SECURITIES AND EXCHANGE COMMISSION
Washington, D. C. 20549
FORM 10-K
ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF
THE SECURITIES EXCHANGE ACT OF 1934
For the fiscal year ended December 31, 1998
Commission File Number 1-6926
C. R. BARD, INC.
(Exact name of registrant as specified in its charter)
New Jersey 22-1454160
(State of incorporation) (I.R.S. Employer Identification No.)
730 Central Avenue, Murray Hill, New Jersey 07974
(Address of principal executive offices)
Registrant's telephone number, including area code: (908) 277-8000
Securities registered pursuant to Section 12(b) of the Act:
Name of each exchange on
Title of each class which registered
Common Stock - $.25 par value New York Stock Exchange
Securities registered pursuant to Section 12(g) of the Act: None
Indicate by check mark whether the registrant (1) has filed all
reports required to be filed by Section 13 or 15(d) of the
Securities Exchange Act of 1934 during the preceding 12 months (or
for such shorter period that the registrant was required to file
such reports), and (2) has been subject to such filing requirements
for the past 90 days. Yes X No
Indicate by check mark if disclosure of delinquent filers pursuant
to Item 405 of Regulation S-K is not contained herein, and will not
be contained, to the best of registrant's knowledge, in definitive
proxy or information statements incorporated by reference in Part
III of this Form 10-K or any amendments to this Form 10-K. [ X ]
The aggregate market value of the voting stock held by
nonaffiliates of the registrant was approximately $2,900,355,800
based on the closing price of stock traded on the New York Stock
Exchange on February 26, 1999. As of February 26, 1999, there were
51,447,553 shares of Common Stock, $.25 par value per share,
outstanding.
The company's definitive Proxy Statement dated March 12, 1999 has
been incorporated by reference with respect to certain information
contained therein in Part III and Part IV of this Form 10-K.
The exhibit index is located in Part IV, Item 14, Page IV-1.
<PAGE>
PART I
Item 1. Business
General Development of Business
The company was started by Charles Russell Bard in 1907. One of
its first medical products was the silk urethral catheter imported
from France. In 1923, the company was incorporated as C. R. Bard,
Inc. and distributed an assortment of urological and surgical
products. Bard became a publicly-traded company in 1963 and five
years later was traded on the New York Stock Exchange.
In 1966, Bard acquired the United States Catheter & Instrument Co.,
a supplier of urological and cardiovascular specialty products.
In 1980 Bard acquired its major source of the Foley catheter -
Davol Inc. Numerous other acquisitions were made over the last
thirty-five years broadening Bard's product lines. Today, C. R.
Bard, Inc. is a leading multinational developer, manufacturer and
marketer of health care products.
1998 sales of $1.165 billion decreased 4% from 1997. Net income
for 1998 totaled $252.3 million compared with $72.3 million in
1997. Basic and diluted earnings per share were $4.54 and $4.51,
respectively, in 1998. Basic and diluted earnings per share were
$1.27 and $1.26, respectively in 1997.
Acquisitions and Dispositions
During the fourth quarter of 1998, the company completed the sale
of its global Coronary Cath Lab business to Arterial Vascular
Engineering, Inc. and its Intra-Aortic Balloon Products business to
Arrow International, Inc. for in excess of $625.0 million. A
portion of the proceeds represents retained working capital,
primarily accounts receivable, which will be collected through
normal operations.
1997 included the sale of two product lines which resulted in a
pretax gain of $22.7 million ($.23 per share).
In September of 1996 Bard completed the acquisition of IMPRA, Inc.
("IMPRA"), a company that develops, manufactures and markets
vascular grafts used for blood vessel replacement surgery. The
purchase and acquisition costs which approximated $155.4 million
were financed with commercial paper.
I-I
<PAGE>
Product Group Information
Bard is engaged in the design, manufacture, packaging, distribution
and sale of medical, surgical, diagnostic and patient care devices.
Hospitals, physicians and nursing homes purchase approximately 90%
of the company's products, most of which are used once and
discarded.
The company reports its sales around the concept of disease state
management. Three of Bard's four major product group categories
are: vascular diagnosis and intervention, urological diagnosis and
intervention, and oncological diagnosis and intervention. In
addition the company maintains and grows its fourth major product
group, surgical specialties, and also has a product group of other
ongoing products. The divested products category contains divested
and discontinued product lines.
The following table sets forth for the last three years ended
December 31, 1998, the approximate percentage contribution by
product line to Bard's consolidated net sales on a worldwide basis.
Years Ended December 31,
1998 1997 1996
Vascular 18% 16% 14%
Urology 29% 27% 26%
Oncology 18% 16% 16%
Surgery 13% 11% 10%
Other ongoing products 5% 5% 5%
Total ongoing products 83% 75% 71%
Divested products 17% 25% 29%
Net sales 100% 100% 100%
Narrative Description of Business
General
Historically, Bard has been known for its products in the
urological field, where its Foley catheter is the leading device
for bladder drainage. Bard's largest product group is the
urological diagnosis and intervention category contributing
approximately 29% of consolidated net sales in 1998.
Bard continually expands its research toward the improvement of
existing products and the development of new ones. It has
pioneered the development of disposable medical products for
standardized procedures.
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<PAGE>
Vascular Diagnosis and Intervention - Bard's line of vascular
diagnosis and intervention products includes peripheral angioplasty
stents, catheters, guidewires, introducers and accessories and vena
cava filters; electrophysiology products including cardiac mapping
and electrophysiology laboratory systems, and diagnostic and
temporary pacing electrode catheters; fabrics and meshes and
implantable blood vessel replacements.
Urological Diagnosis and Intervention - Bard offers a complete line
of urological diagnosis and intervention products including Foley
catheters, procedure kits and trays and related urine monitoring
and collection systems; ureteral stents; and specialty devices for
incontinence, endoscopic procedures and stone removal.
Oncological Diagnosis and Intervention - Bard's line of oncological
diagnosis and intervention products include biopsy products;
specialty access catheters and ports; and gastroenterological
products.
Surgical Specialties - Bard's surgical specialties products include
meshes for hernia repair; irrigation devices for orthopaedic and
laparoscopic procedures; laparoscopic accessories; and topical
hemostasis.
International - Bard markets vascular, urological, oncological and
surgical specialties products throughout the world. Principal
markets are Japan, Canada, the United Kingdom and continental
Europe. Approximately 45% of the sales outside the United States
are of products manufactured by Bard in its facilities in Canada,
France, Germany, Malaysia and the United Kingdom. The balance of
the sales are from products manufactured in the continental United
States, Puerto Rico or Mexico for export. Bard's foreign
operations are subject to the usual risks of doing business abroad,
including restrictions on currency transfer, exchange fluctuations
and possible adverse government regulations. See p. II-31 Note 10
in the Notes to Consolidated Financial Statements for additional
information.
Competition
The company knows of no published statistics permitting a general
industry classification that would be meaningful as applied to the
company's variety of products. However, products sold by the
company are in substantial competition with those of many other
firms, including a number of larger well-established companies.
The company depends more on its consistently reliable product
quality, dependable service and its ability to develop products to
meet market needs than on patent protection, although some of its
products are patented or are the subject of patent applications.
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<PAGE>
Marketing
The company's products are distributed domestically directly to
hospitals and other institutions as well as through numerous
hospital/surgical supply and other medical specialty distributors
with whom the company has distributor agreements. In international
markets, products are distributed either directly or through
distributors with the practice varying by country. Sales promotion
is carried on by full-time representatives of the company in
domestic and international markets.
Sales to distributors, which supply the company's products to many
end users, accounted for approximately 26% of the company's sales
and the five largest distributors combined accounted for
approximately 95% of such sales.
In order to service its customers, both in the U.S. and outside the
U.S., the company maintains inventories at distribution facilities
in most of its principal marketing areas. Orders are normally
shipped within a matter of days after receipt, except for items
temporarily out of stock, and backlog is normally not significant
in the business of the company.
Most of the products sold by the company, whether manufactured by
it or by others, are sold under the BARD trade name or trademark
or other trademarks owned by the company. Such products
manufactured for the company by outside suppliers are produced
according to the company's specifications.
Regulation
The development, manufacture, sale and distribution of the
company's products are subject to comprehensive government
regulation. Government regulation by various federal, state and
local agencies, which includes detailed inspection of and controls
over research and laboratory procedures, clinical investigations,
manufacturing, marketing, sampling, distribution, record keeping,
storage and disposal practices, substantially increases the time,
difficulty, and costs incurred in obtaining and maintaining the
approval to market newly developed and existing products.
Government regulatory actions can result in the seizure or recall
of products, suspension or revocation of the authority necessary
for their production and sale, and other civil or criminal
sanctions.
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<PAGE>
Raw Materials
The company uses a wide variety of readily available plastics,
textiles, alloys and rubbers for conversion into its devices. Two
large, U.S.-based chemical suppliers have sought to restrict the
sale of certain of their materials to the device industry for use
in implantable products. Although one guiding principle in the
adoption of this policy is the avoidance of negative economic
effect on the health care industry, a small portion of the
company's product lines may face a short-term threat to the
continuity of their raw material supply. Such suppliers have
indicated that their action is based on product liability concerns.
Bard and the medical device industry are working to resolve this
problem in general and with these suppliers to assure a continuing
supply of necessary raw materials. Bard is working to maintain a
supply of qualified materials by developing new suppliers and
increasing inventories of important stocks.
Environment
The company continues to address current and pending environmental
regulations relating to its use of ethylene oxide (ETO) for the
sterilization of some of its products. The company is complying
with regulations reducing permitted ETO emissions by installing
scrubbing equipment and adjusting its processes. The company
believes that continuing costs for environmental activities will
not significantly affect earnings or competitive position.
Employees
The company employs approximately 7,700 persons.
Seasonality
The company's business is not affected to any material extent by
seasonal factors.
Research and Development
The company's research and development expenditures amounted to
approximately $72,700,000 in 1998, $85,800,000 in 1997 and
$77,300,000 in 1996.
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<PAGE>
Item 2. Properties
The executive offices of the company are located in Murray Hill,
New Jersey, in facilities that the company owns. Domestic
manufacturing and development units are located in Arizona,
Georgia, Kansas, Massachusetts, New Jersey, New York, Ohio,
Pennsylvania, Puerto Rico, Rhode Island, South Carolina, Texas and
Utah. Sales offices and distribution points are in these locations
as well as others.
Outside the U.S., the company has plants or offices in Australia,
Belgium, Canada, China, France, Germany, Hong Kong, India, Ireland,
Italy, Japan, Korea, Malaysia, Mexico, the Netherlands, Norway,
Portugal, Singapore, Spain, Sweden, Switzerland and the United
Kingdom.
The company owns approximately 1,723,000 square feet in 21
locations and leases approximately 1,370,000 square feet of space
in 53 locations.
All these facilities are well maintained and suitable for the
operations conducted in them.
Item 3. Legal Proceedings
On October 6, 1995, Trimedyne, Inc. filed a complaint in State
Court in California alleging breach of contract, fraud and
negligent misrepresentation by the company in connection with its
performance under a Development, Supply and License Agreement dated
June 28, 1991, concerning side-firing laser products (Urolase ),
along with certain other charges. The parties settled this case
during the fourth quarter of 1998.
During 1993, the United States Environmental Protection Agency (the
"EPA") notified the company's Urological division that it may be a
potentially responsible party relative to cleanup of the Frontier
Chemical site in Niagara Falls, New York. In September, 1993, the
company entered into a consent order concerning the first phase of
the cleanup, which was a drum removal action. The company's
liability for the first phase was $119,000. A second phase of
remedial action involves removal of waste in several large tanks.
The company's liability for this phase was assessed at less than
$15,000. The third phase of remedial action involves soil and
groundwater contamination. The company's responsibility, if any,
for cleanup of this phase is unknown at this time, but it is
believed that the final resolution of this matter is not expected
to have a material adverse financial impact on the company.
I-6
<PAGE>
Item 3. Legal Proceedings (continued)
During 1992, the EPA notified the company that it had been
identified as a potentially responsible party in connection with an
ongoing investigation of the Solvents Recovery Service of New
England site in Southington, Connecticut. Although the full extent
of liability in this case is unknown, the company has been
identified with less than one-half percent of the total gallonage
of waste materials. Beginning in 1995, the company, together with
several hundred other parties, entered into two consent orders to
perform the remedial investigation and feasibility study and two
removal actions with respect to groundwater contamination. The
final resolution of this matter is not expected to have a material
adverse financial impact on the company.
Davol Inc., a Bard subsidiary, has been identified as a Potentially
Responsible Party by the Massachusetts Department of Environmental
Protection for two new Superfund sites in Dartmouth and Freetown,
Massachusetts. The allegations stem from transhipments of waste
from the ReSolve hazardous waste reprocessing facility in
Dartmouth, Massachusetts to each of the sites associated with the
H&M Drum Company. At this time, Davol Inc. and the other former
ReSolve waste generators have agreed to contribute $1,000 towards
a fund to finance a site investigation. The final resolution of
this matter is not expected to have a material adverse financial
impact on the company.
The company is also subject to other legal proceedings and claims
that arise in the ordinary course of business.
Item 4. Results of Votes of Security Holders
Not applicable.
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<PAGE>
Executive Officers of the Registrant
Set forth below is the name, age, position, five-year business
history and other information with respect to each executive
officer of the company as of March 1, 1999. No family
relationships exist among the officers of the company.
Name Age Position
William H. Longfield 60 Chairman and
Chief Executive Officer
and Director
Guy J. Jordan 50 Group President
Timothy M. Ring 41 Group President
John H. Weiland 43 Group President
Charles P. Slacik 44 Senior Vice President and
Chief Financial Officer
Nadia C. Adler 54 Vice President General Counsel
and Secretary
James R. Adwers, M.D. 55 Vice President-Medical Affairs
E. Robert Ernest 58 Vice President-Planning and
Development
Christopher D. Ganser 46 Vice President-Quality Assurance
Hope Greenfield 47 Vice President-Human Resources
Charles P. Grom 51 Vice President and Controller
Richard D. Manthei 63 Vice President-Scientific
Affairs
Earle L. Parker 55 Vice President and
Chief Investor Relations Officer
Todd C. Schermerhorn 38 Vice President and Treasurer
All officers of the company are elected annually by the Board of
Directors.
I-8
<PAGE>
Executive Officers of the Registrant (continued)
William H. Longfield joined Bard in 1989 as Executive Vice
President and Chief Operating Officer. Prior to joining the
company was President and Chief Executive Officer of Cambridge
Group, Inc. Previously was Executive Vice President-Operations of
Lifemark, Inc. and, prior thereto, was employed by American
Hospital Supply Corporation where he held a number of positions
including President of the Convertors Division. Elected President
and Chief Operating Officer in 1991, elected President and Chief
Executive Officer in 1994 and to present position in 1995. Elected
to Board of Directors in 1990.
Guy J. Jordan joined Bard in 1986 as Director of research and
development for USCI. Promoted to Vice President for specialty
access products in 1990 for Davol. In 1991 promoted to Vice
President and General Manager of Bard Access Systems and became
President of the division in 1993. Elected to Group Vice President
in October 1996 and to present position in April 1997. Prior to
joining Bard, he was with American Cyanamid Corporation.
Timothy M. Ring joined Bard as Vice President-Human Resources in
June 1992. Prior to joining the company was with Abbott
Laboratories, Inc. for ten years, most recently with their Hospital
Products Division as director of Personnel. Elected to Group Vice
President in 1993 and to present position in 1997.
John H. Weiland joined Bard in 1996 as Group Vice President. Prior
to joining the company, was Senior Vice President at Dentsply
International. Previously served as President and Chief Executive
Officer of Pharmacia Diagnostics, Inc. and was with American
Hospital Supply and Baxter Healthcare. Served one year as a White
House Fellow in the role of Special Assistant in the Office of
Management and Budget. Elected to present position in 1997.
Charles P. Slacik joined Bard in 1999 as Senior Vice President and
Chief Financial Officer. Prior to joining the company, was with
American Home Products since 1982 in various financial and
operating positions, the most recent as Chief Operating Officer for
Solgar Vitamin and Herb Company. Other American Home Products
positions included Senior Vice President of Finance for Whitehall-Robins
Healthcare Division and Sherwood-Davis & Geck Corp.;
Corporate Controller for American Home Products and Executive Vice
President of Whitehall-Robins Healthcare Division.
I-9
<PAGE>
Executive Officers of the Registrant (continued)
Nadia C. Adler joined Bard in 1999 as Vice President, General
Counsel and Secretary. Prior to joining Bard was Senior Vice
President, General Counsel and Assistant Secretary of Montefiore
Medical Center in New York City since 1987. Before Montefiore, was
Partner in the law firm of Rosenman & Colin as a member of the
Litigation Department and later their Corporate Department.
James R. Adwers, M.D. joined Bard in 1995 as Regional Vice
President, Surgical Group, Corporate Medical Affairs. Promoted to
Staff Vice President of the Corporate Medical Affairs Group in
1996. Prior to joining the company, held medical affairs positions
with Becton, Dickinson and Company and Technomed International.
Promoted to present position in 1997.
E. Robert Ernest joined Bard as Director of Market Research and
Business Development in 1977. Prior to joining Bard, was with
Abbott Laboratories for ten years. Promoted to Vice President-Business
Development in 1979 and named to present position in
1994.
Christopher D. Ganser joined Bard in 1989 as Manager-Quality
Assurance in the Moncks Corner facility. Promoted to Division
Manager-Quality Control Operations in 1991 and to Director of
Quality Assurance of Bard Urological Division in 1992. Promoted to
present position in 1994. Prior to joining Bard, held several
quality assurance positions with Kendall McGaw.
Hope Greenfield joined Bard in 1995 in her present position. Prior
to joining the company, was with Digital Equipment Corporation for
sixteen years where she served as Human Resources Director and Vice
President for various divisions.
Charles P. Grom joined Bard in 1977 as Corporate Accounting Manager
and promoted to Corporate Cost and Budget Manager in 1980. Served
as Division Controller for various Bard Divisions between 1981 and
1988 when he was promoted to Assistant Corporate Controller.
Elected Controller in 1994 and to his present position in 1995.
Richard D. Manthei joined Bard in 1996 in his current position.
Prior to joining the company, was a Partner in the law firm of
McKenna and Cuneo in Washington, D.C., where he chaired the Food,
Drug, Cosmetic, and Medical Device Department. Previously served
as Managing Partner at Burditt, Bowles and Radzius. Held prior
positions with American Hospital Supply Corporation and Baxter
International, Inc.
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<PAGE>
Executive Officers of the Registrant (continued)
Earle L. Parker joined Bard in 1979 as Corporate Cost and Budget
Manager. Promoted to Assistant Controller of Bard Urological
Division in 1980, to Controller of USCI Division in 1981 and to
Vice President and Controller in 1985. Promoted to Vice President-Operations
of USCI Division in 1990, to Vice President and General
Manager of USCI Angiography Division in 1991, to Treasurer in 1992,
to Vice President and Treasurer in 1994, and to present position in
1998.
Todd C. Schermerhorn joined Bard in 1985 as Cost Analyst and has
held increasingly responsible financial positions including
Controller of the Vascular Systems Division and Vice President and
Controller at USCI. Most recently was Vice President and Group
Controller for Bard's Global Cardiology Unit. Promoted to present
position in 1998.
I-11
<PAGE>
PART II
Item 5. Market for Registrant's Common Stock and Related
Stockholder Matters
Market and Market Prices of Common Stock
The company's common stock is traded on the New York Stock Exchange
using the symbol: BCR. The following table illustrates the high
and low sales prices as traded on the New York Stock Exchange for
each quarter during the last two years.
Quarters
1st 2nd 3rd 4th Year
1998
High 38-1/4 38-7/8 41-5/8 50-1/4 50-1/4
Low 28-1/2 32-7/16 32-3/4 33-7/8 28-1/2
Close 36-3/4 38-1/16 36-7/8 49-1/2 49-1/2
1997
High 28-3/4 36-3/4 39 34-7/8 39
Low 26-3/8 27-7/8 32-11/16 26-1/2 26-3/8
Close 28-1/2 36-5/16 34 31-5/16 31-5/16
Approximate Number of Equity Security Holders
Approximate Number
of Record Holders
Title of Class as of February 26, 1999
Common Stock - $.25 par value 6,947
Dividends
The company paid cash dividends of $41,500,000 or $.74 per share in
1998 and $40,000,000 or $.70 per share in 1997. The following
table illustrates the quarterly rate of dividends paid per share.
Quarters
1st 2nd 3rd 4th Year
1998 $ .18 $ .18 $ .19 $ .19 $ .74
1997 $ .17 $ .17 $ .18 $ .18 $ .70
In December 1998 the first quarter dividend of $.19 per share was
declared, indicating an annual rate of $.76 per share. The first
quarter dividend was paid on February 5, 1999 to shareholders of
record on January 25.
II-1
<PAGE>
<TABLE>
Item 6.
SELECTED FINANCIAL DATA
C. R. BARD, INC. AND SUBSIDIARIES
<CAPTION>
For the Years Ended December 31,
(Thousands of dollars except
per share amounts)
1998 1997 1996 1995 1994 1993
<S> <C> <C> <C> <C> <C> <C>
INCOME STATEMENT DATA
Net sales $1,164,700 $1,213,500 $1,194,400 $1,137,800 $1,064,600 $1,008,800
Net income 252,300 72,300 92,500 86,800 75,600 57,800
BALANCE SHEET DATA
Total assets$1,079,800 $1,279,300 $1,332,500 $1,091,000 $1,043,100 $ 881,400
Working
capital $ 185,700 252,900 240,700 230,600 72,300 165,200
Long-term
debt $ 160,000 340,700 342,800 198,400 93,400 82,100
Total debt $ 162,000 443,700 491,000 265,300 294,000 171,000
Shareholders'
investment $ 567,600 573,100 601,500 564,600 495,400 439,900
COMMON STOCK DATA
Basic earnings
per share $ 4.54 $ 1.27 $ 1.62 $ 1.53 $ 1.34 $ 1.02
Diluted earnings
per share $ 4.51 $ 1.26 $ 1.61 $ 1.52 $ 1.33 $ 1.01
Cash dividends
per share .74 .70 .66 .62 .58 .54
Shareholders'
investment
per share $ 11.02 $ 10.09 $ 10.56 $ 9.89 $ 8.77 $ 7.77
Average shares
outstanding
(000's) 55,566 56,971 57,090 56,731 56,461 56,692
Shareholders of
record 6,650 7,088 7,371 7,644 8,104 8,489
SUPPLEMENTARY DATA
Return on average
shareholders'
investment 44.2% 12.3% 15.9% 16.4% 16.2% 13.1%
Net income/net
sales 21.7% 6.0% 7.7% 7.6% 7.1% 5.7%
Days-accts
receivable 72.8 69.6 70.3 66.7 62.3 60.7
Days-
inventory 151.9(1) 151.9 151.7 149.4 143.6 135.9
Total debt/
total
capitaliza-
tion 22.2% 43.6% 44.9% 32.0% 37.2% 28.0%
Interest
expense $ 26,400 $ 32,900 $ 26,400 $ 24,200 $ 16,300 $ 12,500
R&D expense 72,700 85,800 77,300 $ 75,600 $ 71,600 $ 67,500
Number of
employees 7,700 9,550 9,800 9,400 8,900 8,650
Net sales per
employee $ 151.3 $ 127.1 $ 121.9 $ 121.0 $ 119.6 $ 116.6
Net income per
employee $ 32.8 $ 7.6 $ 9.4 $ 9.2 $ 8.5 $ 6.7
<FN>
(1) 1998 excludes divested cardiology businesses.
</TABLE>
II-2
<PAGE>
Item 7. Management's Discussion and Analysis of Results
of Operations and of Financial Conditions
General
Bard is a leading multinational developer, manufacturer and
marketer of products for the large and growing health care
industry. Worldwide health care expenditures approximated $2.5
trillion in 1998 with about half that amount spent in the United
States. Bard's segment of this industry, itself a multi-billion
dollar market, is primarily specialized products used mainly in
hospitals, in outpatient centers and in physician's offices to meet
the needs of the medical profession in caring for their patients.
The company seeks to focus and concentrate on selected markets with
cost-effective, innovative products and specialized sales forces to
maximize Bard's opportunities in managing these markets.
Summary Results
Net sales for the full year 1998 were $1.165 billion, which include
sales of products that were divested during the year. Full-year
sales of ongoing products, which include vascular, urology,
oncology and surgery products increased 6% to $968.9 million. This
increase was primarily the result of growth in new and established
product lines. Bard's key franchises remain strong. The company
reported record earnings in 1998 of $252.3 million, which include
a gain on the sale of its cardiology businesses as well as several
other one-time items. Without the one-time items reported in both
1998 and 1997, earnings per share would have shown growth
consistent with ongoing sales growth.
Results of Operations - 1998 vs. 1997
Net sales for 1998 totaled $1.165 billion, which represents a 4%
decline from the prior year mostly due to the 1998 divestiture of
the company's cardiology businesses. Full year sales of ongoing
products were $968.9 million, an increase of 6% over 1997 results.
Price reductions and the impact of a stronger dollar had the effect
of reducing 1998 reported net sales by 2% and 1%, respectively.
Sales of vascular products rose 6% in 1998. Radiology and
electrophysiology devices showed strong worldwide growth. Graft
product sales from our IMPRA division also contributed to the
overall growth in the product group.
Urology product sales grew 5% in 1998. The Infection Control Foley
catheter and our ProSeed brachytherapy business provided the
majority of the growth in this area.
Sales of oncological products increased 7% in 1998. Specialty
access devices showed good growth, particularly in international
markets.
II-3
<PAGE>
Results of Operations - 1998 vs. 1997 (continued)
Sales of surgery products grew 10% in 1998, propelled by high
worldwide growth of mesh products, used primarily for hernia
repair.
The product areas discussed above represent substantially all of
Bard's ongoing products subsequent to the completion of the
cardiology divestiture.
Net sales by product group for the last three years (in millions)
are:
1998 1997 1996
Vascular $ 209.0 $ 198.0 $ 160.9
Urology 339.8 323.4 306.4
Oncology 213.1 199.1 191.7
Surgery 148.4 134.8 123.0
Other ongoing products 58.6 58.2 62.6
Total ongoing products 968.9 913.5 844.6
Divested products 195.8 300.0 349.8
Net sales $1,164.7 $1,213.5 $1,194.4
Sales in the United States of ongoing products rose 5% to $687.9
million. The vascular and surgery products provided the greatest
growth.
Ongoing product sales outside the U.S. increased 8% to $281.0
million with growth demonstrated by urology, oncology and surgery
products. The impact of a stronger dollar had the effect of
reducing these sales by 3%.
The geographic breakdown of ongoing product sales for the last
three years is:
1998 1997 1996
United States 71% 71% 71%
Europe 19% 19% 19%
Japan 5% 5% 4%
Other 5% 5% 6%
100% 100% 100%
Global pricing pressures together with the additional expenditures
related to Bard's ongoing manufacturing restructuring effort
increased cost of goods sold as a percent of sales to 47.6% from
47.2% in 1997. In the fourth quarter when a substantial portion of
the cardiology sale was completed, Bard reported improved cost of
goods sold as a percent of sales of 45.9% from 47.1% in the prior
year quarter.
Marketing, selling and administrative expenses declined 3% in 1998.
As a percent of sales, these expenses increased due to the effect
of several one-time items such as Year 2000 expenditures. Reported
research and development expense declined 15% as a result of the
sale of the cardiology businesses, while Bard's spending on its
ongoing products was consistent with the prior year.
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<PAGE>
Results of Operations - 1998 vs. 1997 (continued)
Interest expense declined 20% in 1998 due to Bard's decision to
utilize a portion of the proceeds from the sale of the cardiology
businesses to repay short-term debt. In addition, the company
elected in June 1998 to prepay a long-term note which further
reduced 1998 interest expense.
As a result of a series of strategic initiatives, the company has
divested several cardiology product lines. These transactions
closed in the fourth quarter 1998 when the company recorded a
pretax gain of $329.2 million. Please refer to Note 2,
Acquisitions and Dispositions, of the Notes to Consolidated
Financial Statements on page II-19 for additional information.
Please refer to Note 9, Other (Income) Expense, Net, of the Notes
to Consolidated Financial Statements on page II-28 of this report
for a summary of items in this category in the last three years.
Included in this category in 1998 are a net gain of $48.6 million
from the settlement of various patent infringement and legal claims
and a charge of $34.1 million for the writedown of assets primarily
associated with divested businesses.
Income Tax
The effective tax rate was 45.7% in 1998, 31.1% in 1997 and 9.9% in
1996. The increase in 1998 is largely the result of the sale of
the cardiology businesses.
Net Income
In 1998, Bard reported net income of $252.3 million and diluted
earnings per share of $4.51. Excluding the impact of the after-tax
gain on the sale of the cardiology businesses of $2.93, the net
after-tax loss from one-time items of ($0.13) and the after-tax
impact of the Year 2000 costs of ($0.03) diluted earnings per share
would have been $1.76.
In 1997, Bard reported net income of $72.3 million and diluted
earnings per share of $1.26. Excluding the net after-tax loss from
one-time items of ($0.38) and the after-tax impact of the Year 2000
costs of ($0.03), diluted earnings per share would have been $1.67.
