<PAGE> 1
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 11-K
[ X ] ANNUAL REPORT PURSUANT TO SECTION 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934 [FEE REQUIRED]
For the Year Ended June 30, 1997
OR
[ ] TRANSITION REPORT PURSUANT TO SECTION 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934 [NO FEE REQUIRED]
Commission File Number 1-483
Title of the Plan-
INVESTMENT PLAN FOR EMPLOYEES OF
MALLINCKRODT INC.
Name and Address of the Issuer of the Securities
Held Pursuant to the Plan-
Mallinckrodt Inc.
675 McDonnell Boulevard
St. Louis, Missouri 63134
<PAGE> 2
Investment Plan for Employees
of Mallinckrodt Inc.
Financial Statements and
Supplemental Schedules
Years ended June 30, 1997 and 1996
with Report of Independent Auditors
<PAGE> 3
Investment Plan for Employees
of Mallinckrodt Inc.
Financial Statements and
Supplemental Schedules
Years ended June 30, 1997 and 1996
CONTENTS
<TABLE>
<S> <C>
Report of Independent Auditors . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2
Financial Statements
Statements of Net Assets Available for Benefits with Fund Information . . . . . . . . . . . . . . . 3
Statements of Changes in Net Assets Available for Benefits with Fund Information . . . . . . . . . 6
Notes to Financial Statements . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 9
Supplemental Schedules
Line 27(a)-Assets Held for Investment . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . I
Line 27(d)-Reportable Transactions . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . II
</TABLE>
<PAGE> 4
Signature
The Plan - Pursuant to the requirements of the Securities Exchange Act of 1934,
the undersigned, the persons who administer the Employee Benefit Plan and who
are duly authorized, have caused this annual report to be signed.
Investment Plan for Employees of Mallinckrodt Inc.
Employee Benefits Committee
<TABLE>
<CAPTION>
SIGNATURE TITLE DATE
- --------------------------------------------------------------------------------------------------
<S> <C>
ASHOK CHAWLA
- ------------
Ashok Chawla Vice President,
Strategic Management
BRUCE K. CROCKETT
- -----------------
Bruce K. Crockett Vice President, Human Resources
ROGER A. KELLER
- ---------------
Roger A. Keller Vice President, Secretary and
General Counsel
DAVID R. KUPFERER
- -----------------
David R. Kupferer Staff Vice President, Organizational
Development, Human Resources
DOUGLAS A. MCKINNEY
- -------------------
Douglas A. McKinney Vice President and Controller
JOHN J. RIORDAN
- ---------------
John J. Riordan Director,
Pension and Profit Sharing Plans
MICHAEL A. ROCCA
- ----------------
Michael A. Rocca Senior Vice President and
Chief Financial Officer
WILLIAM B. STONE
- ----------------
William B. Stone Vice President Information
Technology
(Chairman of the Committee)
</TABLE>
<PAGE> 5
Report of Independent Auditors
Plan Administrator
Investment Plan for Employees of
Mallinckrodt Inc.
We have audited the accompanying statements of net assets available for
benefits of the Investment Plan for Employees of Mallinckrodt Inc. as of
June 30, 1997 and 1996, and the related statements of changes in net assets
available for 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 benefits of the Plan at
June 30, 1997 and 1996, and the changes in net assets available for 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 basic
financial statements taken as a whole. The accompanying supplemental schedules
of assets held for investment as of June 30, 1997 and reportable transactions
for the year then ended are 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 are not a required part
of the basic financial statements. The fund information in the statements of
net assets available for benefits and the statements of changes in net assets
available for benefits is presented for purposes of additional analysis rather
than to present the net assets available for benefits and changes in net assets
available for benefits of each fund. The supplemental schedules and fund
information have been subjected to the auditing procedures applied in our audit
of the basic financial statements and, in our opinion, are fairly stated in all
material respects to the financial statements taken as a whole.
October 29, 1997 /s/ Ernst & Young LLP
St. Louis, Missouri
2
<PAGE> 6
Investment Plan for Employees of Mallinckrodt Inc.
