SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C., 20549
FORM 11-K
(Mark One)
[ X ] ANNUAL REPORT PURSUANT TO SECTION 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934 [FEE REQUIRED]
For the fiscal year ended December 31, 1993.
[ ] TRANSITION REPORT PURSUANT TO SECTION 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934 [NO FEE REQUIRED]
For the transition period from ___________ to ____________
Commission File Number 0-2085
BETZ LABORATORIES, INC. EMPLOYEE STOCK OWNERSHIP AND 401K PLAN
(Tile of Plan)
BETZ LABORATORIES, INC.
4636 Somerton Road
Trevose, Pennsylvania, 19053
(Name of Issuer of the Securities Held Pursuant to the Plans
and the Address of its Principal Executive Office)
Pursuant to the requirements of the Securities Exchange Act of
1934, the Registrant has duly caused this annual report to be
signed on its behalf by the undersigned, hereunto duly authorized.
BETZ LABORATORIES, INC.
By:s/William C. Brafford
---------------------
William C. Brafford
Vice President, Secretary
and General Counsel
[PAGE 1]
Financial Statements and Schedules
Betz Laboratories, Inc. Employee Stock
Ownership and 401K Plan
Years ended December 31, 1993 and 1992
with Report of Independent Auditors
[PAGE 2]
Betz Laboratories, Inc. Employee Stock
Ownership and 401K Plan
Financial Statements and Schedules
Years ended December 31, 1993 and 1992
Contents
Report of Independent Auditors..................................... 4
Audited Financial Statements
Statements of Net Assets Available for Plan Benefits............... 5
Statements of Changes in Net Assets Available for Plan Benefits.... 6
Notes to Financial Statements...................................... 7
Schedules
Assets Held for Investment......................................... 16
[PAGE 3]
Report of Independent Auditors
Retirement Committee
Betz Laboratories, Inc. Employee Stock Ownership and 401K Plan
We have audited the accompanying statements of net assets available for
plan benefits of the Betz Laboratories, Inc. Employee Stock Ownership and
401K Plan as of December 31, 1993 and 1992, and the related statements of
changes in net assets available for plan benefits for the years 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 generally accepted auditing
standards. Those standards require that we plan and perform the audit to
obtain reasonable assurance about whether the financial statements are free
of material misstatement. An audit includes examining, on a test basis,
evidence supporting the amounts and disclosures in the financial
statements. An audit also includes assessing the accounting principles
used and significant estimates made by management, as well as evaluating
the overall financial statement presentation. We believe that our audits
provide a reasonable basis for our opinion.
In our opinion, the financial statements referred to above present fairly,
in all material respects, the net assets available for plan benefits of the
Plan at December 31, 1993 and 1992, and the changes in its net assets
available for plan benefits for the years then ended, in conformity with
generally accepted accounting principles.
Our audits were made for the purpose of forming an opinion on the financial
statements taken as a whole. The accompanying supplemental schedule of
assets held for investment as of December 31, 1993 is presented for
purposes of complying with the Department of Labor's Rules and Regulations
for Reporting and Disclosure under the Employee Retirement Income Security
Act of 1974, and is not a required part of the financial statements. The
supplemental schedule has been subjected to the auditing procedures applied
in our audit of the 1993 financial statements and, in our opinion, is fairly
stated in all material respects in relation to the 1993 financial statements
taken as a whole.
