SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 11-K
ANNUAL REPORT PURSUANT TO SECTION 15 (d) OF THE
SECURITIES EXCHANGE ACT OF 1934
[X] Annual report pursuant to Section 15 (d) of the Securities Exchange Act
of 1934 (No fee required)
For the period ended December 31, 2001
OR
[ ] Transition report pursuant to Section 15 (d) of the Securities Exchange
Act of 1934 (No fee required)
A. Full title of the Plan and the address of the Plan, if different
from that of the issuer named below:
NCS HealthCare Employee Savings Plan and Trust
B. Name of issuer of the securities held pursuant to the Plan and the
address of its principal executive office:
NCS HealthCare, Inc.
3201 Enterprise Parkway, Suite 220
Beachwood, Ohio 44122
Pursuant to the requirements of the Securities Exchange Act of 1934, the
Administrator of the Plan (or other persons who administer the Plan) have duly
caused this annual report to be signed on its behalf by the undersigned
thereunto duly authorized.
NCS HealthCare Employee
Savings Plan and Trust
Date: June 28, 2002 By /s/ Gerald D. Stethem
---------------------------
Gerald D. Stethem
Senior Vice President and Chief
Financial Officer
NCS HealthCare Employee Savings Plan and Trust
Financial Statements
and Supplemental Schedule
December 31, 2001 and 2000
and the Year Ended December 31, 2001
TABLE OF CONTENTS
Report of Independent Auditors.................................................................................... 1
FINANCIAL STATEMENTS
Statements of Net Assets Available for Benefits................................................................... 2
Statement of Changes in Net Assets Available for Benefits......................................................... 3
Notes to Financial Statements..................................................................................... 4
SUPPLEMENTAL SCHEDULE
Schedule H, Line 4(i) -- Schedule of Assets (Held at End of Year)................................................. 9
Report of Independent Auditors
The Trustees
NCS HealthCare Employee Savings Plan and Trust
We have audited the accompanying statements of net assets available for benefits
of NCS HealthCare Employee Savings Plan and Trust as of December 31, 2001 and
2000, and the related statement of changes in net assets available for 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. 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 its net assets available for
benefits for the year ended December 31, 2001, in conformity with accounting
principles generally accepted in the United States.
Our audits were performed for the purpose of forming an opinion on the financial
statements taken as a whole. The accompanying supplemental schedule of assets
(held at end of year) as of December 31, 2001 is presented for purposes of
additional analysis and is not a required part of the 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 our audits of the financial statements and, in our
opinion, is fairly stated in all material respects in relation to the financial
statements taken as a whole.
/s/ Ernst & Young LLP
Cleveland, Ohio
June 24, 2002
1
NCS HealthCare Employee Savings Plan and Trust
Statements of Net Assets Available for Benefits
DECEMBER 31
2001 2000
----------- -----------
ASSETS
Investments $28,970,643 $29,890,168
Contribution receivables:
Employer 20,204 18,456
Participant 116,358 108,914
----------- -----------
Total contribution receivables 136,562 127,370
----------- -----------
Net assets available for benefits $29,107,205 $30,017,538
=========== ===========
See accompanying notes to financial statements.
2
NCS HealthCare Employee Savings Plan and Trust
Statement of Changes in Net Assets Available for Benefits
Year Ended December 31, 2001
ADDITIONS
Investment income (loss):
Net depreciation in fair value of investments $ (3,437,145)
Interest and dividends 17,992
------------
(3,419,153)
Contributions:
Participants 4,898,068
Employer 897,280
Rollover 102,906
------------
5,898,254
------------
Total additions 2,479,101
DEDUCTIONS
Benefits paid directly to participants 3,389,434
------------
Total deductions 3,389,434
------------
Net decrease (910,333)
Net assets available for benefits
at beginning of year 30,017,538
------------
Net assets available for benefits
at end of year $ 29,107,205
============
See accompanying notes to financial statements
3
NCS HealthCare Employee Savings Plan and Trust
Notes to Financial Statements
December 31, 2001 and 2000 and
Year Ended December 31, 2001
1. DESCRIPTION OF THE PLAN
The following description of the NCS HealthCare Employee Savings Plan and Trust
(the "Plan") provides only general information. Participants should refer to the
Summary Plan Description for a more complete description of the Plan's
provisions.
