UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 11-K
(Mark One)
[X] ANNUAL REPORT PURSUANT TO SECTION 15(d) OF THE SECURITIES EXCHANGE ACT OF
1934 [NO FEE REQUIRED]
For the fiscal year ended June 30, 1999
OR
[_] TRANSITION REPORT PURSUANT TO SECTION 15(d) OF THE SECURITIES EXCHANGE ACT
OF 1934 [NO FEE REQUIRED]
For the transition period from _________ to _________
Commission file number:
000-16723
A. Full title of the plan and the address of the plan, if different from
that of the issuer named below:
Respironics, Inc.
Retirement Savings Plan
B. Name of issuer of the securities held pursuant to the plan and the
address of its principal executive office:
Respironics, Inc.
1501 Ardmore Blvd.
Pittsburgh, Pennsylvania 15221-4401
REQUIRED INFORMATION
The financial statements and related report, prepared in accordance with the
financial reporting requirements of ERISA, listed below are furnished for the
Respironics, Inc. Retirement Savings Plan. The pages referred to are the
numbered pages in Ernst & Young LLP's Report on Audits of Financial Statements
and Supplemental Schedules for the years ended June 30, 1999 and 1998.
Pages
Report of Independent Auditors 1
Financial Statements 2-11
2
SIGNATURE
The Plan. 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 behalf of the Plan by the
undersigned hereunto duly authorized.
RESPIRONICS, INC.
RETIREMENT SAVINGS PLAN
By /s/ James C. Woll
---------------------------------
James C. Woll Plan Administrator
Dated: December 20, 1999
3
Respironics, Inc.
Retirement Savings Plan
______________
Annual Report on Form 11-K
For the Fiscal Year Ended June 30, 1999
EXHIBIT INDEX
Exhibit No. Description of Exhibit
1 Consent of Independent Accountants, Filed herewith.
4
Exhibit No. 1
Consent of Independent Auditors
We consent to the incorporation by reference in the registration Statement (Form
S-8 No. 333-16721) pertaining to the Respironics, Inc. Retirement Savings Plan
of our report dated December 6, 1999, with respect to the financial statements
and schedules of the Respironics, Inc. Retirement Savings Plan included in this
Annual Report (Form 11-K) for the year ended June 30, 1999.
/s/ Ernst & Young LLP
December 20, 1999
Pittsburgh, Pennsylvania
5
SUMMARY ANNUAL REPORT FOR THE RESPIRONICS, INC. RETIREMENT SAVINGS PLAN
For the year ended June 30, 1999
This is a summary of the annual report for the Respironics, Inc. Retirement
Savings Plan (EIN: 25-13-4989) for the period from July 1, 1998 through June 30,
1999. The annual report has been filed with the Internal Revenue Service as
required under the Employee Retirement Income Security Act of 1974.
Benefits under the Plan are provided by a trust funding arrangement. Plan
expenses were $2,439,267, this represented benefits paid to participants and
beneficiaries. There were no administrative expenses paid by the Plan. A total
of 1320 persons were participants in or beneficiaries of the Plan at the end of
the plan year, although not all these persons had yet earned the right to
receive benefits.
The value of plan assets after subtracting liabilities of the Plan was
$31,457,199 as of June 30, 1999. During the plan year, the Plan experienced an
increase in its net assets of $14,203,513. The Plan had total income of
$16,730,405 including a transfer into the plan from the participants of a
terminated plan of $6,812,521, employer contributions of $1,418,674, employee
contributions of $3,664,493, net realized losses from the sale of assets of
$1,697,518, and earnings from investments of $1,024,517. The remainder of
income related to the net unrealized gains.
6
Audited Financial Statements
Respironics, Inc. Retirement Savings Plan
Years Ended June 30, 1999 and 1998
With Report of Independent Auditors
Audited Financial Statements
Respironics, Inc. Retirement Savings Plan
Years Ended June 30, 1999 and 1998
With Report of Independent Auditors
Contents
Report of Independent Auditors............................... 1
Audited Financial Statements
Statements of Net Assets Available for Benefits.............. 2
Statements of Changes in Net Assets Available for Benefits... 3
Notes to Financial Statements................................ 4
Line 27(a)--Schedule of Assets Held for Investment Purposes.. 9
Line 27(d)--Schedule of Reportable Transactions.............. 10
Report of Independent Auditors
Plan Administrator
Respironics, Inc.
