<PAGE>
FORM 11-K
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
(MARK ONE)
[X] Annual Report Pursuant to Section 15(d) of the Securities Exchange Act of
1934
For the fiscal year end December 31, 1998
------------------
Or
[ ] Transition Report Pursuant to Section 15(d) of the Securities Exchange Act
of 1934
For the transition period from __________ to __________
Commission file number 0-11103
--------
CENTOCOR QUALIFIED
SAVINGS AND RETIREMENT PLAN
(Full Title of the Plan)
Centocor, Inc.
200 Great Valley Parkway
Malvern, PA 19355
(Name of issuer of the securities held
pursuant to the plan and the address of its
principal executive office)
<PAGE>
Centocor Qualified Savings and Retirement Plan
----------------------------------------------
Index to Financial Statements and Schedules
-------------------------------------------
Page 3 Independent Auditors' Report
Page 4 Statements of Net Assets Available for Plan Benefits as of
December 31, 1998 and 1997
Page 5 Statements of Changes in Net Assets Available for Plan Benefits
for the years ended December 31, 1998, 1997 and 1996
Pages 6-18 Notes to Financial Statements
Page 19 Item 27a - Schedule of Assets Held For Investment Purposes
Page 20 Item 27d - Schedule of Reportable Transactions
2
<PAGE>
Independent Auditors' Report
----------------------------
To the Participants of the Centocor Qualified Savings and Retirement Plan
and the 401(k) Administrative Committee of Centocor, Inc.:
We have audited the accompanying Statements of Net Assets Available for Plan
Benefits of the Centocor Qualified Savings and Retirement Plan as of December
31, 1998 and 1997, and the related Statements of Changes in Net Assets Available
for Plan Benefits for each of the years in the three-year period ended December
31, 1998. 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 plan benefits of the
Centocor Qualified Savings and Retirement Plan at December 31, 1998 and 1997 and
the changes in net assets available for plan benefits for each of the years in
the three-year period ended December 31, 1998, in conformity with generally
accepted accounting principles.
Our audits were performed for the purpose of forming an opinion on the basic
financial statements taken as a whole. The supplemental schedule of assets held
for investment purposes and schedule of reportable transactions are presented
for the purpose of additional analysis and are not a required part of the basic
financial statements but are supplemental information required by the Department
of Labor's Rules and Regulations for Reporting and Disclosure under the Employee
Retirement Income Security Act of 1974. The supplemental schedules are the
responsibility of the Plan's management. The supplemental schedules have been
subjected to the auditing procedures applied in the audits of the basic
financial statements and, in our opinion, are fairly stated in all material
respects in relation to the basic financial statements taken as a whole.
KPMG LLP
Philadelphia, PA
June 18, 1999
3
<PAGE>
CENTOCOR QUALIFIED SAVINGS AND RETIREMENT PLAN
STATEMENTS OF NET ASSETS AVAILABLE FOR PLAN BENEFITS
<TABLE>
<CAPTION>
December 31,
----------------------------------------
1998 1997
--------------- --------------
<S> <C> <C>
Assets:
Investments (Notes 3 and 8):
Centocor Stock Fund $ 5,340,758 $ 4,176,956
Vanguard Money Market Reserves - Prime Portfolio 1,497,042 1,029,947
Vanguard Bond Index Fund - Total Bond Market
Portfolio 1,567,086 1,350,588
Vanguard Index Trust - 500 Portfolio 11,555,971 9,358,803
Vanguard U.S. Growth Portfolio 4,800,634 3,213,685
Vanguard/Windsor II 1,314,002 288,676
Putnam New Opportunities Class A Shares - 717,034
Templeton Foreign Fund 784,293 816,362
Fidelity Contrafund 1,346,399 -
------------ ------------
28,206,185 20,952,051
Other assets:
Employer's contribution receivable (Note 2) 1,485,822 874,978
Loans receivable from participants 205,012 206,160
------------ ------------
1,690,834 1,081,138
------------ ------------
Total assets $ 29,897,019 $ 22,033,189
============ ============
Net assets available for Plan Benefits (Notes 2 and 8) $ 29,897,019 $ 22,033,189
============ ============
</TABLE>
See accompanying Notes to Financial Statements.
4
<PAGE>
CENTOCOR QUALIFIED SAVINGS AND RETIREMENT PLAN
STATEMENTS OF CHANGES IN NET ASSETS AVAILABLE FOR PLAN BENEFITS
<TABLE>
<CAPTION>
Years ended December 31,
-----------------------------------------------------------
1998 1997 1996
--------------- ---------------- ----------------
<S> <C> <C> <C>
Additions:
Interest and other income $ 984,109 $ 582,969 $ 634,607
Net appreciation in fair value of
investments (Notes 3 and 8) 5,336,589 2,239,941 2,105,260
Contributions (Note 2):
Employee 3,470,946 1,867,029 1,560,255
Employer 1,485,822 874,978 523,631
Participant rollovers into Plan 1,756,048 238,683 -
--------------- ---------------- ----------------
Total additions 13,033,514 5,803,600 4,823,753
Deductions (Note 2):
Benefits paid (1,210,687) (1,111,239) (1,554,006)
Loan advances, net - (33,441) (70,012)
Transfer of Centocor Diagnostics'
Net assets out of Plan (3,958,022) - -
--------------- ---------------- -----------------
(5,168,709) (1,144,680) (1,624,018)
Other income (expense) (975) (32,240) 35,353
--------------- ---------------- -----------------
Net increase 7,863,830 4,626,680 3,235,088
Net assets available for Plan Benefits:
Beginning of year 22,033,189 17,406,509 14,171,421
--------------- ---------------- -----------------
End of year $ 29,897,019 $ 22,033,189 $ 17,406,509
=============== ================ =================
</TABLE>
See accompanying Notes to Financial Statements.
