<PAGE>
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 11-K
(Mark One)
[X] ANNUAL REPORT PURSUANT TO SECTION 15 (D) OF THE
SECURITIES EXCHANGE ACT OF 1934
For the fiscal year ended December 31, 1996
OR
[ ] TRANSITION REPORT PURSUANT TO SECTION 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
For the transaction period from __to
Commission File Number 1-11141
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HEALTH MANAGEMENT ASSOCIATES, INC.
RETIREMENT SAVINGS PLAN
(Full title of the plan)
HEALTH MANAGEMENT ASSOCIATES, INC.
5811 PELICAN BAY BLVD., SUITE 500
NAPLES, FLORIDA 34108-2710
(Name of issuer of the securities held pursuant to the
plan and address of its principal executive office)
<PAGE>
Financial Statements
and Supplemental Schedules
Health Management Associates, Inc.
Retirement Savings Plan
Years ended December 31, 1996, 1995 and 1994
with Report of Independent Auditors
2
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Health Management Associates, Inc. Retirement Savings Plan
Financial Statements
and Supplemental Schedules
Years ended December 31, 1996, 1995 and 1994
CONTENTS
Report of Independent Auditors.........................................4
Financial Statements
Statements of Net Assets Available for Benefits........................6
Statements of Changes in Net Assets Available for Benefits.............7
Notes to Financial Statements..........................................8
Supplemental Schedules
Schedule I - Schedule of Assets Held for Investment Purposes..........17
Schedule II - Schedule of Reportable Transactions.....................18
A schedule of party-in-interest transactions has not been presented because
there were no party-in-interest transactions which were prohibited by ERISA
Section 406 or for which there is not a statutory or administrative exemption.
3
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Report of Independent Auditors
The Plan Sponsor
Health Management Associates, Inc. Retirement Savings Plan
We were engaged to audit the accompanying statements of net assets available for
benefits of the Health Management Associates, Inc. Retirement Savings Plan ("the
Plan"), as of December 31, 1996 and 1995, and the related statements of changes
in net assets available for benefits for each of the three years in the period
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 audits.
We conducted our audits 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 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 at
December 31, 1996 and 1995, and the changes in its net assets available for
benefits for each of the three years in the period ended December 31, 1996, in
conformity with generally accepted accounting principles.
Our audits were made for the purpose of forming an opinion on the financial
statements as a whole. The accompanying supplemental schedule of assets held for
investment purposes as of December 31, 1996 and schedule of reportable
transactions for the year ended December 31, 1996, are presented for purposes of
complying with the Department
4
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of Labor's Rules and Regulations for Reporting and Disclosure under the Employee
Retirement Income Security Act of 1974, and are not a required part of the
financial statements. The supplemental schedules have been subjected to the
auditing procedures applied in our audit of the 1996 financial statements and,
in our opinion, are fairly stated in all material respects in relation to the
1996 financial statements taken as a whole.
ERNST & YOUNG LLP
May 23, 1997
5
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Health Management Associates, Inc. Retirement Savings Plan
Statements of Net Assets Available for Benefits
DECEMBER 31
1996 1995
---------------------------------
ASSETS
Cash $ - $ 14,528
Investments 46,032,810 32,205,707
Receivables:
Participants' contributions 692,543 476,290
Sponsor's contributions 419,387 387,927
---------------------------------
Total assets 47,144,740 33,084,452
---------------------------------
=================================
Net assets available for benefits $47,144,740 $33,084,452
=================================
See accompanying notes.
6
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Health Management Associates, Inc. Retirement Savings Plan
Statements of Changes in Net Assets Available for Benefits
YEAR ENDED DECEMBER 31
1996 1995 1994
---------------------------------------------
Investment income:
Net realized and unrealized
gains on investments $ 6,523,484 $ 7,120,489 $ 1,518,753
Interest and dividends 149,341 101,013 58,632
----------------------------------------------
6,672,825 7,221,502 1,577,385
Contributions:
Participants 8,247,677 5,893,641 4,492,168
Sponsor 2,261,253 1,718,236 1,203,519
----------------------------------------------
10,508,930 7,611,877 5,695,687
Benefit payments (3,113,444) (1,783,496) (1,797,576)
Plan expenses (8,023) (5,935) (6,403)
----------------------------------------------
Increase in net assets available
for benefits 14,060,288 13,043,948 5,469,093
Net assets available for
benefits at beginning of year 33,084,452 20,040,504 14,571,411
----------------------------------------------
Net assets available for
benefits at end of year $47,144,740 $33,084,452 $20,040,504
==============================================
See accompanying notes.
