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
For the fiscal year ended December 31, 2001
OR
[ ]TRANSITION REPORT PURSUANT TO SECTION 15(d) OF THE SECURITIES EXCHANGE
ACT OF 1934
For the transition period from ____ to ____.
Commission file number 000-23249
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A. Full title of the plan and the address of the plan, if different from
that of the issuer named below:
PROFIT SHARING PLAN OF
PRIORITY HEALTHCARE CORPORATION AND AFFILIATES
B. Name of issuer of the securities held pursuant to the plan and the
address of its principal executive office:
PRIORITY HEALTHCARE CORPORATION
250 Technology Park, Suite 124
Lake Mary, Florida 32746
REQUIRED INFORMATION
Item 4. The Plan is subject to the Employee Retirement Income Security
Act of 1974 ("ERISA") and the Plan's financial statements and
schedules have been prepared in accordance with the financial
reporting requirements of ERISA. Such financial statements and
schedules are included in this Report in lieu of the information
required by Items 1-3 of Form 11-K.
Financial Statements and Exhibits
(a) Financial Statements
INDEPENDENT AUDITORS' REPORT
FINANCIAL STATEMENTS:
STATEMENTS OF NET ASSETS AVAILABLE FOR PLAN BENEFITS, WITH FUND
INFORMATION, AT DECEMBER 31, 2001 AND 2000
STATEMENTS OF CHANGES IN NET ASSETS AVAILABLE FOR PLAN BENEFITS, WITH
FUND INFORMATION, FOR THE YEARS ENDED DECEMBER 31, 2001 AND 2000
NOTES TO FINANCIAL STATEMENTS
SUPPLEMENTAL SCHEDULES*:
SCHEDULE OF ASSETS HELD FOR INVESTMENT PURPOSES AT DECEMBER 31, 2001
(SCHEDULE I)
*NOTE - OTHER SCHEDULES HAVE BEEN OMITTED BECAUSE THEY ARE
NOT APPLICABLE.
(b) Exhibits
23 - Consent of Ent & Imler CPA Group, PC
INDEPENDENT AUDITORS' REPORT
To the Administrator and
Administrative Committee of
The Profit Sharing Plan of Priority
Healthcare Corporation and Affiliates:
We have audited the accompanying statements of net assets available for
plan benefits, with fund information, of The Profit Sharing Plan of Priority
Healthcare Corporation and Affiliates (the "Plan") as of December 31, 2001 and
2000, and the related statements of changes in net assets available for plan
benefits, with fund information, for the years then ended. These financial
statements are the responsibility of the Plan's management. Our responsibility
is to express an opinion on the 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 audits 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 plan benefits, with fund
information, as of December 31, 2001 and 2000 and the changes in net assets
available for plan benefits, with fund information, for the years then ended in
conformity with accounting principles generally accepted in the United States
of America.
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 for investment purposes 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.
ENT & IMLER CPA GROUP, PC
Indianapolis, Indiana
June 21, 2002
PROFIT SHARING PLAN OF
PRIORITY HEALTHCARE CORPORATION
AND AFFILIATES
STATEMENT OF NET ASSETS AVAILABLE FOR PLAN BENEFITS, WITH FUND INFORMATION
--------------------------------------------------------------------------
DECEMBER 31, 2001
Fund Information
--------------------------------------------------------------------------
Cardinal PHC
Common Common Mutual Loan
Stock Stock Funds Fund Total
------------- -------------- --------------- -------------- --------------
ASSETS:
Investments, at fair value: $ - $ 1,762,481 $ 3,153,915 $ 44,373 $ 4,960,769
Receivables:
Employer contributions - 196,817 679,326 - 876,143
Employee contributions - - - - -
Accrued investment income 46 2 - 48
------------ ------------- ------------- ------------- ------------
Total assets - 1,959,344 3,833,243 44,373 5,836,960
LIABILITIES:
Other liabilities - - - - -
------------ ------------- ------------- ------------- ------------
Net assets available for
plan benefits $ - $ 1,959,344 $ 3,833,243 $ 44,373 $ 5,836,960
============ ============= ============= ============= ============
See auditors' report and accompanying notes to the financial statements.