Statement of Net Assets Available for Benefits with Fund Information
As of June 30, 1997
<TABLE>
<CAPTION>
STATE STREET AMEX TRUST
MALLINCKRODT INTERNATIONAL EQUITY INDEX
TOTAL STOCK FUND INDEX FUND FUND II
-------------------------------------------------------------
<S> <C> <C> <C> <C>
Investments:
State Street International Index Fund (shares -
115,917; cost - $1,218,009) $ 1,323,544 $ - $1,323,544 $ -
American Express Trust Equity Index Fund II
(shares - 3,446,152; cost - $67,597,820) 80,795,023 - - 80,795,023
State Street Bond Fund (shares - 88,644; cost -
$924,890) 945,387 - - -
American Express Trust Money Market Fund II
(shares - 638,823; cost - $638,823) 638,823 - - -
Pilgrim, Baxter & Associates Growth Fund (shares -
156,921; cost - $3,539,683) 3,886,935 - - -
Fidelity Low-Price Stock Fund (shares - 130,987;
cost - $2,900,825) 3,137,141 - - -
IDS New Dimensions Fund (Y) (shares - 146,099;
cost - $3,175,799) 3,439,180 - - -
Dodge & Cox Stock Fund (shares - 45,533; cost -
$3,929,663) 4,240,982 - - -
Investments in insurance contracts, at contract
value 107,072,199 - - -
Investments in pooled accounts, at fair value
(Mallinckrodt Stock Fund - units 3,906,696; cost -
$27,562,305; AMEX Aggressive Fund - units
412,120; cost - $4,158,129; AMEX Moderate Fund -
units 167,496; cost - $1,687,755; AMEX
Conservative Fund - units 37,589; cost - $381,303) 41,339,683 34,620,356 - -
Loans to participants 8,956,875 - - -
----------------------------------------------------------------
Total investments 255,775,772 34,620,356 1,323,544 80,795,023
Receivables:
Employer contributions 9,862,108 9,761,459 3,132 12,320
Participant contributions 913,276 88,256 35,526 103,597
Interest and dividends 146,631 144,310 - -
----------------------------------------------------------------
Total receivables 10,922,015 9,994,025 38,658 115,917
Amounts owed to (from) other funds - (50,944) 6,541 44,820
----------------------------------------------------------------
Net assets available for benefits $266,697,787 $44,563,437 $1,368,743 $80,955,760
================================================================
<CAPTION>
AMEX TRUST
STATE STREET MONEY MARKET PBHG GROWTH FIDELITY LOW-
BOND FUND FUND II FUND PRICE STOCK FUND
---------------------------------------------------------------------
<S> <C> <C> <C> <C>
Investments:
State Street International Index Fund (shares -
115,917; cost - $1,218,009) $ - $ - $ - $ -
American Express Trust Equity Index Fund II
(shares - 3,446,152; cost - $67,597,820) - - - -
State Street Bond Fund (shares - 88,644; cost -
$924,890) 945,387 - - -
American Express Trust Money Market Fund II
(shares - 638,823; cost - $638,823) - 638,823 - -
Pilgrim, Baxter & Associates Growth Fund (shares -
156,921; cost - $3,539,683) - - 3,886,935 -
Fidelity Low-Price Stock Fund (shares - 130,987;
cost - $2,900,825) - - - 3,137,141
IDS New Dimensions Fund (Y) (shares - 146,099;
cost - $3,175,799) - - - -
Dodge & Cox Stock Fund (shares - 45,533; cost -
$3,929,663) - - - -
Investments in insurance contracts, at contract
value - - - -
Investments in pooled accounts, at fair value
(Mallinckrodt Stock Fund - units 3,906,696; cost -
$27,562,305; AMEX Aggressive Fund - units
412,120; cost - $4,158,129; AMEX Moderate Fund -
units 167,496; cost - $1,687,755; AMEX
Conservative Fund - units 37,589; cost - $381,303) - - - -
Loans to participants - - - -
-----------------------------------------------------------------
Total investments 945,387 638,823 3,886,935 3,137,141
Receivables:
Employer contributions 4,269 1,509 13,569 9,360
Participant contributions 24,418 11,228 115,679 79,888
Interest and dividends - 2,321 - -
-----------------------------------------------------------------
Total receivables 28,687 15,058 129,248 89,248
Amounts owed to (from) other funds 1,454 (6,572) 43,352 15,684
-----------------------------------------------------------------
Net assets available for benefits $ 975,528 $ 647,309 $4,059,535 $ 3,242,073
=================================================================
</TABLE>
See notes to financial statements.
3
<PAGE> 7
Investment Plan for Employees of Mallinckrodt Inc.
Statement of Net Assets Available for Benefits with Fund Information
(continued)
As of June 30, 1997
<TABLE>
<CAPTION>
AMEX AMEX
IDS NEW DODGE & COX AGGRESSIVE MODERATE
DIMENSIONS FUND FUND FUND FUND
--------------------------------------------------------------
<S> <C> <C> <C> <C>
Investments:
State Street International Index Fund (shares -
115,917; cost - $1,218,009) $ - $ - $ - $ -
American Express Trust Equity Index Fund II
(shares - 3,446,152; cost - $67,597,820) - - - -
State Street Bond Fund (shares - 88,644; cost -
$924,890) - - - -
American Express Trust Money Market Fund II
(shares - 638,823; cost- $638,823) - - - -
Pilgrim, Baxter & Associates Growth Fund (shares -
156,921; cost - $3,539,683) - - - -
Fidelity Low-Price Stock Fund (shares - 130,987;
cost - $2,900,825) - - - -
IDS New Dimensions Fund (Y) (shares - 146,099;
cost - $3,175,799) 3,439,180 - - -
Dodge & Cox Fund (shares - 45,533; cost -
$3,929,663) - 4,240,982 - -
Investments in insurance contracts, at contract
value - - - -
Investments in pooled accounts, at fair value
(Mallinckrodt Stock Fund - units 3,906,696;
cost - $27,535,603; AMEX Aggressive Fund - units
412,120; cost - $4,158,129; AMEX Moderate Fund -
units 167,496; cost - $1,687,755; AMEX
