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, 2005
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, 2005 and
2004
Statement of Changes in Net Assets Available for Benefits for the year ended
June 30, 2005
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, 2005
Contents
Report of Independent Registered Public Accounting Firm...............................................F-1
Financial Statements
Statements of Net Assets Available for Benefits as of June 30, 2005 and 2004..........................F-2
Statement of Changes in Net Assets Available for Benefits for the year ended
June 30, 2005......................................................................................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.............................................F-13
Report of Independent Registered Public Accounting Firm
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, 2005
and 2004, and the related statement of changes in net assets available for
benefits for the year then ended. 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. We were not engaged to perform an
audit of the Plan's internal control over financial reporting. Our audits
included consideration of internal control over financial reporting as a basis
for designing audit procedures that are appropriate in the circumstances, but
not for the purpose of expressing an opinion on the effectiveness of the Plan's
internal control over financial reporting. Accordingly, we express no such
opinion. An audit also includes examining, on a test basis, evidence supporting
the amounts and disclosures in the financial statements, assessing the
accounting principles used and significant estimates made by management, and
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, 2005 and 2004, and the changes in its net assets available for benefits for
the year ended June 30, 2005, 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, 2005, 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.
New York, New York
November 21, 2005
F-1
Becton, Dickinson and Company
Savings Incentive Plan
Statements of Net Assets Available for Benefits
June 30
2005 2004
---------------------------------------
Assets
Investments at fair value:
Becton, Dickinson and Company Common Stock (9,692,947
shares and 4,080,596 shares, respectively) $367,096,281 $211,374,873
Becton, Dickinson and Company Series B ESOP Convertible Preferred Stock (0
shares and 538,161 shares, respectively) - 178,411,256
State Street Bank and Trust Company S&P 500 Flagship Fund
Series A 143,991,517 132,446,808
State Street Bank and Trust Company MidCap Index Fund
Series A 86,661,640 68,890,445
Wells Fargo Nikko Investment Advisors Commingled Equity Fund 48,918,200 40,035,820
State Street Short-Term Investment Fund 4,396,813 2,218,171
Capital Guardian International Equity Fund 28,557,326 18,810,647
Lord Abbett Development Growth Fund 25,939,059 23,181,618
Investment contracts at contract value 256,511,142 234,079,648
---------------------------------------
Total investments 962,071,978 909,449,286
Receivables:
Interest 32,205 826,605
Employer contributions 1,168,648 1,672,012
Employee contributions 2,037,095 1,700,278
Loans receivable from participants 22,249,276 20,930,052
Cash and cash equivalents 11,044,213 10,259,005
---------------------------------------
Total assets 998,603,415 944,837,238
Liabilities
Accrued interest payable - 175,560
Debt obligations - 3,715,558
Investment management fees payable 10,146 64,040
---------------------------------------
Total liabilities 10,146 3,955,158
---------------------------------------
Net assets available for benefits $998,593,269 $940,882,080
=======================================
See notes to financial statements.
F-2
Becton, Dickinson and Company
Savings Incentive Plan
Statement of Changes in Net Assets Available for Benefits
Year ended June 30, 2005
Additions:
Participants' contributions $ 54,852,340
Rollover contributions 5,534,834
Company contributions 5,109,298
Interest income 12,751,221
Dividends 4,980,974
------------
83,228,667
Deductions:
Distributions to participants 55,726,213
Administrative expenses and other 1,777,613
------------
57,503,826
Net appreciation in fair value of investments 31,986,348
------------
Net increase in net assets available for benefits 57,711,189
Net assets available for benefits at beginning of year 940,882,080
------------
Net assets available for benefits at end of year $998,593,269
============
See notes to financial statements.
F-3
Becton, Dickinson and Company
Savings Incentive Plan
Notes to Financial Statements
June 30, 2005
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 (the "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 are eligible for
participation in the Plan on the first enrollment date coincident with or next
following their date of hire. Becton, Dickinson and Company is the sponsor of
the Plan.
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
$14,000 plus a catch-up contribution of $4,000 for participants age 50 and older
for 2005, $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 the
employee exceeds the amount of after-tax dollars the employee has contributed to
the Plan.
Employee contributions are invested, at the option of the employee, in any of
the available funds in 1% increments.
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 5.11% and 4.37% at June 30, 2005 and 2004,
respectively. The crediting interest rates ranged from 3.54% to 8.08% for the
plan year ended June 30, 2005. Crediting interest rates are
F-5
Becton, Dickinson and Company
Savings Incentive Plan
Notes to Financial Statements (continued)
2. Description of the Plan (continued)
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 to adjust contract
amounts. The contract value of the investment contracts approximates fair value.
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
Series A, the MidCap Index Fund Series A 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.
