SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 11-K
(Mark One)
[_] ANNUAL REPORT PURSUANT TO SECTION 15(d) OF THE SECURITIES EXCHANGE ACT
OF 1934 (FEE REQUIRED) for the fiscal year ended or
--------------
[X] TRANSITION REPORT PURSUANT TO SECTION 15(d) OF THE SECURITIES EXCHANGE
ACT OF 1934 (NO FEE REQUIRED) for the transition period from
April 1, 1996 to December 31, 1996
Commission file number 1-14142
RENAL TREATMENT CENTERS, INC. SAVINGS PLAN
(Full title of the plan)
RENAL TREATMENT CENTERS, INC.
1180 W. Swedesford Road
Building 2, Suite 300
Berwyn, Pennsylvania 19312
(Name of issuer of the securities held pursuant to the plan and the
address of its principal executive office)
REQUIRED INFORMATION
Financial Statements
Statement of Net Assets Available for Plan Benefits, as of
December 31, 1996.
Statement of Changes in Net Assets Available for Plan Benefits
for the nine months ended December 31, 1996.
Schedule I - Schedule of Assets Held for Investment Purposes
as of December 31, 1996.
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, Renal
Treatment Centers, Inc. has duly caused this report to be signed by the
undersigned thereunto duly authorized.
RENAL TREATMENT CENTERS, INC. SAVINGS PLAN
Date: April 24, 1997 By: /s/Michael Cutuli
----------------------------- -------------------------
Michael Cutuli
Plan Administrator
RENAL TREATMENT CENTERS, INC.
SAVINGS PLAN
REPORT ON AUDIT OF
FINANCIAL STATEMENTS
as of and for the nine months ended
December 31, 1996
RENAL TREATMENT CENTERS, INC.
SAVINGS PLAN
INDEX TO FINANCIAL STATEMENTS
-----------
Report of Independent Accountants................... 2
Financial Statements:
Statement of Net Assets Available for Plan
Benefits, December 31, 1996....................... 3
Statement of Changes in Net Assets Available
for Plan Benefits for the nine months ended
December 31, 1996............................ 4
Notes to Financial Statements..................... 5-9
Supplemental Information:
Schedule of Net Assets Held
for Investment Purposes at
December 31, 1996 11
-1-
Report of Independent Accountants
To the Participants and Administrator of the
Renal Treatment Centers, Inc. Savings Plan:
We have audited the accompanying statement of net assets available for benefits
of the Renal Treatment Centers, Inc. Savings Plan as of December 31, 1996 and
the related statement of changes in net assets available for benefits for the
nine months ended December 31, 1996. 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 audit.
We conducted our audit in accordance with generally accepted auditing standards.
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 audit provides 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, 1996, and the changes in net assets available for benefits for the
nine months ended December 31, 1996 in conformity with generally accepted
accounting principles.
Our audit was performed for the purpose of forming an opinion on the basic
financial statements taken as a whole. The supplemental schedule of net assets
held for investment at December 31, 1996, is presented for the purpose of
additional analysis and is not a required part of the basic financial
statements. The Fund Information in the statement of net assets available for
benefits and the statement of changes in net assets available for benefits is
presented herein for purposes of additional analysis rather than to present the
net assets available for plan benefits and changes in net assets available for
plan benefits of each fund. The supplemental schedule and Fund Information have
been subjected to the auditing procedures applied in the audit 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.
COOPERS & LYBRAND L.L.P.