Conservative Fund - units
37,589; cost - $381,303) - - 4,523,837 1,794,719
Loans to participants - - - -
-----------------------------------------------------------
Total investments 3,439,180 4,240,982 4,523,837 1,794,719
Receivables:
Employer contributions 11,119 10,156 16,223 8,803
Participant contributions 92,157 87,289 132,367 66,878
Interest and dividends - - - -
-----------------------------------------------------------
Total receivables 103,276 97,445 148,590 75,681
Amounts owed to (from) other funds 5,581 19,178 6,806 3,177
-----------------------------------------------------------
Net assets available for benefits $3,548,037 $4,357,605 $4,679,233 $1,873,577
===========================================================
<CAPTION>
AMEX
CONSERVATIVE STABLE VALUE LOAN
FUND FUND ACCOUNT
----------------------------------------------
<S> <C> <C> <C>
Investments:
State Street International Index Fund (shares -
115,917; cost - $1,218,009) $ - $ - $ -
American Express Trust Equity Index Fund II
(shares - 3,446,152; cost - $67,597,820) - - -
State Street Bond Fund (shares - 88,644; cost -
$924,890) - - -
American Express Trust Money Market Fund II
(shares - 638,823; cost - $638,823) - - -
Pilgrim, Baxter & Associates Growth Fund (shares -
156,921; cost - $3,539,683) - - -
Fidelity Low-Price Stock Fund (shares - 130,987;
cost - $2,900,825) - - -
IDS New Dimensions Fund (Y) (shares - 146,099;
cost - $3,175,799) - - -
Dodge & Cox Fund (shares - 45,533; cost -
$3,929,663) - - -
Investments in insurance contracts, at contract
value - 107,072,199 -
Investments in pooled accounts, at fair value
(Mallinckrodt Stock Fund - units 3,906,696;
cost - $27,535,603; AMEX Aggressive Fund - units
412,120; cost - $4,158,129; AMEX Moderate Fund -
units 167,496; cost - $1,687,755; AMEX
Conservative Fund - units
37,589; cost - $381,303) 400,771 - -
Loans to participants - - 8,956,875
---------------------------------------------
Total investments 400,771 107,072,199 8,956,875
Receivables:
Employer contributions 2,374 7,815 -
Participant contributions 18,481 57,512 -
Interest and dividends - - -
---------------------------------------------
Total receivables 20,855 65,327 -
Amounts owed to (from) other funds - (89,077) -
---------------------------------------------
Net assets available for benefits $ 421,626 $107,048,449 $8,956,875
=============================================
</TABLE>
See notes to financial statements.
4
<PAGE> 8
Investment Plan for Employees of Mallinckrodt Inc.
Statement of Net Assets Available for Benefits with Fund Information
As of June 30, 1996
<TABLE>
<CAPTION>
MGI FIXED INCOME
TOTAL STOCK FUND FUND
-----------------------------------------
<S> <C> <C> <C>
ASSETS
Investments:
Mallinckrodt Group Inc. common stock (935,744
shares; cost - $27,989,301) $ 36,377,048 $36,377,048 $ -
Mutual funds:
Vanguard Index Trust - 500 Portfolio (741,121
shares; cost- $35,094,120) 46,609,120 - -
Vanguard/Wellesley Income Fund (1,725,532 shares;
cost - $32,311,174) 34,062,010 - -
Group fixed annuity contracts (cost equals
contract value):
Transamerica Occidental Life Ins. Company 67,869,155 - 67,869,155
Metropolitan Life Ins. Company 17,084,628 - 17,084,628
The Northern Trust Company Collective Short-Term
Investment Fund (221,130 units; cost - $221,130) 221,130 171,524 31,824
Loans to participants 6,900,472 - -
Other 7,686 - 7,686
----------------------------------------
Total investments 209,131,249 36,548,572 84,993,293
Receivables:
Employer contributions 9,734,382 1,831,149 2,547,949
Participant contributions 825,463 181,602 189,856
Interest and dividends 2,294 421 1,024
----------------------------------------
Total receivables 10,562,139 2,013,172 2,738,829
LIABILITIES
Amounts owed to (from) other funds - (1,928,625) 200,910
Amounts owed (to) from other plans 35,707 - 18,619
----------------------------------------
Net assets available for benefits $219,729,095 $36,633,119 $87,951,651
========================================
<CAPTION>
BALANCED S&P 500
FUND INDEX FUND LOAN ACCOUNT
-------------------------------------------
<S> <C> <C> <C>
ASSETS
Investments:
Mallinckrodt Group Inc. common stock (935,744
shares; cost- $27,989,301) $ - $ - $ -
Mutual funds:
Vanguard Index Trust- 500 Portfolio (741,121
shares; cost- $35,094,120) - 46,609,120 -
Vanguard/Wellesley Income Fund (1,725,532 shares;
cost- $32,311,174) 34,062,010 - -
Group fixed annuity contracts (cost equals
contract value):
Transamerica Occidental Life Ins. Company - - -
Metropolitan Life Ins. Company - - -
The Northern Trust Company Collective Short-Term
Investment Fund (221,130 units; cost- $221,130) 5,132 12,650 -
Loans to participants - - 6,900,472
Other - - -
----------------------------------------
Total investments 34,067,142 46,621,770 6,900,472
Receivables:
Employer contributions 2,105,932 3,249,352 -
Participant contributions 181,602 272,403 -
Interest and dividends 424 425 -
----------------------------------------
Total receivables 2,287,958 3,522,180 -
LIABILITIES
Amounts owed to (from) other funds (1,649,089) 3,376,804 -
Amounts owed (to) from other plans (2,461) 19,549 -
----------------------------------------
Net assets available for benefits $ 34,703,550 $53,540,303 $ 6,900,472
========================================
</TABLE>
See notes to financial statements.
5
<PAGE> 9
Investment Plan for Employees of Mallinckrodt Inc.
