| (Mark One) |
| þ | ANNUAL REPORT
PURSUANT TO SECTION 15(D) OF THE SECURITIES EXCHANGE ACT OF 1934 |
| For the fiscal year ended December 31, 2003 |
| OR |
| o |
TRANSITION REPORT PURSUANT TO SECTION 15(D) OF THE SECURITIES EXCHANGE ACT OF 1934 |
| For the transition period from ___________ to ___________ |
Commission File Number: 1-10207
A. Full title of the plan and the address of the plan, if different from that of the issuer named below: |
B. Name of issuer of the securities held pursuant to the plan and the address of its principal executive office: |
ALARIS MEDICAL SYSTEMS RETIREMENT INVESTMENT PLAN
Table of Contents
| Page Number | |||
|---|---|---|---|
| Report of Independent Registered Public Accounting Firms | 1-2 | ||
| Basic Financial Statements | |||
| Statement of Net Assets Available for Plan Benefits | 3 | ||
| Statement of Changes in Net Assets Available for Plan Benefits | 4 | ||
| Notes to Financial Statements | 5-7 | ||
| Additional Information * | |||
| Schedule I - Schedule of Assets (Held at End of Year) | 9 | ||
| Signature | 10 | ||
* Other supplemental schedules required by Section 2520.103-10 of the Department of Labor Rules and Regulations for Reporting and Disclosure under ERISA have been omitted because they are not applicable.
Report of Independent Registered Public Accounting Firm
To the Plan
Administrator of the
ALARIS Medical Systems Retirement Investment Plan:
We have audited the accompanying statements of net assets available for plan benefits of ALARIS Medical Systems Retirement Investment Plan (the “Plan”) as of December 31, 2003, and the related statement of changes in net assets available for plan benefits for the year ended December 31, 2003. 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. The financial statements of ALARIS Medical Systems Retirement Investment Plan as of December 31, 2002 were audited by other auditors whose report dated June 26, 2003, expressed an unqualified opinion on those statements.
We conducted our audit in accordance with the standards of the Public Company Accounting Oversight Board (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 principals used and significant estimates made by management, as well as evaluating the overall financial statement presentation. We believe that our audit provides 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 plan benefits as of December 31, 2003, and the changes in the net assets available for plan benefits for the year ended December 31, 2003 in conformity with accounting principles generally accepted in the United States of America.
Our audit was performed for the purpose of forming an opinion on the basic financial statements taken as a whole. The supplemental schedule, as listed in the accompanying index, is presented for the purpose 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 is the responsibility of the Plan’s management. The supplemental schedule has been subjected to the auditing procedures applied in the audit of the basic financial statements and, in our opinion, are fairly stated in all material respects in relation to the basic financial statements taken as a whole.
/s/ Holthouse Carlin & Van Trigt LLP
Westlake Village,
California
July 9, 2004
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Report of Independent Registered Public Accounting Firm
To the Participants
and Administrator of the
ALARIS Medical Systems Retirement Investment Plan:
In our opinion, the accompanying statement of net assets available for benefits and the related statement of changes in net assets available for benefits present fairly, in all material respects, the net assets available for benefits of ALARIS Medical Systems Retirement Investment Plan (the “Plan”) at December 31, 2002, and the change in net assets available for benefits for the year then ended in conformity with accounting principles generally accepted in the United States of America. 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 audit. We conducted our audit of these statements in accordance with the standards of the Public Company Accounting Oversight Board (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, assessing the accounting principles used and significant estimates made by management, and evaluating the overall financial statement presentation. We believe that our audit provides a reasonable basis for our opinion.
