-----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, L1ROBC/bEwjAEBXcOXepCqftNtclIN5R+Th+a6FGWJGj77F9Km4YMSJy1pxwQX8m RdGAfAyVsRRHdA8u8OdgeQ== 0001021408-01-502895.txt : 20010702 0001021408-01-502895.hdr.sgml : 20010702 ACCESSION NUMBER: 0001021408-01-502895 CONFORMED SUBMISSION TYPE: 11-K PUBLIC DOCUMENT COUNT: 2 CONFORMED PERIOD OF REPORT: 20001231 FILED AS OF DATE: 20010629 FILER: COMPANY DATA: COMPANY CONFORMED NAME: WATSON PHARMACEUTICALS INC CENTRAL INDEX KEY: 0000884629 STANDARD INDUSTRIAL CLASSIFICATION: PHARMACEUTICAL PREPARATIONS [2834] IRS NUMBER: 953872914 STATE OF INCORPORATION: NV FISCAL YEAR END: 1231 FILING VALUES: FORM TYPE: 11-K SEC ACT: SEC FILE NUMBER: 001-13305 FILM NUMBER: 1672905 BUSINESS ADDRESS: STREET 1: 311 BONNIE CIRCLE CITY: CORONA STATE: CA ZIP: 92880 BUSINESS PHONE: 9092701400 MAIL ADDRESS: STREET 1: 311 BONNIE CIRCLE CITY: CORONA STATE: CA ZIP: 92880 11-K 1 d11k.txt FORM 11-K - EMPLOYEES 401(K) PROFIT-SHARING PLAN SECURITIES AND EXCHANGE COMMISSION WASHINGTON, D.C. 20549 ____________________ FORM 11-K ANNUAL REPORT Pursuant to Section 15(d) of the Securities Exchange Act of 1934 [X] ANNUAL REPORT PURSUANT 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 Commission File Number 0-20045 ____________________ A. Full title of the plan and address of the plan, if different from that of the issuer named below: WATSON PHARMACEUTICALS, INC. EMPLOYEES' 401(K) PROFIT-SHARING PLAN B. Name of issuer of the securities held pursuant to the plan and the address of its principal executive office: WATSON PHARMACEUTICALS, INC. 311 Bonnie Circle Corona, CA 92880 WATSON PHARMACEUTICALS, INC. EMPLOYEES' 401(K) PROFIT-SHARING PLAN Financial Statements and Supplemental Schedule As of December 31, 2000 and 1999 And for the Year Ended December 31, 2000 Contents --------
Page(s) ------- REPORT OF INDEPENDENT ACCOUNTANTS...................................... 2 FINANCIAL STATEMENTS: Statements of Net Assets Available for Benefits................... 3 Statement of Changes in Net Assets Available for Benefits......... 4 Notes to Financial Statements..................................... 5-8 SUPPLEMENTAL SCHEDULE: Schedule of Assets (Held at End of Year).......................... 9 SIGNATURES............................................................. 10 EXHIBITS: Consent of Independent Accountants................................ 12
1 Report of Independent Accountants To the Participants and Employee Benefits Plan Committee of the Watson Pharmaceuticals, Inc. Employees' 401(k) Profit-Sharing Plan In our opinion, the accompanying statements 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 the Watson Pharmaceuticals, Inc. Employees' 401(k) Profit-Sharing Plan (the "Plan") at December 31, 2000 and December 31, 1999, and the changes in net assets available for benefits for the year ended December 31, 2000 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 audits. We conducted our audits of these statements in accordance with auditing standards generally accepted in the United States of America, which 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 audits provide a reasonable basis for our opinion. Our audits were conducted for the purpose of forming an opinion on the basic financial statements taken as a whole. The supplemental schedule of assets held at end of year 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. This supplemental schedule is the responsibility of the Plan's management. 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. /s/ PRICEWATERHOUSECOOPERS LLP Orange County, California June 22, 2001 WATSON PHARMACEUTICALS, INC. EMPLOYEES' 401(K) PROFIT-SHARING PLAN Statements of Net Assets Available for Benefits -----------------------------------------------
December 31, 2000 1999 ------------ ----------- Assets: Investments: Investments, at fair value $38,481,864 $36,827,237 Loans to participants 931,838 805,613 ------------ ----------- Total investments 39,413,702 37,632,850 ------------ ----------- Contributions receivable: Company 84,438 146,316 Participant 271,777 409 ------------ ----------- Total contributions receivable 356,215 146,725 ------------ ----------- Net assets available for benefits $39,769,917 $37,779,575 ============ ===========
The accompanying notes are an integral part of these financial statements. 3 WATSON PHARMACEUTICALS, INC. EMPLOYEES 401(K) PROFIT-SHARING PLAN Statement of Changes in Net Assets Available for Benefits ---------------------------------------------------------
