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UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
Form 11-K
[x]ANNUAL REPORT PURSUANT TO SECTION 15(d) OF THE SECURITIES EXCHANGE ACT OF
1934
For the Fiscal Year Ended December 31, 1999
[ ] TRANSITION REPORT PURSUANT TO SECTION 15 (d) OF THE SECURITIES EXCHANGE ACT
OF 1934
For the transition period from _________ to __________ Commission file number
_______
A. Full title of the plan and the address of the plan, if different from that of
the issuer below:
Genesis Health Ventures, Inc. Retirement Plan
B. Name of issuer of the securities held pursuant to the plan and the address of
its principal executive office:
Genesis Health Ventures, Inc.
101 East State Street
Kennett Square, PA 19348
(610) 444-6350
Genesis Health Ventures, Inc. Retirement Plan Financial Statements, Supplemental
Schedule and Exhibits As of December 31, 1999 and 1998 and For the Year Ended
December 31, 1999
The following plan financial statements, schedules and reports, have been
prepared in accordance with the financial reporting requirements of ERISA.
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GENESIS HEALTH VENTURES, INC.
RETIREMENT PLAN
Financial Statements and Supplemental Schedules
December 31, 1999 and 1998
(With Independent Auditors' Report Thereon)
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GENESIS HEALTH VENTURES, INC.
RETIREMENT PLAN
Table of Contents
Page
Independent Auditors' Report 1
Statements of Net Assets Available for Plan Benefits,
December 31, 1999 and 1998 2
Statement of Changes in Net Assets Available for Plan Benefits,
Year ended December 31, 1999 3
Notes to Financial Statements 4
Schedule:
1 Schedule of Assets Held for Investment Purposes,
December 31, 1999 9
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Independent Auditors' Report
The Pension Committee and the Participants
Genesis Health Ventures, Inc. Retirement Plan:
We were engaged to audit the accompanying statements of net assets available for
plan benefits of the Genesis Health Ventures, Inc. Retirement Plan as of
December 31, 1999 and 1998, and the related statement of changes in net assets
available for plan 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.
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 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, 1999 and 1998, and the changes in net assets available for benefits
for the year ended December 31, 1999, in conformity with generally accepted
accounting principles.
Our audits were performed for the purpose of forming an opinion on the financial
statements taken as a whole. The supplemental schedule of assets held for
investment purposes 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
July 7, 2000
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GENESIS HEALTH VENTURES, INC.
RETIREMENT PLAN
Statements of Net Assets Available for Plan Benefits
December 31, 1999 and 1998
1999 1998
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Assets:
Investments $176,682,368 93,398,450
Employer matching receivable 6,425,115 4,184,394
Employee contribution receivable 1,612,608 772,364
Loans to participants 4,366,347 155,512
Cash 200,820 --
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Total assets 189,287,258 98,510,720
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Liabilities:
Due to administrator 84,228 30,407
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Total liabilities 84,228 30,407
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Net assets available for plan benefits $189,203,030 98,480,313
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See accompanying notes to financial statements.
2
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GENESIS HEALTH VENTURES, INC.
RETIREMENT PLAN
Statement of Changes in Net Assets Available for Plan Benefits
Year ended December 31, 1999
Additions:
Contributions:
Employees $ 20,412,301
Employer 6,655,847
Rollovers 575,088
Net appreciation in fair value
of investments 39,866,053
Transfers from the Vitalink Plan 33,902,768
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Total additions 101,412,057
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Deductions:
Administrative expenses (237,324)
Distributions, forfeitures and other (10,452,016)
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Total deductions (10,689,340)
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Net increase 90,722,717
Net assets:
Beginning of year 98,480,313
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End of year $ 189,203,030
============
See accompanying notes to financial statements.
3
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Genesis Health Ventures, Inc.
Retirement Plan
Notes to Financial Statements
December 31, 1999 and 1998
(1) Description of the Plan
The following description of Genesis Health Ventures, Inc. Retirement
Plan (the Plan) is provided for general information purposes only.
Participants should refer to the Plan document for a more complete
description of the Plan's provisions.
(a) General
The Plan is for the benefit of all employees who complete 12
consecutive months during which they have been credited with at
least 1,000 hours of service in their first year or any calendar
year thereafter, and who have not been employed under the terms
and conditions of a collective bargaining agreement. The Plan was
adopted on January 1, 1989, and is a defined contribution plan
subject to the provisions of the Employee Retirement Income
Security Act of 1974 (ERISA) and Section 401(k) of the Internal
Revenue Code.
In October 1999 the Vitalink Pharmacy Services, Inc. Retirement
Savings and Investment Plan (the Vitalink Plan) was merged into
the Plan as a result of an acquisition made by Genesis Health
Ventures, Inc. (the Company or the Plan Sponsor). Total assets
transferred from the Vitalink Plan were $33,902,768.
