<PAGE> 1
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, 1999
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
<PAGE> 2
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, 2000 By /s/ Gerald D. Stethem
-----------------------------------
Gerald D. Stethem
Chief Financial Officer
<PAGE> 3
NCS HealthCare Employee Savings Plan and Trust
Financial Statements
and Supplemental Schedule
December 31, 1999 and 1998
and the Year Ended December 31, 1999
TABLE OF CONTENTS
Report of Independent Auditors................................................1
FINANCIAL STATEMENTS
Statements of Net Assets Available for Benefits...............................3
Statement of Changes in Net Assets Available for Benefits.....................4
Notes to Financial Statements.................................................5
SUPPLEMENTAL SCHEDULE
Schedule H, Line 4(i)--Schedule of Assets Held for
Investment Purposes at End of Year.........................................9
<PAGE> 4
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, 1999 and
1998, and the related statement of changes in net assets available for benefits
for the year ended December 31, 1999. 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.
Except as explained in the following paragraph, 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.
As permitted by 29 CFR 2520.103-8 of the Department of Labor's Rules and
Regulations for Reporting and Disclosure under the Employee Retirement Income
Security Act of 1974, investment assets held by Great-West Life & Annuity
Insurance Company, the custodian of the Plan, and the transactions in those
assets were excluded from the scope of our audit of the Plan's 1998 financial
statements, except for comparing the information provided by the custodian,
which is summarized in Note C, with the related information included in the
financial statements.
Because of the significance of the information that we did not audit, we are
unable to, and do not, express an opinion on the Plan's financial statements as
of December 31, 1998. The form and content of the information included in the
1998 financial statements, other than that derived from the information
certified by the custodian, have been audited by us and, in our opinion, are
presented in compliance with the Department of Labor's Rules and Regulations for
Reporting and Disclosure under the Employee Retirement Income Security Act of
1974.
In our opinion, the financial statements, referred to above, of the NCS
HealthCare Employee Savings Plan and Trust as of December 31, 1999, and for the
year then ended present fairly, in all material respects, the net assets
available for benefits of the Plan as of December 31, 1999, and the changes in
its net assets available for benefits for the year then ended in conformity with
accounting principles generally accepted in the United States.
1
<PAGE> 5
Our audit of the Plan's financial statements as of and for the year ended
December 31, 1999, was performed for the purpose of forming an opinion on the
financial statements taken as a whole. The accompanying supplemental schedule of
assets held for investment purposes at end of year as of December 31, 1999 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 audit of the financial
statements for the year ended December 31, 1999 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 22, 2000
2
<PAGE> 6
NCS HealthCare Employee Savings Plan and Trust
Statements of Net Assets Available for Benefits
DECEMBER 31
1999 1998
---------------------------------
ASSETS
Investments, at fair value $33,990,805 $24,101,110
Contribution receivables
Employer -- 71,429
Participant 307,322 403,481
---------------------------------
Total receivables 307,322 474,910
---------------------------------
Net assets available for benefits $34,298,127 $24,576,020
=================================
See accompanying notes to financial statements.
3
<PAGE> 7
NCS HealthCare Employee Savings Plan and Trust
Statement of Changes in Net Assets Available for Benefits
Year Ended December 31, 1999
ADDITIONS
Investment income:
Net appreciation in fair value of investments $ 5,619,731
Interest and dividends 7,519
-----------------
5,627,250
Contributions:
Participants 6,661,353
Employer 1,110,594
Rollover 911,207
-----------------
8,683,154
-----------------
Total additions 14,310,404
DEDUCTIONS
Benefits paid directly to participants 4,588,297
-----------------
Total deductions 4,588,297
-----------------
Net increase 9,722,107
Net assets available for benefits
at beginning of year 24,576,020
-----------------
Net assets available for benefits
at end of year $34,298,127
=================
See accompanying notes to financial statements
4
<PAGE> 8
NCS HealthCare Employee Savings Plan and Trust
Notes to Financial Statements
December 31, 1999 and 1998 and
Year Ended December 31, 1999
A. 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. 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. Effective January 1, 1999, all matching
contributions made by the Company on or subsequent to that date are invested in
Company stock.
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.
5
<PAGE> 9
NCS HealthCare Employee Savings Plan and Trust
Notes to Financial Statements (continued)
A. 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 $139,305 and
$78,734 of forfeitures available to allocate among the accounts of all eligible
participants as of December 31, 1999 and 1998, 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.
6
<PAGE> 10
NCS HealthCare Employee Savings Plan and Trust
Notes to Financial Statements (continued)
B. 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 are stated at fair value. The insurance company pooled
separate accounts are valued at quoted market prices that represent the net
asset values of shares 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 participant loans are valued 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 generally accepted
accounting principles requires management to make estimates that affect the
amounts reported in the financial statements and accompanying notes. Actual
results could differ from those estimates.
