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 [ fee required]
For the fiscal year end December 31, 2001
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 ______
A. Full title of the plan and address of the plan, if different from that
of the issuer named below:
Genesis Health Ventures, Inc. Retirement Plan
B. Name of issuer of the securities held pursuant to the plan and the
address of its principal executive office:
Genesis Health Ventures, Inc.
101 East State Street
Kennett Square, PA 19348
(610) 444-6350
Genesis Health Ventures, Inc. Retirement Plan Financial Statements, Supplemental
Schedule and Exhibits as of December 31, 2001 and 2000 and for the year ended
December 31, 2001.
The following plan financial statements, schedules and reports, have been
prepared in accordance with the financial reporting requirements of ERISA.
Page No.
Items 1 - 3: Not applicable under ERISA filing.
Item 4: Financial Statements and Exhibits.
Index to Financial Statements 2
Signature Page 11
Index to Exhibits 12
1
GENESIS HEALTH VENTURES, INC.
RETIREMENT PLAN
Financial Statements and Supplemental Schedule
December 31, 2001 and 2000
(With Independent Auditors' Report Thereon)
2
Independent Auditors' Report
The Pension Committee and the Participants
Genesis Health Ventures, Inc. Retirement Plan:
We were engaged to audit the accompanying statements of net assets available for
plan benefits of the Genesis Health Ventures, Inc. Retirement Plan as of
December 31, 2001 and 2000, and the related statement of changes in net assets
available for plan benefits for the year ended December 31, 2001. 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 auditing standards generally accepted
in the United States of America. 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, 2001 and 2000, and the changes in net assets available for benefits
for the year ended December 31, 2001, in conformity with accounting principles
generally accepted in the United States of America.
Our audits were performed for the purpose of forming an opinion on the 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 audit 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/ KPMG LLP
June 25, 2002
3
GENESIS HEALTH VENTURES, INC.
RETIREMENT PLAN
Statements of Net Assets Available for Plan Benefits
December 31, 2001 and 2000
2001 2000
------------ ------------
Assets:
Cash $ -- 4,048
Investments, at fair value 180,362,747 203,595,550
Employer matching receivable 6,211,685 5,955,149
Employee contribution receivable 1,958,329 2,206,251
Loans to participants 5,786,895 5,386,170
------------ ------------
Total assets 194,319,656 217,147,168
------------ ------------
Liabilities:
Due to administrator 49,162 88,380
------------ ------------
Total liabilities 49,162 88,380
------------ ------------
Net assets available for plan benefits $194,270,494 217,058,788
============ ============
See accompanying notes to financial statements.
4
GENESIS HEALTH VENTURES, INC.
RETIREMENT PLAN
Statement of Changes in Net Assets Available for Plan Benefits
Year ended December 31, 2001
Additions:
Contributions:
Employees $ 29,014,037
Employer 6,211,685
Rollovers 415,454
Interest income and dividends 1,730,891
Transfers from other plans (note 1) 386,783
-------------
Total additions 37,758,850
-------------
Deductions:
Administrative expenses 1,037,546
Distributions and other 28,810,187
Net depreciation in fair value of investments 30,699,411
-------------
Total deductions 60,547,144
-------------
Net decrease (22,788,294)
Net assets:
Beginning of year 217,058,788
-------------
End of year $ 194,270,494
=============
See accompanying notes to financial statements.
5
(1) Description of the Plan
The following description of the Genesis Health Ventures, Inc. Retirement
Plan (the Plan) is provided for general information purposes only.
Participants should refer to the Plan document for a more complete
description of the Plan's provisions.
(a) General
The Plan is for the benefit of all employees of Genesis Health
Ventures, Inc. (the Company) who complete 12 consecutive months
during which they have been credited with at least 1,000 hours of
service in their first year or any calendar year thereafter, and
who have not been employed under the terms and conditions of a
collective bargaining agreement. The Plan was adopted on
January 1, 1989, and is a defined contribution plan subject to the
provisions of the Employee Retirement Income Security Act of 1974
(ERISA) and Section 401(k) of the Internal Revenue Code.
In October 2001, the Respiratory Health Services 401(k) Plan was
merged into the Plan as a result of an acquisition made by a
subsidiary of the Company. Total assets transferred from the
Respiratory Health Services 401(k) Plan were $386,783.
On October 2, 2001, the Company consummated a plan of
reorganization (the Reorganization Plan) under Chapter 11 of the
Bankruptcy Code pursuant to a September 20, 2001 order entered by
the Bankruptcy Court approving the Reorganization Plan proposed by
the Company.