PROFIT SHARING PLAN OF
PRIORITY HEALTHCARE CORPORATION
AND AFFILIATES
STATEMENT OF NET ASSETS AVAILABLE FOR PLAN BENEFITS, WITH FUND INFORMATION
--------------------------------------------------------------------------
DECEMBER 31, 2000
Fund Information
-------------------------------------------------------------------------
Cardinal PHC
Common Common Mutual Loan
Stock Stock Funds Fund Total
------------- -------------- --------------- -------------- --------------
ASSETS:
Investments, at fair value: $ 144,246 $ 1,171,624 $ 2,492,890 $ 49,468 $ 3,858,228
Receivables:
Employer contributions - 157,152 425,992 - 583,144
Employee contributions - - - - -
Accrued investment income 35 86 - - 121
------------ ------------- ------------- ------------- ------------
Total assets 144,281 1,328,862 2,918,882 49,468 4,441,493
LIABILITIES:
Other liabilities - - - - -
------------ ------------- ------------- ------------- ------------
Net assets available for
plan benefits $ 144,281 $ 1,328,862 $ 2,918,882 $ 49,468 $ 4,441,493
============= ============= ============= ============= ============
See auditors' report and accompanying notes to the financial statements.
PROFIT SHARING PLAN OF
PRIORITY HEALTHCARE CORPORATION
AND AFFILIATES
STATEMENT OF CHANGES IN NET ASSETS AVAILABLE FOR PLAN BENEFITS, WITH FUND
INFORMATION FOR THE YEAR ENDED DECEMBER 31, 2001
-------------------------------------------------------------------------
Fund Information
-------------------------------------------------------------------------
Cardinal PHC
Common Common Mutual Loan
Stock Stock Funds Fund Total
------------- -------------- --------------- -------------- --------------
Contributions:
Employer $ - $ 196,817 $ 679,326 $ - $ 876,143
Employee - 215,425 716,736 - 932,161
Rollover - 5,915 17,575 23,490
------------ ------------- ------------- -------------- -----------
Total contributions - 418,157 1,413,637 - 1,831,794
------------ ------------- ------------- -------------- -----------
Investment Income:
Interest and dividends 54 1,595 130,099 4,512 136,260
Realized gains and losses 112,383 86,983 (207,370) - (8,004)
Net appreciation
(depreciation) in fair
value of investments (109,934) (163,636) (83,516) - (357,086)
------------ ------------- ------------- -------------- -----------
Total investment income 2,503 (75,058) (160,787) 4,512 (228,830)
------------ ------------- ------------ -------------- -----------
Total additions 2,503 343,099 1,252,850 4,512 1,602,964
Distributions to participants - (33,371) (170,537) - (203,908)
Administrative expenses (87) (3,404) - (98) (3,589)
Net transfers (to) from
other funds (146,697) 324,158 (167,952) (9,509) -
------------ ------------- ------------ ------------- -----------
Net increase in net assets
available for plan benefits (144,281) 630,482 914,361 (5,095) 1,395,467
Beginning of year 144,281 1,328,862 2,918,882 49,468 4,441,493
------------ ------------- ------------ -------------- -----------
End of year $ - $ 1,959,344 $ 3,833,243 $ 44,373 $5,836,960
============ ============= ============= ============== ===========
See auditors' report and accompanying notes to the financial statements.
PROFIT SHARING PLAN OF
PRIORITY HEALTHCARE CORPORATION
AND AFFILIATES
STATEMENT OF CHANGES IN NET ASSETS AVAILABLE FOR PLAN BENEFITS, WITH FUND
INFORMATION FOR THE YEAR ENDED DECEMBER 31, 2000
-------------------------------------------------------------------------
Fund Information
-------------------------------------------------------------------------
Cardinal PHC
Common Common Mutual Loan
Stock Stock Funds Fund Total
------------- -------------- --------------- -------------- --------------
Contributions:
Employer $ - $ 157,152 $ 425,992 $ - $ 583,144
Employee - 108,978 443,073 - 552,051
Rollover - 5,694 14,760 20,454
------------ ------------ ------------ ------------ -----------
Total contributions - 271,824 883,825 - 1,155,649
------------ ------------ ------------ ------------ -----------
Investment Income:
Interest and dividends 633 1,443 220,600 5,366 228,042
Realized gains and losses 32,589 385,186 13,648 - 431,423
Net appreciation 54,633 426,230 (339,698) - 141,165
(depreciation) in fair
value of investments ------------ ------------ ------------ ------------ -----------
Total investment income 87,855 812,859 (105,450) 5,366 800,630
------------ ------------ ------------ ------------ -----------
Total additions 87,855 1,084,683 778,375 5,366 1,956,279
Distributions to participants (1,515) (28,815) (142,143) - (172,473)
Administrative expenses (243) (1,845) - (157) (2,245)
Net transfers (to) from
other funds (71,249) (278,242) 394,981 (45,490) -
------------ ------------ ------------ ------------ -----------
Net increase in net assets
available for plan benefits 14,848 775,781 1,031,213 (40,281) 1,781,561
Beginning of year 129,433 553,081 1,887,669 89,749 2,659,932
------------ ------------ ------------ ------------ -----------
End of year $ 144,281 $ 1,328,862 $ 2,918,882 $ 49,468 $4,441,493
============ ============= ============ ============ ===========
See auditors' report and accompanying notes to the financial statements.
