SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
--------------------------
FORM 10-K/A #2
AMENDMENT TO
ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE
ACT OF 1934
For the fiscal year ended: September 30, 1997 Commission File Number: 1-8147
------------------ ------
MEDIQ Incorporated
------------------------------------------------------
(Exact name of registrant as specified in its charter)
Delaware 51-0219413
------------------------------- -------------------
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
One MEDIQ Plaza, Pennsauken, New Jersey 08110
---------------------------------------- ----------
(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code: (609) 662-3200
--------------
PORTIONS AMENDED
The registrant hereby amends the following items, financial statements,
exhibits or other portions of its Annual Report on Form 10-K for the year ended
September 30, 1997 as set forth in the pages attached hereto.
Item 14. EXHIBITS, FINANCIAL STATEMENT SCHEDULES AND REPORTS ON FORM 8-K
Index to Exhibits
Exhibit 24.1 - Consents of experts and counsel
Exhibit 99 - MEDIQ Incorporated Employees' Savings Plan -
Annual Report for fiscal year ended September 30, 1997
<PAGE>
SIGNATURES
The Registrant. Pursuant to the requirements of the Securities Exchange
Act of 1934, the Registrant has duly caused this Amendment to be signed on
its behalf by the undersigned, thereunto duly authorized.
MEDIQ Incorporated
------------------
(Registrant)
Date: March 27, 1998 By: /s/ Jay M. Kaplan
-------------- ---------------------------------------
Jay M. Kaplan
Senior Vice President - Finance and
Chief Financial Officer
The Plan. Pursuant to the requirements of the Securities Exchange Act of
1934, the trustees have duly caused the annual report included in this
filing to be signed on their behalf by the undersigned, hereunto duly
authorized.
MEDIQ Incorporated
Employees' Savings Plan
(Plan)
Date: March 27, 1998 By: /s/ Jay M. Kaplan
---------------------------------------
Jay M. Kaplan
Senior Vice President - Finance and
Chief Financial Officer, MEDIQ
Incorporated, Administrator of the
Plan
2
<PAGE>
Exhibit 24.1
INDEPENDENT AUDITORS' CONSENT
We consent to the incorporation by reference in Amendment No. 1 to Registration
Statement No. 33-16802 of MEDIQ Incorporated on Form S-8 of our report on MEDIQ
Incorporated Employees' Savings Plan dated March 20, 1998, appearing in Form
10-K/A #2 to the Annual Report on Form 10-K of MEDIQ Incorporated for the year
ended September 30, 1997.
Philadelphia, Pennsylvania
March 27, 1998
Page 3
Exhibit 99
Annual Report for Fiscal Year
Ended September 30, 1997
MEDIQ Incorporated Employees' Savings Plan
------------------------------------------
(Full Title of the Plan)
One MEDIQ Plaza, Pennsauken, New Jersey 08110
---------------------------------------------
(Address of the Plan)
MEDIQ Incorporated, One MEDIQ Plaza, Pennsauken, New Jersey 08110
-----------------------------------------------------------------
(Issuer and address of principal executive office)
Page 4
<PAGE>
Independent Auditors' Report
To the Trustees of
MEDIQ Incorporated Employees' Savings Plan
Pennsauken, New Jersey
We have audited the accompanying statements of net assets available for Plan
benefits of the MEDIQ Incorporated Employees' Savings Plan as of September 30,
1997 and 1996, and the related statements of changes in net assets available for
Plan benefits for each of the three years in the period ended September 30,
1997. These financial statements are the responsibility of the Plan's
administrators. 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, such financial statements present fairly, in all material
respects, the net assets available for Plan benefits of the MEDIQ Incorporated
Employees' Savings Plan as of September 30, 1997 and 1996, and the related
statements of changes in net assets available for Plan benefits for each of the
three years in the period ended September 30, 1997 in conformity with generally
accepted accounting principles.
The Schedule of Assets Held for Investment Purposes that accompanies the Plan's
financial statements does not disclose true historical cost information for
three of the Plan's fund options. The cost basis for these three funds were
restated on January 1, 1997 based on market value at that date, when the
respective funds were transferred to participants individual accounts.
Disclosure of this historical cost information is required by the Department of
Labor's Rules and Regulations for Reporting and Disclosure under the Employee
Retirement Income Security Act of 1974.