May 27, 1994 s/ Ernst & Young
[PAGE 4]
Betz Laboratories, Inc. Employee Stock Ownership and 401K Plan
Statements of Net Assets Available for Plan Benefits
December 31
1993 1992
------------------------------
Assets
Investments:
Series A ESOP convertible preferred stock
of Betz Laboratories, Inc. $130,394,887 $170,576,871
Common stock--Betz Laboratories, Inc. 27,474,063 37,343,717
Putnam Voyager Fund 18,412,994 13,129,883
Putnam U.S. Government Income Trust 5,828,206 4,343,501
Putnam Fund for Growth and Income 16,246,720 10,571,268
Putnam Daily Dividend Trust 5,323,124 3,811,525
Putnam Loan Fund 1,609,943 -
Collective Trust Fund--GIC - 1,952,843
------------ ------------
205,289,937 241,729,608
Contribution receivable from
Betz Laboratories, Inc. 263,947 267,592
Contribution receivable from employees 997,788 1,078,634
Cash 42,232 35,734
------------ ------------
Total assets 206,593,904 243,111,568
Liabilities
Benefits payable - 2,269
Accrued interest payable 263,947 267,592
Loan payable 98,000,000 98,500,000
------------ ------------
Total liabilities 98,263,947 98,769,861
------------ ------------
Net assets available for plan benefits $108,329,957 $144,341,707
============ ============
See accompanying notes.
[PAGE 5]
Betz Laboratories, Inc. Employee Stock Ownership and 401K Plan
Statements of Changes in Net Assets Available for Plan Benefits
Year ended December 31
1993 1992
------------------------------
Additions:
Contributions from employer $ 492,928 $ 583,520
Contributions from employees 10,618,333 7,922,419
Interest and dividend income 11,250,023 11,021,111
Net assets transferred from Betz
Laboratories, Inc. Stock Bonus Profit
Sharing Plan - 3,540,726
------------ -----------
22,361,284 23,067,776
Deductions:
Benefit payments 2,574,986 2,420,992
Interest expense 7,937,253 8,046,767
Administrative expenses 41,090 11,466
------------ ------------
10,553,329 10,479,225
------------ ------------
11,807,955 12,588,551
Net realized and unrealized (depreciation)
appreciation in fair value of investments (47,819,705) 7,662,153
------------ ------------
Net (deductions) additions (36,011,750) 20,250,704
Net assets available for plan benefits
at beginning of year 144,341,707 124,091,003
------------ ------------
Net assets available for plan
benefits at end of year $108,329,957 $144,341,707
============ ============
See accompanying notes.
[PAGE 6]
Betz Laboratories, Inc. Employee Stock Ownership and 401K Plan
Notes to Financial Statements
December 31, 1993
1. Significant Accounting Policies
Valuation of Investments
Series A ESOP Convertible Preferred Stock of Betz Laboratories, Inc. is
stated at aggregate current value as determined by an independent
securities appraisal company. Marketable securities are stated at
aggregate fair value as determined from quoted market prices. Investments
in various mutual funds are stated at aggregate fair value as determined
from quoted market prices. The unallocated insurance contracts, which were
sold in 1993, were valued at cost plus interest earned through the end of
the year. The contracts were part of a collective trust fund and were issued
by Sun Life of America and Continental National Assurance Company. There was
no penalty for early redemption. The change in the difference between
current market values and the cost of investments and realized gains and
losses on sales of investments are reflected in the statement of changes in
net assets available for plan benefits as net realized and unrealized
(depreciation) appreciation in fair value of investments.
2. Description of Plan
The Employee Stock Ownership and 401K Plan (Plan) of Betz Laboratories,
Inc. is a defined contribution plan established on June 19, 1989, which
covers substantially all domestic employees of Betz Laboratories, Inc. (the
"Company") who have attained age 21.
On June 19, 1989, the Plan borrowed $100,000,000 (the "ESOP loan"--Note 4)
and acquired 500,000 shares of a new Series A ESOP Convertible Preferred
Stock issued by the Company (the "Betz Preferred Stock").
Under 401(k) provisions of the Plan, employees can contribute on a pretax
basis amounts up to 15% of salary, the first 4% being matched by the
Company at a rate of 25%. The Company's matching contributions are made in
the form of the Betz Preferred Stock. The Plan was amended in 1992 to
include a participant loan provision which became effective January 1,
1993.
