BECTON DICKINSON & CO — Annual Report 1994

Dec 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