Our audits were conducted for the purpose of forming an opinion on the basic
financial statements taken as a whole. The supplemental schedules of: (1) assets
held for investment purposes as of September 30, 1997, and (2) reportable
transactions for the year then ended, are presented for the purpose of
additional analysis and are not a required part of the basic financial
statements, but are 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. The supplemental fund information is
presented for the purpose of additional analysis of the basic financial
statements rather than to present the net assets available for benefits and
changes in net assets available for benefits of the individual funds and is not
a required part of the basic financial statements. The supplemental schedules
and supplemental fund information are the responsibility of the Plan's
administrators. The supplemental schedules and supplemental fund information
have been subjected to the auditing procedures applied in the audits of the
basic financial statements and, in our opinion, except for the omission of the
historical cost information discussed in the preceding paragraph, are fairly
stated in all material respects in relation to the basic financial statements
taken as a whole.
Philadelphia, Pennsylvania
March 20, 1998
Page 5
<PAGE>
MEDIQ INCORPORATED EMPLOYEES' SAVINGS PLAN
STATEMENT OF NET ASSETS AVAILABLE FOR PLAN BENEFITS
SEPTEMBER 30, 1997
<TABLE>
<CAPTION>
SUPPLEMENTAL INFORMATION
---------------------------------------------------------------
FIXED
SAVINGS EQUITY BALANCED INCOME INDEX
FUND FUND FUND FUND FUND
---------- ---------- ---------- -------- --------
<S> <C> <C> <C> <C> <C>
ASSETS:
CASH
INVESTMENTS - AT FAIR VALUE $1,216,455 $6,733,471 $2,694,011 $323,345 $282,739
EMPLOYEE CONTRIBUTIONS RECEIVABLE 2,855 17,292 8,190 1,335 4,221
EMPLOYER CONTRIBUTIONS RECEIVABLE
LOANS RECEIVABLE
---------- ---------- ---------- -------- --------
NET ASSETS AVAILABLE FOR PLAN BENEFITS $1,219,310 $6,750,763 $2,702,201 $324,680 $286,960
========== ========== ========== ======== ========
<CAPTION>
SUPPLEMENTAL INFORMATION
---------------------------------------------------
INTERNA-
TIONAL STOCK LOAN
FUND FUND FUND TOTAL
-------- ---------- -------- -----------
<S> <C> <C> <C> <C>
ASSETS:
CASH $ 21,260 $ 21,260
INVESTMENTS - AT FAIR VALUE $84,885 4,516,299 15,851,205
EMPLOYEE CONTRIBUTIONS RECEIVABLE 1,522 2,699 38,114
EMPLOYER CONTRIBUTIONS RECEIVABLE 8,710 8,710
LOANS RECEIVABLE $290,461 290,461
------- ---------- -------- -----------
NET ASSETS AVAILABLE FOR PLAN BENEFITS $86,407 $4,548,968 $290,461 $16,209,750
======= ========== ======== ===========
</TABLE>
SEE NOTES TO FINANCIAL STATEMENTS
Page 6
<PAGE>
MEDIQ INCORPORATED EMPLOYEES' SAVINGS PLAN
STATEMENT OF NET ASSETS AVAILABLE FOR PLAN BENEFITS
SEPTEMBER 30, 1996
<TABLE>
<CAPTION>
SUPPLEMENTAL INFORMATION
-----------------------------------------------------------------------------
FIXED
SAVINGS EQUITY BALANCED INCOME STOCK LOAN
FUND FUND FUND FUND FUND FUND TOTAL
---------- ---------- ---------- -------- --------- -------- -----------
<S> <C> <C> <C> <C> <C> <C> <C>
ASSETS:
CASH $ 169 $ 169
INVESTMENTS - AT FAIR VALUE $1,313,068 $5,832,917 $2,337,730 $361,742 3,441,128 13,286,585
EMPLOYEE CONTRIBUTIONS RECEIVABLE 5,597 21,411 12,287 980 5,925 46,200
EMPLOYER CONTRIBUTIONS RECEIVABLE 19,063 19,063
LOANS RECEIVABLE $277,724 277,724
RECEIVABLE (PAYABLE) FROM OTHER FUNDS (139) 7 6,221 55 (6,144) 0
---------- ---------- ---------- -------- ---------- -------- -----------
NET ASSETS AVAILABLE FOR PLAN