During the first quarter of 2005, the trustee of the ESOP converted all of the
outstanding shares of Series B ESOP Convertible Preferred Stock ("ESOP
Preferred") into Becton, Dickinson and Company Common Stock. Conversion of the
ESOP Preferred occurred at the rate of 6.4 common shares for each share of ESOP
Preferred.
F-6
Becton, Dickinson and Company
Savings Incentive Plan
Notes to Financial Statements (continued)
2. Description of the Plan (continued)
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.
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, 2005 and 2004 amounted to $4,484,049 and
$3,674,736, 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 2005, 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 $(14,881,197)
State Street Bank and Trust Company S&P 500
Flagship Fund Series A 8,589,420
State Street Bank and Trust Company MidCap Index Fund
Series A 10,132,637
Wells Fargo Nikko Investment Advisors Commingled Equity
Fund 3,575,849
Capital Guardian International Equity Fund 2,000,275
Lord Abbett Development Growth Fund 806,574
Non-participant directed:
Becton, Dickinson and Company Series B ESOP
Convertible Preferred Stock 21,762,790
------------
$ 31,986,348
============
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 -
Interest and dividends $ 1,122,589
Net realized and unrealized appreciation in fair value 21,762,790
Distribution to participants (4,801,351)
Transfers between funds (see Note 2) (196,086,557)
Expenses (408,727)
-------------
Total $(178,411,256)
=============
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, 2005, the Plan purchased and distributed
6,913,785 shares and 3,998,073 shares, respectively, of the Company's common
stock and recorded $3,871,310 in dividends on the common stock from the Company.
In addition, the Plan purchased and distributed 64,067 shares and 602,228
shares, respectively, of the Series B ESOP convertible preferred stock of the
Company and recorded $1,109,664 in dividends on the preferred stock from the
Company.
6. Employee Stock Ownership Plan (ESOP)
The Company maintains an 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 (see Note
2). 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, 2005 June 30, 2004
-------------------------------------------------------------
Allocated Unallocated Allocated Unallocated
-------------------------------------------------------------
Becton, Dickinson and Company Series B
ESOP Convertible Preferred Stock:
Number of shares -- -- 436,682 101,479
Cost $ -- $ -- $ 25,764,619 $ 5,987,269
Market $ -- $ -- $144,768,893 $ 33,642,363
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 repaid the loan; and as the loan was gradually
repaid, a portion of the preferred stock was 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 were released and available to be allocated to
participants' accounts. If the total value of the preferred shares released (as
the ESOP loan was repaid) was not sufficient to fully match the participants'
contributions, the remaining portion of the match was 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 were due July 1, 2004,
required 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, 2005
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 9,692,947 $367,096,281
State Street Bank & Trust Company
S&P 500 Flagship Fund Series A 656,174 143,991,517
State Street Bank & Trust Company
S&P MidCap Index Fund Series A 3,679,119 86,661,640
Wells Fargo Nikko Investment Advisors
Commingled Equity Fund 1,620,769 48,918,200
State Street Bank & Trust Company
State Street Short-Term Investment Fund 23,606,514 4,396,813
State Street Bank & Trust Company
Cap Guardian International Equity Fund 868,004 28,557,326
State Street Bank & Trust Company
Lord Abbett Development Growth Fund 1,594,288 25,939,059
CDC Financial Production, Inc.
GIC #239-03, due at 3.54% 48,483,859
JP Morgan Chase Bank
GIC #ABECTON1, at 5.57% 47,042,542
* 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, 2005
Number Contract
Identity of Issue, Borrower, Lessor or Similar of Units or Current
Party and Description of Investment or Shares Value
---------------------------------------------------------------------------------------------------------------------
John Hancock Mutual Life Insurance Company
GIC #14973, at 6.55% $ 4,655,434
Rabobank Nederland (IGT BIKRK Int GIC)
BDX080301, due 8/12/03 at 4.54% 46,728,262
Monumental Life Insurance Company
#MDA00091TR, termination date as specified by contract, at 8.08% 9,152,312
Monumental Life Insurance Company
#MDA 00591TR 39,906,878
State Street Bank (IGT Invesco Short-Term Bond)
GIC #103054, at 3.93% 29,190,144
UBS AG
GIC #512, at 3.93% 31,351,711
------------
Total investments 962,071,978
Loans receivable from participants (original loan amounts ranging from $1,000 to
$50,000 bearing interest at rates ranging from 5% to 11.5%) 22,249,276
------------
$984,321,254
============
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 13, 2005
EXHIBIT INDEX
EXHIBIT
NUMBER DESCRIPTION METHOD OF FILING
------ ----------- ----------------
23 Consent of Independent Registered Filed with this report
Public Accounting Firm