600 Lee Road
Wayne, Pennsylvania
April 4, 1997
-2-
RENAL TREATMENT CENTERS, INC. SAVINGS PLAN
STATEMENT OF NET ASSETS AVAILABLE
FOR PLAN BENEFITS WITH FUND INFORMATION
December 31, 1996
Fund Information
-------------------------------------------------------------------------------------------
CIGNA CIGNA CIGNA CIGNA CIGNA CIGNA Fidelity
Guaranteed Lifetime Lifetime Lifetime Lifetime Lifetime Growth
Income 20 30 40 50 60 Opportunities
Fund Fund Fund Fund Fund Fund Fund
-------------------------------------------------------------------------------------------
Cash
Investments, at current value $ 3,409,205 $ 117,546 $178,564 $146,321 $ 65,193 $17,908 $ 1,990,459
Participant notes receivable
Receivables:
Employer's contributions,
net of forfeitures 11,013 1,367 1,299 1,618 483 144 3,227
Participant's contributions 17,363 5,413 5,620 7,157 3,032 703 13,463
--------------------------------------------------------------------------------------------
28,376 6,780 6,919 8,775 3,515 847 16,690
--------------------------------------------------------------------------------------------
Net assets available for
plan benefits $ 3,437,581 $ 124,326 $185,483 $155,096 $ 68,708 $18,755 $ 2,007,149
============================================================================================
- ----------------------------------------------------------------------------------
Warburg Pincus Warburg Pincus Warburg Pincus
Growth Emerging International Renal Treatment
& Income Growth Equity Centers Participant
Fund Fund Fund Common Stock Notes Total
- ----------------------------------------------------------------------------------
$ 921
$114,344 $377,400 $ 92,894 $273,351 6,783,185
$189,533 189,533
1,302 4,085 1,040 5,167 30,745
6,267 17,268 4,690 11,911 92,887
- --------------------------------------------------------------------------------------
7,569 21,353 5,730 17,078 0 123,632
- --------------------------------------------------------------------------------------
$121,913 $398,753 $ 98,624 $290,429 $189,533 $ 7,097,271
======================================================================================
The accompanying notes are an integral part of the financial statements.
-3-
RENAL TREATMENT CENTERS, INC. SAVINGS PLAN
STATEMENT OF CHANGES IN NET ASSETS AVAILABLE
FOR PLAN BENEFITS WITH FUND INFORMATION
For the nine months ended December 31, 1996
Fund Information
--------------------------------------------------------------------------------
General Asset General Asset CIGNA CIGNA
Fund Fund U.S. Money Guaranteed Lifetime
Non-Participant Participant Stock Market Income 20
Directed Directed Fund Fund Fund Fund
--------------------------------------------------------------------------------
Additions
Additions to net assets attributed to:
Investment Income:
Net appreciation (depreciation)
in current value of
investments - - - - $ 116,483 $ 4,438
Interest Income:
Loan - - - - - -
--------------------------------------------------------------------------------
116,483 4,438
--------------------------------------------------------------------------------
Contributions:
Employer - - - - 265,711 18,559
Participants - - - - 685,977 83,884
--------------------------------------------------------------------------------
0 0 0 0 951,688 102,443
--------------------------------------------------------------------------------
Total Additions 0 0 0 0 1,068,171 106,881
--------------------------------------------------------------------------------
Deductions
Deductions from net assets attributed to:
Benefits paid to participants - - - - 158,466 501
Administrative Expenses - - - - 2,093 8
--------------------------------------------------------------------------------
Total Deductions 0 0 0 0 160,559 509
--------------------------------------------------------------------------------
Net increase prior to interfund transfers - - - - 907,612 106,372
Interfund Transfers (901,343) (1,513,802) (1,511,240) (340,914) 2,529,969 17,954
Net increase (decrease) (901,343) (1,513,802) (1,511,240) (340,914) 3,437,581 124,326
Net Assets available for plan benefits:
Beginning of period 901,343 1,513,802 1,511,240 340,914 - -
--------------------------------------------------------------------------------
End of period - - - - 3,437,581 124,326
================================================================================
- ---------------------------------------------------------------------------------------------------------------------
CIGNA CIGNA CIGNA CIGNA Fidelity Warburg Pincus Warburg Pincus Warburg Pinc
Lifetime Lifetime Lifetime Lifetime Growth Growth Emerging Internation
30 40 50 60 Opportunities & Income Growth Equity
Fund Fund Fund Fund Fund Fund Fund Fund
- ---------------------------------------------------------------------------------------------------------------------
$ 5,237 $ 4,946 $2,369 $ 617 $ 240,191 $1,071 $ 10,816 $2,760
- - - - - - - -
- -------------------------------------------------------------------------------------------------------------------
5,237 4,946 2,369 617 240,191 1,071 10,816 2,760
- -------------------------------------------------------------------------------------------------------------------
21,220 23,113 6,276 2,224 80,214 16,930 55,078 13,247
160,753 119,642 42,514 11,224 421,860 94,699 253,937 72,653
- -------------------------------------------------------------------------------------------------------------------
181,973 142,755 48,790 13,448 502,074 111,629 309,015 85,900
- -------------------------------------------------------------------------------------------------------------------
