As filed with the Securities and Exchange Commission on
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, 1998
OR
[ ] TRANSITION REPORT PURSUANT TO SECTION 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
Commission file number 1-4034
A. Full title of the plan and the address of the plan, if different from
that of the issuer named below:
Total Renal Care, Inc.
Retirement Savings Plan
B. Name of issuer of the securities held pursuant to the Plan and the
address of its principal executive office:
Total Renal Care, 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 PricewaterhouseCoopers LLP, independent accountants, Audited Statements
of Net Assets Available for Benefits, With Fund Information as of December
31, 1998 and 1997, Audited Statements of Changes in Net Assets Available
for Benefits, With Fund Information for the Years Ended December 31, 1998
and 1997, and Notes to Financial Statements for the Years Ended December
31, 1998 and 1997, and Notes to Financial Statements for the Years Ended
December 31, 1998 and 1997.
2. Exhibit filed as a part of this annual report: Exhibit 23- Consent
of PricewaterhouseCoopers LLP, independent accountants.
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.
TOTAL RENAL CARE, INC.
RETIREMENT SAVINGS PLAN
Date: June 28, 1999 By: /s/ Marie Ficarella
------------------------
Marie Ficarella, Director
of Human Resources and Designated
Representative of the Plan
Administrator
2
TOTAL RENAL CARE, INC.
RETIREMENT SAVINGS PLAN
Financial Statements and
Additional Information
December 31, 1998 and 1997
Total Renal Care, Inc.
Retirement Savings Plan
Index
- --------------------------------------------------------------------------------
Page
Financial Statements:
Report of Independent Accountants 1
Statement of Net Assets Available for Benefits, with Fund Information 2-4
Statement of Changes in Net Assets Available for Benefits, with Fund Information 5-7
Notes to Financial Statements 8-14
Supplemental Schedules:
Schedule I - Schedule of Assets Held for Investment Purposes 15-16
Schedule II - Schedule of Reportable Transactions 17-18
Report of Independent Accountants
To the Participants and Administrator
of the Total Renal Care, Inc. Retirement Savings Plan
In our opinion, the accompanying statements of net assets available for benefits
and the related statements of changes in net assets available for benefits
present fairly, in all material respects, the net assets available for benefits
of the Total Renal Care, Inc. Retirement Savings Plan at December 31, 1998 and
1997, and the changes in net assets available for benefits for the years then
ended, in conformity with generally accepted accounting principles. 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
generally accepted auditing standards 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 the opinion expressed
above.
Our audits were conducted for the purpose of forming an opinion on the basic
financial statements taken as a whole. The supplemental schedules of assets
held for investment purposes and reportable transactions are presented for the
purpose of additional analysis and are not a required part of the basic
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. The Fund Information in
the statements of net assets available for benefits and the statements of
changes in net assets available for benefits is presented for purposes of
additional analysis rather than to present the net assets available for benefits
and changes in net assets available for benefits of each fund. These
supplemental schedules and Fund Information are the responsibility of the Plan's
management. The supplemental schedules and Fund Information have been subjected
to the auditing procedures applied in the audits 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.
The schedule of assets held for investment purposes and the schedule of
reportable transactions that accompany the Plan's financial statements do not
disclose the historical cost of certain plan assets. Disclosure of this
information is required by the Department of Labor's Rules and Regulations for
Reporting and Disclosure under the Employee Retirement Income Security Act of
1974.
/s/ Price Waterhouse Coopers LLP
June 18, 1999
Total Renal Care, Inc.
Retirement Savings Plan
Statement of Net Assets Available for Benefits, with Fund Information
- -----------------------------------------------------------------------------------------------------------------------------------
December 31, 1998
Fund Information
----------------
Charter Charter Charter
Large Small Small
Charter Company Company Company
Guaranteed Stock - Stock - Stock -
Long-Term Growth Growth Value I
Fund Fund Fund Fund
Assets
Investments, as fair value
CIGNA Charter Guaranteed Long-Term Account $11,974,617
CIGNA Charter Large Company Stock - Growth Fund $ 4,736,775
CIGNA Charter Small Company Stock - Growth Fund $ 1,697,836
CIGNA Charter Small Company Stock - Value I Fund $ 54,075
Cash equivalents 27,732
----------- ----------- ----------- -----------
Net assets available for benefits $12,002,349 $ 4,736,775 $ 1,697,836 $ 54,075
=========== =========== =========== ===========
Charter Charter
Large Large Charter
Charter Company Company Large
Foreign Stock - Stock - Company
Stock II Value I Growth II Stock
Fund Fund Fund Fund
CIGNA Charter Foreign Stock II Fund $2,561,882
CIGNA Charter Large Company Stock - Value I Fund $ 54,281
CIGNA Charter Large Company Stock - Growth II Fund $ 6,305,605
CIGNA Charter Large Company Stock Fund $ 1,176,614
Cash equivalents
----------- ----------- ----------- -----------
Net assets available for benefits $ 2,561,682 $ 54,281 $ 6,305,605 $ 1,176,614
=========== =========== =========== ===========
The accompanying notes are an integral part of these financial statements.
2
Total Renal Care, Inc.