RECLASSIFICATION
Certain amounts in the 1998 financial statements have been reclassified to
conform to the 1999 presentation.
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, 1999 (0.65% at December 31, 1998)
of the fair value of Great-West accounts. The Company pays for those Plan
expenses not borne by the Plan.
7
<PAGE> 11
NCS HealthCare Employee Savings Plan and Trust
Notes to Financial Statements (continued)
C. INVESTMENTS
All investment information related to investments held at December 31, 1998 was
obtained or derived from information supplied to the plan administrator and
certified as complete and accurate by Great-West Life & Annuity Insurance
Company.
During 1999, the Plan's investments (including investments purchased, sold as
well as held during the year) appreciated (depreciated) in fair value as
determined by quoted market prices as follows:
NET REALIZED
AND UNREALIZED
APPRECIATION
(DEPRECIATION) IN
FAIR VALUE OF
INVESTMENTS
----------------------
Common stock $ (538,996)
Shares of registered investment companies 6,158,727
------------------
$5,619,731
==================
Investments that represent 5% or more of fair value of the Plan's assets are as
follows:
<TABLE>
<CAPTION>
DECEMBER 31
1999 1998
---------------------------
<S> <C> <C>
Great-West pooled separate accounts:
Profile Series I $4,356,003 $3,228,903
American Century - Twentieth Century Ultra Fund
4,643,965 2,776,669
AIM Constellation Fund 2,297,044 1,364,923
Profile Series II 4,926,530 3,646,314
Profile Series III 1,935,363 1,416,427
Maxim Money Market Portfolio -- 1,662,684
</TABLE>
8
<PAGE> 12
NCS HealthCare Employee Savings Plan and Trust
Notes to Financial Statements (continued)
D. 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
1999 1998
-------------------------------
Investments, at fair value:
NCS Health Care, Inc. common stock $552,577 $ --
===============================
YEAR ENDED
DECEMBER 31,
1999
--------------
Change in net assets:
Contributions $ 938,350
Net transfers to participant directed funds 153,223
Net realized and unrealized
depreciation in fair value (538,996)
--------------
$ 552,577
==============
E. 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.
9
<PAGE> 13
NCS HealthCare Employee Savings Plan and Trust
Notes to Financial Statements (continued)
NCS HealthCare Employee Savings Plan and Trust
Employee Identification Number (EIN) 34-1532558 Plan Number 001
Schedule H, Line 4(i)--Schedule of Assets Held for
Investment Purposes at End of Year
December 31, 1999
<TABLE>
<CAPTION>
NUMBER OF SHARES
OR INTEREST CURRENT
IDENTITY DESCRIPTION OF INVESTMENTS RATE COST VALUE
--------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
1ER-AWP Interest Bearing Cash 4.500 $ 41
Great-West Guaranteed Certificate Funds:
1CGF 36 Guaranteed Certificate Fund due March 31, 2000 * 5.500 1,202
1CGF 36 Guaranteed Certificate Fund due June 30, 2000 * 5.100 1,750
1CGF 36 Guaranteed Certificate Fund due
September 30, 2000* 4.850 3,771
1CGF 36 Guaranteed Certificate Fund due
December 31, 2000 * 4.850 6,450
1CGF 36 Guaranteed Certificate Fund due March 31, 2001* 4.850 2,615
1CGF 36 Guaranteed Certificate Fund due June 30, 2001 * 4.750 6,617
1CGF 36 Guaranteed Certificate Fund due September 30, 2001*
4.350 2,819
1CGF 36 Guaranteed Certificate Fund due
December 31, 2001* 4.250 14,035
1CGF 36 Guaranteed Certificate Fund due March 31, 2002* 4.700 6,031
1CGF 36 Guaranteed Certificate Fund due June 30, 2002* 5.200 3,527
1CGF 36 Guaranteed Certificate Fund due
September 30, 2002* 5.350 3,418
1CGF 36 Guaranteed Certificate Fund due
December 31, 2002* 5.800 31,191
1CGF 60 Guaranteed Certificate Fund due
December 31, 2001* 5.050 816
1CGF 60 Guaranteed Certificate Fund due June 30, 2002* 5.750 172
1CGF 60 Guaranteed Certificate Fund due
September 30, 2002* 5.350 294
1CGF 60 Guaranteed Certificate Fund due
December 31, 2002* 5.000 587
1CGF 60 Guaranteed Certificate Fund due March 31, 2003* 5.050 2,869