PROFIT SHARING PLAN OF
PRIORITY HEALTHCARE CORPORATION
AND AFFILIATES
NOTES TO FINANCIAL STATEMENTS
AS OF DECEMBER 31, 2001 AND 2000
NOTE 1 - DESCRIPTION OF THE PLAN
The following brief description of the Profit Sharing Plan of Priority
Healthcare Corporation and Affiliates is provided for general information
purposes only. Participants should refer to the plan agreement for more
complete information.
General
Effective January 1, 1999, Priority Healthcare Corporation adopted the
Profit Sharing Plan of Priority Healthcare Corporation and Affiliates (the
"Plan") which is a combined profit sharing and 401(k) pre-tax savings plan,
using the Prism Prototype Retirement Plan and Trust (the "Prism Plan"). The
purpose of the Plan is to provide retirement income and other benefits to
eligible employees of Priority Healthcare Corporation and its Affiliates (the
"Company").
Participation
Employees are eligible to participate in the Company's profit sharing
program of the Plan on January 1, April 1, July 1 or October 1, whichever comes
first, after completing one year of service and attaining age eighteen. An
employee is considered to have completed one year of service at the end of the
first twelve-month period during which the employee has completed no fewer than
1,000 hours of service.
Employees are eligible to make 401(k) pre-tax contributions to the Plan
beginning on January 1, April 1, July 1 or October 1, whichever comes first,
after 90 days of employment and attaining age eighteen.
Expenses
Certain expenses of the plan were paid by the Company and approximated
$4,800 in 2001 and $3,200 in 2000.
Administration
The Plan is administered by a committee (the "Committee") appointed by the
Compensation and Stock Option Committee of the Company's Board of Directors. The
Plan has a trust agreement with Key Trust (the "Trustee") whereby the Trustee
receives contributions, invests Plan assets and distributes amounts for benefit
payments as directed by the Committee. All trustee's fees and other
administrative expenses, exclusive of those incurred in relation to the
Committee, are paid by the Plan.
Contributions and Allocations to Participants
The Company's annual profit sharing contribution to the Plan is a
discretionary amount determined by the Board of Directors. The profit sharing
contribution, before forfeitures, for 2001 and 2000 was $909,826 and $606,530,
respectively.
Participants may authorize that a pre-tax amount between 1% and 13% of
their annual compensation be contributed on their behalf to the Plan. However,
the annual contribution per employee cannot exceed $10,500 for 2001 and 2000.
Participants may also make qualified rollover contributions to the Plan.
Profit sharing contributions are allocated to participants on the basis of
the ratio that each participant's compensation bears to the total compensation
paid to all Plan participants for the applicable Plan year. The maximum
compensation allowed is $170,000 in 2001 and 2000.
Forfeitures (the non-vested portion of those participant's accounts who
have terminated service with the Company) are used to offset future employer
profit sharing contributions. At December 31, 2001 and 2000, forfeited
non-vested accounts totaled $33,683 and $23,285, respectively.
Income (net of expenses) is allocated on a daily basis based on the ratio
of each participant's adjusted beginning balance to the total of all
participants' adjusted beginning balances for the applicable investment fund.
Vesting and Distributions
A participant's interest in his pre-tax employee contributions and the
earnings thereon are 100% vested at all times.
A participant's interest in his profit sharing account is vested as
follows:
Number of Years Percentage
of Service Vested
1 20%
2 40%
3 60%
4 80%
5 100%
In the event of a participant's retirement on or after his 65th birthday,
total disability or death, his profit sharing account becomes fully vested.
Distributions consist of benefit payments to eligible participants,
payments of vested amounts to terminated participants and payments to
participants who can demonstrate financial hardship. Participants are also able
to obtain loans from the Plan. Loans issued under the Prism Plan bear a rate of
interest of prime plus 1%. The loan fund is utilized as the disbursement fund
for loans granted by the Plan.