5
<PAGE>
CENTOCOR QUALIFIED SAVINGS AND RETIREMENT PLAN
NOTES TO FINANCIAL STATEMENTS
Note 1 Summary of Significant Accounting Policies
Basis of Accounting
The accompanying financial statements have been prepared on the accrual
basis of accounting.
Investments
The Centocor Qualified Savings and Retirement Plan's (the "Plan")
investments administered by The Vanguard Group, Inc. (the "Trustee")
from July 1, 1997 through December 31, 1998 and administered by
CoreStates Bank, N.A., the former trustee, through June 30, 1997, are
stated at fair value based on the market value of the underlying
securities.
Centocor, Inc. ("Centocor" or the "Company") common shares are carried
at market value which is determined by quoted market prices.
Participant loans are valued at cost which approximates fair value.
Accounting Estimates
The preparation of financial statements in conformity with generally
accepted accounting principles requires management to make estimates and
assumptions that affect the reported amounts of assets and liabilities
and disclosure of contingent assets and liabilities at the date of the
financial statements and the reported amounts of additions and
deductions during the reporting period. Actual results could differ from
estimates recorded.
Basis of Security Transactions
Security transactions are accounted for on the trade date.
Related Party Transactions
Certain Plan investments are shares of mutual funds managed by the
Trustee. Therefore, these transactions qualify as party-in-interest.
Note 2 Description of Plan
The following description of the Plan provides only general information.
Participants should refer to the Plan document for a more complete
description of the Plan's provisions.
General
Effective January 1, 1985, the Company established the Plan, a defined
contribution savings plan subject to the provisions of the Employee
Retirement Income Security Act of 1974 ("ERISA"). Substantially all U.S.
employees of the Company, or any of its
6
<PAGE>
CENTOCOR QUALIFIED SAVINGS AND RETIREMENT PLAN
NOTES TO FINANCIAL STATEMENTS
subsidiaries or affiliates, are eligible to participate in the Plan.
Employees may participate as of the first date of his/her employment.
Substantially all of the legal, accounting and administrative expenses
associated with Plan operations are currently paid by the Company.
Contributions
Eligible employees may make voluntary tax-deferred contributions of 1 to
15 percent of their eligible cash compensation up to certain annual
limits as prescribed by the U.S. Internal Revenue Code. Maximum annual
contributions may be limited at the discretion of the Company.
Employee contributions are invested as directed by the employee in any
of the eight investment programs available under an investment contract
with the Trustee (see Note 3). Company contributions are made
principally in the Company's Common Stock.
The Company may elect, but is not required, to make contributions to the
Plan for the benefit of the participating employees. To date,
contributions have been made as a percentage of the participants'
contributions for the year, as determined by the Company's Board of
Directors. In 1998 and 1997, the Company elected to contribute an amount
equal to 50 percent of the contributions of each employee. The Company's
contribution is based upon annual employee contributions up to a level
of 6 percent of their cash compensation. In 1996, the Company elected to
contribute an amount equal to 40 percent of the contributions of each
employee earning less than $70,000 per year and 30 percent of the
contributions of each employee earning $70,000 or more per year.
Additionally, in 1998, 1997 and 1996, the Company committed to make a
contribution equal to 1% of each employee's compensation. At December
31, 1998, 38,467 shares of the Centocor Stock Fund with a fair value of
$38.625 per share determined by the average trade price for the last
twenty days in December and $33.85 in cash was due to the Plan from the
Company for its 1998 contribution.
Participants' Accounts
Separate accounts are maintained by the Trustee for each participant.
Each participant's account reflects the participant's contribution, the
Company's contribution, interest, dividends, other income, and gains or
losses earned by each of the investment programs. Investment income is
reinvested in the same programs.
Participants may transfer all or a portion of their accounts among the
eight investment programs available under the Plan by directly
contacting the Trustee. The transfer would take effect immediately upon
the participant's notification of the change.
7
<PAGE>
CENTOCOR QUALIFIED SAVINGS AND RETIREMENT PLAN
NOTES TO FINANCIAL STATEMENTS
Vesting
Employee contributions are fully (100%) vested and non-forfeitable.
Employer contributions are fully vested upon death, total and permanent
disability, or attainment of age 65; otherwise, employer contributions
are subject to vesting percentages based on years of service, as defined
by the Plan documents. Employee non-vested forfeitures are used by the
Company to offset employer contributions. The employer contributions
vesting percentages are as follows:
Less than one year of service 0%
One year of service 20%
Two years of service 40%
Three years of service 60%
Four years of service 80%
Five or more years of service 100%
Payment of Benefits
Benefits from the participants' vested accounts are normally payable to
Plan participants upon retirement, death, termination of Company
employment or total and permanent disability. Included in plan equity
are benefits payable at December 31, 1996 of $150,240 representing
amounts due to former employees. There are no benefits payable to former
employees at December 31, 1998 and 1997.
A participant, while still an employee, may generally withdraw all or a
portion of his vested, non-forfeitable tax-deferred contribution account
if such amount is needed to defray the cost of a medical emergency,
enable the participant to acquire or improve his principal residence, or
assist the participant in preventing eviction or foreclosure
proceedings. Such a withdrawal must first be taken as a loan as noted
below.
Any additional funds required will be distributed as a hardship
withdrawal subject to income tax and penalties. Such loan and withdrawal
shall not exceed the amount required to meet the immediate financial
need created by the hardship and shall not be reasonably available from
other sources of the participant.
Loan Provisions
Participants may borrow up to 50 percent of their vested account balance
not to exceed $50,000 and may have only one loan outstanding at any
point of time. All such loans bear interest at prevailing market rates.