(b) Contributions
Eligible employees may make a voluntary, tax-deferred annual
contribution of up to $10,500 to the Plan for the years ended
December 31, 2001 and 2000. This figure is adjusted annually for
inflation as provided under the Internal Revenue Code. Each plan
year, the board of directors of the Company may fix the
proportionate contribution at any level, and intends to announce
the level of such contributions in advance of each plan year.
During the year ended December 31, 2001, the Company contributed
amounts on behalf of each participant as follows:
For one to six years of service - 50% of the individual's
contribution, limited to 1% of the employee's annual salary.
For seven years or more of service - 75% of the individual's
contribution, limited to 3% of the employee's annual salary.
The Company may also elect to make an additional profit-sharing
contribution to the Plan. Such contribution is a discretionary
contribution, subject to approval by the Company's board of
directors. The Company did not elect to make any profit-sharing
contributions for the year ended December 31, 2001.
In order for a participant to share in the employer's matching
and/or profit-sharing contributions for any plan year, the
participant must have met one of the following conditions during
the plan year to be considered an "active participant":
(a) Remained employed on the last day of the plan year;
(b) Retired;
(c) Died; or
(d) Became disabled.
In addition, a participant is also required to have a minimum of
1,000 hours of service in the plan year to share in profit-sharing
contributions.
(c) Forfeitures
Forfeitures of nonvested Company contributions are used to offset
such future contributions.
6
(d) Participant Accounts
Participants have a nonforfeitable interest in their contributions
at all times, although there are certain restrictions and options
on withdrawals. The participants' vested interest in their
accounts under the Plan as it is attributable to employer matching
contributions and employer profit-sharing contributions is as
follows:
Vested
Years of service percentage
--------------------------------------------------- ----------
Fewer than five years None
Five years or more 100%
Attainment of age 65, death, or disability while
in the employ of the Company 100%
The Plan provides for modification of the vesting schedule to 100%
after three or more years of service in certain situations.
(e) Payment of Benefits
Normal and deferred retirement benefits, disability benefits, and
vested benefits are generally distributed as a single sum. A
participant may request that normal retirement benefits be
distributed in approximately equal installments over a period of
years not to exceed the life expectancy of the participant and the
participant's designated beneficiary.
(f) Investment Income
Unrealized appreciation (depreciation) of the Federated Capital
Preservation Fund, Janus Fund, Janus Adviser Worldwide Fund, First
Union Diversified Bond Group Trust Fund, Vanguard Wellington Fund,
Evergreen Growth and Income Fund, MFS Capital Opportunities Fund,
MFS New Discovery Fund, and First Union Enhanced Stock Market Fund
is determined based upon quoted market values. Dividends in the
Federated Capital Preservation Fund are reinvested. Dividends,
interest income, and capital gains (losses) in the Janus Fund,
Janus Adviser Worldwide Fund, First Union Diversified Bond Group
Trust Fund, Vanguard Wellington Fund, Evergreen Growth and Income
Fund, MFS Capital Opportunities Fund, MFS New Discovery Fund, and
First Union Enhanced Stock Market Fund are reinvested. Such
amounts are added to or deducted from the participants' accounts
based on the terms of the Plan and are treated as net appreciation
(depreciation) in the fair value of investments in the
accompanying statement of changes in net assets available for plan
benefits.
(2) Summary of Significant Accounting Policies
The accompanying financial statements have been prepared on the accrual
basis of accounting and present the net assets available for plan
benefits and changes in those net assets.
(a) Administrative Expenses
Administrative expenses incurred in the operation of the Plan are
paid by the Plan.
(b) Investments
Investments are valued at fair value. Investments in the Federated
Capital Preservation Fund, Janus Fund, Janus Adviser Worldwide
Fund, First Union Diversified Bond Group Trust Fund, Vanguard
Wellington Fund, Evergreen Growth and Income Fund, MFS Capital
Opportunities Fund, MFS New Discovery Fund, and First Union
Enhanced Stock Market Fund are valued at the respective mutual
funds' net asset value.
7
(c) Use of Estimates
The preparation of financial statements in conformity with
accounting principles generally accepted in the United States of
America requires the Plan administrator to make estimates and
assumptions that affect the reported amounts of net assets
available for benefits at the date of the financial statements and
the changes in net assets available for benefits during the
reporting period. Actual results could differ from those
estimates.
(3) Investments
A participant may direct contributions in any of the following investment
options in increments of 1%:
Federated Capital Preservation Fund invests primarily in guaranteed
investment contracts.
Janus Fund invests primarily in large-cap equity funds.
