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, 1994.
[ ] 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 401(k) PLAN
(Full Title 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 Schedule
Betz Laboratories, Inc. Employee Stock
Ownership and 401(k) Plan
Years ended December 31, 1994 and 1993
with Report of Independent Auditors
[PAGE 2]
Betz Laboratories, Inc. Employee Stock
Ownership and 401(k) Plan
Financial Statements and Schedule
Years ended December 31, 1994 and 1993
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
Schedule
Assets Held for Investment Purposes..................................... 15
[PAGE 3]
Report of Independent Auditors
Retirement Committee
Betz Laboratories, Inc. Employee Stock Ownership and 401(k) Plan
We have audited the accompanying statements of net assets available for
plan benefits of the Betz Laboratories, Inc. Employee Stock Ownership and
401(k) Plan as of December 31, 1994 and 1993, 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, 1994 and 1993, 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 performed for the purpose of forming an opinion on the
financial statements taken as a whole. The accompanying supplemental
schedule of assets held for investment purposes as of December 31, 1994 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 1994 financial statements and, in
our opinion, is fairly stated in all material respects in relation to the
1994 financial statements taken as a whole.
Ernst & Young LLP
June 1, 1995
[PAGE 4]
Betz Laboratories, Inc. Employee Stock Ownership and 401(k) Plan
Statements of Net Assets Available for Plan Benefits
December 31
1994 1993
-------------------------------
Assets
Investments:
Series A ESOP convertible preferred stock
of Betz Laboratories, Inc. $129,917,322 $130,394,887
Common stock--Betz Laboratories, Inc. 28,574,344 27,474,063
Putnam Voyager Fund 20,590,262 18,412,994
Putnam Fund for Growth and Income 17,053,101 16,246,720
Putnam Money Market Fund 6,293,401 5,323,124
Putnam U.S. Government Income Trust 4,959,641 5,828,206
Putnam Loan Fund 2,140,901 1,609,943
Putnam Global Growth Fund 1,736,101 -
------------ ------------
211,265,073 205,289,937
Contribution receivable 1,388,059 1,261,735
Cash 50,011 42,232
------------ ------------
Total assets 212,703,143 206,593,904
Liabilities
Accrued interest payable 262,600 263,947
Loan payable 97,500,000 98,000,000
------------ ------------
Total liabilities 97,762,600 98,263,947
------------ ------------
Net assets available for plan benefits $114,940,543 $108,329,957
============ ============
See accompanying notes.
[PAGE 5]
Betz Laboratories, Inc. Employee Stock Ownership and 401(k) Plan
Statements of Changes in Net Assets Available for Plan Benefits
Year ended December 31
1994 1993
--------------------------------
Additions:
Contributions from employer $ 491,664 $ 492,928
Contributions from employees 10,210,955 10,618,333
Interest and dividend income 11,549,362 11,250,023
------------ -------------
22,251,981 22,361,284
Deductions:
Benefit payments 6,067,972 2,574,986
Interest expense 7,896,853 7,937,253
Administrative expenses 40,535 41,090
------------ -------------
14,005,360 10,553,329
------------ -------------
8,246,621 11,807,955
Net realized and unrealized (depreciation)
in fair value of investments (1,636,035) (47,819,705)
------------ -------------
Net additions (deductions) 6,610,586 (36,011,750)
Net assets available for plan benefits
at beginning of year 108,329,957 144,341,707
------------ -------------
Net assets available for plan benefits
at end of year $114,940,543 $108,329,957
============ =============
See accompanying notes.
[PAGE 6]
Betz Laboratories, Inc. Employee Stock Ownership and 401(k) Plan
Notes to Financial Statements
December 31, 1994
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) in fair value of investments.
2. Description of Plan
The Betz Laboratories, Inc. Employee Stock Ownership and 401(k) Plan ("Plan")
is a defined contribution plan, 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.
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
[PAGE 7]
Betz Laboratories, Inc. Employee Stock Ownership and 401(k) Plan
Notes to Financial Statements (continued)
2. Description of Plan (continued)
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
During 1994 and 1993, 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, 1994
Series A ESOP convertible preferred stock
of Betz Laboratories, Inc. $ 599,510 $129,917,322
Common stock--Betz Laboratories, Inc. 221,134 28,574,344
Putnam Voyager Fund (761,878) 20,590,262
Putnam Fund for Growth and Income (1,099,306) 17,053,101
Putnam Money Market Fund - 6,293,401
Putnam U.S. Government Income Trust (525,536) 4,959,641
Putnam Loan Fund - 2,140,901
Putnam Global Growth Fund (69,959) 1,736,101
------------ ------------
$ (1,636,035) $211,265,073
============ ============
[PAGE 8]
Betz Laboratories, Inc. Employee Stock Ownership and 401(k) 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, 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 Fund for Growth and Income 674,601 16,246,720
Putnam Money Market Fund - 5,323,124
Putnam U.S. Government Income Trust (133,218) 5,828,206
Putnam Loan Fund - 1,609,943
------------ ------------
$(47,819,705) $205,289,937
============ ============
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. At December 31, 1994, the Plan held
397,116 unallocated shares of Betz Preferred Stock with a market value of
$104,826,711. 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 1994 and 1993. Debt service contributions
paid to the ESOP during 1994 and 1993 totaled $8,398,200 and $8,440,898,
respectively, including preferred stock dividends of $7,905,245 and
$7,947,637, respectively. An additional contribution of $262,600 has been
accrued by the Plan and is included in the contribution receivable recorded
at December 31, 1994.