187,210 147,701 51,159 14,065 742,265 112,700 319,831 88,660
- -------------------------------------------------------------------------------------------------------------------
1,628 1,196 2,256 316 100,416 416 3,042 143
68 35 12 0 1,300 67 94 10
- -------------------------------------------------------------------------------------------------------------------
1,696 1,231 2,268 316 101,716 483 3,136 153
- -------------------------------------------------------------------------------------------------------------------
185,514 146,470 48,891 13,749 640,549 112,217 316,695 88,507
(31) 8,626 19,817 5,006 1,366,600 9,696 82,058 10,117
185,483 155,096 68,708 18,755 2,007,149 121,913 398,753 98,624
- - - - - - - -
- -------------------------------------------------------------------------------------------------------------------
185,483 155,096 68,708 18,755 2,007,149 121,913 398,753 98,624
===================================================================================================================
- --------------------------------------------------------
Renal Treatment
Centers Participant
Common Stock Notes Other Total
- --------------------------------------------------------
$ (31,268) - - $357,660
- 2,935 - 2,935
-----------------------------------------------------
(31,268) 2,935 0 360,595
-----------------------------------------------------
76,642 - - 579,214
218,055 - 921 2,166,119
-----------------------------------------------------
294,697 0 0 2,745,333
-----------------------------------------------------
263,429 2,935 921 3,105,928
-----------------------------------------------------
3,007 - - 271,387
882 - - 4,569
-----------------------------------------------------
3,889 0 0 275,956
-----------------------------------------------------
259,540 2,935 921 2,829,972
30,889 186,598 - -
290,429 189,533 921 2,829,972
- - - 4,267,299
-----------------------------------------------------
290,429 189,533 921 7,097,271
=====================================================
The accompanying notes are an integral part of the financial statements.
-4-
RENAL TREATMENT CENTERS, INC.
SAVINGS PLAN
NOTES TO FINANCIAL STATEMENTS
-------------------
1. Description of Plan:
-------------------
The following description of the Renal Treatment Centers, Inc. ("Company")
Savings Plan ("Plan") provides only general information. Participants should
refer to the Plan agreement for a more complete description of the Plan's
provisions. Renal Treatment Centers, Inc. serves as the Plan Administrator. The
Plan's assets are held and managed by the trustee, CG Trust Company, a CIGNA
affiliate, in the Renal Treatment Centers, Inc. Savings Plan Trust (the
"Trust"). Effective April 1, 1996, the Plan entered into a group annuity
contract (the "Contract") with Connecticut General Life Insurance Company, a
subsidiary of CIGNA. Assets are held by the trustee until they are used to
purchase annuities for participants at retirement or on earlier termination of
employment with vested benefits. Fees, charges and taxes payable by the Plan
and/or trustee and the trustee compensation are outlined in the trust agreement
and the Contract.
Basis of Presentation and Plan Amendments:
- ------------------------------------------
Effective March 31, 1996, the Plan elected to terminate its relationship with
Principal Mutual Life Insurance Company. The net assets of the Plan were
transferred to CG Trust Company, an affiliate of CIGNA. The Plan's financial
statements for the nine month period ended December 31, 1996 have been prepared
for inclusion in Form 11-K filed with the Securities and Exchange Commission. On
April 1, 1996, as approved by the Board of Directors on December 5, 1996, the
Plan was amended to provide increased investment opportunities for the
participating employees. The number of investment options increased to eleven,
including the option to invest in the Company's common stock. These financial
statements have been prepared for the nine month period as allowed by Form 11-K,
representing the period since the investment option to purchase Company
securities began.
In addition, the Plan was amended to accelerate the vesting schedule, to revise
the employer matching of contributions and to provide a loan feature which
allows participants to borrow from their fund accounts.
General:
- --------
The Plan is a defined contribution plan covering substantially all employees of
Renal Treatment Centers, Inc. and its Subsidiaries who have completed six months
of eligible service.
The Plan is subject to the provisions of the Employee Retirement Income Security
Act of 1974(ERISA).
Contributions:
- --------------
Contributions to the Plan are made by participants and the Company. A
participant may elect to contribute up to 15% of pre-tax earnings (basic
contribution). The employer will contribute $.50 for every $1.00 of pre-tax
contributions up to a maximum of 5% of eligible earnings. The total basic and
supplemental pre-tax contributions for each participant may not exceed $9,500
per Plan year for 1996. The basic and supplemental pre-tax contributions are not
taxable to the employee for federal income tax purposes. Supplemental
contributions are not matched by the Company.
-5-
NOTES TO FINANCIAL STATEMENTS, Continued
--------------------
1. Description of Plan, Continued:
Participant Accounts:
- ---------------------------
Each participant account is credited with the participant's contribution, an
allocation of the Company's contributions and an allocation of Plan earnings.