PricewaterhouseCoopers
LLP
Philadelphia, Pennsylvania
June 26, 2003
2
ALARIS MEDICAL SYSTEMS RETIREMENT INVESTMENT PLAN
Statements
of Net Assets Available for Plan Benefits
| As of December 31, | |||||||||||
| 2003 |
2002 | ||||||||||
| Investments, at Fair Value | |||||||||||
| Registered Investment Companies: | |||||||||||
| American Funds EuroPacific Growth Fund | $ | 3,345,330 | $ | 2,270,437 | |||||||
| Franklin Balance Sheet Investment Fund | 412,397 | 121,482 | |||||||||
| T. Rowe Price Equity Income Fund; Shares | 9,762,797 | 7,420,633 | |||||||||
| Vanguard 500 Index Fund Investor Shares | 15,426,287 | 10,441,849 | |||||||||
| Vanguard Balanced Index Fund Investor Shares | 793,820 | 36,353 | |||||||||
| Vanguard Explorer Fund | 875,041 | 104,367 | |||||||||
| Vanguard Prime Money Market Fund | 1,044,798 | 763,723 | |||||||||
| Vanguard PRIMECAP Fund | 21,838,676 | 14,992,000 | |||||||||
| Vanguard Total Bond Market Index Fund | 3,308,184 | 2,080,121 | |||||||||
| Vanguard U.S. Growth Fund | 7,365,327 | 5,221,206 | |||||||||
| 64,172,657 | 43,452,171 | ||||||||||
| Vanguard Retirement Savings Trust | 17,856,697 | 15,949,056 | |||||||||
| ALARIS Medical Systems Stock Fund | 13,603,593 | 7,694,264 | |||||||||
| Eli Lilly Stock Fund | 23,830,545 | 22,231,698 | |||||||||
| Participant Loans | 1,658,328 | 1,651,733 | |||||||||
| Net Assets Available For Plan Benefits | $ | 121,121,820 | $ | 90,978,922 | |||||||
The accompanying notes are an integral part of the financial statements.
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Statement of Changes in Net Assets Available for Plan Benefits
| Year Ended December 31, 2003 | |||||
| ADDITIONS | |||||
| Investment Income: | |||||
| Interest and Dividend Income, Investments: | |||||
| Interest Income, Common/Collective Trusts | $ | 723,364 | |||
| Dividend Income, Common Stock | 437,719 | ||||
| Dividend Income, Registered Investment Companies | 773,156 | ||||
| Interest income, Participant Loans | 111,406 | ||||
| Total Interest and Dividend Income, Investments | 2,045,645 | ||||
| Net Appreciation In Fair Value Of Investments: | |||||
| Net Realized Gain on Sale of Assets | 1,862,815 | ||||
| Net Realized Gain on Sale of Registered Investment Companies | 545,400 | ||||
| Unrealized Appreciation of Assets | 10,378,893 | ||||
| Unrealized Appreciation of Registered Investment Companies | 12,565,159 | ||||
| Net Appreciation in Fair Value of Investments | 25,352,267 | ||||
| Total Investment Income | 27,397,912 | ||||
| Contributions | |||||
| Employer Contributions | 2,153,634 | ||||
| Participants’ Contributions: | |||||
| Pre-tax | 5,338,390 | ||||
| Rollovers | 451,862 | ||||
| Total Participants’ Contributions | 5,790,252 | ||||
| Total Contributions | 7,943,886 | ||||
| Other Additions | |||||
| Miscellaneous Income | 2,835 | ||||
| Miscellaneous Adjustments | 1,378 | ||||
| Total Other Additions | 4,213 | ||||
| Total Additions | 35,346,011 | ||||
| DEDUCTIONS | |||||
| Payment of Benefits | 5,199,288 | ||||
| Other Deductions | 3,825 | ||||
| Total Deductions | 5,203,113 | ||||
| NET INCREASE IN NET ASSETS AVAILABLE FOR PLAN BENEFITS | 30,142,898 | ||||
| NET ASSETS AVAILABLE FOR PLAN BENEFITS: | |||||
| Beginning of Period | 90,978,922 | ||||
| End of Period | $ | 121,121,820 | |||
The accompanying notes are an integral part of the financial statements.
4
ALARIS MEDICAL SYSTEMS RETIREMENT INVESTMENT PLAN
Notes to Financial
Statements
The following description of the ALARIS Medical Systems Retirement Investment Plan (“Plan”) provides only general information. Participants should refer to the Plan agreement for a more complete description of the Plan’s provisions.
General
The Plan is a defined contribution
plan established to provide eligible employees with additional security for their
retirement. The Plan covers substantially all eligible employees of ALARIS Medical
Systems, Inc. (the “Company”) and is subject to the provisions of the Employee
Retirement Income Security Act of 1974 (“ERISA”). Generally, employees are
eligible to participate after completing one full payroll cycle. Employees may not be
eligible to participate if they are a collectively bargained employee, a leased employee
or an employee scheduled to work less than 20 hours per week (unless actual hours worked
total more than 1,000 hours per year). An Administrative Committee consisting of four
persons, appointed by the Company, has the authority to interpret the Plan and to resolve
all questions arising in connection with the interpretation, application and
administration of the Plan. Vanguard Fiduciary Trust Company (“VFTC”) serves as
the Plan’s trustee.