Year Ended December 31, 2000 ----------- Additions to net assets: Investment income: Interest and dividend income $ 145,125 Net depreciation in the fair value of registered investment company mutual funds (2,316,671) Net depreciation in the fair value of pooled separate accounts (85,517) ------ Total investment loss (2,257,063) ----------- Contributions: Rollover 1,252,349 Participant 6,868,331 Company 1,997,587 ----------- Total contributions 10,118,267 ----------- Total additions 7,861,204 ----------- Deductions from net assets: Benefits paid to participants (5,696,549) Administrative expenses (174,313) ----------- Total deductions (5,803,819) ----------- Net increase 1,990,342 Net asset available for benefits Beginning of year 37,779,575 ----------- End of year $39,769,917 ===========
The accompanying notes are an integral part of these financial statements. 4 WATSON PHARMACEUTICALS, INC. EMPLOYEES' 401(K) PROFIT-SHARING PLAN Notes to Financial Statements 1. General Description of the Plan The following description of the Watson Pharmaceuticals, Inc. Employees' 401(k) Profit-Sharing Plan (the "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 was adopted by Watson Pharmaceuticals, Inc. and certain subsidiaries (collectively, the "Company") on January 1, 1988. The Plan is a defined contribution plan covering substantially all employees of the Company who have met certain eligibility requirements. The Plan is subject to the provisions of the Employee Retirement Income Security Act of 1974 ("ERISA") and is administered by the Plan's Administration Committee. The Plan is intended to be a qualified defined contribution plan, which satisfies the requirements of Section 401(k) of the Internal Revenue Code (the "IRC") as amended. Under the IRC, participants are not liable for federal income taxes on employee contributions, Company contributions or Plan earnings thereon until such time as they are partially or completely withdrawn from the Plan. Due to the Company's acquisition of Schein Pharmaceutical, Inc. in 2000, a large number of participants in the Schein Pharmaceutical, Inc. Savings (the "Schein Plan") were enrolled in the Plan. The underlying net assets in the Schein Plan related to these new participants are expected to be transferred into the Plan in 2001. Vesting Participant contributions and related earnings are fully vested immediately. For the period ended December 31, 2000,participants vest in Company matching contributions at a rate of 20% each year until fully vested after five years. Benefits attributable to each participant will become fully vested in all accounts and benefits in the event of death, disability, normal retirement at age 65, or the complete or partial termination of the Plan. Contributions Participants may elect to contribute from 1% to 20% of their total eligible compensation to the Plan, subject to a maximum dollar limitation as defined by the IRC. For the period ended December 31, 2000, the Company contributes 50% of the first 6% of total compensation that a participant contributes to the Plan. In addition to Company matching contributions, the Company may elect to make discretionary profit sharing contributions. The Company did not make any profit sharing contributions in the current year. Participant Accounts Each participant's account is credited with (a) participant contributions, (b) Company matching contributions, (c) discretionary profit-sharing contribution, if any and (d) an allocation of account earnings. The benefit to which a participant is entitled is the benefit that can be provided from the 5 participant's vested account. Participants direct the investment of their accounts. Changes to these investment elections are allowed at any time. Investment Options The investment fund options consist of various pooled separate accounts and registered investment company mutual funds and, as of July 2000, a company stock fund, which are generally described below. The Principal Guaranteed Interest Accounts invest in private market bonds, commercial mortgages and mortgage-backed securities. The Principal Money Market Separate Account invests in high-quality commercial paper. The Principal Government Securities Separate Account invests in various types of government securities. The Principal Stock Emphasis Balanced Separate Account invests in other separate accounts of Principal Life Insurance Company, which usually invest from 50-100% of the assets in dynamic aggressive investment accounts and 0-50% in conservative and moderate investment accounts. The Principal Large Cap Stock Index Separate Account primarily invests in the common stocks of those companies listed in the Standard & Poor's 500 Stock Index. The Principal Medium Company Value Separate Account invests in medium sized stocks whose prices - relative to their companies' profits, assets, and other value measures - are lower than average. The Principal Small Company Value Separate