Allocations are based on participant account balances, as defined in the Plan
agreement. The benefit to which a participant is entitled is the benefit that
can be provided from the participant's vested account.
Vesting and Forfeitures:
- ------------------------
The value of the Company's matching contributions vest in a participant's
account based on years of continuous service as indicated in the following
table:
Less than 2 years - 0%
2 years, but less than 3 - 25%
3 years, but less than 4 - 50%
4 years, but less than 5 - 75%
5 years or more - 100%
However, a participant becomes 100% vested after attaining age 65, becoming
permanently and totally disabled or at the date of their death. Early retirement
is permitted upon attaining age 59 1/2 and 5 years of vested service.
Notwithstanding the event which gives rise to a participant's termination of
employment, the balance of the participant's contributions plus actual earnings
thereon are always 100% vested and nonforfeitable.
If a participant permanently terminates their employment for reasons other than
death, total disability or retirement and if the person is not fully vested,
they will forfeit the non-vested balance in their account. Under certain
conditions, participants may have their previously forfeited balance reinstated
within the five-year period following their date of retirement or termination.
At December 31, 1996 forfeited nonvested accounts totaled $51,514. These
accounts will be used to reduce future employer contributions. Also, for the
nine month period April 1, 1996 to December 31, 1996, no employer contributions
were reduced by forfeited nonvested accounts.
Participant Notes Receivable:
- -----------------------------
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 percent of their account balance.
Loan transactions are treated as a transfer to (from) the investment fund from
(to) the Participant Notes fund. Loan terms range from 1-5 years or up to 25
years for the purchase of a primary residence. 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 quarterly by the Plan Administrator.
Interest rates range from 6 percent to 10 percent. Principal and interest is
paid ratably through monthly payroll deductions.
-6-
NOTES TO FINANCIAL STATEMENTS, Continued
---------------------
Payment of Benefits:
- -------------------
Benefits are paid according to the vested interest to which participants are
entitled upon retirement, termination, death or disability. Upon retirement,
death or disability, benefits are distributed to the participant or beneficiary
in annual installments under various payment options or in a lump sum payment at
the election of the participant or their beneficiary. Upon termination, a
participant with an account balance exceeding $3,500 may make an irrevocable
election to have the balance distributed to them, or defer commencement of the
distribution until normal retirement age. If the balance does not exceed $3,500,
the amount is distributable to them in a lump sum payment.
2. Summary of Significant Accounting Policies:
Plan Termination:
- ----------------
Although it has not expressed any intent to do so, the Company has the right
under the Plan to discontinue their 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% vested in their employer contribution accounts.
Basis of Accounting:
- -------------------
The financial statements of the Plan are prepared under the accrual method of
accounting.
Investment Valuation and Income Recognition :
- -------------------------------------------
Investments in the CIGNA Lifetime Funds, CIGNA Guaranteed Income Fund, Fidelity
Advisor Growth Opportunities Fund, Warburg Pincus Advisor Growth & Income Fund,
International Equity Fund, and Emerging Growth Fund are stated at market value
as reported to the Plan by CIGNA. The market value of investments in Renal
Treatment Center, Inc. Common Stock is based on quoted market prices as of the
last business day of the Plan year. Investment income and interest are recorded
as earned on the accrual basis. Dividends are recorded on the ex-dividend date.
Participant loans receivable are valued at the outstanding principal loan amount
which approximates fair value.
The Plan presents in the statement of changes in net assets available for
benefits the net appreciation (depreciation) in the fair value of its
investments, which consists of the realized gains or losses and the unrealized
appreciation (depreciation) on those investments.
Purchases and sales of securities are recorded on a trade-date basis. Interest
income is recorded on the accrual basis. Dividends are recorded on the ex-
dividend date.
Payment of Benefits:
- --------------------
Benefits are recorded when paid.
-7-
NOTES TO FINANCIAL STATEMENTS, Continued
--------------------
Use of Estimates:
- -----------------
The preparation of financial statements in conformity with generally accepted
accounting principles requires management to make significant estimates and
assumptions that affect the reported amounts of assets and liabilities and
disclosures of contingent assets and liabilities at the date of the financial
statements and the reported amounts of changes in net assets during the
reporting period. Actual results could differ from the estimates.
Risks and Uncertainties:
- ------------------------
The Plan provides for various investment options in any combination of stocks,
bonds, fixed income securities, mutual funds, and other investment securities.