BENEFIT $1,318,526 $5,854,335 $2,356,238 $362,777 $3,460,141 $277,724 $13,629,741
========== ========== ========== ======== ========== ======== ===========
</TABLE>
SEE NOTES TO FINANCIAL STATEMENTS
Page 7
<PAGE>
MEDIQ INCORPORATED EMPLOYEES' SAVINGS PLAN
STATEMENT OF CHANGES IN NET ASSETS AVAILABLE FOR PLAN BENEFITS
YEAR ENDED SEPTEMBER 30, 1997
<TABLE>
<CAPTION>
SUPPLEMENTAL INFORMATION
---------------------------------------------------------------
FIXED
SAVINGS EQUITY BALANCED INCOME INDEX
FUND FUND FUND FUND FUND
---------- ---------- ---------- -------- --------
<S> <C> <C> <C> <C> <C>
NET ASSETS AVAILABLE FOR PLAN
BENEFITS, OCTOBER 1, 1996 $1,318,526 $5,854,335 $2,356,238 $362,777 $ 0
ADDITIONS:
CONTRIBUTIONS:
EMPLOYEE CONTRIBUTIONS 108,673 583,571 306,569 46,895 55,597
EMPLOYEE ROLLOVER PAYMENTS 12,617 40,227 22,932 233 21,489
EMPLOYER CONTRIBUTIONS
EMPLOYEE LOAN PAYMENTS 26,518 104,762 34,923 6,251 8,383
INVESTMENT INCOME 66,710 275 1,582 24,290
NET APPRECIATION/(DEPRECIATION)
IN FAIR VALUE OF INVESTMENTS 2,134,547 614,181 8,835 15,592
INVESTMENT ELECTION TRANSFERS 13,500 198,199
---------- ---------- ---------- -------- --------
TOTAL ADDITIONS 228,018 2,863,382 980,187 86,504 299,260
DEDUCTIONS:
BENEFIT PAYMENTS 274,698 1,668,331 447,057 68,910 845
EMPLOYEE LOANS
INVESTMENT ELECTION TRANSFERS 52,536 298,623 187,167 55,691 11,455
---------- ---------- ---------- -------- --------
TOTAL DEDUCTIONS 327,234 1,966,954 634,224 124,601 12,300
---------- ---------- ---------- -------- --------
NET ADDITIONS (DEDUCTIONS) (99,216) 896,428 345,963 (38,097) 286,960
---------- ---------- ---------- -------- --------
NET ASSETS AVAILABLE FOR PLAN
BENEFITS, SEPTEMBER 30, 1997 $1,219,310 $6,750,763 $2,702,201 $324,680 $286,960
========== ========== ========== ======== ========
<CAPTION>
SUPPLEMENTAL INFORMATION
---------------------------------------------------
INTERNA-
TIONAL STOCK LOAN
FUND FUND FUND TOTAL
-------- ---------- -------- -----------
<S> <C> <C> <C> <C>
NET ASSETS AVAILABLE FOR PLAN
BENEFITS, OCTOBER 1, 1996 $ 0 $3,460,141 $277,724 $13,629,741
ADDITIONS:
CONTRIBUTIONS:
EMPLOYEE CONTRIBUTIONS 21,801 91,592 1,214,698
EMPLOYEE ROLLOVER PAYMENTS 2,540 30,737 130,775
EMPLOYER CONTRIBUTIONS 277,660 277,660
EMPLOYEE LOAN PAYMENTS 1,369 20,272 202,478
INVESTMENT INCOME 53 92,910
NET APPRECIATION/(DEPRECIATION)
IN FAIR VALUE OF INVESTMENTS 898 1,438,239 4,212,292
INVESTMENT ELECTION TRANSFERS 61,178 93,465 277,759 644,101
-------- ---------- -------- -----------
TOTAL ADDITIONS 87,786 1,952,018 277,759 6,774,914
DEDUCTIONS:
BENEFIT PAYMENTS 183 825,758 87,843 3,373,625
EMPLOYEE LOANS 177,179 177,179
INVESTMENT ELECTION TRANSFERS 1,196 37,433 644,101
-------- ---------- -------- -----------
TOTAL DEDUCTIONS 1,379 863,191 265,022 4,194,905
-------- ---------- -------- -----------
NET ADDITIONS (DEDUCTIONS) 86,407 1,088,827 12,737 2,580,009
-------- ---------- -------- -----------
NET ASSETS AVAILABLE FOR PLAN
BENEFITS, SEPTEMBER 30, 1997 $86,407 $4,548,968 $290,461 $16,209,750
======== ========== ======== ===========
</TABLE>
SEE NOTES TO FINANCIAL STATEMENTS
Page 8
<PAGE>
MEDIQ INCORPORATED EMPLOYEES' SAVINGS PLAN
STATEMENT OF CHANGES IN NET ASSETS AVAILABLE FOR PLAN BENEFITS
YEAR ENDED SEPTEMBER 30, 1996
<TABLE>
<CAPTION>
SUPPLEMENTAL INFORMATION
-----------------------------------------------------------------------------
FIXED
SAVINGS EQUITY BALANCED INCOME STOCK LOAN
FUND FUND FUND FUND FUND FUND TOTAL
---------- ---------- ---------- -------- --------- -------- -----------
<S> <C> <C> <C> <C> <C> <C> <C>
NET ASSETS AVAILABLE FOR PLAN
