SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 11-K
(X) ANNUAL REPORT TO SECTION 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
For the fiscal year ended December 31, 2000
OR
( ) TRANSITION REPORT PURSUANT TO SECTION 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
For the transition period from _____________________ to _____________________
Commission File Number [000-19392]
A. Full title of the plan and address of the plan, if different from
that of the issuer named below:
DIANON Systems, Inc. 401(k) Retirement Plan
200 Watson Boulevard
Stratford, CT 06615
B. Name of issuer of the securities held pursuant to the plan and
the address of its principal executive office:
DIANON Systems, Inc.
200 Watson Boulevard
Stratford, CT 06615
Merrill Lynch and Company
World Financial Center
250 Vesey St.
Manhattan, NY 10281-1306
DIANON SYSTEMS, INC.
401(K) RETIREMENT PLAN
Financial Statements and Schedule
As of December 31, 2000 and 1999
Together with Report of Independent Public Accountants
EIN #06-1128081
Plan #001
DIANON SYSTEMS, INC. 401(K) RETIREMENT PLAN
Index to Financial Statements and Schedule
Page
----
Report of Independent Public Accountants 2
Financial Statements:
Statements of Net Assets Available for Benefits as of December 31, 2000 3
and 1999
Statement of Changes in Net Assets Available for Benefits for the Year
Ended December 31, 2000 4
Notes to Financial Statements 5-10
Supplemental Schedule:
Schedule I - Schedule of Assets Held at End of Year 11
1
REPORT OF INDEPENDENT PUBLIC ACCOUNTANTS
To the Trustees of the
DIANON Systems, Inc. 401(k) Retirement Plan:
We have audited the accompanying statements of net assets available for benefits
of the DIANON Systems, Inc. 401(k) Retirement Plan as of December 31, 2000 and
1999, and the related statement of changes in net assets available for benefits
for the year ended December 31, 2000. These financial statements and the
schedule referred to below are the responsibility of the Plan's management. Our
responsibility is to express an opinion on these financial statements and
schedule based on our audits.
We conducted our audits in accordance with auditing standards generally accepted
in the United States. Those standards require that we plan and perform the audit
to obtain reasonable assurance about whether the financial statements are free
of material misstatement. An audit includes examining, on a test basis, evidence
supporting the amounts and disclosures in the financial statements. An audit
also includes assessing the accounting principles used and significant estimates
made by management, as well as evaluating the overall financial statement
presentation. We believe that our audits provide a reasonable basis for our
opinion.
In our opinion, the financial statements referred to above present fairly, in
all material respects, the net assets available for benefits of the Plan as of
December 31, 2000 and 1999, and the changes in its net assets available for
benefits for the year ended December 31, 2000 in conformity with accounting
principles generally accepted in the United States.
Our audits were performed for the purpose of forming an opinion on the basic
financial statements taken as a whole. The supplemental schedule of assets held
for investment purposes is presented for purposes of additional analysis and is
not a required part of the basic financial statements but is supplementary
information required by the Department of Labor's Rules and Regulations for
Reporting and Disclosure under the Employee Retirement Income Security Act of
1974. The supplemental schedule has been subjected to the auditing procedures
applied in the audits of the basic financial statements and, in our opinion, is
fairly stated in all material respects in relation to the basic financial
statements taken as a whole.
Stamford, Connecticut
June 15, 2001
2
DIANON SYSTEMS, INC. 401(K) RETIREMENT PLAN
Statements of Net Assets Available for Benefits
December 31, 2000 and 1999
2000 1999
----------- ----------
Investments, at fair value $10,305,917 $8,225,041
RECEIVABLES:
Company contributions 12,157 3,577
Employee contributions 42,826 32,431
Accrued income 5,620 3,413
----------- ----------
Total receivables 60,603 39,421
----------- ----------
NET ASSETS AVAILABLE FOR BENEFITS $10,366,520 $8,264,462
----------- ----------
The accompanying notes to financial statements are an integral part of these
statements.
3
DIANON SYSTEMS, INC. 401(K) RETIREMENT PLAN
Statement of Changes in Net Assets Available for Benefits
For the Year Ended December 31, 2000
ADDITIONS:
- ----------
Investment income:
Interest and dividend income $ 427,840
Net realized and unrealized loss on investments (86,779)
------------
Total investment income 341,061
------------
Contributions:
Employer 584,737
Employee 2,072,641
------------
Total contributions 2,657,378
------------
Other (57,844)
------------
Total additions 2,940,595
------------
DEDUCTIONS:
- ----------
Distributions to participants (817,667)
Administrative expenses (1,700)
Other (19,170)
------------
Total deductions (838,537)
------------
Net increase 2,102,058
NET ASSETS AVAILABLE FOR BENEFITS,
beginning of year 8,264,462
------------
NET ASSETS AVAILABLE FOR BENEFITS,
end of year $10,366,520
============
The accompanying notes to financial statements are an integral part of this
statement.
