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 for the fiscal year ended December 31, 1999
Commission file number: 0-10736
A. Full title of the plan and the address of the plan, if different
from that of the issuer named below:
MGI PHARMA, INC. Retirement Savings Plan
B. Name of issuer of the securities held pursuant to the plan and the
address of its principal executive office:
MGI PHARMA, INC.
6300 West Old Shakopee Road, Suite 110
Bloomington, MN 55438-2318
STATEMENTS OF NET ASSETS AVAILABLE FOR PARTICIPANTS
MGI PHARMA, INC. Retirement Savings Plan
(unaudited)
December 31,
-----------------------
1999 1998
---------- ----------
Investments at fair value:
Shares of registered investment companies:
Invesco Stable Value $ 0 $ 397,184
Morley Stable Value 478,788 0
Vanguard Group:
Fixed Income, GNMA 133,614 119,440
Primecap 721,076 448,386
Index 500 222,762 110,720
World, International Growth 368,940 285,051
Fidelity Puritan 689,797 581,045
Baron Asset 58,575 28,820
Janus Worldwide 192,759 62,389
MGI PHARMA, INC. common stock 3,231,235 2,452,310
Participant notes receivable 35,746 47,834
---------- ----------
6,133,292 4,533,179
---------- ----------
Receivables:
Contributions receivable:
Employer 237,509 213,808
Employees -- --
---------- ----------
237,509 213,808
---------- ----------
Cash 0 5,067
---------- ----------
Net assets available for participants $6,370,801 $4,752,054
========== ==========
- -----------------------------------------------------------------
See accompanying notes to financial statements.
1
STATEMENTS OF CHANGES IN NET ASSETS AVAILABLE FOR PARTICIPANTS
MGI PHARMA, INC. Retirement Savings Plan
(unaudited)
Year Ended December 31, 1999
-----------------------------------------------------------------------
Shares of registered investment companies
-----------------------------------------------------------------------
Vanguard Group
Invesco Morley -----------------------------------------------
Stable Stable Fixed Income World Intl.
Value Value GNMA Primecap Index 500 Growth
----- ----- ------------ -------- --------- -----------
Additions to net assets:
Investment income:
Net appreciation (depreciation)
in fair value of investments $ -- $ -- $ -- $ -- $ -- $ --
Dividends 12,106 15,036 2,126 202,285 32,880 82,833
Interest -- -- -- -- -- --
--------- --------- --------- --------- --------- ---------
12,106 15,036 2,126 202,285 32,880 82,833
--------- --------- --------- --------- --------- ---------
Contributions:
Employer -- -- -- -- -- --
Participants 22,012 13,180 15,121 92,865 52,144 47,876
--------- --------- --------- --------- --------- ---------
22,012 13,180 15,121 92,865 52,144 47,876
--------- --------- --------- --------- --------- ---------
Total additions 34,118 28,216 17,247 295,150 85,024 130,709
--------- --------- --------- --------- --------- ---------
Distributions -- -- (9,113) (33,565) (15,257) (34,241)
Transfers between funds, net (431,303) 450,572 6,040 11,105 42,275 (12,579)
--------- --------- --------- --------- --------- ---------
Net increase (decrease) (397,184) 478,788 14,174 272,690 112,042 83,889
Net assets available for participants:
Beginning of year 397,184 $ -- $ 119,440 $ 448,386 $ 110,720 $ 285,051
--------- --------- --------- --------- --------- ---------
End of year $ -- $ 478,788 $ 133,614 $ 721,076 $ 222,762 $ 368,940
========= ========= ========= ========= ========= =========
[TABLE CONTINUES]
Year Ended December 31, 1999
---------------------------------------------------------------------------------
Shares of registered
investment companies
----------------------------- MGI
Fidelity Baron Janus Common Participant
Puritan Asset Worldwide Stock Notes Other Total
-------- ----- --------- ----- ----------- ----- -----
Additions to net assets:
Investment income:
Net appreciation (depreciation)
in fair value of investments $ -- $ -- $ -- $ 594,190 $ -- $ -- $ 594,190