Statement of Changes in Net Assets Available for Benefits with Fund Information
Year ended June 30, 1997
<TABLE>
<CAPTION>
MALLINCKRODT FIXED INCOME BALANCED S&P 500
TOTAL STOCK FUND FUND FUND INDEX FUND
-------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
Investment income:
Interest and dividend income $ 11,651,063 $ 466,394 $ 3,137,404 $ 1,081,783 $ 762,552
Realized and unrealized gains 21,419,126 334,021 - 2,364,750 5,847,133
------------------------------------------------------------------------
Net investment income 33,070,189 800,415 3,137,404 3,446,533 6,609,685
Contributions:
Employer 13,448,055 10,375,628 382,224 140,724 1,009,306
Participant 22,631,014 3,914,334 2,877,880 2,772,506 4,364,087
------------------------------------------------------------------------
Total contributions 36,079,069 14,289,962 3,260,104 2,913,230 5,373,393
Cash and stock distributed to participants (22,100,620) (3,330,729) (6,690,978) (1,953,787) (2,892,044)
Transfers (to) from other plans (79,946) (41,680) (24,378) 3,611 (18,400)
Transfers of investment direction - (3,787,650) 222,733 (819,293) 1,308,457
Transfers (to) from other trustees - - (87,856,536) (38,293,844) (63,921,394)
------------------------------------------------------------------------
Net increase (decrease) 46,968,692 7,930,318 (87,951,651) (34,703,550) (53,540,303)
Net assets available for benefits at
beginning of year 219,729,095 36,633,119 87,951,651 34,703,550 53,540,303
------------------------------------------------------------------------
Net assets available for benefits at end of
year $266,697,787 $ 44,563,437 $ - $ - $ -
========================================================================
<CAPTION>
STATE STREET AMEX TRUST AMEX TRUST
INTERNATIONAL EQUITY INDEX STATE STREET MONEY MARKET
INDEX FUND FUND II BOND FUND FUND II
-------------------------------------------------------------
<S> <C> <C> <C> <C>
Investment income:
Interest and dividend income $ 1,220 $ 3,117,998 $ 1,720 $ 5,881
Realized and unrealized gains 108,689 11,060,728 21,066 -
--------------------------------------------------------
Net investment income 109,909 14,178,726 22,786 5,881
Contributions:
Employer 51,228 261,750 40,154 19,518
Participant 519,925 1,452,542 372,254 244,784
--------------------------------------------------------
Total contributions 571,153 1,714,292 412,408 264,302
Cash and stock distributed to participants (19,927) (3,055,727) (7,567) (45,887)
Transfers (to) from other plans - 901 - -
Transfers of investment direction 707,608 4,196,174 547,901 423,013
Transfers (to) from other trustees - 63,921,394 - -
--------------------------------------------------------
Net increase (decrease) 1,368,743 80,955,760 975,528 647,309
Net assets available for benefits at
beginning of year - - - -
--------------------------------------------------------
Net assets available for benefits at end of
year $ 1,368,743 $ 80,955,760 $ 975,528 $ 647,309
========================================================
</TABLE>
See notes to financial statements.
6
<PAGE> 10
Investment Plan for Employees of Mallinckrodt Inc.
Statement of Changes in Net Assets Available for Benefits with Fund Information
(continued)
Year ended June 30, 1997
<TABLE>
<CAPTION>
IDS NEW AMEX
PBHG GROWTH FIDELITY LOW- DIMENSIONS DODGE & COX AGGRESSIVE
FUND PRICE STOCK FUND FUND FUND FUND
--------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
Investment income:
Interest and dividend income $ 7,565 $ 2,830 $ 3,840 $ 27,718 $ 6,489
Realized and unrealized gains 357,045 237,734 266,856 313,249 373,076
-----------------------------------------------------------------------
Net investment income 364,610 240,564 270,696 340,967 379,565
Contributions:
Employer 175,890 114,748 137,915 114,044 200,379
Participant 1,759,105 1,169,078 1,358,237 1,098,247 1,971,631
-----------------------------------------------------------------------
Total contributions 1,934,995 1,283,826 1,496,152 1,212,291 2,172,010
Cash and stock distributed to
participants 39,203 (33,063) (39,870) (50,022) (50,664)
Transfers (to) from other plans - - - - -
Transfers of investment direction 1,799,133 1,750,746 1,821,059 2,854,369 2,178,322
Transfers (to) from other trustees - - - - -
-----------------------------------------------------------------------
Net increase (decrease) 4,059,535 3,242,073 3,548,037 4,357,605 4,679,233
Net assets available for benefits at
beginning of year - - - - -
-----------------------------------------------------------------------
Net assets available for benefits at end
of year $4,059,535 $3,242,073 $3,548,037 $4,357,605 $4,679,233
=======================================================================
<CAPTION>
AMEX AMEX
MODERATE CONSERVATIVE STABLE VALUE LOAN
FUND FUND FUND ACCOUNT
-----------------------------------------------------------
<S> <C> <C> <C> <C>
Investment income:
Interest and dividend income $ 2,361 $ 514 $ 3,024,794 $ -
Realized and unrealized gains 111,848 22,931 - -
---------------------------------------------------------
Net investment income 114,209 23,445 3,024,794 -
Contributions:
Employer 109,764 29,993 284,790 -
Participant 986,893 285,410 985,759 (3,501,658)
---------------------------------------------------------
Total contributions 1,096,657 315,403 1,270,549 (3,501,658)
Cash and stock distributed to
participants (22,340) (12,729) (9,414,144) 5,558,061
Transfers (to) from other plans - - - -
Transfers of investment direction 685,051 95,507 (13,983,130) -
Transfers (to) from other trustees - - 126,150,380 -
---------------------------------------------------------
Net increase (decrease) 1,873,577 421,626 107,048,449 2,056,403
Net assets available for benefits at
beginning of year - - - 6,900,472
---------------------------------------------------------
Net assets available for benefits at end
of year $1,873,577 $ 421,626 $107,048,449 $ 8,956,875
=========================================================
</TABLE>
See notes to financial statements.