BENEFITS, OCTOBER 1, 1995 $1,727,822 $5,157,887 $1,938,242 $466,916 $3,603,442 $300,348 $13,194,657
ADDITIONS:
CONTRIBUTIONS:
EMPLOYEE CONTRIBUTIONS 175,360 665,563 344,812 74,679 99,932 1,360,346
EMPLOYEE ROLLOVER PAYMENTS 32,859 157,619 87,336 2,402 280,216
EMPLOYER CONTRIBUTIONS 314,340 314,340
EMPLOYEE LOAN PAYMENTS 22,290 110,341 38,552 5,010 14,344 190,537
INVESTMENT INCOME 79,973 6,435 2,981 29,617 133 119,139
NET APPRECIATION/(DEPRECIATION)
IN FAIR VALUE OF INVESTMENTS 657,797 283,292 (6,001) 83,770 1,018,858
INVESTMENT ELECTION TRANSFERS 51,624 154,034 79,099 219,963 504,720
---------- ---------- ---------- -------- ---------- -------- -----------
TOTAL ADDITIONS 310,482 1,649,379 911,007 105,707 591,618 219,963 3,788,156
DEDUCTIONS:
BENEFIT PAYMENTS 443,226 861,181 436,598 132,707 732,053 80,808 2,686,573
EMPLOYEE LOANS 161,779 161,779
INVESTMENT ELECTION TRANSFERS 276,552 91,750 56,413 77,139 2,866 504,720
---------- ---------- ---------- -------- ---------- -------- -----------
TOTAL DEDUCTIONS 719,778 952,931 493,011 209,846 734,919 242.587 3,353,072
---------- ---------- ---------- -------- ---------- -------- -----------
NET ADDITIONS (DEDUCTIONS) (409,296) 696,448 417,996 (104,139) (143,301) (22,624) 435,084
---------- ---------- ---------- -------- ---------- -------- -----------
NET ASSETS AVAILABLE FOR PLAN
BENEFITS, SEPTEMBER 30, 1996 $1,318,526 $5,854,335 $2,356,238 $362,777 $3,460,141 $277,724 $13,629,741
========== ========== ========== ======== ========== ======== ===========
</TABLE>
SEE NOTES TO FINANCIAL STATEMENTS
Page 9
<PAGE>
MEDIQ INCORPORATED EMPLOYEES' SAVINGS PLAN
STATEMENT OF CHANGES IN NET ASSETS AVAILABLE FOR PLAN BENEFITS
YEAR ENDED SEPTEMBER 30, 1995
<TABLE>
<CAPTION>
SUPPLEMENTAL INFORMATION
-----------------------------------------------------------------------------
FIXED
SAVINGS EQUITY BALANCED INCOME STOCK LOAN
FUND FUND FUND FUND FUND FUND TOTAL
---------- ---------- ---------- -------- --------- -------- -----------
<S> <C> <C> <C> <C> <C> <C> <C>
NET ASSETS AVAILABLE FOR PLAN
BENEFITS, OCTOBER 1, 1994 $1,975,694 $4,293,197 $1,715,459 $477,258 $3,312,441 $388,614 $12,162,663
ADDITIONS:
CONTRIBUTIONS:
EMPLOYEE CONTRIBUTIONS 282,382 687,811 367,289 107,745 130,337 1,575,564
EMPLOYEE ROLLOVER PAYMENTS 28,389 104,427 32,031 9,526 8,773 183,146
EMPLOYER CONTRIBUTIONS 373,786 373,786
EMPLOYEE LOAN PAYMENTS 53,949 142,008 58,948 9,060 13,171 277,136
INVESTMENT INCOME 111,126 36,155 476 147,757
NET APPRECIATION/(DEPRECIATION)
IN FAIR VALUE OF INVESTMENTS 1,168,659 403,977 26,774 1,116,712 2,716,122
INVESTMENT ELECTION TRANSFERS 117,652 46,112 266,900 430,664
---------- ---------- ---------- -------- ---------- -------- -----------
TOTAL ADDITIONS 475,846 2,220,557 862,245 189,260 1,689,367 266,900 5,704,175
DEDUCTIONS:
BENEFIT PAYMENTS 315,750 672,817 299,910 101,571 1,175,188 85,499 2,650,735
EMPLOYEE LOANS 246,404 246,404
TRANSFER TO MEDIFAC PLAN 218,056 562,900 278,506 68,097 193,556 23,263 1,344,378
INVESTMENT ELECTION TRANSFERS 189,912 120,150 61,046 29,934 29,622 430,664
---------- ---------- ---------- -------- ---------- -------- -----------
TOTAL DEDUCTIONS 723,718 1,355,867 639,462 199,602 1,398,366 355,166 4,672,181
---------- ---------- ---------- -------- ---------- -------- -----------
NET ADDITIONS (DEDUCTIONS) (247,872) 864,690 222,783 (10,342) 291,001 (88,266) 1,031,994
---------- ---------- ---------- -------- ---------- -------- -----------
NET ASSETS AVAILABLE FOR PLAN
BENEFITS, SEPTEMBER 30, 1995 $1,727,822 $5,157,887 $1,938,242 $466,916 $3,603,442 $300,348 $13,194,657
========== ========== ========== ======== ========== ======== ===========