Account invests in smaller stocks that are considered undervalued at the time of purchase. The Principal International Stock Separate Account invests in common stocks of companies located outside the U.S., mainly in Western Europe and Asia. The Vanguard Asset Allocation Fund is a domestic-hybrid fund, which divides its assets among common stocks, bonds, convertible securities and cash. The Vanguard U.S. Growth Fund invests in large companies that are projected to grow faster than the overall stock market. The American Century Ultra Fund invests in large companies that are projected to grow faster than the overall stock market, focusing on companies in rapidly expanding industries. The T. Rowe Price Mid-Cap Growth Fund invests in common stocks of companies of all sizes, with an emphasis toward mid-size companies - those with market values that currently range from approximately $1 billion to $8 billion. The Company Stock Fund invests in shares of Watson Pharmaceuticals, Inc. common stock ("Company common stock"). Participant Loans Participants may borrow a minimum of $1,000 and a maximum equal to the lesser of $50,000 or 50% of the participant's vested account balance. Each loan is collateralized by the participant's vested account balance and bears interest commensurate with local prevailing rates as determined by the Plan's Administration Committee. Repayment of principal and interest is provided by uniform payroll deductions over a period of up to five years for all loans unless loan proceeds were used to purchase a primary residence. Payment of Benefits Upon termination of service due to separation from the Company (including death, disability, or retirement), a participant will receive the value of the participant's vested interest in his or her account in a lump-sum amount or in certain cases, the participant may have the payment transferred to an IRA or another employer qualified plan, or the participant may elect to purchase a commercially insured annuity contract for the life of the participant. To the extent an account is vested in the Company Stock Fund, payment of all or part of that amount may be made in shares of Company Common Stock. Withdrawals are also permitted for financial hardship, which is determined pursuant to the provisions of the IRC, or, for participant contributions, after age 59 1/2. Benefits to participants are recorded when paid. 6 Forfeitures Forfeitures may be used to defray the reasonable costs and expenses of administering the Plan. Any forfeitures in excess of those used to defray costs and expenses shall either be reallocated among participants or used to reduce Company matching contributions and profit sharing contributions, if any. Administrative Expenses All administrative expenses related to the direct management of the Plan's investments and benefit payments were shared by the Plan and the Company. Professional fees incurred in connection with the Plan's annual compliance with ERISA and the SEC were paid by the Company. For the year ended December 31, 2000, the Company paid administrative expenses totaling $174,313 on behalf of the Plan. Plan Termination Although it has not expressed any intent to do so, the Company has the right under the Plan to discontinue its contributions at any time and to terminate the Plan, subject to the provisions of ERISA. In the event of Plan termination, participants will become 100 percent vested in their accounts and the net assets of the Plan will be allocated among the participants or their beneficiaries, after payment of any expenses properly chargeable to the Plan, in accordance with the provisions of ERISA. 2. Summary of Significant Accounting Policies Basis Of Accounting The financial statements of the Plan have been prepared on an accrual basis and in conformity with accounting principles generally accepted in the United States of America. 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 reported amounts of assets and liabilities, and disclosures of contingent assets and liabilities at the date of the financial statements and the reported amounts in the statement of changes in net assets available for benefits during the reporting period. Actual results could differ from those estimates. Risks And Uncertainties The Plan provides for various investment options in any combination of investment securities. Investment securities are exposed to various risks, such as interest rate, market and credit. Due to the level of risk associated with certain investment securities and the level of uncertainty related to changes in the value of investment securities, it is at least reasonably possible that changes in risks in the near term would materially affect participants' account balances and the amounts reported in the statements of net assets available for benefits and the statement of changes in net assets available for benefits. Investment Valuation and Income Recognition The Plan's investments are stated at fair value. Investments in pooled separate accounts are stated at fair value, based on the net asset value of the composite portfolio. Shares of registered investment company mutual funds and common stock are valued at quoted market prices. Net asset value is the fair market value of the securities on the last business day of the Plan year. Participant loans are valued at the unpaid principal amount of the loan, which approximates fair value. 