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WESLEY JESSEN PUERTO RICO
SAVINGS PLAN
Financial Statements and Supplemental Schedule
December 31, 1999 and 1998
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WESLEY JESSEN PUERTO RICO SAVINGS PLAN
Table of Contents to Financial Statements and Supplemental Schedule
December 31, 1999 and 1998
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Page
<TABLE>
<CAPTION>
Financial Statements:
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<S> <C>
Report of Independent Accountants............................ 1
Statements of Assets Available for Benefits.................. 2
Statements of Changes in Assets Available for
Benefits..................................................... 3
Notes to Financial Statements................................ 4-8
Supplemental Schedule:*
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Schedule I - Schedule of Assets Held for Investment Purposes.. 9
</TABLE>
* Other schedules required by Section 2520.103-10 of the Department of Labor
Rules and Regulations for Reporting and Disclosure under ERISA have been
omitted because they are not applicable.
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Report of Independent Accountants
To the Participants and Administrator of
Wesley Jessen Puerto Rico Savings Plan
In our opinion, the accompanying statements of assets available for benefits and
the related statements of changes in assets available for benefits present
fairly, in all material respects, the assets available for benefits of the
Wesley Jessen Puerto Rico Savings Plan (the "Plan") at December 31, 1999 and
1998, and the changes in assets available for benefits for the years then ended,
in conformity with accounting principles generally accepted in the United
States. 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 of these statements in
accordance with auditing standards generally accepted in the United States,
which 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, 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 the opinion expressed above.
Our audits were conducted for the purpose of forming an opinion on the basic
financial statements taken as a whole. The supplemental schedule of Assets Held
for Investment Purposes as of December 31, 1999 is presented for the purpose of
additional analysis and is not a required part of the basic 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 the audits of the basic financial statements and, in our
opinion, is fairly stated in all material respects in relation to the basic
financial statements taken as a whole.
June 23, 2000
1
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WESLEY JESSEN PUERTO RICO SAVINGS PLAN
Statement of Assets Available for Benefits
December 31, 1999 and 1998
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<TABLE>
<CAPTION>
1999 1998
<S> <C> <C>
Assets:
Investments $ 4,150,320 $ 2,817,597
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Receivables:
Participants' contributions 25,715 4,357
Employer's contributions 489,988 449,045
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515,703 453,402
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Assets available
for benefits $ 4,666,023 $ 3,270,999
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</TABLE>
The accompanying notes are an integral part of these financial statements.
2
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WESLEY JESSEN PUERTO RICO SAVINGS PLAN
Statements of Changes in Assets Available for Benefits
December 31, 1999 and 1998
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<TABLE>
<CAPTION>
1999 1998
<S> <C> <C>
Additions to assets attributed to:
Investment income:
Interest and dividends $ 197,597 $ 113,887
Net appreciation in fair value of investments 333,326 162,239
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530,923 276,126
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Contributions:
Participants 414,645 343,685
Employer 644,340 605,826
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1,058,985 949,511
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Total additions 1,589,908 1,225,637
Deductions from assets attributable to -
Participants benefits (194,884) (130,597)
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Net increase 1,395,024 1,095,040
Assets available for benefits
at beginning of year 3,270,999 2,175,959
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Assets available for benefits
at end of year $4,666,023 $3,270,999
============= =============
</TABLE>
The accompanying notes are an integral part of these financial statements.
3
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WESLEY JESSEN PUERTO RICO SAVINGS PLAN
Notes to Financial Statements
December 31, 1999 and 1998
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1. Description of Plan
The following description of the Wesley Jessen Puerto Rico Savings Plan
(the "Plan") provides only general information. Participants should refer
to the Plan agreement for a more complete description of the Plan's
provisions.
General
The Plan became effective July 1, 1995 as a defined contribution plan
covering all full-time employees of Wesley-Jessen (Puerto Rico), Inc. (the
"Company"). It is subject to the provisions of the Employee Retirement
Income Security Act of 1974 ("ERISA").
Contributions
Participants may contribute up to 10 percent of their pretax annual base
compensation, to a maximum of $8,000. The Company contributes 50 percent
of the first 6 percent that a participant contributes to the Plan.
Additional amounts may be contributed at the option of the Company's board
of directors. During the year ended December 31, 1999 approximately
$490,000 (1998 - $449,000) of additional contributions were made.
Participant Accounts
Each participant's account is credited with the participant's contribution
and allocation of (a) the Company's contribution and (b) Plan earnings.
Allocations are based on participant earnings or account balances, as
defined. The benefit to which a participant is entitled is the benefit
that can be provided from the participant's account.