Retirement Savings Plan
We have audited the accompanying statements of net assets available for benefits
of Respironics, Inc. Retirement Savings Plan as of June 30, 1999 and 1998, and
the related statements of changes in net assets available for benefits for the
years then ended. These financial statements are the responsibility of the
Plan's management. Our responsibility is to express an opinion on these
financial statements based on our audits.
We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to obtain
reasonable assurance about whether the financial statements are free of material
misstatement. An audit includes examining, on a test basis, evidence supporting
the amounts and disclosures in the financial statements. An audit also includes
assessing the accounting principles used and significant estimates made by
management, as well as evaluating the overall financial statement presentation.
We believe that our audits provide a reasonable basis for our opinion.
In our opinion, the financial statements referred to above present fairly, in
all material respects, the net assets available for benefits of the Plan at June
30 1999 and 1998, and the changes in its net assets available for benefits for
the years then ended, in conformity with generally accepted accounting
principles.
Our audits were performed for the purpose of forming an opinion on the financial
statements taken as a whole. The accompanying supplemental schedules of assets
held for investment purposes as of June 30, 1999 and reportable transactions for
the year then ended, are presented for the purpose of additional analysis and
are not a required part of the financial statements but are supplementary
information required by the Department of Labor's Rules and Regulations for
Reporting and Disclosure under the Employee Retirement Income Security Act of
1974. These supplementary schedules are the responsibility of the Plan's
management. The supplemental schedules have been subjected to the auditing
procedures applied in our audits of the financial statements and, in our
opinion, are fairly stated in all material respects in relation to the financial
statements taken as a whole.
/s/ Ernst & Young LLP
December 6, 1999
Pittsburgh, Pennsylvania
STATEMENT OF NET ASSETS AVAILABLE FOR PLAN BENEFITS
RESPIRONICS, INC. RETIREMENT SAVINGS PLAN
As of June 30
1999 1998
-----------------------------
Investments, at fair value $ 29,945,258 $16,384,839
Receivables:
Participants' contributions 205,143 17,601
Employer's contribution 1,394,423 873,850
Interest Receivable - 7,023
-----------------------------
1,599,566 898,474
Liabilities:
Participants' refunds (87,625) (29,627)
-----------------------------
Net Assets Available for Benefits $ 31,457,199 $17,253,686
=============================
See accompanying notes to the financial statements.
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STATEMENTS OF CHANGES IN NET ASSETS AVAILABLE FOR BENEFITS WITH FUND INFORMATION
RESPIRONICS, INC. RETIREMENT SAVINGS PLAN
Years Ended June 30, 1999 and 1998
FAIR VALUE AT JUNE 30, 1997 $ 10,785,269
Contributions:
Participants' 2,402,435
Employer's:
Cash 804,496
Stock 81,623
Investment income 1,219,158
Net realized and unrealized appreciation (depreciation)
in fair value of investments (33,817)
Participant withdrawals (708,677)
Transfers into plan 2,703,199
------------
Net Increase
for the year ended June 30, 1998 6,468,417
------------
FAIR VALUE AT JUNE 30, 1998 17,253,686
============
Contributions:
Participants' 3,664,493
Employer's:
Cash 1,365,480
Stock 53,194
Investment income 1,024,517
Net realized and unrealized appreciation (depreciation)
in fair value of investments 3,722,575
Participant withdrawals (2,439,267)
Transfers into plan 6,812,521
------------
Net Increase
for the year ended June 30, 1999 14,203,513
------------
FAIR VALUE AT JUNE 30, 1999 $ 31,457,199
============
See accompanying notes to the financial statements.
