SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
--------------------------
FORM 11-K
TRANSITION REPORT PURSUANT TO SECTION 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934 [NO FEE REQUIRED]
For the transition period from October 1, 1997 to December 31, 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
<PAGE>
Transition Report for Three Months
Ended December 31, 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)
2
<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 benefits
of the MEDIQ Incorporated Employees' Savings Plan as of December 31, 1997 and
September 30, 1997, and the related statements of changes in net assets
available for benefits for the three months ended December 31, 1997 and for each
of the two years in the period ended September 30, 1997. 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, such financial statements present fairly, in all material
respects, the net assets available for benefits of the MEDIQ Incorporated
Employees' Savings Plan as of December 31, 1997 and September 30, 1997, and the
changes in net assets available for benefits for the three months ended December
31, 1997 and for each of the two years in the period ended September 30, 1997 in
conformity with generally accepted accounting principles.
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, 1997 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. The supplemental information by fund in
the statements of net assets available for benefits and the statements of
changes in net assets available for benefits is presented for the purpose of
additional analysis rather than to present the net assets available for benefits
and changes in net assets available for benefits of the individual funds. The
supplemental schedule and supplemental information by fund is the
responsibility of the Plan's management. Such supplemental schedule and
supplemental information by fund have been subjected to the auditing procedures
applied in our audits of the basic financial statements and, in our opinion,
are fairly stated in all material respects when considered in relation to the
basic financial statements taken as a whole.
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 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.
DELOITTE & TOUCHE LLP
Philadelphia, Pennsylvania
June 19, 1998
3
<PAGE>
MEDIQ INCORPORATED EMPLOYEES' SAVINGS PLAN
STATEMENT OF NET ASSETS AVAILABLE FOR BENEFITS
DECEMBER 31, 1997
<TABLE>
<CAPTION>
SUPPLEMENTAL INFORMATION BY FUND
--------------------------------------------------------------------------------------
FIXED INTERNA-
SAVINGS EQUITY BALANCED INCOME INDEX TIONAL STOCK LOAN
FUND FUND FUND FUND FUND FUND FUND FUND TOTAL
---------- ---------- ---------- -------- -------- -------- ---------- -------- -----------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>
ASSETS:
CASH $ 28,270 $ 28,270
INVESTMENTS - AT FAIR VALUE $1,211,244 $6,288,441 $2,685,203 $325,648 $411,316 $ 94,548 6,066,073 17,082,473
EMPLOYEE CONTRIBUTIONS
RECEIVABLE 4,249 24,270 11,032 1,622 6,451 2,091 4,842 54,557
EMPLOYER CONTRIBUTIONS
