<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, 1999
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 Page
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 December 15, 1999
- -----------------
Bruce K. Crockett Vice President, Human Resources
ROGER A. KELLER December 15, 1999
- ---------------
Roger A. Keller Vice President, Secretary and
General Counsel
DAVID R. KUPFERER December 15, 1999
- -----------------
David R. Kupferer Vice President, Human Resources,
Pharmaceutical Group
JUDITH C. REBHOLZ December 15, 1999
- -----------------
Judith C. Rebholz Director, International Treasury
and Corporate Finance
JOHN J. RIORDAN December 15, 1999
- ---------------
John J. Riordan Vice President,
Pension and Profit Sharing Plans
NANCY J. STEMME December 15, 1999
- ---------------
Nancy J. Stemme Director of Compensation and
Welfare Benefits
WILLIAM B. STONE December 15, 1999
- ----------------
William B. Stone Vice President Information
Technology
(Chairman of the Committee)
FRANK A. VOLTOLINA December 15, 1999
- ------------------
Frank A. Voltolina Vice President and Treasurer
</TABLE>
<PAGE>
Investment Plan for Employees
of Mallinckrodt Inc.
Financial Statements and
Supplemental Schedules
Years ended June 30, 1999 and 1998
with Independent Auditors' Report
<PAGE>
Investment Plan for Employees
of Mallinckrodt Inc.
Financial Statements and
Supplemental Schedules
Years ended June 30, 1999 and 1998
Contents
<TABLE>
<S> <C>
Independent Auditors' Report......................................... 2
Financial Statements
Statements of Net Assets Available for Benefits...................... 3
Statements of Changes in Net Assets Available for Benefits........... 4
Notes to Financial Statements........................................ 5-12
Supplemental Schedules
Line 27(a) - Schedule of Assets Held for Investment Purposes......... 14
Line 27(d) - Schedule of Reportable Transactions..................... 15
</TABLE>
<PAGE>
Independent Auditors' Report
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, 1999
and 1998 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, 1999 and 1998, 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, 1999 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 supplemental schedules 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 in
relation to the financial statements taken as a whole.
/s/ Stone Carlie & Company, L.L.C.
St. Louis, Missouri
November 23, 1999
<PAGE>
Investment Plan for Employees of Mallinckrodt Inc.
Statement of Net Assets Available for Benefits
<TABLE>
<CAPTION>
June 30,
---------------------------------------
1999 1998
--------------- ----------------
<S> <C> <C>
Investments:
Participant directed $255,998,739 $238,776,795
Non-participant directed 38,632,732 27,528,650
--------------- ----------------
Total investments 294,631,471 266,305,445
--------------- ----------------
Receivables:
Employer contributions 6,362,407 6,031,681
Participant contributions 689,031 589,735
--------------- ----------------
Total receivables 7,051,438 6,621,416
--------------- ----------------
Net assets available for benefits $301,682,909 $272,926,861
=============== ================
</TABLE>
See notes to financial statements. Page 3
<PAGE>
Investment Plan for Employees of Mallinckrodt Inc.
Statement of Changes in Net Assets Available for Benefits
<TABLE>
<CAPTION>
Years Ended June 30,
------------------------------------
1999 1998
------------ -------------
<S> <C> <C>
Additions
Investment income:
Interest and dividend income $ 8,212,843 $ 8,856,401
Realized and unrealized gains, net 29,823,915 18,275,739
------------ -------------
Net investment income 38,036,758 27,132,140
------------ -------------
Contributions:
Employer cash 2,037,227 2,216,848
Employer common stock 6,277,600 5,958,902
Participant 16,927,305 18,647,293
------------ -------------
Total contributions 25,242,132 26,823,043
------------ -------------
Total additions 63,278,890 53,955,183
------------ -------------
Deductions
Cash and stock distributed to participants (32,734,614) (47,726,109)
Transfers to other plans (1,788,228) -
------------ -------------
Total deductions (34,522,842) (47,726,109)
------------ -------------
Net increase 28,756,048 6,229,074
Net assets available for benefits at beginning of year 272,926,861 266,697,787
------------ -------------
Net assets available for benefits at end of year $301,682,909 $272,926,861
============ =============
</TABLE>
See notes to financial statements.
Page 4
<PAGE>
Investment Plan for Employees of Mallinckrodt Inc.
Notes to Financial Statements
June 30, 1999 and 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.
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 5
<PAGE>
1. Description of the Plan (continued)
Contributions (continued)
Total employer contributions (including Supermatch) were equal to 84 percent and
77 percent of participants' eligible contributions for the years ended June 30,
1999 and 1998, respectively.
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 6
<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.
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.
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.
