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, 2002
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 Net Assets Available for Benefits, as of June 30, 2002 and
2001
Statement of Changes in Net Assets Available for Benefits for the year ended
June 30, 2002
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, 2002
Contents
Report of Independent Auditors........................................................................F-1
Financial Statements
Statements of Net Assets Available for Benefits as of June 30, 2002 and 2001..........................F-2
Statement of Changes in Net Assets Available for Benefits for the year ended
June 30, 2002......................................................................................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, 2002
and 2001, and the related statement of changes in net assets available for
benefits for the year ended June 30, 2002. 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, 2002 and 2001, and the changes in its net assets available for benefits for
the year ended June 30, 2002, 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, 2002 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 26, 2002
/s/ Ernst & Young LLP
---------------------
F-1
Becton, Dickinson and Company
Savings Incentive Plan
Statements of Net Assets Available for Benefits
June 30
2002 2001
--------------------------------
Assets
Investments at fair value:
Becton, Dickinson and Company Common Stock (4,798,509
shares and 5,119,098 shares, respectively) $165,323,117 $183,212,517
Becton, Dickinson and Company Series B ESOP Convertible
Preferred Stock (659,217 shares and 698,737 shares,
respectively) (Note 6) 145,344,230 160,050,768
State Street Bank and Trust Company S&P 500 Flagship
Fund Series A 98,906,093 118,838,304
State Street Bank and Trust Company MidCap Index Fund
Series A 47,501,917 46,399,158
Barclays Global Investors Balanced Fund 30,909,235 32,090,670
State Street Short-Term Investment Fund 3,071,909 1,847,856
Cap Guardian International Equity Fund 8,563,644 8,984,038
Lord Abbett Development Growth Fund 10,361,780 8,123,636
Investment contracts at contract value 181,633,953 163,778,685
--------------------------------
Total investments 691,615,878 723,325,632
Receivables:
Interest 8,202 25,653
Employer contributions 3,499,190 4,333,123
Employee contributions 977,802 1,210,126
Other receivable 1,135,700 500,685
Loans receivable from participants 18,287,555 16,958,569
Cash and cash equivalents 9,436,924 12,030,243
--------------------------------
Total assets 724,961,251 758,384,031
Liabilities
Accrued interest payable 815,821 1,093,303
Debt obligations (Notes 6 and 7) 17,266,048 23,138,692
Investment management fees payable 196,841 -
--------------------------------
Total liabilities 18,278,710 24,231,995
--------------------------------
Net assets available for benefits $706,682,541 $734,152,036
================================
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, 2002
Additions:
Participants' contributions $ 49,094,692
Rollover contributions 2,874,077
Company contributions 5,685,340
Interest income 8,945,119
Dividends 4,505,606
------------
71,104,834
Deductions:
Distributions to participants 54,058,563
Interest expense 2,724,945
Administrative expenses and other 1,212,726
------------
57,996,234
Net depreciation in fair value of investments (40,578,095)
------------
Net decrease (27,469,495)
Net assets available for benefits at beginning of year 734,152,036
------------
Net assets available for benefits at end of year $706,682,541
============
See accompanying notes.
F-3
Becton, Dickinson and Company
Savings Incentive Plan
Notes to Financial Statements
June 30, 2002
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 (Fixed Income Fund) 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
$11,000 for 2002 and $10,500 for 2001.
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
401(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 any combination of 1%.