RECEIVABLE 11,808 11,808
LOANS RECEIVABLE $359,936 359,936
---------- ---------- ---------- -------- -------- -------- ---------- -------- -----------
NET ASSETS AVAILABLE
FOR BENEFITS $1,215,493 $6,312,711 $2,696,235 $327,270 $417,767 $ 96,639 $6,110,993 $359,936 $17,537,044
========== ========== ========== ======== ======== ======== ========== ======== ===========
</TABLE>
SEE NOTES TO FINANCIAL STATEMENTS
4
<PAGE>
MEDIQ INCORPORATED EMPLOYEES' SAVINGS PLAN
STATEMENT OF NET ASSETS AVAILABLE FOR BENEFITS
SEPTEMBER 30, 1997
<TABLE>
<CAPTION>
SUPPLEMENTAL INFORMATION BY FUND
-----------------------------------------------------------------------------------
SAVINGS EQUITY BALANCED FIXED INCOME INDEX INTERNATIONAL
FUND FUND FUND FUND FUND FUND
---------- ---------- ---------- ------------ -------- -------------
<S> <C> <C> <C> <C> <C> <C>
ASSETS:
CASH
INVESTMENTS - AT FAIR VALUE $1,216,455 $6,733,471 $2,694,011 $323,345 $282,739 $84,885
EMPLOYEE CONTRIBUTIONS RECEIVABLE 2,855 17,292 8,190 1,335 4,221 1,522
EMPLOYER CONTRIBUTIONS RECEIVABLE
LOANS RECEIVABLE
---------- ---------- ---------- -------- -------- -------
NET ASSETS AVAILABLE FOR BENEFITS $1,219,310 $6,750,763 $2,702,201 $324,680 $286,960 $86,407
========== ========== ========== ======== ======== =======
<CAPTION>
SUPPLEMENTAL INFORMATION BY FUND
--------------------------------
STOCK LOAN
FUND FUND TOTAL
---------- -------- -----------
<S> <C> <C> <C>
ASSETS:
CASH $ 21,260 $ 21,260
INVESTMENTS - AT FAIR VALUE 4,516,299 15,851,205
EMPLOYEE CONTRIBUTIONS RECEIVABLE 2,699 38,114
EMPLOYER CONTRIBUTIONS RECEIVABLE 8,710 8,710
LOANS RECEIVABLE $290,461 290,461
---------- -------- -----------
NET ASSETS AVAILABLE FOR BENEFITS $4,548,968 $290,461 $16,209,750
========== ======== ===========
</TABLE>
SEE NOTES TO FINANCIAL STATEMENTS
5
<PAGE>
MEDIQ INCORPORATED EMPLOYEES' SAVINGS PLAN
STATEMENT OF CHANGES IN NET ASSETS AVAILABLE FOR BENEFITS
THREE MONTHS ENDED DECEMBER 31, 1997
<TABLE>
<CAPTION>
SUPPLEMENTAL INFORMATION BY FUND
------------------------------------------------------------------------------------------
SAVINGS EQUITY BALANCED FIXED INCOME INDEX INTERNATIONAL
FUND FUND FUND FUND FUND FUND
----------- ------------ ---------- ------------- ---------- -------------
<S> <C> <C> <C> <C> <C> <C>
NET ASSETS AVAILABLE FOR BENEFITS,
OCTOBER 1, 1997 $ 1,219,310 $ 6,750,763 $ 2,702,201 $324,680 $ 286,960 $ 86,407
ADDITIONS:
CONTRIBUTIONS:
EMPLOYEE CONTRIBUTIONS 19,914 124,286 56,672 8,508 31,459 10,402
EMPLOYEE ROLLOVER PAYMENTS 365 18,788 18,091 2,499 9,968 6,879
EMPLOYER CONTRIBUTIONS
EMPLOYEE LOAN PAYMENTS 4,685 20,016 8,820 1,320 3,695 164
INVESTMENT INCOME 16,224 5,582
NET APPRECIATION/(DEPRECIATION)
IN FAIR VALUE OF INVESTMENTS (229,033) 76,843 1,874 11,565 (8,239)
INVESTMENT ELECTION TRANSFERS 83,635 1,532
----------- ----------- ----------- -------- --------- ----------
TOTAL ADDITIONS 41,188 (65,943) 160,426 19,783 140,322 10,738
DEDUCTIONS:
BENEFIT PAYMENTS 29,081 161,654 62,276 8,570 2,515 506
EMPLOYEE LOANS
INVESTMENT ELECTION TRANSFERS 15,924 210,455 104,116 8,623 7,000
