SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
-------------------
FORM 11-K
ANNUAL REPORT PURSUANT TO SECTION 15(d) OF THE
SECURITIES AND EXCHANGE ACT OF 1934
[X] ANNUAL REPORT PURSUANT TO SECTION 15(d) OF THE SECURITIES EXCHANGE ACT OF
1934
For the fiscal year ended June 30, 2001
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 OFFICER) (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 New Assets Available for Benefits, as of June 30, 2001 and
2000
Statement of Changes in Net Assets Available for Benefits for the year ended
June 30, 2001
Notes to Financial Statements
Schedule H, Line 4(i) -- Schedule of Assets (Held at End of Year)
2.1 EXHIBITS.
See Exhibit Index for a list of Exhibits filed or incorporated by reference
as part of this report.
2
Becton, Dickinson and Company
Savings Incentive Plan
Financial Statements and Supplemental Schedule
June 30, 2001
Contents
Report of Independent Auditors........................................................................F-1
Financial Statements
Statements of Net Assets Available for Benefits as of June 30, 2001 and 2000..........................F-2
Statement of Changes in Net Assets Available for Benefits for the year ended
June 30, 2001......................................................................................F-3
Notes to Financial Statements.........................................................................F-4
Supplemental Schedule
Schedule H, Line 4(i)--Schedule of Assets (Held at End of Year)......................................F-11
Report of Independent Auditors
Savings Incentive Plan Committee
Becton, Dickinson and Company
We have audited the accompanying statements of net assets available for benefits
of the Becton, Dickinson and Company Savings Incentive Plan as of June 30, 2001
and 2000, and the related statement of changes in net assets available for
benefits for the year ended June 30, 2001. 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 auditing standards generally accepted
in the United States. 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 benefits of the Plan at June
30, 2001 and 2000, and the changes in its net assets available for benefits for
the year ended June 30, 2001, in conformity with accounting principles generally
accepted in the United States.
Our audits were performed for the purpose of forming an opinion on the basic
financial statements taken as a whole. The accompanying supplemental schedule of
assets (held at end of year) as of June 30, 2001 is presented for the purpose of
additional analysis and is not a required part of the financial statements but
is supplementary information required by the Department of Labor's Rules and
Regulations for Reporting and Disclosure under the Employee Retirement Income
Security Act of 1974. This supplemental schedule is the responsibility of the
Plan's management. The supplemental schedule has been subjected to the auditing
procedures applied in our audits of the financial statements and, in our
opinion, is fairly stated in all material respects in relation to the financial
statements taken as a whole.
New York, New York
November 19, 2001
F-1
Becton, Dickinson and Company
Savings Incentive Plan
Statements of Net Assets Available for Benefits
June 30
2001 2000
-------------------------------------
Assets
Investments at fair value:
Becton, Dickinson and Company Common Stock (5,119,098 shares and 5,745,381
shares, respectively) $183,212,517 $164,819,470
Becton, Dickinson and Company Series B ESOP Convertible Preferred Stock
(698,737 shares and 752,271 shares, respectively) (Note 6) 160,050,768 138,118,362
State Street Bank and Trust Company S&P 500 Flagship Fund Series A 118,838,304 135,436,563
State Street Bank and Trust Company MidCap Index Fund
Series A 46,399,158 37,696,644
Barclays Global Investors Balanced Fund 32,090,670 32,274,359
State Street Short-Term Investment Fund 1,847,856 2,427,421
Cap Guardian International Equity Fund 8,984,038 8,798,437
Lord Abbett Development Growth Fund 8,123,636 5,944,073
Investment contracts at contract value 163,778,685 148,386,758
------------------------------------
Total investments 723,325,632 673,902,087
Receivables:
Interest 25,653 38,338
Employer contributions 4,333,123 5,334,993
Employee contributions 1,210,126 -
Other receivable 500,685 94,023
Loans receivable from participants 16,958,569 16,942,518
Cash and cash equivalents 12,030,243 12,202,904
------------------------------------
Total assets 758,384,031 708,514,863
Liabilities
Accrued interest payable 1,093,303 1,345,747
Debt obligations (Notes 6 and 7) 23,138,692 28,481,410
Investment management fees payable - 24,815
Other - 70,711
------------------------------------
Total liabilities 24,231,995 29,922,683
------------------------------------
Net assets available for benefits $734,152,036 $678,592,180
====================================
See accompanying notes.
