SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
Form 11-K
[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 1-4034 A
A. Full title of the plan and the address of the plan, if different from
that of the issuer named below:
DaVita Inc.
Retirement Savings Plan
B. Name of issuer of the securities held pursuant to the Plan and the
address of its principal executive office:
DaVita Inc.
21250 Hawthorne Boulevard, Suite 800
Torrance, California 90503-5517
REQUIRED INFORMATION
1. Financial statements filed as a part of this annual report:
Report of KPMG LLP, independent auditors, Audited Statements of Net Assets
Available for Benefits as of December 31, 2000 and 1999, Audited
Statements of Changes in Net Assets Available for Benefits for the Year
Ended December 31, 2000 and Notes to Financial Statements for the Years
Ended December 31, 2000 and 1999.
2. Exhibit filed as a part of this annual report: Exhibit 23.1 -
Consent of KPMG LLP, independent auditors.
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.
DAVITA INC.
RETIREMENT SAVINGS PLAN
Date: June 29, 2001 By: /s/ Marie Ficarella
---------------------------------
Marie Ficarella, Director
of Human Resources and Designated
Representative of the Plan Administrator
DAVITA INC.
RETIREMENT SAVINGS PLAN
Financial Statements and Supplemental Schedule
December 31, 2000 and 1999
(With Independent Auditors' Report Thereon)
DAVITA INC.
RETIREMENT SAVINGS PLAN
Table of Contents
Page
Independent Auditors' Report 1
Statements of Net Assets Available for Benefits 2
Statement of Changes in Net Assets Available for Benefits 3
Notes to Financial Statements 4
Schedule
1 Schedule H, Line 4i - Schedule of Assets (Held at End of Year) 10
Independent Auditors' Report
The Plan Administrator
DaVita Inc. Retirement Savings Plan:
We have audited the accompanying statements of net assets available for benefits
of DaVita Inc. (formerly Total Renal Care, Inc.) Retirement Savings Plan (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 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 DaVita Inc.
Retirement Savings Plan as of December 31, 2000 and 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.
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
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
Seattle, Washington
June 22, 2001
DAVITA INC.
RETIREMENT SAVINGS PLAN
Statements of Net Assets Available for Benefits
December 31, 2000 and 1999
Assets 2000 1999
------------------ ------------------
Investments, at fair value:
Connecticut General Life Insurance Company:
General accounts $ 15,500,027 13,926,531
Pooled separate accounts 41,880,824 39,425,033
DaVita Inc. common stock 10,157,153 2,576,561
Participant loans 2,513,961 2,289,995
------------------ ------------------
70,051,965 58,218,120
Receivables - employee contribution 448,161 --
------------------ ------------------
70,500,126 58,218,120
Liabilities - excess contributions payable 319,157 --
------------------ ------------------
Net assets available for benefits $ 70,180,969 58,218,120
================== ==================
See accompanying notes to financial statements.
2
DAVITA INC.
RETIREMENT SAVINGS PLAN
Statement of Changes in Net Assets Available for Benefits
Year ended December 31, 2000
Additions to net assets attributed to:
Investment income:
Interest $ 1,023,282
Net appreciation in fair value of investments 3,463,340
--------------
4,486,622
--------------
Contributions:
Employer 53,620
Employee 14,438,456
--------------
14,492,076
Rollovers and transfers received from other plans 106,569
--------------
Total additions 19,085,267
--------------
Deductions from net assets attributed to:
Benefit payments 6,941,118
Administration expenses 83,563
Participant loans receivable terminated due to withdrawal of participant 97,737
--------------
Total deductions 7,122,418
--------------
Net increase 11,962,849
Net assets available for benefits at beginning of year 58,218,120
--------------
Net assets available for benefits at end of year $ 70,180,969
==============
See accompanying notes to financial statements.
3
DAVITA INC.