----------- ----------- ----------- -------- --------- ----------
TOTAL DEDUCTIONS 45,005 372,109 166,392 17,193 9,515 506
----------- ----------- ----------- -------- --------- ----------
NET ADDITIONS (DEDUCTIONS) (3,817) (438,052) (5,966) 2,590 130,807 10,232
----------- ----------- ----------- -------- --------- ----------
NET ASSETS AVAILABLE FOR BENEFITS,
DECEMBER 31, 1997 $ 1,215,493 $ 6,312,711 $ 2,696,235 $327,270 $ 417,767 $ 96,639
=========== =========== =========== ======== ========= ==========
<CAPTION>
SUPPLEMENTAL INFORMATION BY FUND
--------------------------------
STOCK LOAN
FUND FUND TOTAL
------------- ---------- -------
<S> <C> <C> <C>
NET ASSETS AVAILABLE FOR BENEFITS,
OCTOBER 1, 1997 $4,548,968 $ 290,461 $16,209,750
ADDITIONS:
CONTRIBUTIONS:
EMPLOYEE CONTRIBUTIONS 24,739 275,980
EMPLOYEE ROLLOVER PAYMENTS 9,563 66,153
EMPLOYER CONTRIBUTIONS 60,500 60,500
EMPLOYEE LOAN PAYMENTS 5,203 43,903
INVESTMENT INCOME 21,806
NET APPRECIATION/(DEPRECIATION)
IN FAIR VALUE OF INVESTMENTS 1,434,645 1,287,655
INVESTMENT ELECTION TRANSFERS 166,841 126,900 378,908
---------- ---------- -----------
TOTAL ADDITIONS 1,701,491 126,900 2,134,905
DEDUCTIONS:
BENEFIT PAYMENTS 106,676 20,146 391,424
EMPLOYEE LOANS 37,279 37,279
INVESTMENT ELECTION TRANSFERS 32,790 378,908
---------- ---------- ----------
TOTAL DEDUCTIONS 139,466 57,425 807,611
---------- ---------- ----------
NET ADDITIONS (DEDUCTIONS) 1,562,025 69,475 1,327,294
---------- ---------- ----------
NET ASSETS AVAILABLE FOR BENEFITS,
DECEMBER 31, 1997 $6,110,993 $ 359,936 $17,537,044
========== ========== ===========
</TABLE>
SEE NOTES TO FINANCIAL STATEMENTS
6
<PAGE>
MEDIQ INCORPORATED EMPLOYEES' SAVINGS PLAN
STATEMENT OF CHANGES IN NET ASSETS AVAILABLE FOR BENEFITS
YEAR ENDED SEPTEMBER 30, 1997
<TABLE>
<CAPTION>
SUPPLEMENTAL INFORMATION BY FUND
------------------------------------------------------------------------------------------
SAVINGS EQUITY BALANCED FIXED INCOME INDEX INTERNATIONAL
FUND FUND FUND FUND FUND FUND
----------- ------------ ---------- ------------- ---------- -------------
<S> <C> <C> <C> <C> <C> <C>
NET ASSETS AVAILABLE FOR BENEFITS,
OCTOBER 1, 1996 $ 1,318,526 $5,854,335 $2,356,238 $ 362,777 $ 0 $ 0
ADDITIONS:
CONTRIBUTIONS:
EMPLOYEE CONTRIBUTIONS 108,673 583,571 306,569 46,895 55,597 21,801
EMPLOYEE ROLLOVER PAYMENTS 12,617 40,227 22,932 233 21,489 2,540
EMPLOYER CONTRIBUTIONS
EMPLOYEE LOAN PAYMENTS 26,518 104,762 34,923 6,251 8,383 1,369
INVESTMENT INCOME 66,710 275 1,582 24,290
NET APPRECIATION/(DEPRECIATION)
IN FAIR VALUE OF INVESTMENTS 2,134,547 614,181 8,835 15,592 898
INVESTMENT ELECTION TRANSFERS 13,500 198,199 61,178
----------- ---------- ---------- --------- -------- -------
TOTAL ADDITIONS 228,018 2,863,382 980,187 86,504 299,260 87,786
DEDUCTIONS:
BENEFIT PAYMENTS 274,698 1,668,331 447,057 68,910 845 183
EMPLOYEE LOANS
INVESTMENT ELECTION TRANSFERS 52,536 298,623 187,167 55,691 11,455 1,196
----------- ---------- ---------- --------- -------- -------
TOTAL DEDUCTIONS 327,234 1,966,954 634,224 124,601 12,300 1,379
----------- ---------- ---------- --------- -------- -------
