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
OR
[ ] Transition Report Pursuant To Section 13 Or 15(d) Of
The SecuritieS Exchange Act Of 1934
For the transition period from __________ to __________
Commission File Number 1-13154
A. Full title of the plan and the address of the plan, if different from that
of the issuer named below:
AMERICAN MEDICAL SECURITY
RETIREMENT SAVINGS PLAN
B. Name of issuer of the securities held pursuant to the plan and the address
of its principal executive office:
AMERICAN MEDICAL SECURITY GROUP, INC.
3100 AMS Boulevard
Green Bay, WI 54313
<PAGE>
American Medical Security Retirement Savings Plan
Annual Report on Form 11-K
For the Fiscal Year Ended December 31, 1999
TABLE OF CONTENTS
PAGE
Financial Statements and Supplemental Schedule
Years ended December 31, 1999 and 1998
Report of Independent Auditors............................................3
Financial Statements
Statements of Net Assets Available for Benefits...........................4
Statements of Changes in Net Assets Available for Benefits................5
Notes to Financial Statements.............................................6
Supplemental Schedule
Schedule H, Line 4i - Schedule of Assets Held for Investment Purposes
at End of Year.........................................................11
Signatures....................................................................12
Exhibit 23 - Consent of Independent Auditors..................................13
2
<PAGE>
Report of Independent Auditors
The Administrative Committee
American Medical Security
Retirement Savings Plan
We have audited the accompanying statements of net assets available for benefits
of American Medical Security Retirement Savings Plan as of December 31, 1999 and
1998, and the related statement of changes in net assets available for benefits
for the years 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 audits.
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.
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, 1999 and 1998, and the changes in its net assets available for
benefits for the years then ended, in conformity with accounting principles
generally accepted in the United States.
Our audits were 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 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 audits of the 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/ ERNST & YOUNG LLP
Milwaukee, WI
March 10, 2000
3
<PAGE>
American Medical Security
Retirement Savings Plan
Statements of Net Assets Available for Benefits
<TABLE>
<CAPTION>
DECEMBER 31
1999 1998
----------------------------------
<S> <C> <C>
ASSETS
Investments, at fair value (NOTE 3):
Mutual funds $45,444,071 $36,567,444
Common stock of American Medical Security
Group, Inc. 148,412 -
Participant loans receivable 694,086 393,035
----------------------------------
Net assets available for benefits $46,286,569 $36,960,479
==================================
</TABLE>
SEE ACCOMPANYING NOTES
4
<PAGE>
American Medical Security
Retirement Savings Plan
Statements of Changes in Net Assets Available for Benefits
<TABLE>
<CAPTION>
YEAR ENDED DECEMBER 31
1999 1998
-----------------------------------
<S> <C> <C>
Investment income:
Net realized and unrealized appreciation in fair value
of investments (NOTE 3) $ 2,819,876 $ 5,665,799
Interest and dividends 3,359,109 576,145
-----------------------------------
6,178,985 6,241,944
Less investment expense 130,128 169,024
-----------------------------------
6,048,857 6,072,920
Contributions:
Employers' 2,498,761 1,146,371
Employees' 6,684,527 3,485,104
-----------------------------------
9,183,288 4,631,475
-----------------------------------
Total additions 15,232,145 10,704,395
Benefits paid 5,906,055 4,108,599
-----------------------------------
Net increase 9,326,090 6,595,796
Net assets available for benefits at beginning of year 36,960,479 30,364,683
-----------------------------------
Net assets available for benefits at end of year $46,286,569 $36,960,479
===================================
</TABLE>
SEE ACCOMPANYING NOTES
5
<PAGE>
American Medical Security
Retirement Savings Plan
Notes to Financial Statements
December 31, 1999
1. DESCRIPTION OF THE PLAN
The following description of the American Medical Security Retirement Savings
Plan (the Plan) provides only general information. Participants should refer to
the Plan document for a complete description of the Plan's provisions.
GENERAL
The Plan is a contributory defined contribution plan covering all full-time and
part-time employees of American Medical Security Group, Inc. (AMSG) and its
subsidiaries, American Medical Security, Inc. and Nurse Healthline, Inc.
(collectively AMSG, the Company or Employer). The Plan is subject to the
provisions of the Employee Retirement Income Security Act of 1974 (ERISA).
PLAN CHANGES
On May 1, 1999, the Plan introduced an option to allow participants to invest in
the common stock of AMSG.
PARTICIPATION AND VESTING
Employees are eligible to become contributing participants in the Plan and
receive matching contributions after reaching the age of eighteen and after
completing 0.08 years of eligible service. Employees are eligible to become
participants in the Plan for purposes of receiving an allocation of any Employer
profit sharing contribution after completing 0.5 years of service.