RETIREMENT SAVINGS PLAN
Notes to Financial Statements
December 31, 2000 and 1999
(1) Description of Plan
The following description of the DaVita Inc. (formerly Total Renal Care,
Inc.) Retirement Savings Plan (the "Plan") provides only general
information. Participants should refer to the Plan agreement for a more
complete description of the Plan's provisions.
(a) General
The Plan is a defined contribution plan for employees of DaVita Inc.
(Company) established effective October 1, 1994 and most recently
amended effective December 1, 1998. Employees become eligible to
participate upon completing six months of service with at least 500
hours and attaining age 21. The Plan is subject to the provisions of
the Employee Retirement Income Security Act of 1974 ("ERISA").
(b) Contributions
Participants may contribute an amount equal to not less than 1
percent nor more than 20 percent of their compensation for the
contribution period. Participants direct the investment of their
contributions into various investment options offered by the Plan.
The Plan currently offers a general account, 12 pooled separate
accounts and Company common stock as investment options for
participants. Employee contributions are recorded in the period
during which the Company makes payroll deductions from the
participant's earnings.
The Company made a matching contribution, where governed by Hawaii
union contracts, in an amount equal to $.50 for each $1.00
contributed by an employee, up to a maximum of 5 percent of the
participant's compensation. The Company's Hawaii operations were
sold in June 2000. The Company may also make discretionary non-
elective contributions and profit sharing contributions. There were
no discretionary non-elective contributions or profit sharing
contributions made in 2000. Matching Company contributions are
recorded annually. Discretionary non-elective contributions and
profit sharing contributions, if any, are recorded annually.
(c) Participant Accounts
Each participant's account is credited with the participant's
contribution and allocation of the Company's contribution and plan
earnings. Allocations are based on participant earnings or account
balances, as defined. The benefit to which a participant is entitled
is the benefit that can be provided from the participant's vested
account.
4
DAVITA INC.
RETIREMENT SAVINGS PLAN
Notes to Financial Statements
December 31, 2000 and 1999
(d) Vesting
Participants are immediately vested in their voluntary contributions
plus actual earnings thereon. For Company contributions, if any,
employees hired before July 1, 1998 became fully vested in their
account balance on that date, and after July 1, 1998 vesting is
based on years of service. A participant becomes 25 percent vested
after two years of service, 50 percent vested after three years of
service, 75 percent vested after four years of service and 100
percent vested after five years of service. However, if an active
participant dies prior to attaining the normal retirement age, the
participant's account becomes 100 percent vested.
(e) Payment of Benefits
On termination of service, a participant may elect to receive either
a lump-sum amount equal to the value of the vested portion of his or
her account, installment payments, or a distribution in the form of
an annuity. Participants with an account balance of less than $5,000
must elect the lump sum payment option. Distributions are subject to
the applicable provisions of the Plan agreement.
(f) Participant Loans
Participants may borrow up to a maximum of $50,000 or 50 percent of
the vested portion of his or her account balance, whichever is less.
A loan is secured by the balance in the participant's account and
bears interest at a rate commensurate with market rates for similar
loans, as defined (8.75% to 10.00% for the years ended December 31,
2000 and 1999).
(2) Summary of Accounting Policies
(a) Method of Accounting
The Plan's financial statements are prepared on the accrual basis of
accounting.
(b) Investment Valuation
Investments in pooled separate accounts are recorded at fair value,
as determined by the unit value reported by Connecticut General Life
Insurance Company ("CG Life"). Investments in the CIGNA Charter
Guaranteed Long-Term Fund are non-fully benefit responsive due to
certain potential restrictions on withdrawls exceeding 10% of the
CIGNA Charter Guaranteed Long-Term Fund assets in any given year and
are recorded at fair value. Participant loans receivable are valued
at cost which approximates fair value. The Company common stock is
valued at its quoted market price. Purchases and sales of
investments are recorded on a trade-date basis.
5
DAVITA INC.
RETIREMENT SAVINGS PLAN
Notes to Financial Statements
December 31, 2000 and 1999
(c) Benefits
Benefits are recorded when paid.