7 Purchases and sales of securities are recorded on a trade-date basis. Interest income is recorded on the accrual basis. Dividends are recorded on the ex-dividend date. The Plan presents in the statement of changes in net assets available for benefits the net appreciation (depreciation) in the fair value of its investments, which consists of the realized gains or losses and unrealized appreciation (depreciation) on those investments. 3. Investments The following presents investments that represent 5 percent or more of the Plan's net assets as of December 31, 2000 and 1999: 2000 1999 Principal Money Market Account $4,308,532 $5,279,457 Principal Government Securities Account 2,145,058 N/A Principal Large Cap Stock Index Account 5,420,055 5,887,562 Vanguard Asset Allocation Fund 3,997,441 3,812,548 Vanguard U.S. Growth Fund 6,869,068 7,514,647 American Century Ultra Fund 4,336,632 4,879,803 T. Rowe Price Mid-Cap Growth Fund 4,314,227 2,604,830 4. Tax Status The Internal Revenue Service has determined and informed the Company by letter dated December 20, 2000, that the Plan and related trust are designed in accordance with applicable sections of the IRC. The Plan, however, has been amended since receiving the determination letter. Once qualified, the Plan is required to operate in conformity with the Code to maintain its qualification. The Company 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. Therefore, no provision for income taxes has been included in the Plan's financial statements. 5. Subsequent Event Effective January 1, 2001, the Plan was amended so that 1) participants vest in Company matching contributions at a rate of 33 1/3% each year until fully vested after three years and 2) the Company contributes 50% of the first 8% of total compensation that a participant contributes to the Plan. 8 Watson Pharmaceuticals, Inc. Employees' 401(k) Profit-Sharing Plan SCHEDULE OF ASSETS HELD AT END OF YEAR December 31, 2000
Identity of Issue Description of Investment Current Value ----------------- ------------------------- ------------- * Principal Guaranteed Interest Account $ 1,669,519 * Principal Money Market Account 4,308,532 * Principal Government Securities Account 2,145,058 * Principal Large Cap Stock Index Account 5,420,055 * Principal Medium Company Value Account 1,330,481 * Principal Stock Emphasis Balanced Account 978,601 * Principal Small Company Value Account 770,870 * Principal International Stock Account 1,833,329 American Century Ultra Fund 4,336,632 Vanguard Group Asset Allocation Fund 3,997,441 Vanguard Group U. S. Growth Fund 6,869,068 T. Rowe Price Funds Mid-Cap Growth Fund 4,314,227 Watson Pharmaceuticals, Inc. Company Stock Fund 508,051 Participant Loans Varying maturity dates, interest rates ranging from 8.75% to 12%, per annum 931,838 ------------- $ 39,413,702 =============
* Party-in-Interest Under ERISA, an asset held for investment purposes is any amount held by the Plan on the last day of the Plan fiscal year. 9 SIGNATURES 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 its behalf by the undersigned hereunto duly authorized. Watson Pharmaceuticals, Inc. Employees' 401(k) Profit-Sharing Plan By: WATSON PHARMACEUTICALS, INC. as plan administrator By: /S/ Robert C. Funsten --------------------------------------- Robert C. Funsten, Senior Vice President, General Counsel and Secretary Dated: June 29, 2001. 10 INDEX TO EXHIBIT Exhibit Number Description Page ---- 23.1 Consent of PricewaterhouseCoopers LLP 12 EX-23.1 2 dex231.txt CONSENT OF PRICEWATERHOUSE COOPERS LLP EXHIBIT 23.1 CONSENT OF INDEPENDENT ACCOUNTANTS We hereby consent to the incorporation by reference in the Registration Statement on Form S-8 (No. 333-38596) of Watson Pharmaceuticals, Inc. of our report dated June 22, 2001 relating to the financial statements and supplemental schedule of the Watson Pharmaceuticals, Inc. Employees' 401(k) Profit-Sharing Plan, which appears in this Form 11-K. /s/ PRICEWATERHOUSECOOPERS LLP Orange County, California June 29, 2001 12 -----END PRIVACY-ENHANCED MESSAGE-----