The ESOP loan matures on June 19, 2009 and requires principal payments of
$1,000,000 in each of the years 1995 through 1999 and $1,500,000 in 2000.
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 401(k) 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 $90,259 and $89,225 in 1994
and 1993, 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 401(k) Plan
Notes to Financial Statements (continued)
7. Investment Programs
The amount of net assets at December 31, 1994 and 1993, 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
Putnam Fund for Money Government Putnam Global
ESOP Stock Voyager Growth Market Income Loan Growth
1994 Fund Fund Fund and Income Fund Trust Fund Fund Total
- -----------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>
Assets
Investments:
ESOP preferred
stock--
Betz Labora-
tories, Inc. $129,917,322 $ - $ - $ - $ - $ - $ - $ - $129,917,322
Common stock of
Betz Labora-
tories, Inc. 28,574,344 28,574,344
Putnam Voyager
Fund 20,590,262 20,590,262
Putnam Fund
for Growth
and Income 17,053,101 17,053,101
Putnam Money
Market Fund 6,293,401 6,293,401
Putnam U.S.
Government
Income Trust 4,959,641 4,959,641
Putnam Loan
Fund 2,140,901 2,140,901
Putnam Global
Growth Fund 1,736,101 1,736,101
Contribution
receivable 262,600 290,865 388,780 266,026 71,873 69,726 38,189 1,388,059
Cash 27,351 22,660 50,011
----------- ----------- ----------- ----------- ---------- ---------- ---------- ---------- ------------
Total assets 130,207,273 28,887,869 20,979,042 17,319,127 6,365,274 5,029,367 2,140,901 1,774,290 212,703,143
Liabilities
Accrued interest
payable 262,600 262,600
Loan payable 97,500,000 97,500,000
----------- ----------- ----------- ----------- ---------- ---------- ---------- ---------- ------------
Net assets $32,444,673 $28,887,869 $20,979,042 $17,319,127 $6,365,274 $5,029,367 $2,140,901 $1,774,290 $114,940,543
=========== =========== =========== =========== ========== ========== ========== ========== ============
</TABLE>
[PAGE 11]
Betz Laboratories, Inc. Employee Stock Ownership and 401(k) Plan
Notes to Financial Statements (continued)
7. Investment Programs (continued)
<TABLE>
<CAPTION>
Putnam
Putnam U.S.
Putnam Putnam Fund Money Government Putnam
ESOP Stock Voyager for Growth Market Income Loan
1993 Fund Fund Fund and Income Fund 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 Fund for
Growth and Income 16,246,720 16,246,720
Putnam Money
Market Fund 5,323,124 5,323,124
Putnam U.S. Government
Income Trust 5,828,206 5,828,206
Putnam Loan Fund 1,609,943 1,609,943
Contribution receivable 263,947 294,014 336,920 244,320 50,551 71,983 1,261,735
Cash 24,536 17,696 42,232
----------- ---------- ---------- ---------- --------- --------- --------- ------------
Total assets 130,683,370 27,785,773 18,749,914 16,491,040 5,373,675 5,900,189 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 $16,491,040 $5,373,675 $5,900,189 $1,609,943 $108,329,957
=========== =========== =========== =========== ========== ========== ========== ============
</TABLE>
[PAGE 12]
Betz Laboratories, Inc. Employee Stock Ownership and 401(k) Plan
Notes to Financial Statements (continued)
7. Investment Programs (continued)
<TABLE>
<CAPTION>
Putnam
U.S. Putnam
Putnam Putnam Fund Putnam Government Putnam Global
Voyager for Growth Money Income Loan Growth
ESOP Fund Stock Fund Fund and Income Market Fund Trust Fund Fund Total
- -----------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>
Net assets at
December 31, 1993 $32,419,423 $27,785,773 $18,749,914 $16,491,040 $5,373,675 $5,900,189 $1,609,943 $ - $108,329,957
Add: Contributions
from employer 491,664 491,664
Contributions
from employees 2,731,053 3,542,602 2,517,962 554,771 687,422 177,145 10,210,955
Loan repayments
from employees 280,998 235,307 190,559 44,884 59,339 (824,866) 13,779 -
Investment income 7,907,931 918,875 871,675 1,050,810 222,669 382,499 138,163 56,740 11,549,362
Loans issued (489,297) (369,087) (233,920) (152,673) (55,802) 1,308,092 (7,313) -
Benefit payments (1,077,002) (1,057,132) (966,925) (1,197,233) (1,166,826) (483,915) (90,431) (28,508) (6,067,972)
Interest expense (7,896,853) (7,896,853)
Administrative
expenses (12,178) (12,625) (9,315) (3,452) (2,719) (246) (40,535)
Net realized
and unrealized
(depreciation)
appreciation
in fair value
of investments 599,510 221,134 (761,878) (1,099,306) (525,536) (69,959) (1,636,035)
Interfund
transfers (1,491,357) (309,941) (391,470) 1,492,226 (932,110) 1,632,652 -
----------- ----------- ----------- ----------- ---------- ---------- ---------- ---------- ------------
Net assets at
December 31, 1994 $32,444,673 $28,887,869 $20,979,042 $17,319,127 $6,365,274 $5,029,367 $2,140,901 $1,774,290 $114,940,543
=========== =========== =========== =========== ========== ========== ========== ========== ============
<FN>
There were 3,157 active participants in the Plan at December 31, 1994
</TABLE>
[PAGE 13]
Betz Laboratories, Inc. Employee Stock Ownership and 401(k) Plan
Notes to Financial Statements (continued)
7. Investment Programs (continued)
<TABLE>
<CAPTION>
Putnam
Putnam Putnam U.S.
