<PAGE>
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, 1998
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>
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> <C>
BRUCE K. CROCKETT
- -------------------------------
Bruce K. Crockett Vice President, Human Resources December 15, 1998
ROGER A. KELLER
- -------------------------------
Roger A. Keller Vice President, Secretary and December 15, 1998
General Counsel
DAVID R. KUPFERER
- -------------------------------
David R. Kupferer Vice President, Human Resources, December 15, 1998
Pharmaceutical Group
JUDITH C. REBHOLZ
- -------------------------------
Judith C. Rebholz Director, International Treasury December 15, 1998
and Corporate Finance
JOHN J. RIORDAN
- -------------------------------
John J. Riordan Vice President, Pension and December 15, 1998
Profit Sharing Plans
NANCY J. STEMME
- -------------------------------
Nancy J. Stemme Director of Compensation and December 15, 1998
Welfare Benefits
WILLIAM B. STONE
- -------------------------------
William B. Stone Vice President, Information December 15, 1998
Technology
(Chairman of the Committee)
FRANK A. VOLTOLINA
- -------------------------------
Frank A. Voltolina Vice President and Treasurer December 15, 1998
</TABLE>
<PAGE>
Investment Plan for Employees
of Mallinckrodt Inc.
Financial Statements and
Supplemental Schedules
Years ended June 30, 1998 and 1997
with Independent Auditors' Reports
<PAGE>
Investment Plan for Employees
of Mallinckrodt Inc.
Financial Statements and
Supplemental Schedules
Years ended June 30, 1998 and 1997
Contents
<TABLE>
<CAPTION>
<S> <C>
Independent Auditors' Reports..................................................... 1-2
Financial Statements
Statements of Net Assets Available for Benefits with Fund Information............. 3-6
Statements of Changes in Net Assets Available for Benefits with Fund Information.. 7-10
Notes to Financial Statements..................................................... 11-16
Supplemental Schedules
Line 27(a)--Schedule of Assets Held for Investment................................ 18
Line 27(d)--Schedule of Reportable Transactions................................... 19-20
</TABLE>
<PAGE>
Independent Auditors' Report
Plan Administrator
Investment Plan for Employees of
Mallinckrodt Inc.
We have audited the accompanying statement of net assets available for benefits
of the Investment Plan for Employees of Mallinckrodt Inc. as of June 30, 1998
and the related statement of changes in net assets available for benefits for
the year 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 audit.
We conducted our audit 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 audit provides 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, 1998, and the changes in net assets available for benefits for the year then
ended in conformity with generally accepted accounting principles.
Our audit was 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, 1998 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 statement of net assets
available for benefits and the statement 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.
/s/ Stone Carlie & Company, L.L.C.
St. Louis, Missouri
November 24, 1998
<PAGE>
Report of Independent Auditors
Plan Administrator
Investment Plan for Employees of
Mallinckrodt Inc.
We have audited the accompanying statement of net assets available for benefits
of the Investment Plan for Employees of Mallinckrodt Inc. as of June 30, 1997
and the related statement of changes in net assets available for benefits for
the year 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 audit.
We conducted our audit 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 audit provides 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 the changes in net assets available for benefits for the year then
ended in conformity with generally accepted accounting principles.
Our audit was made for the purpose of forming an opinion on the basic financial
statements taken as a whole. The fund information in the statement of net assets
available for benefits and the statement 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 fund information has been subjected to the auditing
procedures applied in our audit of the basic financial statements and, in our
opinion, is fairly stated in all material respects to the financial statements
taken as a whole.
/s/ Ernst & Young LLP
St. Louis, Missouri
October 29, 1997
<PAGE>
Investment Plan for Employees of Mallinckrodt Inc.
