-----BEGIN PRIVACY-ENHANCED MESSAGE----- Proc-Type: 2001,MIC-CLEAR Originator-Name: webmaster@www.sec.gov Originator-Key-Asymmetric: MFgwCgYEVQgBAQICAf8DSgAwRwJAW2sNKK9AVtBzYZmr6aGjlWyK3XmZv3dTINen TWSM7vrzLADbmYQaionwg5sDW3P6oaM5D3tdezXMm7z1T+B+twIDAQAB MIC-Info: RSA-MD5,RSA, FqI62S3XCSrt+yw+jIs+YBruM6tLJU0ugkMgXMFr9Q3TUdad3uDPVAsXeVKZnbZG XhqCw7ZSMc8/qNreqPo6QQ== 0000009892-99-000010.txt : 19990402 0000009892-99-000010.hdr.sgml : 19990402 ACCESSION NUMBER: 0000009892-99-000010 CONFORMED SUBMISSION TYPE: 10-K PUBLIC DOCUMENT COUNT: 11 CONFORMED PERIOD OF REPORT: 19981231 FILED AS OF DATE: 19990331 FILER: COMPANY DATA: COMPANY CONFORMED NAME: BARD C R INC /NJ/ CENTRAL INDEX KEY: 0000009892 STANDARD INDUSTRIAL CLASSIFICATION: SURGICAL & MEDICAL INSTRUMENTS & APPARATUS [3841] IRS NUMBER: 221454160 STATE OF INCORPORATION: NJ FISCAL YEAR END: 1231 FILING VALUES: FORM TYPE: 10-K SEC ACT: SEC FILE NUMBER: 001-06926 FILM NUMBER: 99582803 BUSINESS ADDRESS: STREET 1: 730 CENTRAL AVE CITY: MURRAY HILL STATE: NJ ZIP: 07974 BUSINESS PHONE: 9082778000 MAIL ADDRESS: STREET 1: 730 CENTRAL AVENUE CITY: MURRAY HILL STATE: NJ ZIP: 07974 10-K 1 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. 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 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. I-2 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. I-3 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. I-4 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. I-5 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 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. I-7 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 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 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. I-10 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 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 Item 6. SELECTED FINANCIAL DATA C. R. BARD, INC. AND SUBSIDIARIES
For the Years Ended December 31, (Thousands of dollars except per share amounts) 1998 1997 1996 1995 1994 1993 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 (1) 1998 excludes divested cardiology businesses.
II-2 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 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. II-4 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 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 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 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 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 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 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 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 C. R. BARD, INC. AND SUBSIDIARIES STATEMENTS OF CONSOLIDATED INCOME For the Years Ended December 31,
(Thousands of dollars except per share amounts) 1998 1997 1996 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
The accompanying notes to consolidated financial statements are an integral part of these statements. II-13 C. R. BARD, INC. AND SUBSIDIARIES STATEMENTS OF CONSOLIDATED SHAREHOLDERS'INVESTMENT (Thousands of dollars except per share amounts)
Unamortized Capital in Cumulative Expenses Common Stock Excess of Retained Translation Under Shares Amount Par Value Earnings Adjustments Stock Plan Total 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
The accompanying notes to consolidated financial statements are an integral part of these statements. II-14 C. R. BARD, INC. AND SUBSIDIARIES CONSOLIDATED BALANCE SHEETS
December 31, (Thousands of dollars) 1998 1997 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
The accompanying notes to consolidated financial statements are an integral part of these balance sheets. II-15 C. R. BARD, INC. AND SUBSIDIARIES CONSOLIDATED STATEMENTS OF CASH FLOWS
For the Years Ended December 31, (Thousands of dollars) 1998 1997 1996 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
The accompanying notes to consolidated financial statements are an integral part of these statements. II-16 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 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 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 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 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 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 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 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 C. R. BARD, INC. AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS 7. Shareholders' Investment (continued)
Weighted Weighted Number Average Average Of Exercise Fair Shares Price Value 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)
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 $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
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 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 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 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 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 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 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 QUARTERLY FINANCIAL DATA C. R. BARD, INC. AND SUBSIDIARIES 1998 1st 2nd 3rd 4th Year
(Thousands of dollars except per share amounts) 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
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). 1997 1st 2nd 3rd 4th Year
(Thousands of dollars except per share amounts) 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
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 C. R. BARD, INC. AND SUBSIDIARIES Item 9. Changes in and Disagreements with Accountants on Accounting and Financial Disclosure Not applicable. II-33 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 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 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 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 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 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 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 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 EX-3 2 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 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 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 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 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 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 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 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 IV-15 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. IV-16 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. IV-17 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 IV-18 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. IV-19 EX-10 3 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 IV-70 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. IV-71 (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 IV-72 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. IV-73 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. IV-74 (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 IV-75 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 IV-76 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, IV-77 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. IV-78 EX-10 4 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 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 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 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 (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 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 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 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 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 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 (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 (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. IV-31 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. IV-32 (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 EX-10 5 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. IV-34 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 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 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 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-39 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 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-41 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-42 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-43 (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-44 (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. IV-45 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. IV-46 (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 EX-10 6 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 IV-48 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. IV-49 (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. IV-50 "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. IV-51 "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. IV-52 (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 IV-53 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: IV-54 (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. IV-55 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. IV-56 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. IV-57 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: IV-58 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 EX-10 7 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 (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 (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 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 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 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 EX-12 8
Exhibit 12.1 Computation of Ratio of Earnings to Fixed Charges 1998 1997 1996 1995 1994 1993 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
IV-66 EX-21 9 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 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 EX-23 10 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 EX-27 11
5 1,000 YEAR DEC-31-1998 DEC-31-1998 25600 16800 217800 9300 182500 488500 289600 116900 1079800 302800 160000 0 0 14300 584500 1079800 1164700 1164700 554100 1006000 (332100) 0 26400 464400 212100 252300 0 0 0 252300 4.54 4.51
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