<PAGE> 1
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 11-K
[x] ANNUAL REPORT PURSUANT TO SECTION 15(d) OF THE SECURITIES EXCHANGE ACT OF
1934
For the fiscal year ended December 31, 1995
OR
[ ] TRANSITION REPORT PURSUANT TO SECTION 15(d) OF THE SECURITIES EXCHANGE ACT
OF 1934
For the transition period from ______________________ to ______________________
Commission file Number 34-0-20400
A. Full title of the plan and the address of the plan, if different
from that of the issuer named below:
UNIVERSAL STANDARD MEDICAL LABORATORIES, INC.
TAX DEFERRED SAVINGS PLAN AND TRUST
B. Name of issuer of the securities held pursuant to the plan and the
address of its principal executive office:
UNIVERSAL STANDARD MEDICAL LABORATORIES, INC.
26500 Northwestern Highway, Suite 400
Southfield, Michigan 48076
<PAGE> 2
Universal Standard Medical Laboratories, Inc.
Tax Deferred Savings Plan and Trust
Index
Page
----
Report of Independent Accountants .................................. 3 - 4
Financial Statements:
Statement of Net Assets Available for Plan Benefits
as of December 31, 1995 and 1994 ..................... 5
Statement of Changes in Net Assets Available for
Plan Benefits for the Year Ended December 31,
1995 ................................................. 6
Notes to Financial Statements ............................. 7 - 13
Supplemental Schedules:
Item 27a - Schedule of Assets Held for Investment
Purposes at Decenber 31, 1995......................... 15
Item 27d - Schedule of Reportable Transactions for
the Year Ended December 31, 1995...................... 16
Exhibit Index....................................................... 17
2
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[COOPERS & LYBRAND LETTERHEAD]
REPORT OF INDEPENDENT ACCOUNTANTS
To the Plan Administrator of the
Universal Standard Medical Laboratories, Inc.
Tax Deferred Savings Plan and Trust:
We have audited the accompanying statements of net assets available for plan
benefits of Universal Standard Medical Laboratories, Inc. Tax Deferred Savings
Plan and Trust as of December 31, 1995 and 1994, and the related statement of
changes in net assets available for Plan benefits for the year ended December
31, 1995. 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 as of
December 31, 1995 and 1994, and the changes in net assets available for
benefits for the year ended December 31, 1995, in conformity with generally
accepted accounting principles.
Our audits were performed for the purpose of forming an opinion on the
financial statements taken as a whole. The supplemental schedules contained on
pages 15 and 16 are presented for the purpose of additional analysis and are
not a required part of the basic financial statements, but are supplementary
information required by the Department of Labor's Rules and Regulations for
Reporting and Disclosure under the Employee Retirement Income Security Act of
1974. The supplemental 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.
3
<PAGE> 4
The schedule of assets held for investment purposes that accompanies the Plan's
financial statement does not disclose the historical cost of certain plan
assets held by the Plan custodian. Disclosure of this information is required
by the Department of Labor's Rules and Regulations for Reporting and Disclosure
under the Employee Retirement Income Security Act of 1974. In addition, the
Plan custodian does not provide information separately for the components of
investment income including interest and dividend income, realized gains and
losses, and unrealized appreciation or depreciation of the investments.
Coopers & Lybrand LLP
Detroit, Michigan
May 10, 1996
4
<PAGE> 5
Universal Standard Medical Laboratories, Inc.
Tax Deferred Savings Plan and Trust
Statement of Net Assets Available for Plan Benefits
<TABLE>
<CAPTION>
December 31,
----------------------------
1995 1994
-------- ---------
<S> <C> <C>
ASSETS
Investments, at fair value $4,398,649 $3,666,595
Participant loans receivable 67,310 69,477
Employee contribution receivable 88,912 72,155
---------- ----------
Net assets available for plan benefits $4,554,871 $3,808,227
========== ==========
</TABLE>
The accompanying notes are an integral part of the financial statements.