In 1996, Bard reported net income of $92.5 million and diluted
earnings per share of $1.61. Excluding the net after-tax loss from
one-time charges of ($0.45) and a reversal of tax reserves of
$0.26, diluted earnings per share would have been $1.80.
Results of Operations - 1997 vs. 1996
Net sales rose 2% to $1.214 billion. Products divested in 1997
reduced the growth in sales by 6%. Price reductions totaled about
1.5% and the stronger dollar reduced reported net sales by 2%.
II-5
<PAGE>
Results of Operations - 1997 vs. 1996 (continued)
Sales of vascular products rose 23% in 1997. Radiology devices and
a full year of sales of graft products from the acquisition of
IMPRA, Inc. both contributed to the growth rate of vascular
products.
Urology product sales grew 6% in 1997. The Infection Control Foley
Catheter and the Contigen Bard's collagen implant provided the
growth in this area.
Sales of oncological products increased 4% in 1997. Both specialty
venous access devices and biopsy products showed strong
performance.
Sales of surgery products grew 10% in 1997, propelled by high
worldwide growth of mesh products, used primarily for hernia
repair.
The product areas discussed above represent substantially all of
Bard's ongoing products. The combined growth of ongoing products
was 8% in 1997.
Sales in the United States of ongoing products rose 8% in 1997 to
$652.6 million. Vascular and surgery products provided the best
growth in the U.S.
Sales outside the U.S. of ongoing products increased 7% to $260.9
million in 1997. Sales of vascular grafts (helped by the
acquisition of IMPRA in 1996), specialty access devices, mesh
products and basic urological drainage devices contributed to this
growth internationally.
Bard's cost of goods sold improved to 47.2% of sales compared with
48.7% in 1996. The company's efforts to reduce manufacturing costs
and the acquisition of IMPRA resulted in this improvement.
Marketing, selling and administrative expenses increased almost 7%
in 1997 primarily due to a full year of spending associated with
the IMPRA acquisition and the costs associated with programming
changes for the year 2000. These expenses grew faster than sales
and were at a level of 32.2% of sales in 1997 compared with 30.6%
in 1996.
Spending for research and development increased 11% in 1997 to 7.1%
of sales from 6.5% of sales in 1996. This increase in spending
reflected the continued high cost of competing in the cardiology
marketplace.
Additional interest expense for the full year 1997 related to
acquisitions in 1996 and resulted in the increase in total interest
expense for the year.
II-6
<PAGE>
Results of Operations - 1997 vs. 1996 (continued)
Other (income) expense, net, in 1997 included charges of $44.1
million for a manufacturing restructuring plan and $10.5 million
associated with the impairment of investments and intangible
assets, and a legal settlement. These charges were partially
offset by gains of $17.8 million on the sale of the surgical
suction and irrigation product line and $6.7 million from sales of
other product lines and assets. In addition, costs of $9.0 million
in 1996 to combine the operations of acquisitions affected income
in that year.
The effective tax rate was 31.1% in 1997 and 9.9% in 1996. The
lower tax rate in 1996 was primarily due to the increased tax
benefit in the U.S. related to one-time charges and the reversal of
approximately $15 million in tax reserves no longer required. The
tax benefit from operations in Ireland and Puerto Rico favorably
affected the tax rate in each year.
Net income decreased to $72.3 million in 1997 from $92.5 million in
1996. Both years were affected by one-time items as discussed
earlier in this review
Year 2000 Functionality
Bard has a company-wide initiative to address Year 2000
functionality. A team of management and technical representatives
oversees the Year 2000 efforts. The company divides its Year 2000
initiative into two components, information technology (IT) and
non-information technology (Non-IT). The IT initiative includes
purchased and internally developed mainframe and desktop computer
systems and applications. The Non-IT initiative includes
suppliers, manufacturing and support systems and the company's
customers.
Internal and external resources are being used to identify needs,
make the required IT modifications and test Year 2000
functionality. The identification process of all critical IT
applications is complete. The company is currently on schedule to
complete the implementation of all modifications to these
applications by the third quarter of 1999. The company is
utilizing both internal and external resources to provide
independent system verification and validation of Year 2000
functionality. This process will continue through the end of 1999
and includes the development and implementation of contingency
plans to address unforeseen problems.
The company's Non-IT efforts include ensuring suppliers,
manufacturing and support systems and the company's larger
customers are Year 2000 functional. The company is communicating
with suppliers that provide critical products or services and
customers. The company is testing significant manufacturing and
II-7
<PAGE>
Year 2000 Functionality (continued)
support systems. If as a result of the company's communications or
as a result of the company's testing of Non-IT systems there appear
to be potential Year 2000 functionality problems, additional
contingency plans under development should minimize these risks.
There can be no guaranty that the systems of other companies on
which the company's systems rely will be converted in a timely
manner, or that a failure to convert by another company, or a
conversion that is incompatible with the company's systems, would
not have a material adverse effect on the company. In addition,
there are many risks associated with the Year 2000 issue, including
but not limited to the possible failure of the company's computer
and information technology systems. Any failure by a supplier,
customer or other entity may have a material adverse financial or
operational effect on the company.
The company's marketing, selling and administrative expense
included $4.7 million for IT-related Year 2000 expenditures in 1998
and $2.8 million in 1997. Management believes that the company
will incur additional expenses of approximately $3.0 million in
1999. These incremental costs do not include existing internal
resources allocated to the project effort.
These costs and the date on which the company plans to complete the
Year 2000 modification and testing processes are based on
management's best estimates, which were derived utilizing numerous
assumptions of future events including the continued availability
of certain resources, third-party modification plans and other
factors. However, there can be no guaranty that these estimates
will be achieved and actual results could differ from those plans.
Financial Condition and Liquidity
Bard's financial condition substantially strengthened in 1998. The
company received proceeds of approximately $625 million from the
fourth quarter sale of its cardiology businesses. A portion of
these proceeds along with a second quarter intellectual property
settlement and ongoing operating cash flow were used to retire debt
and repurchase common stock. As a result, total debt was reduced
by $281.7 million to $162.0 million at the end of 1998 and the
ratio of total debt to total capitalization declined to 22.2% at
December 31, 1998 from 43.6% at December 31, 1997. Shareholders'
equity was reduced in 1998 with the repurchase of $264.1 million of
common stock.
The company has a $300 million syndicated, committed credit
facility with a group of 12 banks. The company made no borrowings
under this credit facility in 1998. The facility expires in June
2000. This facility supports a commercial paper program of $300
million. The company borrows actively under this program.
II-8
<PAGE>
Financial Condition and Liquidity (continued)
In addition to the $300 million committed credit facility, Bard
maintains uncommitted credit lines with banks for short-term cash
needs and these lines were used as needed during the last three
years. At December 31, 1998 the unused uncommitted lines of credit
totaled $255 million.
The company expects cash flow from operating activities to exceed
capital expenditures and dividend payments. The company believes
it could borrow adequate funds at competitive terms and rates,
should it be necessary. The company believes this overall
financial strength gives Bard sufficient financing flexibility.
Total cash outlays made for purchases of businesses, patents,
trademarks and other related items were approximately $50 million
in 1998, $23 million in 1997, and $237 million in 1996. The
majority of these investments were for intangible assets,
reflecting the premium over book value for these purchases. The
majority of the cash outlays were financed with additional debt
with the balance coming from cash from operations.
Periodically, the company purchases its common stock in the open
market to replace shares issued under various employee stock plans.
In connection with the announced sale of the cardiology businesses,
the Board of Directors in July 1998 authorized the purchase from
time to time of up to 10 million shares of common stock. Total
shares purchases were 6,295,200 in 1998; 955,200 in 1997; and
813,700 in 1996.
Foreign Currency Risk
The company periodically enters into foreign exchange contracts and
options to reduce its exposure to fluctuations in currency values.
Contracts have been exclusively for the forward purchase of, and
options in, currencies in which the company has known or
anticipated payments. These are primarily for intercompany
transactions, resulting in a high degree of confidence that the
anticipated transactions will take place. Monetary assets of the
company held in foreign currencies have relatively short maturities
and are denominated in currencies that have not experienced wide
short-term fluctuations in their equivalent U.S. dollar values.
Please refer to Note 4 of the Notes to Consolidated Financial
Statements on page II-22 of this report for further information
about the company's foreign exchange contracts.
II-9
<PAGE>
Foreign Currency Risk (continued)
The company continues to review and monitor the impact of a common
European currency on its business. Due to numerous uncertainties,
the company cannot at this time accurately estimate the effect one
common currency will have on pricing and the resulting impact, if
any, on the company's financial condition or results of operations.
Currently, management believes that this impact will not be
material.
Legal Proceedings
For a discussion of pending legal proceedings and related matters,
please see Note 5, Commitments and Contingencies, of the Notes to
Consolidated Financial Statements on page II-23.
Acquisitions and Dispositions
For information on the company's acquisitions and dispositions of
businesses, please see Note 2, Acquisitions and Dispositions, of
the Notes to Consolidated Financial Statements on page II-19.
Cautionary Statement Regarding Forward-Looking Information
Certain statements contained herein or in other company documents
and certain statements that may be made by management of the
company orally, including without limitation statements regarding
the use of net proceeds from the sale of the company's cardiology
businesses, statements regarding cost savings from restructuring,
and statements regarding the company's future performance, may
contain forward-looking statements as defined in the Private
Securities Litigation Reform Act of 1995. Because actual results
are affected by risks and uncertainties, the company cautions
investors that actual results may differ materially from those
expressed or implied. Factors which could cause the actual results
to differ materially from expected and historical results include,
but are not limited to: health care industry consolidation
resulting in customer demands for price concessions; competitors'
attempts to gain market share through aggressive marketing
programs; fewer medical procedures performed in a cost-conscious
environment; the unpredictability of the approval time by the FDA
or other government authorities to clear medical devices for
commercial release; unanticipated product failures; legislative or
administrative reforms to the U.S. Medicare and Medicaid systems or
other non-U.S. reimbursement systems in a manner that would
significantly reduce reimbursements for procedures using the
company's medical devices; the acquisition of key patents by
competitors that would have the effect of excluding the company
from new market segments; the uncertainty of whether increased
research and development expenditures will result in increased
sales; unpredictability of existing and future litigation including
without limitation litigation regarding product liability;
II-10
<PAGE>
Cautionary Statement Regarding Forward-Looking Information
(continued)
uncertainty related to tax appeals and litigation; price increases
from the company's suppliers of critical components; foreign
currency fluctuations; unanticipated business disruptions from Year
2000 issues; the risk that the company may not achieve
manufacturing or administrative efficiencies as a result of the
company's restructuring and/or in the integration of acquired
businesses or divestitures.
II-11
<PAGE>
Item 8. Financial Statements and Supplementary Data
Report of Independent Public Accountants
To the Shareholders and Board of
Directors of C. R. Bard, Inc.:
We have audited the accompanying consolidated balance sheets
of C. R. Bard, Inc. (a New Jersey corporation) and subsidiaries as
of December 31, 1998 and 1997 and the related consolidated
statements of income, shareholders' investment and cash flows for
each of the three years in the period ended December 31, 1998.
These financial statements are the responsibility of the company'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 financial position of
C. R. Bard, Inc. and subsidiaries as of December 31, 1998 and 1997,
and the results of their operations and their cash flows for each
of the three years in the period ended December 31, 1998 in
conformity with generally accepted accounting principles.
ARTHUR ANDERSEN LLP
Roseland, New Jersey
January 26, 1999
II-12
<PAGE>
<TABLE>
C. R. BARD, INC. AND SUBSIDIARIES
STATEMENTS OF CONSOLIDATED INCOME
For the Years Ended December 31,
<CAPTION>
(Thousands of dollars except per share amounts)
1998 1997 1996
<S> <C> <C> <C>
Net sales $1,164,700 $1,213,500 $1,194,400
Costs and expenses:
Cost of goods sold 554,100 572,800 581,300
Marketing, selling
and administrative 379,200 390,500 365,800
Research and development 72,700 85,800 77,300
Interest expense 26,400 32,900 26,400
Gain from dispositions of
cardiology businesses (329,200) --- ---
Other(income)expense, net (2,900) 26,600 40,900
Total costs and expenses 700,300 1,108,600 1,091,700
Income before taxes 464,400 104,900 102,700
Income tax provision 212,100 32,600 10,200
Net income $ 252,300 $ 72,300 $ 92,500
Basic earnings per share $ 4.54 $ 1.27 $ 1.62
Diluted earnings per share $ 4.51 $ 1.26 $ 1.61
<FN>
</TABLE>
The accompanying notes to consolidated financial statements are an
integral part of these statements.
II-13
<PAGE>
<TABLE>
C. R. BARD, INC. AND SUBSIDIARIES
STATEMENTS OF CONSOLIDATED SHAREHOLDERS'INVESTMENT
(Thousands of dollars except per share amounts)
<CAPTION> Unamortized
Capital in Cumulative Expenses
Common Stock Excess of Retained Translation Under
Shares Amount Par Value Earnings Adjustments Stock Plan Total
<S> <C> <C> <C> <C> <C> <C> <C>
Balance at December 31, 1995 57,100,598 $14,300 $63,300 $478,900 $ 12,400 $(4,300) $564,600
Net income 92,500 92,500
Currency translation
adjustments (4,400) (4,400)
Comprehensive income 88,100
Cash dividends ($.66 per share) (37,700) (37,700)
Treasury stock retired (813,700) (200) (27,000) (27,200)
Employee stock plans 699,085 200 14,200 (700) 13,700
Balance at December 31, 1996 56,985,983 14,300 77,500 506,700 8,000 (5,000) 601,500
Net income 72,300 72,300
Currency translation
adjustments (46,500) (46,500)
Comprehensive income 25,800
Cash dividends ($.70 per share) (40,000) (40,000)
Treasury stock retired (955,200) (300) (32,300) (32,600)
Employee stock plans 753,768 100 23,600 (5,300) 18,400
Balance at December 31, 1997 56,784,551 14,100 101,100 506,700 (38,500) (10,300) 573,100
Net income 252,300 252,300
Currency translation
adjustments 15,400 15,400
Comprehensive income 267,700
Cash dividends ($.74 per share) (41,500) (41,500)
Treasury stock acquired (6,295,200) (264,100) (264,100)
Employee stock plans 1,008,213 200 31,200 (1,200) 2,200 32,400
Balance at December 31, 1998 51,497,564 $14,300 $132,300 $452,200 $(23,100) $ (8,100) $567,600
<FN>
</TABLE>
The accompanying notes to consolidated financial statements are an integral part
of these statements.
II-14
<PAGE>
<TABLE>
C. R. BARD, INC. AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
<CAPTION>
December 31,
(Thousands of dollars) 1998 1997
<S> <C> <C>
Assets
Current assets:
Cash $ 25,600 $ 8,000
Short-term investments 16,800 52,700
Accounts receivable, less reserve of
$9,300 and $14,000 217,800 240,600
Inventories 182,500 241,700
Other current assets 45,800 20,500
Total current assets 488,500 563,500
Property, plant and equipment, at cost
Land 11,000 11,000
Buildings and improvements 121,900 144,100
Machinery and equipment 156,700 186,800
289,600 341,900
Less - Accumulated depreciation and
amortization 116,900 135,500
Net property, plant and equipment 172,700 206,400
Intangible assets, net of amortization 358,900 424,400
Other assets 59,700 85,000
$1,079,800 $1,279,300
Liabilities and shareholders' investment
Current liabilities:
Short-term borrowings and current
maturities of long-term debt $ 2,000 $ 103,000
Accounts payable 67,400 60,400
Accrued compensation and benefits 41,800 37,900
Accrued expenses 145,600 90,900
Federal and foreign income taxes 46,000 18,400
Total current liabilities 302,800 310,600
Long-term debt 160,000 340,700
Other long-term liabilities 49,400 54,900
Commitments and contingencies --- ---
Shareholders' investment:
Preferred stock, $1 par value, authorized
5,000,000 shares; none issued --- ---
Common stock, $.25 par value, authorized
300,000,000 shares; issued
and outstanding 51,497,564 shares
in 1998, 56,784,551 shares in 1997 14,300 14,100
Capital in excess of par value 132,300 101,100
Retained earnings 452,200 506,700
Accumulated other comprehensive income (23,100) (38,500)
Unamortized expenses under stock plans (8,100) (10,300)
Total shareholders' investment 567,600 573,100
$1,079,800 $1,279,300
<FN>
</TABLE>
The accompanying notes to consolidated financial statements are an integral part
of these balance sheets.
II-15
<PAGE>
<TABLE>
C. R. BARD, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS
<CAPTION>
For the Years Ended December 31,
(Thousands of dollars) 1998 1997 1996
<S> <C> <C> <C>
Cash flows from operating activities:
Net income $252,300 $ 72,300 $ 92,500
Adjustments to reconcile net
income to net cash provided
from operating activities:
Depreciation and amortization 58,700 57,300 57,400
Net gain on sales of product lines,
net of tax (149,200) (22,700) ---
Deferred income taxes (26,300) (15,900) 7,300
Expenses under stock plans 3,600 2,800 2,200
Other noncash items 31,400 38,200 15,500
Changes in assets and
liabilities net of acquired
businesses:
Accounts receivable 9,200 (7,000) (21,500)
Inventories (12,200) (16,100) (9,800)
Other assets 17,500 (18,300) 6,000
Current liabilities, excluding
debt 27,200 4,700 (24,400)
Other long-term liabilities (4,000) 3,200 (2,700)
Net cash provided from operating
activities 208,200 98,500 122,500
Cash flows from investing activities:
Capital expenditures (43,800) (32,800) (41,600)
Net proceeds from sales of product
lines 449,300 29,700 ---
Payments made for purchases of
businesses (17,500) (7,200) (199,400)
Patents, trademarks and other (32,000) (15,300) (37,700)
Net cash used in investing
activities 356,000 (25,600) (278,700)
Cash flows from financing activities:
Common stock issued for options and
benefit plans 28,800 15,600 11,500
Purchase of common stock (264,100) (32,600) (27,200)
Proceeds from long-term
borrowings, net of issuance costs --- 5,600 159,600
Principal payments of long-term
borrowings (180,800) (1,000) (3,100)
Proceeds from(repayments of)
short-term borrowings, net (101,000) (44,900) 79,700
Dividends paid (41,500) (40,000) (37,700)
Net cash provided by (used in)
financing activities (558,600) (97,300) 182,800
Translation adjustment (800) (2,800) (400)
Cash and cash equivalents:
Increase(decrease) during the year 4,800 (27,200) 26,200
Balance at January 1, 36,400 63,600 37,400
Balance at December 31, $ 41,200 $ 36,400 $ 63,600
<FN>
</TABLE>
The accompanying notes to consolidated financial statements are an integral part
of these statements.
II-16
<PAGE>
C. R. BARD, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
C. R. Bard, Inc. ("the company" or "Bard") is a leading
multinational developer, manufacturer and marketer of health care
products. The company markets its products worldwide to hospitals,
individual health care professionals, extended care facilities and
alternate site facilities. Bard holds strong positions in products
used for vascular, urological and oncological diagnosis and
intervention. Bard also has a surgical product group.
1. Significant Accounting Policies
Consolidation The consolidated financial statements include the
accounts of the company and its majority-owned subsidiaries. All
significant intercompany accounts and transactions are eliminated
in consolidation.
Earnings Per Share "Basic earnings per share" represents net income
divided by the weighted average shares outstanding. "Diluted
earnings per share" represents net income divided by weighted
average shares outstanding adjusted for the incremental dilution of
outstanding employee stock options and awards. Unless indicated
otherwise per share amounts are calculated on a diluted basis.
A reconciliation of weighted average common shares outstanding to
weighted average common shares outstanding assuming dilution
follows:
1998 1997 1996
Average common shares
outstanding 55,566,453 56,970,849 57,090,130
Incremental common shares
issuable: Stock option
and incentive plans 403,620 302,151 458,870
Average common shares
outstanding assuming dilution 55,970,073 57,273,000 57,549,000
Derivative Instruments In June 1998, the Financial Accounting
Standards Board issued Statement of Financial Accounting Standards
No. 133, "Accounting for Derivative Instruments and Hedging
Activities" ("FAS 133"). FAS 133 establishes accounting and
reporting standards requiring that every derivative instrument be
recorded in the balance sheet as either an asset or liability
measured at its fair value. FAS 133 requires that changes in the
derivative's fair value be recognized currently in earnings unless
specific hedge accounting criteria are met. FAS 133 is effective
for fiscal years beginning after June 15, 1999 with early adoption
permitted. The company does not expect that the adoption of FAS
133 will have a material impact on its financial statements.
II-17
<PAGE>
C. R. BARD, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
1. Significant Accounting Policies (continued)
Inventories Inventories are stated at the lower of cost or market.
Substantially all domestic inventories are accounted for using the
LIFO method of determining costs. All other inventories are
accounted for using the FIFO method. Inventories valued under the
LIFO method were $123,600,000 in 1998, $136,800,000 in 1997 and
$151,000,000 in 1996; under the FIFO method such inventories would
have been higher by $10,900,000, $14,500,000 and $15,800,000,
respectively. The following is a summary of inventories at
December 31:
(Thousands of dollars) 1998 1997
Finished goods $ 97,800 $144,000
Work in process 52,600 62,700
Raw materials 32,100 35,000
$182,500 $241,700
Depreciation Property, plant and equipment are depreciated on a
straight-line basis over the useful lives (ranging from 3-40 years)
of the various classes of assets.
Short-term Investments Short-term investments that have a maturity
of ninety days or less are considered cash equivalents and amounted
to $15,600,000 and $28,400,000 as of December 31, 1998 and 1997.
Short-term investments are stated at cost, which approximates their
market value.
Intangible Assets Goodwill is amortized using the straight-line
method over periods of 15-40 years as appropriate. Other
intangible assets are amortized over their useful lives. The
company periodically evaluates its intangibles to assess
recoverability from future operations using undiscounted cash
flows. Impairment would be recognized in operating results if a
permanent diminution in value occurred.
As of December 31, 1998 and 1997, intangible assets include the
following:
(Thousands of dollars) 1998 1997
Goodwill $ 355,900 $ 390,800
Other intangibles (primarily 167,100 168,200
patents)
Less accumulated amortization (164,100) (134,600)
Intangible assets, net $ 358,900 $ 424,400
II-18
<PAGE>
C. R. BARD, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
1. Significant Accounting Policies (continued)
Federal Income Taxes The company has not provided for federal
income taxes on the undistributed earnings of its foreign
operations as it is the company's intention to permanently reinvest
undistributed earnings (approximately $567,200,000 as of
December 31, 1998).
Concentrations of Credit Risk Financial instruments, which
potentially subject the company to significant concentrations of
credit risk, consist principally of cash investments, foreign
currency exchange contracts and trade accounts receivable.
The company maintains cash and cash equivalents, investments and
certain other financial instruments with various major financial
institutions. The company performs periodic evaluations of the
relative credit standing of these financial institutions and limits
the amount of credit exposure with any institution.
Concentrations of credit risk with respect to trade accounts
receivable are limited due to the large number of customers and
their dispersion across many geographic areas. However, a
significant amount of trade receivables are with national health
care systems in several countries. Although the company does not
currently foresee a credit risk associated with these receivables,
repayment is dependent upon the financial stability of those
countries' national economies.
Use of Estimates The financial statements and related disclosures
have been prepared in conformity with generally accepted accounting
principles and, accordingly, include amounts based on estimates and
judgments of management with consideration given to materiality.
Actual results could differ from those estimates.
Reclassifications Certain prior year amounts have been reclassified
to conform with the current year presentation.
2. Acquisitions and Dispositions
The second quarter of 1998 included a pre-tax loss on the sale of
several product lines (including the loss on the sale of the
Diagnostic Sciences Division) of $17,500,000 ($.18 per share).
During the third quarter of 1998, the company announced that, as a
step in a series of strategic initiatives being pursued to enhance
operating performance and shareholder value, it had agreed to sell
its global Coronary Cath Lab business to Arterial Vascular
Engineering, Inc. and its Intra-Aortic Balloon Products business to
II-19
<PAGE>
C. R. BARD, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
2. Acquisitions and Dispositions (continued)
Arrow International, Inc. for in excess of $625,000,000. A portion
of the proceeds represents retained working capital, primarily
accounts receivable, which will be collected through normal
operations. The net proceeds of these dispositions are targeted
for the repurchase, from time-to-time, of up to 10,000,000 shares
of common stock, debt reduction and strategic investments and
acquisitions. These transactions were closed in the fourth quarter
of 1998 when the company reported a pretax gain on the disposition
of the Cardiology businesses of $329,200,000 ($3.03 per share). The
gain on the disposition of the cardiology business included, in
addition to the assets sold and normal transaction costs,
incremental costs of $4,800,000 for severance attributed to
terminated employees primarily involved in cardiology operations.
In addition, the remaining cardiology assets were written down to
net realizable value. The company also stated that it would
further consider strategic alternatives for its remaining coronary
vascular businesses and take additional steps necessary to improve
efficiencies in manufacturing and operations globally.
1997 included the sale of two product lines which resulted in a
pretax gain of $22,700,000 ($.23 per share).
In September 1996 Bard completed the acquisition of IMPRA,
Inc.("IMPRA"), a company that developed, manufactured and marketed
vascular grafts used for blood vessel replacement surgery. The
purchase and acquisition costs, which approximated $155,400,000,
were financed with commercial paper. This acquisition was
accounted for under the purchase method of accounting and,
accordingly, IMPRA's assets and liabilities were recorded at their
estimated fair market values and the excess purchase price of
$140,900,000 has been assigned to goodwill.
3. Income Tax Expense
Income tax expense consists of the following:
(Thousands of dollars) 1998 1997 1996
Currently payable:
Federal $205,200 $ 36,300 $ (6,300)
Foreign 10,700 6,600 7,500
State 22,500 5,600 1,700
238,400 48,500 2,900
Deferred:
Federal (29,800) (15,200) 7,600
Foreign 2,800 1,000 (300)
State 700 (1,700) ---
(26,300) (15,900) 7,300
$212,100 $ 32,600 $ 10,200
II-20
<PAGE>
C. R. BARD, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
3. Income Tax Expense (continued)
Deferred income taxes are recognized for the tax consequences of
"temporary differences" by applying enacted statutory tax rates,
applicable to future years, to differences between the financial
reporting and the tax basis of assets and liabilities. At
December 31, 1998, the company's net deferred tax assets amounted
to approximately $50,100,000, which are recorded in other current
assets and other assets. This amount principally comprises the tax
effects of the differences between tax and financial accounting
treatment of employee benefits of $10,900,000, accrued expenses of
$12,500,000, disposition related and other temporary differences of
$33,800,000, offset by the effect of accelerated depreciation of
($7,100,000).
The following is a reconciliation between the effective tax rates
and the statutory rates excluding the impact of the gain from the
disposition of the cardiology businesses in 1998:
1998 1997 1996
U.S. federal statutory rate 35% 35% 35%
State income taxes net of
federal income tax benefits 3 3 3
Foreign operations taxed at
less than the U.S. statutory
rate, primarily Ireland and
Puerto Rico (8) (10) (13)
Reversal of tax reserve --- --- (15)
Other, net 5 3 ---
Effective tax rate 35% 31% 10%
The disposition of the cardiology businesses was taxed at an
effective rate of approximately 50% resulting from differences in
the applicable tax in the countries where the cardiology businesses
were conducted.
Cash payments for income taxes were $183,100,000, $29,400,000 and
$27,100,000 in 1998, 1997 and 1996, respectively.
During the third quarter of 1997, the company filed a protest at
the IRS appeals level related to tax years 1990-1992. Management
believes that the outcome of these matters will not have a material
impact on the company's consolidated financial position or results
of operations.
II-21
<PAGE>
C. R. BARD, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
4. Short-Term Borrowings and Long-Term Debt
The company maintains uncommitted lines of credit, a commercial
paper program and a committed credit facility, which supports the
commercial paper program. The committed facility can also be used
for other corporate purposes. Total short-term borrowings
amounted to $900,000 and $101,900,000 at December 31, 1998 and
1997, respectively. The maximum amount of short-term borrowings
outstanding during 1998 was approximately $264,900,000 with an
average outstanding balance of $96,600,000 and an effective rate of
5.59%.
At December 31, 1998, the company had short-term uncommitted
borrowings of $100,000 and available unused lines under its
uncommitted lines of credit of $255,400,000. $800,000 in
commercial paper was outstanding at December 31, 1998.
Historically, borrowings of $120,000,000 were classified as long-term
debt since the company had both the ability and intent through
its committed credit facility to refinance this amount on a long-term basis.
With the October 1998 sale of the Cath Lab business,
the company paid off substantially all of its commercial paper.
The $300,000,000 committed line of credit is a facility with 12
banks through which the company can borrow at rates slightly above
LIBOR through June 2000. The company had no borrowings under the
committed lines of credit at December 31, 1998.
The following is a summary of long-term debt:
(Thousands of dollars) 1998 1997
6.70% notes due 2026 $149,900 $149,900
8.69% notes due 1999 --- 60,000
7.80% mortgage loan 5,800 5,600
Commercial paper and bank borrowings --- 120,000
Other 5,400 6,300
161,100 341,800
Less: amounts classified as current: 1,100 1,100
$160,000 $340,700
The 6.70% notes due 2026 may be redeemed at the option of the note
holder on December 1, 2006, at a redemption price equal to the
principal amount. In June 1998, the company elected to prepay the
$60,000,000 8.69% notes due in 1999. The charge of retiring the
notes early was recorded in other income and expense in the second
quarter.