F-2
Becton, Dickinson and Company
Savings Incentive Plan
Statement of Changes in Net Assets Available for Benefits
Year ended June 30, 2001
Additions:
Participants' contributions $ 45,247,861
Rollover contributions 2,651,012
Company contributions 5,843,337
Interest income 11,888,774
Dividends 4,792,595
-------------------
70,423,579
Deductions:
Distributions to participants 60,004,211
Interest expense 3,532,353
Administrative expenses and other 1,047,103
-------------------
64,583,667
Net appreciation in fair value of investments 49,719,944
-------------------
Net increase 55,559,856
Net assets available for benefits at beginning of year 678,592,180
-------------------
Net assets available for benefits at end of year $734,152,036
===================
See accompanying notes.
F-3
Becton, Dickinson and Company
Savings Incentive Plan
Notes to Financial Statements
June 30, 2001
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 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 marketable equity securities
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 640%
of the fair value of the Becton, Dickinson and Company Common Stock, whichever
is higher. Investment contracts are contracts with insurance companies which are
fully benefit responsive and valued at contract value. Contract value represents
contributions made, plus interest at the contract rate and transfers, less
distributions. Interests in commingled trust funds and mutual funds are valued
at the redemption price established by the trustee or investment manager of the
respective fund. Participant loans are valued at unpaid principal balances with
maturities ranging from three months to four and one-half years for ordinary
loans and twenty years for primary residence loans. Cash equivalents are stated
at cost, which approximates fair value. The Plan considers all highly-liquid
investments with a maturity of 90 days or less when purchased to be cash
equivalents. Investment management fees, brokerage fees, commissions, stock
transfer taxes, and other expenses related to each investment fund are paid out
of the respective fund. Other expenses, such as trustee fees, ESOP fees, and
other administrative expenses are shared by Becton, Dickinson and Company and
the Plan.
The preparation of financial statements in conformity with accounting principles
generally accepted in the United States requires management to make estimates
and assumptions that affect the amounts reported in the financial statements and
accompanying notes. Actual results could differ from those estimates.
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") are
eligible for participation in the Plan on the first enrollment date coincident
with or next following the date on which the employee commences employment with
the Company.
F-4
Becton, Dickinson and Company
Savings Incentive Plan
Notes to Financial Statements (continued)
2. Description of the Plan (continued)
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 20% inclusive. For purposes of the
Plan, total pay includes base pay, overtime compensation and commissions.
Pre-tax contributions are subject to annual Internal Revenue Code limitations of
$10,500 for 2001 and 2000.
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, at the option of the employee, in any of
the available funds in increments of 1%.
The investment contracts are held by various insurance companies, and provide
known rates of return on deposited funds, provided that the contracts remain
in force until their maturity. The weighted average yield for the investment
contracts was 6.19% and 6.26% at June 30, 2001 and 2000, respectively. The
crediting interest rates ranged from 4.26% to 7.35% at June 30, 2001 and 5.97%
to 7.28% at June 30, 2000. Crediting interest rates are determined based on the
balance and duration of the contract, with certain contracts subject to
quarterly rate resets based on market indices. There are no minimum crediting
interest rates or limitations on guarantees under the terms of the contracts.
No valuation reserves have been established
F-5
Becton, Dickinson and Company
Savings Incentive Plan
Notes to Financial Statements (continued)
2. Description of the Plan (continued)
to adjust contract amounts. The fair value of the investment contracts recorded
at contract value is approximately $167,114,900 and $145,744,266 at June 30,
2001 and 2000, respectively.
State Street Bank & Trust Company ("State Street Bank") 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 investment
contracts. Barclays Global Investors is the investment manager of the Balanced
Fund, Lord Abbett is the investment manager of the Small Cap Fund, and Capital
Guardian Trust Company is the investment manager of the International Equity
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 employee
contributions as well as employer matching contributions.
Any portion of the Funds, pending permanent investment or distribution, may be
held on a short-term basis in cash or cash equivalents. The State Street
Short-Term Investment Fund is a holding account and represents funds received
awaiting allocation to an investment fund.
The Company implemented an Employee Stock Ownership Plan (ESOP) whereby the
Becton, Dickinson and Company Preferred Stock Fund was created to account for
employer matching contributions being invested in convertible preferred stock on
behalf of employees. Over the past several years, preferred shares have
accumulated in the trust in excess of the Company's matching obligation.