</TABLE>
SEE NOTES TO FINANCIAL STATEMENTS
Page 10
<PAGE>
MEDIQ INCORPORATED EMPLOYEES' SAVINGS PLAN
NOTES TO FINANCIAL STATEMENTS
YEARS ENDED SEPTEMBER 30, 1997, 1996 AND 1995
A. Significant Accounting Policies
The financial statements of the MEDIQ Incorporated Employees' Savings Plan
(the "Plan") are presented on the accrual basis of accounting. Investments
are stated at their fair value. Fair values for investments are determined
by closing prices as of the last trading day of the Plan year. Dividends
and interest are recorded when earned. Employee and employer contributions
are recorded in the period to which they are applicable. Benefit payments
are recorded when paid. Brokerage commissions and other expenses incurred
in connection with the purchase or sale of securities, are charged
directly to the Plan. All other costs and expenses of the Plan are paid
for by MEDIQ Incorporated (the "Company"). Should the Company elect not to
pay administrative expenses, such expenses will be paid by the Plan.
The preparation of the Plan's financial statements in conformity with
generally accepted accounting principles necessarily requires Plan
management to make estimates and assumptions. These estimates and
assumptions, which may differ from actual results, will affect the
reported amounts of assets and liabilities and disclosure of contingent
assets and liabilities at the date of the Plan's financial statements, as
well as the reported amounts of changes in net assets available for Plan
benefits during the period.
B. Plan Description
The following is not intended to be a complete description of the Plan.
Plan participants should refer to the Plan documents for a complete
description of the Plan. The original effective date of the Plan was
October 1, 1983. The Plan was amended in its entirety effective as of
January 1, 1997. The Company adopted the Vanguard Prototype 401(k) Savings
Plan and appointed Vanguard Fiduciary Trust Company as trustee and
recordkeeper of the Plan. Employees are eligible to join the Plan upon
completion of twelve months employment during which they have worked a
minimum of 1,000 hours and are age 21 or older. Participants may
contribute to the Plan from 1% to 18% of their salaries to be invested, as
they choose, in the various funds described in Note C. If the participant
is deemed a highly compensated employee, the Plan limits the contribution
to 6%.
The Plan provides that the Company will make a matching contribution equal
to $.50 for each $1.00 contributed by a participant, subject to certain
limitations. The Company's matching contribution is made in cash to be
used to purchase shares of the common stock of the Company for the account
of the participant.
A participant's accrued benefit is at all times fully vested and
nonforfeitable upon death, retirement, disability or termination of
employment.
Distributions from the funds, with the exception of the stock fund, are
made in cash. Distributions from the stock fund are in the form of the
securities held or cash.
Page 11
<PAGE>
C. Investment Options
Participants contributions are invested in accordance with the written
directions of the participant in one or more of the following funds:
1. Savings Fund: The fund objective is to hold high-quality,
short-term investments that preserve the amount of your original
investment and provide current income.
2. Equity Fund: The fund objective is to hold a concentrated
portfolio of large company equity securities. As a secondary
objective, the fund also seeks to provide long-term growth and modest
dividend income.