Under four deposit loan agreements with a bank, $64,000,000 has
been borrowed at floating rates (5.86% at December 31, 1998) with
various maturity dates from December 1999 through June 2005. At
maturity, the loans are to be repaid through matured certificates
of deposit held by the company at the same bank. Since the
II-22
<PAGE>
C. R. BARD, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
4. Short-Term Borrowings and Long-Term Debt (continued)
company has the right of offset under these agreements and it is
the company's intention to present these certificates of deposit
for repayment of these loans at their maturity, the borrowings have
been offset against these certificates of deposit in the
accompanying consolidated balance sheet at December 31, 1998. The
related interest income has been offset against the interest
expense.
At December 31, 1998, the aggregate maturities of long-term debt
were as follows: 1999 - $1,100,000; 2000 - $1,100,000; 2001 -
$1,100,000; 2002 - $1,100,000; 2003 - $1,100,000; 2004 and
thereafter - $155,600,000. The fair value of the company's long-term
debt is not significantly different from its recorded value.
Interest expense in 1998, 1997 and 1996 approximated the cash
outlay in each year.
Certain of the company's debt agreements contain restrictions that,
among other things, require the maintenance of minimum net worth
and operating cash flow levels, limit the amount of debt and
contain a material adverse change clause.
The company enters into foreign exchange forward contracts and
options to help reduce the exposure to fluctuations between certain
currencies. There were no forward contracts or options outstanding
at the end of 1998. During 1998 the company had option contracts
outstanding that were primarily related to anticipated normal
intercompany purchases and their related monthly cash flows. The
company recorded any gains and losses associated with these options
on the income statement as "other income and expense" and on the
balance sheet as "other current assets" or "accrued expenses".
Cash flows associated with the settlement of these options were
reflected as operating activities. At December 31, 1997, there were
options and contracts outstanding in the equivalent of $18,400,000.
5. Commitments and Contingencies
The company is subject to various legal proceedings and claims
involving product liability and disputes on agreements that arise
in the ordinary course of business. The company believes that
these legal matters will likely be disposed of over an extended
period of time and should not have a material adverse impact on the
company's consolidated financial position or results of operations.
The company is committed under noncancelable operating leases
involving certain facilities and equipment. The minimum annual
rentals under the terms of these leases are as follows: 1999 -
$16,000,000; 2000 - $13,100,000; 2001 - $10,800,000; 2002 -
$8,900,000; 2003 - $7,000,000; and thereafter - $7,100,000. Total
rental expense for all leases approximated $20,100,000 in 1998,
$21,000,000 in 1997 and $28,400,000 in 1996.
II-23
<PAGE>
C. R. BARD, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
6. Stock Rights
In October 1995 the company's Board of Directors declared a
dividend distribution of one Common Share Purchase Right for each
outstanding share of Bard common stock. These Rights will expire
in October 2005 and trade with the company's common stock. Such
Rights are not presently exercisable and have no voting power. In
the event a person acquires 20% or more, or makes a tender or
exchange offer for 30% or more, of Bard's common stock, the Rights
detach from the common stock and become exercisable and entitle a
holder to buy one share of common stock at $120.00 (adjustable to
prevent dilution).
If, after the Rights become exercisable, Bard is acquired or
merged, each Right will entitle its holder to purchase $240 market
value of the surviving company's stock for $120, based upon the
current exercise price of the Rights. The company may redeem the
Rights, at its option, at $.05 per Right, prior to a public
announcement that any person has acquired beneficial ownership of
at least 20% of Bard's common stock. These Rights are designed
primarily to encourage anyone interested in acquiring Bard to
negotiate with the Board of Directors. There are 60 million shares
of common stock reserved for the Rights.
7. Shareholders' Investment
The company has stock option, stock award and restricted stock
plans under which certain directors, officers and employees are
participants. At December 31, 1998, approximately 908,000 shares
were reserved for issuance under all company plans.
Under the company's stock option plans, options have been granted
to certain directors, officers and employees at prices equal to the
market value of the shares at the date of grant, become exercisable
in four annual installments and expire not more than 10 years after
the date of grant. During 1998, the company awarded approximately
750,000 performance-based stock options at a price equal to the
market value of the shares at the date of grant. These
performance-based stock options become exercisable on their ninth
anniversary after date of grant or on an accelerated basis when the
company's stock price reaches certain market prices.
The following tables summarize information about stock option
activity and amounts:
II-24
<PAGE>
<TABLE>
C. R. BARD, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
7. Shareholders' Investment (continued)
<CAPTION>
Weighted Weighted
Number Average Average
Of Exercise Fair
Shares Price Value
<S> <C> <C> <C>
Options outstanding,
December 31, 1995 3,691,939 $23.98
(2,038,844 exercisable)
Granted 703,940 $32.89 $ 9.61
Exercised (688,708) $20.47
Canceled (202,116) $26.91
Options outstanding,
December 31, 1996 3,505,055 $26.31
(1,905,876 exercisable)
Granted 1,024,948 $37.04 $11.75
Exercised (714,097) $22.80
Canceled (155,564) $29.70
Options outstanding,
December 31, 1997 3,660,342 $29.83
(1,769,062 exercisable)
Granted 754,762 $40.19 $12.05
Exercised (872,442) $27.46
Canceled (189,317) $34.36
Options outstanding,
December 31, 1998 3,353,345 $32.55
(1,905,996 exercisable)
<FN>
</TABLE>
<TABLE>
<CAPTION>
Weighted Weighted Weighted
Range of Number Average Average Number Average
Exercise Outstanding Remaining Exercise Exercisable Exercise
Prices at 12/31/98 Life Price at 12/31/98 Price
<S> <C> <C> <C> <C> <C>
$10 to 25 496,953 4.0 $20.80 493,870 $20.82
25 to 30 823,665 4.5 $27.99 730,271 $27.79
30 to 35 464,772 6.8 $32.84 258,273 $32.82
35 to 40 857,859 7.6 $37.11 364,286 $37.04
40 to 45 710,096 8.9 $40.36 59,296 $40.35
10 to 45 3,353,345 6.5 $32.55 1,905,996 $28.82
<FN>
</TABLE>
In accordance with Statement of Financial Accounting
Standards No. 123, "Accounting for Stock-Based Compensation" ("FAS
123"), the fair value of option grants is estimated on the date of
grant using the Black-Scholes option-pricing model for pro forma
footnote purposes.
In 1996 the dividend yield was assumed to be 2%, the risk-free
interest rate was 6.67%, the expected option life was 4.4 years and
the expected volatility was 29%. In 1997 the dividend yield was
assumed to be 2%, the risk-free interest rate was 6.2%, the
expected option life was 6 years and the expected volatility was
26%. In 1998 the dividend yield was assumed to be 2%, the risk-free
interest rate was 4.75%, the expected option life was 5.8
years and the expected volatility was 29%.
II-25
<PAGE>
C. R. BARD, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
7. Shareholders' Investment (continued)
As permitted by FAS 123, the company has chosen to continue
accounting for stock options at their intrinsic value.
Accordingly, no compensation expense has been recognized for its
stock option plans. Had the fair value method of accounting been
applied to the company's stock option plans, the tax-effected
impact would be as follows:
(thousands of dollars except
per share amounts) 1998 1997 1996
Net income as reported $252,300 $72,300 $92,500
Estimated fair value of
option grants, net of tax (4,900) (3,200) (1,700)
Net income adjusted $247,400 $69,100 $90,800
Adjusted basic earnings per share $ 4.45 $ 1.21 $ 1.59
Adjusted diluted earnings per share $ 4.42 $ 1.21 $ 1.58
This pro forma impact takes into account options granted since
January 1, 1995 and increases as additional options are granted and
amortized ratably over the vesting period.
Under the company's stock award plans for key employees and
directors, shares are granted at no cost to the recipients and
distributed in three separate installments. During 1998, awards
for 22,554 shares (net of cancellations) were granted and 24,796
shares were issued. Awards are charged to income over the vesting
period. At December 31, 1998, 24,516 awarded shares (aggregate
market price at date of grant $949,533) have not been issued.
Under the company's restricted stock plan, which was established in
1993, common stock may be granted at no cost to certain officers
and key employees. Shares are issued to the participants at the
date of grant entitling the participants to cash dividends and the
right to vote their respective shares. Restrictions limit the sale
or transfer of these shares during a five-year period from the
grant date. During 1998, a total of 76,865 shares were granted,
net of forfeitures. In addition during 1997 the company awarded
130,000 performance-based restricted shares. These performance-based
restricted shares are vested five years after the company's
stock reaches certain market prices. These shares will be
forfeited if the targeted market prices are not met within certain
time periods. As of December 31, 1998, 65,000 shares continued to
be subject to stock price performance restrictions. Upon issuance
of both the restricted and performance-based stock, unearned
compensation ($8,100,000 at December 31, 1998) equivalent to the
market value of the stock at the date of grant is reflected in
shareholders' investment and subsequently amortized to expense over
the relevant restriction periods.
II-26
<PAGE>
C. R. BARD, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
8. Postretirement Benefits
The company has defined benefit pension plans which cover
substantially all domestic and certain foreign employees and its
policy is to fund accrued pension expense for these plans up to the
full funding limitations. These plans provide for benefits based
upon individual participants' compensation and years of service.
The company has a defined contribution plan covering substantially
all domestic employees. In addition, the company has a
supplemental defined contribution plan for certain officers and key
employees. The amounts charged to income for these plans amounted
to $13,500,000 in 1998; $14,100,000 in 1997 and $13,800,000 in
1996.
The following tables set forth the information relative to the
company's defined benefit plans:
(thousands of dollars)
Change in Projected Benefit Obligation
as of September 30: 1998 1997
Projected benefit obligation as of
previous year $127,100 $ 95,700
Service cost 8,300 8,000
Interest cost 8,800 8,100
Curtailment (1,400) ---
Special termination benefits 3,900 1,600
Acquisitions (Divestitures) (10,300) 6,400
Actuarial (gain)/loss 10,200 15,100
Benefits paid (10,600) (7,900)
Other 1,100 100
Projected benefit obligation as of
current year $137,100 $127,100
Change in Plan Assets as of September 30: 1998 1997
Fair value as of previous year $123,200 $ 90,900
Actual return 4,800 25,700
Company contribution 21,000 9,100
Acquisitions (Divestitures) (10,800) 5,100
Benefits paid (10,600) (7,900)
Other 1,500 300
Fair value as of current year $129,100 $123,200
Funded Status as of December 31: 1998 1997
As of current year end $ (8,000) $ (3,900)
Unrecognized net (gain)/loss 9,100 (3,500)
Unrecognized prior service cost 3,500 5,100
Unrecognized net transition (asset)
obligation (700) (1,600)
Prepaid (accrued) pension obligation $ 3,900 $ (3,900)
II-27
<PAGE>
C. R. BARD, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
8. Postretirement Benefits (continued)
Pension costs related to the defined benefit pension plans for the
years ended December 31, 1998, 1997 and 1996 are as follows:
(thousands of dollars) 1998 1997 1996
Service cost $ 8,300 $ 8,000 $ 7,000
Interest cost 8,800 8,100 7,000
Expected return on plan assets (9,000) (7,500) (6,600)
Other 800 800 0
Net Periodic Pension Cost $ 8,900 $ 9,400 $ 7,400
1998 1997
Weighted Average Assumptions:
Discount rate 6.48% 7.34%
Expected return on plan assets 8.94% 8.91%
Rate of compensation increase 4.22% 5.15%
The company does not provide postretirement health care benefits
and life insurance coverage except to a limited number of former
employees. The amounts charged to income for this plan were
approximately $720,000 in 1998 and $550,000 in 1997 and $600,000 in
1996. The accumulated postretirement benefit obligation included
in other liabilities amounted to $11,000,000 and $10,300,000 for
the years ended December 31, 1998 and December 31, 1997,
respectively.
Actuarial assumptions included a discount rate of 6.5% and an
ultimate health care cost trend rate of 5%. The effect of a 1%
annual increase in the assumed cost trend rate would increase the
accumulated postretirement benefit obligation at December 31, 1998,
by $390,000 and postretirement benefit cost by $25,000.
9. Other (Income) Expense, Net
As a result of the company's continuing extensive review of
operations, during the third quarter of 1997, management and the
Board of Directors authorized and committed the company to a
restructuring of its global manufacturing operations. Four
manufacturing facilities have been or are in the process of being
closed, three additional facilities are being downsized and several
European distribution centers are being consolidated. The products
manufactured at these locations are being redeployed to other
facilities including a new plant. These restructuring activities
are in process and will be completed during 1999. The
restructuring plan resulted in a charge of $44,100,000 exclusive of
certain period costs that are required to be expensed as incurred.
II-28
<PAGE>
C. R. BARD, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
9. Other (Income) Expense, Net (continued)
In connection with the disposition of the cardiology businesses in
1998, certain changes were made to the company's restructuring
plan. As a result of the changes, a net additional charge of
$3,200,000 was recorded, primarily related to the carrying value of
certain facilities, the closing of an additional manufacturing
location and the sale of two facilities previously included in the
1997 restructuring. After reflecting the changes made in 1998, the
reserve balance relating to the 1997 restructuring plan amounts to
$16,100,000 at December 31, 1998.
Since the implementation of the 1997 restructuring plan, the
restructuring accruals have decreased by $31,200,000 due to cash
expenditures of approximately $10,200,000, primarily for severance
and related personnel benefits and noncash charges of approximately
$21,000,000 to reduce the carrying value of certain assets related
to manufacturing operations. The restructuring plan, when
completed, will impact approximately 1,000 positions worldwide.
Other income and expense for 1998 includes a net gain of
$48,600,000 from the settlement of patent infringement claims
netted by other legal and patent settlements. Also included is a
charge of $34,100,000 for the writedown of several businesses and
investments (including the loss on the sale of the Diagnostic
Sciences Division), a charge of $6,400,000 related to acquired R&D
and a charge of $10,100,000 related to other items including a
charge related to the retiring of $60 million of long-term debt.
The net after-tax effect of these items and the 1998 restructuring
charge discussed above amounted to an after-tax loss of $7,100,000
($.13 per share).
In addition to the manufacturing restructuring reserve noted above,
other income and expense for 1997 includes the gain on the sale of
several product lines of $24,500,000, a charge for the impairment
of certain investments and intangible assets of $8,500,000 and the
settlement of a legal claim of $2,000,000. The net after-tax
effect of these items amounted to a loss of $21,700,000 ($.38 per
share).
During 1996, the company recorded a charge for the impairment of
certain assets of $31,000,000; a charge of $10,000,000 related to
the reorganization of certain manufacturing operations; a charge of
$9,000,000 to combine operations related to acquisitions made
during the year; a charge of $3,500,000 for legal and patent
settlements, net and $9,200,000 in income related to royalty
II-29
<PAGE>
C. R. BARD, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
9. Other (Income) Expense, Net (continued)
payments received on sales of products for prior periods. The net
after-tax effect of these items amounted to a loss of $26,100,000
($.45 per share).
Other (income) expense, net in the Statements of Consolidated
Income is summarized as follows:
(Thousands of dollars) 1998 1997 1996
Interest income $ (6,000) $ (3,500) $ (3,800)
Foreign exchange (gains) losses (2,100) --- 400
Legal and patent settlements, net (48,600) 2,000 3,500
Asset writedown 34,100 8,500 31,000
Restructuring 3,200 44,100 10,000
Gains from sale of product lines
and other --- (24,500) ---
Costs to combine operations --- --- 9,000
Acquired R&D 6,400 --- ---
Other, net 10,100 --- (9,200)
Total $ (2,900) $ 26,600 $ 40,900
II-30
<PAGE>
C. R. BARD, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
10. Segment Information
The company's management considers its business to be a single
segment entity - the manufacture and sale of medical devices. The
company's products generally share similar distribution channels
and customers. The company designs, manufactures, packages,
distributes and sells medical, surgical, diagnostic and patient
care devices which, for the most part, are purchased by hospitals,
physicians and nursing homes; used once and discarded. Management
evaluates its various global product portfolios on a revenue basis,
which is presented below, and profitability is generally evaluated
on an enterprise-wide basis due to shared infrastructures.
(thousands of dollars) 1998 1997 1996
Sales:
Vascular $ 209,000 $ 198,000 $ 160,900
Urology 339,800 323,400 306,400
Oncology 213,100 199,100 191,700
Surgery 148,400 134,800 123,000
Other ongoing products 58,600 58,200 62,600
Total ongoing products $ 968,900 $ 913,500 $ 844,600
Divested products 195,800 300,000 349,800
Net sales $1,164,700 $1,213,500 $1,194,400
Income before taxes $ 464,400 $ 104,900 $ 102,700
Total Assets $1,079,800 $1,279,300 $1,332,500
Capital Expenditures $ 43,800 $ 32,800 $ 41,600
Depreciation and Amortization $ 58,700 $ 57,300 $ 57,400
The following table presents sales of onging products by geography
based on the location of the external customer.
1998 1997 1996
United States $ 687,900 $ 652,600 $ 601,700
Europe 182,700 171,300 158,200
Japan 50,300 42,900 35,200
Rest of World 48,000 46,700 49,500
Total $ 968,900 $ 913,500 $ 844,600
The following table presents identifiable assets by geography.
1998 1997 1996
United States $ 829,800 $ 899,400 $ 940,600
Europe 224,600 336,000 337,600
Japan 4,600 22,200 24,700
Rest of World 20,800 21,700 29,600
Total $1,079,800 $1,279,300 $1,332,500
II-31
<PAGE>
<TABLE>
QUARTERLY FINANCIAL DATA
C. R. BARD, INC. AND SUBSIDIARIES
1998
1st 2nd 3rd 4th Year
<CAPTION>
(Thousands of dollars
except per share amounts)
<S> <C> <C> <C> <C> <C>
Net sales $296,300 $300,600 $298,500 $269,300 $ 1,164,700
Cost of goods sold 140,900 144,600 144,900 123,700 554,100
Income before taxes 36,300 62,200 34,100 331,800 464,400
Net income 24,900 40,200 23,500 163,700 252,300
Per share information:
Basic earnings per
share $ .44 $ .71 $ .42 $ 3.06 $ 4.54
Diluted earnings per
share $ .44 $ .71 $ .42 $ 3.03 $ 4.51
<FN>
</TABLE>
Note: The second quarter included a net gain of $61,800 ($0.65 per share) for
legal and patent settlements, a charge of $24,100 ($0.25 per share) primarily
for discontinued operations and a charge of $6,500 ($0.07 per share) for other
nonrecurring charges including the cost of retiring $60,000 of long-term debt.
The fourth quarter included a gain of $329,200 ($3.03 per share) for the net
gain on cardiology dispositions and a net charge of $13,200 ($0.15 per share),
$10,000 ($0.12 per share), $6,400 ($0.10 per share) and $6,800 ($0.11 per
share) related to legal settlements, discontinued businesses, acquired
research and develoopment and other nonrecurring charges, respectively.
(Figures in this note are pretax except per share amounts. Per share amounts
are on a diluted basis).
<TABLE>
1997
1st 2nd 3rd 4th Year
<CAPTION>
(Thousands of dollars
except per share amounts)
<S> <C> <C> <C> <C> <C>
Net sales $300,700 $304,000 $297,500 $311,300 $1,213,500
Cost of goods sold 143,200 143,700 139,300 146,600 572,800
Income before taxes 37,900 37,700 (5,000) 34,300 104,900
Net income 26,100 26,200 (3,800) 23,800 72,300
Per share information:
Basic earnings per
share $ .46 $ .46 $ (.07) $ .42 $ 1.27
Diluted earnings per
share $ .45 $ .45 $ (.07) $ .42 $ 1.26
<FN>
</TABLE>
Note: The first quarter included a gain of $4,900 ($0.05 per share) for the
sale of a product line. The second quarter included a gain of $1,800 ($0.02
per share) for the sale of an investment. The third quarter included a
$44,100 charge ($0.52 per share) for manufacturing restructuring. In
addition, the third quarter included a charge primarily for the impairment of
certain investments and intangible assets and the settlement of a legal claim
as well as a gain from the sale of the surgical suction product line totaling
$6,500 ($0.07 per share). The fourth quarter included a charge of $2,100
($0.02 per share) for miscellaneous items including the settlement of a legal
claim. (Figures in this note are pretax except per share amounts. Per share
amounts are on a diluted basis.)
II-32
<PAGE>
C. R. BARD, INC. AND SUBSIDIARIES
Item 9. Changes in and Disagreements with Accountants on
Accounting and Financial Disclosure
Not applicable.
II-33
<PAGE>
C. R. BARD, INC. AND SUBSIDIARIES
PART III
Item 10. Directors and Executive Officers of the Registrant
Directors of the Registrant
Information with respect to Directors of the company is
incorporated herein by reference to the material contained under
the heading "Proposal No. 1 - Election of Directors" appearing on
pages 1 through 4 of the company's definitive Proxy Statement dated
March 12, 1999.
Executive Officers of the Registrant
Information with respect to Executive Officers of the Registrant
are on pages I-8 through I-11 of this filing.
Item 11. Executive Compensation
The information contained under the caption "Executive
Compensation" appearing on Pages 11 through 20 of the company's
definitive Proxy Statement dated March 12, 1999 is incorporated
herein by reference.
Item 12. Security Ownership of Certain Beneficial Owners and
Management
The information contained under the captions "Securities Ownership
of Certain Beneficial Owners" and "Securities Ownership of
Management" on pages 5 and 6 of the company's definitive Proxy
Statement dated March 12, 1999 is incorporated herein by reference.
Item 13. Certain Relationships and Related Transactions
The information contained under the caption "Related Transactions"
on page 17 of the company's definitive Proxy Statement dated March
12, 1999 is incorporated herein by reference.
III-1
<PAGE>
C. R. BARD, INC. AND SUBSIDIARIES
PART IV
Item 14. Exhibits, Financial Statement Schedules, and Reports
on Form 8-K
(a) l. Financial Statements and Supplementary Data
Included in Part II Item 8 of this report:
Page
II-12 Report of Independent Public Accountants.
II-13 Statements of Consolidated Income.
II-14 Statements of Consolidated Shareholders' Investment
II-15 Consolidated Balance Sheets at December 31, 1998 and
1997.
II-16 Consolidated Statements of Cash Flows for the three
years ended December 31, 1998.
II-17 Notes to Consolidated Financial Statements.
II-32 Quarterly Financial Data.
2. Financial Statement Schedules
Schedules are omitted because they are not applicable, are
not required or the information required is included in the
financial statements or notes thereto.
3. Exhibits, No.
3a Registrant's Restated Certificate of Incorporation, as
amended, as of April 17, 1996, filed as Exhibit 3 to
the company's September 30, 1996 Form 10-Q is
incorporated herein by reference.
3b Registrant's Bylaws revised as of February 10, 1999.
(p. IV-8)
4a Rights Agreement dated as of October 11, 1995 between
C. R. Bard, Inc. and First Chicago Trust Company of
New York as Rights Agent, filed as Exhibit 1
to the company's Registration Statement on Form 8-A
filed with the Securities and Exchange Commission on
October 12, 1995 is incorporated herein by reference.
4b Indenture, dated as of December 1, 1996 between
C. R. Bard, Inc. and The Chase Manhattan Bank, as
trustee, filed as Exhibit 4.1 to the company's
Registration Statement on Form S-3, File No. 333-05997
is incorporated herein by reference.
IV-1
<PAGE>
C. R. BARD, INC. AND SUBSIDIARIES
3. Exhibits, No. (Continued)
10* William H. Longfield Change of Control Agreement as
amended dated as of July 13, 1994, filed as Exhibit
10b to the company's 1994 Annual Report on Form 10-K
is incorporated herein by reference.
10a* Hope Greenfield Change of Control Agreement dated as
of March 6, 1996, filed as Exhibit 10d to the
company's 1995 Annual Report on Form 10-K is
incorporated herein by reference.
10b* E. Robert Ernest Change of Control Agreement as
amended dated as of July 19, 1994, filed as Exhibit
10f to the company's 1994 Annual Report on Form 10-K
is incorporated herein by reference.
10c* William H. Longfield Supplemental Executive Retirement
Agreement dated as of January 12, 1994, filed as
Exhibit 10g to the company's 1993 Annual Report on
Form 10-K is incorporated herein by reference.
10d* 1990 Stock Option Plan, filed as Exhibit 10h to the
company's 1993 Annual Report on Form 10-K is
incorporated herein by reference.
10e* 1989 Employee Stock Appreciation Rights Plan, filed as
Exhibit 10i to the company's 1993 Annual Report on
Form 10-K is incorporated herein by reference.
10f* C. R. Bard, Inc. Agreement and Plans Trust, filed as
Exhibit 10j to the company's 1993 Annual Report on
Form 10-K is incorporated herein by reference.
10g* Supplemental Insurance/Retirement Plan, Plan I - For
new corporate officer when previous agreement as non-officer
exists, Plan II - For new corporate officer
when no previous agreement exists, filed as Exhibit
10k to the company's 1993 Annual Report on Form 10-K
is incorporated herein by reference.
10h* Stock Equivalent Plan For Outside Directors of C. R.
Bard, Inc. dated as of January 1, 1997. (p. IV-70)
10i* Deferred Compensation Contract Deferral of Directors'
Fees, as amended entered into with directors William
T. Butler, M.D., Regina E. Herzlinger, and Robert P.
Luciano, filed as Exhibit 10m to the company's 1993
Annual Report on Form 10-K is incorporated herein by
reference.
IV-2
<PAGE>
C. R. BARD, INC. AND SUBSIDIARIES
3. Exhibits, No. (Continued)
10j* 1988 Directors Stock Award Plan, as amended in April
1998, filed as Exhibit 10ae to the company's 1998
Quarterly Report on Form 10-Q for the quarter ended
March 31, 1998, File No. 1-6926 is incorporated herein
by reference.
10k* Excess Benefit Plan, filed as Exhibit 10o to the
company's 1993 Annual Report on Form 10-K is
incorporated herein by reference.
10l* Supplemental Executive Retirement Plan, filed as
Exhibit 10p to the company's 1993 Annual Report on
Form 10-K is incorporated herein by reference.
10m* 1994 Executive Bonus Plan, filed as Exhibit 10 to the
company's Quarterly Report on Form 10-Q for the
quarter ended March 31, 1994, File No. 1-6926 is
incorporated herein by reference.
10n* Long Term Performance Incentive Plan, filed as Exhibit
10r to the company's 1993 Annual Report on Form 10-K
is incorporated herein by reference.
10o* Deferred Compensation Contract Deferral of
Discretionary Bonus, filed as Exhibit 10s to the
company's 1993 Annual Report on Form 10-K is
incorporated herein by reference.
10p* Deferred Compensation Contract Deferral of Salary,
filed as Exhibit 10t to the company's 1993 Annual
Report on Form 10-K is incorporated herein by
reference.
10q* 1993 Long Term Incentive Plan, as amended, filed as
Exhibit 10ad to the company's 1998 Quarterly Report on
Form 10-Q for the quarter ended March 31, 1998, File
No. 1-6926 is incorporated herein by reference.
10r* Earle L. Parker Change of Control Agreement dated
as of June 29, 1994 filed as Exhibit 10v to the
company's 1994 Annual Report on Form 10-K is
incorporated herein by reference.
10s* John H. Weiland Change of Control Agreement dated
as of March 11, 1996 filed as Exhibit 10w to the
company's 1995 Annual Report on Form 10-K is
incorporated herein by reference.
IV-3
<PAGE>
C. R. BARD, INC. AND SUBSIDIARIES
3. Exhibits, No. (Continued)
10t* Timothy M. Ring Change of Control Agreement dated as
of March 12, 1996 filed as Exhibit 10y to the
company's 1995 Annual Report on Form 10-K is
incorporated herein by reference.
10u* Guy J. Jordan Change of Control Agreement dated as
of October 10, 1996 filed as Exhibit 10z to the
company's 1996 Annual Report on Form 10-K is
incorporated herein by reference.
10v* Charles P. Grom Change of Control Agreement dated as
of December 11, 1996, filed as Exhibit 10aa to the
company's 1996 Annual Report on Form 10-K is
incorporated herein by reference.
10w* Richard D. Manthei Change of Control Agreement dated
as of February 11, 1998 filed as Exhibit 10ab to the
company's 1997 Annual Report on Form 10-K is
incorporated herein by reference.
10x* Nadia C. Adler Change of Control Agreement dated as
of February 8, 1999. (p. IV-20)
10y* Charles P. Slacik Change of Control Agreement dated
as of January 6, 1999. (p. IV-34)
10z* C. R. Bard, Inc. Management Stock Purchase Plan
dated as of January 1, 1998. (p. IV-48)
10aa*C. R. Bard, Inc. 1998 Employee Stock Purchase Plan
dated as of April 15, 1998. (p. IV-60)
10ab Stock and Asset Purchase Agreement dated as of July, 9
1998 between C. R. Bard, Inc. and Arterial Vascular
Engineering, Inc. filed as Exhibit 2(a) on the company's
current report on Form 8-K dated October 16, 1998.