7
<PAGE> 11
Investment Plan for Employees of Mallinckrodt Inc.
Statement of Changes in Net Assets Available for Benefits with Fund Information
Year ended June 30, 1996
<TABLE>
<CAPTION>
MGI FIXED INCOME BALANCED
TOTAL STOCK FUND FUND FUND
--------------------------------------------------------
<S> <C> <C> <C> <C>
INVESTMENT INCOME
Net investment income $ 9,284,990 $ 695,660 $ 5,802,634 $ 1,859,162
Realized and unrealized gains 11,626,554 2,993,454 - 1,183,561
--------------------------------------------------------
20,911,544 3,689,114 5,802,634 3,042,723
Contributions:
Employer 12,178,999 2,437,400 3,216,698 2,617,747
Participant 20,704,222 5,741,798 6,719,050 4,805,121
--------------------------------------------------------
Total contributions 32,883,221 8,179,198 9,935,748 7,422,868
Cash and stock distributed to participants (25,851,649) (5,667,348) (15,839,440) (3,987,519)
Transfers from other plans 13,321,989 955,459 5,080,823 2,872,253
Transfers of investment direction - (5,168,013) (1,481,327) (968,093)
--------------------------------------------------------
Net increase 41,265,105 1,988,410 3,498,438 8,382,232
Net assets available for benefits at beginning of year 178,463,990 34,644,709 84,453,213 26,321,318
--------------------------------------------------------
Net assets available for benefits at end of year $219,729,095 $36,633,119 $ 87,951,651 $34,703,550
========================================================
</TABLE>
<TABLE>
<CAPTION>
S&P 500 LOAN
INDEX FUND ACCOUNT
--------------------------
<S> <C> <C>
INVESTMENT INCOME
Net investment income $ 927,534 $ -
Realized and unrealized gains 7,449,539 -
--------------------------
8,377,073 -
Contributions:
Employer 3,907,154 -
Participant 6,300,865 (2,862,612)
--------------------------
Total contributions 10,208,019 (2,862,612)
Cash and stock distributed to participants (4,591,928) 4,234,586
Transfers from other plans 4,413,454 -
Transfers of investment direction 7,617,433 -
--------------------------
Net increase 26,024,051 1,371,974
Net assets available for benefits at beginning of year 27,516,252 5,528,498
--------------------------
Net assets available for benefits at end of year $53,540,303 $ 6,900,472
==========================
</TABLE>
See notes to financial statements.
8
<PAGE> 12
Investment Plan for Employees of Mallinckrodt Inc.
Notes To Financial Statements
Years Ended June 30, 1997 and 1996
1. DESCRIPTION OF THE PLAN
GENERAL
This plan description is provided for general information purposes only.
Participants should refer to the September 1997 plan summary, which is part of
the prospectus for the Investment Plan for Employees of Mallinckrodt Inc. (the
Plan), for a more complete description of the provisions of the Plan. The Plan
was established effective July 1, 1970 and has been subsequently amended from
time to time to incorporate certain changes in plan features and other
legislatively required changes. All nonunion employees of Mallinckrodt Inc.
(Mallinckrodt or the Company) and certain wholly owned subsidiaries and certain
union employees employed in the U.S. or on a U.S. payroll are eligible to
participate in the Plan.
Effective January 1, 1997, American Express Trust Company (AMEX) became the
Plan's recordkeeper and trustee. Assets totaling $219.5 million were
transferred from the previous trustee (The Northern Trust Company) and
recordkeeper on January 2, 1997.
PARTICIPANTS' ACCOUNTS
Separate accounts are maintained for each participant. Each participant's
account balances are adjusted for contributions, distributions, loans, income,
gains, and losses.
CONTRIBUTIONS
The Plan is funded by contributions from participants in the form of after-tax
contributions (payroll deductions) of up to 15 percent of participants' base
monthly salaries. The Plan also provides a qualified cash or deferred
arrangement within the meaning of Section 401(k) of the Internal Revenue Code.
The percentage of a participant's base monthly salary which could be contributed
on a pretax basis (salary reduction contributions) cannot exceed 15 percent up
to a maximum contribution of $9,500. Total after-tax and pretax contributions
cannot exceed 15 percent of a participant's base monthly salary.
The Plan is also funded by employer contributions of 20 percent of a
participant's eligible contributions. Contributions that do not exceed 6
percent of a participant's base monthly salary constitute eligible
contributions. Mallinckrodt may make additional discretionary contributions
("Supermatch") each year as determined by its Board of Directors. All Supermatch
contributions, starting with the contribution for the plan year
<PAGE> 13
Investment Plan for Employees of Mallinckrodt Inc.
Notes to Financial Statements (continued)
1. DESCRIPTION OF THE PLAN (CONTINUED)
CONTRIBUTIONS (CONTINUED)
ending June 30, 1997, will be made and/or invested for the Plan exclusively in
Mallinckrodt common stock. These contributions may not be withdrawn, borrowed
against, or transferred from company stock into another investment fund except
to the extent that the value of these contributions credited to the
participant's account after June 30, 1997 (plus investment return thereon)
exceeds 15 percent of the total value of the participant's accounts.
Employer contributions are subject to certain limitations with respect to
Mallinckrodt's consolidated net earnings and retained earnings. Total employer
contributions (including Supermatch) were equal to 97 percent of participants'
eligible contributions for the year ended June 30, 1997 and 100 percent for the
year ended June 30, 1996.
Contributions to the Plan, including employee and employer contributions, are
subject to various limitations imposed by the Internal Revenue Code.