Investment securities are exposed to various risks, such as interest rate,
market and credit. Due to the level of risk associated with certain investment
securities and the level of uncertainty related to changes in the value of
investment securities, it is at least reasonably possible that changes in risks
in the near term would materially affect participants' account balances and the
amounts reported in the statement of net assets available for plan benefits and
the statement of changes in net assets available for plan benefits.
Plan Expenses:
- -------------
Administrative expenses of the Plan of approximately $34,115 were paid by the
Company for the nine months ended December 31, 1996.
3. Investments
-----------
Under the Plan, each participant may direct his contributions to be invested in
one or more of the following investment programs administered by the Connecticut
General Life Insurance Company, a CIGNA company, the Investment Manager of Plan
assets. Upon enrollment in the Plan, a participant may direct employee
contributions in 1 percent increments in any of the 10 investment options or the
Company stock. Participants may change their investment options at any time and
their contribution percentage on a quarterly basis.
CIGNA Lifetime Funds - These funds are comprised of five distinct, multi-asset
- --------------------
class, multi-manager investment portfolios which invest in different bond/stock
mixes.
Fidelity Advisor Growth Opportunities Fund - This fund invests primarily in
- ------------------------------------------
common stocks and securities convertible into common stock.
Warburg Pincus Advisor Growth & Income Fund - This fund invests in income
- -------------------------------------------
producing securities, including, but not limited to, dividend paying equity
securities and fixed income securities, including common stocks and other
marketable securities which derive their value from common stocks, such as
rights and warrants.
Warburg Pincus Advisor International Equity Fund - This fund invests in a
- ------------------------------------------------
broadly diversified portfolio of equity securities of financially strong non-
U.S. issuers located in growing international economies.
Warburg Pincus Advisor Emerging Growth Fund - This fund invests in equity
- -------------------------------------------
securities of small to medium sized domestic companies with emerging or renewed
growth potential.
CIGNA Guaranteed Income Fund - This fund invests in a diversified portfolio of
- ----------------------------
high quality, fixed income instruments (principally intermediate-term bonds and
commercial mortgages within Connecticut General's General Account).
-8-
NOTES TO FINANCIAL STATEMENTS, Continued
4. Related Party Transactions:
---------------------------
Certain Plan investments are shares of mutual funds managed by CIGNA. CIGNA is
the trustee as defined by the Plan. Fees were paid by the Company for the
investment management services and therefore are not party-in-interest
transactions.
5. Tax Status
----------
The Internal Revenue Service has determined and informed the Company by a letter
dated December 20, 1995, 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 in-house counsel believe that the Plan is designed and is
currently being operated in compliance with the applicable requirements of the
IRC.
-9-
Supplemental Information
-10-
RENAL TREATMENT CENTERS, INC. SAVINGS PLAN
SCHEDULE OF NET ASSETS HELD FOR INVESTMENT
at December 31, 1996
-------------------------
Desription of Investment
Identity of Issuers, Including Maturity Date,
Borrower, Lessor Rate of Interest, Collateral, Current
or Similar Party Par or Maturity Value Cost Value
--------------------- ---------------------------- ------------- ----------------
Connecticut General CIGNA Guaranteed Long
Life Insurance Company Term Fund $ 3,409,204.55 $ 3,409,204.55
Connecticut General
Life Insurance Company Lifetime 20 $ 113,119.37 $ 117,546.48
Connecticut General
Life Insurance Company Lifetime 30 $ 173,677.15 $ 178,564.43
Connecticut General
Life Insurance Company Lifetime 40 $ 141,665.83 $ 146,321.26
Connecticut General
Life Insurance Company Lifetime 50 $ 62,946.71 $ 65,193.37
Connecticut General
Life Insurance Company Lifetime 60 $ 17,313.76 $ 17,907.61
Connecticut General Fidelity Advisor Growth
Life Insurance Company Opportunities $ 1,763,451.15 $ 1,990,458.77
Connecticut General Warburg Pincus Growth
Life Insurance Company & Income $ 113,302.82 $ 114,343.76
Connecticut General Warburg Pincus Emerging
Life Insurance Company Growth Fund $ 366,505.04 $ 377,400.22
Connecticut General Warburg Pincus
Life Insurance Company International Equity $ 90,137.09 $ 92,893.71
National Financial RTC Common Stock $ 305,690.73 $ 273,350.84
Services Co.
Cash Transaction Account
(GST) $ 920.72 $ 920.72
Connecticut General
Life Insurance Company Outstanding Participant
Loan, Interest rate 8.75%
- 10.00% ---- $ 189,533.22
-11-