Statement of Net Assets Available for Benefits with Fund Information
June 30, 1998
<TABLE>
<CAPTION>
State Street AMEX Trust AMEX Trust PBHG Fidelity Low-
Mallinckrodt International Equity Index State Street Money Market Growth Price Stock
Total Stock Fund Index Fund Fund II Bond Fund Fund II Fund Fund
------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Investments:
State Street International
Index Fund (shares-
274,039; cost-$3,121,578) $3,307,374 - $3,307,374 - - - - -
American Express Trust
Equity Index Fund II
(shares-2,879,777; cost-
$68,276,633) 87,556,750 - - $87,556,750 - - - -
State Street Bond Fund
(shares-276,054; cost-
$3,111,129) 3,245,846 - - - $3,245,846 - - -
American Express Trust
Money Market Fund II (shares-
2,765,731; cost-$2,765,731) 2,765,731 - - - - $2,765,731 - -
PBHG Growth Fund (shares-
293,130; cost-$7,588,843) 7,964,331 - - - - - $7,964,331 -
Fidelity Low-Price Stock Fund
(shares-364,705;
cost-$9,190,201) 9,890,810 - - - - - - $9,890,810
IDS New Dimensions Fund (Y)
(shares-351,191;
cost-$8,730,608) 9,784,526 - - - - - - -
Dodge & Cox Stock Fund
(shares-120,574;
cost-$11,727,268) 12,104,456 - - - - - - -
Investments in collective
funds, at fair value
(Mallinckrodt Stock Fund-
units 4,062,070, cost-
$30,831,111; AMEX
Aggressive Fund-
units 816,992, cost-
$9,166,650; AMEX Moderate
Fund-units 369,247, cost-
$4,072,794; AMEX Conservative
Fund-units 123,787, cost-
$1,395,079; Stable Value
Fund-units 7,052,049,
cost-$75,775,139) 120,187,471 $27,528,650 - - - - - -
Loans to participants 9,498,150 - - - - - - -
----------------------------------------------------------------------------------------------------
Total investments 266,305,445 27,528,650 3,307,374 87,556,750 3,245,846 2,765,731 7,964,331 9,890,810
Receivables:
Employer contributions 6,031,681 5,965,285 2,314 9,525 1,971 1,293 7,687 6,392
Participant contributions 589,735 51,010 19,207 80,846 15,192 9,460 64,311 55,043
----------------------------------------------------------------------------------------------------
Total receivables 6,621,416 6,016,295 21,521 90,371 17,163 10,753 71,998 61,435
----------------------------------------------------------------------------------------------------
Net assets available
for benefits $272,926,861 $33,544,945 $3,328,895 $87,647,121 $3,263,009 $2,776,484 $8,036,329 $9,952,245
====================================================================================================
</TABLE>
See notes to financial statements. Page 3
<PAGE>
Investment Plan for Employees of Mallinckrodt Inc.
Statement of Net Assets Available for Benefits with Fund Information (continued)
June 30, 1998
<TABLE>
<CAPTION>
IDS New AMEX AMEX AMEX
Dimensions Dodge & Cox Aggressive Moderate Conservative Stable Value Loan
Fund Fund Fund Fund Fund Fund Account
-----------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C>
Investments:
State Street International
Index Fund (shares-274,039;
cost-$3,121,578) - - - - - - -
American Express Trust Equity
Index Fund II (shares-2,879,777;
cost-$68,276,633) - - - - - - -
State Street Bond Fund (shares-
276,054; cost-$3,111,129) - - - - - - -
American Express Trust Money
Market Fund II (shares-2,765,731;
cost-$2,765,731) - - - - - - -
PBHG Growth Fund (shares-293,130;
cost-$7,588,843) - - - - - - -
Fidelity Low-Price Stock Fund
(shares-364,705; cost-$9,190,201) - - - - - - -
IDS New Dimensions Fund (Y) (shares-
351,191; cost-$8,730,608) $9,784,526 - - - - - -
Dodge & Cox Fund (shares-120,574;
cost-$11,727,268) - $12,104,456 - - - - -
Investments in collective funds, at
fair value (Mallinckrodt Stock
Fund-units 4,062,070, cost-
$30,831,111; AMEX Aggressive Fund-
units 816,992, cost-$9,166,650;
AMEX Moderate Fund-units 369,247,
cost-$4,072,794; AMEX Conservative
Fund-units 123,787, cost-$1,395,079;
Stable Value Fund-units 7,052,049,
cost-$75,775,139) - - $10,372,529 $4,498,910 $1,498,321 $76,289,061 -
Loans to participants - - - - - - $9,498,150
-----------------------------------------------------------------------------------------
Total investments 9,784,526 12,104,456 10,372,529 4,498,910 1,498,321 76,289,061 9,498,150
Receivables:
Employer contributions 6,865 6,975 10,904 5,675 1,561 5,234 -
Participant contributions 56,873 59,555 87,640 41,567 11,386 37,645 -
-----------------------------------------------------------------------------------------
Total receivables 63,738 66,530 98,544 47,242 12,947 42,879 -
-----------------------------------------------------------------------------------------
Net assets available for benefits $9,848,264 $12,170,986 $10,471,073 $4,546,152 $1,511,268 $76,331,940 $9,498,150
=========================================================================================
</TABLE>
See notes to financial statements. Page 4
<PAGE>
Investment Plan for Employees of Mallinckrodt Inc.