4
DIANON SYSTEMS, INC. 401(K) RETIREMENT PLAN
Notes to Financial Statements
December 31, 2000
1. DESCRIPTION OF PLAN
-------------------
The following brief description of the DIANON Systems, Inc. 401(k) Retirement
Plan (the "Plan") for employees of DIANON Systems, Inc. ("DIANON" or the
"Company") is provided for general information purposes only. Participants
should refer to the Plan agreement for a more complete description of the Plan.
General
- -------
The Plan is a voluntary defined contribution plan, which became effective
January 1, 1991. Effective October 1, 1997, the Plan was amended for eligibility
requirements to allow substantially all employees of the Company who have
completed three months of service to participate in the Plan. Employees become
eligible to receive employer contributions after one year of service. The Plan
is subject to the provisions of the Employee Retirement Income Security Act of
1974 ("ERISA") and is administered under a Plan and Trust Agreement. Merrill
Lynch Trust is the trustee of the Plan. Merrill Lynch serves as custodian of the
Plan and maintains and administers the Plan's investment assets for the benefit
of participants.
Employee Contributions
- ----------------------
Eligible employees may elect to defer a percentage of their compensation by
means of a pretax contribution to the Plan, up to an annual maximum of 17% of
compensation. Employee contributions can be invested in any combination of the
following investments: The Merrill Lynch Retirement Preservation Trust, Merrill
Lynch Equity Index Trust, Massachusetts Investors Trust, John Hancock Sovereign
Investors Fund, Merrill Lynch Balanced Capital Fund, MFS Emerging Growth Fund,
Merrill Lynch Global Allocation Fund, Merrill Lynch Growth Fund and DIANON
Systems, Inc. common stock. Employees may change their contribution percentage
and investment allocations or make transfers between investment accounts via a
voice response system on a daily basis.
Employer Contributions
- ----------------------
The Company contributes an amount determined each year by the Board of
Directors. If the Company makes matching contributions, such contributions are
equal to 50% of each participant's elective deferrals, not to exceed 3% of the
participant's annual compensation.
Participant Accounts
- --------------------
Each participant's account is credited with the participant's contribution and
allocations of the Company contribution and plan earnings. Allocations are based
on participant compensation or account balances, as defined.
5
DIANON SYSTEMS, INC. 401(K) RETIREMENT PLAN
Notes to Financial Statements
December 31, 2000
Vesting
- -------
Participants are 100% vested in their contributions. Vesting of the employer
contribution is based on years of service and is summarized as follows:
Years of Vesting
Services Percentages
---------- -----------
Less than 1 0%
1 20%
2 40%
3 60%
4 80%
5 or more 100%
Loans Receivable
- ----------------
Participants may borrow from their fund accounts up to a maximum equal to the
lesser of $50,000 or 50% of the vested portion of their accounts. Loans must be
repaid with one percent over the current prime interest rate and over no more
than 5 years, or up to 30 years, if for the purchase of a primary residence.
Interest rates on loans averaged 9.58% during 2000. Principal and interest is
paid ratably through bi-weekly payroll deductions.
Participant Forfeitures
- -----------------------
Forfeitures from unvested employer contributions will be used to offset the
employer contribution or administrative fees for the subsequent year. At
December 31, 2000, forfeited nonvested accounts totaled $12,400.
Payment of Benefits
- -------------------
On termination of the Plan, or termination of service due to death, disability,
retirement, or other termination, a participant or the lawfully designated
beneficiary will receive a lump-sum amount equal to the value of the
participant's vested interest in his or her account.
2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
------------------------------------------
Basis of Accounting
- -------------------
The financial statements of the Plan have been prepared on the accrual basis of
accounting.
Use of Estimates
- ----------------
The preparation of financial statements in conformity with accounting principles
generally accepted in the United States requires management to make estimates
and assumptions that affect the reported amounts of assets and liabilities and
disclosure of contingent assets and liabilities at the date of the financial
statements and the reported amounts of revenues and expenses during the
reporting period. Actual amounts could differ from those estimates.