7
<PAGE>
Health Management Associates, Inc. Retirement Savings Plan
Notes to Financial Statements
December 31, 1996
1. DESCRIPTION OF THE PLAN
The following description of the Health Management Associates, Inc. Retirement
Savings Plan (the Plan) provides only general information. For further
description of the Plan, reference is made to the Summary Plan Description
provided to all members.
GENERAL
The Plan's sponsor is Health Management Associates, Inc. (the Sponsor). The
effective date of the Plan is October 1, 1990 (date of inception).
The Plan is intended to qualify as a salary reduction plan under Section 401(k)
and as a qualified defined contribution plan under Section 401(a) of the
Internal Revenue Code. The Plan is subject to the provisions of the Employee
Retirement Income Security Act of 1974 (ERISA).
All eligible employees, as defined, who have attained the age of twenty-one (21)
and completed one (1) year of service may elect to participate in the Plan,
provided that such employee is not a person covered under a collective
bargaining agreement under which retirement benefits have been the subject of
good faith bargaining or are participants in any other qualified plan maintained
by the Sponsor.
CONTRIBUTIONS
Each year, participants may elect to defer from 1% to 16% of compensation
received during the plan year. The Sponsor makes nondiscretionary matching
contributions equal to a percentage of each participants' deferred compensation.
In applying such a matching percentage, only salary reductions up to 6% of total
compensation shall be considered, and such sponsor matching contributions are
limited to 2% of the participant's total compensation during the plan year.
8
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Health Management Associates, Inc., Retirement Savings Plan
Notes to Financial Statements (continued)
1. DESCRIPTION OF THE PLAN (CONTINUED)
CONTRIBUTIONS (CONTINUED)
In addition, the Sponsor, at the sole discretion of its Board of Directors, may
make an additional contribution to the Plan. The Sponsor match is in the form of
Sponsor securities, with the exception of designated hospital subsidiaries which
receive the Sponsor match in cash. The Sponsor match in Sponsor securities is
not subject to participant direction. During the years ended December 31, 1996,
1995, and 1994, discretionary contributions of approximately $239,000, $264,000,
and $507,000, respectively, were made to the Plan.
INVESTMENT OPTIONS
Upon enrollment in the Plan, a participant may direct participant contributions
in 1% increments to any of seven investment options.
STOCK OPTION - Funds are invested in units of participation in a
Qualifying Employer Securities Fund that invests solely in Sponsor
securities. The Stock Fund was established on December 31, 1990.
However, no participant election was available with respect to this fund
until July 1, 1993. (Health Management Associates, Inc.
Common Stock Fund).
EQUITY OPTIONS - Funds are invested in units of participation in two
pooled funds that invest primarily in common stocks of domestic compan-
ies. (Nations Capital Growth Fund and Seligman Frontier Fund).
FIXED OPTION - Funds are invested in units of participation in a pooled
fund that invests in investment contracts, commercial paper, and other
fixed income securities. (NationsBank Stable Capital Fund).
BALANCED OPTION - Funds are invested in units of participation in a
pooled fund that invests in common stock and U.S. Treasury and other
fixed income securities.
(Nations Balanced Assets Fund).
9
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Health Management Associates, Inc., Retirement Savings Plan
Notes to Financial Statements (continued)
1. DESCRIPTION OF THE PLAN (CONTINUED)
INVESTMENT OPTIONS (CONTINUED)
INTERNATIONAL OPTION - Funds are invested in units of participation in a
pooled fund that invests primarily in common stocks of foreign
companies. (SoGen International Fund).
BOND OPTION - Funds are invested in units of participation in a pooled
fund that invests in bonds. (Strong Advantage Fund).
Participants may change their investment options daily.
A Nations Treasury Fund was established July 1, 1993 to invest forfeitures
primarily in U.S. Treasury Obligations and repurchase agreements secured by such
obligations. No participant election is available with respect to this fund.
PARTICIPANTS' ACCOUNTS
An individual account is maintained for each participant based on the value of
the investment option(s) elected by the participant. The participants' account
balances can be adjusted daily utilizing the Daily Choice Investment Program.
WITHDRAWALS AND PAYMENTS OF BENEFITS
Upon retirement or death, the total vested value of a participant's account is
distributed to the participant or the beneficiary in cash unless the participant
or the beneficiary elects certain other forms of distribution available under
the Plan.
A participant is only entitled to make a withdrawal from his or her account
prior to separation from service if the participant qualifies for a hardship
withdrawal. If a participant separates from service before vesting, the portion
of the account attributable to Sponsor contributions is not forfeited until the
participant incurs a five-year break in service.