Retirement Savings Plan
Statement of Net Assets Available for Benefits, with Fund Information
(continued)
- --------------------------------------------------------------------------------
December 31, 1998
Fund Information
----------------
Lifetime20 Lifetime30 Lifetime40 Lifetime50
Fund Fund Fund Fund
Assets
Investments, at fair value
CIGNA Charter Guaranteed Long-Term Account
CIGNA Charter Large Company Stock - Growth Fund
CIGNA Charter Small Company Stock - Growth Fund
CIGNA Charter Small Company Stock - Value I Fund
CIGNA Charter Foreign Stock II Fund
CIGNA Charter Large Company Stock - Value I Fund
CIGNA Charter Large Company Stock - Growth II Fund
CIGNA Charter Large Company Stock Fund
CIGNA Lifetime20 Fund $ 743,689
CIGNA Lifetime30 Fund $ 955,152
CIGNA Lifetime40 Fund $5,720,653
CIGNA Lifetime50 Fund $ 588,036
CIGNA Lifetime60 Fund
Total Renal Care Holdings, Inc. Common Stock
Participant notes receivable
Cash equivalents
---------- --------- ---------- ----------
Net assets available for benefits $ 743,689 $ 955,152 $5,720,653 $ 588,036
========== ========= ========== ==========
Total Renal
Care
Holdings, Inc. Participant
Lifetime60 Common Notes
Fund Stock Receivable Total
Assets
Investments, at fair value
CIGNA Charter Guaranteed Long-Term Account $ 11,974,617
CIGNA Charter Large Company Stock - Growth Fund 4,736,775
CIGNA Charter Small Company Stock - Growth Fund 1,697,836
CIGNA Charter Small Company Stock - Value I Fund 54,075
CIGNA Charter Foreign Stock II Fund 2,561,882
CIGNA Charter Large Company Stock - Value I Fund 54,281
CIGNA Charter Large Company Stock - Growth II Fund 6,305,605
CIGNA Charter Large Company Stock Fund 1,176,614
CIGNA Lifetime20 Fund 743,689
CIGNA Lifetime30 Fund 955,152
CIGNA Lifetime40 Fund 5,720,653
CIGNA Lifetime50 Fund 588,036
CIGNA Lifetime60 Fund $ 92,923 92,923
Total Renal Care Holdings, Inc. Common Stock $4,343,015 4,343,015
Participant notes receivable $1,737,316 1,737,316
Cash equivalents 27,732
--------- ---------- ---------- -----------
Net assets available for benefits $ 92,923 $4,343,015 $1,737,316 $42,770,201
========= ========== ========== ===========
The accompanying notes are an integral part of these financial statements.
3
December 31, 1997
Fund Information
-----------------
American Warburg
Century - Pincus Total
Charter Fidelity Twentieth Advisor Renal Care
Guaranteed Advisor Century International Holdings, Inc. Participant
Long-Term Balanced Ultra Equity Common Notes
Fund Fund Fund Fund Stock Receivable Total
---------- ---------- ---------- ------------- -------------- ---------- ------------
Assets
Investments, at fair value
CIGNA Charter Guaranteed $5,920,950 $5,920,950
Long-Term Account
CIGNA Fidelity Advisor $3,109,971 3,109,971
Balanced Fund
CIGNA American Century -
Twentieth Century
Ultra Fund $3,698,292 3,698,292
CIGNA Warburg Pincus Advisor
International Equity Fund $1,557,626 1,557,626
Total Renal Care Holdings, Inc.
Common Stock $1,176,959 1,176,959
Participant notes receivable $752,284 752,284
---------- ---------- ---------- ---------- ---------- -------- -----------
Net assets available for benefits $5,920,950 $3,109,971 $3,698,292 $1,557,626 $1,176,959 $752,284 $16,216,082
========== ========== ========== ========== ========== ======== ===========
4
Total Renal Care, Inc..