The Committee must approve all distributions and loans to participants.
NOTE 2 - SIGNIFICANT ACCOUNTING POLICIES
Basis of Accounting
The accounts of the Plan are maintained on the accrual basis of accounting.
Investments and Investment Income
Investments are stated at fair value which equals quoted market value or
unit values based upon quoted market values. Participant loans are valued at
cost, which approximates fair value. Interest and dividends are credited to the
accounts when earned.
Payment of Benefits
Upon termination of service, a participant may elect to receive a lump sum
amount equal to the value of their account. Benefits are recorded when paid.
Use of Estimates
The preparation of the financial statements in conformity with accounting
principles generally accepted in the United States of America requires
management to make estimates and assumptions that effect the reported amounts of
assets, liabilities, and changes therein, and disclosure of contingent assets
and liabilities. Actual results could differ from those estimates.
NOTE 3 - INVESTMENTS
The Plan's investments are held by a Trustee. The Plan provides that the
contributions will be invested in several different investment programs as
directed by each participant. These investment programs range from money market,
government secured, fixed income, growth, aggressive funds, and the Company's
own stock. For the participants who fail to complete the proper investment
election forms, these participant accounts are automatically invested in the low
risk government secured investment. The net appreciation (depreciation) in fair
value for each significant class of investment is shown in the accompanying
financial statements as investment income.
Investment Options
Under the Prism Plan, participants are able to direct their contributions
among several investment options. The investment funds available to participants
are as follows:
1. Victory Investment Quality Bond Fund - invests primarily in
investment-grade bonds issued by corporations and the U.S. Government and its
agencies or instrumentalities.
2. Victory Balanced Fund - invests in a diversified portfolio of common
stocks and fixed income securities or other collective funds holding these
securities.
3. Victory Special Value Fund - invests primarily in common stocks of
small and medium-sized companies.
4. Cardinal Health, Inc. Common Stock Fund - invests in the common stock
of Cardinal Health, Inc.
5. Victory U.S. Government Obligations Fund - invests only in short-term
securities issued or guaranteed by the U.S. Treasury and repurchase agreements
collateralized by U.S. Treasury securities with maturities of thirteen months
or less.
6. American EuroPacific Growth Fund - invests in small and large companies
based in industrial nations as well as smaller, developing nations.
7. American Washington Mutual Investors Fund - invests primarily in
companies that consistently pay dividends and earn more than their dividend
payout.
8. Janus Fund - invests primarily in a diversified portfolio of common
stocks of issuers of any size.
9. Victory Stock Index - composed of 500 domestically traded common stocks
weighted according to the market value of each common stock in the Index.
10. Priority Healthcare Corporation Common Stock Fund - invests in the
common stock of Priority Healthcare Corporation.
11. Victory Intermediate Income Fund - invests at least 65% of assets
in investment-grade debt securities.
12. Victory Government Reserves Fund - invests only in securities issued
by the U.S. Government, its agencies and/or instrumentalities.
Fund Transfers
Transfers between funds result from participants redirecting their
contributions between the funds listed above.
NOTE 4 - PARTY-IN-INTEREST
Participants in the Plan may invest their contributions/account balances in
a Priority Healthcare Corporation Common Stock Fund, which primarily holds
shares of Priority Healthcare Corporation common stock. At December 31, 2001,
this fund held 50,064 shares with a historical cost of $1,442,468 and a market
value of $1,762,481. At December 31, 2000, this fund held 28,088 shares with a
historical cost of $646,330 and a market value of $1,171,624.
NOTE 5 - INCOME TAX STATUS
The Internal Revenue Service issued a determination letter stating that the
Plan qualifies for tax exempt status under the applicable provisions of the
Internal Revenue Code. The Plan has been amended since receiving the
determination letter. However, management believes the Plan is designed and is
currently being administered in accordance with the Internal Revenue Code and
ERISA.
NOTE 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.
NOTE 7 - PLAN AMENDMENTS
Effective February 21, 2001, the Company suspended employee purchases of
Bindley Western Industries, Inc./Cardinal Health, Inc. stock. The participant
account balances previously held in the Bindley Western Industries, Inc. fund
were re-allocated according to current investment elections.