The assets of the Fixed Income Fund 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. The weighted
average yield for the investment contracts was 5.71% and 6.19% at June 30, 2002
and 2001, respectively. The crediting interest rates ranged from 5.08% to 7.67%
at June 30, 2002 and 4.26% to 7.35% at June 30, 2001. 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 $181,633,953 and $167,114,900 at June 30,
2002 and 2001, 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 Fixed Income
Fund. 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 both 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 originating during a year bear a fixed rate
of interest which is set annually. Employees are required to make installment
payments at each payroll date. 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 years
of service as follows:
Full Years of Service Percentage
--------------------------------------------------------
Less than 2 years 0%
2 but less than 3 years 50%
3 but less than 4 years 75%
4 years or more 100%
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, 2002 and 2001 amounted to $236,100 and $15,553,
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 2002, the Plan's investments (including investments purchased, sold, as
well as held during the year) depreciated in fair value as determined by quoted
market prices as follows:
Participant-directed:
Becton, Dickinson and Company Common Stock $ (5,601,954)
State Street Bank and Trust Company S&P 500
Flagship Fund Series A (21,866,591)
State Street Bank and Trust Company MidCap Index Fund
Series A (2,472,958)
Barclays Global Investors Balanced Fund (2,803,066)
Cap Guardian International Equity Fund (627,978)
Lord Abbett Development Growth Fund (1,510,545)
Non-participant directed:
Becton, Dickinson and Company Series B ESOP
Convertible Preferred Stock (5,695,003)
------------
$(40,578,095)
============
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 $ 4,707,538
Interest and dividends 2,607,736
Net realized and unrealized depreciation in fair value (5,695,003)
Distribution to participants (5,697,223)
Loan withdrawals (1,960,549)
Transfers between funds (5,142,872)
Interest expense (2,724,945)
Other (801,220)
------------
Total $(14,706,538)
============
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. The Plan has been amended and a new determination letter
has been requested but has not yet been received. Once qualified, the Plan is
F-8
Becton, Dickinson and Company
Savings Incentive Plan
Notes to Financial Statements (continued)
4. Income Tax Status (continued)
required to operate in conformity with the Code to maintain its 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, 2002, the Plan purchased and distributed 475,774
shares and 795,943 shares, respectively, of the Company's common stock and
recorded $1,919,770 in dividends on the common stock from the Company. In
addition, the Plan purchased and distributed 132,098 shares and 171,619 shares,
respectively, of the Series B ESOP convertible preferred stock of the Company
and recorded $2,585,836 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, 2002 June 30, 2001
------------------------------------------------------------
Allocated Unallocated Allocated Unallocated
------------------------------------------------------------
Becton, Dickinson and
Company Series B ESOP
Convertible Preferred Stock:
Number of shares 414,530 244,686 390,418 308,319
Cost $24,466,840 $14,442,123 $23,030,034 $18,187,166
Market 91,395,754 53,948,476 89,428,069 70,622,699
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, 2003 to 2005 are as follows: 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, 2002
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 4,798,509 $165,323,117
State Street Bank & Trust Company
*Becton, Dickinson and Company Series B ESOP Convertible
Preferred Stock 659,217 145,344,230
State Street Bank & Trust Company
S&P 500 Flagship Fund Series A 2,923,195 98,906,093
State Street Bank & Trust Company
S&P MidCap Index Fund Series A 13,281,912 47,501,917
Barclays Global Investors
Balanced Fund 12,352,710 30,909,235
State Street Bank & Trust Company
State Street Short-Term Investment Fund 13,501,683 3,071,909
State Street Bank & Trust Company
Cap Guardian International Equity Fund 9,816,726 8,563,644
State Street Bank & Trust Company
Lord Abbett Development Growth Fund 8,051,902 10,361,780
Allstate Life Insurance Company
GIC #GA/77016A, at 7.37% 9,881,482
GIC #GA/77156, at 5.20% 16,090,849
Bank of America NT & SA
GIC #01-025, termination date as specified by contract, at 5.08% 26,772,316
Caisse des Depots
BR-239-02, due 12/12/02, at 4.54% 2,004,628
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, 2002
Number Contract
Identity of Issue, Borrower, Lessor or Similar of Units or Current
Party and Description of Investment or Shares Value
--------------------------------------------------------------------------------------------------------------
JP Morgan Chase Bank
GIC #ABECTON1, at 6.38% $ 20,199,665
John Hancock Mutual Life Insurance Company
GIC #14973, due 5/1/07 at 6.46% 11,249,887
Metropolitan Life Insurance Company
GIC #GA/28436, due 11/7/01, at 6.80% 12,776,163
UBS AG
GIC #5070, termination date as specified by contract, at 2.09% 5,463,491
Monumental Life Insurance Company
#00091TR, termination date as specified by contract, at 6.01% 20,690,887
Security Life of Denver Insurance Company
GIC #108GIC, due 9/28/02, at 2.34% 5,026,772
State Street Bank and Trust
GIC #96034, due 10/16/06, at 6.09% 21,743,656
UBS AG
GIC #5042, maturing at last asset cash flow, at 6.93% 13,655,989
Business Men's Assurance - MBIA
GIC #1324, due 11/03/03, at 5.48% 5,179,271
GIC #1352, due 3/21/03, at 6.05% 2,424,884
Jackson National Life Insurance Company
GIC #1261, due 3/18/04, at 6.05% 3,639,083
------------
Total investments 691,615,878
Loans receivable from participants (original loan amounts
ranging from $1,000 to $50,000 bearing interest at rates
ranging from 7% to 11.5%) 18,287,555
------------
$709,903,433
============
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 17, 2002
EXHIBIT INDEX
EXHIBIT
NUMBER DESCRIPTION METHOD OF FILING
------ ----------- ----------------
23 Consent of Independent Auditors Filed with this report