1CGF 60 Guaranteed Certificate Fund due June 30, 2003* 4.800 1,134
</TABLE>
10
<PAGE> 14
NCS HealthCare Employee Savings Plan and Trust
Notes to Financial Statements (continued)
<TABLE>
<CAPTION>
NUMBER OF SHARES
OR INTEREST CURRENT
IDENTITY DESCRIPTION OF INVESTMENTS RATE COST VALUE
--------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
1CGF 60 Guaranteed Certificate Fund due
September 30, 2003* 4.600 616
1CGF 60 Guaranteed Certificate Fund due
December 31, 2003* 4.350 1,203
1CGF 60 Guaranteed Certificate Fund due March 31, 2004* 4.900 653
1CGF 60 Guaranteed Certificate Fund due June 30, 2004* 5.450 603
1CGF 60 Guaranteed Certificate Fund due
September 30, 2004* 5.500 664
1CGF 84 Guaranteed Certificate Fund due December 31, 2002 5.000 6,153
1CGF 84 Guaranteed Certificate Fund due March 31, 2003* 5.000 1,240
1CGF 84 Guaranteed Certificate Fund due March 31, 2003* 5.500 4,670
1CGF 84 Guaranteed Certificate Fund due June 30, 2003* 5.650 901
1CGF 84 Guaranteed Certificate Fund due
September 30, 2003* 5.200 26,640
1CGF 84 Guaranteed Certificate Fund due
December 31, 2003* 5.750 2,042
1CGF 84 Guaranteed Certificate Fund due March 31, 2004* 6.000 3,115
1CGF 84 Guaranteed Certificate Fund due June 30, 2004* 5.500 3,527
1CGF 84 Guaranteed Certificate Fund due
September 30, 2004* 5.100 1,812
1CGF 84 Guaranteed Certificate Fund due
December 31, 2004* 5.100 5,292
1CGF 84 Guaranteed Certificate Fund due June 30, 2005* 4.850 3,116
1CGF 84 Guaranteed Certificate Fund due
September 30, 2005* 4.750 3,102
1CGF 84 Guaranteed Certificate Fund due
December 31, 2005* 4.500 3,082
1CGF 84 Guaranteed Certificate Fund due March 31, 2006* 5.050 2,822
1CGF 84 Guaranteed Certificate Fund due June 30, 2006* 5.650 2,537
1CGF 84 Guaranteed Certificate Fund due
September 30, 2006* 5.950 2,395
Great-West Pooled Separate Accounts:
1BIMXBI Maxim Bond Index * 9,087 115,288
1BIMXLC Maxim Loomis Sayles Corporate Bond * 18,029 282,704
1BIMXUS Maxim U.S. Government Mortgage Securities 25,773 337,327
1BINXDG Maxim Global Bond * 6,909 75,304
1BSHXST Maxim Short-Term Maturity * 4,915 61,275
1CMMXMM Maxim Money Market * 97,644 1,367,739
1ER-STK NCS HealthCare, Inc. Stock * 229,643 $1,054,075 552,577
1IEUXIE Maxim Index Eurporan * 6,373 99,549
1IFSFAO Fidelity Advisor Overseas * 19,471 380,643
1IFSXIA Maxim Invesco Adr * 4,979 69,112
1IPAXIP Maxim Index Pacific * 20,382 254,632
</TABLE>
11
<PAGE> 15
NCS HealthCare Employee Savings Plan and Trust
Notes to Financial Statements (continued)
<TABLE>
<CAPTION>
NUMBER OF SHARES
OR INTEREST CURRENT
IDENTITY DESCRIPTION OF INVESTMENTS RATE COST VALUE
--------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
1IWSPGC Putnam Global Growth * 48,536 1,476,654
1LBLCHA Aim Charter * 29,434 908,510
1LBLO15 Orchard Index 500 * 33,563 1,097,419
1LBLXFG Maxim Founder's Growth and Income * 15,327 306,892
1LGRULT American Century Ultra * 134,063 4,643,965
1LGRWIN AIM Weingarten * 37,507 1,175,696
1LGRXGI Maxim Growth Index * 38,755 1,485,452
1LVAFEI Fidelity Advisor Equity Inc. * 23,028 432,791
1LVAFGO Fidelity Advisor Growth Opportunities * 51,662 1,119,796
1LVAPGI Putnam Fund For Growth and Income * 44,745 1,006,406
1LVAXVI Maxim Value Index * 23,601 629,025
1MGRCON AIM Constellation * 78,007 2,297,044
1MGRXTM Maxim T. Rowe Price Mid-Cap Growth * 24,214 406,294
1PBAXP1 Profile Series I * 165,730 4,356,003
1PBAXP2 Profile Series II * 213,868 4,926,530
1PBAXP3 Profile Series III * 96,412 1,935,363
1PBAXP4 Profile Series IV * 26,537 460,601
1PBAXP5 Profile Series V * 9,852 148,734
1SBLO16 Orchard Index 600 * 13,471 251,980
1SGRLDG Lord Abbett Developing Growth * 4,922 68,207
1SVAXAS Maxim Ariel Small-Cap Value * 5,589 95,556
1SVAXLS Maxim Loomis Sayles Small-Cap Value * 21,303 419,589
----------------
33,410,181
Participant Loans * 8.0% to 9.75%,
with maturity
dates through 2019
580,624
----------------
$33,990,805
================
</TABLE>
* Indicates party-in-interest to the Plan.
12
