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
(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 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.
5775 West Old Shakopee Road, Suite 100
Bloomington, MN 55437-3174
MGI PHARMA, INC. RETIREMENT SAVINGS PLAN
Financial Statements
December 31, 2001 and 2000
MGI PHARMA, INC. RETIREMENT SAVINGS PLAN
Table of Contents
Page
Independent Auditors' Report 1
Statements of Net Assets Available for Plan Benefits 2
Statement of Changes in Net Assets Available for Plan Benefits 3
Notes to Financial Statements 4
Schedule
Schedule of Assets (Held at End of Year) 8
Independent Auditors' Report
The Board of Trustees
MGI Pharma Inc. Retirement Savings Plan:
We have audited the accompanying statement of net assets available for Plan
benefits of MGI Pharma, Inc. Retirement Savings Plan as of December 31, 2001,
and the related statement of changes in net assets available for Plan benefits
for the year then ended. 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 auditing standards generally accepted
in the United States of America. 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 also 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 Plan benefits as of December
31, 2001, and the changes in net assets available for Plan benefits for the
fiscal year then ended in conformity with accounting principles generally
accepted in the United States of America.
The accompanying statement of net assets available for Plan benefits of MGI
Pharma, Inc. Retirement Savings Plan as of December 31, 2000 was not audited by
us and, accordingly, we do not express an opinion on it.
Our audit was performed for the purpose of forming an opinion on the basic
financial statements taken as a whole. The supplemental schedule of assets (held
at end of year) 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.
/s/ KPMG LLP
May 13, 2002
MGI PHARMA, INC. RETIREMENT SAVINGS PLAN
Statements of Net Assets Available for Plan Benefits
December 31, 2001 and 2000
(Unaudited)
2001 2000
---------- -----------
Assets:
Investments at fair value (note 6) $7,390,707 6,628,085
---------- ----------
Receivables:
Employer contribution 581,987 316,173
---------- ----------
Total receivables 581,987 316,173
---------- ----------
Total assets $7,972,694 6,944,258
========== ==========
See accompanying notes to financial statements.
2
MGI PHARMA, INC. RETIREMENT SAVINGS PLAN
Statement of Changes in Net Assets Available for Plan Benefits
Year ended December 31, 2001
Additions (deductions):
Investment income:
Net (depreciation) appreciation in fair value of
investments (note 6) $ (526,364)
Interest and dividends 48,704
-----------
(477,660)
-----------
Contributions:
Employer 836,458
Employee 874,367
Forfeitures (23,312)
-----------
1,687,513
-----------
Total additions 1,209,853
-----------
Deductions:
Benefits paid to participants (180,165)
Plan administrator fees (1,252)
-----------
Total deductions (181,417)
-----------
Net increase 1,028,436
Net assets available for benefits:
Beginning of year 6,944,258
-----------
End of year $ 7,972,694
===========
See accompanying notes to financial statements.
3
MGI PHARMA, INC. RETIREMENT SAVINGS PLAN
Notes to Financial Statements
December 31, 2001 and 2000
(1) Summary of Significant Accounting Policies
(a) Basis of Presentation
The accompanying financial statements have been prepared on the
accrual basis of accounting in accordance with accounting principles
generally accepted in the United States of America.
(b) Investments 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 $15.28 and $16.50 per
share at December 31, 2001 and 2000, 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.
(c) Payment of Benefits
Benefits are recorded when paid.
(d) Expenses
All administrative expenses of the Plan, with the exception of loan
fees, are paid by MGI Pharma, Inc. (MGI or the Company).
(e) Accounting Estimates
The preparation of financial statements in conformity with accounting
principles generally accepted in the United States of America requires
the management to make estimates and assumptions that affect the
reported amounts of net assets available for plan benefits and
disclosure of contingent assets and liabilities at the date of the
financial statements and the reported amounts of changes in net assets
available for plan benefits during the reporting period. Actual
results could differ from those estimates.
(2) Summary Description of the 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. The Plan 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.
4 (Continued)
MGI PHARMA, INC. RETIREMENT SAVINGS PLAN
Notes to Financial Statements
December 31, 2001 and 2000
At December 31, 2001, 157 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 12% 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. 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 certain MGI "change in control" events. Distributions may
be a lump sum of cash and MGI common stock held in a participant's account.