Retirement Savings Plan
Statement of Changes in Net Assets Available for Benefits, with Fund Information
- --------------------------------------------------------------------------------
Year Ended December 31, 1998
Fund Information
----------------
Charter Charter Charter
Large Small Small
Charter Company Company Company Charter
Guaranteed Stock- Stock- Stock- Foreign
Long-Term Growth Growth Value I Stock II
Fund Fund Fund Fund Fund
Additions to net assets attributed to:
Investment income
Interest $ 484,535
Net appreciation (depreciation) in fair $ 412,505 $ (17,004) $ 4,971 $ (49,194)
----------- ---------- ---------- --------- ----------
value of investments 484,535 412,505 (17,004) 4,971 49,194
----------- ---------- ---------- --------- ----------
Contributions
Employer 23,010
Employee 2,127,361 447,623 249,182 37,193 352,135
----------- ---------- ---------- --------- ----------
2,150,371 447,623 249,182 37,193 352,135
----------- ---------- ---------- --------- ----------
Total additions 2,634,906 860,128 232,178 42,164 302,941
----------- ---------- ---------- --------- ----------
Deductions from net assets attributed to:
Benefit payments 524,329 158,055 46,103 715 70,259
Transaction charge 9,212 1,431 1,088 80 2,628
----------- ---------- ---------- --------- ----------
Total deductions 533,541 159,486 47,191 795 72,887
Change in forfeiture reserve, net 3,087 (37) (15) (33)
----------- ---------- ---------- --------- ----------
Net increase prior to interfund
transfers 2,104,452 700,605 184,972 41,368 230,021
Interfund transfers, net (215,964) 182,712 (87,062) 12,706 1,860,851
Transfer of assets due to plan merger 4,192,911 3,853,458 1,599,916 471,010
----------- ---------- ---------- --------- ----------
Net increase (decrease) 6,081,399 4,736,775 1,697,836 54,075 2,561,882
Net assets available for benefits at
beginning of year 5,920,950 - - - -
----------- ---------- ---------- --------- ----------
Net assets available for benefits at
end of year $12,002,349 $4,736,775 $1,697,836 $ 54,075 $2,561,882
=========== ========== ========== ========= ==========
Charter Charter American
Large Large Charter Century-
Company Company Large Fidelity Twentieth
Stock- Stock- Company Advisor Century
Value I Growth II Stock Balanced Ultra
Fund Fund Fund Fund Fund
Additions to net assets attributed to:
Investment income
Interest
Net appreciation (depreciation) in fair $ 3,626 $ 230,311 $ 31,077 $ 414,640 $ 1,212,842
-------- ---------- ---------- ---------- -----------
value of investments $ 3,626 $ 230,311 $ 31,077 $ 414,640 $ 1,212,842
-------- ---------- ---------- ---------- -----------
Contributions
Employer
Employee 42,195 758,000 249,234 629,619 811,435
-------- ---------- ---------- ---------- -----------
45,195 988,311 988,311 330,311 1,044,259
Total additions 45,821 988,311 330,311 1,044,259 1,933,277
Deductions from net assets attributed to:
Benefit payments 40 104,316 31,902 72,857 76,637
Transaction charge 2,022 244 1,207 1,013
-------- ---------- ---------- ---------- -----------
Total deductions 40 106,338 32,146 74,064 77,650
-------- ---------- ---------- ---------- -----------
Change in forfeiture reserve, net 34
Net increase prior to interfund
transfers 45,781 881,973 298,131 970,195 1,855,627
Interfund transfers, net 8,500 5,423,632 88,229 (4,080,166) (5,553,919)
Transfer of assets due to plan merger 790,254
-------- ---------- ---------- ---------- -----------
Net increase (decrease) 54,281 6,305,605 1,176,614 (3,109,971) (3,698,292)
-------- ---------- ---------- ---------- -----------
Net assets available for benefits at
beginning of year - - - 3,109,971 3,698,292
-------- ---------- ---------- ---------- -----------
Net assets available for benefits at
end of year $ 54,281 $6,305,605 $1,176,614 $ - $ -
-------- ---------- ---------- ---------- -----------
The accompanying notes are an integral part of these financial statements.
5
Total Renal Care, Inc.
Retirement Savings Plan
Statment of Changes in Net Assets Available for Benefits, with Fund Information
- -----------------------------------------------------------------------------------------------------------------------------------
Year Ended December 31, 1998
Fund Information
----------------
Warburg
Pinens
Advisor
International
Equity Lifetime20 Lifetime30 Lifetime40
Fund Fund Fund Fund
Additions to net assets attributed to:
Investment income
Interest
Net appreciation in fair value of investments $ 232,559 $ 11,413 $ 18,066 $ 127,315
------------ ---------- ---------- ----------
232,559 11,413 18,066 127,315
------------ ---------- ---------- ----------
Contributions
Employer
Employee 346,396 140,472 165,584 777,474
------------ ---------- ---------- ----------
346,396 140,472 165,584 777,474
------------ ---------- ---------- ----------
Total additions 578,955 151,885 183,650 904,789
Deductions from net assets attributed to:
Benefit payments 28,945 30,431 24,022 113,877
Transaction charge 583 763 690 2,200
Participant notes receivable terminated
due to withdrawal of participant
------------ ---------- ---------- ----------
Total deductions 29,528 31,194 24,712 116,077
------------ ---------- ---------- ----------
Change in forfeiture reserve, net
Net increase prior to interfund transfers 549,427 120,691 158,938 788,712
Interfund transfers, net (2,107,053) (21,408) (15,527) 3,930,798
Transfer of assets due to plan merger 644,406 811,741 1,001,143
------------ ---------- ---------- ----------
Net (decrease) increase (1,557,626) 743,689 955,152 5,720,653
Net assets available for benefits at beginning of
year 1,557,626 - - -
------------ ---------- ---------- ----------
Net assets available for benefits at end of year $ - $ 743,689 $ 955,152 $5,720,653
============ ========== ========== ==========
Total Renal
Care
Holdings, Inc. Participant
Lifetime50 Lifetime60 Common Notes
Fund Fund Stock Receivable Total
Additions to net assets attributed to:
Investment income
Interest $ 91,341 $ 575,876
Net appreciation in fair value of investments $ 15,420 $ 3,277 $ 168,486 2,779,310
------------ ---------- ---------- ---------- -----------
15,420 3,277 168,486 91,341 3,355,186
------------ ---------- ---------- ---------- -----------
Contributions
Employer 509 23,519
Employee 88,641 25,044 962,536 8,210,124
------------ ---------- ---------- ---------- -----------
88,641 25,044 963,045 8,233,643
------------ ---------- ---------- ---------- -----------
Total additions 104,061 28,321 1,131,531 91,341 11,588,829
Deductions from net assets attributed to:
Benefit payments 8,985 379 159,188 1,451,040
Transaction charge 232 101 6,599 30,093
Participant notes receivable terminated
due to withdrawal of participant 58,252 58,252
------------ ---------- ---------- ---------- -----------
Total deductions 9,217 480 165,787 58,252 1,539,385
Change in forfeiture reserve, net (153) 2,815
------------ ---------- ---------- ---------- -----------
Net increase prior to interfund transfers 94,844 27,841 965,591 33,089 10,052,259
Interfund transfers, net 19,951 3,018 192,016 358,676 -
Transfer of assets due to plan merger 473,241 62,064 2,008,449 593,267 16,501,860
------------ ---------- ---------- ---------- -----------
Net (decrease) increase 588,036 92,923 3,166,056 985,032 26,554,119
Net assets available for benefits at beginning of
year - - 1,176,959 752,284 16,216,082
------------ ---------- ---------- ---------- -----------
Net assets available for benefits at end of year $ 588,036 $ 92,923 $4,343,015 $1,737,316 $42,770,201
============ ========== ========== ========== ===========
The accompanying ntoes are an integral part of these financial statements.