Dividends 18,694 7,737 67,641 -- -- -- 441,338
Interest -- -- -- -- 2,965 -- 2,965
-------- ------- --------- ---------- --------- --------- ----------
18,694 7,737 67,641 594,190 2,965 -- 1,038,493
-------- ------- --------- ---------- --------- --------- ----------
Contributions:
Employer -- -- -- 47,491 -- 363,958 411,449
Participants 69,665 8,131 21,008 34,778 -- 32,636 409,416
-------- ------- --------- ---------- --------- --------- ----------
69,665 8,131 21,008 82,269 -- 396,594 820,865
-------- ------- --------- ---------- --------- --------- ----------
Total additions 88,359 15,868 88,649 676,459 2,965 396,594 1,859,358
-------- ------- --------- ---------- --------- --------- ----------
Distributions (20,069) (5,949) (826) (45,274) 7,000 -- (157,294)
Transfers between funds, net 40,462 19,837 42,547 147,740 (22,053) (377,960) (83,317)
-------- ------- --------- ---------- --------- --------- ----------
Net increase (decrease) 108,752 29,756 130,370 778,925 (12,088) 18,634 1,618,747
Net assets available for participants:
Beginning of year $581,045 $28,820 $ 62,389 $2,452,310 $ 47,834 $ 218,875 4,752,054
-------- ------- --------- ---------- --------- --------- ----------
End of year $689,797 $58,576 $ 192,759 $3,231,235 $ 35,746 $ 237,509 $6,370,801
======== ======= ========= ========== ========= ========= ==========
- ----------------------------------------------------------
See accompanying notes to financial statements.
2
STATEMENTS OF CHANGES IN NET ASSETS AVAILABLE FOR PARTICIPANTS
MGI PHARMA, INC. Retirement Savings Plan
(unaudited)
Year Ended December 31, 1999
------------------------------------------------------------
Shares of registered investment companies
------------------------------------------------------------
Vanguard Group
Invesco -----------------------------------------------
Stable Fixed Income World Intl.
Value GNMA Primecap Index 500 Growth
----- ------------ -------- --------- -----------
Additions to net assets:
Investment income:
Net appreciation (depreciation)
in fair value of investments $ -- $ (684) $ 43,475 $ 9,559 $ (4,693)
Dividends 18,304 9,180 44,313 9,055 42,975
Interest -- -- -- -- --
-------- -------- -------- -------- --------
18,304 8,496 87,788 18,614 38,282
-------- -------- -------- -------- --------
Contributions:
Employer -- -- -- -- --
Participants 30,584 12,877 88,811 39,481 68,037
-------- -------- -------- -------- --------
30,584 12,877 88,811 39,481 68,037
-------- -------- -------- -------- --------
Total additions 48,888 21,373 176,599 58,095 106,319
-------- -------- -------- -------- --------
Distributions (2,901) (2,253) (3,263) (140) (25,826)
Transfers between funds, net 141,167 (3,672) (9,284) 12,656 (30,981)
-------- -------- -------- -------- --------
Net increase (decrease) 187,154 15,448 164,052 70,611 49,512
Net assets available for participants:
Beginning of year 210,030 103,992 284,334 40,109 235,539
-------- -------- -------- -------- --------
End of year $397,184 $119,440 $448,386 $110,720 $285,051
======== ======== ======== ======== ========
[TABLE CONTINUES]
Year Ended December 31, 1999
-------------------------------------------------------------------------------
Shares of registered
investment companies
------------------------------- MGI
Fidelity Baron Janus Common Participant
Puritan Asset Worldwide Stock Notes Other Total
-------- ----- --------- ------ ----------- ----- -----
Additions to net assets:
Investment income:
Net appreciation (depreciation)
in fair value of investments $(16,214) $(32,865) $10,090 $1,449,334 $ -- $ -- $1,458,002
Dividends 107,012 37,863 237 -- -- -- 268,939
Interest -- -- -- -- 4,059 -- 4,059
-------- -------- ------- ---------- ------- --------- ----------
90,798 4,998 10,327 1,449,334 4,059 -- 1,731,000
-------- -------- ------- ---------- ------- --------- ----------
Contributions:
Employer -- -- -- 100,399 -- 213,808 314,207
Participants 76,442 537 945 42,709 -- 9,288 369,711
-------- -------- ------- ---------- ------- --------- ----------
76,442 537 945 143,108 -- 223,096 683,918
-------- -------- ------- ---------- ------- --------- ----------
Total additions 167,240 5,535 11,272 1,592,442 4,059 223,096 2,414,918
-------- -------- ------- ---------- ------- --------- ----------
Distributions (3,636) 0 0 (18,365) -- -- (56,384)
Transfers between funds, net (141,846) 23,285 51,117 122,282 (2,235) (173,137) (10,648)
-------- -------- ------- ---------- ------- --------- ----------
Net increase (decrease) 21,758 28,820 62,389 1,696,359 1,824 49,959 2,347,886
Net assets available for participants:
Beginning of year 559,287 0 0 755,951 46,010 168,916 2,404,168
-------- -------- ------- ---------- ------- --------- ----------
End of year $581,045 $ 28,820 $62,389 $2,452,310 $47,834 $ 218,875 $4,752,054
======== ======== ======= ========== ======= ========= ==========
- ---------------------------------------------------------
See accompanying notes to financial statements.
3
NOTES TO FINANCIAL STATEMENTS
MGI PHARMA, INC. Retirement Savings Plan
(unaudited)
1. Description of Plan
-------------------
The following description of the MGI PHARMA, INC. Retirement Savings
Plan (the "Plan") provides only general information. Participants
should refer to the Summary Plan Description for a more complete
description of the Plan's provisions. The plan is a defined
contribution retirement savings plan sponsored by MGI PHARMA, INC.
("MGI"). It conforms to Section 401(k) of the Internal Revenue Code and
therefore defers income taxes on qualifying contributions and Plan
earnings. The Plan benefits eligible employees by accumulating
retirement assets during their working careers through employee
participation in a systematic savings and investment program to which
MGI also contributes. The Plan is administered by an Administrative
Committee appointed for that purpose by MGI's Board of Directors and
all Plan administrative costs are currently borne by MGI.
At December 31, 1999, 94 employees were participants in the Plan. The
Plan is available to every employee of MGI who completes six months of
employment, is at least 21 years old, and is scheduled for at least
1,000 hours of service annually. Eligible employees may participate in
the Plan through: (1) contributions of up to 10% of their compensation;
(2) employer matching contributions equal to 50% of employee
contributions, up to 6% of an employee's compensation; (3) employer
discretionary contributions; and (4) employee rollover contributions.
Contributions are subject to certain limitations.
Employee contributions and related earnings are directed by the
participant into available investment options and are fully vested at
all times. Employer contributions are in the form of MGI common stock.
Following full vesting, a participant may elect to redirect investment
of employer contributions to any of the plan's investment alternatives.
At December 31, 1999, employer directed balances totaled $345,220 of
the MGI common stock fund. Employer contributions are 20% vested after
completion of two years of employment, 40% after three years, 75% after
four years and 100% after five years. Employer discretionary
contributions are allocated to a participant's account based upon
his/her pro rata share of total recognized compensation during the
year. Forfeitures are used to reduce the amount of MGI's contributions
to the Plan.
A participant's account may mature and be distributed upon the
occurrence of one of the following: (1) death, (2) retirement, (3) the
attainment of 70-1/2 years of age, (4) termination of employment, (5)
termination of the Plan or (6) upon
4
certain MGI "change in control" events. Distributions may be a lump sum
of cash and MGI common stock held in a participant's account.