Statement of Net Assets Available for Benefits with Fund Information
June 30, 1997
<TABLE>
<CAPTION>
State Street AMEX Trust
Mallinckrodt International Equity Index
Total Stock Fund Index Fund Fund II
-------------------------------------------------------------------------
Investments:
<S> <C> <C> <C> <C>
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
=======================================================================
</TABLE>
See notes to financial statements.
<TABLE>
<CAPTION>
AMEX Trust Fidelity
State Street Money Market PBHG Growth Low-Price
Bond Fund Fund II Fund Stock Fund
---------------------------------------------------------------------------
Investments:
<S> <C> <C> <C> <C>
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>
Page 5
See notes to financial statements.
<PAGE>
Investment Plan for Employees of Mallinckrodt Inc.
Statement of Net Assets Available for Benefits with Fund Information (continued)
June 30, 1997
<TABLE>
<CAPTION>
IDS New AMEX AMEX AMEX
Dimensions Dodge & Cox Aggressive Moderate Conservative Stable Value
Fund Fund Fund Fund Fund Fund Loan Account
-------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <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 -- -- -- -- -- $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) -- -- $4,523,837 $1,794,719 $400,771 -- --
Loans to participants -- -- -- -- -- -- $8,956,875
------------------------------------------------------------------------------------------------
Total investments 3,439,180 4,240,982 4,523,837 1,794,719 400,771 107,072,199 8,956,875
Receivables:
Employer contributions 11,119 10,156 16,223 8,803 2,374 7,815 --
Participant contributions 92,157 87,289 132,367 66,878 18,481 57,512 --
Interest and dividends -- -- -- -- -- -- --
------------------------------------------------------------------------------------------------
Total receivables 103,276 97,445 148,590 75,681 20,855 65,327 --
Amounts owed to (from) other funds 5,581 19,178 6,806 3,177 -- (89,077) --
------------------------------------------------------------------------------------------------
Net assets available for benefits $3,548,037 $4,357,605 $4,679,233 $1,873,577 $ 421,626 $107,048,449 $8,956,875
================================================================================================
</TABLE>
Page 6
<PAGE>
Investment Plan for Employees of Mallinckrodt Inc.
Statement of Changes in Net Assets Available for Benefits with Fund Information
Year ended June 30, 1998
<TABLE>
<CAPTION>
State Street AMEX Trust
Mallinckrodt International Equity Index
Total Stock Fund Index Fund Fund II
----------------------------------------------------------------
<S> <C> <C> <C> <C>
Investment income:
Interest and dividend income $ 8,856,401 $ 609,702 - $ 3,268
Realized and unrealized gains (losses) 18,275,739 (7,909,910) $ 211,232 21,484,193
----------------------------------------------------------------
Net investment income 27,132,140 (7,300,208) 211,232 21,487,461
Contributions:
Employer cash 2,216,848 203,019 77,783 271,345
Employer common stock 5,958,902 5,958,902 - -
Participant 18,647,293 2,049,529 819,882 2,987,611
----------------------------------------------------------------
Total contributions 26,823,043 8,211,450 897,665 3,258,956
Cash and stock distributed to participants (47,726,109) (5,307,039) (346,103) (14,577,173)
Transfers of investment direction - (6,622,695) 1,197,358 (3,477,883)
----------------------------------------------------------------
Net increase (decrease) 6,229,074 (11,018,492) 1,960,152 6,691,361
Net assets available for benefits at beginning of year 266,697,787 44,563,437 1,368,743 80,955,760
----------------------------------------------------------------
Net assets available for benefits at end of year $272,926,861 $ 33,544,945 $3,328,895 $ 87,647,121
================================================================
</TABLE>
<TABLE>
<CAPTION>
AMEX Trust PBHG Fidelity
State Street Money Market Growth Low-Price
Bond Fund Fund II Fund Stock Fund
------------------------------------------------------------
<S> <C> <C> <C> <C>
Investment income:
Interest and dividend income - $ 66,922 - $ 424,630
Realized and unrealized gains (losses) $ 189,545 - $ 424,256 779,252
------------------------------------------------------------
Net investment income 189,545 66,922 424,256 1,203,882