6
Year Ended December 31, 1997
Fund Information
----------------------------
American Warburg
Century - Pincus Total
Charter Fidelity Twentieth Advisor Renal Care
Guaranteed Advisor Century International Holdings, Inc. Participant
Long-Term Balanced Ultra Equity Common Notes
Fund Fund Fund Fund Stock Receivable Total
---------- ---------- ---------- ---------- ----------- ---------- -----------
Additions to net assets
attributed to:
Investment income
Interest $ 321,696 $ 56,982 $ 378,678
Net appreciation
(depreciation) in fair
value of investments $ 478,059 $ 526,222 $ (108,519) $ 161,202 1,056,964
---------- ---------- ---------- ---------- ----------- ---------- -----------
321,696 478,059 526,222 (108,519) 161,202 56,982 1,435,642
---------- ---------- ---------- ---------- ----------- ---------- -----------
Contributions
Employer - - - - - -
Employee 1,340,319 877,934 1,191,372 559,279 329,650 4,298,554
---------- ---------- ---------- ---------- ----------- ---------- -----------
1,340,319 877,934 1,191,372 559,279 329,650 4,298,554
---------- ---------- ---------- ---------- ----------- ---------- -----------
Total additions 1,662,015 1,355,993 1,717,594 450,760 490,852 56,982 5,734,196
Deductions from net assets
attributed to:
Benefit payments 333,366 107,760 129,067 61,113 7,320 638,626
Transaction charge 6,847 1,105 1,459 736 2,076 12,223
Participant notes receivable
terminated
due to withdrawal of
participant 17,766 17,766
---------- ---------- ---------- ---------- ----------- ---------- -----------
Total deductions 340,213 108,865 130,526 61,849 9,396 17,766 668,615
Change in forfeiture reserve,
net 868 868
---------- ---------- ---------- ---------- ----------- ---------- -----------
Net increase prior to interfund
transfers 1,322,670 1,247,128 1,587,068 388,911 481,456 39,216 5,066,449
Interfund transfers, net (380,416) 26,896 55,805 (52,422) 165,068 185,069 -
---------- ---------- ---------- ---------- ----------- ---------- -----------
Net increase 942,254 1,274,024 1,642,873 336,489 646,524 224,285 5,066,449
Net assets available for
benefits at beginning of year 4,978,696 1,835,947 2,055,419 1,221,137 530,435 527,999 11,149,633
---------- ---------- ---------- ---------- ----------- ---------- -----------
Net assets available for
benefits at end of year $5,920,950 $3,109,971 $3,698,292 $1,557,626 $1,176,959 $ 752,284 $16,216,082
========== =========== ========== ========== =========== ========== ===========
The accompanying notes are an integral part of these financial statements.
7
Total Renal Care, Inc.
Retirement Savings Plan
Notes to Financial Statements
- --------------------------------------------------------------------------------
1. Description of Plan
The following description of the 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.
General
The Plan is a defined contribution plan established effective October 1,
1994 and most recently amended effective December 1, 1998. Effective July
1, 1998, current employees of Total Renal Care Holdings, Inc. (the
"Company") became eligible to participate immediately. Employees hired
after July 1, 1998 become eligible to participate upon completing six
months of service and attaining the age of 21. Prior to July 1, 1998,
employees became eligible to participate upon completing one year of
service with 1,000 hours of service. The Plan is subject to the provisions
of the Employee Retirement Income Security Act of 1974 ("ERISA").
Contributions
Effective July 1, 1998, participants may contribute an amount equal to not
less than 1 percent nor more than 20 percent of their compensation for the
contribution period. The Company will only make 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 may also make profit sharing
contributions and discretionary non-elective contributions. There were no
profit sharing or discretionary non-elective contributions made in 1998 or
1997. Prior to July 1, 1998, participants could contribute an amount equal
to not less than 1 percent nor more than 15 percent of their compensation
for the contribution period. The Company could also have made discretionary
non-elective contributions.