The Plan also has loan provisions whereby employees are allowed to take loans on
their vested account balances. Loans bear a fixed rate of interest which is set
annually. Employees are required to make installment payments at each payroll
date beginning in the second month after the issuance of the loan. 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 canceled and deemed a distribution under the
Plan.
F-6
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:
Full Months of Participation Percentage
-------------------------------------------------------------
Less than 24 months 0%
24 but less than 36 months 50%
36 but less than 48 months 75%
48 months or more 100%
Any participating employee with 5 or more years of service regardless of months
of participation 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.
Amounts allocated to withdrawn participants which have not yet been distributed
from the Plan as of June 30, 2001 and 2000 amounted to $15,553 and $85,901,
respectively. For the purpose of preparing the Plan's Form 5500 such amounts are
recorded as liabilities.
F-7
Becton, Dickinson and Company
Savings Incentive Plan
Notes to Financial Statements (continued)
3. Investments
During 2001, the Plan's investments (including investments purchased, sold, as
well as held during the year) appreciated (depreciated) in fair value as
determined by quoted market prices as follows:
Participant-directed:
Becton, Dickinson and Company Common Stock $ 38,860,563
State Street Bank and Trust Company S&P 500
Flagship Fund Series A (20,472,224)
State Street Bank and Trust Company MidCap Index Fund Series A 3,439,139
Barclays Global Investors Balanced Fund (1,686,413)
Cap Guardian International Equity Fund (2,511,529)
Lord Abbett Development Growth Fund (734,645)
Non-participant directed:
Becton, Dickinson and Company Series B ESOP
Convertible Preferred Stock 32,825,053
-------------------
$ 49,719,944
===================
Information about the significant components of the changes in net assets
related to the non-participant directed investment, Becton, Dickinson and
Company Series B ESOP Convertible Preferred Stock, is as follows:
Contributions $ 4,630,051
Interest and dividends 2,805,258
Net realized and unrealized depreciation in fair value 32,825,053
Distribution to participants (6,855,260)
Loan withdrawals (2,951,283)
Transfers between funds (5,015,663)
Interest expense (3,532,353)
Other 26,603
-------------------
Total $21,932,406
===================
4. Income Tax Status
The Plan has received a determination letter from the Internal Revenue Service
dated December 30, 1994, stating that the Plan is qualified under Section 401(a)
of the Internal Revenue Code (the "Code") and, therefore, the related trust is
exempt from taxation. Once qualified, the Plan is required to operate in
conformity with the Code to maintain its
F-8
Becton, Dickinson and Company
Savings Incentive Plan
Notes to Financial Statements (continued)
4. Income Tax Status (continued)
qualification. The plan committee believes the Plan is being operated in
compliance with the applicable requirements of the Code, and therefore, believes
that the Plan is qualified and the related trust is tax-exempt.
5. Related Party Transactions
During the year ended June 30, 2001, the Plan purchased and distributed 705,950
shares and 1,332,233 shares, respectively, of the Company's common stock and
recorded $2,031,215 in dividends on the common stock from the Company. In
addition, the Plan purchased and distributed 142,153 shares and 195,687 shares,
respectively, of the Series B ESOP convertible preferred stock of the Company
and recorded $2,761,380 in dividends on the preferred stock 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 6.4 shares of the Company's common stock. 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.
The allocated and unallocated shares at cost and market at June 30 were as
follows:
June 30, 2001 June 30, 2000
-------------------------------------------------------------------
Allocated Unallocated Allocated Unallocated
-------------------------------------------------------------------
Becton, Dickinson and Company
Series B ESOP Convertible
Preferred Stock:
Number of shares 390,418 308,319 370,492 381,779
Cost $23,030,034 $18,187,166 $21,859,028 $22,524,961
Market 89,428,069 70,622,699 68,022,269 70,096,093
F-9
Becton, Dickinson and Company
Savings Incentive Plan
Notes to Financial Statements (continued)
6. Employee Stock Ownership Plan (ESOP) (continued)
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 available to be
allocated to participants' accounts. If the total value of the preferred shares
released (as the ESOP loan is repaid) is not sufficient to fully match the
participants' contributions, the remaining portion of the match will be made to
the Company Common Stock Fund.