GENERAL
The Plan is a defined contribution plan available to certain employees of NCS
HealthCare, Inc. (the Company and Plan Sponsor) who have completed six months of
service, attained the age of 18 and completed a minimum of 500 hours of
consecutive service, excluding employees covered by a collective bargaining
agreement. The Plan is subject to the provisions of the Employee Retirement
Income Security Act of 1974 (ERISA).
CONTRIBUTIONS
Each year, participants may contribute up to 15 percent of their pretax annual
compensation, as defined in the Plan, limited to the maximum permitted by the
Internal Revenue Code. Participants may also contribute amounts representing
distributions from other qualified defined benefit or defined contribution
plans. In addition, the Company may make matching and special discretionary
contributions to the Plan in an amount to be determined each year by the
Company. For the year ended December 31, 2001, the Company contributed 20% of
the first 10% of base compensation that a participant contributed to the Plan.
Special discretionary Company contributions are allocated to those participants
who are both employed by the Company at the end of the year and have 1,000 hours
of service. From January 1, 1999 through September 30, 2000, all matching
contributions made by the Company were invested in Company stock. Effective
October 1, 2000, all Company matching contributions are invested at the
direction of the participant.
PARTICIPANT ACCOUNTS
Each participant's account is credited with the participant's contributions and
allocations of the Company's contributions, Plan earnings and forfeitures.
Allocations of the Company's contributions and Plan earnings are based on the
ratio of the participant's account balance in the respective fund to the total
fund balance as of the valuation date. Allocation of forfeitures is based on the
ratio of the compensation with respect to total compensation for all
participants. The benefit to which a participant is entitled is the benefit that
can be provided from the participant's account.
4
NCS HealthCare Employee Savings Plan and Trust
Notes to Financial Statements (continued)
1. DESCRIPTION OF THE PLAN (CONTINUED)
VESTING
Participants are immediately vested in their contributions plus actual earnings
thereon. Participants vest in the employer contributions at a rate of 20 percent
per year beginning after one year of service, becoming 100 percent vested after
five years of service. Participants or their beneficiaries are entitled to
receive the vested portion of the participant account balance, upon normal
retirement (age 65), death, disability or termination of employment. Upon
termination of employment, a participant's nonvested portion of Company
contributions and related earnings are forfeited. There were $115,558 and
$211,016 of forfeitures available to allocate among the accounts of all eligible
participants as of December 31, 2001 and 2000, respectively.
PARTICIPANT LOANS
Participants may borrow from their fund accounts a minimum of $1,000 up to a
maximum equal to the lesser of $50,000 or 50% of their account balance. The
loans are secured by the balance in the participant's account and bear interest
at a rate commensurate with local prevailing rates as determined monthly by the
Plan Administrator. The maximum number of years permitted for repayment is five
years, except for loans used for the purchase of a principal residence.
PAYMENT OF BENEFITS / WITHDRAWALS
Upon retirement, death, disability or termination of service, or plan
termination, a participant's normal form of benefits is a life annuity or joint
and survivor spouse annuity. Optional forms of distribution include one lump-sum
payment, installment payments, or other types of annuities. Participants who
prove financial hardship may withdraw a portion of their account balance, as
determined by the plan administrator.
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.
5
NCS HealthCare Employee Savings Plan and Trust
Notes to Financial Statements (continued)
2. SIGNIFICANT ACCOUNTING POLICIES
BASIS OF ACCOUNTING
The financial statements of the Plan are prepared on the accrual basis of
accounting.
INVESTMENT VALUATION AND INCOME RECOGNITION
The Plan's investments, excluding the guaranteed certified funds, are stated at
fair value. The insurance company pooled separate accounts are valued at the
redemption value of units held by the Plan at year-end. The NCS HealthCare, Inc.
Common Stock shares are valued at the quoted market price at year-end in an
active market. The guaranteed certificate funds are stated at contract value,
which approximates fair value. The participant loans are recorded at their
outstanding balances, which approximate fair value.
Purchases and sales of securities are recorded on a trade-date basis. Interest
income is recorded on the accrual basis.
USE OF ESTIMATES
The preparation of financial statements in conformity with accounting principles
generally accepted in the United States requires management to make estimates
that affect the amounts reported in the financial statements and accompanying
notes. Actual results could differ from those estimates.