5
<PAGE> 6
Universal Standard Medical Laboratories, Inc.
Tax Deferred Savings Plan and Trust
Statement of Changes in Net Assets Available for Plan Benefits
for the year ended December 31, 1995
<TABLE>
<S> <C>
Additions:
Participant contributions $ 948,272
Investment income, net 614,490
-----------
Total additions 1,562,762
-----------
Deductions:
Benefit payments 791,417
Administrative expenses 24,701
-----------
Total deductions 816,118
-----------
Net additions 746,644
Net assets available for plan benefits, beginning of year 3,808,227
-----------
Net assets available for plan benefits, end of year $ 4,554,871
===========
</TABLE>
The accompanying notes are an integral part of the financial statements.
6
<PAGE> 7
Universal Standard Medical Laboratories, Inc.
Tax Deferred Savings Plan and Trust
Notes to Financial Statements
1. PLAN DESCRIPTION:
The following description of the Universal Standard Medical
Laboratories, Inc. (the "Company" or "USML") Tax Deferred Savings Plan
and Trust (the "Plan") is provided for general information purposes
only. Participants should refer to the plan document as amended for
more complete information.
a. GENERAL: The Plan is a defined contribution plan covering
substantially all employees of the Company who have one year
of service and have attained the age of 21. The plan is
subject to the Employee Retirement Income Security Act of 1974
("ERISA"). The Plan was amended during 1994 to allow
participants the option to invest in Company common stock.
b. CONTRIBUTIONS: Each year, participants may contribute up to
15 percent of pretax annual compensation, as defined by the
Plan. Company contributions are on a discretionary basis, as
defined by the Plan. Contributions are subject to certain
limitations established by the Internal Revenue Service.
c. VESTING AND DISTRIBUTIONS: Under the provisions of the Plan,
participant's contributions vest immediately while the
employer contributions vest as follows:
<TABLE>
<CAPTION>
EMPLOYER
PARTICIPANT'S CONTRIBUTIONS
YEARS OF VESTING
SERVICE PERCENTAGE
--------------- ------------------
<S> <C>
1 25%
2 50
3 75
4 100
</TABLE>
Withdrawals of contributions and interest earned can be made only at
the time of retirement, on and after the attainment of age 59-1/2, on
the termination of employment, at the death of the participant, or
disability of the participant as defined by the Plan.
7
<PAGE> 8
d. PARTICIPANTS ACCOUNTS: Each participant's account is credited
with the participant's contributions, employer contributions,
if any, and the participant's share of the Plan earnings. The
Plan earnings from investments are allocated quarterly to the
participant's account proportionately based on the account
balance at the prior allocation date, adjusted for any
contributions or withdrawals made during the period.
e. INVESTMENT OPTIONS: Under the Plan and Trust agreement the
Company has appointed Equitable Life Assurance Society of the
United States ("Equitable") as custodian of the Plan. Upon
enrollment in the Plan, and monthly, a participant may direct
his credited account balance in any of six investment options.
Equitable Guaranteed Interest Account: Funds are invested in
the Equitable general account, which supports all of its
insurance and annuity operations. Contributions allocated to
the account earn interest at the current guaranteed interest
rate, which was 6.50% during 1995.
Equitable Common Stock Fund: Funds are invested primarily in
common stock and other equity-type securities issued by
intermediate and large-sized companies.
Equitable Bond Fund: Funds are invested primarily in publicly
traded fixed income securities, such as bonds, debentures and
notes.
Equitable Aggressive Stock Fund: Funds are invested primarily
in securities of medium and smaller-sized companies perceived
to have greater growth potential than larger companies.
Equitable Balanced Fund: Funds are invested primarily in
common stocks, other equity-type instruments, longer-term
fixed income securities, publicly-traded debt securities and
short term money market instruments.
USML Stock Fund: Funds are invested in common stock of USML.
8
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f. LOANS: A participant may elect to draw an interest-bearing
loan from the Plan in accordance with the plan agreement.