NET ADDITIONS (DEDUCTIONS) (99,216) 896,428 345,963 (38,097) 286,960 86,407
----------- ---------- ---------- --------- -------- -------
NET ASSETS AVAILABLE FOR BENEFITS,
SEPTEMBER 30, 1997 $ 1,219,310 $6,750,763 $2,702,201 $ 324,680 $286,960 $86,407
=========== ========== ========== ========= ======== =======
<CAPTION>
SUPPLEMENTAL INFORMATION BY FUND
--------------------------------
STOCK LOAN
FUND FUND TOTAL
------------- ---------- -------
<S> <C> <C> <C>
NET ASSETS AVAILABLE FOR BENEFITS,
OCTOBER 1, 1996 $3,460,141 $ 277,724 $13,629,741
ADDITIONS:
CONTRIBUTIONS:
EMPLOYEE CONTRIBUTIONS 91,592 1,214,698
EMPLOYEE ROLLOVER PAYMENTS 30,737 130,775
EMPLOYER CONTRIBUTIONS 277,660 277,660
EMPLOYEE LOAN PAYMENTS 20,272 202,478
INVESTMENT INCOME 53 92,910
NET APPRECIATION/(DEPRECIATION)
IN FAIR VALUE OF INVESTMENTS 1,438,239 4,212,292
INVESTMENT ELECTION TRANSFERS 93,465 277,759 644,101
---------- ---------- -----------
TOTAL ADDITIONS 1,952,018 277,759 6,774,914
DEDUCTIONS:
BENEFIT PAYMENTS 825,758 87,843 3,373,625
EMPLOYEE LOANS 177,179 177,179
INVESTMENT ELECTION TRANSFERS 37,433 644,101
---------- ---------- -----------
TOTAL DEDUCTIONS 863,191 265,022 4,194,905
---------- ---------- -----------
NET ADDITIONS (DEDUCTIONS) 1,088,827 12,737 2,580,009
---------- ---------- -----------
NET ASSETS AVAILABLE FOR BENEFITS,
SEPTEMBER 30, 1997 $4,548,968 $ 290,461 $16,209,750
========== ========== ===========
</TABLE>
SEE NOTES TO FINANCIAL STATEMENTS
7
<PAGE>
MEDIQ INCORPORATED EMPLOYEES' SAVINGS PLAN
STATEMENT OF CHANGES IN NET ASSETS AVAILABLE FOR BENEFITS
YEAR ENDED SEPTEMBER 30, 1996
<TABLE>
<CAPTION>
SUPPLEMENTAL INFORMATION BY FUND
--------------------------------------------------------------------------
SAVINGS EQUITY BALANCED FIXED INCOME STOCK LOAN
FUND FUND FUND FUND FUND FUND TOTAL
------- ------------ ---------- ------------ --------- ---------- -------
<S> <C> <C> <C> <C> <C> <C> <C>
NET ASSETS AVAILABLE FOR 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 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
8
<PAGE>
MEDIQ INCORPORATED EMPLOYEES' SAVINGS PLAN
NOTES TO FINANCIAL STATEMENTS
THREE MONTHS ENDED DECEMBER 31, 1997 AND
YEARS ENDED SEPTEMBER 30, 1997 AND 1996
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 ("MEDIQ" or 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 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 Fiduciary Trust Company
Prototype Non-Standarized Safe Harbor Profit Sharing Plan with CODA
("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 and up to
May 31, 1998, was to be used to purchase shares of the common stock of the
Company for the account of the participant. Effective June 1, 1998, all
company matching contributions will be invested according to each
participant's pre-tax contribution allocation.
A participant's accrued benefit is at all times fully vested and
nonforfeitable.
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.
9
<PAGE>
C. Investment Options
Participant 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 the 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.