ADMINISTRATIVE CHARGES
Great-West Life and Annuity Insurance Company (Great-West) provides certain
recordkeeping and other administrative services to the Plan. These services are
paid for by the Plan through a daily variable asset charge that reduces the
investment income earned by the Great-West accounts. The annualized variable
asset charge is equal to 0.25% at December 31, 2001 and 2000 of the fair value
of Great-West accounts. The Company pays for those Plan expenses not borne by
the Plan.
6
NCS HealthCare Employee Savings Plan and Trust
Notes to Financial Statements (continued)
3. INVESTMENTS
During 2001, the Plan's investments (including investments purchased, sold, as
well as held during the year) (depreciated) appreciated in fair value as
determined by quoted market prices as follows:
NCS HealthCare, Inc. common stock $ 101,336
Pooled separate accounts (3,538,481)
-----------
$(3,437,145)
===========
Investments that represent 5% or more of fair value of the Plan's net assets are
as follows:
DECEMBER 31
2001 2000
---------- ----------
Great-West pooled separate accounts:
Profile Series I $3,462,463 $3,829,467
American Century - Twentieth Century
Ultra Fund 3,098,416 3,449,021
AIM Constellation Fund 1,644,316 2,236,471
Profile Series II 4,237,407 4,437,039
Profile Series III 1,773,323 1,949,581
Maxim Money Market 1,731,436 1,559,556
7
NCS HealthCare Employee Savings Plan and Trust
Notes to Financial Statements (continued)
4. NONPARTICIPANT-DIRECTED INVESTMENTS
Information about the net assets and the significant components of changes in
net assets related to the nonparticipant-directed investment is as follows:
DECEMBER 31
2001 2000
-------- --------
Investments, at fair value:
NCS Health Care, Inc. common stock $186,384 $108,887
======== ========
YEAR ENDED
DECEMBER 31,
2001
---------
Change in net assets:
Distributions to participants $ (18,319)
Forfeitures (5,520)
Net appreciation in fair value of common stock 101,336
---------
$ 77,497
=========
5. INCOME TAX STATUS
The Plan has received a determination letter from the Internal Revenue Service
dated April 22, 1998, stating that the Plan is qualified under Section 401(a) of
the Internal Revenue Code (the "Code") and, therefore, the related trust is
exempt from taxation. Once qualified, the Plan is required to operate in
conformity with the Code to maintain its qualification. The Plan Sponsor has
indicated that it will take the necessary steps, if any, to maintain the Plan's
qualified status.
8
NCS HealthCare Employee Savings Plan and Trust
Employee Identification Number (EIN): 34-1816187 Plan Number: 001
Schedule H, Line 4(i) -- Schedule of Assets (Held at End of Year)
December 31, 2001
NUMBER OF
SHARES/UNITS
OR
INTEREST CURRENT
IDENTITY DESCRIPTION OF INVESTMENTS RATE COST** VALUE
- -------------------------------------------------------------------------------------------------------------------------------
1ER-AWP Interest Bearing Cash 4.50% $ 36
Great-West Guaranteed Certificate Funds:
1CGF 36 Guaranteed Certificate Fund due
March 31, 2002* 4.70% 5,671
1CGF 36 Guaranteed Certificate Fund due
June 30, 2002* 5.20% 3,120
1CGF 36 Guaranteed Certificate Fund due
September 30, 2002* 5.35% 2,866
1CGF 36 Guaranteed Certificate Fund due
December 31, 2002* 5.80% 35,576
1CGF 36 Guaranteed Certificate Fund due
March 31, 2003* 6.20% 13,947
1CGF 36 Guaranteed Certificate Fund due
June 30, 2003* 6.25% 2,160
1CGF 36 Guaranteed Certificate Fund due