8
<PAGE>
CENTOCOR QUALIFIED SAVINGS AND RETIREMENT PLAN
NOTES TO FINANCIAL STATEMENTS
Transfer of Net Assets
In November 1998 the Company sold its oncology diagnostics business.
Immediately following the closing of the sale, $3,958,022 of the Plan's
net assets related to diagnostic oncology employees were transferred
from the Company's Plan to the plan sponsored by the acquiring company.
Note 3 Investments
The number of participants in the investment programs at December 31,
1998 was as follows:
<TABLE>
<S> <C>
Centocor Stock Fund 596
Vanguard Money Market Reserves - Prime Portfolio 201
Vanguard Bond Index Fund - Total Bond Market Portfolio 270
Vanguard Index Trust - 500 Portfolio 664
Vanguard U.S. Growth Portfolio 557
Vanguard/Windsor II 448
Templeton Foreign Fund 290
Fidelity Contrafund 387
</TABLE>
The Centocor Stock Fund program consists of shares of Centocor, Inc.
Common Stock. The Vanguard Money Market Reserves - Prime Portfolio
invests in short-term, high-quality money market instruments issued by
financial institutions, nonfinancial corporations, the U.S. government
and federal agencies. The Vanguard Bond Index Fund - Total Bond Market
Portfolio invests in U.S. Treasury, federal agency, mortgage backed and
corporate securities and attempts to match the performance of the Lehman
Brothers Aggregate Bond Index, a widely recognized measure of the entire
taxable U.S. bond market. The Vanguard Index Trust - 500 Portfolio
invests in all of the 500 stocks that make up the Standard & Poor's 500
Composite Stock Price Index, a widely recognized benchmark of U.S. stock
market performance. The Vanguard U.S. Growth Portfolio invests in large,
high-quality, seasoned U.S. companies. The Vanguard/Windsor II Fund
invests in a diversified group of out-of-favor stocks of large-
capitalization companies. The Templeton Foreign Fund invests primarily
in stocks of companies located outside the United States. The Fidelity
Contrafund invests in undervalued stocks of foreign and U.S. companies
with the goal of achieving long-term capital appreciation.
9
<PAGE>
CENTOCOR QUALIFIED SAVINGS AND RETIREMENT PLAN
NOTES TO FINANCIAL STATEMENTS
Custody of the Plan's investments is maintained by the Trustee. Plan investments
at December 31, 1998 and 1997 were as follows (see also Note 8):
<TABLE>
<CAPTION>
Number of
Name of Issuer and Title of Issue At December 31, 1998 Shares Cost Fair Value
--------------- -------------- ---------------
<S> <C> <C> <C>
Centocor Stock Fund 118,355 $ 2,793,678 $ 5,340,758
Vanguard Money Market Reserves - Prime Portfolio 1,497,042 1,497,042 1,497,042
Vanguard Bond Index Fund - Total Bond Market Portfolio 152,589 1,522,250 1,567,086
Vanguard Index Trust - 500 Portfolio 101,413 8,866,606 11,555,971
Vanguard U.S. Growth Portfolio 128,051 3,905,618 4,800,634
Vanguard/Windsor II 44,020 1,352,714 1,314,002
Templeton Foreign Fund 93,479 968,667 784,293
Fidelity Contrafund 23,708 $ 1,193,623 1,346,399
---------------
$ 28,206,185
===============
</TABLE>
<TABLE>
<CAPTION>
Number of
Name of Issuer and Title of Issue At December 31, 1997 Shares Cost Fair Value
--------------- -------------- ---------------
<S> <C> <C> <C>
Centocor Stock Fund 125,623 $ 2,473,011 $ 4,176,956
Vanguard Money Market Reserves - Prime Portfolio 1,029,947 1,029,947 1,029,947
Vanguard Bond Index Fund - Total Bond Market Portfolio 133,854 1,317,723 1,350,588
Vanguard Index Trust - 500 Portfolio 103,906 8,686,191 9,358,803
Vanguard U.S. Growth Portfolio 111,975 3,137,031 3,213,685
Vanguard/Windsor II 10,087 297,432 288,676
Putnam New Opportunities Class A Shares 14,739 699,939 717,034
Templeton Foreign Fund 82,046 $ 940,529 816,362
---------------
$ 20,952,051
===============
</TABLE>
Net realized gains of $509,950 in 1998 resulted principally from sales
in the Vanguard Index Trust - 500 Portfolio, the Vanguard U.S. Growth
Portfolio and shares of the Centocor Stock Fund.
Net realized gains of $4,336,733 in 1997 resulted principally from sales
in the CoreFund Equity Index Fund, the CoreFund Growth Equity Fund and
shares of the Centocor Stock Fund.
Net realized gains of $1,182,855 in 1996 resulted principally from sales
in the CoreFund Equity Index Fund, the CoreFund Growth Equity Fund and
shares of the Centocor Stock Fund.