[PAGE 7]
Betz Laboratories, Inc. Employee Stock Ownership and 401K Plan
Notes to Financial Statements (continued)
2. Description of Plan (continued)
After satisfying the 401(k) matching contributions, the remaining allocable
preferred shares are allocated to individual participants' accounts as of
December 31st of each plan year based on the participants' eligible
compensation as a percentage of total eligible compensation. The number of
shares released for allocation in a plan year is equal to the number of
previously unreleased shares multiplied by a fraction. The numerator of
the fraction is the amount of principal and interest paid on the loan for
the Plan year, and the denominator of the fraction is the sum of the
numerator plus the principal and interest to be paid on the loan for all
future plan years during the term of the loan.
The Board of Directors has the right to discontinue the Company's
contributions to the Plan and to terminate or partially terminate the Plan
at any time. In the event of Plan termination or discontinuance of Company
contributions, the rights of the affected participants shall be 100%
vested.
Additional information about the plan agreement, its vesting, distribution,
and forfeiture provisions is contained in Company publications available
from the Plan Administrator.
3. Investments
As of October 28, 1992, all assets were transferred to Putnam Fiduciary Trust
Company. During 1993 and 1992, the Plan's investments (including
investments bought, sold, as well as held during the year) (depreciated)
appreciated as follows:
Net
Appreciation
(Depreciation)
in Fair Value Fair Value at
During Year End of Year
----------------------------------
Year ended December 31, 1993
Series A ESOP convertible preferred stock
of Betz Laboratories, Inc. $(39,811,963) $130,394,887
Common stock--Betz Laboratories, Inc. (10,602,957) 27,474,063
Putnam Voyager Fund 2,053,832 18,412,994
Putnam US Government Income Trust (133,218) 5,828,206
Putnam Fund for Growth and Income 674,601 16,246,720
Putnam Daily Dividend Trust - 5,323,124
Putnam Loan Fund - 1,609,943
------------ ------------
$(47,819,705) $205,289,937
============ ============
[PAGE 8]
Betz Laboratories, Inc. Employee Stock Ownership and 401K Plan
Notes to Financial Statements (continued)
3. Investments (continued)
Net
Appreciation
(Depreciation)
in Fair Value Fair Value at
During Year End of Year
----------------------------------
Year ended December 31, 1992
Series A ESOP convertible preferred stock
of Betz Laboratories, Inc. $ 6,689,783 $170,576,871
U.S. Government securities 24,547 -
Common stock--Betz Laboratories, Inc. 1,376,011 37,343,717
Common stocks (89,145) -
Corporate notes 56,614 -
Collective Trust Fund--GIC - 1,952,843
Putnam Voyager Fund (166,657) 13,129,883
Putnam US Government Income Trust 19,742 4,343,501
Putnam Fund for Growth and Income (248,742) 10,571,268
Putnam Daily Dividend Trust - 3,811,525
------------ ------------
$ 7,662,153 $241,729,608
============ ============
4. ESOP Loan, Company Loan Guarantee and Employer Contributions
The ESOP loan is secured by the unallocated shares of Betz Preferred Stock
and is guaranteed by the Company. The Company is required to make
contributions to the Plan which, together with dividends received on stock
held by the Plan, are sufficient to enable the Plan to service its
indebtedness. Interest was incurred on the loan at 8.08% in 1993 and 8.15%
in 1992. Debt service contributions paid to the ESOP during 1993 and 1992
totaled $8,440,898 and $8,548,125, respectively, including preferred stock
dividends of $7,947,637 and $7,963,601, respectively. An additional
contribution of $263,947 has been accrued by the Plan and is recorded as a
contribution receivable from the Company.
The ESOP loan matures on June 19, 2009 and requires principal payments of
$500,000 in 1994 and $1,000,000 in each of the years 1995 through 1999.
The Company is obligated to maintain, among other things, certain levels of
tangible net worth, interest coverage and not to exceed a maximum funded
debt level.