Participant Accounts
Each participant's account is credited with the participant's contribution
and allocation of the Company's contribution and Plan earnings. Earnings
are allocated by fund based on the ratio of a participant's account
invested in a particular fund to all participants' investments in that
fund. The benefit to which a participant is entitled is the benefit that
can be provided from the participant's account.
8
Total Renal Care, Inc.
Retirement Savings Plan
Notes to Financial Statements
- --------------------------------------------------------------------------------
Vesting
Participants are immediately vested in their voluntary contributions plus
actual earnings thereon. For participants hired after July 1, 1998, the
balance of vesting in the participants' accounts 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. Prior to July 1, 1998, all participants became 20 percent vested
after one year of service, 40 percent vested after two years of service, 60
percent vested after three years of service, 80 percent vested after four
years of service and 100 percent vested after five years of service.
Employees hired before July 1, 1998 became fully vested in their account
balance.
Investment Options
Upon enrollment in the Plan, a participant may currently direct
contributions among any of the following investment options:
. Charter Guaranteed Long-Term Fund - Funds are invested in the CIGNA
Charter Guaranteed Long-Term Account, which provides a guaranteed rate
of return reset semiannually.
. Charter Large Company Stock - Growth Fund - Funds are invested in the
CIGNA Charter Large Company Stock - Growth Fund, which invests in large
company stocks.
. Charter Small Company Stock - Growth Fund - Funds are invested in the
CIGNA Charter Small Company Stock - Growth Fund, which invests primarily
in small company stocks.
. Charter Small Company Stock - Value I Fund - Funds are invested in the
CIGNA Charter Small Company Stock - Value I Fund, which invests in small
company stocks.
. Charter Foreign Stock II Fund - Funds are invested in the CIGNA Charter
Foreign Stock II Fund, which invests in large foreign company stock.
. Charter Large Company Stock - Value I Fund - Funds are invested in the
CIGNA Charter Large Company Stock - Value I Fund, which invests
primarily in stocks listed on the New York Stock Exchange.
9
Total Renal Care, Inc.
Retirement Savings Plan
Notes to Financial Statements
- --------------------------------------------------------------------------------
. Charter Large Company Stock - Growth II Fund - Funds are invested in the
CIGNA Charter Large Company Stock - Growth II Fund, which invests
primarily in common stock, convertible securities and preferred stock
traded on U.S. exchanges or over-the-counter.
. Charter Large Company Stock Fund - Funds are invested in the CIGNA
Charter Large Company Stock Fund, which invests primarily in domestic
equity securities.
. Lifetime20 Fund - Funds are invested in five actively managed separate
accounts including the CIGNA Fidelity Advisor Growth Opportunities Fund,
CIGNA Warburg Pincus Advisor Emerging Growth Fund, CIGNA Warburg Pincus
Advisor International Equity Fund, CIGNA Charter Actively Managed (Core)
Fixed Income Fund, and the CIGNA Charter High Yield Bond Fund.
. Lifetime30 Fund - Funds are invested in six actively managed separate
accounts including the CIGNA Fidelity Advisor Growth Opportunities Fund,
CIGNA Charter Growth & Income Fund, CIGNA Warburg Pincus Advisor
Emerging Growth Fund, CIGNA Warburg Pincus Advisor International Equity
Fund, CIGNA Charter Actively Managed (Core) Fixed Income Fund, and the
CIGNA Charter High Yield Bond Fund.
. Lifetime40 Fund - Funds are invested in seven actively managed separate
accounts including the CIGNA Fidelity Advisor Growth Opportunities Fund,
CIGNA Vanguard Growth & Income Fund, CIGNA Charter Growth & Income Fund,
CIGNA Warburg Pincus Advisor Emerging Growth Fund, CIGNA Warburg Pincus
Advisor International Equity Fund, CIGNA Charter Actively Managed (Core)
Fixed Income Fund, and the CIGNA Charter High Yield Bond Fund.
. Lifetime50 Fund - Funds are invested in seven actively managed separate
accounts including the CIGNA Fidelity Advisor Growth Opportunities Fund,
CIGNA Charter Growth & Income Fund, CIGNA Vanguard Growth & Income Fund,
CIGNA Warburg Pincus Advisor Emerging Growth Fund, CIGNA Warburg Pincus
Advisor International Equity Fund, CIGNA Charter Actively Managed (Core)
Fixed Income Fund, and the CIGNA Charter High Yield Bond Fund.
. Lifetime60 Fund - Funds are invested in five actively managed separate
accounts including the CIGNA Charter Growth & Income Fund, CIGNA
Vanguard Growth & Income Fund, CIGNA Warburg Pincus Advisor
International Equity Fund, CIGNA Charter Short-Term Fixed Income Fund,
and the CIGNA Charter Actively Managed (Core) Fixed Income Fund.
10
Total Renal Care, Inc.
Retirement Savings Plan
Notes to Financial Statements
- --------------------------------------------------------------------------------
. Total Renal Care Holdings, Inc. Common Stock - Funds are invested solely
in shares of Total Renal Care Holdings, Inc. common stock.