10
<PAGE>
CENTOCOR QUALIFIED SAVINGS AND RETIREMENT PLAN
NOTES TO FINANCIAL STATEMENTS
The change in net unrealized appreciation (depreciation) on investments
as of and for the years ended December 31, 1998, 1997 and 1996 was as
follows (see Note 8):
<TABLE>
<CAPTION>
CoreFund CoreFund CoreFund CoreFund Twentieth
Centocor Intermediate Equity International Growth Equity Century
Stock Bond Fund Index Fund Fund Fund Vista
Fund Series A Series A Series A Series A Fund
----------- -------------- ------------ ------------- ------------- ------------
<S> <C> <C> <C> <C> <C> <C>
Balance at December 31, 1995 $ 2,402,400 $ 3,707 $ 909,674 $ 29,570 $ 199,284 $ -
Appreciation (depreciation) (31,359) (10,451) 933,573 (25,035) 89,455 (33,778)
----------- -------------- ------------ ------------- ------------- ------------
Balance at December 31, 1996 2,371,041 (6,744) 1,843,247 4,535 288,739 (33,778)
Appreciation (depreciation) (667,096) 6,744 (1,843,247) (4,535) (288,739) 33,778
----------- -------------- ------------ ------------- ------------- ------------
Balance at December 31, 1997 1,703,945 - - - - -
Appreciation 1,431,704 - - - - -
Transfer out of Centocor Diagnostics'
Net Assets (824,185) - - - - -
----------- -------------- ------------ ------------- ------------- ------------
Balance at December 31, 1998 $ 2,311,464 $ - $ - $ - $ - $ -
=========== ============== ============ ============= ============= ============
</TABLE>
<TABLE>
<CAPTION>
Vanguard Bond Vanguard
Index Fund - Index Vanguard Putnam New Templeton
Total Bond Trust - 500 U.S. Growth Vanguard/ Opportunities Fidelity Foreign
Market Portfolio Portfolio Portfolio Windsor II Class A Shares Contrafund Fund
----------------- ------------- ------------- ------------ -------------- ----------- ---------
<S> <C> <C> <C> <C> <C> <C> <C>
Balance at December 31, 1996 $ - $ - $ - $ - $ - $ - $ -
Appreciation (depreciation) 32,865 672,612 76,654 (8,756) 17,095 - (124,167)
----------------- ------------- ------------- ------------ -------------- ----------- ---------
Balance at December 31, 1997 32,865 672,612 76,654 (8,756) 17,095 - (124,167)
Appreciation (depreciation) 22,546 2,383,591 963,097 (17,414) - 167,976 (124,861)
Transfer out of Centocor
Diagnostics' Net Assets (8,345) (331,269) (139,345) (12,864) (17,095) (15,200) 40,693
----------------- ------------- ------------- ------------ -------------- ----------- ---------
Balance at December 31, 1998 $ 47,066 $ 2,724,934 $ 900,406 $ (39,034) $ - $ 167,976 $(208,335)
================= ============= ============= ============ ============== =========== =========
</TABLE>
Note 4 Federal Income Taxes
The Internal Revenue Service has made a determination dated April 26,
1995 that the Plan has complied with the requirements of ERISA and
therefore is qualified under the provisions of Section 401(a) of the
Internal Revenue Code and is exempt from Federal income tax.
Note 5 Plan Termination
Although it has not expressed an intent to do so, the Company has the
right under the Plan to discontinue its contributions at any time and to
terminate the Plan subject to the provisions of ERISA.
11
<PAGE>
CENTOCOR QUALIFIED SAVINGS AND RETIREMENT PLAN
NOTES TO FINANCIAL STATEMENTS
Note 6 Form 5500
The Plan had not yet prepared its Form 5500 for the year ended December
31, 1998 as of the date of the audit report. The Plan has filed an
extension until September 15, 1999 to file its 1998 Form 5500.
Note 7 Plan Amendments/Changes
Effective July 1, 1997, the Company changed its investment administrator
and trustee from Corestates, Bank, N.A. to The Vanguard Group. As a
result, new investments have been offered effective July 1, 1997 and the
record keeping for the plan is being performed by The Vanguard Group.
Contributions and vesting schedules will remain the same, however, the
plan changed from quarterly valuation to daily valuation. These changes
provide additional services and flexibility to the participants of the
Plan.
12
<PAGE>
CENTOCOR QUALIFIED SAVINGS AND RETIREMENT PLAN
NOTES TO FINANCIAL STATEMENTS
Note 8 Allocation of Plan Assets to Investment Programs
<TABLE>
<CAPTION>
December 31, 1998
-------------------------------------------------------------------------------------------
VANGUARD
VANGUARD BOND INDEX
MONEY MARKET CENTOCOR PARTICIPANT FUND - TOTAL VANGUARD
RESERVES - STOCK LOAN BOND MARKET INDEX TRUST -
ASSETS PRIME PORTFOLIO FUND FUND PORTFOLIO 500 PORTFOLIO
-------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
VANGUARD MONEY MARKET RESERVES -
PRIME PORTFOLIO $ 1,497,042 $ - $ - $ - $ -
CENTOCOR STOCK FUND - 5,340,758 - - -
VANGUARD BOND INDEX FUND - TOTAL
BOND MARKET PORTFOLIO - - - 1,567,086 -
VANGUARD INDEX TRUST - 500 PORTFOLIO - - - - 11,555,971