[PAGE 9]
Betz Laboratories, Inc. Employee Stock Ownership and 401K Plan
Notes to Financial Statements (continued)
5. Transactions with Parties-in-Interest
In accordance with the Plan document, the Company will pay substantially
all administrative expenses reasonably incurred in connection with the
Plan. It is impractical to allocate common expenses of the Company and the
Plan. However, certain employees of the Company are involved in the
operation of the Plan. Trustee's and other expenses directly applicable to
the Plan and paid by the Company amounted to $89,225 and $278,531 in 1993
and 1992, respectively.
6. Income Tax Status
The Internal Revenue Service has ruled (November 30, 1989) that the Plan
qualifies under Section 401(a) of the Internal Revenue Code (IRC) and is,
therefore, not subject to tax under present income tax law. Once
qualified, the Plan is required to operate in conformity with the IRC to
maintain its qualification. The Retirement Committee is not aware of any
course of action or series of events that have occurred that might
adversely affect the Plan's qualified status.
[PAGE 10]
Betz Laboratories, Inc. Employee Stock Ownership and 401K Plan
Notes to Financial Statements
7. Investment Programs
The amount of net assets at December 31, 1993 and 1992, and the
changes in net assets for the years then ended, were
allocated to the separate investment programs as follows:
<TABLE>
<CAPTION>
Putnam Putnam
Putnam U.S. Putnam Fund Daily Putnam
Voyager Government for Growth Dividend Loan
1993 ESOP Fund Stock Fund Fund Income Trust and Income Trust Fund Total
- -----------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Assets
Investments:
ESOP preferred
stock--Betz
Laboratories,
Inc. $130,394,887 $ - $ - $ - $ - $ - $ - $130,394,887
Common stock
of Betz
Laboratories,
Inc. 27,474,063 27,474,063
Putnam Voyager
Fund 18,412,994 18,412,994
Putnam U.S.
Government
Income Trust 5,828,206 5,828,206
Putnam Fund
for Growth
and Income 16,246,720 16,246,720
Putnam Daily
Dividend Trust 5,323,124 5,323,124
Putnam Loan Fund 1,609,943 1,609,943
Contribution
receivable 263,947 294,014 336,920 71,983 244,320 50,551 1,261,735
Cash 24,536 17,696 42,232
---------------------------------------------------------------------------------------------------------------
Total assets 130,683,370 27,785,773 18,749,914 5,900,189 16,491,040 5,373,675 1,609,943 206,593,904
Liabilities
Accrued interest
payable 263,947 263,947
Loan payable 98,000,000 98,000,000
----------------------------------------------------------------------------------------------------------------
Net assets $ 32,419,423 $27,785,773 $18,749,914 $ 5,900,189 $16,491,040 $5,373,675 $1,609,943 $108,329,957
================================================================================================================
</TABLE>
[PAGE 11]
Betz Laboratories, Inc. Employee Stock Ownership and 401K Plan
Notes to Financial Statements (continued)
7. Investment Programs (continued)
<TABLE>
<CAPTION>
Putnam
Putnam U.S. Putnam Fund Putnam
Voyager Government for Growth Daily
1992 ESOP Fund Stock Fund GIC Fund Fund Income Trust and Income Dividend Trust Total
- ------------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Assets
Investments:
ESOP preferred
stock--Betz
Laboratories,
Inc. $170,576,871 $ - $ - $ - $ - $ - $ - $170,576,871
Common stock
of Betz
Laboratories,
Inc. 37,343,717 37,343,717
Putnam Voyager
Fund 13,129,883 13,129,883
Putnam U.S.