(b) Contributions
Eligible employees may make a voluntary, tax-deferred annual
contribution of up to $10,000 to the Plan for the years ended
December 31, 1999 and 1998. This figure is adjusted annually for
inflation as provided under the Internal Revenue Code. Each plan
year, the Board of Directors of the Company may fix the
proportionate contribution at any level, and intends to announce
the level of such contributions in advance of each plan year.
During the years ended December 31, 1999 and 1998, the Company
contributed amounts on behalf of each participant as follows:
For one to six years of service - 50% of the individual's
contribution, limited to 1% of the employee's annual
salary.
For seven to ten years of service - 75% of the
individual's contribution, limited to 3% of the employee's
annual salary.
For ten or more years of service - 100% of the
individual's contribution, limited to 4% of the employee's
annual salary.
The Company may also elect to make an additional profit-sharing
contribution to the Plan. Such contribution is discretionary by
the Company's Board of Directors. The Company did not elect to
make any profit-sharing contributions for the years ended December
31, 1999 and 1998.
4
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Genesis Health Ventures, Inc.
Retirement Plan
Notes to Financial Statements
December 31, 1999 and 1998
In order for a participant to share in the employer's matching
and/or profit-sharing contributions for any plan year, the
participant must have met one of the following conditions during
the plan year to be considered an "active participant":
a) Remained employed on the last day of the plan year;
b) Retired;
c) Died; or
d) Became disabled.
In addition, a participant is also required to have a minimum of
1,000 hours of service in the plan year to share in profit-sharing
contributions.
(c) Participant Accounts
Participants have a nonforfeitable interest in their contributions
at all times, although there are certain restrictions and options
on withdrawals. The participant's vested interest in their account
under the Plan as it is attributable to employer matching
contributions and employer profit-sharing contributions is as
follows:
Vested
Years of service percentage
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Fewer than five years None
Five years or more 100%
Attainment of age 65, regardless of service 100%
Death or disability while in the employ
of the Company 100%
The Plan provides for modification of the vesting schedule to 100%
after three or more years of service in certain situations.
(d) Payment of Benefits
Normal and deferred retirement benefits, disability benefits, and
vested benefits are generally distributed as a single sum. A
participant may request that normal retirement benefits be
distributed in approximately equal installments over a period of
years not to exceed the life expectancy of the participant and
their designated beneficiary.
(e) Forfeitures
Forfeitures of nonvested Company contributions are used to offset
such future contributions.
5
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Genesis Health Ventures, Inc.
Retirement Plan
Notes to Financial Statements
December 31, 1999 and 1998
(f) Investment Income
Unrealized appreciation (depreciation) is determined periodically
for the Stock Fund based on changes in the quoted market value of
the Company's common stock (note 3). Unrealized appreciation
(depreciation) of the Capital Preservation Fund, Janus Fund, Janus
Worldwide Fund, Diversified Bond Fund, Vanguard Wellington Fund,
Evergreen Growth and Income Fund, and Enhanced Stock Fund is
determined based upon quoted market values. Dividends in the
Capital Preservation Fund are reinvested. Dividends, interest
income, and capital gains (losses) in the U.S. Government
Securities Fund, Janus Fund, Janus Worldwide Fund, Diversified
Bond Fund, Vanguard Wellington Fund, Evergreen Growth and Income
Fund, and Enhanced Stock Fund are reinvested. Such amounts are
added to or deducted from the participants' accounts based on the
terms of the Plan and are treated as net appreciation in fair
value of investments in the accompanying statement of changes in
net assets available for plan benefits.
(2) Summary of Significant Accounting Policies
The accompanying financial statements have been prepared on the accrual
basis of accounting and present the net assets available for plan
benefits and changes in those net assets.
(a) Administrative Expenses
Administrative expenses incurred in the operation of the Plan are
paid by the Plan.
(b) Investments
Investments in the Genesis Stock Fund are valued at their quoted
market value. Investments in the Capital Preservation Fund, Janus
Fund, Janus Worldwide Fund, Diversified Bond Fund, Evergreen
Growth & Income Fund, Vanguard Wellington Fund, and Enhanced Stock
Fund are valued at the funds' net asset value, which approximates
fair value.
(3) Investments
A participant may direct contributions in any of the following investment
options in increments of 1%:
Capital Preservation Fund invests primarily in guaranteed
investment contracts.
Janus Fund invests primarily in common stocks of a large number of
issuers.
Janus Worldwide Fund invests primarily in common stocks of foreign
and domestic companies.
Diversified Bond Fund invests in full maturity bonds.
6
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Genesis Health Ventures, Inc.
Retirement Plan
Notes to Financial Statements
December 31, 1999 and 1998
Genesis Health Ventures, Inc. Stock Fund invests in common stock
of Genesis Health Ventures, Inc.
Vanguard Wellington Fund invests in a balance of equities and
fixed income securities.
Evergreen Growth & Income Fund invests in small-mid cap equity
funds.
Enhanced Stock Market Fund invests in large cap equity index
funds.
The Stock Fund investments represent 947,935 and 87,594 shares at
December 31, 1999 and 1998, respectively, of common stock of the Company.
