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, 2004
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 Registered Public Accounting Firm
Statements of Net Assets Available for Benefits as of June 30, 2004 and
2003
Statement of Changes in Net Assets Available for Benefits for the year ended
June 30, 2004
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
Annual Report on Form 11-K
Becton, Dickinson and Company
Savings Incentive Plan
Financial Statements and Supplemental Schedule
June 30, 2004
Contents
Report of Independent Registered Public Accounting Firm.................................F-1
Financial Statements
Statements of Net Assets Available for Benefits as of June 30, 2004 and 2003............F-2
Statement of Changes in Net Assets Available for Benefits for the year ended
June 30, 2004........................................................................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
Consent of Independent Registered Public Accounting Firm.........................Exhibit 23
Report of Independent Registered Public Accounting Firm
To the Compensation and Benefits Committee of 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, 2004
and 2003, and the related statements of changes in net assets available for
benefits for the year ended June 30, 2004. 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 the standards of the Public Company
Accounting Oversight Board (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, 2004 and 2003, and the changes in its net assets available for benefits for
the year ended June 30, 2004, in conformity with U.S. generally accepted
accounting principles.
Our audits were performed for the purpose of forming an opinion on the financial
statements taken as a whole. The accompanying supplemental schedule of assets
(held at end of year) as of June 30, 2004 is presented for purposes 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.
December 7, 2004
F-1
Becton, Dickinson and Company
Savings Incentive Plan
Statements of Net Assets Available for Benefits
June 30
2004 2003
----------------------------------
Assets
Investments at fair value:
Becton, Dickinson and Company Common Stock (4,080,596
shares and 4,458,799 shares, respectively) $211,374,873 $173,224,341
Becton, Dickinson and Company Series B ESOP Convertible
Preferred Stock (538,161 shares and 593,236 shares,
respectively) 178,411,256 147,502,349
State Street Bank and Trust Company S&P 500 Flagship
Fund Series A 132,446,808 104,576,539
State Street Bank and Trust Company MidCap Index Fund
Series A 68,890,445 48,056,101
Wells Fargo Nikko Investment Advisors Commingled Equity Fund 40,035,820 34,390,812
State Street Short-Term Investment Fund 2,218,171 2,163,881
Cap Guardian International Equity Fund 18,810,647 10,243,980
Lord Abbett Development Growth Fund 23,181,618 14,049,344
Investment contracts at contract value 234,079,648 222,318,646
------------------------------------
Total investments 909,449,286 756,525,993
Receivables:
Interest 826,605 4,105
Employer contributions 1,672,012 1,538,916
Employee contributions 1,700,278 1,336,691
Other receivable - 1,235,745
Loans receivable from participants 20,930,052 18,754,118
Cash and cash equivalents 10,259,005 8,885,540
------------------------------------
Total assets 944,837,238 788,281,108
Liabilities
Accrued interest payable 175,560 510,816
Debt obligations 3,715,558 10,810,918
Investment management fees payable 64,040 138,820
------------------------------------
Total liabilities 3,955,158 11,460,554
------------------------------------
Net assets available for benefits $940,882,080 $776,820,554
====================================
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, 2004
Additions:
Participants' contributions $ 51,498,401
Rollover contributions 5,875,746
Company contributions 5,179,352
Interest income 10,267,307
Dividends 4,496,899
------------
77,317,705
Deductions:
Distributions to participants 58,956,970
Administrative expenses and other 1,288,650
------------
60,245,620
Net appreciation in fair value of investments 146,989,441
------------
Net increase 164,061,256
Net assets available for benefits at beginning of year 776,820,554
------------
Net assets available for benefits at end of year $940,882,080
============
See accompanying notes.
F-3
Becton, Dickinson and Company
Savings Incentive Plan
Notes to Financial Statements
June 30, 2004
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 U.S. generally
accepted accounting principles 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 their date of hire.
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
$13,000 plus a catch-up contribution of $3,000 for participants age 50 and older
for 2004 and $12,000 plus a catch-up contribution of $2,000 for participants age
50 and older for 2003.
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 investment contracts are 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 4.37% and 4.70% at June 30, 2004 and 2003,
respectively. The crediting interest rates ranged from 3.54% to 8.08% at June
30, 2004. Crediting interest rates are determined based on the balance and
duration of the contract, with certain contracts
F-5
Becton, Dickinson and Company
Savings Incentive Plan
Notes to Financial Statements (continued)
2. Description of the Plan (continued)
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 to adjust contract
amounts. The contract value of the investment contracts, which approximate fair
value, is approximately $234,079,648 and $222,318,646 at June 30, 2004 and 2003,
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 Flagship Fund,
the MidCap Index Fund and the Becton, Dickinson and Company Common Stock Fund.