Participants are immediately vested in their contributions plus actual earnings
thereon. Participants vest in Company contributions according to the following
schedule; (1,000 hours of service are required to constitute a year of vesting
service).
Years of Vesting Service Vesting Percentage
---------------------------------- -----------------------------
1 0%
2 30
3 40
4 50
5 60
6 80
7 100
6
<PAGE>
American Medical Security
Retirement Savings Plan
Notes to Financial Statements (continued)
1. DESCRIPTION OF THE PLAN (CONTINUED)
CONTRIBUTIONS, WITHDRAWALS AND LOANS
Plan participants are permitted to make contributions on a before-tax basis each
payroll period up to a maximum of 18% of base compensation and subject to a
maximum amount allowed by the Internal Revenue Code (IRC). Participants can
change their before-tax contribution percentage effective January 1 and July 1
of each year.
The Company contributes 50% of the first 6% of compensation that a participant
contributes to the Plan. Additional amounts may be contributed at the option of
the Company.
Distributions due to retirement, death, permanent disability and termination of
employment are provided for as defined within the Plan.
Participants may borrow from their fund accounts a minimum of $1,000 up to a
maximum of the lesser of one-half of their vested account balance or $50,000.
The loan is secured by the balance in the participant's account and bears
interest at a rate commensurate with prevailing rates as determined by the Plan
administrator. Principal and interest are paid through payroll deductions.
INVESTMENT OF PLAN ASSETS
Prior to January 1, 1998, all of the participants' Company contributions were
held in a non-participant directed money market account. On January 1, 1998,
$15,822,164 of non-participant directed funds were transferred to other
investment funds based on each participant's fund allocation.
The Plan was administered by Emjay Corporation through September 30, 1998. As of
October 1, 1998, Smith Barney Corporate Trust Company became the new Plan
trustee and its affiliate Smith Barney Plan Services began providing
administrative services. On October 1, 1998, all of the Plan's assets were
transferred to new investment fund choices. Participants made investment
allocation decisions from among ten mutual fund choices offered by the Plan as
of October 1, 1998.
7
<PAGE>
American Medical Security
Retirement Savings Plan
Notes to Financial Statements (continued)
1. DESCRIPTION OF THE PLAN (CONTINUED)
Effective January 1, 1999, participants may change their investment options at
any time directly through Smith Barney Plan Service.
TERMINATION OF THE PLAN
The Company has established the Plan with the intention and expectation that the
Employer will be able to make contributions indefinitely, but the Employer
neither is nor shall be under any obligation or liability whatsoever to maintain
the Plan for any given length of time. The Company retains the right to modify
or terminate the Plan at any time, but may not retroactively reduce the share of
any participant or cause the Plan's assets to revert to the Company unless
required by law. In the event of termination, the balance of each participant's
account would become fully vested, and all assets would be distributed to the
participants and beneficiaries.
RECLASSIFICATIONS
Certain amounts in the 1998 financial statements have been reclassified to
conform to the 1999 presentation.
2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
INVESTMENT VALUATION AND ACCOUNTING METHOD
The Plan's financial statements are prepared on the accrual basis of accounting.
The Plan's investments are stated at fair value. The fair value of mutual fund
shares and AMSG common stock are based on the quoted market values on the last
business day of the Plan year.
USE OF ESTIMATES
The preparation of financial statements in conformity with generally accepted
accounting principles requires the Company to make estimates that affect the
amounts reported in the Plan's financial statements and accompanying notes.
Actual results could differ from these estimates.
8
<PAGE>
American Medical Security
Retirement Savings Plan
Notes to Financial Statements (continued)
3. INVESTMENTS
The following individual investments represent more than 5% of the Plan's net
assets available for benefits:
<TABLE>
<CAPTION>
DECEMBER 31
1999 1998
--------------------------------
<S> <C> <C>
Investments at fair value as determined by quoted market price:
Dreyfus Appreciation Fund $ - $13,548,286
Hotchkis & Wiley International Fund 3,130,074 3,858,121
MCM Stable Value Fund 5,029,845 3,993,443
Scudder Growth & Income Fund 9,103,267 9,518,806
Warburg Pincus Emerging Growth Fund 7,680,510 5,642,366
Lazard Small Cap Fund 2,442,640 -
Lexington Worldwide Emerging Markets Fund 2,534,491 -
Montag & Caldwell Growth Fund 12,582,088 -
</TABLE>
The Plan's investments, including gains and losses on investments bought, sold
and held during the year, appreciated (depreciated) in fair value as follows:
<TABLE>
<CAPTION>
DECEMBER 31
1999 1998
--------------------------------
<S> <C> <C>
Mutual funds $ 2,866,445 $ 5,665,799
Common stock of American Medical Security Group, Inc. (46,569) -
--------------------------------
$ 2,819,876 $ 5,665,799
================================
</TABLE>
4. INCOME TAX STATUS
The Plan has received a determination letter from the Internal Revenue Service
dated October 15, 1991 stating that the Plan is qualified under Section 401(a)
of the IRC and, therefore, the related trust is not subject to tax under present
income tax law. The Plan administrator is not aware of any course of action or
series of events that have occurred that might adversely affect the Plan's
qualified status. Subsequent amendments to the Plan have been structured to, and
are intended to maintain the Plan's qualified status.