(d) 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 assets and
liabilities and changes therein, and disclosure of contingent assets
and liabilities. Actual results could differ from those estimates.
(e) New Accounting Pronouncements
In June 1998, the Financial Accounting Standards Board issued
Statement of Financial Accounting Standards (SFAS) No. 133,
Accounting for Derivative Instruments and Hedging Activities, as
amended by SFAS Nos. 137 and 138. SFAS No. 133 requires that an
entity recognize all derivatives and measure those instruments at
fair value.
SFAS No. 133 is effective for fiscal years beginning after June 15,
2000. Pursuant to SFAS No. 137, the Plan is required to adopt SFAS
No. 133 effective January 1, 2001. The impact of SFAS No. 133 on the
Plan financial statements is immaterial.
(3) Investments
Investments that represent five percent or more of the Plan's net assets
at either December 31, 2000 or 1999 are separately identified below:
2000 1999
------------------- -------------------
CIGNA Charter Guaranteed Long-Term Fund, 414,119
and 393,213 units $ 15,498,826 13,909,934
CIGNA Charter Large Company Stock - Growth Fund,
431,518 and 404,532 units 6,230,325 7,126,493
CIGNA Charter Large Company Stock - Growth II
Fund, 800,116 and 712,538 units 10,359,202 10,472,976
CIGNA Charter Small Company Stock - Growth Fund,
265,156 and 191,231 units 4,521,023 2,978,236
CIGNA Charter Foreign Stock II Fund, 317,226 and
293,088 units 3,894,204 3,943,064
CIGNA Lifetime40 Fund, 607,137 and 584,700 units 7,674,968 7,466,777
Davita Inc. Common Stock, 593,118 and 372,598
shares 10,157,153 2,576,561
6
DAVITA INC.
RETIREMENT SAVINGS PLAN
Notes to Financial Staements
December 31, 2000 and 1999
(a) Investment Performance
During 2000, the Plan's net investment income (including gains and
losses on investments bought and sold, as well as held during the
year) was as follows:
Interest earnings:
General account:
CIGNA Charter Guaranteed Long-Term Fund $ 816,233
Participant loans 207,049
----------------
1,023,282
----------------
Net appreciation in fair value of investments:
Pooled separate accounts:
CIGNA Charter Large Company Stock Fund (300,808)
CIGNA Charter Large Company Stock - Growth Fund (1,373,307)
CIGNA Charter Large Company Stock - Growth II Fund (1,473,390)
CIGNA Charter Large Company Stock - Value I Fund 99,003
CIGNA Charter Small Company Stock - Growth Fund 219,626
CIGNA Charter Small Company Stock - Value I Fund 165,427
CIGNA Charter Foreign Stock II Fund (373,792)
CIGNA Lifetime20 Fund (26,147)
CIGNA Lifetime30 Fund (10,104)
CIGNA Lifetime40 Fund (112,272)
CIGNA Lifetime50 Fund (2,151)
CIGNA Lifetime60 Fund 6,007
Davita Inc. common stock 6,645,248
----------------
3,463,340
----------------
Net investment income $ 4,486,622
================
(4) Investment Contract with Insurance Company
The Plan participates in a contract with CG Life via the CIGNA Charter
Guaranteed Long-Term Fund. CG Life prospectively guarantees the interest
rates credited for the CIGNA Charter Guaranteed Long-Term Fund for six-
month periods. For the Plan's investment in the CIGNA Charter Guaranteed
Long-Term Fund, the Plan is credited with interest at the rate declared in
the contract which was 5.80% and 5.75% at December 31, 2000 and 1999,
respectively, net of asset charges. The CIGNA Charter Guaranteed Long-Term
Fund is included in the financial statements at fair value.
7
DAVITA INC.