Contributions:
Employer cash 59,554 33,617 257,556 197,483
Employer common stock - - - -
Participant 606,944 325,250 2,708,079 2,150,544
------------------------------------------------------------
Total contributions 666,498 358,867 2,965,635 2,348,027
Cash and stock distributed to participants (324,851) (1,323,148) (805,790) (1,034,517)
Transfers of investment direction 1,756,289 3,026,534 1,392,693 4,192,780
------------------------------------------------------------
Net increase (decrease) 2,287,481 2,129,175 3,976,794 6,710,172
Net assets available for benefits at beginning of year 975,528 647,309 4,059,535 3,242,073
------------------------------------------------------------
Net assets available for benefits at end of year $3,263,009 $ 2,776,484 $8,036,329 $ 9,952,245
============================================================
</TABLE>
Page 7
See notes to financial statements.
<PAGE>
Investment Plan for Employees of Mallinckrodt Inc.
Statement of Changes in Net Assets Available for Benefits with Fund Information
(continued)
Year ended June 30, 1998
<TABLE>
<CAPTION>
IDS New AMEX AMEX AMEX Stable
Dimensions Dodge & Fox Aggressive Moderate Conservative Value Loan
Fund Fund Fund Fund Fund Fund Account
-------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C>
Investment income:
Interest and dividend income $ 519,708 $ 931,491 -- -- -- $5,555,842 $ 744,838
Realized and unrealized gains 1,103,988 427,192 $ 1,044,971 $ 405,991 $ 115,029 -- --
-------------------------------------------------------------------------------------------
Net investment income 1,623,696 1,358,683 1,044,971 405,991 115,029 5,555,842 744,838
Contributions:
Employer cash 216,311 214,615 328,944 171,001 40,609 145,011 --
Employer common stock -- -- -- -- -- -- --
Participant 2,301,934 2,355,747 3,503,110 1,731,077 415,327 1,523,688 (4,831,429)
-------------------------------------------------------------------------------------------
Total contributions 2,518,245 2,570,362 3,832,054 1,902,078 455,936 1,668,699 (4,831,429)
Cash and stock distributed to
participants (895,365) (1,882,297) (1,515,540) (643,089) (260,920) (23,438,143) 4,627,866
Transfers of investment direction 3,053,651 5,766,633 2,430,355 1,007,595 779,597 (14,502,907) --
-------------------------------------------------------------------------------------------
Net increase (decrease) 6,300,227 7,813,381 5,791,840 2,672,575 1,089,642 (30,716,509) 541,275
Net assets available for benefits
at beginning of year 3,548,037 4,357,605 4,679,233 1,873,577 421,626 107,048,449 8,956,875
-------------------------------------------------------------------------------------------
Net assets available for benefits
at end of year $9,848,264 $12,170,986 $10,471,073 $4,546,152 $1,511,268 $76,331,940 $9,498,150
===========================================================================================
</TABLE>
See notes to financial statements. Page 8
<PAGE>
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 -- -- --
==========================================================================
</TABLE>
<TABLE>
<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. Page 9
<PAGE>
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>
PBHG Fidelity Low- IDS New Dodge & AMEX AMEX AMEX
Growth Price Stock Dimensions Cox Aggressive Moderate Conservative Stable Value Loan
Fund Fund Fund Fund Fund Fund Fund Fund Account
----------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>
Investment income:
Interest and
dividend income $7,565 $2,830 $3,840 $27,718 $6,489 $2,361 $514 $3,024,794 --
Realized and
unrealized gains 357,045 237,734 266,856 313,249 373,076 111,848 22,931 -- --
----------------------------------------------------------------------------------------------------------------
Net investment
income 364,610 240,564 270,696 340,967 379,565 114,209 23,445 3,024,794 --
Contributions:
Employer 175,890 114,748 137,915 114,044 200,379 109,764 29,993 284,790 --
Participant 1,759,105 1,169,078 1,358,237 1,098,247 1,971,631 986,893 285,410 985,759 ($3,501,658)
----------------------------------------------------------------------------------------------------------------
Total
contributions 1,934,995 1,283,826 1,496,152 1,212,291 2,172,010 1,096,657 315,403 1,270,549 (3,501,658)
Cash and stock
distributed to
participants (39,203) (33,063) (39,870) (50,022) (50,664) (22,340) (12,729) (9,414,144) 5,558,061
