<PAGE>
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 [FEE REQUIRED]
FOR THE FISCAL YEAR ENDED DECEMBER 31, 1999
OR
[_] TRANSITION REPORT PURSUANT TO SECTION 15(d) OF THE SECURITIES EXCHANGE ACT
OF 1934 [NO FEE REQUIRED]
FOR THE TRANSITION PERIOD FROM _______ TO ________
Commission file number 0-7416
A. Full title of the plan and the address of the plan, if different from
that of the issuer named below:
SMS Retirement Savings Plan
B. Name of issuer of the securities held pursuant to the plan and the
address of its principal executive office:
Shared Medical Systems Corporation
51 Valley Stream Parkway
Malvern, Pennsylvania 19355
<PAGE>
SMS RETIREMENT SAVINGS PLAN
---------------------------
INDEX TO FINANCIAL STATEMENTS AND SCHEDULE
-------------------------------------------
<TABLE>
<CAPTION>
PAGE
REFERENCE
---------
<S> <C>
REPORT OF INDEPENDENT PUBLIC ACCOUNTANTS 1
STATEMENT OF NET ASSETS AVAILABLE FOR BENEFITS -
DECEMBER 31, 1999 and 1998 2
STATEMENT OF CHANGES IN NET ASSETS AVAILABLE FOR BENEFITS
FOR THE YEAR ENDED DECEMBER 31, 1999 3
NOTES TO FINANCIAL STATEMENTS 5
SCHEDULE I: ITEM 27(a) - SCHEDULE OF ASSETS HELD
FOR INVESTMENT - DECEMBER 31, 1999 10
CONSENT OF INDEPENDENT PUBLIC ACCOUNTANTS 11
SIGNATURE PAGE 12
</TABLE>
<PAGE>
REPORT OF INDEPENDENT PUBLIC ACCOUNTANTS
To the Administrative Committee of the
SMS Retirement Savings Plan:
We have audited the accompanying statements of net assets available for benefits
of the SMS Retirement Savings Plan (the "Plan") 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 and the
schedule referred to below are the responsibility of the Administrative
Committee ("Management"). Our responsibility is to express an opinion on these
financial statements and the schedule 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 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 accounting
principles generally accepted in the United States.
Our audits were made for the purpose of forming an opinion on the basic
financial statements taken as a whole. The supplemental schedule of assets held
for investment as of December 31, 1999 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. The fund information in the statements of net assets
available for benefits and the statement of changes in net assets available for
benefits is presented for purposes of additional analysis rather than to present
the net assets available for plan benefits and changes in net assets available
for plan benefits of each fund. The supplemental schedule and fund information
have been subjected to the auditing procedures applied in the audits of the
basic financial statements and, in our opinion, are fairly stated, in all
material respects, in relation to the basic financial statements taken as a
whole.
/s/ Arthur Andersen LLP
Philadelphia, PA
May 11, 2000
1
<PAGE>
SMS RETIREMENT SAVINGS PLAN
---------------------------
STATEMENTS OF NET ASSETS AVAILABLE FOR BENEFITS
-----------------------------------------------
(amounts in thousands)
<TABLE>
<CAPTION>
DECEMBER 31
--------------------------
1999 1998
--------- --------
<S> <C> <C>
RECEIVABLES:
Participant Contributions................................... $ 1,715 $ 1,645
Company Contributions........................................ 297 351
Participant Loan Repayments.................................. 176 157
PARTICIPANTS' LOANS RECEIVABLE..................................... 6,465 5,682
INVESTMENTS, AT FAIR VALUE:
SMS Company Stock Fund....................................... 19,938 16,750
Vanguard Wellington Fund..................................... 18,530 15,836
Vanguard Windsor Fund........................................ 73,691 71,430
Vanguard Morgan Growth Fund.................................. 62,382 42,951
Vanguard Long-Term Corporate Fund............................ 20,838 23,164
Vanguard Prime Money Market Fund............................. 16,873 13,634
Vanguard 500 Index Fund...................................... 94,137 68,395
Vanguard PRIMECAP Fund....................................... 48,214 22,754
Vanguard International Growth Fund........................... 9,832 6,559
Vanguard Total Bond Market Index Fund........................ 2,927 2,725
--------- ---------
NET ASSETS AVAILABLE FOR BENEFITS..................... $ 376,015 $ 292,033
========= =========
</TABLE>
The accompanying notes are an integral part of these statements.