9
<PAGE>
American Medical Security
Retirement Savings Plan
Notes to Financial Statements (continued)
5. DIFFERENCES BETWEEN FINANCIAL STATEMENTS AND FORM 5500
The following is a reconciliation of net assets available for benefits reflected
in the 1998 financial statements to the Form 5500:
<TABLE>
<CAPTION>
DECEMBER 31
1998
--------------------------------
<S> <C>
Net assets available for benefits - Financial Statements $ 36,960,479
Contributions receivable 2,048,020
--------------------------------
Net assets available for benefits - Form 5500 $39,008,499
================================
</TABLE>
There were no differences as of December 31, 1999 in net assets available for
benefits.
6. TRANSACTIONS WITH PARTIES IN INTEREST
Investment fees incurred are paid by participants. In addition, certain services
are provided by the Plan sponsor at no cost to the Plan.
7. SUBSEQUENT EVENTS
Effective January 1, 2000, the vesting schedule for Company contributions to the
Plan was changed to 100% vesting after three years of service. In addition, the
Company increased its matching contribution to 60% of the first 6% of
compensation that a participant contributes to the Plan. Further, beginning
April 1, 2000 participants can change their before-tax contribution percentage
on a quarterly basis. Prior to that time changes were allowed twice per year.
10
<PAGE>
American Medical Security
Retirement Savings Plan
Employer Identification Number 39-1431799
Plan Number 001
Schedule H, Line 4i - Schedule of Assets Held for Investment Purposes
at End of Year
December 31, 1999
<TABLE>
<CAPTION>
IDENTITY OF ISSUER, BORROWER/ UNITS/ CURRENT
DESCRIPTION OF INVESTMENT SHARES VALUE
--------------------------------------------------------------------------------------------------------
<S> <C> <C>
Dreyfus Appreciation 10.4585 $ 478
Dreyfus GNMA Fund 55,946.7396 774,863
Dreyfus S&P 500 1,502.7958 64,485
Hotchkis & Wiley International 118,563.4199 3,130,074
Loomis Sayles Bond Fund Institutional 115,848.1755 1,334,571
Lazard Small Cap Fund 147,949.1177 2,442,640
Montag & Caldwell Growth (N Share) 363,224.2426 12,582,088
Montgomery Emerging Markets 8.3926 109
MCM Stable Value Advisory 458,106.5721 5,029,845
Scudder Growth & Income 341,074.0624 9,103,267
Warburg Pincus Emerging Growth 154,041.5008 7,680,509
Warburg Pincus Global Fixed Income 76,895.7762 766,651
Lexington Worldwide Emerging Markets 167,847.0993 2,534,491
American Medical Security Group, Inc. common stock* 24,735.3153 148,412
Participant loans receivable - 694,086
-------------
$46,286,569
=============
</TABLE>
*Represents a party in interest to the Plan.
11
<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the
Administrative Committee of the American Medical Security Retirement Savings
Plan has duly caused this annual report to be signed on its behalf by the
undersigned hereunto duly authorized.
DATE: June 21, 2000
AMERICAN MEDICAL SECURITY
RETIREMENT SAVINGS PLAN
/s/ Gary D. Guengerich
Gary D. Guengerich
American Medical Security Retirement Savings
Plan Administrative Committee Member
12
<PAGE>
Exhibit 23
CONSENT OF INDEPENDENT AUDITORS
We consent to the incorporation by reference in the Registration Statement (Form
S-8 No. 333-75477) pertaining to the American Medical Security Retirement
Savings Plan (the Plan) of American Medical Security Group, Inc. of our report
dated March 10, 2000, with respect to the financial statements and schedules of
the Plan included in the Annual Report (Form 11-K) for the year ended December
31, 1999.
/s/ ERNST & YOUNG LLP
Milwaukee, WI
June 20, 2000
13