12.1 Computation in Support of Ratio of Earnings to Fixed
Charges. (p. IV-66)
21 Subsidiaries of registrant. (p. IV-67).
23 Arthur Andersen LLP consent to the incorporation by
reference of their report on Form 10-K into
previously filed Forms S-8 and S-3. (p. IV-69)
27 Financial data schedule
IV-4
<PAGE>
C. R. BARD, INC. AND SUBSIDIARIES
3. Exhibits, No. (Continued)
99 Indemnity agreement between the company and each of
its directors and officers, filed as Exhibit 99 to
the company's 1993 Annual Report on Form 10-K is
incorporated herein by reference.
* Each of these exhibits listed under the number 10 constitutes
a management contract or a compensatory plan or arrangement.
All other exhibits are not applicable.
(b) Reports on Form 8-K
(b) The Registrant filed a current report on Form 8-K dated
October 16, 1998 announcing the completion of the sale of
the company's Coronary Catheter Lab business to Arterial
Vascular Engineering, Inc. and certain financial and pro
forma information.
IV-5
<PAGE>
C. R. BARD, INC. AND SUBSIDIARIES
Signatures
Pursuant to the requirements of Section 13 or 15(d) of the
Securities Exchange Act of 1934, the registrant has duly caused
this report to be signed on its behalf by the undersigned,
thereunto duly authorized.
C. R. BARD, INC.
(Registrant)
By: Charles P. Slacik /s/
Charles P. Slacik
Senior Vice President and
Chief Financial Officer
Date: March 30, 1999
Pursuant to the requirements of the Securities Exchange Act of
1934, this report has been signed below by the following persons on
behalf of the registrant and in the capacities and on the dates
indicated.
Signatures Title Date
William H. Longfield /s/ Chairman and March 30, 1999
William H. Longfield Chief Executive Officer
and Director
(Principal Executive
Officer)
Charles P. Slacik /s/ Senior Vice President March 30, 1999
Charles P. Slacik and Chief Financial
Officer
(Principal Financial
Officer)
Charles P. Grom /s/ Vice President and March 30, 1999
Charles P. Grom Controller
(Principal Accounting
Officer)
IV-6
<PAGE>
Signatures Title Date
Joseph F. Abely, Jr. /s/ Director March 26, 1999
Joseph F. Abely, Jr.
Marc C. Breslawsky /s/ Director March 23, 1999
Marc C. Breslawsky
William T. Butler, M.D. /s/ Director March 23, 1999
William T. Butler, M.D.
Daniel A. Cronin, Jr. /s/ Director March 23, 1999
Daniel A. Cronin, Jr.
T. Kevin Dunnigan /s/ Director March 26, 1999
T. Kevin Dunnigan
Regina E. Herzlinger /s/ Director March 29, 1999
Regina E. Herzlinger
Robert P. Luciano /s/ Director March 23, 1999
Robert P. Luciano
Anthony Welters /s/ Director March 23, 1999
Anthony Welters
Tony L. White /s/ Director March 23, 1999
Tony L. White
IV-7
<PAGE>
EXHIBIT 3b
BY-LAWS
of
C. R. BARD, INC.
(A New Jersey Corporation)
(Amended February 10, 1999)
ARTICLE I
OFFICES
The principal office of the Corporation shall be in the
Borough of New Providence, County of Union, State of New Jersey.
The Corporation may also establish and have such other offices as
needed for the conduct of its business at such other place or
places within or without the state of New Jersey as may from time
to time be designated by the Board of Directors.
ARTICLE II
SEAL
The Corporate seal shall have inscribed thereon the name of
the Corporation, the year of its organization, and the words,
"CORPORATE SEAL, NEW JERSEY".
ARTICLE III
STOCKHOLDERS' MEETINGS
SECTION 1. Place of Meetings. Meetings of the stockholders
may be held at the principal office in New Jersey or at such other
place within or without the State of New Jersey as from time to
time may be designated by the Board of Directors and stated in the
notice of meeting.
SECTION 2. Annual Meetings. The annual meeting of
stockholders for the election of Directors and the transaction of
such other business as may properly be brought before the meeting
shall be held on the third Wednesday in April in each year. If this
date shall fall upon a legal holiday, the meeting shall be held on
the next succeeding business day which is not a legal holiday.
SECTION 3. Business Transacted-Annual Meetings. At any
annual meeting of the stockholders of the Corporation, only such
business shall be conducted as shall have been brought before the
meeting (a) by or at the direction of the Board of Directors or (b)
by any stockholder of the Corporation who complies with the
procedures set forth in this Section 3. For business properly to be
brought before an annual meeting by a stockholder, the stockholder
must have given timely notice thereof in proper written form to the
IV-8
<PAGE>
Secretary of the Corporation. To be timely, a stockholder's notice
must be delivered to or mailed and received at the principal
executive offices of the Corporation not less than 90 days nor more
than 120 days prior to the first anniversary of the preceding
year's annual meeting; provided, however, that in the event that
the date of the annual meeting is more than 30 days before or more
than 60 days after such anniversary date, notice by the stockholder
to be timely must be so received not later than the close of
business on the 10th day following the day on which public
announcement of the date of the annual meeting is first made. To
be in proper written form, a stockholder's notice to the Secretary
shall set forth in writing as to each matter the stockholder
proposes to bring before the annual meeting (a) a brief description
of the business desired to be brought before the annual meeting and
the reasons for conducting such business at the annual meeting, (b)
the name and address, as they appear on the Corporation's books, of
the stockholder proposing such business, (c) the class and number
of shares of the Corporation which are beneficially owned by the
stockholder and (d) any material interest of the stockholder in
such business. Notwithstanding anything in the By-Laws to the
contrary, no business shall be conducted at an annual meeting
except in accordance with the procedures set forth in this Section
3. The chairman of an annual meeting shall, if the facts warrant,
determine and declare to the meeting that business was not properly
brought before the meeting in accordance with the provisions of
this Section 3, and, if he should so determine, he shall so declare
to the meeting and any such business not properly brought before
the meeting shall not be transacted.
SECTION 4. Special Meetings. Except as otherwise provided by
law, special meetings of the stockholders may be called at any time
by the Chairman of the Board, the President, or a majority of the
Board of Directors.
SECTION 5. Business Transacted-Special Meetings. Business
transacted at any special meeting shall be confined to the purpose
or purposes stated in the notice thereof.
SECTION 6. Notice of Meetings. Written notice of the annual
meeting or of a special meeting, stating the time, place, and
purpose or purposes of the meeting, shall be given not less than
ten (10) nor more than sixty (60) days before the date of the
meeting, either personally or by mail, to each stockholder of
record entitled to vote at such meeting.
SECTION 7. Quorum. The holders of a majority of the stock
issued and outstanding and entitled to vote thereat, represented in
person or by proxy, shall constitute a quorum at all meetings of
the stockholders for the transaction of business except as
otherwise provided by statute or by the Certificate of
Incorporation. If, however, such quorum shall not be present or
represented at any meeting of the stockholders, the stockholders
IV-9
<PAGE>
present in person or represented by proxy shall have power to
adjourn the meeting from time to time without notice other than
announcement at the meeting, until a quorum shall be present or
represented. At such adjourned meeting at which a quorum shall be
present or represented, any business may be transacted which might
have been transacted at the meeting as originally notified.
SECTION 8. Voting. Whenever any action, other than the
election of directors, is to be taken by vote of the stockholders,
it shall be authorized by a majority of the votes cast at a meeting
of stockholders at which a quorum is present by the holders of
shares entitled to vote thereon, unless a greater plurality is
required by law or by the Restated Certificate of Incorporation.
SECTION 9. Proxies. Any stockholder of record entitled to
vote may be represented at any annual or special meeting of the
stockholders by a duly appointed proxy. A proxy may be given in any
manner, and may take any form, allowed by applicable law provided
that it is filed with, or communicated to, the Secretary of the
meeting before being voted.
SECTION 10. Consents to Corporate Action. (a) Action by
Written Consent. Unless otherwise provided in the Certificate of
Incorporation, any action required or permitted to be taken at any
annual or special meeting of stockholders of the Corporation,
subject to the provisions of subsections (b) and (c) of this
Section 10, may be taken without a meeting upon the written consent
(which shall set forth the action to be so taken) of less than all
the stockholders entitled to cast at least the minimum number of
votes which would be required to take such action at a meeting at
which all stockholders entitled to vote thereon are present;
provided, however, that prompt notice of the taking of corporate
action without a meeting and by less than unanimous written consent
shall be given to those stockholders who have not consented in
writing.
(b) Determination of Record Date for Action by Written
Consent. The record date for determining stockholders entitled to
express consent to corporate action in writing without a meeting
shall be fixed by the Board of Directors of the Company. Any
stockholder seeking to have the stockholders of the Corporation
authorize or take corporate action by written consent without a
meeting shall, by written notice to the Secretary of the
Corporation, request the Board of Directors to fix a record date.
Upon receipt of such a request, the Secretary shall, as promptly as
practicable, call a special meeting of the Board of Directors to be
held as promptly as practicable. At such meeting, the Board of
Directors shall fix a record date within the limitations provided
in Section 14A:5-7 (or its successor provision) of the New Jersey
Business Corporation Act. Notice of the record date shall be
published in accordance with the rules and policies of any stock
exchange on which securities of the Company are then listed. Should
IV-10
<PAGE>
the Board of Directors fail to fix a record date as provided for in
this paragraph (b), then the record date shall be the close of
business on the day next preceding the day on which notice of the
meeting is given or, if no notice is given, the day next preceding
the day on which the meeting is held.
(c) Procedures for Written Consent. In the event of the
delivery to the Company of a written consent or consents purporting
to represent the requisite voting power to authorize or take
corporate action and/or related revocations, the Secretary of the
Corporation shall provide for the safe-keeping of such consents and
revocations and shall engage nationally recognized independent
inspectors of elections for the purpose of promptly performing a
ministerial review of the validity of the consents and revocations.
No action by written consent without a meeting shall be effective
until such inspectors have completed their review, have determined
that the requisite number of valid and unrevoked consents has been
obtained to authorize the action specified in the consents, and
have certified such determination for entry into the records of the
Corporation kept for the purpose of recording the proceedings of
meetings of stockholders.
ARTICLE IV
DIRECTORS
SECTION 1. Number and Term of Directors. The Board of
Directors of the Corporation shall consist of no fewer than three
and no more than fourteen Directors and shall be divided into three
classes, namely, Classes I, II and III, with each class consisting
of not fewer than one nor more than five Directors, as the Board of
Directors shall from time to time determine. In the absence of such
determination by the Board of Directors, the number shall be the
number of Directors elected at the preceding Annual Meeting of
Stockholders. At each Annual Meeting of Stockholders, the
successors to any class of Directors whose terms shall then expire
shall be elected to serve until the third Annual Meeting following
their election and until their respective successors shall have
been duly elected and qualified. Directors elected as hereinbefore
provided may not be removed prior to the expiration of their
respective terms of office without cause. Directors need not be
residents of the State of New Jersey nor stockholders of the
Corporation.
SECTION 2. Vacancies. Any vacancy occurring in the Board of
Directors, including any vacancy resulting from an increase in the
number of Directors, may be filled until the next succeeding Annual
Meeting of Stockholders by the affirmative vote of a majority of
the remaining Directors through less than a quorum of the Board of
Directors.
IV-11
<PAGE>
SECTION 3. Notice of Stockholder Nominees. Only persons who
are nominated in accordance with the procedures set forth in this
Section 3 shall be eligible for election as Directors of the
Corporation. Nominations of persons for election to the Board of
Directors of the Corporation may be made at an annual meeting of
stockholders (a) by or at the direction of the Board of Directors
or (b) by any stockholder of the Corporation entitled to vote for
the election of Directors at such annual meeting who complies with
the procedures set forth in this Section 3. All nominations by
stockholders shall be made pursuant to timely notice in proper
written form to the Secretary of the Corporation. To be timely, a
stockholder's notice shall be delivered to or mailed and received
at the principal executive offices of the Corporation not less than
90 days nor more than 120 days prior to the first anniversary of
the preceding year's annual meeting; provided, however, that in the
event that the date of the annual meeting is more than 30 days
before or more than 60 days after such anniversary date, notice by
the stockholder to be timely must be so received not later than the
close of business on the 10th day following the day on which public
announcement of the date of the annual meeting is first made. To be
in proper written form, such stockholder's notice shall set forth
in writing (a) as to each person whom the stockholder proposes to
nominate for election or re-election as a Director, all information
relating to such person that is required to be disclosed in
solicitations of proxies for election of directors, or is otherwise
required, in each case pursuant to Regulation 14A under the
Securities Exchange Act of 1934, as amended, including, without
limitation, such person's written consent to being named in the
proxy statement as a nominee and to serving as a Director if
elected; and (b) as to the stockholder giving the notice (i) the
name and address, as they appear on the Corporation's books, of
such stockholder and (ii) the class and number of shares of the
Corporation which are beneficially owned by such stockholder. At
the request of the Board of Directors, any person nominated by the
Board of Directors for election as a Director shall furnish to the
Secretary of the Corporation that information required to be set
forth in a stockholder's notice of nomination which pertains to the
nominee. In the event that a stockholder seeks to nominate one or
more Directors, the Secretary shall appoint two inspectors, who
shall not be affiliated with the Corporation, to determine whether
a stockholder has complied with this Section 3. If the inspectors
shall determine that a stockholder has not complied with this
Section 3, the inspectors shall direct the chairman of the meeting
to declare to the meeting that a nomination was not made in
accordance with the procedures prescribed by the By-Laws of the
Corporation, and the chairman shall so declare to the meeting and
the defective nomination shall be disregarded.
SECTION 4. Duties and Powers. The Board of Directors shall
have the control and management of the affairs of the Corporation
and shall exercise all such powers of the Corporation and do all
such lawful acts and things necessary or expedient in the control
IV-12
<PAGE>
and management thereof as are not by statute or by the Certificate
of Incorporation or by these By-Laws directed or required to be
exercised or done by the stockholders. The Directors may adopt such
rules and regulations for the conduct of their meetings and the
management of the Corporation as they may deem proper, not
inconsistent with the laws of the State of New Jersey.
SECTION 5. Meetings of the Board of Directors. Meetings of
the Board of Directors shall be held at the office of the
Corporation or at any other place within or without the State of
New Jersey which the Chairman of the Board, or the President or a
majority of the Board of Directors may from time to time designate.
There shall be an annual meeting of the Board of Directors held
without notice upon the day of their election or as soon thereafter
as convenient and such regular meetings, without notice, as the
Board of Directors may by resolution establish. The Chairman of the
Board or the President shall call a special meeting of the Board of
Directors whenever requested in writing by five (5) or more
Directors so to do. Two (2) days notice shall be given to each
Director by the Secretary of each special meeting of the Board of
Directors. Such notice may be given by mail, telegram or in person.
A majority of the number of Directors shall constitute a
quorum for the transaction of business, but the Director or
Directors present, if less than a quorum, may adjourn any meeting
from time to time until such quorum be present. All questions
coming before the Board shall be determined and decided by a
majority vote of Directors present. Each Director shall be entitled
to one (1) vote at all meetings of Directors.
SECTION 6. Compensation of Directors. Directors, as such,
shall not receive any stated salary for their services, but the
Board may, from time to time, by resolution, fix the fees or
compensation of the Directors for services as such to the
Corporation, including attendance at meetings of the Board of
Directors or any committee thereof. Nothing herein contained shall
be construed to preclude any Director from serving the Corporation
in any other capacity and receiving compensation therefor.
SECTION 7. Executive Committee. The Board of Directors shall
appoint an Executive Committee from the Directors, consisting of
not less than three (3) members, to constitute an Executive
Committee, which Committee shall have and exercise all of the
authority of the Board of Directors in the management of the
Corporation, except as otherwise required by law. Vacancies in the
membership of the Committee shall be filled by the Board of
Directors at a regular or special meeting of the Board of
Directors. The Executive Committee shall keep regular Minutes of
its proceedings and report the same to the Board when required. A
majority of the Committee shall be necessary to constitute a
quorum, and in every case the vote of the majority of the members
present shall be necessary for the passage of any resolution.
IV-13
<PAGE>
SECTION 8. Other Committees. The Board of Directors may
appoint any other committees, standing or special, from time to
time, from among its own members or otherwise confer powers on such
committees and revoke such powers and terminate the existence of
such committees at pleasure. Each such committee shall keep Minutes
of its proceedings and report same to the Board when required.
ARTICLE V
NOTICES
SECTION 1. Giving of Notice. Whenever, under the provision
of the law or of the Certificate of Incorporation or of these
By-Laws, notice is required to be given to any Director or
stockholder, it shall not be construed to mean personal notice, but
such notice may be given in writing, by mail, addressed to such
Director or stockholder at his address as it appears on the records
of the Corporation, with postage thereon prepaid, and such notice
shall be deemed to be given at the time when the same shall be
deposited in the United States mail. Notice to Directors may also
be given by telegram.
SECTION 2. Waiver. Whenever any notice whatever is required
to be given under the provisions of the statutes or under the
provisions of the Certificate of Incorporation or of these By-Laws,
a waiver thereof in writing signed by the person or persons
entitled to such notice, whether before or after the time stated
therein, shall be deemed equivalent to the giving of such notice.
ARTICLE VI
OFFICERS
SECTION 1. Election of Officers. The officers of the
Corporation shall be a Chairman of the Board; a Chief Executive
Officer; a President; a Chief Operating Officer; a Chief Financial
Officer; one or more Executive Vice Presidents; one or more Group
Presidents and/or Group Vice Presidents; one or more Vice
Presidents; a Secretary and a Treasurer. The Corporation may also
have, at the discretion of the Board, one or more Assistant
Secretaries, one or more Assistant Treasurers, and such other
officers, agents and employees as it shall deem necessary. Any two
(2) of the aforesaid offices may be held by the same person. Every
officer shall perform such duties as the Board of Directors may
from time to time designate.
The Directors, immediately after each annual meeting of
stockholders, shall appoint from their number a Chairman of the
Board, a Chief Executive Officer, and a President. At such meeting
the Directors shall also choose one or more Vice Presidents, a
Secretary and a Treasurer, none of whom need be a member of the
Board.
IV-14
<PAGE>
The Board of Directors may elect such other officers as it
shall deem necessary, who shall hold their offices for such terms
and shall exercise such powers and perform such duties as shall be
determined from time to time by the Board of Directors.
SECTION 2. Compensation. The salaries of all officers of the
Corporation earning more than $100,000 shall be fixed by the Board
of Directors.
SECTION 3. Term and Removal. The officers of the Corporation
shall hold office for one (1) year and until their successors are
chosen and qualified in their stead. Any officer elected or
appointed by the Board of Directors may be removed at any time by
the affirmative vote of a majority of the Directors. If the office
of any officer becomes vacant for any reason, the vacancy shall be
filed by the Board of Directors.
SECTION 4. Chairman of the Board. The Chairman of the Board
shall be an Officer of the Corporation and shall preside at all
meetings of the Board of Directors and stockholders. He shall
assist the Board of Directors and other officers in the formulation
of the policies of the Corporation and shall be available to other
officers for consultation and advice. He shall have such other
powers and duties as may be from time to time prescribed by the
Board of Directors.
SECTION 5. Chief Executive Officer. The Chief Executive
Officer shall be either the Chairman of the Board or the President
as designated by the Board of Directors. Under the direction of the
Board of Directors, he shall have responsibility for the general
direction of the Corporation's business, policies and affairs. The
Chief Executive Officer shall be empowered at any time and from
time to time to issue and promulgate rules, regulations and
directives relating to the conduct and the business and affairs of
the Corporation. The Chief Executive Officer may hold such other
offices of the Corporation as shall be designated by the Board of
Directors. In the absence or disability of the Chairman of the
Board, he shall preside over meetings of the Board of Directors and
shareholders.
SECTION 6. President. The President shall be an officer and
shall perform such duties as assigned to him by the Board of
Directors or Chairman of the Board. Subject to the above, he shall
have the general powers and duties of management usually vested in
the office of President of the Corporation and shall have such
other powers and duties as may be prescribed by the Board of
Directors or the By-Laws.
SECTION 7. Chief Operating Officer. The Chief Operating
Officer shall be an officer and shall have the responsibility for
the active executive management and direction of the operating
divisions of the Corporation, subject to the overall direction of
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the Chief Executive Officer and to the control of the Board of
Directors and the Executive Committee. He shall have such
additional powers and duties as the Chief Executive Officer or the
Board of Directors may from time to time assign to him.
SECTION 8. Chief Financial Officer. The Chief Financial
Officer shall be an officer, elected and designated by the Board of
Directors as Chief Financial Officer, who shall be responsible: (a)
for the receipt, custody and disbursement of all funds and
securities of the Corporation; (b) to receive and give receipts for
monies due and payable to the Corporation from any source
whatsoever and deposit all such monies in the name of the
Corporation in such banks, trust companies or other depositories as
shall from time to time be selected; (c) to disburse the funds of
the Corporation as ordered by the Chief Executive Officer or as
required in the ordinary conduct of the business of the
Corporation; (d) to render to the Chief Executive Officer or the
Board of Directors, upon request, an account of all transactions
and on the financial condition of the Corporation; and (e) in
general, to perform all the duties incident to the office of Chief
Financial Officer and such other duties as from time to time may be
assigned by the Chief Executive Officer, or the Board of Directors.
SECTION 9. Executive Vice President. The Corporation may
have one or more Executive Vice Presidents. Such Executive Vice
Presidents shall, under the direction of the President, exercise
general supervision over those functions of the Corporation
designated to such Executive Vice President. He may act for the
President in other ways as specifically directed by the President.
In the absence of the President, an Executive Vice President so
designated shall have and exercise all powers and duties of the
President and perform such other duties as may be prescribed by the
Board of Directors.
SECTION 10. Group President/Group Vice President. The
Corporation may have one or more Group Presidents and/or Group Vice
Presidents. Such Group Presidents and/or Group Vice Presidents
shall direct and guide such operations, divisions or groups of the
Corporation as shall be assigned to them by the President or the
Board of Directors, and shall assist the President in the
development and formulation of overall company objectives,
operating policies and plans, and shall have such additional powers
and perform such additional duties as may be assigned by the
President or the Board of Directors.
SECTION 11. Vice President. The Vice President, or if there
shall be more than one (1), shall have such powers and perform such
duties as may be assigned by the President or Board of Directors.
Vice Presidents may be so designated by seniority and by function.
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SECTION 12. Secretary. The Secretary shall attend all
meetings of the Board of Directors and of the stockholders, and
shall record all votes and the Minutes of all proceedings in a book
to be kept for that purpose. The Secretary shall give or cause to
be given notice of all meetings of the stockholders and the Board
of Directors and shall affix the seal of the Corporation to all
certificates of stock, and to such other documents as may require
it, and shall have charge of the Corporation's seal, and the stock
certificate book, and such other books and papers as the Board of
Directors may direct, and shall cancel all surrendered stock
certificates before issuing new certificates, and shall preserve
such cancelled certificates. The Secretary shall also perform such
other duties as the Board of Directors may from time to time
prescribe.
SECTION 13. Assistant Secretary. An Assistant Secretary
shall have and exercise all the powers and duties of the Secretary
in case of the Secretary's absence or inability to act and shall
have such other powers and perform such other duties as may be
assigned to the Secretary by the Board of Directors.
SECTION 14. Treasurer. The Treasurer shall have the custody
of the Corporate funds and securities and shall deposit all monies
and other valuable effects in the name and to credit of the
Corporation in such depositories as may be authorized by the Board
of Directors. The Treasurer shall disburse the funds of the
Corporation as may be ordered by the Board, taking proper vouchers
for such disbursements and shall render to the Corporation an
account of all transactions and of the financial condition of the
Corporation. The Treasurer shall perform such other duties and have
such other powers as the Board, the Chief Executive Officer, the
Chief Financial Officer, or the officer to whom he shall report may
from time to time prescribe.
SECTION 15. Assistant Treasurer. As Assistant Treasurer
shall have and exercise all the powers and duties of the Treasurer
in case of the Treasurer's absence or inability to act and shall
have such other powers and perform such other duties as may be
assigned by the Board of Directors.
SECTION 16. Controller. The Controller shall be the chief
accounting officer of the Corporation and shall keep or cause to be
kept correct records of the business and transactions of the
Corporation and shall, upon request, at all reasonable times
exhibit or cause to be exhibited such records at the place where
such records are kept. He shall perform such other duties as from
time to time may be assigned to him by the Chief Executive Officer,
the President, the Chief Financial Officer or the officer to whom
he shall report.
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SECTION 17. General Counsel. The General Counsel shall be
the chief legal officer of the Corporation and shall have, subject
to the control of the Board of Directors and the Chief Executive
Officer, general and active supervision and direction over the
legal affairs of the Corporation. He shall have such other powers
and perform such other duties as may be assigned to him by the
Board of Directors, the Chief Executive Officer, or the officer to
whom he shall report.
ARTICLE VII
CERTIFICATES OF STOCK
SECTION 1. Form. The certificates of stock of the
Corporation shall be numbered and entered in the books of the
Corporation as they are issued. They shall exhibit the holder's
name and the number of shares and shall be signed by the Chairman
of the Board or the President or a Vice President and the Treasurer
or an Assistant Treasurer or the Secretary or an Assistant
Secretary, and shall bear the Corporate seal. Such seal may be a
facsimile, engraved or printed. Where certificates are manually
signed by a Transfer Agent or Registrar who is not an officer or
employee of the Corporation, all other signatures on the
certificates may be facsimile.
SECTION 2. Transfer of Stock. Upon surrender to the
Corporation or the Transfer Agent of the Corporation of a
certificate of stock duly endorsed or accompanied by proper
evidence of succession, assignment or authority to transfer, it
shall be the duty of the Corporation to issue a new certificate to
the person entitled thereto and cancel the old certificates; every
such transfer of stock shall be entered on the stock books of the
Corporation.
SECTION 3. The Corporation shall be entitled to treat the
holder of record of any share or shares of stock as the holder in
fact thereof, and, accordingly, shall not be bound to recognize any
equitable or other claims to or interest in such share on the part
of any other person whether or not it shall have express or other
notice thereof, except as expressly provided by the laws of New
Jersey.
ARTICLE VIII
GENERAL PROVISIONS
SECTION 1. Stockholders' Record Date. Except as otherwise
provided in these By-Laws, in order that the Corporation may
determine the stockholders entitled to notice of or to vote at any
meeting of stockholders or any adjournment thereof, or entitled to
receive payment of any dividend or other distribution or allotment
of any rights, or entitled to exercise any rights in respect of any
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change, conversion or exchange of stock or for the purpose of any
other lawful action, the Board of Directors may fix, in advance, a
record date, which shall not be more than sixty (60) nor less than
ten (10) days before the day of such meeting, nor more than sixty
(60) days prior to any other action. A determination of
stockholders of record entitled to notice of or to vote at a
meeting of stockholders shall apply to any adjournment of the
meeting; provided, however, that the Board of Directors may fix a
new record date for the adjourned meeting.
SECTION 2. Dividends. Dividends upon the capital stock of
the Corporation, subject to any provisions of the Certificate of
Incorporation relating thereto, may be declared by the Board of
Directors at any regular or special meeting, pursuant to law.
Before payment of any dividend, there may be set aside out of
the net profits of the Corporation available for dividends such sum
or sums as the Directors from time to time in their absolute
discretion think proper as a reserve fund to meet contingencies, or
for equalizing dividends, or for repairing or maintaining any
property of the Corporation, or for such other purpose as the
Directors shall think conducive to the interests of the
Corporation, and the Directors may modify or abolish any such
reserve in the manner in which it was created.
SECTION 3. Checks. All checks or demands for money and notes
of the Corporation shall be signed by such officer or officers or
such other person or persons as the Board of Directors may from
time to time designate.
SECTION 4. Fiscal Year. The fiscal year of the Corporation
shall be fixed by resolution of the Board of Directors.
ARTICLE IX
AMENDMENTS
These By-Laws may be altered, amended, or repealed or new
By-Laws may be adopted by the affirmative vote of a majority of the
Board of Directors at any regular or special meeting of the Board,
subject to any provisions in the Certificate of Incorporation or
the statutes, reserving to the stockholders the power to adopt,
amend, or repeal By-Laws, provided, however, that By-Laws made by
the Board may be altered or repealed and new By-Laws made by the
stockholders. The stockholders may prescribe that any By-Law made
by them shall not be altered or repealed by the Board.
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EXHIBIT 10h
STOCK EQUIVALENT PLAN FOR OUTSIDE DIRECTORS OF
C. R. BARD, INC.
(Effective January 1, 1997)
1. Purpose. The purpose of the Stock Equivalent Plan for Outside
Directors of C. R. Bard, Inc. (the "Plan") is to provide C. R.
Bard, Inc. (the "Company") with a means of attracting and retaining
as Outside Directors persons whose abilities, experience and
judgment can contribute to the Company's continued progress, and of
retaining their continuing counsel following retirement from the
Board of Directors. The Plan is intended to be an unfunded plan
maintained for the purpose of providing deferred compensation for
Outside Directors, and as such is exempt from the Employee
Retirement Income Security Act of 1974.