6
DIANON SYSTEMS, INC. 401(K) RETIREMENT PLAN
Notes to Financial Statements
December 31, 2000
3. INVESTMENT OPTIONS
------------------
Investments held in the funds are valued on the basis of quoted market value.
Income derived from investments is recognized when earned. However, the
historical cost and, therefore the net gain or loss is not disclosed for certain
transactions. A description of the Plan's investment options are as follows:
Merrill Lynch Retirement Preservation Trust
-------------------------------------------
The objective of this fund is to provide income while preserving capital and
maintaining liquidity. The fund invests in a broadly diversified portfolio of
investment contracts offered by major insurance companies and other approved
financial institutions and in U.S. government obligations.
Merrill Lynch Equity Index Trust
--------------------------------
The objective of this fund is to produce income and to provide an opportunity
for growth of principal consistent with common stock investing.
Massachusetts Investors Trust
-----------------------------
This fund seeks reasonable current income and long-term growth of income and
capital by investing primarily in quality stocks representing well-known
companies across a wide range of industries.
John Hancock Sovereign Investors Fund
-------------------------------------
This fund seeks long-term growth of capital and income without undue market
risks. The fund invests primarily in marketable debt securities.
Merrill Lynch Balanced Capital Fund
-----------------------------------
The objective of this fund is to emphasize total return consistent with
prudent risk through a diversified investment in stocks and bonds.
MFS Emerging Growth Fund
------------------------
The objective of this fund is to seek long-term growth of capital by
emphasizing securities of small and medium-size companies in the U.S. and
other economies with earnings growth that is expected to accelerate.
Merrill Lynch Global Allocation Fund
------------------------------------
This fund seeks total return consistent with prudent risk through a
diversified investment in both domestic and foreign securities, debt and
money market investments issued in at least three countries.
Merrill Lynch Growth Fund
-------------------------
This fund seeks growth of capital by investing primarily in undervalued
equity.
7
DIANON SYSTEMS, INC. 401(K) RETIREMENT PLAN
Notes to Financial Statements
December 31, 2000
DIANON Systems, Inc. Common Stock
---------------------------------
The DIANON Systems, Inc. common stock is purchased bi-monthly on the open
market at the closing price on the day the broker receives the cash.
Cash Fund
---------
This is an account that identifies the value of any contributions received
but not yet allocated to record or the value of any distributions for which
funds were liquidated from record but still remain payable from the trust.
Loan Fund
---------
This account reflects new loans issued as well as loan repayments.
Pending Settlement Fund
-----------------------
If equities reside in the Plan, this fund accounts for the value of the
employer security during the three business day settlement period of Plan
level exchange sells and the corresponding exchange purchases.
Expenses of the Plan
- --------------------
All administrative expenses of the Plan, with the exception of loan origination
fees, are paid by the Company.
Payment of Benefits
- -------------------
Benefits are recorded when paid.
4. INVESTMENTS
-----------
The following presents investments that represent 5 percent or more of the
Plan's net assets:
December December
31, 2000 31, 1999
--------- ----------
Merrill Lynch Retirement Preservation Trust $1,617,858 $1,377,474
Merrill Lynch Equity Index Trust 2,628,269 2,489,144
Mass Investors Trust 1,744,614 1,782,343
MFS Emerging Growth Fund 1,367,265 1,179,179
DIANON Systems, Inc. Common Stock 1,328,811 -
8
DIANON SYSTEMS, INC. 401(K) RETIREMENT PLAN
Notes to Financial Statements
December 31, 2000
During the year ended December 31, 2000, the Plan's investments (including gains
and losses on investments bought and sold, as well as held during the year)
depreciated in value by ($86,779) as follows:
December 31,
2000
------------
Merrill Lynch Equity Index Trust $ (259,897)
Mass Investors Trust (81,418)
John Hancock Sovereign Investors 13,758
Merrill Lynch Bal Capital Fund (14,682)
MFS Emerging Growth (582,142)
Merrill Lynch Global Allocation Fund (13,322)
Merrill Lynch Growth Fund (98,436)
DIANON Systems, Inc. Common Stock 949,360
------------
$ (86,779)
5. NONPARTICIPANT-DIRECTED INVESTMENTS
-----------------------------------
Information about the net assets and the significant components of the changes
in net assets relating to the nonparticipant-directed investments is as follows:
December December
31, 2000 31, 1999
--------- --------
Net Assets:
Pending Settlement Fund $ 42,395 $ 5,915
Changes in Net Assets:
Interfund Transfers In 659,110 5,915
Interfund Transfers Out (622,630) -
--------- --------
$ 36,480 $ 5,915
6. PLAN TERMINATION
----------------
Although it has not expressed any intention to do so, the Company may terminate
the Plan at any time subject to the terms of ERISA. Upon termination, the
accounts of all participants would become fully vested and Plan assets would be
allocated to the participants of the Plan as specified in the Plan agreement.