VANGUARD U.S. GROWTH PORTFOLIO - - - - -
VANGUARD/WINDSOR II - - - - -
TEMPLETON FOREIGN FUND - - - - -
FIDELITY CONTRAFUND - - - - -
EMPLOYER'S CONTRIBUTION RECEIVABLE - 1,485,822 - - -
LOANS RECEIVABLE FROM PARTICIPANTS - - 205,012 - -
-------------------------------------------------------------------------------------------
TOTAL ASSETS $ 1,497,042 $ 6,826,580 $ 205,012 $ 1,567,086 $ 11,555,971
===========================================================================================
<CAPTION>
-------------------------------------------------------------------------------------------
VANGUARD TEMPLETON
U.S. GROWTH VANGUARD/ FOREIGN FIDELITY
ASSETS PORTFOLIO WINDSOR II FUND CONTRAFUND TOTAL
-------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
VANGUARD MONEY MARKET RESERVES -
PRIME PORTFOLIO $ - $ - $ - $ - $ 1,497,042
CENTOCOR STOCK FUND - - - - 5,340,758
VANGUARD BOND INDEX FUND - TOTAL
BOND MARKET PORTFOLIO - - - - 1,567,086
VANGUARD INDEX TRUST - 500 PORTFOLIO - - - - 11,555,971
VANGUARD U.S. GROWTH PORTFOLIO 4,800,634 - - - 4,800,634
VANGUARD/WINDSOR II - 1,314,002 - - 1,314,002
TEMPLETON FOREIGN FUND - - 784,293 - 784,293
FIDELITY CONTRAFUND - - - 1,346,399 1,346,399
EMPLOYER'S CONTRIBUTION RECEIVABLE - - - - 1,485,822
LOANS RECEIVABLE FROM PARTICIPANTS - - - - 205,012
-------------------------------------------------------------------------------------------
TOTAL ASSETS $ 4,800,634 $ 1,314,002 $ 784,293 $ 1,346,399 $ 29,897,019
===========================================================================================
</TABLE>
13
<PAGE>
CENTOCOR QUALIFIED SAVINGS AND RETIREMENT PLAN
NOTES TO FINANCIAL STATEMENTS
Note 8 Allocation of Plan Assets to Investment Programs
<TABLE>
<CAPTION>
December 31, 1997
-------------------------------------------------------------------------------------------
VANGUARD
VANGUARD BOND INDEX
MONEY MARKET CENTOCOR PARTICIPANT FUND - TOTAL VANGUARD
RESERVES - STOCK LOAN BOND MARKET INDEX TRUST -
ASSETS PRIME PORTFOLIO FUND FUND PORTFOLIO 500 PORTFOLIO
-------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
VANGUARD MONEY MARKET RESERVES -
PRIME PORTFOLIO $ 1,029,947 $ - $ - $ - $ -
CENTOCOR STOCK FUND - 4,176,956 - - -
VANGUARD BOND INDEX FUND - TOTAL
BOND MARKET PORTFOLIO - - - 1,350,588
VANGUARD INDEX TRUST - 500 PORTFOLIO - - - - 9,358,803
VANGUARD U.S. GROWTH PORTFOLIO - - - - -
VANGUARD/WINDSOR II - - - - -
PUTNAM NEW OPPORTUNITIES CLASS A SHARES - - - - -
TEMPLETON FOREIGN FUND - - - - -
EMPLOYER'S CONTRIBUTION RECEIVABLE - 874,978 - - -
LOANS RECEIVABLE FROM PARTICIPANTS - - 206,160 - -
-------------------------------------------------------------------------------------------
TOTAL ASSETS $ 1,029,947 $ 5,051,934 $ 206,160 $ 1,350,588 $ 9,358,803
===========================================================================================
<CAPTION>
-------------------------------------------------------------------------------------------
VANGUARD PUTNAM NEW TEMPLETON
U.S. GROWTH VANGUARD/ OPPORTUNITIES FOREIGN
ASSETS PORTFOLIO WINDSOR II CLASS A SHARES FUND TOTAL
-------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
VANGUARD MONEY MARKET RESERVES -
PRIME PORTFOLIO $ - $ - $ - $ - $ 1,029,947
CENTOCOR STOCK FUND - - - - 4,176,956
VANGUARD BOND INDEX FUND - TOTAL
BOND MARKET PORTFOLIO - - - - 1,350,588
VANGUARD INDEX TRUST - 500 PORTFOLIO - - - - 9,358,803
VANGUARD U.S. GROWTH PORTFOLIO 3,213,685 - - - 3,213,685
VANGUARD/WINDSOR II - 288,676 - - 288,676
PUTNAM NEW OPPORTUNITIES CLASS A SHARES - - 717,034 - 717,034
TEMPLETON FOREIGN FUND - - - 816,362 816,362
EMPLOYER'S CONTRIBUTION RECEIVABLE - - - - 874,978
LOANS RECEIVABLE FROM PARTICIPANTS - - - - 206,160
-------------------------------------------------------------------------------------------
TOTAL ASSETS $ 3,213,685 $ 288,676 $ 717,034 $ 816,362 $ 22,033,189
===========================================================================================
</TABLE>
14
<PAGE>
CENTOCOR QUALIFIED SAVINGS AND RETIREMENT PLAN
NOTES TO FINANCIAL STATEMENTS
Note 9 Allocation of Plan Income and Changes in Plan Equity to Investment
Programs
<TABLE>
<CAPTION>
Year ended December 31, 1998
----------------------------------------------------------------------------------------
VANGUARD
VANGUARD BOND INDEX VANGUARD
MONEY MARKET CENTOCOR PARTICIPANT FUND - TOTAL INDEX
RESERVES - STOCK LOAN BOND MARKET TRUST - 500
PRIME PORTFOLIO FUND FUND PORTFOLIO PORTFOLIO
----------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
INTEREST & OTHER INCOME $ 63,815 $ 6,023 $ 20,089 $ 95,706 $ 183,313
NET APPRECIATION (DEPRECIATION)
IN FAIR VALUE OF INVESTMENTS - 1,720,186 - 25,075 2,503,295
CONTRIBUTIONS:
EMPLOYEE 114,774 296,972 - 178,231 970,234
EMPLOYER - 1,485,822 - - -
PARTICIPANT ROLLOVERS INTO PLAN 104,932 96,239 - 98,977 558,790
DEDUCTIONS:
BENEFITS PAID (59,863) (252,366) (4,221) (66,441) (424,635)
LOAN REPAYMENTS (ADVANCES), NET 1,039 1,132 (1,683) 306 (33,860)
OTHER EXPENSE (446) - - - (429)
TRANSFER OF CENTOCOR DIAGNOSTICS' NET
ASSETS OUT OF PLAN (248,626) (718,246) (15,333) (254,999) (1,548,922)
NET INTERFUND INVESTMENT REDIRECTION 491,470 (861,116) - 139,643 (10,618)
---------------------------------------------------------------------------------------
NET INCREASE/(DECREASE) 467,095 1,774,646 (1,148) 216,498 2,197,168
PLAN EQUITY AT BEGINNING OF PERIOD 1,029,947 5,051,934 206,160 1,350,588 9,358,803
---------------------------------------------------------------------------------------
PLAN EQUITY AT END OF PERIOD $1,497,042 $6,826,580 $205,012 $1,567,086 $11,555,971
=======================================================================================
<CAPTION>
------------------------------------------------------------------------------------------------
VANGUARD PUTNAM NEW TEMPLETON FIDELITY
U.S. GROWTH VANGUARD/ OPPORTUNITIES FOREIGN CONTRA
PORTFOLIO WINDSOR II CLASS A SHARES FUND FUND TOTAL
------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
INTEREST & OTHER INCOME $ 295,707 $ 127,915 $ - $ 88,790 $ 102,751 $ 984,109
NET APPRECIATION (DEPRECIATION)
IN FAIR VALUE OF INVESTMENTS 1,052,444 (16,565) (3,832) (131,123) 187,109 5,336,589
CONTRIBUTIONS:
EMPLOYEE 649,347 599,023 - 229,313 433,052 3,470,946
EMPLOYER - - - - - 1,485,822
PARTICIPANT ROLLOVERS INTO PLAN 404,586 274,475 - 54,442 163,607 1,756,048
DEDUCTIONS:
BENEFITS PAID (217,509) (62,799) - (68,107) (54,746) (1,210,687)
LOAN REPAYMENTS (ADVANCES), NET (5,906) 18,287 - 1,404 19,281 -
OTHER EXPENSE (20) (80) - - - (975)
TRANSFER OF CENTOCOR DIAGNOSTICS'
NET ASSETS OUT OF PLAN (665,432) (245,319) - (104,017) (157,128) (3,958,022)
NET INTERFUND INVESTMENT REDIRECTION 73,732 330,389 (713,202) (102,771) 652,473 -
------------------------------------------------------------------------------------------------
NET INCREASE/(DECREASE) 1,586,949 1,025,326 (717,034) (32,069) 1,346,399 7,863,830
PLAN EQUITY AT BEGINNING OF PERIOD 3,213,685 288,676 717,034 816,362 - 22,033,189
------------------------------------------------------------------------------------------------
PLAN EQUITY AT END OF PERIOD $4,800,634 $1,314,002 $ - $ 784,293 $1,346,399 $29,897,019
================================================================================================
</TABLE>
15
<PAGE>
CENTOCOR QUALIFIED SAVINGS AND RETIREMENT PLAN
NOTES TO FINANCIAL STATEMENTS
Note 9 Allocation of Plan Income and Changes in Plan Equity to Investment
Programs
<TABLE>
<CAPTION>
For the Period July 1, 1997 through December 31, 1997
---------------------------------------------------------------------------------------
VANGUARD
VANGUARD BOND INDEX
MONEY MARKET CENTOCOR PARTICIPANT FUND - TOTAL VANGUARD
RESERVES STOCK LOAN BOND MARKET INDEX - TRUST
PRIME PORTFOLIO FUND FUND PORTFOLIO 500 PORTFOLIO
--------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
INTEREST & OTHER INCOME $ 26,362 $ 3 $ 6,770 $ 41,358 $ 137,024
NET APPRECIATION (DEPRECIATION)
IN FAIR VALUE OF INVESTMENTS - 133,305 - 33,225 702,341
CONTRIBUTIONS:
EMPLOYEE 26,255 94,973 - 50,082 232,272
EMPLOYER - 874,978 - - -
PARTICIPANT ROLLOVERS INTO PLAN 108,695 5,287 - 1,470 37,444
DEDUCTIONS:
BENEFITS PAID (5,082) (96,558) (2,187) (6,704) (201,870)
LOAN REPAYMENTS (ADVANCES), NET (51,354) (243) 59,602 (533) (21,152)
NET INTERFUND INVESTMENT (155) (62,043) - 7,887 (135,027)
REDIRECTION
---------------------------------------------------------------------------------------
NET INCREASE 104,721 949,702 64,185 126,785 751,032
TRANSFERS IN FROM FORMER TRUSTEE 925,226 4,102,232 141,975 1,223,803 8,607,771
---------------------------------------------------------------------------------------
PLAN EQUITY AT END OF PERIOD $ 1,029,947 $5,051,934 $ 206,160 $ 1,350,588 $9,358,803
=======================================================================================
<CAPTION>
----------------------------------------------------------------------------------------
PUTNAM NEW
VANGUARD OPPORTUNITIES TEMPLETON
U.S. GROWTH VANGUARD/ CLASS A FOREIGN
PORTFOLIO WINDSOR II SHARES FUND TOTAL
----------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
INTEREST & OTHER INCOME $ 124,552 $ 22,424 $ 43,600 $ 85,725 $ 487,818
NET APPRECIATION (DEPRECIATION)
IN FAIR VALUE OF INVESTMENTS 85,220 (8,607) 18,610 (126,350) 837,744
CONTRIBUTIONS:
EMPLOYEE 157,730 137,510 120,042 74,718 893,582
EMPLOYER - - - - 874,978
PARTICIPANT ROLLOVERS INTO PLAN 19,446 6,972 15,528 7,411 202,253