Effective August 25, 2003, the ALARIS Medical Systems Stock Fund was reopened for contributions into the fund.
Contributions
Participants may make tax deferred
contributions to the Plan of up to 20% of their eligible compensation, subject to the
maximum permitted under the Plan and the Internal Revenue Code. Participants
may also contribute amounts representing distributions from other defined benefit or
defined contribution plans.
Effective January 2002, participants who are age 50 and older may make “catch-up” contributions to the Plan in accordance with the tax law that was passed in 2001.
The Company makes matching contributions equal to 50% of the first 8% of eligible compensation contributed. The Company also may make discretionary profit sharing contributions. There were no discretionary profit sharing contributions in 2003 or 2002.
Participant Accounts
Each participant’s account is
credited with the participant’s contributions and an allocation of the Company’s
contributions and Plan earnings and charged with an allocation of administrative expenses,
if any. Plan earnings, which are not taxable to the participant under federal and state
tax laws until withdrawn, are allocated on the basis of the participants’ account
balances in the various investment alternatives.
Vesting
All participant contributions and
related earnings credited to the participants’ accounts are fully vested and
non-forfeitable. Company contributions and related earnings become 100% vested after one
year of service with the Company.
Participant Loans
Plan participants may borrow up to
50% of their vested account balance, subject to a minimum of $1,000 and a maximum of
$50,000. The loans are collateralized by the participants’ account balances. The
loans bear interest at a rate of the prime rate plus 1%, determined on a quarterly basis
and established when the loan is made. Interest rates range from 5.00% to 10.50% at
December 31, 2003. Participants may have only one loan outstanding at a time, and may not
have more than one loan in any 12-month period. If the participant is married, spousal
consent is required to take a loan.
5
Notes to Financial
Statements (Continued)
Payment of Benefits
Upon retirement, disability, death or
termination of employment, a participant is entitled to 100% of his/her vested account
balance, reduced by any participant loan outstanding. Participant accounts with balances
up to $5,000 are settled with lump-sum distributions. Participants with a balance greater
than $5,000 may elect a distribution, rollover, or to leave their balances in the Plan.
Amounts left on deposit with the Plan and the earnings thereon are not forfeitable.
Participants also have an option to take hardship withdrawals, age 59½ withdrawals or other in-service withdrawals, subject to Plan provisions.
Forfeited Accounts
Forfeited balances of terminated
participants’ non-vested accounts are used to reduce future Company contributions or
pay administrative expenses. There were no forfeitures used in 2003 and forfeitures of
$25,987 were used in 2002. At December 31, 2003 and December 31, 2002, forfeited non-vested
accounts totaled $2,856 and $7, respectively.
Plan Termination
The Company may terminate the Plan
for any reason at any time subject to the provisions of ERISA. In the event of
termination, all participants will become 100% vested.
The following accounting policies, which conform with U.S. generally accepted accounting principles, have been used consistently in the preparation of the Plan’s financial statements.
Basis of Accounting
The financial statements of the Plan
are prepared under the accrual method of accounting.
Use of Estimates
The preparation of financial
statements in conformity with U.S. generally accepted accounting principles requires Plan 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 additions and deductions during the
reporting period. Actual results could differ from those estimates.
Investment Valuation and
Income Recognition
The Plan’s investments are
stated at fair value. Shares of registered investment companies are valued at quoted
market prices which represent the net asset value of shares held by the Plan at year-end.
Units of the Retirement Savings Trust are valued at net asset value at year-end. The
Company stock fund is valued at its year-end unit closing price (comprised of year-end
market price plus uninvested cash position). Participant loans are valued at cost which
approximates fair value.
Purchases and sales of investments are recorded on a trade-date basis. Interest income is accrued when earned. Dividend income is recorded on the ex-dividend date. Capital gain distributions are included in dividend income.
Payment of Benefits
Benefits are
recorded when paid.
6
Notes to Financial
Statements (Continued)
Concentration of Risk
The Plan has
exposure to risk to the extent that its investments are subject to market fluctuations
and interest rate fluctuations that may materially affect the value of the investment
balances.