Government
Income Trust 4,343,501 4,343,501
Putnam Fund for
Growth and
Income 10,571,268 10,571,268
Putnam Daily
Dividend Trust 3,811,525 3,811,525
Collective Trust
Fund--GIC 1,952,843 1,952,843
Contribution
receivable 267,592 335,839 349,492 86,798 247,068 59,437 1,346,226
Cash 22,751 12,983 35,734
---------------------------------------------------------------------------------------------------------------
Total assets 170,867,214 37,692,539 1,952,843 13,479,375 4,430,299 10,818,336 3,870,962 243,111,568
Liabilities
Benefit payable 2,269 2,269
Accrued interest
payable 267,592 267,592
Loan payable 98,500,000 98,500,000
----------------------------------------------------------------------------------------------------------------
Net assets $ 72,099,622 $37,692,539 $1,952,843 $13,479,375 $4,430,299 $10,818,336 $3,868,693 $144,341,707
================================================================================================================
</TABLE>
[PAGE 12]
Betz Laboratories, Inc. Employee Stock Ownership and 401K Plan
Notes to Financial Statements (continued)
7. Investment Programs (continued)
<TABLE>
<CAPTION>
Putnam
U.S. Putnam Putnam
Putnam Government Fund for Daily Putnam
ESOP Stock GIC Voyager Income Growth and Dividend Loan
Fund Fund Fund Fund Trust Income Trust Fund Total
- -----------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>
Net assets at
December
31, 1992 $72,099,622 $37,692,539 $1,952,843 $13,479,375 $4,430,299 $10,818,336 $3,868,693 $ - $144,341,707
Contribu-
tions from
employer 492,928 492,928
Contri-
butions from
employees 3,077,352 (10,007) 3,518,338 867,179 2,582,760 582,711 10,618,333
Loan repay-
ments from
employees 105,854 98,518 30,725 82,724 21,346 (339,167) -
Investment
income 7,949,421 833,774 38,734 674,884 420,842 1,142,671 128,444 61,253 11,250,023
Loans issued (664,436) (53,620) (512,736) (137,930) (412,208) (138,994) 1,919,924 -
Benefit
payments (373,332) (760,944) (435) (294,902) (169,340) (328,484) (615,482) (32,067) (2,574,986)
Interest
expense (7,937,253) (7,937,253)
Administrative
expenses (12,994) (246) (12,190) (3,163) (9,284) (3,213) (41,090)
Net realized
and unreal-
ized appreci-
ation (depre-
ciation) in
fair value of
investments (39,811,963) (10,602,957) 2,053,832 (133,218) 674,601 (47,819,705)
Interfund
transfers (1,882,415) (1,927,269) (255,205) 594,795 1,939,924 1,530,170 -
------------------------------------------------------------------------------------------------------------------
Net assets at
December
31, 1993 $32,419,423 $27,785,773 $ 0 $18,749,914 $5,900,189 $16,491,040 $5,373,675 $1,609,943 $108,329,957
==================================================================================================================
<FN>
There were 3,220 active participants in the Plan at December 31, 1993.
</TABLE>
[PAGE 13]
Betz Laboratories, Inc. Employee Stock Ownership and 401K Plan
Notes to Financial Statements (continued)
7. Investment Programs (continued)
<TABLE>
<CAPTION>
Fixed
ESOP Stock Income Balanced Equity GIC Sub-Total
Fund Fund Fund Fund Fund Fund Page 14
- ----------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C>
Net assets at
December 31, 1991 $65,331,358 $30,901,761 $5,460,520 $8,036,774 $6,644,658 $7,715,932 $124,091,003
Net assets transferred
from Stock Bonus
Profit Sharing Plan 3,540,726 3,540,726
Contributions from
employer 583,520 583,520
Contributions from
employees 2,588,263 617,235 936,918 1,025,517 604,459 5,772,392
Investment income 7,969,821 722,806 313,571 353,264 165,285 410,680 9,935,427
Benefit payments (421,493) (1,014,092) (277,525) (261,454) (95,844) (295,649) (2,366,057)
Interest expense (8,046,767) (8,046,767)
Administrative
expenses (165) (3,117) (1,326) (493) (714) (233) (6,048)