3. Balanced Fund: The fund objective is to hold a broad diversified
portfolio of stocks and bonds to provide a combination of long-term
growth and income. The fund maintains 60% to 70% of its assets in
stocks and 30% to 40% in high-quality bonds.
4. Fixed Income Fund: The fund objective is to hold a mix of
government and affiliated agency securities to provide income from
interest. The fund invests in mortgage-backed certificates issued by
the Government National Mortgage Association ("GNMA").
5. Index Fund: The fund objective is to provide long-term growth of
capital and income from dividends; the fund holds all of the 500
stocks that make up the Standard & Poor's 500 composite Stock Price
Index in proportion to their weighting in the Index. The fund
attempts to match the performance of the Index, a widely recognized
benchmark of the U.S. Stock Market performance.
6. International Fund: The fund objective is to provide long-term
growth of capital. The fund invests in stocks of high quality
seasoned companies based outside the United States. The fund invests
60% to 70% of its assets in companies with sustainable competitive
advantages and strong prospects for long-term growth.
7. Stock Fund: The assets of the stock fund, including earnings
thereon, are invested in the Company's common stock. A brokerage firm
purchases the Company's stock at prevailing market rates in the open
market, and, in the normal course of business, sells such stock to
meet distribution requirements of the Plan. Also included in the
stock fund is a small portion invested in short term reserves to help
accommodate daily transactions.
Pursuant to the Plan, with the exception of the Company's matching
contributions, the selection of investment options is the sole
responsibility of each participant. Neither the trustees nor the Company
have any responsibility to select investment options or to advise
participants in selecting their investment options. Subject to applicable
provisions of law, each participant assumes all risks connected with any
decrease in the market value of any securities in these funds, and
distributions from such funds are the sole source of payments made under
the Plan.
Page 12
<PAGE>
D. Investments
The fair value of the investments of the Plan are as follows:
September 30,
------------------------------
1997 1996
----------- -----------
Savings Fund $ 1,216,455 $ 1,313,068
Equity Fund 6,733,471 5,832,917
Balanced Fund 2,694,011 2,337,730
Fixed Income Fund 323,345 361,742
Index Fund 282,739 -0-
International Fund 84,885 -0-
Stock Fund:
Common Stock -- MEDIQ 4,516,299 3,417,000
Common Stock -- MHM -0- 24,128
----------- -----------
$15,851,205 $13,286,585
=========== ===========
The Savings Fund's investment is comprised of 1,216,455 shares of
Vanguard's Prime Portfolio Fund, with a fair value of $1.00 per share at
September 30, 1997 and 1,313,068 shares at $1.00 per share at September
30, 1996.
The Equity Fund's investment is comprised of 324,818 shares of Vanguard's
Windsor Fund, with a fair value of $20.73 per share at September 30, 1997
and 358,287 shares at $16.28 per share at September 30, 1996.
The Balanced Fund's investment is comprised of 87,810 shares of Vanguard's
Wellington Fund, with a fair value of $30.68 per share at September 30,
1997 and 89,913 shares at $26.00 per share at September 30, 1996.
The Fixed Income Fund's investment is comprised of 31,181 shares of
Vanguard's - GNMA portfolio, with a fair value of $10.37 per share at
September 30, 1997 and 35,887 shares at $10.08 per share at September 30,
1996.
The Index Fund investment is comprised of 3,189 shares of Vanguard's Index
Trust 500 portfolio, with a fair value of $88.65 per share at September
30, 1997.
The International Fund investment is comprised of 4,487 shares of
Vanguard's International Growth portfolio, with a fair value of $18.92 per
share at September 30, 1997.
The Stock Fund's investment is comprised of 535,265 shares of the
Company's common stock, with a fair value of $8.4375 at September 30, 1997
and 581,617 shares of the Company's common stock and 32,171 shares of MHM
common stock, with a fair value of $5.875 and $.75 per share,
respectively, at September 30, 1996.
Investment income is accrued as earned. The net appreciation or
depreciation in fair value of investments represents the change in the
fair value during the periods as a result of reinvested dividends or
appreciation or depreciation in the underlying securities in the various
funds except to the extent of gains or losses realized on investments sold
during the year.
Page 13
<PAGE>
E. Loans
A participant may be granted a loan at the discretion of the Plan
Administrator in accordance with the Plan document and current IRS
regulations. Loans shall be repaid in equal installments of principal and
interest over a period and at rates designated by the Plan.
F. Withdrawals
Participants are limited to two withdrawals per Plan year with respect to
amounts attributable to basic contributions. In order to obtain a hardship
withdrawal, a participant must exhaust the possibility of all other
distributions (other than hardship withdrawals) under the Plan. Upon
receiving a hardship distribution, a participant is suspended from making
contributions to the Plan for one year.
