11-K: Annual report of employee stock purchase, savings and similar plans
Published on December 23, 1994
FORM 11-K
[X] ANNUAL REPORT PURSUANT TO SECTION 15(d) OF THE SECURITIES EXCHANGE ACT OF
1934
For the fiscal year ended June 30, 1994
OR
[ ] TRANSITION REPORT PURSUANT TO SECTION 15(d) OF THE SECURITIES EXCHANGE ACT
OF 1934
For the transition period from ___________ to _____________
Commission file number 1-4802
BECTON, DICKINSON AND COMPANY
SAVINGS INCENTIVE PLAN
(Full title of the plan)
BECTON, DICKINSON AND COMPANY
(Name of issuer of securities held pursuant to the plan)
1 Becton Drive
Franklin Lakes, New Jersey 07417-1880
(Address of principal executive office) (Zip Code)
(201) 847-6800
(Telephone Number)
1. Financial Statements and Schedules.
----------------------------------
The following financial data for the Plan are submitted herewith:
Report of Independent Auditors
Statements of Net Assets Available for
Plan Benefits
Statement of Changes in Net Assets
Available for Plan Benefits
Notes to Financial Statements
Item 27a - Schedule of Assets Held for
Investment Purposes
Item 27d - Schedule of Reportable Transactions
2. Exhibits.
--------
See Exhibit Index for a list of Exhibits filed or incorporated by
reference as part of this report.
2
SIGNATURES
----------
Pursuant to the requirements of the Securities Exchange Act of 1934, the
members of the Savings Incentive Plan Committee have duly caused this annual
report to be signed by the undersigned hereunto duly authorized.
BECTON, DICKINSON AND COMPANY
SAVINGS INCENTIVE PLAN
Date: December 23, 1994 /s/ Richard A. Weimert
----------------------------------
Richard A. Weimert
Member, Savings Incentive
Plan Committee
3
Becton, Dickinson and Company
Savings Incentive Plan
Financial Statements and Schedules
June 30, 1994 and 1993
CONTENTS
Report of Independent Auditors
Savings Incentive Plan Committee
Becton, Dickinson and Company
We have audited the accompanying statements of net assets available for plan
benefits of the Becton, Dickinson and Company Savings Incentive Plan as of June
30, 1994 and 1993, and the related statement of changes in net assets available
for plan benefits for the year ended June 30, 1994. These financial statements
are the responsibility of the Plan's management. Our responsibility is to
express an opinion on these financial statements based on our audits.
We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to obtain
reasonable assurance about whether the financial statements are free of material
misstatement. An audit includes examining, on a test basis, evidence supporting
the amounts and disclosures in the financial statements. An audit also includes
assessing the accounting principles used and significant estimates made by
management, as well as evaluating the overall financial statement presentation.
We believe that our audits provide a reasonable basis for our opinion.
In our opinion, the financial statements referred to above present fairly, in
all material respects, the net assets available for plan benefits of the Plan at
June 30, 1994 and 1993, and the changes in its net assets available for plan
benefits for the year ended June 30, 1994, in conformity with generally accepted
accounting principles.
Our audits were made for the purpose of forming an opinion on the basic
financial statements taken as a whole. The accompanying supplemental schedules
of assets held for investment purposes as of June 30, 1994, and reportable
transactions for the year then ended, are presented for purposes of complying
with the Department of Labor's Rules and Regulations for Reporting and
Disclosure under the Employee Retirement Income Security Act of 1974, and are
not a required part of the basic financial statements. The supplemental
schedules have been subjected to the auditing procedures applied in our audit of
the 1994 financial statements and, in our opinion, are fairly stated in all
material respects in relation to the 1994 basic financial statements taken as a
whole.
/s/ Ernst & Young LLP
September 28, 1994
F-1
Becton, Dickinson and Company
Savings Incentive Plan
Statement of Net Assets Available for Plan Benefits
June 30, 1994
F-2
Becton, Dickinson and Company
Savings Incentive Plan
Statement of Net Assets Available for Plan Benefits
June 30, 1993
See accompanying notes.