-3-
NOTES TO FINANCIAL STATEMENTS
Respironics, Inc. Retirement Savings Plan
June 30, 1999
NOTE A--SIGNIFICANT ACCOUNTING POLICIES
Basis of Accounting
- -------------------
The accounting records of the Respironics, Inc. Retirement Savings Plan (the
"Plan") are maintained on the accrual basis. Certain financial information as
of and for the year ended June 30, 1998 has been reclassified to conform with
the financial statement presentation as of and for the year ended June 30, 1999.
These reclassifications did not impact the total net assets available for
benefits.
Valuation of Investments
- ------------------------
The fair value of the Plan's investments in registered investment companies are
based on quoted redemption value on the last business day of the plan year.
Shares of Respironics, Inc. common stock are valued at the last trade price on
the last business day of the plan year.
Use of Estimates
- ----------------
The preparation of financial statements in conformity with generally accepted
accounting principles requires management to make estimates and assumptions that
affect the amounts reported in the financial statements and accompanying notes.
Actual results could differ from those estimates.
NOTE B--PLAN DESCRIPTION
The Plan is a defined contribution plan qualifying under Section 401(a) of the
Internal Revenue Code. The Plan is subject to the provisions of the Employee
Retirement Income Security Act of 1974 (ERISA). The following description of
the Plan provides only general information. Participants should refer to the
Summary Plan Description for a more complete description of the Plan's
provisions.
-4-
NOTE B--PLAN DESCRIPTION (continued)
Contributions
- -------------
Employees of Respironics, Inc. (the "Company"), upon date of hire, are eligible
to participate and contribute to the Plan. An employee electing to participate
in the Plan (a "participant") may contribute from 1% to 15% of his or her
compensation through payroll deductions. The Plan sponsor matches participant
contributions 100% up to a maximum of 3% of the participant's base wages. The
matching contribution is funded in cash among the available investment options
and/or Company common stock based upon the election of each participant.
Discretionary contributions may be authorized by the Board of Directors of the
Company. The amount of the discretionary contribution shall be determined by
the Board of Directors. No discretionary contributions were made during 1999 or
1998.
Investments
- -----------
Participants may elect to invest their salary deferral contributions in any one
of 15 funds or may split their contributions between these funds. Individual
accounts are established for each plan participant and are credited for
participant and Company contributions and an allocation of earnings based on the
participant's account balance.
Termination and Vesting
- -----------------------
With respect to Company discretionary and matching contributions, a participant
vests gradually and becomes fully vested at the end of four years of credited
service in accordance with an amendment to the Plan effective October 21, 1996
that reduced the number of years required to become fully vested from seven to
four. Participants who terminate as a result of normal retirement, death or
disability become 100% vested at that time regardless of years of credited
service. Upon termination of service, participants receive their entire salary
deferral contributions and the vested portion of the Company's discretionary and
matching contributions through a lump-sum payment at termination or at a future
date of their choosing. The remaining non-vested portion of the Company's
discretionary and matching contributions are forfeited to the Company, and are
available to the Company, to be utilized to offset future years' Company
matching contributions.
-5-
NOTE B--PLAN DESCRIPTION (continued)
Termination and Vesting (continued)
- -----------------------
Participants may elect to withdraw all or a portion of their account, without
terminating employment with the Company, upon becoming disabled, reaching age
59-1/2, or under special hardship provisions.
Although the Company expects to continue the Plan indefinitely, it maintains the
right to discontinue contributions and terminate the Plan. In the event of a
termination of the Plan, each participant would become fully vested and
participants' account balances would be distributed accordingly.
Loans
- -----
Effective with an October 21, 1996 amendment to the Plan, the administrator may
authorize a loan to a participant for an amount up to 50% of the vested account
balance of the participant. The minimum amount that may be borrowed is $500,
and the maximum amount varies with the participant's vested account balance, but
cannot exceed $50,000. The plan administrator will determine a reasonable rate
of interest for each loan upon consideration of the rate of interest then
prevailing in the local community for similar loans, currently prime plus 1%.
Loans are generally required to be repaid in five years in equal installments;
however, the term of the loan may be extended if the intended use of the funds
is to acquire a residence.