G. Plan Participants
As of September 30, 1997 and 1996, respectively, 587 and 677 participants
of the Plan participated in each fund as follows:
September 30,
-------------
1997 1996
---- ----
Savings Fund 219 321
Equity Fund 493 547
Balanced Fund 382 464
Fixed Income Fund 148 197
Index Fund 97 -
International Fund 53 -
Stock Fund 587 677
Plan participants may invest in one or more funds. As a result, the sum of
the number of participants in each fund is not equal to the employee
totals in 1997 and 1996.
H. Benefits Payable
The following amounts, $0 and $341,097 as of September 30, 1997 and
September 30, 1996, respectively, have been allocated to the accounts of
persons who have elected to withdraw from the plan but have not yet been
paid.
I. Administration of the Plan
The Plan is administered by Jay M. Kaplan, the Plan Administrator, who has
fiduciary responsibility for the general operations of the Plan and may
interpret provisions of the Plan. The Plan Administrator does not have any
responsibilities with respect to the investment of Plan assets.
The Plan's trustees are appointed by the Board of Directors of the Company
for the current year and may resign or be removed at any time. The Company
indemnifies such trustees to the extent determined by its Board of
Directors. Effective January 1, 1997 the Board of Directors of the Company
appointed Vanguard Fiduciary Trust Company as Trustee for the Plan.
Page 14
<PAGE>
I. Administration of the Plan (continued)
Under the provisions of the Employee Retirement Income Security Act of
1974 ("ERISA"), each of the above individuals is a "party-in-interest" and
serves without compensation.
Although the Company expects to continue the Plan, the right to amend or
terminate the Plan is reserved. In the event of Plan termination, the net
assets of the Plan would be allocated as required by ERISA, as amended.
J. Federal Tax Considerations
The Plan Administrator received a determination letter dated February 22,
1996 from the Internal Revenue Service ("IRS") that the Plan met the
requirements of Section 401(a) of the Internal Revenue Code of 1986, as
amended (the "Code"). The Plan has since been admended through the
adoption of the Vanguard Fiduciary Trust Company Prototype Non-Standarized
Safe Harbor Profit Sharing Plan with CODA. The Plan Administrator believes
that the Plan is in compliance with the applicable requirements of the
Code, and that the Plan's related trust is exempt from federal income tax
under the provisions of Section 501(a) of the Code. As a result, matching
contributions and salary reduction contributions, as well as earnings on
all Plan assets, are generally not subject to federal income tax until
distributed from the Plan.
The Plan Administrator must refund excess aggregate contributions and
excess contributions to certain highly compensated employees for the plan
year ended September 30, 1997 to meet the nondiscrimination requirements
of Section 401(k) and 401(m) of the Code. The Plan Administrator intends
to make the required distributions prior to September 30, 1998. By making
such distributions, the Plan will be in compliance with applicable IRS
rules for the year ending September 30, 1997.
K. MHM Stock Sale
On November 21, 1996, the Plan sold all of its shares of MHM. All proceeds
were reinvested to the participants accounts that held MHM stock,
according to their current investment allocation election.
L. Divestitures - Special Distributions
In November 1996, the Company sold substantially all of the assets of
MEDIQ Mobile X-Ray Services, Inc. ("Mobile X-Ray"), a wholly-owned
subsidiary of the Company. This resulted in a total distribution of
$1,217,711 from the Plan to 96 employees during fiscal year 1997.
In August 1995, the Company entered into an agreement to sell MEDIQ
Imaging Services, Inc., a wholly-owned subsidiary of the Company. This
resulted in a total distribution of $861,405 from the Plan consisting of
$694,818 in cash and 38,048 shares of MEDIQ common stock with a market
value of $4.25 per share, and 1,953 shares of MHM common stock with a
market value of $2.50 per share to 75 employees in December 1995.
In June 1995, the Company entered into an agreement to sell Medifac, Inc.
("Medifac"), a wholly-owned subsidiary of the Company. This resulted in a
total distribution of $1,344,378 from the Plan consisting of $1,127,558 in
cash, loan notes of $23,263 and 32,852 shares of MEDIQ common stock with a
market value of $5.75 per share, and 1,774 shares of MHM common stock with
a market value of $2.625 per share to 54 employees of Medifac in August
1995.