10
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Health Management Associates, Inc., Retirement Savings Plan
Notes to Financial Statements (continued)
1. DESCRIPTION OF THE PLAN (CONTINUED)
WITHDRAWALS AND PAYMENTS OF BENEFITS (CONTINUED)
Forfeited balances of terminated participants' nonvested accounts are used to
reduce future Sponsor contributions. Forfeitures aggregated $557,000 at December
31, 1996.
VESTING
Participants are immediately vested in their voluntary contributions plus actual
earnings thereon. Participants become one hundred percent (100%) vested in the
remainder of their accounts upon the occurrence of any of the following events:
(a) The participant dies while still in service as an employee;
(b) The participant becomes totally and permanently disabled while
still in service as an employee; or
(c) The Plan is terminated by the Sponsor.
In other cases, a gradual vesting scale applies, with one hundred percent (100%)
vesting upon reaching seven (7) years of vesting service. A plan year during
which an employee works for at least one thousand (1,000) hours is counted as
one year of vesting service.
TERMINATION OF THE PLAN
While the Sponsor has not expressed any intent to discontinue the Plan, the Plan
may be terminated for any reason at any time.
11
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Health Management Associates, Inc., Retirement Savings Plan
Notes to Financial Statements (continued)
2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
INVESTMENT VALUATION
Investments in the NationsBank Stable Capital Fund are included in the
statements of net assets available for benefits at fair value (redemption price)
as established by the Trustee. The fair values of the remaining investments in
the Health Management Associates, Inc. Common Stock Fund, the Nations Capital
Growth Fund, the Nations Balanced Assets Fund, the Strong Advantage Fund, the
SoGen International Fund, the Seligman Frontier Fund, and the Nations Treasury
Fund are based upon quoted closing prices on national stock exchanges.
CONTRIBUTIONS
Contributions from participants are recorded when payroll deductions are made.
Sponsor contributions accrue to the Plan at the payroll deduction dates. Such
amounts are remitted monthly to the Trustee for investment based on the
investment options designated by the Plan's participants.
Discretionary Sponsor contributions accrue to the Plan when declared and are
remitted prior to the date the Sponsor files its federal income tax return for
the corresponding fiscal year.
INVESTMENT INCOME
All interest and dividend income is recorded on an accrual basis. Upon
conversion to the Daily Choice Investment Program, investment income is added
daily to the fund and income, excluding dividend distributions, for all funds
except the Treasury Fund is presented as investment appreciation.
FORM 5500
Differences between the Form 5500 and the financial statements for the year
ended December 31, 1996 relate to contributions receivable which are recorded on
the Plan's financial statements and not included in the Form 5500. There were no
differences between the Form 5500 and the financial statements for the year
ended December 31, 1995.
12
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Health Management Associates, Inc., Retirement Savings Plan
Notes to Financial Statements (continued)
2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)
USE OF ESTIMATES
The preparation of the financial statements in conformity with generally
accepted accounting principles requires management to make estimates and
assumptions that affect the amounts reported in the financial statements and
accompanying notes. Actual results inevitably will differ from those estimates,
and such differences may be material to the financial statements.
3. INVESTMENTS
The investments of the Plan are held in trust under an agreement with
NationsBank of Georgia, N.A. (the "Trustee"). The fair values of investments are
as follows:
1996 1995
--------------------------
Health Management Associates, Inc. Common Stock
Fund $24,845,239(1) $15,745,127
NationsBank Stable Capital Fund 8,370,443(1) 7,427,382
Nations Capital Growth Fund 8,617,795(1) 6,522,576
Nations Balanced Assets Fund 3,357,197(1) 2,187,275
Nations Treasury Fund 607,943 323,347
Other 234,193 -
============================
$46,032,810 $32,205,707
============================
(1) Investment represents 5% or more of net assets available for benefits at
December 31, 1996.