F-3
Becton, Dickinson and Company
Savings Incentive Plan
Statement of Changes in Net Assets Available for Plan Benefits
Year ended June 30, 1994
See accompanying notes.
F-4
Becton, Dickinson and Company
Savings Incentive Plan
Notes to Financial Statements (continued)
1. SIGNIFICANT ACCOUNTING POLICIES
Accounting records of the Becton, Dickinson and Company Savings Incentive Plan
(the "Plan") are maintained on the accrual basis whereby all income, costs and
expenses are recorded when earned or incurred. Investments in securities are
recorded on the basis of cost but are reported in the Plan's financial
statements at fair value, redemption value or contract value. Fair value of
investments is determined by quoted market prices in an active market. The
value of the Becton, Dickinson and Company Series B ESOP Convertible Preferred
Stock was determined based upon the guaranteed redemption value of $59 per share
or 160% of the fair value of the Becton, Dickinson and Company Common Stock,
whichever is higher. On February 26, 1993, Becton, Dickinson and Company
distributed to shareholders one additional share of common stock for each share
owned on January 29, 1993. Accordingly, all Becton, Dickinson and Company
common stock per share data have been restated to reflect the stock split.
Contract value represents contributions made, plus interest at the contract rate
and transfers, less distributions. Cash equivalents are stated at cost, which
approximates fair value. The Company considers all highly-liquid investments
with a maturity of 90 days or less when purchased to be cash equivalents. Costs
and expenses incurred with regard to the purchase, sale and transfer of
securities in connection with the operation of the Plan are charged to the Plan.
All other costs and expenses of the Plan are paid for by Becton, Dickinson and
Company.
2. DESCRIPTION OF THE PLAN
The Plan is a defined contribution plan established for the purpose of
encouraging and assisting employees in following a systematic savings program
and to provide an opportunity for employees, at no cost to themselves, to become
shareholders of Becton, Dickinson and Company. Employees of Becton, Dickinson
and Company and certain of its domestic subsidiaries (the "Company") who have
met defined service requirements are eligible for participation in the Plan.
Eligible employees who are members of the Plan can authorize a payroll deduction
for a contribution to the Plan in an amount per payroll period equal to any
selected whole percentage of pay from 2% to 16% inclusive. For purposes of the
Plan, total pay includes base pay, overtime compensation and commissions.
Compensation is limited to $150,000 subject to annual indexing by the Internal
Revenue Code.
F-5
Becton, Dickinson and Company
Savings Incentive Plan
Notes to Financial Statements (continued)
2. DESCRIPTION OF THE PLAN (CONTINUED)
Individual employee contributions of up to 6% of total pay are eligible for a
matching Company contribution. The Board of Directors of the Company may,
within prescribed limits, establish, from time to time, the rate of Company
contributions. It has authorized the Company to make a monthly contribution to
the Plan in an amount equal to 50% of eligible employee contributions during
said month minus any forfeitures.
Employee contributions can be in either before-tax ("401(k)") dollars or after-
tax dollars or a combination of both. Employee contributions in before-tax
dollars result in savings going into the Plan before most federal, state or
local taxes are withheld. Taxes are deferred until the employee withdraws the
40l(k) contributions from the Plan.
Participating employees are not liable for federal income taxes on amounts
earned in the Plan or on amounts contributed by the Company until such time that
their participating interest is distributed to them. In general, a
participating employee is subject to tax on the amount by which the distribution
paid to him exceeds the amount of after-tax dollars he has contributed to the
Plan.
Employee contributions are invested in five funds as described below:
Fixed Income Fund (Fund A): A fixed income fund with the full principal amount
of employee contributions guaranteed by the Company.
S&P 500 Index Fund (Fund B): A diversified portfolio of common stocks and
securities convertible into common stock. The Trustee's investment approach
will be to hold all the common stocks included in Standard and Poor's 500 Stock
Index (S&P 500) and, as a result, to produce an investment return very similar
to that of the Index.
Becton, Dickinson and Company Common Stock Fund (Fund D): A fund which is
comprised entirely of the Company's common stock.