Under certain circumstances, participants may transfer their benefits from
other plans to the Plan.
FUND ASSET VALUATION
Participants' equity in each investment fund is valued in dollars each business
day (valuation date). As of each valuation date, the market value of the
assets in each of the investment funds is determined, and the increase or
decrease of each fund is allocated to each participant's account invested in
that fund, based on the participant's proportionate interest (units or shares)
of such fund as of the previous valuation date.
INVESTMENTS
The Plan, through December 31, 1996, offered four investment funds trusteed at
The Northern Trust Company. These investments included MGI Stock Fund,
Balanced Fund, S&P 500 Index Fund, and the Fixed Income Fund. All balances were
transferred to American Express Trust Company, effective January 1, 1997. Upon
transfer, the Balanced Fund and Fixed Income Fund were transferred into the
Stable Value Fund. The S&P 500 Index Fund was transferred into the AMEX Trust
Equity Index Fund II.
10
<PAGE> 14
Investment Plan for Employees of Mallinckrodt Inc.
Notes to Financial Statements (continued)
1. DESCRIPTION OF THE PLAN (CONTINUED)
INVESTMENTS (CONTINUED)
Effective January 1, 1997, the Plan expanded participant investment options to
ten investment funds and three lifestyle funds held by AMEX. The new investment
options include Mallinckrodt Stock Fund, State Street International Index Fund,
AMEX Trust Equity Index Fund II, State Street Bond Fund, AMEX Trust Money
Market Fund II, PBHG Growth Fund, Fidelity Low-Price Stock Fund, IDS New
Dimensions Fund, Dodge & Cox Fund, and the Stable Value Fund.
The assets at June 30, 1997 of the Mallinckrodt Stock Fund, AMEX Trust Equity
Index Fund II, and the Stable Value Fund represent 5 percent or more of the
fair value of net assets available for benefits at June 30, 1997. The assets of
the MGI Stock Fund, Fixed Income Fund, Balanced Fund, and S&P 500 Index Fund
represent 5 percent or more of the fair value of net assets available for
benefits at June 30, 1996.
INVESTMENT PROGRAMS
Participants select their desired investment funds upon joining the Plan.
Participants may direct that their past and future contributions, employer
contributions, and earnings on such contributions be invested in one of the
funds or in increments of 1 percent in any of the funds, subject to
Mallinckrodt Stock Fund minimum balance restrictions. Participants may also
elect to change the investment direction of their contributions at any time
during the year, upon giving the required notice. Such a change only affects
the investment of the participant's contributions and employer contributions
received by the Plan after the effective date of the change.
Prior to December 31, 1996, all new contributions to the Fixed Income Fund were
invested 75 percent in the Transamerica Occidental Life Insurance Company
(Transamerica) contract and 25 percent in the Metropolitan Life Insurance
Company (Metropolitan) contract. Effective January 1, 1997, all net cash
inflows into the Stable Value Fund are invested in the AMEX Trust Money Market
Fund II. Transfers out of the Stable Value Fund are made on a prorated basis of
75 percent/25 percent from both the Transamerica contract and the Metropolitan
contract, respectively. Because of limitations contained within insurance
contracts held in the Stable Value Fund, the plan administrator may be required
to limit transfers from that fund or minimize adverse market value adjustments.
Also, the Stable Value Fund prohibits direct transfers to the AMEX Trust Money
Market Fund II. Transfers from the Stable Value Fund to the
11
<PAGE> 15
Investment Plan for Employees of Mallinckrodt Inc.
Notes to Financial Statements (continued)
1. DESCRIPTION OF THE PLAN (CONTINUED)
INVESTMENT PROGRAMS (CONTINUED)
AMEX Trust Money Market Fund II must be directed through another fund for 90
days before final transfer to the AMEX Trust Money Market Fund II.
A participant may change the amount of payroll deduction or salary reduction at
any time throughout the year.
VESTING AND PARTICIPATION
The participant is at all times fully vested in all contributions made by the
participant and the employer and the earnings thereon. Effective January 1,
1997, employees who are eligible to join the Plan may elect to do so upon their
employment date. Contribution elections become effective with the payroll
period next following the participant's elections.
WITHDRAWALS
The Plan does permit participants to withdraw various portions or, in certain
instances, their entire account balance in the Plan under limited
circumstances. However, these rights of withdrawal are limited and carry, in
certain cases, suspension of participation penalties.
Participants may withdraw their entire interest in the Plan without penalty
upon termination of their employment or upon reaching age 59 1/2 or becoming
disabled as defined in the Plan.
Except as noted above, amounts contributed through salary deferrals, as well as
earnings thereon, may not be withdrawn while a participant is employed by the
Company except under certain conditions of financial hardship. In such
instances, salary deferrals may be withdrawn; however, as a penalty, the
participant is suspended from participation for at least 12 months.
Participants may also withdraw after-tax and employer contributions without
penalty upon demonstration of financial hardship, or these amounts may be
withdrawn for any purpose, in which case the participant would also incur a
suspension of participation for
12
<PAGE> 16
Investment Plan for Employees of Mallinckrodt Inc.
Notes to Financial Statements (continued)
1. DESCRIPTION OF THE PLAN (CONTINUED)
WITHDRAWALS (CONTINUED)
12 months. Except as noted below, participants will receive distribution of
their interest in the Plan in a lump-sum payment.