DEDUCTIONS:
BENEFITS PAID (155,392) (2,944) (7,369) (10,950) (489,056)
LOAN REPAYMENTS (ADVANCES), NET 1,412 5,983 5,312 973 -
NET INTERFUND INVESTMENT 31,122 127,338 9,091 21,787 -
REDIRECTION ----------------------------------------------------------------------------------------
NET INCREASE 264,090 288,676 204,814 53,314 2,807,319
TRANSFERS IN FROM FORMER TRUSTEE 2,949,595 - 512,220 763,048 19,225,870
----------------------------------------------------------------------------------------
PLAN EQUITY AT END OF PERIOD $3,213,685 $288,676 $ 717,034 $ 816,362 $ 22,033,189
========================================================================================
</TABLE>
16
<PAGE>
CENTOCOR QUALIFIED SAVINGS AND RETIREMENT PLAN
NOTES TO FINANCIAL STATEMENTS
Note 9 Allocation of Plan Income and Changes in Plan Equity to Investment
Programs
<TABLE>
<CAPTION>
For the Period January 1, 1997 through June 30, 1997
----------------------------------------------------------------------------------
COREFUND COREFUND COREFUND
TREASURY CENTOCOR PARTICIPANT INTERMEDIATE EQUITY
RESERVE STOCK LOAN BOND FUND INDEX FUND
SERIES A FUND FUND SERIES A SERIES A
----------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
INTEREST & OTHER INCOME $ 22,104 $ 457 $ 6,479 $ 35,381 $ 27,612
NET APPRECIATION (DEPRECIATION)
IN FAIR VALUE OF INVESTMENTS - (411,690) - (3,235) 1,424,512
CONTRIBUTIONS:
EMPLOYEE 39,803 65,037 - 56,933 377,457
PARTICIPANT ROLLOVERS IN 23,018 - - - 6,706
DEDUCTIONS:
BENEFITS PAID (65,447) (49,239) - (86,454) (168,505)
LOAN ADVANCES, NET - - (33,441) - -
OTHER EXPENSE - (13,387) (978) - -
NET INTERFUND INVESTMENT
REDIRECTION (50,547) (192,960) (8,519) 68,895 96,112
----------------------------------------------------------------------------------
NET INCREASE (DECREASE) (31,069) (601,782) (36,459) 71,520 1,763,894
PLAN EQUITY AT BEGINNING OF PERIOD 952,912 4,704,014 178,434 1,152,283 6,843,877
TRANSFERS OUT TO SUCCESSOR TRUSTEE (921,843) (4,102,232) (141,975) (1,223,803) (8,607,771)
------------------------------------------------------------------------------------
PLAN EQUITY AT END OF PERIOD $ - $ - $ - $ - $ -
====================================================================================
<CAPTION>
-----------------------------------------------------------------------------------
COREFUND COREFUND TWENTIETH
INTERNATIONAL GROWTH COREFUND CENTURY
GROWTH EQUITY CONTRIBUTION/ VISTA
SERIES A SERIES A DISTRIBUTION FUND TOTAL
-----------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
INTEREST & OTHER INCOME $ 64 $ 2,994 $ 13 $ 47 $ 95,151
NET APPRECIATION (DEPRECIATION)
IN FAIR VALUE OF INVESTMENTS 88,759 371,486 - (67,635) 1,402,197
CONTRIBUTIONS:
EMPLOYEE 84,939 233,171 - 116,107 973,447
PARTICIPANT ROLLOVERS IN - 2,877 - 3,829 36,430
DEDUCTIONS:
BENEFITS PAID (132,809) (110,165) - (9,564) (622,183)
LOAN ADVANCES, NET - - - - (33,441)
OTHER EXPENSE - - (17,875) - (32,240)
NET INTERFUND INVESTMENT
REDIRECTION 52,733 51,639 189 (17,542) -
-----------------------------------------------------------------------------------
NET INCREASE (DECREASE) 93,686 552,002 (17,673) 25,242 1,819,361
PLAN EQUITY AT BEGINNING OF PERIOD 669,362 2,397,593 21,056 486,978 17,406,509
TRANSFERS OUT TO SUCCESSOR TRUSTEE (763,048) (2,949,595) (3,383) (512,220) (19,225,870)
-----------------------------------------------------------------------------------
PLAN EQUITY AT END OF PERIOD $ - $ - $ - $ - $ -
===================================================================================
</TABLE>
17
<PAGE>
CENTOCOR QUALIFIED SAVINGS AND RETIREMENT PLAN
NOTES TO FINANCIAL STATEMENTS
Note 9 Allocation of Plan Income and Changes in Plan Equity to Investment
Programs
<TABLE>
<CAPTION>
Year ended December 31, 1996
--------------------------------------------------------------------------------------------
COREFUND
COREFUND COREFUND EQUITY COREFUND
TREASURY CENTOCOR PARTICIPANT INTERMEDIATE INDEX INTERNATIONAL
RESERVE STOCK LOAN BOND FUND FUND GROWTH
SERIES A FUND FUND SERIES A SERIES A SERIES A
------------------------------------------------------------------------------------------
INTEREST & OTHER INCOME $ 46,540 $ 2,534 $ 8,135 $ 60,408 $ 159,992 $ 58,615
NET APPRECIATION (DEPRECIATION)
IN FAIR VALUE OF INVESTMENTS - 929,463 - (11,606) 1,090,939 (6,308)
CONTRIBUTIONS:
EMPLOYEE 85,287 247,196 - 92,157 533,457 112,261
EMPLOYER - 523,631 - - - -
DEDUCTIONS:
BENEFITS PAID (99,571) (358,319) - (110,901) (646,210) (115,260)
LOAN ADVANCES, NET - - (70,012) - - -
OTHER INCOME (EXPENSE) - (32,487) (1,293) - - -
NET INTERFUND INVESTMENT REDIRECTION (53,255) (2,272,452) 110,136 (135,010) 770,054 306,378
------------------------------------------------------------------------------------------