Transfers into Plan
- -------------------
In August 1997 approximately $2.7 million of participant accounts were rolled
into the Respironics Inc. Retirement Savings Plan, in connection with the
termination of the LIFECARE International Inc. Employee Retirement Savings and
Profit Sharing Plan. The Company acquired LIFECARE International Inc. on
October 21, 1996, pursuant to which the Plan was amended to provide
participation rights to eligible LIFECARE International Inc. employees.
In September, 1998, approximately $6.8 million of participant accounts were
rolled into the Respironics Inc. Retirement Savings Plan from another qualified
plan. The rollover results from a February, 1998 merger of one of the Company's
wholly owned subsidiaries with Healthdyne Technologies, Inc. The Plan was
restated in August of 1998 in order to incorporate all prior amendments and
provide for the participation of Healthdyne Technologies, Inc employees.
-6-
NOTE C--PLAN INVESTMENTS
Pursuant to the integration of the Healthdyne Technologies, Inc. employees, the
1998 plan year fund options were replaced. All participant balances in the 1998
replaced funds were reallocated to the new fund options, at the discretion of
each participant. Additionally, those participant accounts invested in the
former Healthdyne Technologies, Inc. plan were allocated to the new fund
options, at the discretion of each participant.
The following presents investments that represent 5 percent or more of the
Plan's net assets:
June 30,
1999 1998
---------- ----------
PNC Investment Contract Fund $3,926,987 $ 940,881
Invesco Balanced Profile Fund 4,779,657 -
Blackrock Large Capital Value Equity Fund
6,586,538 -
Janus Overseas Fund 1,272,137 -
Janus Worldwide Fund 1,375,044 -
Blackrock Select Equity Fund, 4,368,144 -
Invesco Dynamics Fund 1,633,838 -
Respironics, Inc. Common Stock Fund 2,507,085 2,285,379
Loan Fund 921,189 531,753
Income Fund of America - 3,947,990
US Government Securities Fund of America
- 550,444
Investment Company of America - 3,976,864
Euro Pacific Growth Fund of America - 817,869
Fundamental Investors Fund of America
- 1,358,157
New Perspective Fund of America - 633,480
-7-
NOTE C--PLAN INVESTMENTS (continued)
During 1999, the Plan's investments (including gains and losses on investments
bought and sold, as well as held during the year) appreciated in value by
$3,722,575 as follows:
Mutual funds $3,013,216
Common stock 704,453
Money Market 6,414
US Government Securities (1,508)
----------
$3,722,575
==========
NOTE D--INCOME TAX STATUS
The Plan has received a determination letter from the Internal Revenue Service
(IRS) dated November 8, 1995, stating that the Plan qualified under section
401(a) of the Internal Revenue Code (the Code) and, therefore, the related trust
is exempt from taxation. The Plan was amended subsequent to IRS determination
letter. The Plan Administrator believes the Plan is being operated in
compliance with the applicable requirements of the Code and, therefore, believes
that the Plan is qualified and the related trust is tax exempt.
NOTE E--TRANSACTIONS WITH PARTIES-IN-INTEREST
All administrative expenses of the Plan are paid by the Company.
NOTE F-- YEAR 2000 (Unaudited)
The Company has completed formal communications with its significant service
providers, who have indicated the Plan's systems or operations should not be
vulnerable to those parties' failure to remediate their Year 2000 issues. In
addition the Company has completed its process of identifying and assessing its
internal systems that impact the processing of employee benefits. These systems
have been tested, with any instances of non-compliance identified for necessary
remediation.
Based on current information, the Company expects that its internal systems will
be Year 2000 compliant, with no foreseeable significant costs to complete its
efforts.