Participants may change their investment options at any time.
Payment of Benefits
Effective July 1, 1998 on termination of service, a participant may elect
to receive either a lump-sum amount equal to the value of his or her
account, installment payments, or a distribution in the form of an annuity.
Prior to July 1, 1998, a participant could elect to receive a lump-sum
amount equal to the value of his or her account, a distribution in the form
of an annuity, or a combination of both. Distributions are subject to the
applicable provisions of the Plan agreement.
Participant Notes Receivable
Participants may borrow up to the lesser of $50,000 or 50 percent of the
vested portion of their account balance, subject to certain restrictions,
in accordance with interest rates and collateral requirements established
by the Company.
Cash Equivalents
Contributions received prior to year end awaiting investment in the
appropriate investment option at December 31, 1998 are invested in the
CIGNA Charter Guaranteed Short-Term Account, which is recorded at fair
value, and are included as cash equivalents within the fund in which units
are subsequently purchased.
2. Summary of Accounting Policies
Method of Accounting
The Plan's financial statements are prepared on the accrual basis of
accounting, and reflect management's estimates and assumptions, such as
those regarding fair value, that affect the recorded amounts. Significant
estimates used are discussed throughout the notes to financial statements.
11
Total Renal Care, Inc.
Retirement Savings Plan
Notes to Financial Statements
- --------------------------------------------------------------------------------
Investments
Investments in pooled separate accounts (CIGNA Charter Large Company Stock-
Growth Fund, CIGNA Charter Small Company Stock - Growth Fund, CIGNA Charter
Small Company Stock - Value I Fund, CIGNA Charter Foreign Stock II Fund,
CIGNA Charter Large Company Stock - Value I Fund, CIGNA Charter Large
Company Stock - Growth II Fund, CIGNA Charter Large Company Stock Fund,
CIGNA Lifetime20 Fund, CIGNA Lifetime30 Fund, CIGNA Lifetime40 Fund, CIGNA
Lifetime50 Fund and CIGNA Lifetime60 Fund) are recorded at fair value, as
determined by the unit value as reported by the Connecticut General Life
Insurance Company ("CG Life"). The investment in the CIGNA Charter
Guaranteed Long-Term Account is non-fully benefit responsive and is
recorded at fair value. Participant notes receivable are valued at cost
which approximates fair value. The Company common stock is valued at its
quoted market price. Effective August 1, 1998, the Plan's investments in
the CIGNA Fidelity Advisor Balanced Fund, the CIGNA American Century
Twentieth Century Ultra Fund and the CIGNA Warburg Pincus Advisor
International Equity Fund were deleted as investment options.
Contributions
Employee contributions are recorded in the period during which the Company
makes payroll deductions from the participants' earnings. Matching Company
contributions are recorded annually. Profit sharing contributions and
discretionary non-elective contributions, if any, are recorded annually.
Benefits
Benefit claims are recorded as expenses when they have been approved for
payment and paid by the Plan.
3. Deposit With Insurance Company
The Plan participates in a contract with CG Life via an investment in the
CIGNA Charter Guaranteed Long-Term Account. CG Life commingles the assets
of the CIGNA Charter Guaranteed Long-Term Account with other assets. For
the Plan's investment in the CIGNA Charter Guaranteed Long-Term Account the
Plan is credited with interest at the rate specified in the contract which
ranged from 6.05% to 5.95% and was 6.05% for the years ended December 31,
1998 and 1997, respectively, net of asset charges. CG Life prospectively
guaranteed the interest rates credited for the CIGNA Charter Guaranteed
Long-Term Account for six months. As discussed in Note 2, the CIGNA Charter
Guaranteed Long-Term Account is included in the financial statements at
fair value which, principally because of the periodic rate reset process,
approximates contract value.
12
Total Renal Care, Inc.
Retirement Savings Plan
Notes to Financial Statements
- --------------------------------------------------------------------------------
4. Investments
Investments that represent 5 percent or more of the Plan's net assets are
separately identified below.
December 31,
1998 1997
CIGNA Charter Guaranteed Long-Term Account $11,974,617 $5,920,950
interest rates, 5.95%; 6.05%
CIGNA Charter Large Company Stock - Growth Fund 4,736,775 -
units, 346,255; -
CIGNA Charter Foreign Stock II Fund 2,561,882 -
units, 246,809; -
CIGNA Charter Large Company Stock - Growth II Fund 6,305,605 -
units, 594,308; -
CIGNA Fidelity Advisor Balanced Fund - 3,109,971
units, - ; 113,752
CIGNA American Century - Twentieth Century Ultra Fund - 3,698,292
units, - ; 95,415
CIGNA Warburg Pincus Advisor International Equity Fund - 1,557,626
units, - ; 70,163
CIGNA Lifetime40 Fund 5,720,653 -
units, 530,181; -
Total Renal Care Holdings, Inc. Common Stock 4,343,015 1,176,959
shares, 146,922; 42,799
5. Participant Notes Receivable
Under the terms of the Plan, participants may borrow from their accounts up
to the lesser of $50,000 or 50% of their vested account balance. Loan
transactions are treated as a transfer to/from the investment fund from/to
Participant Notes Receivable. 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% and 10.00% for the
years ended December 31, 1998 and 1997, respectively).