Wells Fargo Nikko Investment Advisors is the investment manager of the
Commingled Equity Fund, Lord Abbett is the investment manager of the Development
Growth 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 years but less than 3 years 50%
3 years 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, 2004 and 2003 amounted to $3,674,736 and
$7,923,428, 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 2004, the Plan's investments (including investments purchased, sold, as
well as held during the year) appreciated in fair value as determined by quoted
market prices as follows:
Participant-directed:
Becton, Dickinson and Company Common Stock $ 55,382,127
State Street Bank and Trust Company S&P 500
Flagship Fund Series A 20,360,081
State Street Bank and Trust Company MidCap Index Fund
Series A 13,891,432
Wells Fargo Nikko Investment Advisors Commingled
Equity Fund 4,281,944
Cap Guardian International Equity Fund 3,312,120
Lord Abbett Development Growth Fund 3,412,488
Non-participant directed:
Becton, Dickinson and Company Series B ESOP
Convertible Preferred Stock 46,349,249
---------------
---------------
$146,989,441
===============
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 $ 4,837,431
Interest and dividends 2,159,001
Net realized and unrealized appreciation in fair value 46,349,249
Distribution to participants (8,231,765)
Transfers between funds (6,782,774)
Expenses (782,067)
--------------
Total $37,549,075
==============
F-8
Becton, Dickinson and Company
Savings Incentive Plan
Notes to Financial Statements (continued)
4. Income Tax Status
The Plan has received a determination letter from the Internal Revenue Service
dated February 4, 2004, 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 qualification.
5. Related Party Transactions
During the year ended June 30, 2004, the Plan purchased and distributed 524,031
shares and 902,234 shares, respectively, of the Company's common stock and
recorded $2,344,276 in dividends on the common stock from the Company. In
addition, the Plan purchased and distributed 139,479 shares and 194,554 shares,
respectively, of the Series B ESOP convertible preferred stock of the Company
and recorded $2,152,623 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:
F-9
Becton, Dickinson and Company
Savings Incentive Plan
Notes to Financial Statements (continued)
6. Employee Stock Ownership Plan (ESOP) (continued)
June 30, 2004 June 30, 2003
----------------------------------------------------------------------
Allocated Unallocated Allocated Unallocated
----------------------------------------------------------------------
Becton, Dickinson and Company
Series B ESOP Convertible
Preferred Stock:
Number of shares 436,682 101,479 421,958 171,278
Cost $ 25,764,619 $ 5,987,269 $ 24,895,964 $10,105,409
Market $144,768,893 $33,642,363 $104,915,744 $42,586,605
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. Such final
payment was made on a timely basis.
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, 2004
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 4,080,596 $211,374,873
State Street Bank & Trust Company
*Becton, Dickinson and Company Series B ESOP Convertible
Preferred Stock 538,161 178,411,256
State Street Bank & Trust Company
S&P 500 Flagship Fund Series A 3,314,163 132,446,808
State Street Bank & Trust Company
S&P MidCap Index Fund Series A 16,365,246 68,890,445
Wells Fargo Nikko Investment Advisors
Commingled Equity Fund 14,379,867 40,035,820
State Street Bank & Trust Company
State Street Short-Term Investment Fund 4,879,252 2,218,171
State Street Bank & Trust Company
Cap Guardian International Equity Fund 18,725,428 18,810,647
State Street Bank & Trust Company
Lord Abbett Development Growth Fund 23,209,234 23,181,618
CDC Financial Production, Inc.
GIC #239-03, due at 3.54% 36,433,577
* 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, 2004
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 5.57% $ 41,655,773
John Hancock Mutual Life Insurance Company
GIC #14973, at 6.55% 6,039,981
Rabobank Nederland (IGT BIKRK Int GIC)
BDX080301, due 8/12/03 at 4.54% 41,743,103
Monumental Life Insurance Company
#MDA00091TR, termination date as specified by contract, at 8.08% 13,766,493
Monumental Life Insurance Company
#MDA 00591TR 35,651,484
State Street Bank (IGT Invesco Short-Term Bond)
GIC #103054, at 3.93% 29,430,956
UBS AG
GIC #512, at 2.68% 29,358,281
---------------
Total investments 909,449,286
Loans receivable from participants (original loan amounts ranging from $1,000 to
$50,000 bearing interest at rates ranging from 5% to 11.5%)
20,930,052
---------------
$930,379,338
===============
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 16, 2004
EXHIBIT INDEX
EXHIBIT
NUMBER DESCRIPTION METHOD OF FILING
------ ----------- ----------------
23 Consent of Independent Registered Filed with this report
Public Accounting Firm