Putnam Fund for Money Government Putnam
ESOP Stock Voyager Growth and Market Income Loan GIC
Fund Fund Fund Income Fund Trust Fund Fund Total
- ------------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>
Net assets at
January 1, 1993 $72,099,622 $37,692,539 $13,479,375 $10,818,336 $3,868,693 $4,430,299 $ - $1,952,843 $144,341,707
Contributions
from employer 492,928 492,928
Contributions
from employees 3,077,352 3,518,338 2,582,760 582,711 867,179 (10,007) 10,618,333
Loan repayments
from employees 105,854 98,518 82,724 21,346 30,725 (339,167) -
Investment income 7,949,421 833,774 674,884 1,142,671 128,444 420,842 61,253 38,734 11,250,023
Loans issued (664,436) (512,736) (412,208) (138,994) (137,930) 1,919,924 (53,620) -
Benefit payments (373,332) (760,944) (294,902) (328,484) (615,482) (169,340) (32,067) (435) (2,574,986)
Interest expense (7,937,253) (7,937,253)
Administrative
expenses (12,994) (12,190) (9,284) (3,213) (3,163) (246) (41,090)
Net realized
and unrealized
appreciation
(depreciation)
in fair value
of investments (39,811,963) (10,602,957) 2,053,832 674,601 (133,218) (47,819,705)
Interfund
transfers (1,882,415) (255,205) 1,939,924 1,530,170 594,795 (1,927,269) -
----------- ----------- ----------- ----------- ---------- ---------- ---------- ---------- ------------
Net assets at
December 31, 1993 $32,419,423 $27,785,773 $18,749,914 $16,491,040 $5,373,675 $5,900,189 $1,609,943 $ - $108,329,957
=========== =========== =========== =========== ========== ========== ========== ========== ============
</TABLE>
[PAGE 14]
Betz Laboratories, Inc. Employee Stock Ownership and 401(k) Plan
Assets Held for Investment Purposes
December 31, 1994
<TABLE>
<CAPTION>
Description of Investment
Identity of Including Maturity Date,
Issue, Borrower, Rate of Interest, Par, or
or Similar Party Maturity Value Cost Market
- --------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
Preferred stock:
Betz Laboratories, Inc.*
Series A ESOP convertible
preferred stock 492,166 shares $98,433,200 $129,917,322
Common stock:
Betz Laboratories, Inc.* 645,747 shares 21,234,620 28,574,344
Mutual funds:
Putnam* Voyager Fund 1,787,349 units 19,670,120 20,590,262
Putnam* Fund for Growth &
Income 1,340,652 units 17,806,695 17,053,101
Putnam* Money Market Fund 6,293,303 units 6,293,401 6,293,401
Putnam* U.S. Government
Income Trust 406,861 units 5,475,380 4,959,641
Putnam* Loan Fund Participant loans at
8% interest 2,140,901 2,140,901
Putnam* Global Growth Fund 188,297 units
1,805,033 1,736,101
------------ ------------
Total mutual funds 53,191,530 52,773,407
------------ ------------
Total assets held for investment
purposes $172,859,350 $211,265,073
============ ============
<FN>
*Indicates party-in-interest to the Plan.
</TABLE>
[PAGE 15]
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 401(k) Plan and in the related Prospectus of our report
dated June 1, 1995, with respect to the financial statements and schedule
of the Betz Laboratories, Inc. Employee Stock Ownership and 401(k) Plan
included in this Annual Report (Form 11-K) for the year ended
December 31, 1994.
Ernst & Young LLP
Philadelphia, Pennsylvania
June 21, 1995