Vesting
Participants are immediately vested in their contributions plus actual
earnings thereon. Vesting in the remainder of their account is based on
years of continuous service. A participant is 100 percent vested after
four years of credited service. Former employees of Schering-Plough
Products, Inc. are vested 100 percent after three years of credited
service. Forfeitures are used to reduce Company's contributions.
Investment Options
Upon enrollment in the Plan, a participant may direct contributions in any
of the following ten investments options:
. Vanguard Wellington Fund - Seeks to provide income and long-term
growth of capital, without undue risk to capital, by investing
about 65% of its assets in stocks and the remaining 35% in bonds.
. Vanguard Windsor Fund - Seeks to provide long-term growth of
capital and income by investing in stocks believed to be
undervalued by the market. It focuses on stocks selling at prices
that seem low in relation on such factors as past earnings,
potential growth, and dividend payments.
4
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WESLEY JESSEN PUERTO RICO SAVINGS PLAN
Notes to Financial Statements
December 31, 1999 and 1998
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. Vanguard Explorer Fund - Seeks to provide long-term growth of
capital by investing in a diversified group small-company stock
with prospects for above-average growth.
. Vanguard Short-Term Corporate Bond Fund - Seeks to provide income
while maintaining a high degree of stability of principal by
investing in short-term bonds, including high-quality corporate
and U.S.Treasury securities.
. Vanguard Index 500 Portfolio Fund - Seeks to provide long-term
growth of capital and income from dividends by holding all of the
500 stocks that make up the unmanaged Standard & Poor's 500
Composite Stock Price Index, a widely recognized benchmark of
U.S. stock market performance.
. Vanguard Treasury Money Market Portfolio Fund - Seeks to provide
high income and a stable share price of $1 by investing in short-
term securities that are backed by the full faith and credit of
the U.S. government. At least 65% of the Portfolio's assets are
invested in U.S. Treasury securities.
. Vanguard International Growth Portfolio Fund - Seeks to provide
long-term growth of capital by investing in stocks of high-
quality, seasoned companies based outside the United States.
Stocks are selected from more than 15 countries.
. Wesley-Jessen Stock Fund - Funds are invested in shares of common
stock of Wesley-Jessen VisionCare, Inc. and seeks to provide the
potential for long-term growth through increases in the value of
the stock and reinvestment of its dividends.
. Vanguard PRIMECAP Fund - Seeks long-term growth of capital by
investing in stocks of companies with above-average prospects for
continued earnings growth, strong industry positions, and skilled
management teams.
. Vanguard Total Bond Market Index Fund - Seeks to provide high
level of interest income by attempting to match the performance
of the unmanaged Lehman Brothers Aggregate Bond Index, which is
widely recognized measure of the entire taxable U.S. bond market.
Participants may change their investment options quarterly.
Participant Loans
Participants may borrow from their fund accounts a maximum amount equal to
the lesser of $50,000 or 50 percent of their account vested balance. Loan
transactions are treated as a transfer to (from) the investment funds from
(to) the Participant Loans Fund. Loan terms are for a period not
exceeding 5 years. Loans used to acquire a principal residence shall
provide for repayment over a reasonable period of time that may exceed 5
years.
The loans are secured by the vested balance in the participant's account
and bear interest at a rate determined by the Plan administrator at the
time of the loan. Interest rates range from 8 percent to 10 percent.
Principal and interest is paid ratably through payroll deductions.
5
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WESLEY JESSEN PUERTO RICO SAVINGS PLAN
Notes to Financial Statements
December 31, 1999 and 1998
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Payment of Benefits
On termination of service due to death, disability or retirement, a
participant may elect to receive either a lump-sum amount equal to the
value of the participant's vested interest in his or her account, or
installments not exceeding the life expectancy of the participant or
beneficiary. For termination of service due to other reasons, a
participant may receive the value of the vested interest in his or her
account as a lump-sum distribution.
Forfeited Accounts
At December 31, 1999, forfeited nonvested accounts amounted to
approximately $28,286.
Administrative Expenses
Certain expenses relating to the Plan, including administrative fees, are
paid by the Company.
2. Summary of Significant Accounting Policies
Basis of Accounting
The Plan's financial statements are prepared on the accrual basis of
accounting.
Use of Estimates
The preparation of financial statements in conformity with generally
accepted accounting principles requires management to make estimates and
assumptions that affect the reported amounts of assets and liabilities and
disclosures of contingent assets and liabilities at the date of the
financial statements and the reported amounts of revenues and expenses
during the reporting period. Actual results could differ from those
estimates.
The following are the most significant accounting policies followed by the
Plan.