Loan transactions are treated as a transfer to (from) the
fixed income account (to) from the participant loan account.
2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES:
The following is a summary of significant accounting policies followed
in the preparation of these financial statements. These policies are
in accordance with generally accepted accounting principles.
a. INVESTMENT VALUATION: The Plan's investments are stated at
fair value. Investments in the Common Stock Fund, Bond Fund,
Aggressive Stock Fund and Balanced Fund represent interest in
pooled investment funds. The fair value of pooled investments
represents the Plan's pro rata interests in the aggregate fair
value of the pooled investment funds as determined by the
trustee. The Guaranteed Interest Account is included in the
financial statements at contract value, which approximates
fair value, as reported to the Plan by Equitable. Contract
value represents total contributions, plus interest at the
current guaranteed interest rate, less benefit payments or
other withdrawals and deductions for fees and expenses. The
Company stock is valued at its quoted market price.
Participant notes receivable are valued at cost which
approximates fair value.
Investment transactions are reflected on a trade-date basis.
Interest income is recorded on the accrual basis.
b. INVESTMENT INCOME: Investment income included in the
Statement of Changes in Net Assets Available for Plan Benefits
represents the accumulated changes in net asset fair values of
the accounts in which the plan assets are invested, including
interest and dividend income, realized gains or losses and
unrealized appreciation or depreciation of the investments.
c. BENEFIT PAYMENT: Benefit payments to participants are
recorded when paid.
9
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d. ESTIMATES: The preparation of financial statements in
conformity with generally accepted accouning 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 revenues
and expenses during the reporting period. Actual results
could differ from those estimates.
3. INVESTMENTS:
The following table represents the fair value of investments available
for plan benefits at December 31, 1995 and 1994. Investments that
represent five percent or more of the Plan's net assets are separately
identified.
<TABLE>
<CAPTION>
DECEMBER 31,
-----------------------
DESCRIPTION 1995 1994
----------- ------ -------
<S> <C> <C>
Equitable Life Assurance Society of the United States:
Guaranteed Interest Account $1,795,427 $1,876,324
Balanced Fund 1,071,662 863,622
Common Stock Fund 813,907 492,861
Aggressive Stock Fund 606,924 376,503
Other 110,729 57,285
----------- -----------
$4,398,649 $3,666,595
=========== ===========
</TABLE>
The following table represents the changes in net assets available for
plan benefits for each of the six investment accounts for the year
ended December 31, 1995:
10
<PAGE> 11
<TABLE>
<CAPTION>
Guaranteed Common Aggressive USML
Interest Balanced Stock Stock Bond Stock
Account Fund Fund Fund Fund Fund
---------- -------- ------ ---------- ---- -----
<S> <C> <C> <C> <C> <C> <C>
Additions:
Participant contributions 251,895 197,877 255,534 184,620 40,640 17,707
Investment income (loss) 116,959 187,044 173,645 129,259 9,653 (7,873)
--------- --------- --------- --------- --------- --------
Total additions 368,854 384,921 429,179 313,879 50,293 9,834
Deductions:
Benefit payments 388,303 120,151 144,422 122,093 15,438 1,010
Administrative expenses 11,638 6,004 3,836 2,821 402 --
--------- --------- --------- --------- --------- --------
Total deductions 399,941 126,155 148,258 124,914 15,840 1,010
Net additions prior to interfund
transfers (31,087) 258,766 280,921 188,965 34,453 8,824
Interfund transfers (46,922) (52,146) 65,198 32,270 9,200 370
--------- --------- --------- --------- --------- --------
Net additions (deductions) (78,009) 206,620 346,119 221,235 43,653 9,194
Net assets available for plan benefits,
beginning of year 1,884,621 850,732 535,505 405,516 50,360 12,016
--------- --------- --------- --------- --------- --------
Net assets available for plan benefits,