Balanced Fund (Fund F): A balanced fund comprised of fixed income securities,
common stocks and convertible securities.
MidCap Index Fund (Fund G): An equities fund which seeks greater capital
appreciation than the S&P 500 Index Fund, through investing in common stock and
convertible securities.
At June 30, 1994, approximately $2.8 million was transferred from Funds A, B and
D to establish Funds F and G.
F-6
Becton, Dickinson and Company
Savings Incentive Plan
Notes to Financial Statements (continued)
2. DESCRIPTION OF THE PLAN (CONTINUED)
Employee contributions are invested, at the option of the employee, in Fund A,
B, D, F or G in any combination of 1%, with a maximum of 50% being contributed
to Fund D.
The assets of the Fixed Income Fund (Fund A) are invested in contracts with
various insurance companies, which provide known rates of return on deposited
funds, provided that the contracts remain in force until their maturity.
State Street Bank & Trust Company is the Plan's Trustee. State Street Bank is
also the investment manager of the S&P 500 Index Fund, the MidCap Index Fund and
the Becton, Dickinson and Company Common Stock Fund. PRIMCO Capital Management
Inc. is the investment manager of the Fixed Income Fund. Wells Fargo Nikko
Investment Advisors is the investment manager of the Balanced Fund.
The assets of the Company Common Stock Fund are invested in shares of the
Company's common stock. The Trustee has advised that its present intention is
to purchase the Company's common stock exclusively on the open market.
Contributions to the Company Common Stock Fund are comprised of both employee
contributions, as well as employer matching contributions. For recordkeeping
purposes, separate funds have been created to account for the respective
contributions. These funds are referred to as Fund C for employer matching
contributions and Fund D for employee contributions. Funds C and D have been
combined into one investment fund referred to as the Company Common Stock Fund.
Any portion of the Funds, pending permanent investment or distribution, may be
invested in short-term securities.
The Company implemented an Employee Stock Ownership Plan (ESOP) whereby Fund E
was created to account for employer matching contributions being invested in
convertible preferred stock on behalf of employees. Refer to Note 6.
The Plan also has a loan provision whereby employees are allowed to take loans
on their vested account balances. Loans bear a rate of interest which is set
annually and employees are required to pay installment payments, at least
monthly. The outstanding balance of a loan becomes due and payable upon an
employee's termination. Should an employee, upon his termination, elect not to
repay the outstanding balance, the loan is cancelled and deemed a distribution
under the Plan.
F-7
Becton, Dickinson and Company
Savings Incentive Plan
Notes to Financial Statements (continued)
2. DESCRIPTION OF THE PLAN (CONTINUED)
The Plan provides for vesting in employer matching contributions based on months
of participation as follows:
Any participating employee with 5 or more years of service will have a 100%
vested percentage in the Company's matching contributions. Also, participants
may become fully vested on the date of termination of employment by reasons of
death, retirement or disability, or attainment of age 65. Participants may be
partially vested under certain conditions in the event of termination of
employment or participation in the Plan for any other reason. Non-vested
Company contributions forfeited by participants are applied to reduce future
Company contributions. Participants' contributions are always 100% vested.
The Board of Directors of the Company reserves the right to terminate, modify,
alter or amend the Plan at any time and at its own discretion, provided that no
such termination, modification, alteration or amendment shall permit any of the
funds established pursuant to the Plan to be used for any purpose other than the
exclusive benefit of the participating employees. The right to modify, alter or
amend includes the right to change the percentage of the Company's
contributions.
Assets allocated to participants who have withdrawn from the Plan as of June 30,
1994 and 1993 amounted to $4,360,000 and $2,160,000, respectively. For the
purpose of preparing the Plan's Form 5500, assets allocated to participants who
have withdrawn from the Plan are recorded as liabilities.