Effective January 20, 2001, the Plan was amended for eligibility and
vesting purposes. Years of service with the following predecessor employers
shall count in fulfilling the eligibility and determining vested amounts
for this plan:
Bindley Western Industries, Inc., and subsidiaries, but only for service
as of the Effective Date, and only for employees employed by Priority
Healthcare Corporation (or its affiliates) as of the Effective Date,
Pharmacy Plus, Inc., Supplies Unlimited, and active Employees of FRECO,
Inc., Lynnfield Compounding Center, Inc., Lynnfield Drug, Inc.
d/b/a Freedom Drug and Physicians Formulary employed on January 20, 2001.
NOTE 8 - DIFFERENCE FROM FORM 5500
At December 31, 2001 and 2000, there are no differences between the Annual
Return/Report of Employee Benefit Plan (Form 5500) filed with the Internal
Revenue Service and the accompanying financial statements.
NOTE 9 - SIGNIFICANT EVENT
On February 14, 2001 Bindley Western Industries, Inc. merged with Cardinal
Health, Inc. This was a stock-for-stock transaction, where Bindley Western
Industries, Inc. shareholders received 0.4275 Cardinal Health, Inc. common
shares for each outstanding share of Bindley Western Industries, Inc.
Schedule I
Form 5500
Schedule H
Part IV line 4i
PROFIT SHARING PLAN OF
PRIORITY HEALTHCARE CORPORATION
AND AFFILIATES
SCHEDULE OF ASSETS HELD FOR INVESTMENT PURPOSES AT END OF YEAR
--------------------------------------------------------------
DECEMBER 31, 2001
EIN: 35-1927379 PLAN #: 001
<s> <c> <c> <c> <c>
Current
Identity of Issue Description of Investment Cost Value
----- ---------------------------------- --------------------------------- ----------- ------------
Priority Healthcare Corp Common Equity Securities of Priority
* Stock Fund Healthcare Corporation $ 1,442,468 $ 1,762,481
American Europacific Growth Fund Registered Investment Companies 388,642 310,273
Janus Fund Registered Investment Companies 687,391 554,757
Victory Special Value Fund Registered Investment Companies 545,874 524,459
Victory Stock Index Fund Registered Investment Companies 169,397 142,483
Victory Balanced Fund Registered Investment Companies 401,018 363,438
American Washington Mutual Inv.
Fund Registered Investment Companies 653,677 638,516
Victory Intermediate Income Fund Registered Investment Companies 207,465 204,446
Victory Gradison Government
Reserves - G Registered Investment Companies 414,356 415,543
Loans to participants (Interest
* rates of 8.25% to 9.25%) 44,373 44,373
------------ ------------
$ 4,954,661 $ 4,960,769
============ ============
*Denotes party-in-interest.
See auditors' report and accompanying notes to the financial statements.
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.
PROFIT SHARING PLAN OF PRIORITY HEALTHCARE
CORPORATION AND AFFILIATES
Date: June 26, 2002 By: /s/ Barbara J. Luttrell
--------------------------------
Name: Barbara J. Luttrell
Title: Plan Administrator
EXHIBIT 23
CONSENT OF INDEPENDENT ACCOUNTANTS
We hereby consent and give permission to use our report dated June 21,
2002 in this annual report on Form 11-K, and its incorporation by reference in
the registration statement on Form S-8 relating to The Profit Sharing Plan of
Priority Healthcare Corporation and Affiliates.
ENT & IMLER CPA GROUP, PC
/S/ ENT & IMLER CPA GROUP, PC
Indianapolis, Indiana
June 26, 2002
BAKER & DANIELS
300 NORTH MERIDIAN STREET, SUITE 2700 . INDIANAPOLIS, INDIANA 46204
(317) 237-0300 FAX (317) 237-1000
June 27, 2002
VIA EDGAR
Securities and Exchange Commission
450 Fifth Street, N.W.
Judiciary Plaza
Washington, D.C.
Attention: Filing Desk
Re: Form 11-K for Profit Sharing Plan of
Priority Healthcare Corporation and Affiliates
Dear Sir or Madam:
On behalf of the Profit Sharing Plan of Priority Healthcare Corporation and
Affiliates (the "Plan"), we enclose for filing, via direct transmission to the
EDGAR system of the Securities and Exchange Commission, an Annual Report on
Form 11-K (with exhibit) for the fiscal year of the Plan ended December 31,
2001. If you should have any questions, please contact the undersigned.
Sincerely,
/s/ Heather J. Kidwell
Heather J. Kidwell
Enclosure