September 30, 2003* 6.00% 2,797
1CGF 36 Guaranteed Certificate Fund due
December 31, 2003* 5.35% 12,432
1CGF 36 Guaranteed Certificate Fund due
March 31, 2004 * 4.25% 4,822
1CGF 36 Guaranteed Certificate Fund due
June 30, 2004* 4.20% 23,003
1CGF 36 Guaranteed Certificate Fund due
September 30, 2004* 3.20% 6,033
1CGF 36 Guaranteed Certificate Fund due
December 31, 2004* 3.30% 4,800
1CGF 60 Guaranteed Certificate Fund due
June 30, 2002* 5.75% 193
1CGF 60 Guaranteed Certificate Fund due
December 31, 2002* 5.00% 647
1CGF 60 Guaranteed Certificate Fund due
March 31, 2003* 5.05% 3,166
1CGF 60 Guaranteed Certificate Fund due
June 30, 2003* 4.80% 1,242
9
NCS HealthCare Employee Savings Plan and Trust
Employee Identification Number (EIN): 34-1816187 Plan Number: 001
Schedule H, Line 4(i)--Schedule of Assets (Held at End of Year) (continued)
NUMBER OF
SHARES/UNITS
OR
INTEREST CURRENT
IDENTITY DESCRIPTION OF INVESTMENTS RATE COST** VALUE
- -------------------------------------------------------------------------------------------------------------------------------
1CGF 60 Guaranteed Certificate Fund due
September 30, 2003* 4.60% 670
1CGF 60 Guaranteed Certificate Fund due
December 31, 2003* 4.35% 1,305
1CGF 60 Guaranteed Certificate Fund due
March 31, 2004* 4.90% 707
1CGF 60 Guaranteed Certificate Fund due
June 30, 2004* 5.45% 610
1CGF 60 Guaranteed Certificate Fund due
September 30, 2004* 5.50% 716
1CGF 60 Guaranteed Certificate Fund due
December 31, 2004* 6.05% 750
1CGF 60 Guaranteed Certificate Fund due
March 31, 2005* 6.35% 1,141
1CGF 60 Guaranteed Certificate Fund due
June 30, 2005* 6.35% 856
1CGF 60 Guaranteed Certificate Fund due
September 30, 2005* 6.10% 1,123
1CGF 60 Guaranteed Certificate Fund due
December 31, 2005* 5.45% 956
1CGF 60 Guaranteed Certificate Fund due
March 31, 2006* 4.50% 1,130
1CGF 60 Guaranteed Certificate Fund due
June 30, 2006* 4.55% 927
1CGF 60 Guaranteed Certificate Fund due
September 30, 2006* 3.70% 994
1CGF 60 Guaranteed Certificate Fund due
December 30, 2006* 4.10% 900
10
NCS HealthCare Employee Savings Plan and Trust
Employee Identification Number (EIN): 34-1816187 Plan Number: 001
Schedule H, Line 4(i)--Schedule of Assets (Held at End of Year) (continued)
NUMBER OF
SHARES/UNITS
OR
INTEREST CURRENT
IDENTITY DESCRIPTION OF INVESTMENTS RATE COST** VALUE
- -------------------------------------------------------------------------------------------------------------------------------
1CGF 84 December 31, 2002* 5.00% 3,225
1CGF 84 Guaranteed Certificate Fund due
March 31, 2003* 5.00% 743
1CGF 84 Guaranteed Certificate Fund due
June 30, 2003* 5.50% 4,896
1CGF 84 Guaranteed Certificate Fund due
September 30, 2003* 5.65% 806
1CGF 84 Guaranteed Certificate Fund due
December 31, 2003* 5.20% 26,135
1CGF 84 Guaranteed Certificate Fund due
March 31, 2004* 5.75% 1,391
1CGF 84 Guaranteed Certificate Fund due
June 30, 2004* 6.00% 2,470
1CGF 84 Guaranteed Certificate Fund due
September 30, 2004* 5.50% 2,923
1CGF 84 Guaranteed Certificate Fund due
December 31, 2004* 5.10% 1,293
1CGF84 Guaranteed Certificate Fund
due March 31, 2005* 5.10% 4,742
1CGF 84 Guaranteed Certificate Fund due
June 30, 2005* 4.85% 2,627
1CGF 84 Guaranteed Certificate Fund due
September 30, 2005* 4.75% 2,611
1CGF 84 Guaranteed Certificate Fund due
December 31, 2005* 4.50% 2,509
1CGF 84 Guaranteed Certificate Fund due
March 31, 2006* 5.05% 2,315
1CGF 84 Guaranteed Certificate Fund due
June 30, 2006* 5.65% 2,117
11
NCS HealthCare Employee Savings Plan and Trust