6. 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.
13
Total Renal Care, Inc.
Retirement Savings Plan
Notes to Financial Statements
- --------------------------------------------------------------------------------
7. Income Taxes
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 and tax counsel believe 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
Certain balances included on lines 31 and 32 of the Annual Return/Report of
Employee Benefit Plan (the "Form 5500") have been reclassified for purposes
of presentation in these financial statements to provide additional
disclosure.
9. Transfer from Affiliated Plan
Effective September 1, 1998, assets of the Renal Treatment Center 401(k)
Plan were transferred to the Plan.
10. Forfeitures
The net change in forfeiture reserve represents the net change in the
available forfeiture reserve balance from the prior year plus the current
year forfeitures generated. Forfeitures result from nonvested benefit
payments remaining in the Plan for all terminated employees. Upon reaching
the break-in-service requirement, as defined in the Plan agreement,
forfeitures generated are added to the forfeiture reserve balance. The
forfeiture reserve of $87,069 and $15,271 at December 31, 1998 and 1997,
respectively, is included in the CIGNA Charter Guaranteed Long-Term Account
and is available to offset contributions or to pay Plan expenses, which
would be otherwise payable by the Company, in accordance with the Plan
agreement.
11. Subsequent Event
Effective March 17, 1999, assets of the Western Nephrology and Metabolic
Bone Disease, P.C. Employee Profit Sharing Plan were transferred to the
Plan and participants became eligible to participate in the Plan subject
to the provisions of the Plan agreement.
14
Total Renal Care, Inc. Supplemental Schedule
Retirement Savings Plan Schedule I
Line 27a Form 5500 - Schedule of Assets Held for Investment Purposes
December 31, 1998
- --------------------------------------------------------------------------------
(c)
(b) Description of investment including (e)
Identity of Issue, borrower, maturity date, rate of interest, (d) Current
(a) lessor, or similar party collateral, par or maturity value Cost value
* Connecticut General Life CIGNA Charter Guaranteed
Insurance Company Long-Term Account
5.95% $11,974,617 $11,974,617
* Connecticut General Life CIGNA Charter Large Company
Insurance Company Stock - Growth Fund
$13.68/unit 4,309,869 4,736,775
* Connecticut General Life CIGNA Charter Small Company
Insurance Company Stock - Growth Fund
$9.88/unit 1,680,605 1,697,836
* Connecticut General Life CIGNA Charter Small Company
Insurance Company Stock - Value I Fund
$9.59/unit 49,127 54,075
Connecticut General Life CIGNA Charter Foreign Stock II Fund
* Insurance Company $10.38/unit 2,578,654 2,561,882
* Connecticut General Life CIGNA Charter Large Company
Insurance Company Stock - Value I Fund
$11.86/unit 50,662 54,281
* Connecticut General Life CIGNA Charter Large Company
Insurance Company Stock - Growth II Fund
$10.61/unit 5,987,119 6,305,605
* Connecticut General Life CIGNA Charter Large Company
Insurance Company Stock Fund
$13.27/unit 1,087,653 1,176,614
* Indicates an identified person known to be a party-in-interest to the Plan.
15
Total Renal Care, Inc. Supplemental Schedule
Retirement Savings Plan Schedule I
Line 27a Form 5500 - Schedule of Assets Held for Investment Purposes
December 31, 1998 (continued)
- --------------------------------------------------------------------------------
(c)
(b) Description of investment including (e)
Identity of Issue, borrower, maturity date, rate of interest, (d) Current
(a) lessor, or similar party collateral, par or maturity value Cost value
Connecticut General Life CIGNA Lifetime20 Fund
* Insurance Company $10.70/unit $ 726,898 $ 743,689
Connecticut General Life CIGNA Lifetime30 Fund
* Insurance Company $10.75/unit 931,793 955,152
Connecticut General Life CIGNA Lifetime40 Fund
* Insurance Company $10.79/unit 5,550,507 5,720,653
Connecticut General Life CIGNA Lifetime50 Fund
* Insurance Company $10.86/unit 571,383 588,036
Connecticut General Life CIGNA Lifetime60 Fund
* Insurance Company $10.96/unit 89,537 92,923
* National Financial Total Renal Care Holdings, Inc.
Services Corporation Common Stock
$29.56/share ** 4,343,015
* Connecticut General Life Cash Equivalents (CIGNA Charter 27,732 27,732
Insurance Company Short-Term Account)
* Participant Notes Receivable 8.75% - 10.00% 1,737,316 1,737,316
* Indicates an identified person known to be a party-in-interest to the Plan.