Page 7
<PAGE>
1. Description of the Plan (continued)
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 participant per plan year. In addition, specific
transaction charges, such as loan fees directed by participants, are charged to
participant accounts.
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.
Investment in the Stable Value Fund
At June 30, 1999 and 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). 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, 1999 and 1998 is 6.5
percent, net of investment management fees.
Page 8
<PAGE>
2. Summary of Significant Accounting Policies (continued)
Investment in the Stable Value Fund (continued)
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.
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.
Page 9
<PAGE>
Investments
The following presents investments of the Plan, including investments that
represent 5 percent or more of the Plan's net assets.
<TABLE>
<CAPTION>
Year Ended June 30,
------------------------------------------
1999 1998
------------------- -------------------
<S> <C> <C>
Participant directed investments:
State Street International Index Fund
(shares - 313,363 and 274,039, respectively) $ 4,064,949 $ 3,307,374
American Express Trust Equity Index Fund II
(shares - 2,647,111 and 2,879,777, respectively) 98,390,451 87,556,750
State Street Bond Fund
(shares - 299,984 and 276,054, respectively) 3,612,109 3,245,846
American Express Trust Money Market Fund II
(shares - 3,656,970 and 2,765,731, respectively) 3,656,970 2,765,731
PBHG Growth Fund
(shares - 301,037 and 293,130, respectively) 8,230,371 7,964,331
Fidelity Low-Price Stock Fund
(shares - 348,119 and 364,705, respectively) 8,542,853 9,890,810
IDS New Dimensions Fund (Y)
(shares - 531,681 and 351,191, respectively) 17,216,895 9,784,526
Dodge & Cox Stock Fund
(shares - 115,276 and 120,574, respectively) 12,489,017 12,104,456
AMEX Aggressive Fund
(units - 843,651 and 816,992, respectively) 11,714,938 10,372,529
AMEX Moderate Fund
(units - 448,252 and 369,247, respectively) 5,940,232 4,498,910
AMEX Conservative Fund
(units - 219,910 and 123,787, respectively) 2,880,382 1,498,321
Stable Value Fund
(units - 6,072,561 and 7,052,049, respectively) 69,858,742 76,289,061
Loans to participants 9,400,830 9,498,150
------------------- -------------------
Total participant directed investments $255,998,739 $238,776,795
=================== ===================
</TABLE>
Page 10
<PAGE>
3. Investments (continued)
<TABLE>
<CAPTION>
Year Ended June 30,
------------------------------------------
1999 1998
------------------- -------------------
<S> <C> <C>
Nonparticipant directed investments:
Mallinckrodt Stock Fund
(units - 4,657,352 and 4,062,070, respectively) $ 38,632,732 $ 27,528,650
------------------- -------------------
Total investments $294,631,471 $266,305,445
=================== ===================
</TABLE>
4. Nonparticipant Directed Investments
The changes in net assets relating to the Mallinckrodt Stock Fund, a
nonparticipant directed investment, are as follows:
<TABLE>
<CAPTION>
Year Ended June 30,
--------------------------------------------
1999 1998
------------------- --------------------
<S> <C> <C>
Investment Income
Interest and dividend income $ 512,016 $ 609,702
Realized and unrealized gains (losses), net 8,435,531 (7,909,910)
------------------- --------------------
Net investment income (loss) 8,947,547 (7,300,208)
------------------- --------------------
Contributions
Employer cash 153,461 203,019
Employer common stock 6,277,600 5,958,902
Employee 1,554,858 2,049,529
------------------- --------------------
Total contributions 7,985,919 8,211,450
------------------- --------------------
Cash and stock distributed to participants (3,281,200) (5,307,039)
Net transfers to participant directed investments (2,243,253) (6,622,695)
------------------- --------------------
(5,524,453) (11,929,734)
------------------- --------------------
Net increase (decrease) 11,409,013 (11,018,492)
Nonparticipant directed investments including
contributions receivable at beginning of year 33,544,945 44,563,437
------------------- --------------------
Nonparticipant directed investments including
contributions receivable at end of year 44,953,958 33,544,945
Less contributions receivable directed to
nonparticipant directed investments (6,321,226) (6,016,295)
------------------- --------------------
Nonparticipant directed investments at end of year $38,632,732 $ 27,528,650
=================== ====================
</TABLE>
Page 11
<PAGE>
5. 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.
6. Transactions With Parties-in-Interest
The only transactions with parties-in-interest were purchases and sales of
assets through AMEX. AMEX's fees are based on customary and reasonable rates for
such services and are paid by the Plan.
7. Transfers To Other Plans
Effective July 31, 1998, Mallinckrodt Inc. spun-off its Trimet division. As a
result, the Plan transferred assets of $1,788,228 to the retirement plan
established by the new employer.