Employee Identification Number (EIN): 34-1816187 Plan Number: 001
Schedule H, Line 4(i)--Schedule of Assets (Held at End of Year) (continued)
NUMBER OF
SHARES/UNITS
OR
INTEREST CURRENT
IDENTITY DESCRIPTION OF INVESTMENTS RATE COST** VALUE
- -------------------------------------------------------------------------------------------------------------------------------
1CGF 84 September 30, 2006* 5.95% 1,907
1CGF 84 Guaranteed Certificate Fund due
December 31, 2006* 6.20% 1,770
1CGF 84 Guaranteed Certificate Fund due
March 31, 2007* 6.50% 2,389
1CGF 84 Guaranteed Certificate Fund due
June 30, 2007* 6.45% 1,590
1CGF 84 Guaranteed Certificate Fund due
September 30, 2007* 6.30% 1,664
1CGF 84 Guaranteed Certificate Fund due
December 31, 2007* 5.65% 1,329
1CGF 84 Guaranteed Certificate Fund due
March 31, 2008* 4.75% 1,511
1CGF 84 Guaranteed Certificate Fund due
June 30, 2008* 4.95% 54,516
1CGF 84 Guaranteed Certificate Fund due
September 30, 2008* 4.20% 1,458
1ER-STK NCS HealthCare, Inc. Stock * 980,970 shares $1,228,398 186,384
Great-West Pooled Separate Accounts:
1BIMXBI Maxim Bond Index * 17,485 units 264,107
1BMSXLC Maxim Loomis Sayles Corporate Bond * 18,475 units 309,256
1BIMXUS Maxim U.S. Government Mortgage
Securities * 24,386 units 376,679
1BINXDG Maxim Global Bond * 7,989 units 97,666
1BSHXST Maxim Short-Term Maturity * 4,682 units 67,214
1CMMXMM Maxim Money Market * 119,841 units 1,731,436
1IEUXIE Maxim Index Eurporan * 6,968 units 74,560
1IFSFAO Fidelity Advisor Overseas * 21,481 units 271,352
1IFSXIA Maxim Invesco Adr * 5,869 units 60,794
1IPAXIP Maxim Index Pacific * 15,769 units 91,950
1IWSPGC Putnam Global Growth * 63,517 units 948,312
1LBLCHA Aim Charter * 30,492 units 614,037
1LBLFGO Fidelity Advisors Growth Opportunities* 53,851 units 955,080
1LBLO15 Orchard Index 500 * 41,313 units 1,063,876
12
NCS HealthCare Employee Savings Plan and Trust
Employee Identification Number (EIN): 34-1816187 Plan Number: 001
Schedule H, Line 4(i)--Schedule of Assets (Held at End of Year) (continued)
NUMBER OF
SHARES/UNITS
OR
INTEREST CURRENT
IDENTITY DESCRIPTION OF INVESTMENTS RATE COST** VALUE
- -------------------------------------------------------------------------------------------------------------------------------
1LBLXFG Maxim Founder's Growth and Income * 12,259 units 161,976
1LGRULT American Century - Twentieth
Century Ultra Fund* * 131,471 units 3,098,416
1LGRWIN AIM Weingarten * 44,651 units 733,943
1LGRXGI Maxim Growth Index * 27,284 units 701,995
1LVAPGI Putnam Fund For Growth and Income * 47,574 units 1,071,441
1LVAXVI Maxim Value Index * 22,021 units 539,276
1LGRCON AIM Constellation Fund* 81,902 units 1,644,316
1MGRXTM Maxim T. Rowe Price Mid-Cap Growth * 36,855 units 653,028
1PBAXP1 Profile Series I * 168,849 units 3,462,463
1PBAXP2 Profile Series II * 218,018 units 4,237,407
1PBAXP3 Profile Series III * 96,779 units 1,773,323
1PBAXP4 Profile Series IV * 21,466 units 367,096
1PBAXP5 Profile Series V * 26,041 units 417,854
1SBLO16 Orchard Index 600 * 17,987 units 391,399
1SGRLDG Lord Abbett Developing Growth * 24,827 units 263,711
1SVAXAS Maxim Ariel Small-Cap Value * 17,769 units 442,820
1SVAXLS Maxim Loomis Sayles Small-Cap Value * 31,039 units 860,663
Participant Loans * 8.0% to 9.75%, with
maturity dates through
2021
772,254
--------------
$ 28,970,643
==============
* Indicates party-in-interest to the Plan.
* Historical cost provided only for nonparticipant-directed investments.
13