2
<PAGE>
SHARED MEDICAL SYSTEMS
----------------------
STATEMENT OF CHANGES IN NET ASSETS AVAILABLE FOR BENEFITS
---------------------------------------------------------
FOR THE YEAR ENDED DECEMBER 31, 1999
------------------------------------
(amounts in thousands)
<TABLE>
<CAPTION>
SMS COMPANY VANGUARD VANGUARD VANGUARD VANGUARD VANGUARD
STOCK WELLINGTON WINDSOR MORGAN LONG-TERM PRIME MONEY
FUND FUND FUND GROWTH FUND CORPORATE FUND MARKET FUND
------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
INVESTMENT INCOME:
Interest, Dividends, Capital Gain Distributions...........$ 294 $ 1,621 $ 9,399 $ 7,756 $ 1,557 $ 740
PARTICIPANTS' CONTRIBUTIONS................................. 1,561 2,555 5,478 3,658 1.748 1,439
COMPANY CONTRIBUTIONS....................................... 310 424 956 610 323 271
PARTICIPANT REDISTRIBUTIONS................................. 327 (944) (9,670) 668 (2,355) 1,313
NET REALIZED/UNREALIZED GAINS (LOSSES)
ON INVESTMENTS............................................ 1,173 (927) (1,716) 7,814 (2,972) -
DISTRIBUTIONS TO PARTICIPANTS............................... (704) (215) (2,882) (1,435) (842) (703)
PARTICIPANTS' LOANS ISSUED, NET OF
REPAYMENTS................................................ 217 172 618 374 194 173
------------------------------------------------------------------------
NET INCREASE (DECREASE) IN PLAN ASSETS...................... 3,178 2,686 2,183 19,445 (2,347) 3,233
NET ASSETS AVAILABLE FOR BENEFITS:
BEGINNING OF YEAR......................................... 16,876 16,015 71,849 43,188 23,293 13,751
------------------------------------------------------------------------
END OF YEAR $ 20,054 $ 18,701 $ 74,032 $ 62,633 $ 20,946 $ 16,984
========================================================================
</TABLE>
The accompanying notes are an integral part of this statement.
3
<PAGE>
SHARED MEDICAL SYSTEMS
----------------------
STATEMENT OF CHANGES IN NET ASSETS AVAILABLE FOR BENEFITS
---------------------------------------------------------
FOR THE YEAR ENDED DECEMBER 31, 1999
------------------------------------
(amounts in thousands)
<TABLE>
<CAPTION>
VANGUARD VANGUARD VANGUARD VANGUARD TOTAL
500 INDEX PRIMECAP INTERNATIONAL BOND MARKET PARTICIPANT
FUND FUND GROWTH FUND INDEX FUND LOANS TOTAL
--------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
INVESTMENT INCOME:
Interest, Dividends, Capital Gain Distributions.... $ 1,639 $ 3,456 $ 483 $ 190 $ 495 $ 27,630
PARTICIPANTS' CONTRIBUTIONS.......................... 7,093 4,036 1,077 494 - 29,139
COMPANY CONTRIBUTIONS................................ 1,181 637 167 84 - 4,963
PARTICIPANT REDISTRIBUTIONS.......................... 2,457 8,468 63 (327) - -
NET REALIZED/UNREALIZED GAINS (LOSSES)
ON INVESTMENTS..................................... 14,218 9,125 1,541 (215) - 28,041
DISTRIBUTIONS TO PARTICIPANTS........................ (1,374) (447) (134) (47) 2,992 (5,791)
PARTICIPANTS' LOANS ISSUED, NET OF
REPAYMENTS......................................... 578 258 76 24 (2,684) -
----------------------------------------------------------------------------
NET INCREASE (DECREASE) IN PLAN ASSETS............... 25,792 25,533 3,273 203 803 83,982
NET ASSETS AVAILABLE FOR BENEFITS:
BEGINNING OF YEAR.................................. 68,838 22,992 6,631 2,761 5,839 292,033
----------------------------------------------------------------------------
END OF YEAR........................................ $94,630 $48,525 $ 9,904 $2,964 $ 6,642 $376,015
============================================================================
</TABLE>
The accompanying notes are an integral part of this statement.
4
<PAGE>
SMS RETIREMENT SAVINGS PLAN
---------------------------
NOTES TO FINANCIAL STATEMENTS
-----------------------------
DECEMBER 31, 1999 and 1998
---------------------------
(1) SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES:
------------------------------------------
The accompanying financial statements have been prepared on the accrual
basis of accounting.