** Cost information is not currently available.
16
Total Renal Care, Inc. Supplemental Schedule
Retirement Savings Plan Schedule II
Line 27d Form 5500 - Schedule of Reportable transactions
Year Ended December 31, 1998
- --------------------------------------------------------------------------------
(a) (b) (c) (d) (e) (f) (g) (h) (i)
Identity of party Description of asset Purchase Selling Lease Expense Cost of Current value Net gain
involved (include interest rate price price Rental incurred asset of asset on or (loss)
and maturity in case with transaction
of a loan) transaction date
Connecticut General Purchases into CIGNA $7,147,616 N/A N/A N/A $7,147,616 $7,147,616 -
Life Insurance Charter Guaranteed
Company Long-Term Account
Connecticut General Sales from CIGNA N/A $1,581,298 N/A N/A 1,581,298 1,581,298 -
Life Insurance Charter Guaranteed
Company Long-Term Account
Connecticut General Purchases into CIGNA 4,592,468 N/A N/A N/A 4,592,468 4,592,468 -
Life Insurance Charter Large Company
Company Stock - Growth Fund
Connecticut General Sales from CIGNA N/A 268,198 N/A N/A 284,123 268,198 $ (15,925)
Life Insurance Charter Large Company
Company Stock - Growth Fund
Connecticut General Purchases into CIGNA 1,912,714 N/A N/A N/A 1,912,714 1,912,714 -
Life Insurance Charter Small Company
Company Stock - Growth Fund
Connecticut General Sales from CIGNA N/A 197,874 N/A N/A 232,386 197,874 (34,512)
Life Insurance Charter Small Company
Company Stock - Growth Fund
Connecticut General Purchases into CIGNA 2,849,417 N/A N/A N/A 2,849,417 2,849,417 -
Life Insurance Charter Foreign
Company Stock II Fund
Connecticut General Sales from CIGNA N/A 238,341 N/A N/A 271,110 238,341 (32,769)
Life Insurance Charter Foreign
Company Stock II Fund
Connecticut General Purchases into CIGNA 6,655,241 N/A N/A N/A 6,655,241 6,655,241 -
Life Insurance Charter Large Company
Company Stock - Growth II Fund
Connecticut General Sales from CIGNA N/A 579,947 N/A N/A 660,989 579,947 (81,042)
Life Insurance Charter Large Company
Company Stock - Growth II Fund
Connecticut General Purchases into CIGNA 1,171,937 N/A N/A N/A 1,171,937 1,171,937 -
Life Insurance Charter Large Company
Company Stock Fund
Connecticut General Sales from CIGNA N/A 76,400 N/A N/A 84,815 76,400 (8,415)
Life Insurance Charter Large Company
Company Stock Fund
Connecticut General Purchases into CIGNA 844,191 N/A N/A N/A 844,191 844,191 -
Life Insurance Fidelity Advisor
Company Balanced Fund
Connecticut General Sales from CIGNA N/A 4,368,802 N/A N/A 3,353,018 4,368,802 1,015,784
Life Insurance Fidelity Advisor
Company Balanced Fund
17
Total Renal Care, Inc. Supplemental Schedule
Retirement Savings Plan Schedule II
Line 27d Form 5500 - Schedule of Reportable transactions
Year Ended December 31, 1998 (continued)
- --------------------------------------------------------------------------------
(a) (b) (c) (d) (e) (f) (g) (h) (i)
Identity of party Description of asset Purchase Selling Lease Expense Cost of Current value Net gain
involved (include interest rate price price Rental incurred asset of asset on or (loss)
and maturity in case with transaction
of a loan) transaction date
Connecticut General Purchases into CIGNA $1,283,417 N/A N/A N/A $1,283,417 $1,283,417 -
Life Insurance American Century -
Company Twentieth Century
Ultra Fund
Connecticut General Sales from CIGNA N/A $6,103,551 N/A N/A 4,260,321 6,103,551 $1,843,230
Life Insurance American Century -
Company Twentieth Century
Ultra Fund
Connecticut General Purchases into CIGNA 422,945 N/A N/A N/A 422,945 422,945 -
Life Insurance Warburg Pincus Advisor
Company International Equity Fund
Connecticut General Sales from CIGNA Warburg N/A 2,213,130 N/A N/A 1,972,704 2,213,130 240,426
Life Insurance Pincus Advisor
Company International Equity Fund
Connecticut General Purchases into CIGNA 791,407 N/A N/A N/A 791,407 791,407 -
Life Insurance Lifetime20 Fund
Company
Connecticut General Sales from CIGNA N/A 59,131 N/A N/A 65,675 59,131 (6,544)
Life Insurance Lifetime20 Fund
Company
Connecticut General Purchases into CIGNA 992,771 N/A N/A N/A 992,771 992,771 -
Life Insurance Lifetime30 Fund
Company
Connecticut General Sales from CIGNA N/A 55,685 N/A N/A 61,035 55,685 (5,350)
Life Insurance Lifetime30 Fund
Company
Connecticut General Purchases into CIGNA 5,956,661 N/A N/A N/A 5,956,661 5,956,661 -
Life Insurance Lifetime40 Fund
Company
Connecticut General Sales from CIGNA N/A 363,323 N/A N/A 402,282 363,323 (38,959)
Life Insurance Lifetime40 Fund
Company
National Financial Purchases into Total 1,438,530 N/A N/A N/A 1,438,530 1,438,530 -
Services Renal Care Holdings,
Corporation Inc. Common Stock
National Financial Sales from Total Renal N/A 449,800 N/A N/A ** 449,800 **
Services Care Holdings, Inc.
Corporation Common Stock
** Cost information is not presently available.
18