NET INCREASE (DECREASE) (20,999) (960,434) 46,966 (104,952) 1,908,232 355,686
PLAN EQUITY AT BEGINNING OF PERIOD 973,911 5,664,448 131,468 1,257,235 4,935,645 313,676
------------------------------------------------------------------------------------------
PLAN EQUITY AT END OF PERIOD $952,912 $ 4,704,014 $178,434 $1,152,283 $6,843,877 $ 669,362
==========================================================================================
<CAPTION>
---------------------------------------------------------------------------------
COREFUND TWENTIETH
GROWTH COREFUND CENTURY
EQUITY CONTRIBUTION/ VISTA
SERIES A DISTRIBUTION FUND TOTAL
---------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
INTEREST & OTHER INCOME $ 261,348 $ 641 $ 36,394 $ 634,607
NET APPRECIATION (DEPRECIATION)
IN FAIR VALUE OF INVESTMENTS 136,612 - (33,840) 2,105,260
CONTRIBUTIONS:
EMPLOYEE 346,090 - 143,807 1,560,255
EMPLOYER - - - 523,631
DEDUCTIONS:
BENEFITS PAID (212,073) - (11,672) (1,554,006)
LOAN ADVANCES, NET - - - (70,012)
OTHER INCOME (EXPENSE) - 69,133 - 35,353
NET INTERFUND INVESTMENT REDIRECTION 988,914 (67,054) 352,289 -
---------------------------------------------------------------------------------
NET INCREASE (DECREASE) 1,520,891 2,720 486,978 3,235,088
PLAN EQUITY AT BEGINNING OF PERIOD 876,702 18,336 - 14,171,421
---------------------------------------------------------------------------------
PLAN EQUITY AT END OF PERIOD $2,397,593 $ 21,056 $486,978 $17,406,509
=================================================================================
</TABLE>
18
<PAGE>
CENTOCOR, INC.
QUALIFIED SAVINGS AND RETIREMENT PLAN
ITEM 27a - SCHEDULE OF ASSETS HELD FOR INVESTMENT PURPOSES
AT DECEMBER 31, 1998
<TABLE>
<CAPTION>
Description of Assets: Number of Shares Cost Market
- ------------------------------------ ------------------- ---------------- --------------
<S> <C> <C> <C>
Centocor Stock Fund 118,355 $ 2,793,678 $ 5,340,758
Vanguard Money Market Reserves -
Prime Portfolio 1,497,042 $ 1,497,042 $ 1,497,042
Vanguard Bond Index Fund - Total
Bond Market Portfolio 152,589 $ 1,522,250 $ 1,567,086
Vanguard Index Trust - 500 Portfolio 101,413 $ 8,866,606 $ 11,555,971
Vanguard U.S. Growth Portfolio 128,051 $ 3,905,618 $ 4,800,634
Vanguard/Windsor II 44,020 $ 1,352,714 $ 1,314,002
Templeton Foreign Fund 93,479 $ 968,667 $ 784,293
Fidelity Contrafund 23,708 $ 1,193,623 $ 1,346,399
</TABLE>
<TABLE>
<CAPTION>
Number of
Participants Cost Market
----------------- ------------- -------------
<S> <C> <C> <C>
Loans from participants 36 $ 205,012 $ 205,012
</TABLE>
19
<PAGE>
CENTOCOR
QUALIFIED SAVINGS AND RETIREMENT PLAN
ITEM 27d - SCHEDULE OF REPORTABLE TRANSACTIONS
YEAR ENDED DECEMBER 31, 1998
<TABLE>
<CAPTION>
Purchase Selling Cost Net
Identity of Party Involved Description of Assets Price Price of Asset Gain / (Loss)
- -------------------------- ------------------------------------ --------- --------- --------- -------------
<S> <C> <C> <C> <C> <C>
N/A Centocor Stock Fund $1,573,074 $1,555,337 $1,266,855 $288,482
The Vanguard Group, Inc. Vanguard Money Market Reserves -
Prime Portfolio 918,314 294,262 294,262 -
The Vanguard Group, Inc. Vanguard Bond Index Fund - Total
Bond Market Portfolio 128,974 124,647 123,131 1,516
The Vanguard Group, Inc. Vanguard Index Trust - 500 Portfolio 2,521,131 1,284,470 1,164,767 119,703
The Vanguard Group, Inc. Vanguard U.S. Growth Portfolio 1,984,119 784,183 694,836 89,347
The Vanguard Group, Inc. Vanguard/Windsor II 1,465,103 177,894 177,044 850
The Vanguard Group, Inc. Fidelity Contrafund 1,576,578 260,160 241,027 19,133
</TABLE>
20
<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the Board
of Directors has duly caused this Annual Report to be signed by the undersigned
thereunto duly authorized.
CENTOCOR QUALIFIED SAVINGS
AND RETIREMENT PLAN
June 18, 1999 By: /s/ David P. Holveck
--------------------
David P. Holveck
Chief Executive Officer, and
Director (principal executive
officer)
<PAGE>
Consent of Independent Auditors
The Board of Directors
Centocor, Inc.:
We consent to incorporation by reference in Registration Statement Nos. 33-00167
and 33-16285 on Form S-8 of Centocor, Inc. of our report dated June 18, 1999,
relating to the statements of net assets available for plan benefits of the
Centocor Qualified Savings and Retirement Plan as of December 31, 1998 and 1997,
and the related statements of changes in net assets available for plan benefits
for each of the years in the three-year period ended December 31, 1998, which
report appears in the December 31, 1998 annual report on Form 11-K of the
Centocor Qualified Savings and Retirement Plan.
KPMG LLP
Philadelphia, Pennsylvania
June 28, 1999