Investments
-----------
The following investment alternatives are available to participants:
Registered Investment Companies Funds:
Invesco Funds Group:
Stable Value - The INVESCO Retirement Trust Stable Value Fund seeks
to provide a high level of current income while preserving
principal, primarily by investing in a diversified portfolio of
investment contracts with insurance companies, banks or other
financial institutions. An investment contract is an agreement to
provide a specific rate of return for a period of time. Risk in
these contracts relates to the financial performance of the issuing
entity and in certain cases a portfolio of marketable securities
securing the investment. The Invesco Stable Value was replaced by
the Morley Stable Value Fund in the second quarter of 1999.
Morley Financial Services:
Stable Value - The Stable Value Fund is designed to provide
preservation of capital and protection to participants from the risk
of market price volatility. The Fund seeks to earn a high level of
income consistent with those objectives. The fund consists of a
diversified portfolio of high-quality stable value investment
contracts issued by life insurance companies, banks and other
financial institutions. The principal value of these assets are
intended to remain stable regardless of stock and bond market
fluctuations.
Vanguard Group:
Fixed Income, GNMA - The GNMA portfolio is part of the Fixed Income
Securities Fund, a no-load, open-end, diversified fund that seeks to
provide a high level of current income while maintaining a high
level of principal protection and liquidity. The portfolio invests
at least 80% of its assets in Government National Mortgage
Association ("GNMA" or "Ginnie Mae") pass-through mortgage backed
certificates representing part ownership of a pool of mortgage
loans. The mortgage loans underlying GNMA certificates are
guaranteed by the full faith and credit of the U.S. Government.
Primecap Fund - The Vanguard/PRIMECAP Fund, Inc. is an open-end
diversified investment company that seeks to provide long-term
growth of capital by investing principally in common stocks.
Dividend income is incidental to this objective. The Fund selects
stocks primarily on the basis of above-average earnings growth
potential and quality of management.
Vanguard Index 500 - Vanguard Index 500 portfolio is part of the
Vanguard Index Trust, an open-end investment company that includes
six separate, diversified mutual fund portfolios. The Index 500
portfolio seeks to track the
5
performance of the Standard and Poor's 500 Composite Stock
Price Index, which emphasizes stocks of large U.S. companies.
World, International Growth - The International Growth Portfolio is
part of the World Fund, a no load, open end, diversified equity
security fund. The portfolio seeks to provide long-term capital
growth by investing primarily in equity securities of growth
companies located outside the United States.
Fidelity Investments:
Puritan - The Puritan fund is an open-end, diversified security fund
that seeks to primarily provide income by investing in common
stocks, preferred stocks and bonds.
Baron Funds:
Asset Fund - The Baron Asset Fund is an open-end, diversified
security fund that seeks capital appreciation through investments in
securities of small and medium sized companies with undervalued
assets or favorable growth prospects. Production of income, if any,
is incidental to this objective.
Janus Funds:
Worldwide Fund - The Janus Worldwide Fund is a diversified fund that
seeks long-term growth of capital by investing primarily in common
stocks of foreign and domestic issuers.
MGI PHARMA, INC. common stock - MGI PHARMA, INC. (the Plan Sponsor)
common stock is publicly traded, with trades reported on the NASDAQ
National Market System. MGI is a pharmaceutical company that acquires,
develops and markets differentiated speciality pharmaceutical products.
MGI has not paid, and has no present intention of paying cash dividends
on its common stock.
Participant Notes Receivable
----------------------------
Participants may borrow from their accounts a minimum of $1,000 up to
the lesser of $50,000 or one-half of their balances. Loan transactions
are treated as transfers between the relevant investment fund and the
Participant Notes fund. Loan terms generally cannot exceed five years.
The loans are secured by balances in the participant's accounts and
bear interest fixed at 1% above the prime rate upon initiation of the
loan. Principal and interest is paid monthly or by more frequent
installments.