13
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Health Management Associates, Inc., Retirement Savings Plan
Notes to Financial Statements (continued)
3. INVESTMENTS (CONTINUED)
During the years ended December 31, 1996, 1995 and 1994, the changes in net
assets available for benefits by investment option and unallocated cash were as
follows:
<TABLE>
<CAPTION>
NATIONS NATIONS HMA NATIONS
CAPITAL BANK STOCK BALANCED
GROWTH STABLE OPTION ASSET
CAPITAL
------------------------------------------------
Net assets available for
<S> <C> <C> <C> <C>
benefits at January 1, 1994 $3,752,674 $5,526,937 $4,684,604 $ 472,420
Net realized and unrealized
gains (losses) on (88,423) 270,736 1,376,458 (40,018)
investments
Interest and dividend income 34,572 - - 19,233
Contributions:
Participants 1,390,222 1,400,551 893,236 808,159
Sponsor 9,296 16,689 1,174,436 3,098
Benefit payments (475,816) (662,529) (575,811) (83,420)
Plan expenses (605) (2,806) (2,792) (200)
Fund transfers (313,532) (96,963) 459,629 (31,880)
------------------------------------------------
Net assets available for 4,308,388 6,452,615 8,009,760 1,147,392
benefits at December 31, 1994
Net realized and unrealized
gains on investments 1,284,207 392,779 5,124,855 318,648
Interest and dividend income 35,559 - 54,750
Contributions:
Participants 1,696,248 1,540,662 1,826,958 829,773
Sponsor 9,842 20,431 1,684,819 3,144
Benefit payments (346,347) (652,087) (685,954) (99,108)
Plan expenses (589) (2,953) (2,059) (334)
<CAPTION>
SOGEN
STRONG INTER-NATISELIGMAN NATIONS
ADVANTAGE FRONTIER TREASURY CASH TOTAL
-----------------------------------------------------------------
<S> <C> <C> <C> <C>
Net assets available for
benefits at January 1, 1994 $ - $ - $ - $134,776 $ - $14,571,411
Net realized and unrealized
gains (losses) on - - - - - 1,518,753
investments
Interest and dividend income - - - 4,827 - 58,632
Contributions:
Participants - - - - - 4,492,168
Sponsor - - - - - 1,203,519
Benefit payments - - - - - (1,797,576)
Plan expenses - - - - - (6,403)
Fund transfers - - - (28,819) 11,565 -
-----------------------------------------------------------------
Net assets available for - - - 110,784 11,565 20,040,504
benefits at December 31, 1994
Net realized and unrealized
gains on investments - - - - - 7,120,489
Interest and dividend income - - - 10,704 - 101,013
Contributions:
Participants - - - - - 5,893,641
Sponsor - - - - - 1,718,236
Benefit payments - - - - - (1,783,496)
Plan expenses - - - - - (5,935)
</TABLE>
14
<PAGE>
3. INVESTMENTS (CONTINUED)
<TABLE>
<CAPTION>
NATIONS NATIONS HMA NATIONS
CAPITAL BANK STOCK BALANCED
GROWTH STABLE OPTION ASSET
CAPITAL
------------------------------------------------
Fund transfers (320,880) (195,400) 311,777 (321)
------------------------------------------------
Net assets available for
<S> <C> <C> <C> <C>
benefits at December 31, 1995 6,666,428 7,556,047 16,270,156 2,253,944
Net realized and unrealized
gains (losses) on 1,230,499 440,282 4,569,845 287,724
investments
Interest and dividend income 33,235 - - 92,948
Contributions:
Participants 2,091,469 1,706,642 3,325,386 1,109,458
Sponsor 8,345 19,047 2,231,575 2,220
Benefit payments (613,110) (790,207) (1,496,877) (213,250)
Plan expenses (946) (3,708) (2,909) (460)
Fund transfers (653,887) (439,862) 723,656 (99,219)
===============================================
Net assets available for
benefits at December 31, 1996 $8,762,033 $8,488,241 $25,620,832 $3,433,365
===============================================
<CAPTION>
SOGEN
STRONG INTER-NATISELIGMAN NATIONS
ADVANTAGE FRONTIER TREASURY CASH TOTAL
-----------------------------------------------------------------
Fund transfers - - - 201,861 2,963 -
------------------------------------------------------------------
Net assets available for
benefits at December 31, 1995 - - - 323,349 14,528 33,084,452
Net realized and unrealized
gains (losses) on 43 (3,136) (1,776) 3 - 6,523,484
investments
Interest and dividend income 49 - - 23,109 - 149,341
Contributions:
Participants 2,390 5,522 6,810 - - 8,247,677
Sponsor 32 27 7 - - 2,261,253
Benefit payments - - - - - (3,113,444)
Plan expenses - - - - - (8,023)
Fund transfers 22,720 93,046 106,592 261,482 (14,528) -
==================================================================
Net assets available for
benefits at December 31, 1996 $25,234 $95,459 $111,633 $607,943 $ $47,144,740
-
==================================================================
</TABLE>
15
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Health Management Associates, Inc., Retirement Savings Plan
Notes to Financial Statements (continued)
4. INCOME TAX STATUS
The Plan has obtained a favorable determination letter as to its tax exempt
status from the Internal Revenue Service. The Plan's sponsor is not aware of any
action or event that has occurred which might affect the Plan's qualified
status.