8. Subsequent Events
Effective July 1, 1999, two defined contribution plans operated by subsidiaries
of the Company, the Nellcor Puritan Bennett Voluntary Investment Plus Plan and
the Mallinckrodt 401(k) Profit Sharing Plan for the Hobart facility, were merged
into the Plan. As a result, assets of $123,077,429 and $2,547,907, respectively,
were also transferred into the Plan. There were no significant modifications to
the provisions of the Plan, as described in Note 1, as a result of these
mergers.
Page 12
<PAGE>
Supplemental Schedules
<PAGE>
Investment Plan for Employees of Mallinckrodt Inc.
Line 27(a) - Schedule of Assets Held for Investment Purposes
June 30, 1999
<TABLE>
<CAPTION>
Identity of Issuer, Fair
or Party Involved Description Cost Value
- ----------------------------------------------------------- ------------------ ------------------------- ------------------
<S> <C> <C> <C>
American Express Trust Money Market Fund II 3,656,970 shares $ 3,656,970 $ 3,656,970
American Express Trust Equity Index Fund II 2,647,111 shares 81,358,942 98,390,451
State Street Daily Bond Fund Series C 299,984 shares 3,111,129 3,612,109
State Street International Index Fund 313,363 shares 3,842,461 4,064,949
Dodge & Cox Stock Fund 115,276 shares 11,384,210 12,489,017
Fidelity Low-Price Stock Fund 348,119 shares 8,765,301 8,542,853
IDS New Dimensions Fund (Y) 531,681 shares 15,201,824 17,216,895
Mallinckrodt Stock Fund 4,657,352 units 36,094,478 38,632,732
Stable Value Fund 6,072,561 units 64,551,323 69,858,742
AMEX Conservative Fund 219,910 units 2,669,707 2,880,382
AMEX Moderate Fund 448,252 units 5,087,660 5,940,232
AMEX Aggressive Fund 843,651 units 9,609,185 11,714,938
PBHG Growth Fund 301,037 shares 7,798,081 8,230,371
Participant Loans Interest from 6.0%
to 10.5% due
through 2009 - 9,400,830
</TABLE>
See independent auditors' report. Page 14
<PAGE>
Investment Plan for Employees of Mallinckrodt Inc.
Line 27(d) - Schedule of Reportable Transactions
Year Ended June 30, 1999
Category (iii) Series of Transactions in Excess of 5% of the Current
Value of Plan Assets at the Beginning of the Year
<TABLE>
<CAPTION>
Selling/
Description Number of Purchase Maturity
Identity of Party Involved of Asset Transactions Price Price Cost of Asset
- ------------------------------ --------------- ------------- ----------- ----------- --------------
<S> <C> <C> <C> <C> <C>
IDS New Dimensions Fund (Y) Stock Mutual 246 purchases $ 9,702,388
Fund 261 sales $ 4,434,616 $ 3,691,959
Mallinckrodt Inc. Stock 120 purchases 6,960,662
122 sales 9,508,521 9,636,237
American Express Trust Stock Fund 284 purchases 12,989,657
Equity Index Fund II 376 sales 19,413,483 12,303,791
American Express Trust Money Market 166 purchases 14,493,178
Company Money Market I Fund 171 sales 14,532,092 14,532,092
Stable Value Fund Collective Fund 87 purchases 9,030,354
164 sales 19,950,982 18,914,179
American Express Trust Money Market 233 purchases 7,261,484
Money Market Fund II Fund 105 sales 6,450,226 6,450,226
<CAPTION>
Current Value
Description on Transaction Net
Identity of Party Involved of Asset Date Gain (Loss)
- ------------------------------ --------------- --------------- --------------
<S> <C> <C> <C>
IDS New Dimensions Fund (Y) Stock Mutual
Fund $ 4,434,616 $ 742,656
Mallinckrodt Inc. Stock
9,508,521 (127,721)
American Express Trust Stock Fund
Equity Index Fund II 19,413,483 7,109,695
American Express Trust Money Market
Company Money Market I Fund 14,532,092 -
Stable Value Fund Collective Fund 19,950,982 1,036,798
American Express Trust Money Market
Money Market Fund II Fund 6,450,226 -
</TABLE>
See independent auditors' report. Page 15
<PAGE>
Consent of Independent Auditors
We consent to the incorporation by reference in the Registration Statement
(Form S-8 No. 333-85789) pertaining to the Investment Plan for Employees of
Mallinckrodt Inc. and in the related Prospectus of our report dated November 23,
1999, 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, 1999 and 1998.
/s/ Stone Carlie & Company, L.L.C.
St. Louis, Missouri
December 14, 1999