Transfers (to)
from other
plans -- -- -- -- -- -- -- -- --
Transfers of
investment
direction 1,799,133 1,750,746 1,821,059 2,854,369 2,178,322 685,051 95,507 (13,983,130) --
Transfers (to)
from other
trustees -- -- -- -- -- -- -- 126,150,380 --
----------------------------------------------------------------------------------------------------------------
Net increase
(decrease) 4,059,535 3,242,073 3,548,037 4,357,605 4,679,233 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 $4,059,535 $3,242,073 $3,548,037 $4,357,605 $4,679,233 $1,873,577 $421,626 $107,048,449 $8,956,875
================================================================================================================
</TABLE>
See notes to financial statements. Page 10
<PAGE>
Investment Plan for Employees of Mallinckrodt Inc.
Notes to Financial Statements
June 30, 1998
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 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.
Participation and Vesting
Eligible employees may join the Plan immediately upon being hired. Participants
are fully vested in all participant and employer contributions and the earnings
thereon.
Participants' Accounts
Separate accounts are maintained for each participant. Participant account
balances are adjusted daily for contributions, distributions, loans, income,
gains, and losses.
Contributions
Participants generally can contribute up to 15 percent of their base salaries on
a pre-tax, after-tax, or combined basis. The Company makes matching
contributions equal to 20 percent of a participant's eligible contributions.
Eligible contributions are limited to 6 percent of a participant's base monthly
salary.
The Company may make additional discretionary contributions ("Supermatch") each
year as determined by its Board of Directors. Supermatch contributions are made
in or invested in Mallinckrodt Inc. common stock. Supermatch contributions may
not be withdrawn, borrowed, 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.
Page 11
<PAGE>
Investment Plan for Employees of Mallinckrodt Inc.
1. Description of the Plan (continued)
Contributions (continued)
Total employer contributions (including Supermatch) were equal to 77 percent of
participants' eligible contributions for the year ended June 30, 1998 and 97
percent for the year ended June 30, 1997.
Contributions to the Plan, including employee and employer contributions, are
subject to various limitations imposed by the Internal Revenue Code.
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) in such fund
as of the previous valuation date.
Investments
Participants direct investment of their contributions as well as employer
contributions among the following funds:
. State Street International Index Fund -- This fund invests in equity
securities of companies located outside North and South America and is
structured to match returns of the Morgan Stanley Capital International
Europe, Australia, Far East (EAFE) Index.
. AMEX Trust Equity Index Fund II -- This fund invests in equity securities of
companies with sector and industry weighting similar to the Standard and
Poor's 500.
. State Street Bond Market Fund -- This fund invests primarily in investment
grade corporate, governmental and mortgage-backed bonds with the objective of
producing current income.
. AMEX Trust Money Market Fund II -- This fund invests in high quality
commercial paper, bankers acceptance obligations, certificates of deposit,
and United States Treasury Bills with the object of providing high liquidity,
capital preservation, and generating moderate levels of current income.
. PBHG Growth Fund -- This mutual fund invests primarily in equity securities
of medium size domestic companies with the objective of long-term capital
growth.
Page 12
<PAGE>
1. Description of the Plan (continued)
Investments (continued)
. Fidelity Low-Price Stock Fund -- This mutual fund invests primarily in equity
securities of medium size domestic companies with the objective of long-term
capital growth.
. IDS New Dimensions Fund -- This mutual fund invests primarily in equity
securities of medium to large companies with the objective of long-term
capital growth.
. Dodge & Cox Fund -- This mutual fund invests principally in the common stock
of large companies with the objective of long-term capital growth.