The preparation of financial statements in conformity with accounting
principles generally accepted in the United States requires management to
make estimates and assumptions that affect the reported amounts of assets
and liabilities, changes in net assets available for benefits, disclosure
of contingent assets and liabilities at the date of the financial
statements and the reported amounts of revenues and expenses during the
reporting period. Actual results could differ from those estimates.
Shared Medical Systems Corporation (the "Company") has elected to file with
the Securities and Exchange Commission financial statements prepared in
conformance with guidelines issued under the Employee Retirement Income
Security Act of 1974, as amended.
Investments of the Plan are presented in the statements of net assets
available for benefits at fair value.
Plan receivables reported on the statements of net assets available for
benefits have not been allocated on an individual fund basis. Therefore,
the December 31, 1999 fair values reported for each investment fund on the
statements of net assets available for benefits differ from the ending fund
balances reported on the statement of changes in net assets available for
benefits, but the statements agree in aggregate.
(2) DESCRIPTION OF THE PLAN:
------------------------
ELIGIBILITY
-----------
Employees of the Company, as defined in the Plan, are eligible to
participate in the Plan with respect to before-tax contributions ("base
contributions") and employer matching contributions (both as described
below) on the first day of employment, and with respect to employer profit-
sharing contributions (also described below) on the January 1 coincident
with or following the first day of employment. Approximately 7,229
employees were eligible to participate in the Plan as of December 31, 1999.
PARTICIPATION
-------------
Base Contributions - Eligible employees may contribute, through salary
------------------
reductions, up to 15% of compensation, subject to certain limitations under
the Internal Revenue Code (the "Code"). The percentage of base
contributions by a participant is subject to adjustment by the Company at
any time to maintain the Plan's compliance with the anti-discrimination
requirements of the Code.
Employer Matching Contributions - The Company may match, through
-------------------------------
discretionary employer contributions, a portion of a participant's base
contribution in an amount to be determined annually by the Company's Board
of Directors. For the Plan years ended December 31, 1999 and 1998 the
Company contributed $4,963,000 and $4,510,000 respectively, in matching
contributions.
5
<PAGE>
Profit-sharing Contributions - The Company may make profit-sharing
----------------------------
contributions as determined at the discretion of its Board of Directors.
Such contributions will be allocated in accordance with the Plan document.
For the Plan years ended December 31, 1999 and 1998 there were no profit-
sharing contributions.
Vesting - All participants are fully vested in their base contribution
-------
account balances at all times. A participant becomes 20% vested in his or
her employer matching and employer profit-sharing contributions after three
years of service. An additional 20% vests each year thereafter, with full
vesting after seven years of service. A year of service is defined as a
calendar year in which the participant completes at least 1,000 hours of
service. Forfeitures are used to reduce employer matching or employer
profit-sharing contributions for the year in which the forfeitures occur.
Investment Directions - Participants may elect to have their base, employer
---------------------
matching, and profit-sharing contributions to the Plan invested in the
following funds, provided that each fund selected must receive a proportion
of not less than 10% of a participant's contribution:
SMS Company Stock Fund - invests in Company common stock.
----------------------
Vanguard Wellington Fund - provides conservative investors with a
------------------------
prudent investment program that ensures a)conservation of principal;
b)reasonable income return; and, c)profits without undue risks.
Vanguard Windsor Fund - seeks long-term growth of capital and income
---------------------
by investing in a Fund of common stocks. As a secondary objective,
the Fund also seeks a reasonable level of current income.
Vanguard Morgan Growth Fund - seeks long-term growth of capital by
---------------------------
investing in a Fund of common stocks.
Vanguard Long-Term Corporate Fund - provides a high level of current
---------------------------------
income, consistent with maintenance of principal and liquidity, by
investing in a diversified Fund of long-term, investment-grade bonds.
Vanguard Prime Money Market Fund - seeks maximum current income,
--------------------------------
preservation of capital, and liquidity by investing in a Portfolio of
money market instruments.
Vanguard 500 Index Fund - attempts to provide investment results that
-----------------------
correspond to the price and yield performance of publicly traded
stocks, in the aggregate, as represented by the Standard & Poor's 500
Composite Stock Price Index.
Vanguard PRIMECAP Fund - seeks long-term growth of capital by
----------------------
investing principally in a Fund of common stocks.
Vanguard International Growth Fund - seeks long-term capital growth by
----------------------------------
investing in the common stocks of companies based outside of the
United States.
Vanguard Total Bond Market Index Fund - attempts to match the total
-------------------------------------
return of the Lehman Brothers Aggregate Bond Index.