(a) Investments
At December 31, 2001, the following investment alternatives were
available to plan participants: Vanguard Primecap Fund, Vanguard
World, International Growth, Janus Worldwide Fund, ABN AMRO Income
Plus Fund, ABN AMRO Chicago Capital Growth Fund, ABN AMRO Veredus
Aggressive Growth Fund, ABN AMRO Chicago Capital Balanced Fund, ABN
AMRO Chicago Capital Bond Fund, and MGI Pharma, Inc. common stock.
(b) Participant Loans
Participants may borrow from their accounts a minimum of $1,000 up to
the lesser of $50,000 or one-half of their vested 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.
(3) Federal Income Taxes
The Plan received a tax qualification letter from the Internal Revenue
Service dated December 21, 1994 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.
5 (Continued)
MGI PHARMA, INC. RETIREMENT SAVINGS PLAN
Notes to Financial Statements
December 31, 2001 and 2000
(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 Section 408(b)(8) and
are not prohibited by the Employee Retirement Income Security Act (ERISA).
(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% vested in their accounts.
(6) Investments
The following investments, as of December 31, 2001 and 2000, represented 5%
or more of the Plan's net assets:
Principal amount
or number Market
of shares value
----------------- ----------
2001:
Vanguard Primecap Fund 17,643 $ 908,962
ABN AMRO Chicago Capital Balanced Fund 47,497 535,272
MGI Pharma, Inc. common stock 289,800 4,425,205
2000 (unaudited):
Vanguard Group of Mutual Funds:
Primecap Fund 15,022 $ 907,017
World, International Growth 18,861 355,903
Fidelity Puritan Fund 25,538 480,880
MGI Pharma, Inc. common stock 233,286 3,849,219
During 2001, the Plan's investments (including gains and losses on
investments bought and sold, as well as held during the year) depreciated
in value as follows:
2001
----------
Mutual funds $ (314,276)
Common stock (212,088)
----------
(526,364)
===========
6 (Continued)
MGI PHARMA, INC. RETIREMENT SAVINGS PLAN
Notes to Financial Statements
December 31, 2001 and 2000
(7) Nonparticipant-directed Investments
Information about the net assets and the significant components of the
changes in net assets relating to the nonparticipant-directed investments
is as follows:
2001 2000
---------- ---------
MGI Pharma, Inc. common stock $4,425,205 3,849,219
Contribution due from MGI Pharma, Inc. 581,987 316,173
---------- ---------
Net assets $5,007,192 4,165,392
========== =========
Changes in net assets:
Net appreciation (depreciation) in
fair value of investments $ (212,088)
Contributions 1,076,536
Transfer from other funds 38,095
Forfeitures (22,639)
Distributions (38,019)
Other (47)
----------
Increase in
nonparticipant-directed
investments $ 841,838
==========
7
Schedule
MGI PHARMA, INC. RETIREMENT SAVINGS PLAN
Schedule of Assets (Held at End of Year)
December 31, 2001
Fair market
Identity of issuer Description value
- ------------------------------------------ ---------------------------------- -----------
* Vanguard Group:
Primecap Fund Registered Investment Fund $ 908,923
World, International Growth Registered Investment Fund 330,050
* Janus Worldwide Registered Investment Fund 272,931
* ABN AMRO:
Chicago Capital Bond Fund Registered Investment Fund 184,842
Chicago Capital Balanced Fund Registered Investment Fund 535,272
Chicago Capital Growth Fund Registered Investment Fund 331,968
Income Plus Fund Registered Investment Fund 276,204
Veredus Aggressive Growth Fund Registered Investment Fund 70,453
* MGI Pharma, Inc. common stock Common Stock, par value $0.01 4,425,205
Participant loans Loans to participants ranging
between 6.0% and 10.5% 54,859
----------
Total $7,390,707
==========
* Represents party-in-interest
See accompanying independent auditors' report.
8
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.
Date: June 18, 2002 MGI PHARMA, INC. Retirement Savings Plan
By /s/ Edgar F. Timberlake
--------------------------------------
Name: Edgar F. Timberlake
Title: Plan Administrator