end of year 1,806,612 1,057,352 881,624 626,751 94,013 21,210
========= ========= ========= ========= ========= ========
<CAPTION>
Participant
Loan
Account Total
----------- -----
<S> <C> <C>
Additions:
Participant contributions -- 948,272
Investment income (loss) 5,803 614,490
--------- ---------
Total additions 5,803 1,562,762
Deductions:
Benefit payments -- 791,417
Administrative expenses -- 24,701
--------- ---------
Total deductions -- 816,118
Net additions prior to interfund
transfers 5,803 746,644
Interfund transfers (7,970) --
--------- ---------
Net additions (deductions) (2,167) 746,644
Net assets available for plan benefits,
beginning of year 69,477 3,808,227
--------- ---------
Net assets available for plan benefits,
end of year 67,310 4,554,871
========= =========
</TABLE>
11
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4. PRIORITIES UPON TERMINATION OF THE PLAN:
Although it has not expressed any intent to do so, the Company has the
right under the Plan to discontinue its contribution at any time and
to terminate the Plan subject to the provisions of ERISA. In the
event of complete discontinuance of contributions by the employer or,
if the Plan is terminated, the date of such discontinuance or
determination shall be deemed an anniversary for the purpose of making
the allocations of earnings. The accounts of the participant shall
thereupon become 100 percent vested.
5. TAX STATUS:
The Plan obtained its latest determination letter on April 20, 1995 in
which the Internal Revenue Service stated that the Plan, as then
designed, is qualified and the trust established under the Plan is
tax-exempt, under the appropriate sections of the Internal Revenue
Code.
6. EXPENSES:
For the year ended December 31, 1995, certain administrative costs
associated with the Plan, including custodian, legal and audit fees,
were paid by the Company and are not reflected as expenses of the
Plan.
7. RECONCILIATION OF FINANCIAL STATEMENTS TO FORM 5500:
The following is a reconciliation of net assets available for benefits
per the financial statements to the Form 5500:
<TABLE>
<CAPTION>
December 31,
----------------------------
1995 1994
-------- --------
<S> <C> <C>
Net assets available for benefits per the financial statements $4,554,871 $3,808,227
Amounts allocated to withdrawing participants (336,826) (269,812)
---------- ----------
Net assets available for benefits per the Form 5500 $4,218,045 $3,538,415
========== ==========
</TABLE>
12
<PAGE> 13
The following is a reconciliation of benefits paid to participants per
the financial statements to the Form 5500 for the year ended December
31, 1995:
<TABLE>
<S> <C>
Benefits paid to participants per the financial statements $ 791,417
Add amounts allocated to withdrawing participants at December 31, 1994 336,826
Less amounts allocated to withdrawing participants at December 31, 1993 (269,812)
---------
Benefits paid to participants per the Form 5500 $ 858,431
=========
</TABLE>
Amounts allocated to withdrawing participants are recorded on the Form
5500 for benefit claims that have been processed and approved for
payment prior to December 31, but not yet paid as of that date.
8. RELATED PARTY TRANSACTIONS:
Certain Plan investments are shares of pooled investment funds managed
by the Equitable Life Assurance Society of the United States.
Equitable is the custodian as defined by the Plan and, therefore,
qualifies as a party-in-interest. Fees paid by the Plan for the
investment management services amounted to $24,701 for the year ended
December 31, 1995.
13
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SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934,
the trustee (or other persons who administer the Plan) have duly caused this
annual report to be signed on its behalf by the undersigned thereunto duly
authorized.
Date: June 14, 1996 UNIVERSAL STANDARD MEDICAL
LABORATORIES, INC. TAX
DEFERRED SAVINGS PLAN
By: UNIVERSAL STANDARD MEDICAL
LABORATORIES, INC.
Its: Plan Administrator
By: /s/Eugene E. Jennings
--------------------------------
Eugene E. Jennings
Its: Chairman, President and
Chief Executive Officer
14
<PAGE> 15
Universal Standard Medical Laboratories, Inc.