6
<PAGE>
In the absence of any written designation of investment fund preference,
the Trustee shall direct that all base, employer matching or employer
profit-sharing contributions received for any participant be invested in
the Vanguard Money Market Reserves Prime Fund.
Participants must maintain a minimum of 10% of their account balance in
each selected fund. Participants may reapportion their account balances
once during each quarter ending March 31, June 30, September 30, and
December 31.
The following funds individually represent more than 5% of the net assets
available for benefits of the Plan for the years ended December 31, 1999:
- Vanguard Windsor Fund
- Vanguard Morgan Growth Fund
- Vanguard 500 Index Fund
- Vanguard Long-Term Corporate Fund
- SMS Company Stock Fund
Participant Loans - A participant may borrow the lesser of $50,000 or one-
-----------------
half of the vested balance of the participant's base contribution account
and employer matching contribution account, with a minimum loan amount of
$1,000. A participant may not have more than one loan outstanding at any
time. The participant may elect repayment terms of one to five years,
except that a loan used to acquire the participant's principal residence
may have a longer term. The interest rate charged for the term of the loan
is one percentage point above the prime rate at the date of inception. The
interest rates on outstanding loans as of December 31, 1999 range from 7.0%
to 12.5%.
Withdrawals - A participant may elect to make withdrawals of supplemental
-----------
contributions (after-tax contributions made to the Plan prior to January 1,
1989) in accordance with the Plan. After withdrawing all amounts credited
to his/her supplemental contribution account, the participant can withdraw
his/her remaining vested account balance in accordance with Plan provisions
for hardship withdrawals.
Distribution of Benefits - Upon termination of service due to death,
------------------------
disability, retirement, or other reasons, a participant shall be entitled
to benefits based on the net vested amounts in the participant's accounts.
The form of payment of these benefits is a lump sum distribution or
installment payments, in accordance with Plan provisions.
Termination of the Plan - 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, affected
participants will become fully vested in their account balances and receive
a complete distribution in accordance with Plan provisions.
Administration of the Plan - The Plan is administered by an administrative
--------------------------
committee, which is appointed by the Board of Directors.
The Vanguard Group of Investment Companies, is the Plan recordkeeper,
trustee and custodian. All costs with respect to services performed for the
Plan by Vanguard were paid by the Company.
7
<PAGE>
(3) FEDERAL INCOME TAXES APPLICABLE TO THE PLAN:
-------------------------------------------
The Internal Revenue Service has determined and informed the Company by a
letter dated June 4, 1997 that the Plan is in compliance with the
applicable sections of the Internal Revenue Code (IRC). The Administrative
Committee and Legal Counsel believe that the plan is designed and is
currently being operated in compliance with the applicable requirements of
the IRC. Accordingly, no income taxes have been provided in the
accompanying financial statements.
(4) SUBSEQUENT EVENT:
----------------
Autobahn Acquisition Corporation (the "Purchaser"), a Delaware corporation
and a wholly-owned subsidiary of Siemens Corporation, a Delaware
corporation ("Siemens"), has commenced a tender offer to purchase all of
the outstanding shares of the Company's Common Stock and the associated
preferred stock purchase rights (the "Rights") issued pursuant to the
Rights Agreement dated as of May 1, 1991, as amended, between the Company
and ChaseMellon Shareholder Services, L.L.C. (the Common Stock and the
Rights together being referred to herein as the "Shares"), at a purchase
price of $73.00 per Share, net to the seller in cash, upon the terms and
subject to the conditions set forth in the Purchaser's Offer to Purchase,
dated May 10, 2000 and in the related Letter of Transmittal (which,
together with any amendments or supplements thereto, collectively
constitute the "Offer"). Siemens is a wholly-owned indirect subsidiary of
Siemens Aktiengesellschaft. The Offer is described in a Tender Offer
Statement on Schedule TO filed by Siemens and the Purchaser with the
Securities and Exchange Commission on May 10, 2000. The Offer is being made
in accordance with the Agreement and the Plan of Merger, dated as of April
30, 2000, among Siemens, the Purchase and the Company (the "Merger
Agreement"). The Merger Agreement provides that, subject to the
satisfaction or waiver of certain conditions, following completion of the
Offer, and in accordance with the General Corporation Law of the State of
Delaware (the "DGCL"), the Purchaser will be merged with and into the
Company (the "Merger"). Following the consummation of the Merger, the
Company will continue as the surviving corporation and will be a wholly-
owned subsidiary of Siemens. At the effective time of the Merger, each
issued and outstanding Share (other than Shares owned by Siemens, the
Purchaser, any of their respective subsidiaries, the Company or any of its
subsidiaries, which will be cancelled, and Shares, if any, held by
stockholders who did not vote in favor of the Merger Agreement and who
comply with all of the relevant provisions of Section 262 of the DGCL
relating to dissenters' rights of appraisal) will be converted into the
right to receive $73.00 in cash or any greater amount per Share paid
pursuant to the Offer.