. Mallinckrodt Stock Fund -- This fund is invested in Mallinckrodt Inc. common
stock.
. Lifestyle Funds (Aggressive, Moderate, and Conservative) -- These funds
invest among the other fund options of the Plan in order to maintain an
overall investment asset allocation commensurate with either an aggressive,
moderate or conservative risk profile. Investments in the component funds are
periodically rebalanced in order to maintain the desired risk profile amid
market fluctuations.
. Stable Value Fund -- This fund invests in Guaranteed Investment Contracts
issued by insurance companies and in the American Express Income Fund II. The
investment objective is to preserve principal and provide current income.
Prior to January 1, 1997, the Plan offered four investment funds trusteed at The
Northern Trust Company. These investments included a Mallinckrodt Inc. Stock
Fund, a Balanced Fund, an S&P 500 Index Fund, and a 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, and the S&P 500 Index Fund was transferred into the
AMEX Trust Equity Index Fund II.
The assets at June 30, 1998 and 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, 1998 and 1997.
Withdrawals
Participants may withdraw their balances in the Plan upon retirement,
termination of employment, or becoming disabled as defined by the Plan. Upon
termination of employment with Mallinckrodt or its affiliates, plan participants
generally may elect to receive a full or partial distribution, or may elect to
maintain their balances in the Plan.
Page 13
<PAGE>
Investment Plan for Employees of Mallinckrodt Inc.
1. Description of the Plan (continued)
Withdrawals (continued)
Active participants can make hardship withdrawals of employee contributions in
certain circumstances and can make withdrawals of employer contributions on a
hardship or non-hardship basis. All such withdrawals are subject to various
restrictions, including Supermatch restrictions, and may be subject to income
tax penalties.
Loans to Participants
Participants may obtain loans from their plan accounts subject to certain terms,
as defined by the Plan. General purpose loans are made for periods of one to
five years and residential loans are made for periods of one to ten years. The
interest rate charged is the prime rate quoted in The Wall Street Journal on the
first business day of the month in which the loan is approved. Principal and
interest payments are made by payroll deductions or in lump-sum repayments and
are invested in the same manner as current contributions.
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, such as
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.
2. Summary of Significant Accounting Policies
Basis of Accounting
Plan accounting records are maintained on the accrual basis.
Investments
Investments in mutual funds are valued at quoted market prices. Investments in
the other funds except for the Stable Value Fund are valued at the quoted market
prices of the underlying securities. Investments in the Stable Value Fund
include insurance contracts valued at contract value, which approximates market
value.
Page 14
<PAGE>
Investment Plan for Employees of Mallinckrodt Inc.
2. Summary of Significant Accounting Policies (continued)
Investment in the Stable Value Fund
At June 30, 1998, the Stable Value Fund includes investments in the American
Express Trust Income Fund II and a guaranteed interest contract with
Transamerica Occidental Life Insurance Company (Transamerica). At June 30, 1997,
the stable value fund was invested in guaranteed interest contracts with
Transamerica and Metropolitan Life Insurance Company (Metropolitan). 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 each of the contract years beginning January 1, 1998 and 1997 is
6.5 percent, net of investment management fees. The contract with Metropolitan
dated October 18, 1991 provided 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 was 6.08 percent, net of investment management
fees.
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 to 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 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.
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
Although 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 the balances 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.
Page 15
<PAGE>
Investment Plan for Employees of Mallinckrodt Inc.
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 those 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 AMEX and The Northern Trust Company. AMEX's and Northern Trust's
fees are based on customary and reasonable rates for such services and are paid
by the Plan.
Page 16
<PAGE>
Investment Plan for Employees of Mallinckrodt Inc.
Supplemental Schedules
<PAGE>
Investment Plan for Employees of Mallinckrodt Inc.