Net realized and
unrealized
appreciation
(depreciation)
in fair value of
investments 6,689,783 1,376,011 (34,372) 108,944 (82,556) 8,057,810
Interfund transfers (6,435) (419,819) (6,078,103) (9,173,953) (7,656,346) (6,482,346) (29,817,002)
-----------------------------------------------------------------------------------------------------
Net assets at
December 31, 1992 $72,099,622 $37,692,539 $0 $0 $0 $1,952,843 $111,745,004
=====================================================================================================
</TABLE>
[PAGE 14]
Betz Laboratories, Inc. Employee Stock Ownership and 401K Plan
Notes to Financial Statements (continued)
7. Investment Programs (continued)
<TABLE>
<CAPTION>
Putnam
U.S. Putnam Putnam
Putnam Goverment Fund for Daily
Sub-Total Voyager Income Growth & Dividend Sub-Total
Page 14 Fund Trust Income Trust Page 15 Total
- ----------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C>
Net assets at
December 31, 1991 $124,091,003 $ - $ - $ - $ - $ - $124,091,003
Net assets transferred
from Stock Bonus
Profit Sharing Plan 3,540,726 - 3,540,726
Contributions from
employer 583,520 - 583,520
Contributions from
employees 5,772,392 993,753 248,274 709,784 198,216 2,150,027 7,922,419
Investment income 9,935,427 619,720 28,184 429,179 8,601 1,085,684 11,021,111
Benefit payments (2,366,057) (9,179) (673) (23,748) (21,335) (54,935) (2,420,992)
Interest expense (8,046,767) - (8,046,767)
Administrative
expenses (6,048) (2,417) (650) (1,755) (596) (5,418) (11,466)
Net realized and
unrealized
appreciation
(depreciation)
in fair value of
investments 8,057,810 (166,657) 19,742 (248,742) (395,657) 7,662,153
Interfund transfers (29,817,002) 12,044,155 4,135,422 9,953,618 3,683,807 29,817,002 -
-------------------------------------------------------------------------------------------------------
Net assets at
December 31, 1992 $111,745,004 $13,479,375 $4,430,299 $10,818,336 $3,868,693 $32,596,703 $144,341,707
=======================================================================================================
</TABLE>
[PAGE 15]
Betz Laboratories, Inc. Employee Stock Ownership and 401K Plan
Assets Held for Investment
December 31, 1993
<TABLE>
<CAPTION>
Description of Investment
Including Maturity Date,
Identity of Issue, Borrower, or Rate of Interest, Par, or
Similar Party Maturity Value Cost Market
- -------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
Preferred Stock:
Betz Laboratories, Inc. Series
A ESOP Convertible
Preferred Stock* 496,005 shares $ 99,201,000 $130,394,887
Common Stock:
Betz Laboratories, Inc.* 626,189 shares 19,552,238 27,474,063
Mutual Funds:
Putnam* Fund for
Growth and Income 1,194,611 units 15,861,087 16,246,720
Putnam* Voyager Fund 1,535,695 units 16,553,836 18,412,994
Putnam* Daily Dividend
Trust 5,323,124 units 5,323,124 5,323,124
Putnam* U.S. Government
Income Trust 433,323 units 5,937,195 5,828,206
Putnam* Loan Fund 1,609,943 1,609,943
----------------------------
Total Mutual Funds 45,285,185 47,420,987
----------------------------
Total assets held for investment $164,038,423 $205,289,937
============================
<FN>
*Indicates party-in-interest to the Plan.
</TABLE>
[PAGE 16]
Consent of Independent Auditors
We consent to the incorporation by reference in the Registration Statement
(Form S-8 No. 33-40175) pertaining to the Betz Laboratories, Inc. Employee
Stock Ownership and 401K Plan and in the related Prospectus of our report
dated May 27, 1994, with respect to the financial statements and schedules
of the Betz Laboratories, Inc. Employee Stock Ownership and 401K Plan
included in this Annual Report (Form 11-K) for the year ended December 31,
1993.
Philadelphia, Pennsylvania s/ Ernst & Young
June 21, 1994