2. Definitions. Except as otherwise specified, or as the
context may otherwise require, the following terms have the
meanings indicated below for all Plan purposes of the Plan:
(a) "Account" means a book account maintained by the Committee
to disclosure the interest of each Participant under the Plan.
(b) "Annual Retainer" means the annual amount, exclusive of
any Meeting Fees, received by an Outside Director as may from time
to time be set by the Board of Directors.
(c) "Board of Directors" means the Board of Directors of the
Company.
(d) "Change of Control" means a change of control of the nature
that would be required to be reported in response to Item 1(a) of
the Current Report on Form 8-K as in effect on the Effective Date
pursuant to Section 13 or 15 (d) of the Securities Exchange Act of
1934 (the "Exchange Act"), provided that, without limitation, a
"Change of Control" shall be deemed to have occurred if (i) at any
time after the Effective Date the beneficial ownership by any
"person, 11 as def ined in clause (A) of this section, of capital
stock of the Company, the voting power of which constitutes 20% or
more of the general voting power of all of the Company's
outstanding capital, or (ii) individuals who, as of the Effective
Date, constitute the Board of Directors (the "Incumbent Board")
cease for any reason to constitute at least a majority of the Board
of Directors, provided that any person becoming a Director of the
Company subsequent to the date hereof whose election or nomination
for election by the Company's shareholders was approved by a vote
of at least three-quarters of the Directors comprising the
Incumbent Board (other than an election or nomination of an
individual whose initial assumption of office is in connection with
an actual or threatened election contest relating to the election
of the Directors of the Company, pursuant to Rule 14a-11 of
Regulation 14A promulgated under the Exchange Act) shall be, for
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purposes of this Plan, considered as though such person were a
member of the Incumbent Board. No sale to underwriters or private
placement of its capital stock by the Company, nor any acquisition
by the Company, through merger, purchase of assets or otherwise,
effected in whole or in part by issuance or reissuance of shares of
its capital stock, shall constitute a Change of Control. For
purposes of this definition of "Change of Control," the following
definitions and rules shall be applicable:
(A) The term "person" shall mean any individual, group,
corporation or other entity.
(B) Any person shall be deemed to be the beneficial owner of
any shares of capital stock of the Company:
(1) which that person owns directly, whether or not of
record, or
(2) which that person has the right to acquire pursuant to
any agreement or understanding or upon exercise of conversion
rights, warrants, or options, or otherwise, or
(3) which are beneficially owned, directly or indirectly
(including shares deemed owned through application of clause (B)
above), by an "affiliate" or "associate" (as defined pursuant to
Rule 12b-2 under the Exchange Act) of that person or
(4) which are beneficially owned, directly or indirectly
(including shares deemed owned through application of clause (B)
above), by any other person with which that person or his
"affiliate" or "associate" (defined as aforesaid) has any
agreement, arrangement or understanding for the purpose of
acquiring, holding, voting or disposing of capital stock of the
Company.
(C) The outstanding shares of capital stock of the Company
shall include shares deemed owned through application of clauses
(B)(2), (3) and (4), above, but shall not include any other shares
which may be issuable pursuant to any agreement or upon exercise of
conversion rights, warrants or options, or otherwise, but which are
not actually outstanding.
(D) Shares of capital stock, if any, held by The Chase
Manhattan Bank N.A. under the Indenture and the Escrow Agreement
dated as of November 1. 1971 between International Paper Company
and said Bank shall not be deemed owned by International Paper
Company or by said Bank for purposes of this Plan, so long as they
are held by said Bank under said Escrow Agreement, but said shares
shall be deemed outstanding for the purpose of determining the
aggregate number of outstanding shares of capital stock of the
Company.
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(e) "Committee" means the Policy, Procedures and
Organization Committee of the Board of Directors.
(f) "Company Stock" means the common stock, par value
$.25 per share, of the Company.
(g) "Effective Date" means January 1, 1997.
(h) "Fair Market Value" means the average of the highest
and lowest selling prices of Company Stock as listed on the New
York Stock Exchange on a given date.
(i) "Meeting Fee" means the fee paid to an Outside
Director for attendance at each meeting of the Board of Directors
and each meeting of any Committee of the Board of Directors, but
shall not include the additional fee paid to a Committee Chairman.
(j) "Outside Director" means a member of the Board of
Directors who is not also an employee of the Company.
(k) "Outside Director Fee" means an amount equal to the
amount of the Annual Retainer received by an Outside Director at
the time his Service terminates, plus 12 times the amount of the
Meeting Fee received by the Outside Director at the time his
service terminates.
(l) "Participant" means an Outside Director who has
fulfilled the eligibility requirements of Section 3 and whose
distributable interest under the Plan has not been fully paid,
forfeited or cancelled.
(m) "Plan" means the Stock Equivalent Plan for Outside
Directors of C. R. Bard, Inc.
(n) "Service" means the number of years that the Outside
Director serves on the Board of Directors, commencing on the date
of his election as an Outside Director and ending on the date of
his termination as an Outside Director. With regard to an outside
Director who is a former Chief Executive Officer of the Company,
"Service" means the number of years served as a member of the Board
of Directors, commencing on the date of his election as a Director
and ending on his termination as an Outside Director. For purposes
of determining Service, a partial year shall be rounded up to a
full year.
(o) "Unit" means a share equivalent under the Plan.
3. Eligibility. Each Outside Director who serves on the Board
on or after the Effective Date shall become a Participant on the
later of (a) the date his Service [as an Outside Director]
commences or (b) the Effective Date, except that no Outside
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Director except a former Chief Executive Officer of the Company
shall become a Participant if he is a participant or former
participant under the Employees' Retirement Plan of C. R. Bard,
Inc.
4. Grant of Stock Equivalents.
(a) Effective each December 31 after the Effective Date, the
Committee shall grant each Participant a number of Units determined
by: (i) adding (A) the Annual Retainer in effect on such date plus
(B) the Meeting Fee on such date multiplied by 12; then (ii)
dividing by the Fair Market Value of Company Stock on the date of
grant of such Units.
(b) The Committee shall maintain an Account for each
Participant in which Units shall be entered when granted. The
Committee shall furnish annually to each Participant a statement of
his Account.
5. Grandfathered Benefits Under Prior Plan. Each Participant
who was participating in the Retirement Plan for Outside Directors
of C. R. Bard, Inc. (the "Prior Plan") on December 31, 1996 shall,
prior to January 15, 1997, elect one of the following options with
respect to his benefits under the Prior Plan:
Option 1: An amount shall be added to the Participant's
Account at his termination of Service equal to (a) the Outside
Director Fee multiplied by (b) the Participant's Service as of
December 31, 1996; or
Option 2: As soon as practicable following the Effective
Date, the Participant shall be granted the number of Units
determined by (a) multiplying the Participant's Service on December
31, 1996 by $39,400, then (b) dividing the result by the Fair
Market Value of Company Stock on January 2, 1997.
An election under this section shall be made by giving written
notice to the Committee in a form acceptable to the Committee, and
shall be irrevocable. If a Participant does not make an election as
required under this section, he shall be deemed to have elected
Option 1.
6. Vesting. A Participant shall be vested in the balance in
his Account based on his Service at termination as an outside
Director according to the following schedule:
Service at Termination Vested Percentage
Less than 5 years 0%
5 years or more 100%
Notwithstanding the foregoing provisions of this section,
each Participant shall be 100% vested in the balance in his Account
upon the effective date of a Change of Control.
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7. Determination of Distributable Interest. A Participant's
distributable interest under the Plan shall be determined on the
date of his termination of Service, and shall be calculated by (a)
multiplying the number of Units in his Account by (b) the average
closing price for Company Stock as listed on the New York Stock
Exchange during the six-month period immediately preceding such
termination date, then (c) adding to the result the amount
determined under Option 1 of Section 5 (if applicable), then (d)
multiplying the result by the Participant's vested percentage
determined under Section 6. Any balance in a Participant's Account
which is not vested on the date of his termination of service shall
be forfeited.
8. Form and Time of Payments.
(a) Unless a Participant elects a lump sum payment pursuant
to Section 8 (b) , payment of his distributable interest will be
made in equal quarterly installments for a period of years equal to
the number of years of his Service, commencing as of the first day
of the calendar quarter next following the later of (i) the date
the Participant terminates Service or (ii) the date the Participant
attains age 55.
(b) A Participant may make an irrevocable election to
receive his distributable interest under the Plan in a lump sum.
Such an election must be made in writing and delivered to the
Committee prior to the Participant's termination of Service. The
lump sum value of a Participant's distributable interest shall be
the present value of the installment payments provided for in
Section 8(a), determined using the applicable interest rate
prescribed under Section 417(e) (3) of the Internal Revenue Code of
1986, as amended, for the date of the Participant's termination of
Service.
(c) All payments under the Plan shall be made in cash.
9. Increases in outside Director Fees. If the Annual Retainer
and/or Meeting Fees are increased to an amount higher than that in
effect as of the date an Outside Director ceased his
Service, the Committee may, in its sole discretion, prospectively
increase the amount of Outside Director Fees to be paid, or then
being paid, to a retired Outside Director.
10. Death Benefits.
(a) If a Participant dies on or after the date payment of
his distributable interest under the Plan is made or commences, his
surviving spouse shall receive his remaining distributable interest
under the Plan in the manner determined under Section 8.
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(b) If a Participant dies prior to the date payment of his
distributable interest under the Plan is made or commences, his
surviving spouse shall receive the payment or payments, if any, the
Participant would have received had he terminated Service on the
date of his death.
(c) If a Participant is not married on the date of his
death, his distributable interest, if any, under the Plan shall be
cancelled and no further amount shall be payable with respect to
him under the Plan. If the surviving spouse of a deceased
Participant dies before the Participant's entire distributable
interest under the Plan is paid, the remaining distributable
interest of the Participant shall be cancelled and no further
amount shall be payable with respect to him under the Plan.
11. Removal for Cause. Not-withstanding anything to the
contrary contained in the Plan, if a Participant is removed as an
Outside Director for Cause, as determined by the Board of
Directors, his entire Account balance shall be forfeited. For
purposes of this provision, "Cause" shall mean any act or omission
(a) in breach of the Outside Director's duty of loyalty to the
Company or its shareholders, (b) not in good faith or involving a
knowing violation of law, or (c) resulting in receipt by the
Outside Director of an improper personal benefit.
12. Obligations of Retired Outside Directors. Notwithstanding
anything to the contrary contained in this Plan, payments under the
Plan shall commence, and continue to be paid, only if the Outside
Director remains available to provide advice and counsel to the
Company, and does not engage in business activity with other firms
which the Board of Directors determines is competitive to the
Company's interests following his termination of Service; provided,
however, that the obligations of this section do not apply after
the effective date of a Change of Control or after a Participant's
death.
13. Adjustments to Units. In the event of (a) a reorganization,
recapitalization, stock split, stock dividend, combination of
shares, rights offering, merger, consolidation or other like change
in the corporate structure or capital stock of the Company, (b)
changes in generally accepted principles of accounting, (c) an
extraordinary, nonrecurring event, such as a merger or sale or
purchase of assets, resulting in an adjustment to the net book
value of a share of Company Stock which, in the opinion of the
Committee, inequitably affects the value of a Unit, or (d) a Change
of Control, the Committee shall have the power and authority to
make such adjustment, as it may deem appropriate, in the number of
Units then credited to a Participant's Account or in the net book
value in order to preserve for each Participant rights
substantially proprortionate to such Participants' rights existing
prior to such event, provided however that in the event
of a Change of Control in no
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event shall the net book value be an amount less than the net book
value immediately preceding the Change of Control.
14. Administration. The Plan shall be administered by the
Committee. Except as otherwise specified in the Plan, the Committee
shall have discretionary and exclusive power to make final
determinations of eligibility for benefits, to construe the terms
of the Plan, and to make final determinations of all questions of
fact under the Plan, and any such construction or determination
shall be conclusive and binding on all persons interested in the
Plan.
15. Unfunded Plan. The Plan is unfunded, and all benefits
payable hereunder shall be provided from the general assets of the
Company. The Company shall not be required to reserve, or otherwise
set aside, funds for the payment of its obligations hereunder.
16. Amendment and Termination. The Board of Directors reserves
the right, at any time and from time to time, to alter, amend or
terminate this Plan an whole or in part; provided, however, that no
such action may reduce or eliminate the vested Account balance of
any Participant.
17. Arbitration. The parties agree that any dispute or claim
concerning this Plan or the terms thereof, including whether such
dispute or claim is arbitrable, will be settled by arbitration. The
arbitration proceedings shall be conducted under the Commercial
Arbitration Rules of the American Arbitration Association in effect
at the time a demand for arbitration under the rules is made.
Either party shall make a demand for arbitration by giving a demand
in writing to the other party.
The parties may agree upon one arbitrator, but in the event that
they cannot agree, there shall be three, one named in writing by
each of the parties and a third chosen by the two arbitrators.
Should either party refuse or neglect to join in the appointment of
the arbitrator(s) or to furnish the arbitrator(s) with any papers
or information demanded, the arbitrator(s) are empowered by both
parties to proceed ex parte. The arbitrators shall be persons who
have a minimum of five years' experience in resolving pension trust
disputes during the ten years immediately preceding the dispute.
Arbitration shall take place in the Borough of New Providence,
State of New Jersey, and the hearing before the arbitrator(s) of
the matter to be arbitrated shall be at the time and place within
said Borough as is selected by the arbitrator(s).
At the hearing, any relevant evidence may be presented by either
party, and the formal rules of evidence and discovery applicable to
judicial proceedings shall not be applicable. Evidence may be
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admitted or excluded in the sole discretion of the arbitrator(s).
Said arbitrator(s) shall hear and determine the matter and shall
execute and acknowledge their binding award in writing and cause a
copy thereof to be delivered to each of the parties.
The decision of the arbitrator(s) including determination of amount
of any damages suffered shall be exclusive, final and binding upon
both parties, their heirs, executors, administrators, successors,
and assigns.
A judgment confirming the award of the arbitrator(s) may be
rendered by any court having jurisdiction; or such court may
vacate, modify, or correct the award in accordance with the
prevailing laws of the State of New Jersey.
The costs of such arbitration shall be borne by the Company.
To the extent that any language contained in this arbitration
clause shall be inconsistent with any provision of NJS 2A:24-1 et
seq. or any provision of the Commercial Arbitration Rules referred
to herein, it is the intention of the parties hereto that the
subsequent inconsistent provision of this clause shall control.
Notwithstanding anything contrary in this Plan, this section is in
no way an attempt to limit discovery which shall be at the sole
discretion and prior approval of the arbitrator(s) and his (their)
rulings on discovery shall be binding; however, he (they) is (are)
to be guided by the most expeditious manner in resolving disputes
under this Plan.
18. Attorneys' Fees. In the event that the outside Director
shall be the prevailing party in any arbitration or any action at
law or in equity to enforce an arbitration award, the Company shall
pay the Outside Director all costs, expenses and reasonable
attorneys' fees incurred therein by such outside Director
including, without limitation, such costs, expenses and fees on any
appeals.
19. Miscellaneous.
(a) Nothing herein contained shall be deemed to give any
Outside Director the right to be retained as a Director nor shall
it interfere with the Outside Director's right to terminate his
directorship at any time.
(b) No benefit payable hereunder shall be subject to
alienation or assignment.
(c) The retirement benefits herein contained are in
addition to any other award, arrangement, contract or benefits,
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if any, that any Outside Director may have by virtue of service for
the Company, unless and to the extent that any such other award,
arrangement, contract or benefit provides otherwise.
20. Notices. Any notice required to be given hereunder shall
be deemed given when delivered by in-hand delivery or mailed by
certified mail, return receipt requested, postage prepaid, to the
Participant at his last address on file with the Company, and to
the Committee as follows:
c/o C. R. Bard, Inc.
730 Central Avenue
Murray Hill, NJ 07974
Attention: Mr. Donald J. Maddi
21. Governing Law. This Plan shall be construed according to the
laws of the State of New Jersey.
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EXHIBIT 10x
AGREEMENT
AGREEMENT by and between C. R. BARD, INC., a New Jersey
corporation (the "Corporation"), and Nadia C. Adler (the
"Executive"), dated as of the 8th day of February, 1999.
WHEREAS, the Corporation, on behalf of itself and its
shareholders, wishes to assure that the Corporation will have the
continued dedication of the Executive, notwithstanding the
possibility, threat, or occurrence of a Change of Control (as
defined below) of the Corporation. The Board of Directors of the
Corporation (the "Board") believes it is imperative to diminish the
inevitable distraction of the Executive by virtue of the personal
uncertainties and risks created by a pending or threatened Change
of Control, to encourage his attention and dedication to his
assigned duties currently and in the event of any threatened or
pending Change of Control, and to provide the Executive with
competitive compensation arrangements; therefore, the Board has
caused the Corporation to enter into this Agreement (i) to ensure
the Executive of individual financial security in the event of a
Change of Control, and (ii) to provide such protection in a manner
which is competitive with that of other corporations.
NOW, THEREFORE, IT IS HEREBY AGREED AS FOLLOWS:
1. Certain Definitions. (a) The "Effective Date"
shall be the first date during the "Change of Control Period" (as
defined in Section l(b)) on which a Change of Control occurs.
Anything in this Agreement to the contrary notwithstanding, if the
Executive's employment with the Corporation is terminated prior to
the date on which a Change of Control occurs, and the Executive can
reasonably demonstrate that such termination (1) was at the request
of a third party who has taken steps reasonably calculated to
effect a Change of Control or (2) otherwise arose in connection
with or anticipation of a Change of Control, then for all purposes
of this Agreement the "Effective Date" shall mean the date
immediately prior to the date of such termination.
(b) The "Change of Control Period" is the period
commencing on the date hereof and ending on the earlier to occur of
(i) the third anniversary of such date or (ii) the first day of the
month next following the Executive's normal retirement date
("Normal Retirement Date") under the Corporation's retirement plan;
provided, however, that commencing on the date one year after the
date hereof, and on each annual anniversary of such date (such date
and each annual anniversary thereof is hereinafter referred to as
the "Renewal Date"), the Change of Control Period shall be auto-
matically extended so as to terminate on the earlier of (x) two
years from such Renewal Date or (y) the first day of the month
coinciding with or next following the Executive's Normal Retirement
Date, unless at least 60 days prior to the Renewal Date the
Corporation shall give notice that the Change of Control Period
shall not be so extended.
IV-20
<PAGE>
2. Change of Control. (a) For purposes of this
Agreement, a "Change of Control" shall be deemed to have occurred
if a change of control of the nature that would be required to be
reported in response to Item 1(a) of the Current Report on Form 8-K
as in effect on the date hereof pursuant to Section 13 or 15(d) of
the Securities Exchange Act of 1934 (the "Exchange Act") occurs,
provided that, without limitation, a "Change of Control" shall be
deemed to have occurred if (i) the beneficial ownership at any time
hereafter by any person, as defined herein, of capital stock of the
Corporation, constitutes 20 percent or more of the general voting
power of all of the Corporation's outstanding capital or (ii)
individuals who, as of the date hereof, constitute the Board (as of
the date hereof, the "Incumbent Board") cease for any reason to
constitute at least a majority of the Board, provided that any
person becoming a Director subsequent to the date hereof whose
election, or nomination for election by the Corporation's
shareholders, was approved by a vote of at least three-quarters of
the Directors comprising the Incumbent Board (other than an
election or nomination of an individual whose initial assumption of
office is in connection with an actual or threatened election
contest relating to the election of the Directors of the
Corporation, as such terms are used in Rule 14a-11 of Regulation
14A promulgated under the Exchange Act) shall be, for purposes of
this Agreement, considered as though such person were a member of
the Incumbent Board. No sale to underwriters or private placement
of its capital stock by the Corporation, nor any acquisition
initiated by the Corporation, through merger, purchase of assets or
otherwise, effected in whole or in part by issuance or reissuance
of shares of its capital stock, shall constitute a Change of
Control.
(b) For purposes of the definition of "Change of
Control", the following definitions shall be applicable:
(i) The term "person" shall mean any individual,
corporation or other entity and any group as such term is used
in Section 13(d)(3) or 14(d)(2) of the Exchange Act.
(ii) Any person shall be deemed to be the beneficial
owner of any shares of capital stock of the Corporation:
A. which that person owns directly, whether or not
of record, or
B. which that person has the right to acquire
pursuant to any agreement or understanding or upon
exercise of conversion rights, warrants, or options, or
otherwise, or
C. which are beneficially owned, directly or
indirectly (including shares deemed owned through
application of clause (B) above), by an "affiliate" or
"associate" (as defined in the rules of the Securities
and Exchange Commission under the Securities Act of 1933,
as amended) of that person, or
IV-21
<PAGE>
D. which are beneficially owned, directly or
indirectly (including shares deemed owned through
application of clause (B) above), by any other person
with which that person or his "affiliate" or "associate"
(defined as aforesaid) has any agreement, arrangement or
understanding for the purpose of acquiring, holding,
voting or disposing of capital stock of the Corporation.
(iii) The outstanding shares of capital stock of the
Corporation shall include shares deemed owned through
application of clauses (ii) (B), (C) and (D), above, but shall
not include any other shares which may be issuable pursuant to
any agreement or upon exercise of conversion rights, warrants
or options, or otherwise, but which are not actually
outstanding.
(iv) Shares of capital stock, if any, held by The Chase
Manhattan Bank N.A. under the Indenture and the Escrow
Agreement dated as of November 1, 1971 between International
Paper Corporation and said bank shall not be deemed owned by
International Paper Corporation or by said bank for purposes
of this definition, so long as they are held by said bank
under said Escrow Agreement, but said shares shall be deemed
outstanding for the purpose of determining the aggregate
number of outstanding shares of capital stock of the
Corporation.
3. Employment Period. The Corporation hereby agrees to
continue the Executive in its employ, and the Executive hereby
agrees to remain in the employ of the Corporation, for the period
commencing on the Effective Date and ending on the earlier to occur
of (a) the third anniversary of such date or (b) the first day of
the month coinciding with or next following the Executive's Normal
Retirement Date (the "Employment Period").
4. Terms of Employment. (a) Position and Duties. (i)
During the Employment Period, (A) the Executive's position
(including status, offices, titles and reporting requirements),
authority, duties and responsibilities shall be at least
commensurate in all material respects with the most significant of
those held, exercised and assigned at any time during the 90-day
period immediately preceding the Effective Date and (B) the
Executive's services shall be performed at the location where the
Executive was employed immediately preceding the Effective Date or
any office or location less than thirty-five (35) miles from such
location.
(ii) During the Employment Period, and excluding
any periods of vacation and sick leave to which the Executive is
entitled, the Executive agrees to devote reasonable attention and
time during normal business hours to the business and affairs of
the Corporation and, to the extent necessary to discharge the
responsibilities assigned to the Executive hereunder, to use the
Executive's reasonable best efforts to perform faithfully and
efficiently such responsibilities. During the Employment Period it
IV-22
<PAGE>
shall not be a violation of this Agreement for the Executive to (A)
serve on corporate, civic or charitable boards or committees, (B)
deliver lectures, fulfill speaking engagements or teach at
educational institutions and (C) manage personal investments, so
long as such activities do not significantly interfere with the
performance of the Executive's responsibilities as an employee of
the Corporation in accordance with this Agreement. It is expressly
understood and agreed that to the extent that any such activities
have been conducted by the Executive prior to the Effective Date,
the continued conduct of such activities (or the conduct of
activities similar in nature and scope thereto) subsequent to the
Effective Date shall not thereafter be deemed to interfere with the
performance of the Executive's responsibilities to the Corporation.
(b) Compensation. (i) Base Salary. During the
Employment Period, the Executive shall receive a base salary ("Base
Salary") at a monthly rate at least equal to the highest monthly
base salary paid to the Executive by the Corporation during the
twelve-month period immediately preceding the month in which the
Effective Date occurs. During the Employment Period, the Base
Salary shall be reviewed at least annually and shall be increased
at any time and from time to time as shall be consistent with
increases in base salary awarded in the ordinary course of business
to other key executives of the Corporation. Any increase in Base
Salary shall not serve to limit or reduce any other obligation to
the Executive under this Agreement. Base Salary shall not be
reduced after any such increase.
(ii) Annual Bonus. In addition to Base Salary, the
Executive shall be awarded, for each fiscal year during the
Employment Period, an annual bonus (an "Annual Bonus") in cash at
least equal to the average bonus received by the Executive from the
Corporation in respect of the three fiscal years immediately
preceding the fiscal year in which the Effective Date occurs.
(iii) Incentive, Savings and Retirement Plans. In
addition to Base Salary and Annual Bonus payable as hereinabove
provided, the Executive shall be entitled to participate during the
Employment Period in all incentive, savings and retirement plans
and programs, whether qualified or non-qualified, then applicable
to other key executives of the Corporation and its affiliates
(including the Corporation's 1981 Stock Option Plan, the Long-Term
Performance Incentive Plan, the 1986 Stock Award Plan, the 1981
Employee Stock Appreciation Rights Plan, the Employees' Stock
Ownership Plan and the Employees' Retirement Savings Plan, in each
case to the extent then in effect or as subsequently amended);
provided, however, that such plans and programs, in the aggregate,
shall provide the Executive with compensation, benefits and reward
opportunities at least as favorable as the most favorable such
compensation benefits and reward opportunities provided by the
Corporation for the Executive under such plans and programs as in
effect at any time during the 90-day period immediately preceding
the Effective Date or, if more favorable to the Executive, as
provided at any time thereafter with respect to other key
executives.
IV-23
<PAGE>
(iv) Welfare Benefit Plans. During the Employment
Period, the Executive and/or the Executive's family, as the case
may be, shall be eligible for participation in and shall receive
all benefits under welfare benefit plans provided by the
Corporation (including, without limitation, medical, prescription,
dental, disability, salary continuance, executive life, group life,
accidental death and travel accident insurance plans and programs),
at least comparable to those in effect at any time during the
90-day period immediately preceding the Effective Date which would
be most favorable to the Executive or, if more favorable to the
Executive, as in effect at any time thereafter with respect to
other key executives.
(v) Expenses. During the Employment Period, the
Executive shall be entitled to receive prompt reimbursement for all
reasonable expenses incurred by the Executive in accordance with
the most favorable policies and procedures of the Corporation and
its affiliates in effect at any time during the 90-day period
immediately preceding the Effective Date or, if more favorable to
the Executive, as in effect at any time thereafter with respect to
other key executives.
(vi) Fringe Benefits. During the Employment
Period, the Executive shall be entitled to fringe benefits, in
accordance with the most favorable policies of the Corporation and
its affiliates in effect at any time during the 90-day period
immediately preceding the Effective Date or, if more favorable to
the Executive, as in effect at any time thereafter with respect to
other key executives.
(vii) Office and Support Staff. During the
Employment Period, the Executive shall be entitled to an office or
offices of a size and with furnishings and other appointments, and
to secretarial and other assistance, at least equal to those
provided to the Executive at any time during the 90-day period
immediately preceding the Effective Date which would be most
favorable to the Executive or, if more favorable to the Executive,
as provided at any time thereafter with respect to other key
executives.
(viii) Vacation. During the Employment Period, the
Executive shall be entitled to paid vacation in accordance with the
most favorable policies of the Corporation and its affiliates as in
effect at any time during the 90-day period immediately preceding
the Effective Date or, if more favorable to the Executive, as in
effect at any time thereafter with respect to other key executives.
5. Termination. (a) Death or Disability. This
Agreement shall terminate automatically upon the Executive's death.
The Corporation may terminate this Agreement, after having
established the Executive's Disability (pursuant to the definition
of "Disability" set forth below), by giving to the Executive
written notice of its intention to terminate the Executive's
employment. In such a case, the Executive's employment with the
Corporation shall terminate effective on the 180th day after
IV-24
<PAGE>
receipt of such notice (the "Disability Effective Date"), provided
that, within 180 days after such receipt, the Executive shall not
have returned to full-time performance of the Executive's duties.
For purposes of this Agreement, "Disability" means disability
which, at least 26 weeks after its commencement, is determined to
be total and permanent by a physician selected by the Corporation
or its insurers and acceptable to the Executive or the Executive's
legal representative (such agreement as to acceptability not to be
withheld unreasonably).
(b) Cause. The Corporation may terminate the
Executive's employment for "Cause." For purposes of this Agreement,
"Cause" means (i) an act or acts of dishonesty taken by the
Executive and intended to result in substantial personal enrichment
of the Executive at the expense of the Corporation, (ii) repeated
violations by the Executive of the Executive's obligations under
Section 4(a) of this Agreement which are demonstrably willful and
deliberate on the Executive's part and which are not remedied after
the receipt of notice from the Corporation or (iii) the conviction
of the Executive of a felony.