Line 27(a) Schedule of Assets Held for Investment Purposes
June 30, 1998
<TABLE>
<CAPTION>
Identity of Issuer, Fair
or Party Involved Description Cost Value
- ------------------------------------------------------------------------------
<S> <C> <C> <C>
American Express Trust Money
Market Fund II 2,765,731 shares $2,765,731 $2,765,731
American Express Trust Equity
Index Fund II 2,879,777 shares 68,276,633 87,556,750
State Street Daily Bond Fund
Series C 276,054 shares 3,111,129 3,245,846
State Street International
Index Fund 274,039 shares 3,121,578 3,307,374
Dodge & Cox Fund 120,574 shares 11,727,268 12,104,456
Fidelity Low-Price Stock Fund 364,705 shares 9,190,201 9,890,810
IDS New Dimensions Fund 351,191 shares 8,730,608 9,784,526
Mallinckrodt Stock Fund 4,062,070 units 30,831,111 27,528,650
Stable Value Fund 7,052,049 units 75,775,139 76,289,061
AMEX Conservative Fund 123,787 units 1,395,079 1,498,321
AMEX Moderate Fund 369,247 units 4,072,794 4,498,910
AMEX Aggressive Fund 816,992 units 9,166,650 10,372,529
PBHG Growth Fund 293,130 shares 7,588,843 7,964,331
Participant Loans Interest from 6.0% - 9,498,150
to 10.5% due
through 2008
-------------------------
Total investments $235,752,764 $266,305,445
=========================
</TABLE>
See independent auditors' report. Page 18
<PAGE>
Investment Plan for Employees of Mallinckrodt Inc.
Line 27(d) -- Schedule of Reportable Transactions
Year Ended June 30, 1998
Category (i) Single Transaction Exceeding 5% of the Current Value of Plan Assets
at the Beginning of the Year
<TABLE>
<CAPTION>
Selling/
Maturity Current Value on Net Gain
Identity of Party Involved Description of Asset Purchase Price Price Cost of Asset Transaction Date (Loss)
- ------------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
Metropolitan Life Insurance Guaranteed Interest $18,433,059 $18,433,059 $18,433,059 -
Company Contract
American Express Trust Fixed Income Fund $18,560,000 18,560,000 18,560,000 -
Income Fund II
American Express Trust Fixed Income Fund 17,951,184 17,951,184 17,951,184 -
Income Fund II
</TABLE>
See independent auditors' report. Page 19
<PAGE>
Investment Plan for Employees of Mallinckrodt Inc.
Line 27(d) -- Schedule of Reportable Transactions (Continued)
Year Ended June 30, 1998
Category (iii) Series of Transactions in excess of 5% of the Current
Value of Plan Assets at the Beginning of the Year
<TABLE>
<CAPTION>
Number Selling/
Identity of Party Of Purchase Maturity
Involved Description of Asset Transactions Price Price
- --------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Dodge & Cox Stock Stock Mutual Fund 500 purchases $11,418,316
Fund 410 sales $2,772,085
American Express Trust Fixed Income Fund 5 purchases 26,392,018
Income II 10 sales 26,626,092
American Express Trust Stock Fund 265 purchases 7,342,052
Equity Index II 391 sales 21,733,989
American Express Trust Money Market Fund 145 purchases 20,953,189
Company Money 190 sales 20,242,378
Market I
American Express Trust Money Market Fund 276 purchases 16,027,741
Company Money 229 sales 30,561,777
Market II
</TABLE>
<TABLE>
<CAPTION>
Current Value
Identity of Party on Transaction Net Gain
Involved Description of Asset Cost of Asset Date (Loss)
- -----------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Dodge & Cox Stock Stock Mutual Fund $11,418,316 $11,418,316
Fund 2,598,901 2,772,085 $173,184
American Express Trust Fixed Income Fund 26,392,018 26,392,018
Income II 26,407,128 26,626,092 218,964
American Express Trust Stock Fund 7,342,052 7,342,052
Equity Index II 16,318,327 21,733,989 5,415,662
American Express Trust Money Market Fund 20,953,189 20,953,189
Company Money 20,242,378 20,242,378 --
Market I
American Express Trust Money Market Fund 16,027,741 16,027,741
Company Money 30,561,777 30,561,777 --
Market II
</TABLE>
See independent auditors' report. Page 20
<PAGE>
Exhibit 23.1
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 November 24,
1998, 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, 1998.
/s/ Stone Carlie & Company, L.L.C.
St. Louis, Missouri
December 14, 1998
<PAGE>
Exhibit 23.2
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, 1998.
/s/ Ernst & Young LLP
St. Louis, Missouri
December 11, 1998