At December 31, 1999 and 1998, the Company stock has been valued at $2.06
and $8.50 per share, respectively, based on the closing trading price
listed on the New York Stock Exchange. On June 22, 2000, Genesis Health
Ventures, Inc. filed for bankruptcy protection under Chapter XI with the
U.S. Bankruptcy Court in Wilmington, Delaware and its stock was delisted
from the New York Stock Exchange. The Company's common stock now trades
as an over-the-counter (OTC) equity security on the OTC bulletin board
(OTCBB) under the symbol GHVIQ. At the close of business on July 7, 2000,
the market price of the Company's stock was $0.14 per share.
(4) Investments
The following presents the investment balances at December 31, 1999 and
1998:
1999 1998
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Genesis Genesis Stock Fund $ 2,567,018 747,613
Federated Capital Preservation Fund* 25,530,359 23,948,812
Janus Janus Fund* 77,930,671 34,791,961
Janus Janus Worldwide Fund* 48,046,340 26,553,179
First Union Diversified Bond Fund 8,346,045 7,117,207
Vanguard Vanguard Wellington Fund 3,391,401 102,810
Evergreen Evergreen Growth & Income Fund 1,493,399 53,606
First Union Enhanced Stock Market Fund 9,377,135 83,262
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$176,682,368 93,398,450
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At the close of business on July 7, 2000, the market value of the Genesis
Health Ventures, Inc. common stock was $0.14 per share compared to $2.06
per share at December 31, 1999.
*Represents 5% or more of the Plan's net assets.
(5) Federal Income Tax
The Internal Revenue Service has determined that the Plan is designed in
accordance with applicable sections of the Internal Revenue Code and thus
is a qualified plan for federal income tax purposes. The latest amendment
to the Plan for the year ended December 31, 1998, which was effective
January 1, 1998, was dated November 11, 1998. The Plan Sponsor believes
the Plan, as amended, continues to operate and qualify as designed.
7
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Genesis Health Ventures, Inc.
Retirement Plan
Notes to Financial Statements
December 31, 1999 and 1998
(6) Plan Termination
Although it has not expressed any intent to do so, the Company reserves
the right to amend, suspend and/or terminate the Plan at any time. Upon
termination, all participants will become fully vested in the amounts
standing to their credit under the Plan.
(7) Loan Fund
Beginning March 1999, loans became an option in the Plan. Participants
are able to borrow up to 50% of their vested balance with a minimum loan
of $1,000 and a maximum loan of $50,000. Such loans are generally repaid
through payroll deductions over a period not to exceed five years and
bear interest at prime rate at the date of the loan. Only one loan
outstanding at a time is permitted (Prior plans merged in permitted
multiple loans, which were grandfathered into the Plan).
(8) Reconciliation of Financial Statements to Form 5500
As of July 7, 2000, the Plan has not yet prepared its Form 5500 for the
year ended December 31, 1999.
(9) Changes in Reporting Requirements
In September 1999, the American Institute of Certified Public Accountants
issued Statement of Position (SOP) 99-3, Accounting for and Reporting of
Certain Defined Contribution Plan Investments and Other Disclosure
Matters. SOP 99-3 simplifies the disclosure for certain investments and
is effective for plan years ending after December 15, 1999, with earlier
application encouraged. The Plan adopted SOP 99-3 during the Plan year
ended December 31, 1999. Accordingly, information previously required to
be disclosed about participant-directed fund investment programs are no
longer required to be presented in the Plan's 1999 financial statements.
The Plan's 1998 financial statements have been reclassified to conform
with the current year's presentation.
8
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Schedule 1
Genesis Health Ventures, Inc.
Retirement Plan
Schedule of Assets Held for Investment Purposes
December 31, 1999
Fair or
contract
Description value
Common stock:
Genesis Health Ventures, Inc.* $ 2,567,018
Mutual funds:
Federated Bank and Trust Capital
Preservation Fund 25,530,359
Janus Fund 77,930,671
Janus Worldwide Fund 48,046,340
Diversified Bond Fund 8,346,045
Vanguard Wellington Fund 3,391,401
Enhanced Stock Fund 9,377,135
Evergreen Growth & Income Fund 1,493,399
Loans to participants (6.72% - 11.00%) 4,366,347
Total investments $181,048,715
* At the close of business on July 7, 2000, the market value of the Genesis
Health Ventures, Inc. common stock was $0.14 per share compared to $2.06 per
share at December 31, 1999. On June 22, 2000, Genesis Health Ventures, Inc.
filed for bankruptcy protection under Chapter XI with the U.S. Bankruptcy
Court in Wilmington, Delaware and subsequently its stock was delisted from the
New York Stock Exchange. The Company's common stock now trades as an over-the-
counter (OTC) equity security on the OTC bulletin board (OTCBB) under the
symbol GHVIQ.
9
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SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the
trustees (or other persons who administer the Plan) have duly caused this annual
report to be signed by the undersigned thereunto duly authorized.
Genesis Health Ventures, Inc. Retirement Plan
August 31, 2000 By: /s/ JAMES W. TABAK
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Senior Vice President,
Human Resources