DISTRIBUTION UPON TERMINATION OF EMPLOYMENT OR RETIREMENT
Upon termination of employment with Mallinckrodt and its affiliates, plan
participants are entitled to receive a complete distribution of their entire
account balance in the Plan. All participants who terminate their employment
with vested account balances whose value exceeds $3,500 are eligible to defer
receipt of any distribution from the Plan until January 31 of the year following
termination or no later than the April 1 following their attainment of
age 70 1/2.
Participants electing deferral must (1) elect to receive their distributions in
(a) a lump sum on the date of distribution or (b) in substantially equal annual
installments not to exceed ten and (2) make any election for the method of
distribution in the event of their death prior to total distribution. The
beneficiary of a retired participant is permitted, in the event of the latter's
death, to change the form of payment election made by the deceased participant.
One restriction applies to all withdrawals. The Company Supermatch
contributions made after June 30, 1997 plus investment returns on them may be
withdrawn only to the extent the value of the post-June 30, 1997 Supermatch
contribution account exceeds 15 percent of the participant's total account
balance in the Plan at the time the withdrawal is made.
LOANS TO PARTICIPANTS
Participants in the Plan may be granted loans from their plan accounts subject
to certain terms, maximum dollar amounts, or plan account balance limits and
other rules as defined by the Plan. The amount of any such loan is withdrawn
from the account of the participant to whom the loan was made, and such account
does not share in the allocation of income, gains, and losses of the investment
funds to the extent of the outstanding balance of such loan. Rather, the
interest paid by the participant on the loan is credited to the participant's
account. Loans are accounted for in the Loan Account in the accompanying
statement of net assets available for benefits. Principal repayments, which
are over one to five years for general purpose loans and over one to ten years
for residential loans, and related interest income, determined at the prime
rate, are credited to the borrowing participant's account. The rate of interest
charged for the term of a loan is
13
<PAGE> 17
Investment Plan for Employees of Mallinckrodt Inc.
Notes to Financial Statements (continued)
1. DESCRIPTION OF THE PLAN (CONTINUED)
LOANS TO PARTICIPANTS (CONTINUED)
the prime rate quoted in The Wall Street Journal on the first business day of
the month in which the loan is approved. Loan repayments are made by payroll
deductions or in lump-sum repayments.
Loan repayments are invested in the same manner as current contributions.
2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
BASIS OF ACCOUNTING
The accounting records of the Plan are maintained on the accrual basis of
accounting.
CONTRIBUTIONS
Contributions from participants and the Company match are recorded to
participants' accounts twice a month. Any additional contributions by
Mallinckrodt are made following approval by its Board of Directors.
PLAN EXPENSES
All expenses incurred in connection with acquisition or disposition of
securities for and the operation of the investment funds as well as the mutual
funds offered under the Plan are charged directly against those funds and their
investment returns. All other administrative expenses of the Plan, namely
recordkeeping and disbursing expenses, trustee fees, counsel and accountant
expenses, and communication charges incurred by the Company for the plan
operations, are charged to and paid by the Plan and allocated against the
participant accounts. The maximum administration charge against participant
accounts is limited to $60 per plan year in addition to specific transaction
charges directed by participants.
INVESTMENT IN POOLED ACCOUNTS
The investments are valued at fair value based upon quoted market values
obtained from the insurance carrier. The investments are described as the
Stable Value Fund, AMEX Aggressive Fund, AMEX Moderate Fund, or AMEX
Conservative Fund.
14
<PAGE> 18
Investment Plan for Employees of Mallinckrodt Inc.
Notes to Financial Statements (continued)
2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)
INVESTMENT IN THE STABLE VALUE FUND
One of the 13 fund options, the Stable Value Fund (previously known as the
Fixed Income Fund), includes investments in two asset groups. The first is the
AMEX Trust Money Market Fund II; the second consists of two guaranteed interest
contracts with Transamerica and Metropolitan at June 30, 1997. The contract with
Transamerica dated November 2, 1989 provides guaranteed rates of interest to be
set annually on all new monies invested over the contract term. The rate for
the contract year beginning January 1, 1997 is 6.85 percent, net of investment
management fees. The contract with Metropolitan dated October 18, 1991 provides
guaranteed rates of interest to be set annually on all new monies invested over
the contract term. The rate for the contract year beginning January 1, 1997 is
6.08 percent, net of investment management fees.
SECURITY TRANSACTIONS
Purchases and sales of securities are accounted for on the trade date (date the
order to buy or sell is executed).
Dividend income is recorded on the ex-dividend date. Income from other
investments is recorded as earned on an accrual basis.
PLAN TERMINATION
While Mallinckrodt has not expressed any intent to terminate the Plan, it is
free to do so at any time. In the event the Plan terminates, participants will
be entitled to receive a complete distribution of their undistributed account
balance as held in their respective plan accounts. Because all plan assets are
allocated to plan participants and a participant's benefit under the Plan equals
the value of the participant's account balance, the Plan is not subject to the
insurance provisions of the Pension Benefit Guarantee Corporation.
RECLASSIFICATION
Certain prior-year balances have been reclassified to conform to the current
year's treatment.
15
<PAGE> 19
Investment Plan for Employees of Mallinckrodt Inc.
Notes to Financial Statements (continued)
2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)
USE OF ESTIMATES
The preparation of financial statements in conformity with generally accepted
accounting principles requires management to make estimates and assumptions
that affect certain reported amounts within the financial statements, as well
as amounts disclosed in the notes. While the Company uses its best estimates
and judgments, actual results could differ from these estimates.