7. PARTY-IN-INTEREST TRANSACTIONS
------------------------------
Certain Plan investments are shares of DIANON Systems, Inc.'s common stock and
shares of funds managed by Merrill Lynch Trust Services. DIANON Systems, Inc. is
the plan sponsor, and Merrill Lynch Trust Services is the custodian as defined
by the Plan. Therefore, these transactions qualify as party-in-interest.
9
DIANON SYSTEMS, INC. 401(K) RETIREMENT PLAN
Notes to Financial Statements
December 31, 2000
8. TAX STATUS
----------
The Plan received a favorable tax determination letter from the Internal Revenue
Service dated June 14, 1995 stating that the Plan is in compliance with the
requirements for a qualified plan under Section 401(a) of the Internal Revenue
Code and is exempt from federal income taxes under the provisions of Section
501(a) of the Internal Revenue Code. Effective January 1, 1998, the Plan was
amended for eligibility requirements, but maintained its tax exempt status.
However, the Plan has not received an updated determination letter. The Plan
Administrator believes that the Plan is currently designed and is being operated
in compliance with the applicable requirements of the Internal Revenue Code.
9. RECENT ACCOUNTING PRONOUNCEMENTS
--------------------------------
In September 1999, the Financial Accounting Standards Board cleared for
adoption, Statement of Position ("SOP") 99-3, "Accounting for and Reporting
Certain Defined Contribution Benefit Plan Investments and Other Disclosure
Matters". This SOP eliminates the previous requirement for a defined
contribution plan to present plan investments by general type for
participant-related investments in the statement of net assets available for
benefits; it eliminates the requirement for a defined contribution plan to
disclose participant directed investment programs and eliminates the requirement
to disclose the total number of units and the net asset value per unit during
the period, and at the end of the period, by defined contribution pension plans
that assign units to participants; it requires a defined contribution plan to
identify non-participant-directed investments that represent 5% or more of net
assets available for benefits; and it eliminates the requirement for defined
contribution plans, including both health and welfare benefit plans and pension
plans, to disclose benefit-responsive investments contracts by investment fund
option. This SOP is effective for plan years ending after December 15, 1999 and
has been adopted by the Company.
10
Schedule I
DIANON SYSTEMS, INC. 401(K) RETIREMENT PLAN
Schedule of Assets Held at End of Year
EIN #06-1128081
Plan #001
Identity Current
of Issue Description of Investment Cost Value
---------------------------- ------------------------------------------- ---------- -----------
* Merrill Lynch Trust Services Merrill Lynch Retirement Preservation Trust $1,617,858 $ 1,617,858
* Merrill Lynch Trust Services Merrill Lynch Equity Index Trust 2,373,452 2,628,269
* Merrill Lynch Trust Services Massachusetts Investors Trust 1,696,853 1,744,614
* Merrill Lynch Trust Services John Hancock Sovereign Investors Fund 451,588 447,006
* Merrill Lynch Trust Services Merrill Lynch Capital Fund 320,340 293,997
* Merrill Lynch Trust Services MFS Emerging Growth Fund 1,576,269 1,367,265
* Merrill Lynch Trust Services Merrill Lynch Global Allocation Fund 228,426 213,630
* Merrill Lynch Trust Services Merrill Lynch Growth Fund 388,594 321,151
* DIANON Systems, Inc. Stock DIANON Systems, Inc. Common Stock 591,103 1,328,811
* Participant Loans Loan Fund ** 273,173 273,173
* Merrill Lynch Trust Services Cash Fund 27,748 27,748
* Merrill Lynch Trust Services Pending Settlement 42,395 42,395
---------- -----------
$9,587,799 $10,305,917
========== ===========
* Denotes a party-in-interest.
** Interest rates on loans ranged from 8% to 10%
*** Non Participant Directed
The accompanying notes to financial statements are an integral part of this
schedule.
11
EXHIBITS
23.1 Consent of Arthur Andersen LLP
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the
trustees (or other persons who administer the employee benefit plan) have duly
caused this annual report to be signed on its behalf by the undersigned hereunto
duly authorized.
DIANON Systems, Inc.
401(k) Retirement Plan
By: /s/ David R. Schreiber
--------------------------------------
David R. Schreiber
Date: June 27, 2001