(c) Termination by Executive for Good Reason. The
Executive's employment may be terminated by the Executive for Good
Reason. For purposes of this Agreement, "Good Reason" means
(i) (A) the assignment to the Executive of any duties
inconsistent in any respect with the Executive's position
(including status, offices, titles and reporting
requirements), authority, duties or responsibilities as
contemplated by Section 4(a) of this Agreement, or (B) any
other action by the Corporation which results in a diminution
in such position, authority, duties or responsibilities, other
than an insubstantial and inadvertent action which is remedied
by the Corporation promptly after receipt of notice thereof
given by the Executive;
(ii) any failure by the Corporation to comply with any
of the provisions of Section 4(b) of this Agreement, other
than an insubstantial and inadvertent failure which is
remedied by the Corporation promptly after receipt of notice
thereof given by the Executive;
(iii) the Corporation's requiring the Executive to be
based at any office or location other than that described in
Section 4(a)(i)(B) hereof, except for travel reasonably
required in the performance of the Executive's
responsibilities;
(iv) any purported termination by the Corporation of
the Executive's employment otherwise than as permitted by this
Agreement; or
(v) any failure by the Corporation to comply with and
satisfy Section 11(c) of this Agreement.
IV-25
<PAGE>
Anything in this Agreement to the contrary
notwithstanding, any termination by the Executive for any reason
whatsoever during the six month period immediately following the
first anniversary of the date of a Change of Control shall be a
termination for "Good Reason". For purposes of this Section 5(c),
any good faith determination of "Good Reason" made by the Executive
shall be conclusive.
(d) Notice of Termination. Any termination by the
Corporation for Cause or by the Executive for Good Reason shall be
communicated by Notice of Termination to the other party hereto
given in accordance with Section 12(b) of this Agreement. For
purposes of this Agreement, a "Notice of Termination" means a
written notice which (i) indicates the specific termination
provision in this Agreement relied upon, (ii) sets forth in
reasonable detail the facts and circumstances claimed to provide a
basis for termination of the Executive's employment under the
provision so indicated and (iii) if the termination date is other
than the date of receipt of such notice, specifies the termination
date (which date shall be not more than fifteen (15) days after the
giving of such notice).
(e) Date of Termination. "Date of Termination" means
the date of receipt of the Notice of Termination or any later date
specified therein, as the case may be. If the Executive's
employment is terminated by the Corporation other than for Cause or
Disability, the Date of Termination shall be the date on which the
Corporation notifies the Executive of such termination.
6. Obligations of the Corporation upon Termination. (a)
Death. If the Executive's employment is terminated by reason of
the Executive's death, this Agreement shall terminate without
further obligations to the Executive's legal representatives under
this Agreement, other than those obligations accrued or earned by
the Executive hereunder at the date of the Executive's death.
Anything in this Agreement to the contrary notwithstanding, the
Executive's family shall be entitled to receive benefits at least
equal to the most favorable benefits provided by the Corporation to
surviving families of executives of the Corporation under such
plans, programs and policies relating to family death benefits, if
any, as in effect at any time during the 90-day period immediately
preceding the Effective Date or, if more favorable to the Executive
and/or the Executive's family, as in effect on the date of the
Executive's death with respect to other key executives and their
families.
(b) Disability. If the Executive's employment is
terminated by reason of the Executive's Disability, this Agreement
shall terminate without further obligations to the Executive, other
than those obligations accrued or earned by the Executive hereunder
as of the Disability Effective Date. Anything in this Agreement to
the contrary notwithstanding, the Executive shall be entitled after
the Disability Effective Date to receive disability and other
benefits at least equal to the most favorable of those provided by
the Corporation to disabled employees and/or their families in
IV-26
<PAGE>
accordance with such plans, programs and policies relating to
disability, if any, as in effect at any time during the 90-day
period immediately preceding the Effective Date or, if more
favorable to the Executive and/or the Executive's family, as in
effect at any time thereafter with respect to other key executives
and their families.
(c) Cause; Other than for Good Reason. If the
Executive's employment shall be terminated for Cause or the
Executive terminates his employment other than for Good Reason, the
Corporation shall pay the Executive his full Base Salary through
the Date of Termination at the rate in effect at the time Notice of
Termination is given and shall have no further obligations to the
Executive under this Agreement.
(d) Termination by Executive for Good Reason;
Termination by Corporation Other Than for Cause or Disability. If,
during the Employment Period, the Corporation shall terminate the
Executive's employment other than for Cause or Disability, or the
employment of the Executive shall be terminated by the Executive
for Good Reason:
(i) the Corporation shall pay to the Executive in a
lump sum in cash within 10 days after the Date of Termination
(the "Payment Date") the aggregate of the following amounts:
A. to the extent not theretofore paid, the
Executive's Base Salary through the Date of Termination
at the rate in effect on the Date of Termination or, if
higher, at the highest rate in effect at any time within
the three year period preceding the Effective Date (the
"Highest Base Salary"); and
B. the product of (x) the average of the annual
bonuses paid, or payable to the extent deferred, to the
Executive for the three full fiscal years prior to the
Effective Date (the "Recent Bonus") and (y) the fraction
obtained by dividing (i) the number of days between the
Date of Termination and the last day of the last full
fiscal year and (ii) 365; and
C. the product of (x) three and (y) the sum of the
Highest Base Salary and (ii) the Recent Bonus; and
D. in the case of compensation previously deferred
by the Executive, all amounts previously deferred and not
yet paid by the Corporation; and
(ii) for one year after the Date of Termination, the
Corporation shall continue benefits to the Executive and/or
the Executive's family at least equal to those which would
have been provided to them in accordance with the plans,
programs and policies described in Section 4(b)(iv) of this
Agreement if the Executive's employment had not been
terminated, including health insurance and life insurance, if
IV-27
<PAGE>
and as in effect at any time during the 90-day period
immediately preceding the Effective Date or, if more favorable
to the Executive, as in effect at any time thereafter with
respect to other key executives and their families and for
purposes of eligibility for retiree benefits pursuant to such
plans, programs and policies, the Executive shall be
considered to have remained employed until the end of the
Employment Period and to have retired on the last day of such
period.
Anything herein to the contrary notwithstanding, the
Executive may elect in his Notice of Termination to receive the
payment provided for pursuant to Section 6(d)(i)(C) hereof (the
"Severance Payment") in installments. If the Executive elects the
installment method, one-quarter of the Severance Payment shall be
paid to the Executive on the Payment Date and one-quarter of the
severance payment shall be paid to the Executive on each of the
next three anniversaries thereof and, in the case of the latter
three payments, the amounts to be paid shall include interests from
the Payment Date on the remaining unpaid balance of the Severance
Payment calculated at the Morgan Guaranty Trust Company prime rate
as in effect from time to time.
7. Non-exclusivity of Rights. Nothing in this
Agreement shall prevent or limit the Executive's continuing or
future participation in any benefit, bonus, incentive or other plan
or program provided by the Corporation or any of its affiliated
companies and for which the Executive may qualify, nor shall
anything herein limit or otherwise affect such rights as the
Executive may have under any stock option or other agreements with
the Corporation or any of its affiliated companies. Amounts which
are vested benefits or which the Executive is otherwise entitled to
receive under any plan or program of the Corporation or any of its
affiliated companies at or subsequent to the Date of Termination
shall be payable in accordance with such plan or program.
8. Full Settlement. The Corporation's obligation to
make the payments provided for in this Agreement and otherwise to
perform its obligations hereunder shall not be affected by any
set-off, counterclaim, recoupment, defense or other claim, right or
action which the Corporation may have against the Executive or
others. In no event shall the Executive be obligated to seek other
employment or take any other action by way of mitigation of the
amounts payable to the Executive under any of the provisions of
this Agreement. The Corporation agrees to pay, to the full extent
permitted by law, all legal fees and expenses which the Executive
may reasonably incur as a result of any contest (regardless of the
outcome thereof) by the Corporation or others of the validity or
enforceability of, or liability under, any provision of this
Agreement or any guarantee of performance thereof or as a result of
any contest by the Executive about the amount of any payment
pursuant to Section 9 of this Agreement, plus in each case interest
at the Federal Rate (as defined below).
IV-28
<PAGE>
9. Gross-up.
(a) In the event it shall be determined that any
payment, benefit or distribution (or combination thereof) by the
Corporation to or for the benefit of Executive (whether paid or
payable or distributed or distributable pursuant to the terms of
this Agreement, or otherwise) (a "Payment") would be subject to the
excise tax imposed by Section 4999 of the Internal Revenue Code of
1986, as amended (the "Code"), or any interest or penalties are
incurred by Executive with respect to such excise tax (such excise
tax, together with any such interest and penalties, hereinafter
collectively referred to as the "Excise Tax"), Executive shall be
entitled to receive an additional payment (a "Gross-Up Payment") in
an amount such that after payment by Executive of the Excise Tax
imposed upon the Gross-Up Payment, Executive retains an amount of
the Gross-Up Payment equal to the Excise Tax imposed upon the
Payments.
(b) Subject to the provisions of Section 9(c), all
determinations required to be made under this Section 9, including
whether and when a Gross-Up Payment is required and the amount of
such Gross-Up Payment and the assumptions to be utilized in
arriving at such determination, shall be made by Arthur Andersen &
Co. (the "Accounting Firm") which shall provide detailed supporting
calculations both to the Corporation and Executive within fifteen
(15) business days of the receipt of notice from Executive that
there has been a Payment, or such earlier time as is requested by
the Corporation. In the event that the Accounting Firm is serving
as accountant or auditor for an individual, entity or group
effecting the change in ownership or effective control (within the
meaning of Section 280G of the Code), Executive shall appoint
another nationally recognized accounting firm to make the
determinations required hereunder (which accounting firm shall then
be referred to as the Accounting Firm hereunder). All fees and
expenses of the Accounting Firm shall be borne solely by the
Corporation. Any Gross-Up Payment, as determined pursuant to this
Section 9, shall be paid by the Corporation to Executive within
five (5) days after the receipt of the Accounting Firm's
determination. If the Accounting Firm determines that no Excise
Tax is payable by Executive, it shall so indicate to Executive in
writing. Any determination by the Accounting Firm shall be binding
upon the Corporation and Executive. As a result of the uncertainty
in the application of Section 4999 of the Code at the time of the
initial determination by the Accounting Firm hereunder, it is
possible that Gross-Up Payments which will not have been made by
the Corporation should have been made ("Underpayment"), consistent
with the calculations required to be made hereunder. In the event
that the Corporation exhausts its remedies pursuant to Section 9(c)
and Executive thereafter is required to make a payment of any
Excise Tax, the Accounting Firm shall determine the amount of the
Underpayment that has occurred and any such Underpayment shall be
promptly paid by the Corporation to or for the benefit of
Executive.
IV-29
<PAGE>
(c) Executive shall notify the Corporation in writing of
any claim by the Internal Revenue Service that, if successful,
would require the payment by the Corporation of the Gross-Up
Payment. Such notification shall be given as soon as practicable
but no later than ten (10) business days after Executive is
informed in writing of such claim and shall apprise the Corporation
of the nature of such claim and the date on which such claim is
requested to be paid. Executive shall not pay such claim prior to
the expiration of the thirty (30) day period following the date on
which it gives such notice to the Corporation (or such shorter
period ending on the date that any payment of taxes with respect to
such claim is due). If the Corporation notifies Executive in
writing prior to the expiration of such period that it desires to
contest such claim, Executive shall:
(i) give the Corporation any information reasonably
requested by the Corporation relating to such claim;
(ii) take such action in connection with contesting such
claim as the Corporation shall reasonably request in writing from
time to time, including, without limitation, accepting legal
representation with respect to such claim by an attorney reasonably
selected by the Corporation;
(iii) cooperate with the Corporation in good faith in
order to effectively contest such claim; and
(iv) permit the Corporation to participate in any
proceedings relating to such claim;
provided, however, that the Corporation shall bear and pay directly
all costs and expenses (including additional interest and
penalties) incurred in connection with such contest and shall
indemnify and hold Executive harmless, on an after-tax basis, for
any Excise Tax (including interest and penalties with respect
thereto) imposed as a result of such representation and payment of
costs and expenses. Without limitation on the foregoing provisions
of this Section 9(c), the Corporation shall control all proceedings
taken in connection with such contest and, at its sole option, may
pursue or forego any and all administrative appeals, proceedings,
hearings and conferences with the taxing authority in respect of
such claim and may, at its sole option, either direct Executive to
pay the tax claimed and sue for a refund or contest the claim in
any permissible manner, and Executive agrees to prosecute such
contest to a determination before any administrative tribunal, in
a court of initial jurisdiction and in one or more appellate
courts, as the Corporation shall determine; provided, however, that
if the Corporation directs Executive to pay such claim and sue for
a refund, the Corporation shall advance the amount of such payment
to Executive, on an interest-free basis, and shall indemnify and
hold Executive harmless, on an after-tax basis, from any Excise Tax
(including interest or penalties with respect thereto) imposed with
respect to such advance or with respect to any imputed income with
respect to such advance; and provided, further, that if Executive
is required to extend the statute of limitations to enable the
Corporation to contest such claim, Executive may limit this
extension solely to such contested amount.
IV-30
<PAGE>
(d) If, after the receipt by Executive of an amount
advanced by the Corporation pursuant to Section 9(c), Executive
becomes entitled to receive any refund with respect to such claim,
Executive shall (subject to the Corporation's complying with the
requirements of Section 9(c)) promptly pay to the Corporation the
amount of such refund (together with any interest paid or credited
thereon after taxes applicable thereto). If, after the receipt by
Executive of an amount advanced by the Corporation pursuant to
Section 9(c), a determination is made that Executive shall not be
entitled to any refund with respect to such claim and the
Corporation does not notify Executive in writing of its intent to
contest such denial of refund prior to the expiration of thirty
(30) days after such determination, then such advance shall be
forgiven and shall not be required to be repaid and the amount of
such advance shall offset, to the extent thereof, the amount of
Gross-Up Payment required to be paid.
10. Confidential Information. The Executive shall hold
in a fiduciary capacity for the benefit of the Corporation all
secret or confidential information, knowledge or data relating to
the Corporation or any of its affiliated companies, and their
respective businesses, which shall have been obtained by the
Executive during the Executive's employment by the Corporation or
any of its affiliated companies and which shall not be public
knowledge (other than by acts by the Executive or his
representatives in violation of this Agreement). After termination
of the Executive's employment with the Corporation, the Executive
shall not, without the prior written consent of the Corporation,
communicate or divulge any such information, knowledge or data to
anyone other than the Corporation and those designated by it. In
no event shall an asserted violation of the provisions of this
Section 10 constitute a basis for deferring or withholding any
amounts otherwise payable to the Executive under this Agreement.
11. Successors. (a) This Agreement is personal to the
Executive and without the prior written consent of the Corporation
shall not be assignable by the Executive otherwise than by will or
the laws of descent and distribution. This Agreement shall inure
to the benefit of and be enforceable by the Executive's legal
representatives.
(b) This Agreement shall inure to the benefit of and be
binding upon the Corporation and its successors.
(c) The Corporation will require any successor (whether
direct or indirect, by purchase, merger, consolidation or
otherwise) to all or substantially all of the business and/or
assets of the Corporation to expressly assume and agree to perform
this Agreement in the same manner and to the same extent that the
Corporation would be required to perform it if no such succession
had taken place. As used in this Agreement, "Corporation" shall
mean the Corporation as hereinbefore defined and any successor to
its business and/or assets as aforesaid which assumes and agrees to
perform this Agreement by operation of law, or otherwise.
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12. Miscellaneous. (a) This Agreement shall be
governed by and construed in accordance with the laws of the State
of New Jersey, without reference to principles of conflict of laws.
The captions of this Agreement are not part of the provisions
hereof and shall have no force or effect. This Agreement may not
be amended or modified otherwise than by a written agreement
executed by the parties hereto or their respective successors and
legal representatives.
(b) All notices and other communications hereunder shall
be in writing and shall be given by hand delivery to the other
party or by registered or certified mail, return receipt requested,
postage prepaid, addressed as follows:
If to the Executive:
Nadia C. Adler
1 Sunnyside Court
Briarcliff Manor, New York 10510
If to the Corporation:
C. R. BARD, INC.
730 Central Avenue
Murray Hill, New Jersey 07974
Attention: General Counsel
or to such other address as either party shall have furnished to
the other in writing in accordance herewith. Notice and
communications shall be effective when actually received by the
addressee.
(c) The invalidity or unenforceability of any provision
of this Agreement shall not affect the validity or enforceability
of any other provision of this Agreement.
(d) The Corporation may withhold from any amounts
payable under this Agreement such Federal, state or local taxes as
shall be required to be withheld pursuant to any applicable law or
regulation.
(e) The Executive's failure to insist upon strict
compliance with any provision hereof shall not be deemed to be a
waiver of such provision or any other provision thereof.
(f) This Agreement contains the entire understanding of
the Corporation and the Executive with respect to the subject
matter hereof.
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(g) The Executive and the Corporation acknowledge that
the employment of the Executive by the Corporation is "at will",
and, prior to the Effective Date, may be terminated by either the
Executive or the Corporation at any time. Upon a termination of
the Executive's employment or upon the Executive's ceasing to be an
officer of the Corporation, in each case, prior to the Effective
Date, there shall be no further rights under this Agreement.
IN WITNESS WHEREOF, the Executive has hereunto set her
hand and, pursuant to the authorization from its Board of
Directors, the Corporation has caused these presents to be executed
in its name on its behalf, all as of the day and year first above
written.
Nadia C. Adler /s/
Nadia C. Adler
C. R. BARD, INC.
By: William H. Longfield /s/
William H. Longfield
Chairman and
Chief Executive Officer
Attest:
Assistant Secretary
IV-33
EXHIBIT 10y
AGREEMENT
AGREEMENT by and between C. R. BARD, INC., a New Jersey
corporation (the "Corporation"), and Charles P. Slacik (the
"Executive"), dated as of the 6th day of January, 1999.
WHEREAS, the Corporation, on behalf of itself and its
shareholders, wishes to assure that the Corporation will have the
continued dedication of the Executive, notwithstanding the
possibility, threat, or occurrence of a Change of Control (as
defined below) of the Corporation. The Board of Directors of the
Corporation (the "Board") believes it is imperative to diminish the
inevitable distraction of the Executive by virtue of the personal
uncertainties and risks created by a pending or threatened Change
of Control, to encourage his attention and dedication to his
assigned duties currently and in the event of any threatened or
pending Change of Control, and to provide the Executive with
competitive compensation arrangements; therefore, the Board has
caused the Corporation to enter into this Agreement (i) to ensure
the Executive of individual financial security in the event of a
Change of Control, and (ii) to provide such protection in a manner
which is competitive with that of other corporations.
NOW, THEREFORE, IT IS HEREBY AGREED AS FOLLOWS:
1. Certain Definitions. (a) The "Effective Date"
shall be the first date during the "Change of Control Period" (as
defined in Section l(b)) on which a Change of Control occurs.
Anything in this Agreement to the contrary notwithstanding, if the
Executive's employment with the Corporation is terminated prior to
the date on which a Change of Control occurs, and the Executive can
reasonably demonstrate that such termination (1) was at the request
of a third party who has taken steps reasonably calculated to
effect a Change of Control or (2) otherwise arose in connection
with or anticipation of a Change of Control, then for all purposes
of this Agreement the "Effective Date" shall mean the date
immediately prior to the date of such termination.
(b) The "Change of Control Period" is the period
commencing on the date hereof and ending on the earlier to occur of
(i) the third anniversary of such date or (ii) the first day of the
month next following the Executive's normal retirement date
("Normal Retirement Date") under the Corporation's retirement plan;
provided, however, that commencing on the date one year after the
date hereof, and on each annual anniversary of such date (such date
and each annual anniversary thereof is hereinafter referred to as
the "Renewal Date"), the Change of Control Period shall be auto-
matically extended so as to terminate on the earlier of (x) two
years from such Renewal Date or (y) the first day of the month
coinciding with or next following the Executive's Normal Retirement
Date, unless at least 60 days prior to the Renewal Date the
Corporation shall give notice that the Change of Control Period
shall not be so extended.
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<PAGE>
Agreement, a "Change of Control" shall be deemed to have occurred
if a change of control of the nature that would be required to be
reported in response to Item 1(a) of the Current Report on Form 8-K
as in effect on the date hereof pursuant to Section 13 or 15(d) of
the Securities Exchange Act of 1934 (the "Exchange Act") occurs,
provided that, without limitation, a "Change of Control" shall be
deemed to have occurred if (i) the beneficial ownership at any time
hereafter by any person, as defined herein, of capital stock of the
Corporation, constitutes 20 percent or more of the general voting
power of all of the Corporation's outstanding capital or (ii)
individuals who, as of the date hereof, constitute the Board (as of
the date hereof, the "Incumbent Board") cease for any reason to
constitute at least a majority of the Board, provided that any
person becoming a Director subsequent to the date hereof whose
election, or nomination for election by the Corporation's
shareholders, was approved by a vote of at least three-quarters of
the Directors comprising the Incumbent Board (other than an
election or nomination of an individual whose initial assumption of
office is in connection with an actual or threatened election
contest relating to the election of the Directors of the
Corporation, as such terms are used in Rule 14a-11 of Regulation
14A promulgated under the Exchange Act) shall be, for purposes of
this Agreement, considered as though such person were a member of
the Incumbent Board. No sale to underwriters or private placement
of its capital stock by the Corporation, nor any acquisition
initiated by the Corporation, through merger, purchase of assets or
otherwise, effected in whole or in part by issuance or reissuance
of shares of its capital stock, shall constitute a Change of
Control.
(b) For purposes of the definition of "Change of
Control", the following definitions shall be applicable:
(i) The term "person" shall mean any individual,
corporation or other entity and any group as such term is used
in Section 13(d)(3) or 14(d)(2) of the Exchange Act.
(ii) Any person shall be deemed to be the beneficial
owner of any shares of capital stock of the Corporation:
A. which that person owns directly, whether or not
of record, or
B. which that person has the right to acquire
pursuant to any agreement or understanding or upon
exercise of conversion rights, warrants, or options, or
otherwise, or
C. which are beneficially owned, directly or
indirectly (including shares deemed owned through
application of clause (B) above), by an "affiliate" or
"associate" (as defined in the rules of the Securities
and Exchange Commission under the Securities Act of 1933,
as amended) of that person, or
IV-35
<PAGE>
D. which are beneficially owned, directly or
indirectly (including shares deemed owned through
application of clause (B) above), by any other person
with which that person or his "affiliate" or "associate"
(defined as aforesaid) has any agreement, arrangement or
understanding for the purpose of acquiring, holding,
voting or disposing of capital stock of the Corporation.
(iii) The outstanding shares of capital stock of the
Corporation shall include shares deemed owned through
application of clauses (ii) (B), (C) and (D), above, but shall
not include any other shares which may be issuable pursuant to
any agreement or upon exercise of conversion rights, warrants
or options, or otherwise, but which are not actually
outstanding.
(iv) Shares of capital stock, if any, held by The Chase
Manhattan Bank N.A. under the Indenture and the Escrow
Agreement dated as of November 1, 1971 between International
Paper Corporation and said bank shall not be deemed owned by
International Paper Corporation or by said bank for purposes
of this definition, so long as they are held by said bank
under said Escrow Agreement, but said shares shall be deemed
outstanding for the purpose of determining the aggregate
number of outstanding shares of capital stock of the
Corporation.
3. Employment Period. The Corporation hereby agrees to
continue the Executive in its employ, and the Executive hereby
agrees to remain in the employ of the Corporation, for the period
commencing on the Effective Date and ending on the earlier to occur
of (a) the third anniversary of such date or (b) the first day of
the month coinciding with or next following the Executive's Normal
Retirement Date (the "Employment Period").
4. Terms of Employment. (a) Position and Duties. (i)
During the Employment Period, (A) the Executive's position
(including status, offices, titles and reporting requirements),
authority, duties and responsibilities shall be at least
commensurate in all material respects with the most significant of
those held, exercised and assigned at any time during the 90-day
period immediately preceding the Effective Date and (B) the
Executive's services shall be performed at the location where the
Executive was employed immediately preceding the Effective Date or
any office or location less than thirty-five (35) miles from such
location.
(ii) During the Employment Period, and excluding
any periods of vacation and sick leave to which the Executive is
entitled, the Executive agrees to devote reasonable attention and
time during normal business hours to the business and affairs of
the Corporation and, to the extent necessary to discharge the
responsibilities assigned to the Executive hereunder, to use the
Executive's reasonable best efforts to perform faithfully and
efficiently such responsibilities. During the Employment Period it
IV-36
<PAGE>
shall not be a violation of this Agreement for the Executive to (A)
serve on corporate, civic or charitable boards or committees, (B)
deliver lectures, fulfill speaking engagements or teach at
educational institutions and (C) manage personal investments, so
long as such activities do not significantly interfere with the
performance of the Executive's responsibilities as an employee of
the Corporation in accordance with this Agreement. It is expressly
understood and agreed that to the extent that any such activities
have been conducted by the Executive prior to the Effective Date,
the continued conduct of such activities (or the conduct of
activities similar in nature and scope thereto) subsequent to the
Effective Date shall not thereafter be deemed to interfere with the
performance of the Executive's responsibilities to the Corporation.
(b) Compensation. (i) Base Salary. During the
Employment Period, the Executive shall receive a base salary ("Base
Salary") at a monthly rate at least equal to the highest monthly
base salary paid to the Executive by the Corporation during the
twelve-month period immediately preceding the month in which the
Effective Date occurs. During the Employment Period, the Base
Salary shall be reviewed at least annually and shall be increased
at any time and from time to time as shall be consistent with
increases in base salary awarded in the ordinary course of business
to other key executives of the Corporation. Any increase in Base
Salary shall not serve to limit or reduce any other obligation to
the Executive under this Agreement. Base Salary shall not be
reduced after any such increase.
(ii) Annual Bonus. In addition to Base Salary, the
Executive shall be awarded, for each fiscal year during the
Employment Period, an annual bonus (an "Annual Bonus") in cash at
least equal to the average bonus received by the Executive from the
Corporation in respect of the three fiscal years immediately
preceding the fiscal year in which the Effective Date occurs.
(iii) Incentive, Savings and Retirement Plans. In
addition to Base Salary and Annual Bonus payable as hereinabove
provided, the Executive shall be entitled to participate during the
Employment Period in all incentive, savings and retirement plans
and programs, whether qualified or non-qualified, then applicable
to other key executives of the Corporation and its affiliates
(including the Corporation's 1981 Stock Option Plan, the Long-Term
Performance Incentive Plan, the 1986 Stock Award Plan, the 1981
Employee Stock Appreciation Rights Plan, the Employees' Stock
Ownership Plan and the Employees' Retirement Savings Plan, in each
case to the extent then in effect or as subsequently amended);
provided, however, that such plans and programs, in the aggregate,
shall provide the Executive with compensation, benefits and reward
opportunities at least as favorable as the most favorable such
compensation benefits and reward opportunities provided by the
Corporation for the Executive under such plans and programs as in
effect at any time during the 90-day period immediately preceding
the Effective Date or, if more favorable to the Executive, as
provided at any time thereafter with respect to other key
executives.
IV-37
Period, the Executive and/or the Executive's family, as the case
may be, shall be eligible for participation in and shall receive
all benefits under welfare benefit plans provided by the
Corporation (including, without limitation, medical, prescription,
dental, disability, salary continuance, executive life, group life,
accidental death and travel accident insurance plans and programs),
at least comparable to those in effect at any time during the
90-day period immediately preceding the Effective Date which would
be most favorable to the Executive or, if more favorable to the
Executive, as in effect at any time thereafter with respect to
other key executives.
(v) Expenses. During the Employment Period, the
Executive shall be entitled to receive prompt reimbursement for all
reasonable expenses incurred by the Executive in accordance with
the most favorable policies and procedures of the Corporation and
its affiliates in effect at any time during the 90-day period
immediately preceding the Effective Date or, if more favorable to
the Executive, as in effect at any time thereafter with respect to
other key executives.
(vi) Fringe Benefits. During the Employment
Period, the Executive shall be entitled to fringe benefits, in
accordance with the most favorable policies of the Corporation and
its affiliates in effect at any time during the 90-day period
immediately preceding the Effective Date or, if more favorable to
the Executive, as in effect at any time thereafter with respect to
other key executives.
(vii) Office and Support Staff. During the
Employment Period, the Executive shall be entitled to an office or
offices of a size and with furnishings and other appointments, and
to secretarial and other assistance, at least equal to those
provided to the Executive at any time during the 90-day period
immediately preceding the Effective Date which would be most
favorable to the Executive or, if more favorable to the Executive,
as provided at any time thereafter with respect to other key
executives.
(viii) Vacation. During the Employment Period, the
Executive shall be entitled to paid vacation in accordance with the
most favorable policies of the Corporation and its affiliates as in
effect at any time during the 90-day period immediately preceding
the Effective Date or, if more favorable to the Executive, as in
effect at any time thereafter with respect to other key executives.
5. Termination. (a) Death or Disability. This
Agreement shall terminate automatically upon the Executive's death.
The Corporation may terminate this Agreement, after having
established the Executive's Disability (pursuant to the definition
of "Disability" set forth below), by giving to the Executive
written notice of its intention to terminate the Executive's
employment. In such a case, the Executive's employment with the
Corporation shall terminate effective on the 180th day after
IV-38
<PAGE>
receipt of such notice (the "Disability Effective Date"), provided
that, within 180 days after such receipt, the Executive shall not
have returned to full-time performance of the Executive's duties.
For purposes of this Agreement, "Disability" means disability
which, at least 26 weeks after its commencement, is determined to
be total and permanent by a physician selected by the Corporation
or its insurers and acceptable to the Executive or the Executive's
legal representative (such agreement as to acceptability not to be
withheld unreasonably).