Effective June 1, 1998, the company added two new funds, a Vanguard Growth
Fund and a Vanguard Index Growth Fund.
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.
As of result of the Merger on May 29, 1998, between MEDIQ and MQ
Acquisition Company (See Note L), the MEDIQ Common Stock Fund has been
eliminated. The cash proceeds for each share of MEDIQ Common Stock were
reallocated to the participants' other investment options based on their
investment allocation elections in effect as of June 5, 1998.
10
<PAGE>
C. Investment Options (continued)
In regard to the newly issued Series A Preferred Stock, no additional
purchases, withdrawals, or loan transactions will be permitted. The only
available option will allow participants to sell their Preferred Shares and
reallocate the proceeds into any of the other existing funds.
D. Investments
As of December 31, 1997 and September 30, 1997, the Savings Fund, Equity
Fund, Balanced Fund and the Common Stock Fund, individually represent 5% or
more of net assets available for benefits.
The fair value of the investments of the Plan are as follows:
December 31, 1997 September 30, 1997
----------------- ------------------
Savings Fund $1,211,244 $1,216,455
Equity Fund 6,288,441 6,733,471
Balanced Fund 2,685,203 2,694,011
Fixed Income Fund 325,648 323,345
Index Fund 411,316 282,739
International Fund 94,548 84,885
Stock Fund:
Common Stock -- MEDIQ 6,066,073 4,516,299
----------- -----------
$17,082,473 $15,851,205
=========== ===========
The Savings Fund investment is comprised of 1,211,244 shares of Vanguard's
Prime Portfolio Fund, with a fair value of $1.00 per share at December 31,
1997 and 1,216,455 shares at $1.00 per share at September 30, 1997.
The Equity Fund investment is comprised of 370,344 shares of Vanguard's
Windsor Fund, with a fair value of $16.98 per share at December 31, 1997
and 324,818 shares at $20.73 per share at September 30, 1997.
The Balanced Fund investment is comprised of 91,178 shares of Vanguard's
Wellington Fund, with a fair value of $29.45 per share at December 31, 1997
and 87,810 shares at $30.68 per share at September 30, 1997.
The Fixed Income Fund investment is comprised of 31,222 shares of
Vanguard's - GNMA portfolio, with a fair value of $10.43 per share at
December 31, 1997 and 31,181 shares at $10.37 per share at September 30,
1997.
The Index Fund investment is comprised of 4,567 shares of Vanguard's Index
Trust 500 portfolio, with a fair value of $90.07 per share at December 31,
1997 and 3,189 shares at $88.65 per share at September 30, 1997.
The International Fund investment is comprised of 5,769 shares of
Vanguard's International Growth portfolio, with a fair value of $16.39 per
share at December 31, 1997 and 4,487 shares at $18.92 per share at
September 30, 1997.
11
<PAGE>
D. Investments (continued)
The Stock Fund investment is comprised of 545,265 shares of the Company's
common stock, with a fair value of $11.125 at December 31, 1997 and 535,265
shares of the Company's common stock, with a fair value of $8.4375 per
share at September 30, 1997.
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.
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. Administration of the Plan
The Plan is administered by Jay M. Kaplan, Senior Vice President and Chief
Financial Officer of MEDIQ, 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.
Under the provisions of the Employee Retirement Income Security Act of 1974
("ERISA"), each of the above individuals is a "party-in-interest".
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.
12
<PAGE>
H. 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 amended through the adoption
of the "Vanguard Prototype 401(k) Savings Plan". 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 has met the nondiscrimation requirements of Section 401(k) and
401(m) of the Code for the three months ended December 31, 1997.
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 ended September 30, 1997.
I. Mental Health Management, Inc. ("MHM") Stock Sale
On November 21, 1996, the Plan sold all of its shares of "MHM" Common
Stock. All proceeds were reinvested to the participants' accounts,
according to their current investment allocation election.