RETIREMENT SAVINGS PLAN
Notes to Financial Staements
December 31, 2000 and 1999
(5) Related-Party Transactions
Plan assets include investments in funds managed by CG Life, a wholly
owned division of CIGNA Corporation (CIGNA). CIGNA is the Plan's trustee
and as such, transactions with the trustee qualify as party-in-interest
transactions. Personnel and facilities of the Company have been used to
perform administrative functions for the Plan at no charge to the Plan. In
addition, the Plan holds shares of DaVita Inc, the Plan Sponsor, which
also qualifies as a party-in-interest.
(6) Plan Termination
Although it has not expressed any intent to do so, the Company has the
right under the Plan 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.
(7) Tax Status
The Internal Revenue Service has determined and informed the Company by a
letter dated November 25, 1996, 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's administrator believes that the Plan is
designed and is currently being operated in compliance with the applicable
requirements of the IRC. Therefore, no provision for income taxes has been
included in the Plan's financial statements.
(8) Reconciliation of Plan Financial Statements to the Form 5500
The following is a reconciliation of net assets available for benefits per
the financial statements to the Form 5500 at December 31, 2000:
Net assets available for benefits per the financial statements $ 70,180,969
Benefit claims payable (11,834)
----------------------
Net assets available for benefits per the Form 5500 $ 70,169,135
======================
Net increase in net assets available for benefits per the financial
statements $ 11,962,849
Benefit claims payable (11,834)
----------------------
Net increase in net assets available for benefits
per the Form 5500 $ 11,951,015
======================
8
DAVITA INC.
RETIREMENT SAVINGS PLAN
Notes to Financial Staements
December 31, 2000 and 1999
(9) Forfeitures
At December 31, 2000 and 1999, forfeited non-vested accounts totaled
$323,084 and $259,820, respectively. These accounts will be used to reduce
future employer contributions or pay Plan expenses. Also, in 2000,
employer contributions were not reduced by forfeited nonvested accounts.
9
Schedule 1
DAVITA INC.
RETIREMENT SAVINGS PLAN
Schedule H, Line 4i - Schedule of Assets (Held at End of Year)
Year ended December 31, 2000
Description of investment including
Identity of issue, borrower, maturity date, rate of interest,
lessor, or similar party collateral, par or maturity value Cost Current value
-------------------------------------------------- --------------------------------------------- ---------- -------------
* Connecticut General Life Insurance Company CIGNA Charter Guaranteed Long-Term Fund n/a ** $ 15,498,826
* Connecticut General Life Insurance Company CIGNA Charter Large Company Stock Fund n/a ** 3,108,579
* Connecticut General Life Insurance Company CIGNA Charter Large Company Stock-Growth Fund n/a ** 6,230,325
* Connecticut General Life Insurance Company CIGNA Charter Large Company Stock-Growth II Fund n/a ** 10,359,202
* Connecticut General Life Insurance Company CIGNA Charter Large Company Stock-Value I Fund n/a ** 1,138,875
* Connecticut General Life Insurance Company CIGNA Charter Small Company Stock-Growth Fund n/a ** 4,521,023
* Connecticut General Life Insurance Company CIGNA Charter Small Company Stock-Value I Fund n/a ** 942,973
* Connecticut General Life Insurance Company CIGNA Charter Foreign Stock II Fund n/a ** 3,894,204
* Connecticut General Life Insurance Company CIGNA Lifetime20 Fund n/a ** 1,337,650
* Connecticut General Life Insurance Company CIGNA Lifetime30 Fund n/a ** 1,448,084
* Connecticut General Life Insurance Company CIGNA Lifetime40 Fund n/a ** 7,674,968
* Connecticut General Life Insurance Company CIGNA Lifetime50 Fund n/a ** 1,037,297
* Connecticut General Life Insurance Company CIGNA Lifetime60 Fund n/a ** 187,644
* DaVita Inc. Common Stock n/a ** 10,157,153
* Participant Loans 8.75% to 10.0% -- 2,513,961
* Connecticut General Life Insurance Company Cash Equivalents (CIGNA Charter Guaranteed
Short-Term Fund) n/a ** 1,201
* Indicates an identified person known to be a party-in-interest to the Plan.
** Cost information has been omitted for participant directed investments.
10