Page 15
<PAGE>
M. Change In Plan Year
On September 30, 1997 the Board of Directors of MEDIQ Incorporated
approved the change of the Plan Trust Year from fiscal year, September
30th, to calendar year, December 31st. This change is effective for the
plan year ending December 31, 1997.
N. Subsequent Event
On January 15, 1998, the Company announced that, pursuant to the terms of
a definitive agreement and plan of merger (the "Merger Agreement"), MQ
Acquisition Corporation ("Acquirer"), a Delaware corporation formed by
Bruckmann, Rosser, Sherrill & Co., L.P. ("BRS"), has agreed to enter into
a transaction with the Company whereby Acquirer will be merged with and
into the Company (the "Merger"), with the Company being the Surviving
Corporation in the Merger (the "Surviving Corporation"). In the Merger,
holders of the Company's outstanding Common Stock and Preferred Stock will
be entitled to receive, in exchange for each outstanding share of Common
Stock or Preferred Stock, $13.75 in cash, without interest, and 0.075 of a
share of a newly created Series A 13% Cumulative Compounding Preferred
Stock, par value $.01 per share (the "13% Senior Preferred Stock") of the
Surviving Corporation. The 13% Senior Preferred Stock will have a
liquidation preference of $10.00 per share. The aggregate consideration
payable pursuant to the Merger, including amounts payable to holders of
options, is expected to be approximately $390.7 million. At the effective
date of the merger it is anticipated that the MEDIQ Common Stock Fund will
be eliminated. The cash proceeds from the sale of shares in the MEDIQ
Common Stock Fund will be reallocated to the existing fund options at the
direction of the plan participants.
Page 16
<PAGE>
MEDIQ INCORPORATED EMPLOYEES' SAVINGS PLAN
ITEM 27a - SCHEDULE OF ASSETS HELD FOR INVESTMENT PURPOSES
SEPTEMBER 30, 1997
<TABLE>
<CAPTION>
- -------------------------------------------------------------------------------------------------
Current
Fund Identity of Issue Shares Cost (1) Value
- ---- ----------------- --------- ----------- -----------
<S> <C> <C> <C>
Savings Vanguard Money Market Fund 1,216,455 $ 1,216,455 $ 1,216,455
Equity Vanguard Windsor Fund 324,818 5,458,618 6,733,471
Balanced Vanguard Wellington Fund 87,810 2,317,633 2,694,011
Fixed Income Vanguard GNMA Fund 31,181 318,661 323,345
Index Vanguard Index Trust - 500 Portfolio 3,189 269,760 282,739
Inter'l. Vanguard International Growth Fund 4,487 84,041 84,885
Stock MEDIQ Common Stock Fund 535,265 2,618,626 4,516,299
Loan Participant Loans (bearing interest
at 7.4%-12.5%, maturity ranging from
1 year to 30 years) 0 290,461
----------- -----------
TOTAL INVESTMENTS $12,283,794 $16,141,666
=========== ===========
</TABLE>
(1) The cost basis for September 30, 1997 for the Equity Fund, Balanced Fund,
and Fixed Income Fund were restated based on the market value of January
1, 1997. The Company appointed Vanguard Fiduciary Trust Company as trustee
and recordkeeper effective January 1, 1997. This change also allowed the
Company to provide daily valuation format to participants. Due to this
conversion, the funds of the Equity, Balanced, and Fixed Income funds were
transferred to participants' individual accounts. In addition, two new
funds, the Index and International, were made available to participants
effective January 1, 1997.
Page 17
<PAGE>
MEDIQ INCORPORATED EMPLOYEES' SAVINGS PLAN
ITEM 27d - SCHEDULE OF REPORTABLE TRANSACTIONS
YEAR ENDED SEPTEMBER 30, 1997
- -------------------------------------------------------------------------------
Transactions involving an amount in excess of 5% of beginning plan asset value:
<TABLE>
<CAPTION>
Identity of Cost of Number of Proceeds Number Net Gain
Party Involved Identity of Issue Assets Purchases from Sales of Sales (Loss)
- -------------- ----------------- ------- --------- ---------- -------- --------
<S> <C> <C> <C> <C> <C> <C>
Vanguard Windsor Fund $ 901,457 53
Vanguard Money Market Account 710,895 $ 710,895 60 $ 0
Vanguard Windsor Fund 1,992,901 2,127,389 56 134,888
Vanguard MEDIQ Common Stock 664,963 806,260 47 141,297
Janney Montgomery Scott MEDIQ Common Stock 86,004 87,834 1 1,830
</TABLE>
Page 18
