President and Chief Operating Officer (Incorporated by reference to Warner-Lambert's
Quarterly Report on Form 10-Q for the quarter ended September 30, 1991).
(n) Consulting Agreement, dated as of September 1, 1991, between Warner-Lambert Company and Joseph D.
Williams, Director (Incorporated by reference to Warner-Lambert's Form 10-K for the fiscal year
ended December 31, 1991).
[Enlarge/Download Table]
EXHIBIT
NUMBER DESCRIPTION OF DOCUMENT
------ -----------------------
(o) Consulting Arrangement between Warner-Lambert Company and B. Charles Ames, Director (Incorporated
by reference to Warner-Lambert's Form 10-K for the fiscal year ended December 31, 1991).
(p) Global Principles Agreement, dated as of December 10, 1993, between Warner-Lambert Company and
Glaxo Holdings plc (Incorporated by reference to Warner-Lambert's Form 10-K for the fiscal year
ended December 31, 1993).
(q) Global Principles Agreement, dated December 17, 1993, between Warner-Lambert Company and Wellcome
plc (Incorporated by reference to Warner-Lambert's Form 10-K for the fiscal year ended December 31,
1993).
(12) Computation of Ratio of Earnings to Fixed Charges.
(13) Copy of the Warner-Lambert Company Annual Report for the year ended December 31, 1995. Such report,
except for those portions thereof which are expressly incorporated by reference herein, is furnished
solely for the information of the Commission and is not to be deemed 'filed' as part of this filing.
(21) Subsidiaries of the registrant.
(23) Consent of Independent Accountants.
(27) Financial Data Schedule (EDGAR filing only).
Dates Referenced Herein and Documents Incorporated by Reference
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