J. 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 transaction resulted in a total distribution of
$1,217,711 from the Plan to 96 employees during fiscal year 1997.
K. Change In Plan Year
On September 30, 1997 the Board of Directors of MEDIQ approved the change
of the Plan Trust Year from fiscal year, September 30th, to calendar year,
December 31st effective October 1, 1997.
L. Subsequent Event
On May 29, 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., has entered into a transaction
with the Company whereby Acquirer 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 are 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 has a liquidation preference of $10.00 per
share.
13
<PAGE>
M. Financial Information as of and for the Three Months Ended December 31,
1996 (Unaudited)
The net assets available for benefits as of December 31, 1996 were as
follows:
Cash $ 1,094
Investments - At Fair Value 14,473,300
Employee Contributions Receivable 3,748
Loans Receivable 354,165
-----------
Net Assets Available For Benefits $14,832,307
===========
The changes in net assets for the three months ended December 31, 1996 were
as follows:
Net Assets Available For Benefits, October 1, 1996 $13,629,741
Additions:
Employee Contributions 303,255
Employee Rollover Payments 30,611
Employer Contributions 70,832
Employee Loan Repayments 42,954
Investment Income 25,378
Net Appreciation/(Depreciation)
In Fair Value of Investments 1,099,888
Investment Election Transfers 203,467
-----------
Total Additions 1,776,385
Deductions:
Benefit Payments 334,293
Employee Loans 36,059
Investment Elections Transfers 203,467
-----------
Total Deductions 573,819
-----------
Net Additions (Deductions) 1,202,566
-----------
Net Assets Available For Benefits, December 31,1996 $14,832,307
===========
Exhibit Index
-------------
Exhibit 23 - Consents of Experts and Counsel
14
<PAGE>
<TABLE>
<CAPTION>
MEDIQ INCORPORATED EMPLOYEES' SAVINGS PLAN
ITEM 27a - SCHEDULE OF ASSETS HELD FOR INVESTMENT PURPOSES
DECEMBER 31, 1997
- ----------------------------------------------------------------------------------------------------------------------
Current
Fund Identity of Issue Shares Cost (1) Value
- ---- ----------------- ------ -------- -----
<S> <C> <C> <C> <C>
Savings Vanguard Money Market Fund 1,211,244 $ 1,211,244 $ 1,211,244
Equity Vanguard Windsor Fund 370,344 6,242,308 6,288,441
Balanced Vanguard Wellington Fund 91,178 2,432,968 2,685,203
Fixed Income Vanguard GNMA Fund 31,222 319,387 325,648
Index Fund Vanguard Index Trust - 500 Portfolio 4,567 391,760 411,316
International Vanguard International Growth Fund 5,769 105,486 94,548
Stock MEDIQ* Common Stock Fund 545,265 2,831,869 6,066,073
Loan Participant Loans (bearing interest at 7.4%-12.5%,
maturity ranging from 1 year to 30 years) 0 359,936
----------- -----------
TOTAL INVESTMENTS $13,535,022 $17,442,409
=========== ===========
</TABLE>
(1) The cost basis for December 31, 1997 for the Equity Fund, Balanced Fund,
and Fixed Income Fund were restated based on the market value as 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.
*Indicates party-in-interest to the Plan.
15
<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: June 29, 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: June 29, 1998 By: /s/ Jay M. Kaplan
------------- ------------------
Jay M. Kaplan
Senior Vice President - Finance and
Chief Financial Officer, MEDIQ
Incorporated, Administrator of the
Plan
16
INDEPENDENT AUDITOR'S 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 the
financial statements of the MEDIQ Incorporated Employees' Savings Plan dated
June 19, 1998, appearing in the transition report on Form 11-K of MEDIQ
Incorporated Employees' Savings Plan forthe transition period from October 1,
1997 to December 31, 1997.
DELOITTE & TOUCHE LLP
Philadelphia, Pennsylvania
June 26, 1998