Janus Adviser Worldwide Fund invests primarily in common stocks of
foreign and domestic companies.
First Union Diversified Bond Group Trust Fund invests in full maturity
bonds.
Vanguard Wellington Fund invests in a balance of equities and fixed
income securities.
MFS Capital Opportunities Fund invests in large- and mid-cap equity
funds.
MFS New Discovery Fund invests in small-cap equity funds.
First Union Enhanced Stock Market Fund invests in large-cap equity index
funds.
The Genesis Stock Fund was discontinued as an investment option on
June 5, 2000.
The following presents the investment balances at December 31, 2001 and
2000:
2001 2000
------------ -----------
Genesis Genesis Health Ventures, Inc. Stock Fund $ -- 48,872
Federated Capital Preservation Fund* 35,674,142 31,658,660
Janus Janus Fund* 53,601,529 82,146,368
Janus Janus Adviser Worldwide Fund* 31,299,052 44,411,947
First Union Diversified Bond Group Trust Fund* 17,664,265 11,407,104
Vanguard Vanguard Wellington Fund* 24,803,789 16,121,713
Evergreen Evergreen Growth and Income Fund -- 3,440,927
First Union Enhanced Stock Market Fund* 12,320,965 14,359,959
MFS Capital Opportunities Fund 4,128,982 --
MFS New Discovery Fund 870,023 --
------------ -----------
$180,362,747 203,595,550
============ ===========
*Represents 5% or more of the Plan's net assets.
During 2001, the Plan's investments in mutual funds (including gains and
losses on investments bought and sold, as well as held during the year)
depreciated in value by $30,699,411.
(4) Forfeitures
The total of nonvested forfeiture accounts used to reduce employer
contributions for 2001 and 2000 was $842,509 and $518,392, respectively.
As of December 31, 2001, there are no forfeiture accounts available for
the reduction of future employer contributions.
8
(5) Federal Income Tax
The Internal Revenue Service has determined that the Plan is designed in
accordance with applicable sections of the Internal Revenue Code and thus
is a qualified plan for federal income tax purposes. The Company believes
the Plan, as amended, continues to operate and qualify as designed.
(6) Plan Termination
Although it has not expressed any intent to do so, the Company reserves
the right to amend, suspend, and/or terminate the Plan at any time. Upon
termination, all participants will become fully vested in the amounts
standing to their credit under the Plan.
(7) Loan Fund
Participants are able to borrow up to 50% of their vested balance with a
minimum loan of $1,000 and a maximum loan of $50,000. Such loans are
generally repaid through payroll deductions over a period not to exceed
five years and bear interest at prime rate at the date of the loan. Only
one loan outstanding at a time is permitted. Prior plans merged into the
Plan permitted multiple loans, which were grandfathered into the Plan.
(8) Party-in-Interest Transactions
Plan investments in the First Union Diversified Bond Group Trust Fund and
the First Union Enhanced Stock Market Fund are shares of mutual funds
managed by First Union, the trustee, as defined by the Plan and therefore
these transactions qualify as party-in-interest transactions.
The Plan incurred $1,037,546 of administrative fees for First Union's
trustee and record-keeping services. These transactions qualify as
party-in-interest transactions.
9
Schedule 1
GENESIS HEALTH VENTURES, INC.
RETIREMENT PLAN
Schedule H, Line 4i - Schedule of Assets (Held at End of Year)
December 31, 2001
Fair
Description value
------------------------------------------------------------------------- ------------
Mutual funds:
Federated Capital Preservation Fund $ 35,674,142
Janus Fund 53,601,529
Janus Adviser Worldwide Fund 31,299,052
First Union Diversified Bond Group Trust Fund* 17,664,265
Vanguard Wellington Fund 24,803,789
First Union Enhanced Stock Market Fund* 12,320,965
MFS Capital Opportunities Fund 4,128,982
MFS New Discovery Fund 870,023
Loans to participants (interest rates range from 4.93% to 12.5%)* 5,786,895
------------
Total investments $186,149,642
============
* Represents a party-in-interest.
See accompanying independent auditors' report.
10
SIGNATURES
The Plan: Pursuant to the requirements of the Securities Exchange Act of 1934,
the trustees (or other person who administer the employee benefit plan) have
duly caused this annual report to be signed on its behalf by the undersigned
hereto duly authorized.
GENESIS HEALTH VENTURES, INC RETIREMENT PLAN
(Name of Plan)
By: /S/ James W. Tabak
----------------------------------
James W. Tabak, Sr. Vice President,
Human Resources
Date: July 1, 2002
EXHIBIT INDEX
Item
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23 Consent of Independent Auditors