F-8
Becton, Dickinson and Company
Savings Incentive Plan
Notes to Financial Statements (continued)
3. UNIT VALUES
The number of units and unit values of each Fund at June 30, 1994 and 1993 were
as follows:
6,345,011 units and 912,406 units of the Company Common Stock Fund were related
to Funds C and D, respectively, as of June 30, 1994. As of June 30, 1993,
7,107,437 units and 648,734 units of the Company Common Stock Fund were related
to Funds C and D, respectively. In Fund E, 238,675 and 199,054 of the total
preferred shares of 961,221 and 988,810 held as of June 30, 1994 and 1993,
respectively, were allocated to participant accounts.
4. INCOME TAX STATUS
The Internal Revenue Service has ruled (February 28, 1992) that the Plan
qualifies under Section 401(a) and 401(k) of the Internal Revenue Code (IRC) and
is, therefore, not subject to tax under present income tax law. Once qualified,
the Plan is required to operate in conformity with the IRC to maintain its
qualification. The Plan Administrator is not aware of any course of action or
series of events that have occurred that might adversely affect the Plan's
qualified status.
F-9
Becton, Dickinson and Company
Savings Incentive Plan
Notes to Financial Statements (continued)
5. RELATED PARTY TRANSACTIONS
During the year ended June 30, 1994, the Plan purchased and distributed 109,950
shares and 150,062 shares, respectively, of the Company's common stock and
received $1,217,634 in dividends from the Company. In addition, the Plan
distributed 27,589 shares of the Series B ESOP convertible preferred stock and
received $3,741,081 in dividends from the Company.
6. EMPLOYEE STOCK OWNERSHIP PLAN (ESOP)
The Company maintains an Employee Stock Ownership Plan (ESOP) as part of the
Savings Incentive Plan. The ESOP operates to satisfy all or part of the
Company's obligation to match 50% of employees' contributions, up to a maximum
of 3% of each participant's covered compensation. To accomplish this, the ESOP
borrowed $60,000,000 in a private debt offering and used the proceeds to buy the
Company's Series B ESOP convertible preferred stock.
Each share of preferred stock has a guaranteed liquidation value of $59 per
share and is convertible into 1.6 shares of the Company's common stock at a
conversion price of $36.88 per share. The preferred stock pays an annual
dividend of $3.835 per share which will be used by the ESOP, together with
Company contributions to repay the ESOP borrowings. Over a 15 year period, the
trust will repay the loan; and as the loan is gradually repaid, a portion of the
preferred stock will be released and used to match participants' contributions
in the Plan. The initial allocation of preferred stock to plan participants
began in March 1990. Each year, a pre-determined number of preferred shares
will be released and allocated to participants' accounts. If the total value of
the preferred shares released (as the ESOP loan is repaid) is not enough to
fully match the participants' contributions, the remaining portion of the match
will be made to the Company Common Stock Fund (Fund C).
7. DEBT OBLIGATIONS
In connection with the Employee Stock Ownership Plan feature, the Plan issued
$60,000,000 of ESOP notes in a private placement. The notes bear interest at
9.45% and are guaranteed by the Company. The notes, which are due July 1, 2004,
require semi-annual interest payments and annual principal payments. The
aggregate annual maturities of the debt obligations during the years ended June
30, 1995 to 1999 are as follows: 1995--$3,029,000; 1996--$3,330,000; 1997--
$3,660,000; 1998--$4,023,000; and 1999--$4,422,000.
F-10
Becton, Dickinson and Company
Savings Incentive Plan
Item 27a--Schedule of Assets Held for Investment Purposes
June 30, 1994
* As Becton, Dickinson and Company is the plan sponsor, these represent party-
in-interest transactions.
F-11
Becton, Dickinson and Company
Savings Incentive Plan
Item 27a--Schedule of Assets Held for Investment Purposes (continued)
June 30, 1994
F-12
Becton, Dickinson and Company
Savings Incentive Plan
Item 27d--Schedule of Reportable Transactions
Year ended June 30, 1994
There were no category (i), (ii), or (iv) reportable transactions during 1994.
F-13
EXHIBIT INDEX
-------------
Exhibit Method of
Number Description Filing
------- ----------- ---------
23 Consent of Independent Filed with
Auditors this report