(b) Cause. The Corporation may terminate the
Executive's employment for "Cause." For purposes of this Agreement,
"Cause" means (i) an act or acts of dishonesty taken by the
Executive and intended to result in substantial personal enrichment
of the Executive at the expense of the Corporation, (ii) repeated
violations by the Executive of the Executive's obligations under
Section 4(a) of this Agreement which are demonstrably willful and
deliberate on the Executive's part and which are not remedied after
the receipt of notice from the Corporation or (iii) the conviction
of the Executive of a felony.
(c) Termination by Executive for Good Reason. The
Executive's employment may be terminated by the Executive for Good
Reason. For purposes of this Agreement, "Good Reason" means
(i) (A) the assignment to the Executive of any duties
inconsistent in any respect with the Executive's position
(including status, offices, titles and reporting
requirements), authority, duties or responsibilities as
contemplated by Section 4(a) of this Agreement, or (B) any
other action by the Corporation which results in a diminution
in such position, authority, duties or responsibilities, other
than an insubstantial and inadvertent action which is remedied
by the Corporation promptly after receipt of notice thereof
given by the Executive;
(ii) any failure by the Corporation to comply with any
of the provisions of Section 4(b) of this Agreement, other
than an insubstantial and inadvertent failure which is
remedied by the Corporation promptly after receipt of notice
thereof given by the Executive;
(iii) the Corporation's requiring the Executive to be
based at any office or location other than that described in
Section 4(a)(i)(B) hereof, except for travel reasonably
required in the performance of the Executive's
responsibilities;
(iv) any purported termination by the Corporation of
the Executive's employment otherwise than as permitted by this
Agreement; or
(v) any failure by the Corporation to comply with and
satisfy Section 11(c) of this Agreement.
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<PAGE>
Anything in this Agreement to the contrary
notwithstanding, any termination by the Executive for any reason
whatsoever during the six month period immediately following the
first anniversary of the date of a Change of Control shall be a
termination for "Good Reason". For purposes of this Section 5(c),
any good faith determination of "Good Reason" made by the Executive
shall be conclusive.
(d) Notice of Termination. Any termination by the
Corporation for Cause or by the Executive for Good Reason shall be
communicated by Notice of Termination to the other party hereto
given in accordance with Section 12(b) of this Agreement. For
purposes of this Agreement, a "Notice of Termination" means a
written notice which (i) indicates the specific termination
provision in this Agreement relied upon, (ii) sets forth in
reasonable detail the facts and circumstances claimed to provide a
basis for termination of the Executive's employment under the
provision so indicated and (iii) if the termination date is other
than the date of receipt of such notice, specifies the termination
date (which date shall be not more than fifteen (15) days after the
giving of such notice).
(e) Date of Termination. "Date of Termination" means
the date of receipt of the Notice of Termination or any later date
specified therein, as the case may be. If the Executive's
employment is terminated by the Corporation other than for Cause or
Disability, the Date of Termination shall be the date on which the
Corporation notifies the Executive of such termination.
6. Obligations of the Corporation upon Termination. (a)
Death. If the Executive's employment is terminated by reason of
the Executive's death, this Agreement shall terminate without
further obligations to the Executive's legal representatives under
this Agreement, other than those obligations accrued or earned by
the Executive hereunder at the date of the Executive's death.
Anything in this Agreement to the contrary notwithstanding, the
Executive's family shall be entitled to receive benefits at least
equal to the most favorable benefits provided by the Corporation to
surviving families of executives of the Corporation under such
plans, programs and policies relating to family death benefits, if
any, as in effect at any time during the 90-day period immediately
preceding the Effective Date or, if more favorable to the Executive
and/or the Executive's family, as in effect on the date of the
Executive's death with respect to other key executives and their
families.
(b) Disability. If the Executive's employment is
terminated by reason of the Executive's Disability, this Agreement
shall terminate without further obligations to the Executive, other
than those obligations accrued or earned by the Executive hereunder
as of the Disability Effective Date. Anything in this Agreement to
the contrary notwithstanding, the Executive shall be entitled after
the Disability Effective Date to receive disability and other
benefits at least equal to the most favorable of those provided by
the Corporation to disabled employees and/or their families in
IV-40
<PAGE>
accordance with such plans, programs and policies relating to
disability, if any, as in effect at any time during the 90-day
period immediately preceding the Effective Date or, if more
favorable to the Executive and/or the Executive's family, as in
effect at any time thereafter with respect to other key executives
and their families.
(c) Cause; Other than for Good Reason. If the
Executive's employment shall be terminated for Cause or the
Executive terminates his employment other than for Good Reason, the
Corporation shall pay the Executive his full Base Salary through
the Date of Termination at the rate in effect at the time Notice of
Termination is given and shall have no further obligations to the
Executive under this Agreement.
(d) Termination by Executive for Good Reason;
Termination by Corporation Other Than for Cause or Disability. If,
during the Employment Period, the Corporation shall terminate the
Executive's employment other than for Cause or Disability, or the
employment of the Executive shall be terminated by the Executive
for Good Reason:
(i) the Corporation shall pay to the Executive in a
lump sum in cash within 10 days after the Date of Termination
(the "Payment Date") the aggregate of the following amounts:
A. to the extent not theretofore paid, the
Executive's Base Salary through the Date of Termination
at the rate in effect on the Date of Termination or, if
higher, at the highest rate in effect at any time within
the three year period preceding the Effective Date (the
"Highest Base Salary"); and
B. the product of (x) the average of the annual
bonuses paid, or payable to the extent deferred, to the
Executive for the three full fiscal years prior to the
Effective Date (the "Recent Bonus") and (y) the fraction
obtained by dividing (i) the number of days between the
Date of Termination and the last day of the last full
fiscal year and (ii) 365; and
C. the product of (x) three and (y) the sum of the
Highest Base Salary and (ii) the Recent Bonus; and
D. in the case of compensation previously deferred
by the Executive, all amounts previously deferred and not
yet paid by the Corporation; and
(ii) for one year after the Date of Termination, the
Corporation shall continue benefits to the Executive and/or
the Executive's family at least equal to those which would
have been provided to them in accordance with the plans,
programs and policies described in Section 4(b)(iv) of this
Agreement if the Executive's employment had not been
terminated, including health insurance and life insurance, if
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and as in effect at any time during the 90-day period
immediately preceding the Effective Date or, if more favorable
to the Executive, as in effect at any time thereafter with
respect to other key executives and their families and for
purposes of eligibility for retiree benefits pursuant to such
plans, programs and policies, the Executive shall be
considered to have remained employed until the end of the
Employment Period and to have retired on the last day of such
period.
Anything herein to the contrary notwithstanding, the
Executive may elect in his Notice of Termination to receive the
payment provided for pursuant to Section 6(d)(i)(C) hereof (the
"Severance Payment") in installments. If the Executive elects the
installment method, one-quarter of the Severance Payment shall be
paid to the Executive on the Payment Date and one-quarter of the
severance payment shall be paid to the Executive on each of the
next three anniversaries thereof and, in the case of the latter
three payments, the amounts to be paid shall include interests from
the Payment Date on the remaining unpaid balance of the Severance
Payment calculated at the Morgan Guaranty Trust Company prime rate
as in effect from time to time.
7. Non-exclusivity of Rights. Nothing in this
Agreement shall prevent or limit the Executive's continuing or
future participation in any benefit, bonus, incentive or other plan
or program provided by the Corporation or any of its affiliated
companies and for which the Executive may qualify, nor shall
anything herein limit or otherwise affect such rights as the
Executive may have under any stock option or other agreements with
the Corporation or any of its affiliated companies. Amounts which
are vested benefits or which the Executive is otherwise entitled to
receive under any plan or program of the Corporation or any of its
affiliated companies at or subsequent to the Date of Termination
shall be payable in accordance with such plan or program.
8. Full Settlement. The Corporation's obligation to
make the payments provided for in this Agreement and otherwise to
perform its obligations hereunder shall not be affected by any
set-off, counterclaim, recoupment, defense or other claim, right or
action which the Corporation may have against the Executive or
others. In no event shall the Executive be obligated to seek other
employment or take any other action by way of mitigation of the
amounts payable to the Executive under any of the provisions of
this Agreement. The Corporation agrees to pay, to the full extent
permitted by law, all legal fees and expenses which the Executive
may reasonably incur as a result of any contest (regardless of the
outcome thereof) by the Corporation or others of the validity or
enforceability of, or liability under, any provision of this
Agreement or any guarantee of performance thereof or as a result of
any contest by the Executive about the amount of any payment
pursuant to Section 9 of this Agreement, plus in each case interest
at the Federal Rate (as defined below).
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9. Gross-up.
(a) In the event it shall be determined that any
payment, benefit or distribution (or combination thereof) by the
Corporation to or for the benefit of Executive (whether paid or
payable or distributed or distributable pursuant to the terms of
this Agreement, or otherwise) (a "Payment") would be subject to the
excise tax imposed by Section 4999 of the Internal Revenue Code of
1986, as amended (the "Code"), or any interest or penalties are
incurred by Executive with respect to such excise tax (such excise
tax, together with any such interest and penalties, hereinafter
collectively referred to as the "Excise Tax"), Executive shall be
entitled to receive an additional payment (a "Gross-Up Payment") in
an amount such that after payment by Executive of the Excise Tax
imposed upon the Gross-Up Payment, Executive retains an amount of
the Gross-Up Payment equal to the Excise Tax imposed upon the
Payments.
(b) Subject to the provisions of Section 9(c), all
determinations required to be made under this Section 9, including
whether and when a Gross-Up Payment is required and the amount of
such Gross-Up Payment and the assumptions to be utilized in
arriving at such determination, shall be made by Arthur Andersen &
Co. (the "Accounting Firm") which shall provide detailed supporting
calculations both to the Corporation and Executive within fifteen
(15) business days of the receipt of notice from Executive that
there has been a Payment, or such earlier time as is requested by
the Corporation. In the event that the Accounting Firm is serving
as accountant or auditor for an individual, entity or group
effecting the change in ownership or effective control (within the
meaning of Section 280G of the Code), Executive shall appoint
another nationally recognized accounting firm to make the
determinations required hereunder (which accounting firm shall then
be referred to as the Accounting Firm hereunder). All fees and
expenses of the Accounting Firm shall be borne solely by the
Corporation. Any Gross-Up Payment, as determined pursuant to this
Section 9, shall be paid by the Corporation to Executive within
five (5) days after the receipt of the Accounting Firm's
determination. If the Accounting Firm determines that no Excise
Tax is payable by Executive, it shall so indicate to Executive in
writing. Any determination by the Accounting Firm shall be binding
upon the Corporation and Executive. As a result of the uncertainty
in the application of Section 4999 of the Code at the time of the
initial determination by the Accounting Firm hereunder, it is
possible that Gross-Up Payments which will not have been made by
the Corporation should have been made ("Underpayment"), consistent
with the calculations required to be made hereunder. In the event
that the Corporation exhausts its remedies pursuant to Section 9(c)
and Executive thereafter is required to make a payment of any
Excise Tax, the Accounting Firm shall determine the amount of the
Underpayment that has occurred and any such Underpayment shall be
promptly paid by the Corporation to or for the benefit of
Executive.
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(c) Executive shall notify the Corporation in writing of
any claim by the Internal Revenue Service that, if successful,
would require the payment by the Corporation of the Gross-Up
Payment. Such notification shall be given as soon as practicable
but no later than ten (10) business days after Executive is
informed in writing of such claim and shall apprise the Corporation
of the nature of such claim and the date on which such claim is
requested to be paid. Executive shall not pay such claim prior to
the expiration of the thirty (30) day period following the date on
which it gives such notice to the Corporation (or such shorter
period ending on the date that any payment of taxes with respect to
such claim is due). If the Corporation notifies Executive in
writing prior to the expiration of such period that it desires to
contest such claim, Executive shall:
(i) give the Corporation any information reasonably
requested by the Corporation relating to such claim;
(ii) take such action in connection with contesting such
claim as the Corporation shall reasonably request in writing from
time to time, including, without limitation, accepting legal
representation with respect to such claim by an attorney reasonably
selected by the Corporation;
(iii) cooperate with the Corporation in good faith in
order to effectively contest such claim; and
(iv) permit the Corporation to participate in any
proceedings relating to such claim;
provided, however, that the Corporation shall bear and pay directly
all costs and expenses (including additional interest and
penalties) incurred in connection with such contest and shall
indemnify and hold Executive harmless, on an after-tax basis, for
any Excise Tax (including interest and penalties with respect
thereto) imposed as a result of such representation and payment of
costs and expenses. Without limitation on the foregoing provisions
of this Section 9(c), the Corporation shall control all proceedings
taken in connection with such contest and, at its sole option, may
pursue or forego any and all administrative appeals, proceedings,
hearings and conferences with the taxing authority in respect of
such claim and may, at its sole option, either direct Executive to
pay the tax claimed and sue for a refund or contest the claim in
any permissible manner, and Executive agrees to prosecute such
contest to a determination before any administrative tribunal, in
a court of initial jurisdiction and in one or more appellate
courts, as the Corporation shall determine; provided, however, that
if the Corporation directs Executive to pay such claim and sue for
a refund, the Corporation shall advance the amount of such payment
to Executive, on an interest-free basis, and shall indemnify and
hold Executive harmless, on an after-tax basis, from any Excise Tax
(including interest or penalties with respect thereto) imposed with
respect to such advance or with respect to any imputed income with
respect to such advance; and provided, further, that if Executive
is required to extend the statute of limitations to enable the
Corporation to contest such claim, Executive may limit this
extension solely to such contested amount.
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(d) If, after the receipt by Executive of an amount
advanced by the Corporation pursuant to Section 9(c), Executive
becomes entitled to receive any refund with respect to such claim,
Executive shall (subject to the Corporation's complying with the
requirements of Section 9(c)) promptly pay to the Corporation the
amount of such refund (together with any interest paid or credited
thereon after taxes applicable thereto). If, after the receipt by
Executive of an amount advanced by the Corporation pursuant to
Section 9(c), a determination is made that Executive shall not be
entitled to any refund with respect to such claim and the
Corporation does not notify Executive in writing of its intent to
contest such denial of refund prior to the expiration of thirty
(30) days after such determination, then such advance shall be
forgiven and shall not be required to be repaid and the amount of
such advance shall offset, to the extent thereof, the amount of
Gross-Up Payment required to be paid.
10. Confidential Information. The Executive shall hold
in a fiduciary capacity for the benefit of the Corporation all
secret or confidential information, knowledge or data relating to
the Corporation or any of its affiliated companies, and their
respective businesses, which shall have been obtained by the
Executive during the Executive's employment by the Corporation or
any of its affiliated companies and which shall not be public
knowledge (other than by acts by the Executive or his
representatives in violation of this Agreement). After termination
of the Executive's employment with the Corporation, the Executive
shall not, without the prior written consent of the Corporation,
communicate or divulge any such information, knowledge or data to
anyone other than the Corporation and those designated by it. In
no event shall an asserted violation of the provisions of this
Section 10 constitute a basis for deferring or withholding any
amounts otherwise payable to the Executive under this Agreement.
11. Successors. (a) This Agreement is personal to the
Executive and without the prior written consent of the Corporation
shall not be assignable by the Executive otherwise than by will or
the laws of descent and distribution. This Agreement shall inure
to the benefit of and be enforceable by the Executive's legal
representatives.
(b) This Agreement shall inure to the benefit of and be
binding upon the Corporation and its successors.
(c) The Corporation will require any successor (whether
direct or indirect, by purchase, merger, consolidation or
otherwise) to all or substantially all of the business and/or
assets of the Corporation to expressly assume and agree to perform
this Agreement in the same manner and to the same extent that the
Corporation would be required to perform it if no such succession
had taken place. As used in this Agreement, "Corporation" shall
mean the Corporation as hereinbefore defined and any successor to
its business and/or assets as aforesaid which assumes and agrees to
perform this Agreement by operation of law, or otherwise.
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12. Miscellaneous. (a) This Agreement shall be
governed by and construed in accordance with the laws of the State
of New Jersey, without reference to principles of conflict of laws.
The captions of this Agreement are not part of the provisions
hereof and shall have no force or effect. This Agreement may not
be amended or modified otherwise than by a written agreement
executed by the parties hereto or their respective successors and
legal representatives.
(b) All notices and other communications hereunder shall
be in writing and shall be given by hand delivery to the other
party or by registered or certified mail, return receipt requested,
postage prepaid, addressed as follows:
If to the Executive:
Charles P. Slacik
2 Redman Farm Road
Mendham, New Jersey 07945
If to the Corporation:
C. R. BARD, INC.
730 Central Avenue
Murray Hill, New Jersey 07974
Attention: General Counsel
or to such other address as either party shall have furnished to
the other in writing in accordance herewith. Notice and
communications shall be effective when actually received by the
addressee.
(c) The invalidity or unenforceability of any provision
of this Agreement shall not affect the validity or enforceability
of any other provision of this Agreement.
(d) The Corporation may withhold from any amounts
payable under this Agreement such Federal, state or local taxes as
shall be required to be withheld pursuant to any applicable law or
regulation.
(e) The Executive's failure to insist upon strict
compliance with any provision hereof shall not be deemed to be a
waiver of such provision or any other provision thereof.
(f) This Agreement contains the entire understanding of
the Corporation and the Executive with respect to the subject
matter hereof.
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(g) The Executive and the Corporation acknowledge that
the employment of the Executive by the Corporation is "at will",
and, prior to the Effective Date, may be terminated by either the
Executive or the Corporation at any time. Upon a termination of
the Executive's employment or upon the Executive's ceasing to be an
officer of the Corporation, in each case, prior to the Effective
Date, there shall be no further rights under this Agreement.
IN WITNESS WHEREOF, the Executive has hereunto set his
hand and, pursuant to the authorization from its Board of
Directors, the Corporation has caused these presents to be executed
in its name on its behalf, all as of the day and year first above
written.
Charles P. Slacik /s/
Charles P. Slacik
C. R. BARD, INC.
By: William H. Longfield /s/
William H. Longfield
Chairman and
Chief Executive Officer
Attest:
Assistant Secretary
IV-47
EXHIBIT 10z
C. R. BARD, INC. MANAGEMENT STOCK PURCHASE PLAN
Article 1. Establishment and Objectives
1.1 Establishment of the Plan. C. R. Bard, Inc., a New
Jersey corporation, hereby establishes, effective January 1, 1998,
the C. R. Bard, Inc. Management Stock Purchase Plan (the "Plan"),
as set forth in this document. The Plan provides a mechanism for
deferral of the receipt of certain bonuses through mandatory and
voluntary purchases of restricted stock.
1.2 Objectives of the Plan. The objectives of the Plan are
to link the interests of Participants to those of the Company's
stockholders; to allow Participants to share in the success of the
Company; and to assist in fulfilling the Company stock ownership
requirements of Participants.
Article 2. Definitions
Whenever used in the Plan, the following terms shall have the
meanings set forth below, and when the meaning is intended, the
initial letter of the word shall be capitalized:
"Applicable Fair Market Value" means the lower of (a) the Fair
Market Value on the first business day in July of the calendar year
preceding the date the bonus otherwise would have been payable; or
(b) the Fair Market Value on the date the bonus otherwise would
have been payable.
"Board" means the Board of Directors of the Company.
"Bonus Plan" means the Executive Bonus Plan, the Executive
Incentive Plan, or any other bonus plan or arrangement of the
Company designated by the Committee.
"Change of Control" of the Company means a change of control
of the nature that would be required to be reported in response to
item 1(a) of the Current Report on Form 8-K as in effect on the
Effective Date pursuant to Section 13 or 15(d) of the Exchange Act,
provided that, without limitation, a "Change of Control" shall be
deemed to have occurred if (i) any person shall become the
beneficial owner, as those terms are defined herein, of capital
stock of the Company, the voting power of which constitutes 20% or
more of the general voting power of all of the Company's
outstanding capital stock or (ii) individuals who, as of the
Effective Date, constitute the Board (the "Incumbent Board") cease
for any reasons to constitute at least a majority of the Board,
provided that any person becoming a Director subsequent to the
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Effective Date whose election, or nomination for election by the
Company's shareholders, was approved by a vote of at least three
quarters of the Directors comprising the Incumbent Board (other
than an election or nomination of an individual whose initial
assumption of office is in connection with an actual or threatened
election contest relating to the election of the Directors of the
Company, which is or would be subject to Rule 14a-11 of the
Regulation 14A promulgated under the Exchange Act) shall be, for
purposes of the Plan, considered as though such person were a
member of the Incumbent Board. No sale to underwriters or private
placement of its capital stock by the Company nor any acquisition
by the Company, through merger, purchase of assets or otherwise,
effected in whole or in part by issuance or reissuance of shares of
its capital stock, shall constitute a Change of Control. For
purposes of the definition of "Change of Control", the following
definitions shall be applicable:
(i) The term "person" shall mean any individual, group,
company or other entity.
(ii) Any person shall be deemed to be the beneficial
owner of any shares of capital stock of the
Company:
(A) which that person owns directly, whether or
not of record, or
(B) which that person has the right to acquire
pursuant to any agreement or understanding or
upon exercise of conversion rights, warrants,
or options, or otherwise, or
(C) which are beneficially owned, directly or
indirectly (including shares deemed owned
through application of clause (B) above), by
an "affiliate" or "associate" (as defined
pursuant to Rule 12b-2 under the Exchange Act)
of that person, or
(D) which are beneficially owned, directly or
indirectly (including shares deemed owned
through application of clause (B) above), by
any other person with which that person or
such person's "affiliate" or "associate"
(defined as aforesaid) has any agreement,
arrangement or understanding for the purpose
of acquiring, holding, voting or disposing of
capital stock of the Company.
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(iii) The outstanding shares of capital stock of the
Company shall include shares deemed owned
through application of clauses (ii)(B), (C)
and (D) above, but shall not include any other
shares which may be issuable pursuant to any
agreement or upon exercise of conversion
rights, warrants or options, or otherwise, but
which are not actually outstanding.
(iv) Shares of capital stock, if any, held by The
Chase Manhattan Bank N.A. under the Indenture
and the Escrow Agreement dated as of November
1, 1971 between International Paper Company
and said bank shall not be deemed owned by
International Paper Company or by said bank
for purposes of this Plan, so long as they are
held by said bank under said Escrow Agreement,
but said shares shall be deemed outstanding
for the purpose of determining the aggregate
number of outstanding shares of capital stock
of the Company.
"Code" means the Internal Revenue Code of 1986, as amended
from time to time.
"Committee" means the Compensation Committee of the Board or
such other committee as may be appointed by the Board to administer
the Plan.
"Company" means C. R. Bard, Inc., a New Jersey corporation,
and any successor thereto.
"Deferral Account" means an account on the books of the
Company to which Elective Shares and Premium Shares are credited
during the Deferral Period.
"Deferral Election" means the election form filed by a
Participant with the Committee under Section 4.2.
"Deferral Period" means the period during which Elective
Shares and Premium Shares are credited to a Participant's Deferral
Account, commencing on the date on which a Participant's deferred
bonus compensation would otherwise be paid and ending on the date
determined in Section 4.4.
"Deferred Delivery Election" means an election by a
Participant to defer delivery of Elective Shares and Premium Shares
credited to his Deferral Account to the date he terminates
employment with the Company and all Subsidiaries. The Committee
shall establish rules and procedures as it deems appropriate for
Deferred Delivery Elections.
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"Director" means any individual who is a member of the Board.
"Disability" shall mean (a) long-term disability as defined
under the Company's long-term disability plan covering that
individual, or (b) if the individual is not covered by such a long-term
disability plan, disability as defined for purposes of
eligibility for a disability award under the Social Security Act.
"Effective Date" means January 1, 1998.
"Elective Shares" means Shares credited to a Participant's
Deferral Account which are not initially subject to forfeiture as
provided in Section 6.2 or Section 6.3.
"Eligible Employee" means each participant in the Executive
Bonus Plan, the Executive Incentive Plan, or any other bonus plan
or arrangement of the Company designated by the Committee.
"Exchange Act" means the Securities Exchange Act of 1934, as
amended from time to time, or any successor act thereto.
"Executive Bonus Plan" means the C. R. Bard, Inc. 1994
Executive Bonus Plan, as amended.
"Executive Incentive Plan" means the C. R. Bard, Inc.
Executive Incentive Plan, as amended.
"Fair Market Value" means, on a specified day, (a) the mean
between the high and low sales price for a Share on that day as
reported on the New York Stock Exchange -- Composite Transactions
Tape or, if no sale of Shares shall have occurred on the New York
Stock Exchange on that day, on the next preceding day on which
there was a sale, or (b) in the case of a simultaneous exercise and
sale, the actual price the Participant receives in the open market
on the date of the exercise. If the Shares are not traded on the
New York Stock Exchange, the Fair Market Value shall be the amount
that is reasonably determined by the Committee.
"Participant" means an Eligible Employee who has deferred
bonus compensation under Section 4.1(a) or (b).
"Premium Shares" means Shares credited to a Participant's
Deferral Account which are initially subject to forfeiture as
provided in Section 6.2 or Section 6.3.
"Retirement" means normal or early retirement under the terms
of a pension plan of the Company or voluntary termination of
employment, provided that in each case the Company must have given
its prior consent to treat the person's termination of employment
as a Retirement.
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"Shares" means the shares of common stock, $.25 par value, of
the Company.
"Subsidiary" means any corporation, other than the Company, in
an unbroken chain of corporations beginning with the Company if
each of the corporations other than the last corporation in the
unbroken chain owns stock possessing 50% or more of the total
combined voting power of all classes of stock in one of the other
corporations in such chain.
Article 3. Administration
3.1 The Committee. The Plan shall be administered by the
Committee. The Committee (unless otherwise determined by the
Board) shall satisfy the "nonemployee director" requirements of
Rule 16b-3 under the Exchange Act and the regulations thereunder
and the "outside director" provisions of Code Section 162(m), or
any successor regulations or provisions. The members of the
Committee shall be appointed from time to time by, and shall serve
at the discretion of, the Board. The Committee shall act by a
majority of its members at the time in office and eligible to vote
on any particular matter, and such action may be taken either by a
vote at a meeting or in writing without a meeting.
3.2 Authority of the Committee. Except as limited by law and
subject to the provisions herein, the Committee shall have full
power to construe and interpret the Plan and any agreement or
instrument entered into under the Plan, and establish, amend or
waive rules and regulations for the Plan's administration.
Further, the Committee shall make all other determinations which
may be necessary or advisable for the administration of the Plan.
The Committee may delegate its authority to the extent permitted by
law and consistent with Section 3.1.
3.3 Decisions Binding. All determinations and decisions made
by the Committee pursuant to the provisions of the Plan shall be
final, conclusive and binding on all persons, including the
Company, its stockholders, the Board, all Subsidiaries, employees,
Participants and their estates and beneficiaries.
Article 4. Automatic and Elective Deferrals
4.1 Deferral of Bonus Compensation
(a) 25% of each bonus payable to an Eligible Employee
under any Bonus Plan for each year commencing on or after the
Effective Date shall be automatically deferred under the Plan
unless the Eligible Employee has satisfied the Share ownership
requirements established for him by the Board and notified the
Committee in accordance with Section 4.2.
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(b) Subject to the terms and provisions of the Plan, an
Eligible Employee may elect to defer the payment of all or any
portion of the remaining 75% of any bonus payable to him under
any Bonus Plan for any year commencing on or after the
Effective Date.
4.2 Deferral Election. An Eligible Employee who elects a
voluntary deferral of bonus compensation pursuant to Section 4.1(b)
for a given year shall file with the Committee a Deferral Election
that shall specify the amount of deferral for that year. An
Eligible Employee who has satisfied his Share ownership
requirements and who declines participation in the Plan for a given
year shall notify the Committee in his Deferral Election for that
year. The Committee shall establish rules and procedures as it
deems appropriate for Deferral Elections.
4.3 Deferral Accounts. The Company shall establish a
Deferral Account for each Participant. A Participant's Deferral
Account shall be credited as of the date the bonus otherwise would
have been payable with
(a) a number of Elective Shares (rounded up to the next
whole Share) equal to the amount deferred under Section 4.1
divided by the Applicable Fair Market Value on that date; plus
(b) a number of Premium Shares determined as follows:
Step 1: Determine the Applicable Fair Market
Value as of the date the bonus otherwise
would have been paid.
Step 2: Multiply such Applicable Fair Market
Value by 75%.
Step 3: Divide the total dollar amount deferred
under Section 4.1 by the result in Step
2; round up to the next whole number.
Step 4: Subtract the number of Elective Shares
determined in Section 4.3(a) from the
result in Step 3.
Elective Shares and Premium Shares credited to a Participant's
Deferral Account shall be distributed to the Participant (or, if
applicable, the Participant's beneficiary) at the end of the
applicable Deferral Period in accordance with Article 6.
4.4 Deferral Period. Subject to Article 6, the Deferral
Period for Elective Shares and Premium Shares shall end on the
later of (a) the third anniversary of the date such Shares are
credited to the Participant's Deferral Account, or (b) if the
Participant has made a Deferred Delivery Election and has not
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<PAGE>
terminated employment with the Company and all Subsidiaries on such
anniversary, the date he terminates employment with the Company and
all Subsidiaries.