(5) RECONCILIATION OF FINANCIAL STATEMENTS TO FORM 5500
---------------------------------------------------
The following is a reconciliation of net assets available for benefits per
the financial statements to the Form 5500:
December 31,
1999 1998
---- ----
Net assets available for plan benefits
per the financial statements $ 376,015,000 $ 292,033,000
Amounts allocated to withdrawing
participants. (27,000) (208,000)
------------- -------------
Net assets available for benefits
per the Form 5500. 375,988,000 $ 291,825,000
============= =============
8
<PAGE>
The following is a reconciliation of benefits paid to participants per the
financial statements to the Form 5500 for the year ended December 31, 1999:
Benefits paid to participants per the financial
statements $ 5,791,000
Add: Amounts allocated to withdrawing participants
at December 31, 1999 27,000
Less: Amounts allocated to withdrawing participants
at December 31, 1998 (208,000)
---------
Benefits paid to participants per the Form 5500 $ 5,610,000
=========
Amounts allocated to withdrawing participants are recorded on the Form 5500
for benefit claims that have been processed and approved for payment prior
to December 31 but not yet paid as of that date.
9
<PAGE>
ITEM 27 (a) SCHEDULE I
PLAN NO. 007
EIN 23-1704148
--------------
SMS RETIREMENT SAVINGS PLAN
---------------------------
SCHEDULE OF ASSETS HELD FOR INVESTMENT
--------------------------------------
DECEMBER 31, 1999
-----------------
(dollars in thousands)
<TABLE>
<CAPTION>
FAIR
IDENTITY OF ISSUE DESCRIPTION COST VALUE
----------------- ----------- ---- -----
<S> <C> <C> <C>
SMS Company SMS Common Stock $ 15,392 $ 19,938
Stock Fund (1) 391,419 shares
Vanguard Wellington Fund (1) Mutual Fund 18,305 18,530
662,733 shares
Vanguard Windsor Fund (1) Mutual Fund 74,248 73,691
4,857,672 shares
Vanguard Morgan Mutual Fund 45,244 62,382
Growth Fund (1) 2,721,734 shares
Vanguard Long-Term Mutual Fund 22,142 20,838
Corporate Fund (1) 2,569,430 shares
Vanguard Prime Money Money Market Fund 16,873 16,873
Market Fund (1)
Vanguard 500 Index Fund (1) Mutual Fun 53,749 94,137
695,611 shares
Vanguard PRIMECAP Fund (1) Mutual Fund 34,392 48,214
776,768 shares
Vanguard International Mutual Fund 7,849 9,832
Growth Fund (1) 437,186 shares
Vanguard Total Bond Mutual Fund 3,069 2,927
Market Index Fund (1) 306,131 shares
Participant Loans (1) Loan Fund 6,641 6,641
-------- --------
7.0% to 12.5% $297,904 $374,003
======== ========
</TABLE>
(1) Denotes party-in-interest
10
<PAGE>
CONSENT OF INDEPENDENT PUBLIC ACCOUNTANTS
To the Administrative Committee of the
SMS Retirement Savings Plan:
As independent public accountants, we hereby consent to the incorporation by
reference of our report dated May 11, 2000, on the SMS Retirement Savings Plan
financial statements as of December 31, 1999 included in this Form 11-K, into
Shared Medical Systems Corporation's previously filed Registration Statement on
Form S-8 (File No. 33-34089).
/s/ ARTHUR ANDERSEN LLP
Philadelphia, PA
May 26, 2000
11
<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the
trustees (or other persons who administer the employee benefit plan) have duly
caused this annual report to be signed on its behalf by the undersigned
thereunto duly authorized.
SMS RETIREMENT SAVINGS PLAN
Date: June 27, 2000 By:__________________________________
Paul Yakulis
Chairman, Administrative Committee
12
<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the
trustees (or other persons who administer the employee benefit plan) have duly
caused this annual report to be signed on its behalf by the undersigned
thereunto duly authorized.
SMS RETIREMENT SAVINGS PLAN
Date: June 27, 2000 By: /s/ Paul Yakulis
----------------------------------
Paul Yakulis
Chairman, Administrative Committee
13