During 2003, the Plan’s investments (including gains and losses on investments bought and sold, as well as held during the year) changed in value as follows:
| For the Year Ended December 31, 2003 | |||||
| Registered Investment Companies | $ | 13,110,559 | |||
| Common Stock | 12,241,708 | ||||
| Net appreciation in fair value of Investments | $ | 25,352,267 | |||
The following investments represent 5 percent or more of the Plan’s net assets as of December 31, 2003:
| T. Rowe Price Equity Income Fund; Shares | $ | 9,762,797 | |||
| Vanguard 500 Index Fund Investor Shares | $ | 15,426,287 | |||
| Vanguard PRIMECAP Fund | $ | 21,838,676 | |||
| Vanguard U.S. Growth Fund | $ | 7,365,327 | |||
| Vanguard Retirement Savings Trust | $ | 17,856,697 | |||
| ALARIS Medical Systems Stock Fund | $ | 13,603,593 | |||
| Eli Lilly Stock Fund | $ | 23,830,545 |
The Plan invests in shares of mutual funds managed by an affiliate of VFTC. VFTC acts as trustee for only those investments as defined by the Plan. Transactions in such investments qualify as party-in-interest transactions which are exempt from the prohibited transaction rules.
Generally, the Plan’s administrative expenses are paid as follows: trustee fees are paid by the Plan; accounting and legal fees are paid through forfeitures, if available. If forfeitures are not available, the accounting and legal fees are paid by the Company.
7
Notes to Financial
Statements (Continued)
The Internal Revenue Service has determined and informed the Company by a letter dated May 30, 2002 that the Plan and related trust are designed in accordance with applicable sections of the Internal Revenue Code (“IRC”). The plan has been amended since receiving the determination letter, however, the plan administrator believes that the Plan is designed and is currently being operated in compliance with the applicable requirements of the IRC.
Cardinal Health, Inc. completed its acquisition of ALARIS Medical Systems, Inc. on July 6, 2004. In connection with this acquisition, all shares held in the ALARIS Medical Systems Stock Fund were liquidated into the Vanguard Prime Money Market Fund.
8
| ALARIS MEDICAL SYSTEMS RETIREMENT INVESTMENT PLAN | Schedule I |
Schedule
of Assets (Held at End of Year)
As of December 31, 2003
ALARIS Medical Systems Retirement Investment Plan, EIN 13-3492624, Plan #002
Attachment to Form 5500, Schedule H, Line 4(i):
| Identity of Issue
|
Investment Type
|
Current Value
| |||||||||
| * | American Funds EuroPacific Growth | Registered Investment Company | $ | 3,345,330 | |||||||
| * | Franklin Balance Sheet | Registered Investment Company | 412,397 | ||||||||
| * | T. Rowe Price Equity Income | Registered Investment Company | 9,762,797 | ||||||||
| * | Vanguard 500 Index Inv | Registered Investment Company | 15,426,287 | ||||||||
| * | Vanguard Balanced Index Inv | Registered Investment Company | 793,820 | ||||||||
| * | Vanguard Explorer Fund | Registered Investment Company | 875,041 | ||||||||
| * | Vanguard Prime Money Mkt | Registered Investment Company | 1,044,798 | ||||||||
| * | Vanguard PRIMECAP Fund | Registered Investment Company | 21,838,676 | ||||||||
| * | Vanguard Total Bond Mkt Index | Registered Investment Company | 3,308,184 | ||||||||
| * | Vanguard U.S. Growth | Registered Investment Company | 7,365,327 | ||||||||
| * | Vanguard Retirement Savings Trust | Common/Collective Trust | 17,856,697 | ||||||||
| * | ALARIS Medical Systems Stock | Company Stock Fund | 13,603,593 | ||||||||
| * | Eli Lilly Stock Fund | Company Stock Fund | 23,830,545 | ||||||||
| * | Participant Loans | 5.00% - 10.50% | 1,658,328 | ||||||||
| Total assets held for investment purposes | $ | 121,121,820 | |||||||||
| * | Party in Interest | ||||||||||
See accompanying notes to financial statements and auditors' report.
9
Pursuant to the requirements of the Securities Exchange Act of 1934, the trustees have duly caused this annual report to be signed on its behalf by the undersigned, hereunto duly authorized.
| ALARIS Medical Systems Retirement Investment Plan By: ALARIS Medical Systems, Inc. (plan administrator) |
| Date: July 12, 2004 | By: /s/ ROBERT F. MATHEWS
—————————————— Robert F. Mathews Vice President - Finance and Treasurer (Principal Accounting Officer) |
10