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, 2002 to 2005 are as follows: 2002-$5,873,000, 2003-$6,455,000,
2004-$7,095,000 and 2005-$3,716,000.
F-10
EIN: 22-0760120
Plan #: 011
Becton, Dickinson and Company
Savings Incentive Plan
Schedule H, Line 4(i)--Schedule of Assets
(Held at End of Year)
June 30, 2001
Number Contract
Identity of Issue, Borrower, Lessor or Similar of Units or Current
Party and Description of Investment or Shares Value
---------------------------------------------------------------------------------------------------------------------
State Street Bank & Trust Company
*Becton, Dickinson and Company Common Stock 5,119,098 $183,212,517
State Street Bank & Trust Company
*Becton, Dickinson and Company Series B ESOP Convertible Preferred Stock 698,737 160,050,768
State Street Bank & Trust Company
S&P 500 Flagship Fund Series A 2,906,147 118,838,304
State Street Bank & Trust Company
S&P MidCap Index Fund Series A 13,281,912 46,399,158
Barclays Global Investors
Balanced Fund 12,352,710 32,090,670
State Street Bank & Trust Company
State Street Short-Term Investment Fund 13,501,683 1,847,856
State Street Bank & Trust Company
Cap Guardian International Equity Fund 9,816,726 8,984,038
State Street Bank & Trust Company
Lord Abbett Development Growth Fund 8,051,902 8,123,636
Allstate Life Insurance Company
GIC #GA/77016A, due 2/15/03, at 6.47% 12,855,317
GIC #GA/77156, at 5.92% 6,416,127
Bank of America NT & SA
GIC #99-242, termination date as specified by contract, at 6.42% 16,130,032
GIC #01-025, termination date as specified by contract, at 5.53% 4,073,213
Caisse des Depots
BR-239-02, due 12/12/02, at 5.13% 2,005,215
BR-239-03, due 5/15/04 at 5.92% 4,834,930
* As Becton, Dickinson and Company is the plan sponsor, these represent
party-in-interest transactions.
F-11
EIN: 22-0760120
Plan #: 011
Becton, Dickinson and Company
Savings Incentive Plan
Schedule H, Line 4(i)--Schedule of Assets
(Held at End of Year) (continued)
June 30, 2001
Number Contract
Identity of Issue, Borrower, Lessor or Similar of Units or Current
Party and Description of Investment or Shares Value
---------------------------------------------------------------------------------------------------------------------
Continental Assurance Co.
GIC #63005752, maturing at last asset cash flow, at 7.35% $ 13,010,944
John Hancock Mutual Life Insurance Company
GIC #GA/7238-1, due 5/1/02 at 6.21% 5,747,628
GIC #14973, due 5/1/07 at 6.90% 10,553,779
Metropolitan Life Insurance Company
GIC #GA/25710, due 11/7/01, at 7.13% 3,136,022
Prudential Cap Max
GIC #10008-212, due 4/23/02 at 5.91% 1,359,866
UBS AG
GIC #5070, termination date as specified by contract, at 4.26% 5,326,618
Monumental Life Insurance Company
#00091TR, termination date as specified by contract, at 6.13% 22,460,003
Security Life of Denver Insurance Company
GIC #108GIC, due 9/28/01, at 5.18% 4,885,832
State Street Bank and Trust
GIC #96034, due 10/16/06, at 6.19% 23,428,855
UBS AG
GIC #5042, maturing at last asset cash flow, at 6.98% 16,657,763
Business Men's Assurance - MBIA
GIC #1324, due 11/03/03, at 5.48% 5,178,514
GIC #1352, due 3/21/03, at 6.05% 2,286,548
Jackson National Life Insurance Company
GIC #1261, due 3/18/04, at 6.05% 3,431,479
----------------------
Total investments 723,325,632
Loans receivable from participants (original loan amounts ranging from $1,000 to
$50,000 bearing interest at rates ranging from 7% to 11.5%)
16,958,569
----------------------
$740,284,201
======================
F-12
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
/s/ Gerald Caporicci
--------------------------
GERALD CAPORICCI
MEMBER, SAVINGS INCENTIVE PLAN
COMMITTEE
Date: December 12, 2001
EXHIBIT INDEX
EXHIBIT
NUMBER DESCRIPTION METHOD OF FILING
------ ----------- ----------------
23 Consent of Independent Auditors Filed with this report