Tax Deferred Savings Plan and Trust
Item 27a - Schedule of Assets Held for Investment Purposes
at December 31, 1995
<TABLE>
<CAPTION>
(c)
(b) Description of Investment,
Identity of Issuer, Including Maturity Date, (e)
Borrower, Lessor Rate of Interest, Collateral, (d) Current
(a) or Similar Party Par or Maturity Value Cost Value
- ----------- ------------------- ----------------------------- -------- -----------
<S> <C> <C> <C> <C>
Equitable Life Guaranteed Interest Account * $1,795,427
Assurance Balanced Fund * 1,071,662
Society of the Common Stock Fund 8 813,907
United States Aggressive Stock Fund 8 606,924
Bond Fund * 88,883
USML USML Stock Fund * 21,846
Participant Loans Interest rates range from $0 67,310
Receivable 8.5%-15% ----------
$4,465,959
==========
</TABLE>
Information regarding the cost of the investments was not available
from the custodian.
15
<PAGE> 16
Universal Standard Medical Laboratories, Inc.
Tax Deferred Savings Plan and Trust
Item 27d - Schedule of Reportable Transactions
for the year ended December 31, 1995
<TABLE>
<CAPTION>
(h)
Current (i)
(b) (f) Value of Net
(a) Description of Asset (c) (d) (e) Expenses (g) Asset on Gain
Identity of (Including Interest Rate and Purchase Selling Lease Incurred with Cost Transaction or
Party Involved Maturity in Case of a Loan) Price Price Rental Transaction * of Asset Date (Loss)
- -------------- ---------------------------- -------- ------- ------ ------------- -------- ----------- ------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
REPORTABLE
CRITERION I: Any transaction within the plan year, with
respect to any plan asset, involving an
amount in excess of five percent of the
current value of plan assets. (Note A)
None.
REPORTING
CRITERION II: Any series of transactions (other than
transactions with respect to securities)
within the plan year with or in conjunction
with the same person which, when
aggregated, regardless of the category of
asset and the gain or loss on any
transaction, involves an amount in
excess of five percent of the current
value of plan assets.
None.
REPORTING
CRITERION III: Any transaction within the plan year
involving securities of the same issue if
within the plan year any series of
transactions with respect to such
securities, when aggregated, involves an
amount in excess of five percent of the
current value of plan assets. (Note B)
Equitable Life 31 purchases, Guaranteed Interest Account $279,255 $279,255 $279,255
Assurance 15 purchases, Common Stock Fund 247,004 247,004 247,004
States 35 sales, Guaranteed Interest Account $426,156 426,156
REPORTING
CRITERION IV: Any transaction within the plan year with
respect to securities with or in
conjunction with a person if any prior or
subsequent single transaction within the
plan year with such person with respect
to securities exceeds five percent of the
current value of plan assets. (Note C).
None.
</TABLE>
Notes:
(A) Transaction already reported under Criterion III are not reported
here.
(B) Transactions already reported under Criterion I are not reported
here.
(C) Transactions already included in Criterion I or III are not reported
here.
* Information regarding expenses incurred with each transaction was
not available from the asset custodian.
** Information regarding the cost and net gain or loss on assets sold
during the Plan year was not available from the custodian.
16
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EXHIBIT INDEX
EXHIBIT
NO. DESCRIPTION
- ------- -----------
23 Consent of Independent Accountants
17
<PAGE> 1
EXHIBIT 23
[COOPERS & LYBRAND LETTERHEAD]
CONSENT OF INDEPENDENT ACCOUNTANTS
We consent to the incorporation by reference in the registration statement of
Universal Standard Medical Laboratories, Inc. on Form S-8 (File No. 33-80356)
of our report dated May 10, 1996, on our audit of the financial statements of
the Universal Standard Medical Laboratories, Inc. Tax Deferred Savings Plan and
Trust as of December 13, 1995 and 1994, and for the year ended December 31,
1995, which report is included in this annual report on Form 11-K.
Coopers & Lybrand LLP
Detroit, Michigan
May 10, 1996