Investment Valuation and Income Recognition
Plan investments are stated at fair value. Shares of registered investment
companies are valued at the quoted net asset value (redemption value) of
the respective investment company determined by Vanguard Fiduciary Trust
Company. The Company stock fund is valued at its year-end unit closing
price (comprised of year-end market price plus uninvested cash position).
Participant loans are valued at cost which approximates fair value.
Purchases and sales of investments are recorded on a trade-date basis.
Interest income is accrued when earned. Dividend income is recorded on the
ex-dividend date. Capital gain distributions are included in dividend
income.
6
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WESLEY JESSEN PUERTO RICO SAVINGS PLAN
Notes to Financial Statements
December 31, 1999 and 1998
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Contributions
Employee contributions are recorded in the period during which the Company
makes payroll deductions from the Plan participants' earnings. Matching
Company contributions are recorded in the same period.
Benefits
Benefits are recorded when paid.
3. Investments
Investments that represent 5% or more of the Plan's assets are summarized
below:
<TABLE>
<CAPTION>
1999 1998
<S> <C> <C>
Investments at fair value determined by quoted market prices:
Shares of registered investment companies:
Vanguard Windsor Fund -26,701 shares
(1998 - 25,198 shares) $ 405,058 $ 392,329
Vanguard Short-term Corporate Bond
Fund - 25,605 shares
(1998 - 21,602 shares) 269,623 234,168
Vanguard Index 500 Portfolio Fund -
11,387 shares (1998 - 9,449 shares) 1,540,957 1,076,748
Vanguard Treasury Money Market
Portfolio Fund - 589,116 shares
(1998 - 476,445) 589,117 476,445
Vanguard Wellington Fund - 6,707 shares
(1998 - 4,471 shares) 187,514 131,220
Wesley Jessen Stock Fund - 2,218 shares
(1998 - 4,246 shares) 220,830 83,696
Vanguard PRIMECAP Fund -4,426, shares
(1998 - 654 shares) 274,705 31,188
Investment at estimated fair value:
Participant loans other than mortgages 493,308 308,705
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$3,981,112 $2,734,499
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</TABLE>
7
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WESLEY JESSEN PUERTO RICO SAVINGS PLAN
Notes to Financial Statements
December 31, 1999 and 1998
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During 1999 and 1998, the Plan's investments (including gains and losses on
investments bought and sold) appreciated (depreciated) in value as follows:
<TABLE>
<CAPTION>
1999 1998
<S> <C> <C>
Mutual funds $ 268,818 $ 172,893
Common stock 64,508 (10,654)
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$333,326 $162,239
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</TABLE>
4. Related Parties
The Plan invests in shares of mutual funds managed by an affiliate of
Vanguard Fiduciary Trust Company ("VFTC"). VFTC acts as trustee for only
those investments as defined by the Plan. Transactions in such investments
qualify as party-in-interest transactions which are exempt from the
prohibited transaction rules.
5. Plan Termination
Although it has not expressed any intent to do so, the Company has the
right under the Plan to discontinue its contributions at any time and to
terminate the Plan subject to the provisions of ERISA. In the event of
Plan termination, participants will become 100 percent vested in their
accounts.
6. Tax Status
The Puerto Rico Treasury Department has determined and informed the Company
by a letter dated March 9, 1998, that the Plan and related trust are
designed in accordance with applicable sections of the Puerto Rico Internal
Revenue Code.
8
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WESLEY JESSEN SUPPLEMENTAL SCHEDULE I
PUERTO RICO SAVINGS PLAN
Item 27a Part I Form 5500 Schedule of Assets
December 31, 1999
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<TABLE>
<CAPTION>
(c) Description of investment
including maturity date, rate of
(a) (b) Identity of issue, borrower, interest, collateral, par or (d) Current
lessor, or similar party maturity value value
<S> <C> <C> <C>
Shares of Registered
* Vanguard Fiduciary Trust Company: Investment Companies:
Vanguard Wellington Fund 6,707 shares $ 187,514
Vanguard Windsor Fund 26,701 shares 405,058
Vanguard Explorer Fund 1,257 shares 86,260
Vanguard Shor-term Corporate Bond Fund 25,605 shares 269,623
Vanguard Index 500 Portfolio Fund 11,387 shares 1,540,957
Vanguard Treasury Money Market
Portfolio Fund 589,116 shares 589,117
Vanguard International Growth
Portfolio Fund 3,034 shares 68,235
Vanguard PRIMECAP Fund 4,426 shares 274,705
Vanguard Total Bond Market Index Fund 1,539 shares 14,713
Wesley-Jessen Stock Fund Shares of common stock, 4,246 shares 220,830
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3,657,012
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** Participant loans Loans other than mortgages,
8.25% - 10% 493,308
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$4,150,320
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</TABLE>
* Recordkeeper ** Party-in-interest
9