3. FEDERAL INCOME TAX STATUS
On September 26, 1995, the Internal Revenue Service advised that the Plan, as
amended, qualifies under Section 401(a) of the Internal Revenue Code (IRC) and
that the Investment Trust for Employees of Mallinckrodt Inc., as amended,
established thereunder is exempt from federal income taxation under
Section 501(a). Once qualified, the Plan is required to operate in conformity
with the IRC in order to maintain its qualification. The plan administrator
and Mallinckrodt's legal counsel are not aware of any course of action or series
of events that have occurred that might adversely affect the Plan's qualified
status.
4. TRANSACTIONS WITH PARTIES-IN-INTEREST
The only transactions with parties-in-interest were purchases and sales of
assets through The Northern Trust Company and AMEX. Northern's and AMEX's fees
are based on customary and reasonable rates for such services and are paid by
the Plan.
5. SUBSEQUENT EVENT
On June 30, 1997, the Company disposed of its animal health operating segment.
A portion of the participants of the Plan are employees associated with this
segment. According to the terms of the sales agreement, Mallinckrodt Inc.
retained all responsibility for the assets of the Plan related to the employees
of the animal health segment. The assets were frozen for future contributions
on the effective sale date.
16
<PAGE> 20
Investment Plan for Employees of Mallinckrodt Inc.
Notes to Financial Statements (continued)
6. RECONCILIATION OF FINANCIAL STATEMENTS TO FORM 5500
The following is a reconciliation of net assets available for benefits per the
financial statements to the Form 5500.
<TABLE>
<CAPTION>
JUNE 30, 1996
-------------
<S> <C>
Net assets available for benefits per the financial statements $219,729,095
Amounts allocated to withdrawing participants (2,423,518)
------------
Net assets available for benefits per the Form 5500 $217,305,577
============
</TABLE>
Amounts allocated to withdrawing participants by fund option are as follows:
<TABLE>
<CAPTION>
JUNE 30, 1996
-------------
<S> <C>
Mallinckrodt Stock Fund $ 311,845
Fixed Income Fund 1,616,629
Balanced Fund 223,058
S&P 500 Index Fund 271,986
------------
$2,423,518
============
</TABLE>
No material differences between the financial statements and Form 5500 were
noted at June 30, 1997.
17
<PAGE> 21
SUPPLEMENTAL SCHEDULES
<PAGE> 22
Schedule I
Investment Plan for Employees of Mallinckrodt Inc.
Line 27(a) - Assets Held for Investment
As of June 30, 1997
<TABLE>
<CAPTION>
FAIR
DESCRIPTION NUMBER OF SHARES COST VALUE
- ---------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
American Express Trust Money
Market Fund II 638,823 $ 638,823 $ 638,823
American Express Trust Equity
Index Fund II 3,446,152 67,597,820 80,795,023
State Street Daily EAFE Fund
Series C 88,644 924,890 945,387
State Street International Index Fund 115,917 1,218,009 1,323,544
Dodge & Cox Fund 45,533 3,929,663 4,240,982
Fidelity Low-Price Stock Fund 130,987 2,900,825 3,137,141
IDS New Dimensions Fund 146,099 3,175,799 3,439,180
Mallinckrodt Stock Fund 3,909,696 27,562,305 34,620,356
Stable Value Fund 10,561,472 107,068,663 107,072,199
AMEX Conservative Fund 37,589 381,303 400,771
AMEX Moderate Fund 167,496 1,687,755 1,794,719
AMEX Aggressive Fund 412,120 4,158,129 4,523,837
PBHG Growth Fund 156,921 3,539,683 3,886,935
Participant Promissory Note 8,956,875 8,956,875 8,956,875
--------------------------------
Total investments $233,740,542 $255,775,772
================================
</TABLE>
<PAGE> 23
Schedule II
Investment Plan for Employees of Mallinckrodt Inc.
Line 27(d) - Reportable Transactions
Year ended June 30, 1997
<TABLE>
<CAPTION>
PURCHASES SALES NET GAIN
----------------- -----------------------------------
DESCRIPTION NUMBER COST NUMBER PROCEEDS COST (LOSS)
- ------------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
Category (i) series of securities
- ---------------------------------
transactions
------------
AMEX Trust Money Market Fund II 1 $37,500,000 $ - $ - $ -
AMEX Trust Equity Index Fund II 1 63,921,394 - - -
Category (iii) series of securities transactions
- ------------------------------------------------
The Northern Trust Company
Collective Short-Term
Investment Fund (1) 30,518,883 30,766,539 30,766,539 -
Vanguard Index Trust 500
Portfolio 15 12,991,203 7 65,255,782 48,085,323 17,170,459
Vanguard/Wellesley Income Fund 12 4,580,858 10 40,095,032 36,892,032 3,203,000
AMEX Trust Money Market Fund II (1) 68 2,362,488 63 22,496,634 22,496,634 -
AMEX Trust Equity Index Fund II 116 8,864,539 73 5,251,455 4,805,294 446,161
</TABLE>
Notes: (1) Due to the nature of these transactions, no gain or loss on
disposition is recognized.
(2) There were no category (ii) or (iv) reportable transactions
during the year ended June 30, 1997.
<PAGE> 1
Consent of Independent Auditors
We consent to the incorporation by reference in the Registration Statement
(Form S-8 No. 333-34489) pertaining to the Investment Plan for Employees of
Mallinckrodt Inc. and in the related Prospectus of our report dated October 29,
1997, with respect to the financial statements and schedules of the Investment
Plan for Employees of Mallinckrodt Inc. included in this Annual Report (Form
11-K) for the year ended June 30, 1997.
December 18, 1997 /s/ Ernst & Young LLP
St. Louis, Missouri