-8-
LINE 27(a)--SCHEDULE OF ASSETS HELD FOR INVESTMENT PURPOSES
RESPIRONICS, INC. RETIREMENT SAVINGS PLAN
EIN 25-1304989 PLAN NO. 001
June 30, 1999
Face Value
Description Units of Shares Cost Market Value
- ------------------------------------------------------------- ------------------ ----------- -------------
PNC Funds*:
PNC Investment Contract Fund 1,917,568.596 $ 3,774,427 $ 3,926,987
Blackrock Intermediate Government Bond Fund 67,198.898 693,023 667,957
Blackrock Managed Income Fund 16,272.788 169,963 162,728
PNC Moderate Profile Fund 22,647.117 339,838 386,419
PNC Balance Profile Fund 16,844.507 280,314 334,753
PNC Growth Profile Fund 29,621.163 510,751 637,670
Blackrock Large Capital Value Equity Fund 367,552.426 5,450,211 6,586,538
Blackrock Select Equity Fund 196,232.881 3,442,534 4,368,144
Blackrock Small Capital Growth Equity Fund 15,597.311 288,524 361,546
Invesco Balanced Profile Fund 272,811.463 4,007,909 4,779,657
Invesco Dynamics Fund 82,851.845 1,188,195 1,633,838
Janus Overseas Fund 57,148.992 1,062,326 1,272,137
Janus Worldwide Fund 25,735.427 1,140,962 1,375,044
Respironics, Inc. Common Stock* 165,757.666 1,083,266 2,507,085
Respironics Liquidity (Money Market Fund) * 23,566.100 23,566 23,566
Participant Loans* (interest rates: 8.75% - 9.5%) 921,189.170 - 921,189
----------- -----------
$23,455,809 $29,945,258
=========== ===========
* Indicates a party-in-interest.
-9-
LINE 27(d)--SCHEDULE OF REPORTABLE TRANSACTIONS
RESPIRONICS, INC. RETIREMENT SAVINGS PLAN
EIN 25-1304989 PLAN NO. 001
Year Ended June 30, 1999
Current Value
Description of Assets of Asset
Purchase Selling on Transaction Net
Type (i) Transactions Price Price Date Gain/(Loss)
------------- ------------- -------------- --------------
A transaction within the plan year with respect to any plan asset involving an
- ------------------------------------------------------------------------------
amount in excess of 5% of the current value of plan assets
- ----------------------------------------------------------
Blackrock Select Equity Fund $ 3,631,657 $ - $ 3,631,657 $ -
Blackrock Large Capital Value Equity Fund 5,003,803 - 5,003,803 -
Invesco Balanced Fund 3,688,466 - 3,688,466 -
Janus Overseas Fund 865,310 - 865,310 -
PNC EBT Investment Contract Fund 2,929,693 - 2,929,693 -
Type (iii) Transactions
Any transaction within the plan year involving securities of the same issue if
- ------------------------------------------------------------------------------
within the plan year any series of transactions with respect to such
----------------------------------------------------------------------
securities when aggregated, involves an amount in excess of 5% of the
-----------------------------------------------------------------------
current value of plan assets
------------------------------
Blackrock Select Equity Fund $ - $ 1,883,801 $ 1,531,308 $ 352,493
Blackrock Select Equity Fund 4,988,172 - 4,988,172 -
Blackrock Large Capital Value Equity Fund - 1,436,822 1,292,253 144,569
Blackrock Large Capital Value Equity Fund 6,758,211 - 6,758,211 -
Invesco Balanced Fund - 579,157 517,341 61,816
Invesco Balanced Fund 4,529,060 - 4,529,060 -
Janus Overseas Fund - 291,363 254,877 36,486
Janus Overseas Fund 1,317,307 - 1,317,307 -
PNC EBT Investment Contract Fund - 664,838 648,363 16,475
PNC EBT Investment Contract Fund 4,428,237 - 4,428,237 -
Respironics Common Stock Fund - 239,379 79,718 159,661
Respironics Common Stock Fund 1,261,776 - 1,261,776 -
Invesco Dynamics Fund - 187,595 146,281 41,314
Invesco Dynamics Fund 1,349,614 - 1,349,614 -
Janus Worldwide Fund - 187,834 161,687 26,147
Janus Worldwide Fund 1,307,286 - 1,307,286 -
Loan Fund - 1,577,619 1,411,858 165,761
Loan Fund 1,252,860 - 1,252,860 -
There were no Type (ii) or Type (iv) Transactions during the year ended June 30,
1999.
-10-