5. PLAN EXPENSES
Pursuant to the provisions of the Plan, all expenses incurred in administering
the Plan are paid out of assets of the Plan unless paid or provided for by the
Sponsor.
6. BENEFITS PAYABLE
Amounts allocated to withdrawn participants approximated $3,781,000 and
$1,386,000 at December 31, 1996 and 1995, respectively.
7. RELATED PARTY TRANSACTIONS
The Stock Fund held investments in Sponsor securities with a market value of
$24,845,239 and $15,745,127 as of December 31, 1996 and 1995, respectively.
16
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Schedule I
Health Management Associates, Inc. Retirement Savings Plan
Line 27a - Schedule of Assets Held for Investment Purposes
December 31, 1996
<TABLE>
<CAPTION>
MARKET
DESCRIPTION UNITS COST VALUE
- ------------------------------------------------------------------------------------
<S> <C> <C> <C>
Health Management Associates, Inc. Common
Stock 231,454 $13,956,102 $24,845,239
NationsBank Stable Capital Fund - Fixed 538,054 7,411,277 8,370,443
Nations Capital Growth Fund - Equity 545,107 8,835,279 8,617,795
Nations Balanced Assets Fund 219,185 3,448,933 3,357,197
Nations Treasury Fund 607,942 607,943 607,943
Seligman Frontier 4,936 117,516 113,500
SoGen International 2,550 98,803 95,459
Strong Advantage 1,254 25,191 25,234
==============================
$34,501,044 $46,032,810
==============================
</TABLE>
17
<PAGE>
Schedule II
Health Management Associates, Inc. Retirement Savings Plan
Line 27d - Schedule of Reportable Transactions
Year ended December 31, 1996
<TABLE>
<CAPTION>
CURRENT VALUE
PURCHASE AT DATE OF
DESCRIPTION OF ASSET PRICE SELLING PRICE COST OF ASSET TRANSACTION NET GAIN
- ----------------------------------------------------------------------------------------------------------------------------
CATEGORY (III) - SERIES OF TRANSACTIONS IN EXCESS OF 5% OF PLAN ASSETS.
EQUITY FUND
<S> <C> <C> <C> <C> <C>
Nations Capital Growth Fund $ - $1,880,963 $1,679,518 $1,803,315 $ 77,648
Nations Capital Growth Fund 4,639,601 - 4,639,601 4,639,601 -
Nations Balanced Assets Fund - 652,757 633,748 633,134 19,623
Nations Balanced Assets Fund 1,925,693 - 1,925,693 1,925,693 -
STOCK FUND
Health Management Associates, Inc. Common - 2,821,620 1,672,221 2,374,789 446,831
Stock
Health Management Associates, Inc. Common 7,364,525 - 7,364,525 7,364,525 -
Stock
FIXED FUND
NationsBank Stable Capital Fund - 1,786,239 1,654,163 1,745,693 40,546
NationsBank Stable Capital Fund 2,289,120 - 2,289,120 2,289,120 -
</TABLE>
THERE WERE NO CATEGORY (I) - INDIVIDUAL TRANSACTIONS IN EXCESS OF 5% OF PLAN
ASSETS, CATEGORY (II) - SERIES OF TRANSACTIONS OTHER THAN SECURITIES
TRANSACTIONS OR CATEGORY (IV) - OTHER TRANSACTIONS DURING THE YEAR ENDED
DECEMBER 31, 1996.
18
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SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934,
Health Management Associates, Inc., as Administrator, has duly caused this
Annual Report to be signed on its behalf by the undersigned hereunto duly
authorized.
Health Management Associates, Inc.,
AS ADMINISTRATOR OF
Health Management Associates, Inc.
Retirement Savings Plan
Date: June 19, 1997 By: /s/ Robert E. Farnham
-----------------------
Robert E. Farnham
Vice President
Corporate Controller
19
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INDEX TO EXHIBITS
(23) Consents of experts and counsel
Consent of Ernst & Young is included as Exhibit 23.1 at page 21 of this
Report.
<PAGE>
EXHIBIT 23.1
CONSENT OF INDEPENDENT AUDITORS
We consent to the incorporation by reference in the Registration Statement (Form
S-8 No.-65382) pertaining to the Retirement Savings Plan of Health Management
Associates, Inc. Of our report dated May 23, 1997, with respect to the financial
statements and supplemental schedules of Health Management Associates, Inc.
Retirement Savings Plan included in this Annual Report (Form 11-K) for the year
ended December 31, 1996
ERNST & YOUNG LLP
Atlanta, Georgia
June 19, 1997