Notwithstanding anything to the contrary in the Plan, upon the
occurrence of a Change in Control, unless otherwise specifically
prohibited under applicable laws, or by the rules and regulations
of any governing governmental agencies or national securities
exchanges, the Deferral Period for all Shares credited to a
Participant's Account shall end.
During the Deferral Period, Elective Shares and Premium Shares
credited to a Participant's Deferral Account may not be sold,
assigned, transferred, pledged or otherwise encumbered, other than
by will or the laws of descent and distribution.
Article 5. Dividends and Voting Rights
Each Participant whose Deferral Account is credited with
Elective Shares and Premium Shares shall have the right to receive
all dividends paid on such Shares and the right to vote such
Shares.
Article 6. Timing and Form of Payout
6.1 In General. Except as otherwise provided in this
Article 6, a Participant shall be entitled to receive the Elective
Shares and Premium Shares credited to his Deferral Account at the
end of the applicable Deferral Period. Delivery of such Shares
shall be made after the end of the applicable Deferral Period as
soon as administratively feasible following the Participant's
request. Notwithstanding anything herein to the contrary, the
Committee may defer delivery of any Elective Shares and Premium
Shares credited to a Participant's Deferral Account if the delivery
of such Shares would constitute compensation to the Participant
that is not deductible by the Company or a Subsidiary due to the
application of Code Section 162(m); provided, that any such Shares
deferred under this sentence shall in any event be delivered to the
Participant on or before the January 15 of the first year in which
the Participant is no longer a "covered employee" of the Company
(within the meaning of Code Section 162(m)) following the end of
the Deferral Period.
All Shares issued under the Plan shall be Treasury shares.
6.2 Termination of Employment Due to Death, Retirement or
Disability. If the Participant terminates employment with the
Company and all Subsidiaries before the end of the Deferral Period
by reason of death, Retirement or Disability, the Participant (or
in the case of the Participant's death, the Participant's
beneficiary) shall be entitled to receive a distribution of the
following:
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(a) all Elective Shares credited to his Deferral
Account; plus
(b) any Premium Shares credited to his Deferral Account
for three years or more; plus
(c) a prorated number (rounded up to the next whole
share) of any Premium Shares credited to his Deferral Account
not included in clause (b) of this section determined as
follows:
(i) the product of the number of such Premium
Shares which have been credited to the Participant's
Deferral Account for 12 months or more but less than two
years multiplied by 1/3; plus
(ii) the product of the number of such Premium
Shares which have been credited to the Participant's
Deferral Account for two years or more but less than
three years multiplied by 2/3.
6.3 Termination of Employment for Any Other Reason. If the
Participant terminates employment with the Company and all
Subsidiaries before the end of the Deferral Period for any reason
other than those described in Section 6.2, the Participant shall be
entitled to receive a distribution of the following:
(a) all Elective Shares credited to his Deferral
Account; plus
(b) any Premium Shares credited to his Deferral Account
for three years or more.
6.4 Forfeiture of Unvested Shares. Any Premium Shares
credited to a Participant's Deferral Account which are not
distributed to the Participant in accordance with this article
shall be forfeited.
Article 7. Beneficiary Designation
Each Participant may, from time to time, name any beneficiary
or beneficiaries (who may be named contingently or successively) to
whom any payment under the Plan is to be paid in case of the death
of the Participant. Each such designation shall revoke all prior
designations by the same Participant, shall be in a form prescribed
by the Committee and shall be delivered to the Committee during the
Participant's lifetime. If the Participant's designated
beneficiary predeceases the Participant or no beneficiary has been
designated, the Participant's beneficiary shall be deemed to be the
Participant's spouse or if none, the Participant's estate.
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Article 8. Amendment, Modification and Termination
The Board may, at any time and from time to time, alter,
amend, modify or terminate the Plan in whole or in part; provided
that no termination, amendment or modification of the Plan shall
adversely affect in any material way any deferral previously made
under the Plan.
Article 9. Withholding
9.1 Tax Withholding. The Company shall have the power and
the right to deduct or withhold, or require a Participant to remit
to the Company, an amount (either in cash or Shares) sufficient to
satisfy federal, state, and local taxes, domestic or foreign,
required by law or regulation to be withheld with respect to any
taxable event arising as a result of this Plan.
9.2 Share Withholding. With respect to withholding required
upon the delivery of Shares previously credited to a Participant's
Deferral Account, or upon any other taxable event arising
hereunder, the Company may satisfy the minimum withholding
requirement for supplemental wages, in whole or in part, by
withholding Shares having a Fair Market Value (determined on the
date the Participant recognizes taxable income) equal to the
withholding tax required to be collected on the transaction. The
Participant may elect, subject to the approval of the Committee, to
deliver the necessary funds to satisfy the withholding obligation
to the Company, in which case there will be no reduction in the
Shares otherwise distributable to the Participant.
Article 10. Indemnification
Each person who is or has been a member of the Committee, or
of the Board, shall be indemnified and held harmless by the Company
against and from any loss, cost, liability, or expense that may be
imposed upon or reasonably incurred by such person in connection
with or resulting from any claim, action, suit, or proceeding to
which such person may be a party or in which such person may be
involved by reason of any action taken or failure to act under the
Plan and against and from any and all amounts paid by such person
in a settlement approved by the Company, or paid by such person in
satisfaction of any judgment in any such action, suit, or
proceeding against such person, provided such person shall give the
Company an opportunity, at its own expense, to handle and defend
the same before such person undertakes to handle and defend it.
The foregoing right of indemnification shall not be exclusive of
any other rights of indemnification to which such persons may be
entitled under the Company's Articles of Incorporation or By-Laws,
as a matter of law, or otherwise, or any power that the Company may
have to indemnify them or hold them harmless.
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Article 11. Successors
All obligations of the Company under the Plan or any Deferral
Election or Deferred Delivery Election shall be binding on any
successor to the Company, whether the existence of such successor
is the result of a direct or indirect purchase of all or
substantially all of the business and/or assets of the Company, or
a merger, consolidation, or otherwise.
Article 12. Miscellaneous
12.1 Employment. Nothing in the Plan shall interfere with or
limit in any way the right of the Company or any Subsidiary to
terminate any Participant's employment at any time, or confer upon
any Participant any right to continue in the employ of the Company
or any Subsidiary or to receive a bonus under a Bonus Plan.
12.2 Gender and Number. Except where otherwise indicated by
the context, any masculine term used herein also shall include the
feminine; the plural shall include the singular and the singular
shall include the plural.
12.3 Severability. In the event any provision of the Plan
shall be held illegal or invalid for any reason, the illegality or
invalidity shall not affect the remaining parts of the Plan, and
the Plan shall be construed and enforced as if the illegal or
invalid provision had not been included.
12.4 Requirements of Law. The issuance of Shares under the
Plan shall be subject to all applicable laws, rules, and
regulations, and to such approvals by any governmental agencies or
national securities exchanges as may be required.
12.5 Securities Law Compliance. With respect to any
individual who is, on the relevant date, an officer, director or
ten percent beneficial owner of any class of the Company's equity
securities that is registered pursuant to Section 12 of the
Exchange Act, all as defined under Section 16 of the Exchange Act,
transactions under the Plan are intended to comply with all
applicable conditions of Rule 16b-3 under the Exchange Act, or any
successor rule. To the extent any provision of the Plan or action
by the Committee fails to so comply, it shall be deemed null and
void, to the extent permitted by law and deemed advisable by the
Committee.
12.6 Restrictions on Share Transferability. The Committee may
impose such restrictions on any Shares acquired under this Plan as
it deems necessary or advisable, including, without limitation,
restrictions under applicable federal securities laws, under the
requirements of any stock exchange or market upon which such Shares
are then listed and/or traded, and under any blue sky or state
securities laws applicable to such Shares.
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12.7 Awards to Foreign Nationals and Employees Outside the
United States. To the extent the Committee deems it necessary,
appropriate or desirable to comply with foreign law or practice and
to further the purposes of this Plan, the Committee may, without
amending the Plan, establish rules applicable to Eligible Employees
who are foreign nationals, are employed outside the United States,
or both, including rules that differ from those set forth in this
Plan.
12.8 Unfunded Status of the Plan. The Plan is intended to
constitute an "unfunded" plan for deferred compensation. With
respect to any Elective Shares or Premium Shares credited to a
Participant's Deferral Account and not yet paid or delivered to the
Participant, nothing contained herein shall give any rights that
are greater than those of a general creditor of the Company. The
Committee may authorize the creation of trusts or other
arrangements to meet the obligations created under the Plan to
deliver Shares hereunder consistent with the foregoing.
12.9 Governing Law. To the extent not preempted by federal
law, the Plan shall be construed in accordance with and governed by
the laws of the State of New Jersey.
Example I: On July 1, 1998 the Fair Market Value is
$36.00. The date the bonus for the 1998
calendar year for a Bonus Plan otherwise
would have been paid is February 10,
1999. The Fair Market Value on
February 10, 1999 is $42.00. The
Applicable Fair Market Value is $36.00.
Participant P has not satisfied the Share
ownership requirements established for him by
the Board. P participates in the Executive
Incentive Plan. 25% of any bonus under the
Executive Incentive Plan for 1998 will
automatically be deferred under Section
4.1(a). He files a Deferral Election to defer
all of the remaining 75% of his bonus under
Section 4.1(b). On February 10, 1999, a
$10,000 bonus would otherwise be payable to P
under the Bonus Plan.
The number of Elective Shares credited to P's
Deferral Account is 278 ($10,000 divided by $36.00).
The number of Premium Shares credited to P's
Deferral Account is 93, as determined under
the steps in Section 4.3(b) as follows:
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Step 1: $36.00
Step 2: $36.00 x 75% = $27.00
Step 3: $10,000 divided by $27.00 = 371
Step 4: 371 - 278 = 93.
Example II: Participant P in Example I under Section
4.3 terminates employment due to
Retirement on December 31, 2001. P's
Deferral Account consists only of the
Elective Shares and Premium Shares
credited under Example I. P's
distribution under the Plan consists of
278 Elective Shares and 62 Premium
Shares, determined as follows:
(a) all Elective Shares credited to P's
Deferral Account = 278.
(b) Premium Shares credited to P's Deferral
Account for two years or more but less
than three years = 93 x 2/3 = 62.
IV-59
EXHIBIT 10aa
1998 EMPLOYEE STOCK PURCHASE PLAN
OF
C. R. BARD, INC.
The 1998 Employee Stock Purchase Plan of C. R. Bard, Inc.
provides Eligible Employees of C. R. Bard, Inc., a New Jersey
corporation (the "Company"), and its Subsidiaries an opportunity to
purchase shares of Common Stock of the Company on the terms and
conditions set forth below.
1. Definitions
(a) Business Day--any day the New York Stock Exchange is
open for business.
(b) Code--the Internal Revenue Code of 1986, as amended.
(c) Common Stock--the Company's Common Stock, par value
$.25 per share.
(d) Compensation--with respect to a Participant, the
portion of the Participant's "basic pay," as defined in the
Retirement Plan, paid to the Participant during the applicable
payroll period.
(e) Eligible Employee--an employee who is eligible to
participate in the Plan pursuant to Section 3.
(f) Fair Market Value--the mean between the high and low
sales price of the Common Stock on the subject day as reported
on the New York Stock Exchange--Composite Transactions Tape
or, if no sale of the Common Stock shall have occurred on the
New York Stock Exchange on that day, on the next preceding day
on which there is a sale. If the Common Stock is not traded on
the New York Stock Exchange, the Fair Market Value shall be
the amount that is reasonably determined by the Plan
Administrator.
(g) Grant Date--each January 1 and July 1.
(h) Option--an option to purchase shares of Common Stock
under the Plan, pursuant to the terms and conditions hereof.
(i) Participant--an Eligible Employee who is
participating in the Plan pursuant to Section 4.
(j) Purchase Date--except as provided in Section 15,
each June 30 and December 31 (or the following Business Day if
such date is not a Business Day).
IV-60
<PAGE>
(k) Purchase Price--unless the Plan Administrator
determines before a Grant Date that a higher or lower price
that complies with Code Section 423 shall apply, the Purchase
Price of the shares of Common Stock which are to be sold under
the Plan on the Purchase Date next following such Grant Date
shall be the lesser of 85% of the Fair Market Value of Common
Stock on such Grant Date and 85% of the Fair Market Value of
a share of Common Stock on such Purchase Date.
(l) Plan--1998 Employee Stock Purchase Plan of C. R.
Bard, Inc., as amended from time to time.
(m) Plan Account--an account maintained by the Company
or its designated recordkeeper for each Participant to which
the Participant's payroll deductions are credited, against
which funds used to purchase shares of Common Stock are
charged and to which shares of Common Stock purchased are
credited.
(n) Plan Administrator--the Retirement Committee under
the Retirement Plan, or such other person or persons,
including a committee, as may be appointed by the Board of
Directors of the Company to administer the Plan. The Board of
Directors of the Company may at any time remove or replace the
Plan Administrator.
(o) Retirement Plan--the Employees' Retirement Plan of
C. R. Bard, Inc., as amended.
(p) Subsidiary--any corporation, other than the Company,
in an unbroken chain of corporations beginning with the
Company if, at the time of the granting of the Option, each of
the corporations other than the last corporation in the
unbroken chain owns stock possessing 50% or more of the total
combined voting power of all classes of stock in one of the
other corporations in such chain.
2. Stock Subject to the Plan. Subject to Section 12, the
aggregate number of shares of Common Stock which may be sold under
the Plan is 500,000. The Company shall make open-market purchases
to provide shares of Common Stock for purchase under the Plan. If
sufficient shares are not available through open market purchases,
the Company shall sell Treasury shares or issue authorized but
unissued shares of Common Stock.
3. Eligible Employees. An "Eligible Employee" means each
employee of the Company or any domestic Subsidiary, and each
employee of a foreign Subsidiary to which the Plan is extended by
the Plan Administrator, except:
(a) an employee whose customary employment is fewer than
20 hours or less per week; or
IV-61
<PAGE>
(b) an employee whose customary employment is for fewer
than five months in any calendar year.
4. Participation in the Plan.
(a) An Eligible Employee may participate in the Plan by
completing and filing with the Company or its designated
recordkeeper an election form which authorizes payroll deductions
from the employee's Compensation. Such deductions shall commence on
the first Grant Date thereafter as elected by the Employee, and
shall continue until the Employee terminates participation in the
Plan or the Plan is terminated. An Eligible Employee may
participate in the Plan only through payroll deductions. Other
contributions will not be accepted.
(b) Notwithstanding the foregoing, an Eligible Employee shall
not be granted an Option on any Grant Date if such employee,
immediately after the Option is granted, owns stock possessing 5%
or more of the total combined voting power or value of all classes
of stock of the Company or any Subsidiary. For purposes of this
paragraph, the rules of Code Section 424(d) shall apply in
determining the stock ownership of an individual, and stock which
an employee may purchase under outstanding options shall be treated
as stock owned by the employee.
5. Payroll Deductions. Payroll deductions shall be made from
the Compensation paid to each Participant for each payroll period
in such whole percentage from 1% to 10% as the Participant shall
authorize in such Participant's election form. No Eligible Employee
may be granted an Option which permits such Eligible Employee to
purchase Common Stock under the Plan, and any other stock purchase
plan of the Company or any Subsidiary that is qualified under
Section 423 of the Code, to accrue at a rate which exceeds $25,000
of Fair Market Value of such stock (determined at the time such
Option is granted) for each calendar year in which the Option is
outstanding at any time.
6. Changes in Payroll Deductions. Subject to the minimum and
maximum deductions set forth above, a Participant may change the
amount of such Participant's payroll deductions as of the next
Grant Date by filing a new election form with the Company or its
designated recordkeeper no later than ten Business Days in advance
of the next Grant Date. The change shall be effective until revoked
in writing.
7. Termination of Participation in Plan. A Participant may,
at any time and for any reason, voluntarily terminate participation
in the Plan by written notification of withdrawal delivered to the
appropriate payroll office. Such Participant's payroll deductions
under the Plan shall cease as soon as practicable following
delivery of such notice. A Participant's participation in the Plan
shall be terminated upon termination of
IV-62
<PAGE>
such Participant's employment with the Company and its Subsidiaries
for any reason. If the former Participant remains employed by the
Company or any of its Subsidiaries after termination of
participation in the Plan, any payroll deductions credited to such
Participant's Plan Account shall be used to purchase shares of
Common Stock on the next Purchase Date. If the former Participant
is no longer employed by the Company or any of its Subsidiaries
after termination of participation in the Plan, any payroll
deductions credited to such Participant's Plan Account shall be
paid to such Participant in cash as soon as practicable following
termination of employment. An Eligible Employee whose participation
in the Plan is terminated may rejoin the Plan by filing a new
election form in accordance with Section 6.
8. Purchase of Shares.
(a) On each Grant Date, each Participant shall be deemed to
have been granted an Option.
(b) On each Purchase Date, each Participant shall be deemed,
without any further action, to have purchased that number of whole
shares of Common Stock determined by dividing the Purchase Price
into the balance in the Participant's Plan Account on the Purchase
Date. Any amount remaining in the Participant's Plan Account shall
be carried forward to the next Purchase Date unless the Plan
Account is closed.
(c) As soon as practicable after each Purchase Date, a
statement shall be delivered to each Participant which shall
include (i) the number of shares of Common Stock purchased on the
Purchase Date on behalf of such Participant under the Plan,
(ii) the purchase price per share, (iii) the total amount of cash
transferred to the Participant's Plan Account pursuant to Section 5
and (iv) the amount of cash in the Participant's Plan Account that
will be carried forward.
(d) A stock certificate for whole shares of Common Stock in
a Participant's Plan Account shall be issued upon request of the
Participant at any time after such shares have been held in such
Participant's Plan Account for a period of six months.
Notwithstanding the preceding sentence, if the Participant's
employment with the Company and its Subsidiaries terminates, a
stock certificate for whole shares of Common Stock in such
Participant's Plan Account shall be issued as soon as
administratively feasible thereafter. Stock certificates under the
Plan shall be issued, at the election of the Participant, in such
Participant's name or in such Participant's name and the name of
another person as joint tenants with right of survivorship or as
tenants in common. A cash payment shall be made for any fraction of
a share in such account, if necessary to close a Participant's Plan
Account.
IV-63
<PAGE>
9. Rights as a Shareholder. As of the Purchase Date, a
Participant shall be treated as record owner of such Participant's
shares purchased pursuant to the Plan.
10. Rights Not Transferable. Rights under the Plan are not
transferrable by a Participant other than by will or the laws of
descent and distribution, and are exercisable during the
Participant's lifetime only by the Participant or by the
Participant's guardian or legal representative. No rights or
payroll deductions of a Participant shall be subject to execution,
attachment, levy, garnishment or similar process.
11. Sale of Purchased Stock. An Eligible Employee must
advise C. R. Bard, Inc. promptly if the Eligible Employee disposes
of any shares of Common Stock purchased by the Eligible Employee
under the Plan if such disposition shall have occurred within two
years after the Grant Date immediately preceding the Eligible
Employee's purchase of such shares.
12. Application of Funds. All funds of Participants received
or held by the Company under the Plan before purchase of the shares
of Common Stock shall be held by the Company without liability for
interest or other increment.
13. Adjustments in Case of Changes Affecting Shares. In the
event of a subdivision or consolidation of outstanding shares of
Common Stock, or the payment of a stock dividend, the number of
shares approved for the Plan shall be increased or decreased
proportionately, and such other adjustment shall be made as may be
deemed equitable by the Plan Administrator. In the event of any
other change affecting the Common Stock, such adjustment shall be
made as shall be deemed equitable by the Plan Administrator to give
proper effect to such event.
14. Administration of the Plan. The Plan shall be
administered by the Plan Administrator. The Plan Administrator
shall have authority to make rules and regulations for the
administration of the Plan and its interpretations, and decisions
with regard to the Plan and such rules and regulations shall be
final and conclusive. It is intended that the Plan shall at all
times meet the requirements of Code Section 423, if applicable, and
the Plan Administrator shall, to the extent possible, interpret the
provision of the Plan so as to carry out such intent.
15. Amendments to the Plan. The Plan Administrator may, at
any time, or from time to time, amend or modify the Plan; provided,
however, that no amendment shall be made increasing or decreasing
the number of shares authorized for the Plan (other than as
provided in Section 12 or 15), and that, except to conform the Plan
to the requirements of the Code, no amendment shall be made which
would cause the Plan to fail to meet the applicable requirements of
Code Section 423.
IV-64
<PAGE>
16. Termination of Plan. The Plan shall terminate upon the
earlier of (a) the termination of the Plan by the Board of
Directors of the Company as specified below or (b) the date no more
shares remain to be purchased under the Plan. The Board of
Directors of the Company may terminate the Plan as of any date, and
the date of termination shall be deemed a Purchase Date. If on such
Purchase Date Participants in the aggregate have Options to
purchase more shares of Common Stock than are available for
purchase under the Plan, each Participant shall be eligible to
purchase a reduced number of shares of Common Stock on a pro rata
basis, and any excess payroll deductions shall be returned to
Participants, all as provided by rules and regulations adopted by
the Plan Administrator.
17. Costs. All costs and expenses incurred in administering
the Plan shall be paid by the Company. Any costs or expenses of
selling shares of Common Stock acquired pursuant to the Plan shall
be borne by the holder thereof.
18. Governmental Regulations. The Company's obligation to
sell and deliver Common Stock pursuant to the Plan is subject to
the approval of any governmental authority required in connection
with the authorization, issuance or sale of such stock.
19. Applicable Law. The Plan shall be interpreted under the
laws of the United States of America and, to the extent not
inconsistent therewith, by the laws of the State of New Jersey. The
Plan is not to be subject to the Employee Retirement Income
Security Act of 1974, as amended, but is intended to comply with
Code Section 423, if applicable. Any provisions required to be set
forth in the Plan by such Code section are hereby included as fully
as if set forth in the Plan in full.
20. Effect on Employment. The provisions of the Plan shall
not affect the right of the Company or any Subsidiary or any
Participant to terminate the Participant's employment with the
Company or any Subsidiary.
21. Withholding. The Company reserves the right to withhold
from stock or cash distributed to a Participant any amounts which
it is required by law to withhold.
22. Sale of Company. In the event of a proposed sale of all
or substantially all of the assets of the Company or a merger of
the Company with or into another corporation, the Company shall
require that each outstanding Option be assumed or an equivalent
right to purchase stock of the successor or purchaser corporation
be substituted by the successor or purchaser corporation, unless
the Plan is terminated.
23. Effective Date. The Plan shall become effective July 1, 1998,
provided that the stockholders of the Company approve it within
12 months after the date the Plan was adopted by the Board of
Directors of the Company.
IV-65
4/15/98
<TABLE>
<CAPTION>
Exhibit 12.1 Computation of Ratio of Earnings to Fixed Charges
1998 1997 1996 1995 1994 1993
<S> <C> <C> <C> <C> <C> <C>
Earnings before taxes $464,400 $104,900 $102,700 $123,500 $104,100 $101,400
Add(Deduct)
Fixed Charges 31,400 38,200 33,500 31,500 23,200 18,700
Undistributed earnings
of less than 50% owned
companies carried at
equity (800) (500) (700) (800) (400) (200)
Interest capitalized 0 0 0 0 (200) 0
Earnings available for fixed
charges $495,000 $142,600 $135,500 $154,200 $126,700 $119,900
Fixed charges:
Interest, including
amounts capitalized 26,400 32,900 26,400 24,200 16,500 12,500
Proportion of rent
expense deemed to
represent interest
factor 5,000 5,300 7,100 7,300 6,700 6,200
Fixed Charges $ 31,400 $ 38,200 $ 33,500 $ 31,500 $ 23,200 $ 18,700
Ratio of earnings to fixed
charges 15.76 3.73 4.04 4.89 5.46 6.41
<FN>
</TABLE>
IV-66
C. R. BARD, INC. AND SUBSIDIARIES
Exhibit 21
Parents and Subsidiaries of Registrant
The following table lists, as of December 31, 1998, the company
and its significant subsidiaries and indicates the jurisdiction
of organization of each subsidiary and the percentage of voting
securities owned by the immediate parent of each subsidiary.
Where % of
Incorporated Voting Stock
C. R. Bard, Inc. New Jersey (Registrant)
Bard Access Systems, Inc. Utah 100
Bard Canada Inc. Canada 100
Vas-Cath, Inc. Canada 100
Bard Cardiopulmonary, Inc. Delaware 100
Bard Devices, Inc. Delaware 100
Davol Inc. Delaware 100
Bard Fiberoptic Technologies,
Inc. Michigan 100
Bard Holdings Limited England 100
Bard Limited England 100
Angiomed UK Limited England 100
Bard Sendirian Berhad Malaysia 85
Bard Sweden Sweden 100
Bard Medical Systems Norway 100
Bard Medical Systems Finland 100
Bard Implants, Inc. Delaware 100
Bard International, Inc. Delaware 100
Bard Australia Pty. Ltd. Australia 100
Bard Japan Limited Japan 100
Productos Bard de Mexico S.A.
de C.V. Mexico 100
Bard Shannon Limited Ireland 100
Angiomed GmbH Germany 100
Angiomed Netherlands Netherlands 100
Bard Benelux N.V. Belgium 100
Bard Dublin Ireland 100
Bard de Espana, S.A. Spain 100
Bard Portugal LDA Portugal 100
Bard S.P.A. Italy 100
Angiomed Italy S.P.A. Italy 100
C. R. Bard GmbH Germany 100
Angiomed KG Germany 100
IV-67
<PAGE>
C. R. BARD, INC. AND SUBSIDIARIES
Exhibit 21
Parents and Subsidiaries of Registrant (continued)
Where % of
Incorporated Voting Stock
Laboratories Bard S.A. France 100
Cardial S.A. France 100
BCP Puerto Rico, Inc. Delaware 100
BCR Delaware, Inc Delaware 100
Dymax Corporation Pennsylvania 100
Catalina Acquisition Corp. Delaware 100
Endomatrix Massachusetts 100
IMPRA, Inc. Arizona 100
Impra Foreign Sales Corporation Arizona 100
Laboratoires Bard, Inc. Delaware 100
Bard Nice S.N.C. France 100
MedChem Products, Inc. Massachusetts 100
Gesco International, Inc. Massachusetts 100
Roberts Laboratories, Inc. Arizona 100
The Consolidated Financial Statements include the accounts of the
Registrant and all its wholly-owned subsidiaries.
IV-68
Exhibit 23
CONSENT OF INDEPENDENT PUBLIC ACCOUNTANTS
To C. R. Bard, Inc.:
As independent public accountants, we hereby consent to the
incorporation by reference of our report dated January 26, 1999,
included in this Form 10-K, into C. R. Bard, Inc.'s previously
filed Registration Statements (i) on Form S-8 for the Employees'
Retirement Savings Plan of C. R. Bard, Inc., Registration
No. 333-30217, (ii) on Form S-3 Registration No. 333-05997, (iii)
the 1990 Employee Stock Option Plan, as amended, Registration No.
333-35544, (iv) the C. R. Bard, Inc. 1988 Directors Stock Award
Plan, as amended, Registration No.'s 333-64874 and 333-51793, (v) the
1993 Long-Term Incentive Plan of C. R. Bard, Inc., as amended,
Registration No.'s 33-64874, 333-07189 and 333-51793, (vi) the 1998
Employee Stock Purchase Plan of C. R. Bard, Inc., Registration No.
333-51793, (vii) the C. R. Bard, Inc. Management Stock Purchase Plan,
Registration No. 333-69857, and (viii) the MedChem Products, Inc. 1994
Stock Option Plan, MedChem Products, Inc. 1993 Stock Option Plan,
MedChem Products, Inc. 1993 Spin-off Stock Option Plan, MedChem
Products, Inc. 1993 Director Stock Option Plan, MedChem Products,
Inc. amended and restated Stock Option Plan, all formerly
maintained by MedChem Products, Inc., Registration No. 33-63147.
Arthur Andersen LLP /s/
Roseland, New Jersey
March 29, 1999
IV-69
<TABLE> <S> <C>
<ARTICLE> 5
<MULTIPLIER> 1,000
<S> <C>
<PERIOD-TYPE> YEAR
<FISCAL-YEAR-END> DEC-31-1998
<PERIOD-END> DEC-31-1998
<CASH> 25600
<SECURITIES> 16800
<RECEIVABLES> 217800
<ALLOWANCES> 9300
<INVENTORY> 182500
<CURRENT-ASSETS> 488500
<PP&E> 289600
<DEPRECIATION> 116900
<TOTAL-ASSETS> 1079800
<CURRENT-LIABILITIES> 302800
<BONDS> 160000
0
0
<COMMON> 14300
<OTHER-SE> 584500
<TOTAL-LIABILITY-AND-EQUITY> 1079800
<SALES> 1164700
<TOTAL-REVENUES> 1164700
<CGS> 554100
<TOTAL-COSTS> 1006000
<OTHER-EXPENSES> (332100)
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 26400
<INCOME-PRETAX> 464400
<INCOME-TAX> 212100
<INCOME-CONTINUING> 252300
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 252300
<EPS-PRIMARY> 4.54
<EPS-DILUTED> 4.51
</TABLE>