2. Summary of Accounting Policies
------------------------------
Basis of Accounting
-------------------
The financial statements of the Plan are prepared under the accrual
method of accounting.
6
Investment Valuation and Income Recognition
-------------------------------------------
Plan investments are stated at fair value. Shares of registered
investment companies are valued at quoted market prices that represent
the net asset value of shares held by the Plan at year-end. Company
stock is valued at its quoted market price of $11.9375 and $9.75 per
share at December 31, 1999 and 1998, respectively. Participant notes
receivable are valued at cost which approximates fair value.
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. Investment income is allocated to
participants' accounts based upon their pro rata share of the
respective investment balance during the income period.
Payment of Benefits
-------------------
Benefits are recorded when paid.
3. Federal Income Taxes
--------------------
The Plan received a tax qualification letter from the Internal Revenue
Service stating that it is a qualified plan under the Internal Revenue
Code ("IRC"), and therefore the associated trust is exempt from federal
income taxes. Following the qualification letter, the Plan
administration believes operation of the Plan has been performed in a
manner to maintain compliance with the applicable requirements of the
IRC.
4. Party-in-interest Transactions
------------------------------
The Plan engaged in transactions involving the acquisition or
disposition of units of participation in collective investment funds of
the Trustee, which is a party-in-interest with respect to the Plan.
These transactions are not considered "prohibited transactions" under
ERISA and are for short-term investment of cash balances pending
reinvestment.
5. 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.
7
Schedule 1
SCHEDULE OF INVESTMENTS HELD AT END OF PLAN YEAR
MGI PHARMA, INC. Retirement Savings Plan
December 31, 1999
(unaudited)
Number Fair Market
Description of shares/units Cost Value
- ----------- --------------- ---- -----
Shares of registered investment companies:
Invesco Stable Value 0 $ * $ 0
Morley Stable Value 33,741 * 478,788
Vanguard Group:
Fixed Income, GNMA 13,551 * 133,614
Primecap Fund 11,617 * 721,076
Index 500 1,646 * 222,762
World, International Growth 16,405 * 368,940
Fidelity Puritan 36,248 * 689,797
Baron Fund 997 * 58,575
Janus Worldwide 2,522 * 192,759
MGI PHARMA, INC. common stock 270,679 * 3,231,235
Participant notes receivable N/A 35,746 35,746
------- ----------
Total $6,133,292
==========
* Fidelity Investments, the Custodian, does not maintain cost records,
therefore, this information is not available.
8
Schedule 2
REPORTABLE TRANSACTIONS
MGI PHARMA, INC. Retirement Savings Plan
Year ended December 31, 1999
(unaudited)
Total Total Total Dollar Total Dollar
Number Number Value of Value Net Gain
Description of Purchases of Sales Purchases of Sales or (Loss)
- ----------- ------------ -------- --------- ------------ ---------
Shares of registered investment companies:
Invesco Stable Value 10 6 49,238 459,623 *
Morley Stable Value 38 2 474,320 8,936 *
Vanguard Group:
Fixed Income, GNMA 46 6 29,519 17,548 *
Primecap Fund 63 12 108,535 41,108 *
Index 500 51 7 92,836 14,390 *
World, International Growth 52 13 58,926 54,135 *
Fidelity Puritan 67 9 133,609 40,272 *
Baron Asset 30 3 27,699 5,995 *
Janus Worldwide 33 2 63,445 1,290 *
MGI PHARMA, INC. common stock 26 16 84,199 207,215 *
* Fidelity Investments, the Custodian, does not maintain cost records,
Therefore, realized gains and losses on the disposition of units of the funds
are not available.
9
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934,
the Plan Administrative Committee has duly caused this annual report to be
signed on its behalf by the undersigned thereto duly authorized.
MGI PHARMA, INC.
Retirement Savings Plan
Date: June 29, 2000
By: /s/ Robin Dawe
-----------------------------------
Name: Robin Dawe
Title: Administrative Committee
Retirement Savings Plan
10