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 [fee required]
For the fiscal year end December 31, 2002
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 _________
A. Full title of the plan and address of the plan, if different from that of the
issuer named 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, 2002 and 2001 and for the year ended
December 31, 2002.
The following plan financial statements, schedules and reports, have been
prepared in accordance with the financial reporting requirements of ERISA.
Items 1 - 3: Not applicable under ERISA filing.
Item 4: Financial Statements and Exhibits.
GENESIS HEALTH VENTURES, INC.
RETIREMENT PLAN
Financial Statements and Supplemental Schedule
December 31, 2002 and 2001
(With Independent Auditors' Report Thereon)
GENESIS HEALTH VENTURES, INC.
RETIREMENT PLAN
Table of Contents
Page
Independent Auditors' Report 1
Statements of Net Assets Available for Benefits, December 31, 2002 and 2001 2
Statements of Changes in Net Assets Available for Benefits, Years ended December 31, 2002 and 2001 3
Notes to Financial Statements 4
Schedule:
1 Schedule H, Line 4i - Schedule of Assets (Held at End of Year), December 31, 2002 10
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
benefits of the Genesis Health Ventures, Inc. Retirement Plan as of December 31,
2002 and 2001, and the related statements of changes in net assets available for
plan 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 of America. 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, 2002 and 2001, and the changes in net assets available for benefits
for the years then ended, in conformity with accounting principles generally
accepted in the United States of America.
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 at end of
year) 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 audits 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.
June 12, 2003
1
GENESIS HEALTH VENTURES, INC.
RETIREMENT PLAN
Statements of Net Assets Available for Benefits
December 31, 2002 and 2001
2002 2001
-------------- ------------
Assets:
Investments, at fair value $ 173,491,054 180,362,747
Employer matching receivable 5,570,912 6,211,685
Employee contribution receivable 1,633,310 1,958,329
Loans to participants 6,435,615 5,786,895
------------- -----------
Total assets 187,130,891 194,319,656
------------- -----------
Liabilities:
Due to administrator 61,358 49,162
------------- -----------
Total liabilities 61,358 49,162
------------- -----------
Net assets available for benefits $ 187,069,533 194,270,494
============= ===========
See accompanying notes to financial statements.
2
GENESIS HEALTH VENTURES, INC.
RETIREMENT PLAN
Statements of Changes in Net Assets Available for Benefits
Years ended December 31, 2002 and 2001
2002 2001
------------- ------------
Additions:
Contributions:
Employees $ 30,989,680 29,014,037
Employer 5,570,912 6,211,685
Rollovers 733,950 415,454
Interest income and dividends 1,781,200 1,730,891
Transfers from affiliated plans 400,983 386,783
------------- -----------
Total additions 39,476,725 37,758,850
------------- -----------
Deductions:
Administrative expenses 1,130,936 1,037,546
Distributions 18,185,083 28,810,187
Net depreciation in fair value of investments 27,257,115 30,699,411
Transfers to affiliated plans 104,552 --
------------- -----------
Total deductions 46,677,686 60,547,144
------------- -----------
Net decrease (7,200,961) (22,788,294)
Net assets:
Beginning of year 194,270,494 217,058,788
------------- -----------
End of year $ 187,069,533 194,270,494
============= ===========
See accompanying notes to financial statements.
3
GENESIS HEALTH VENTURES, INC.
RETIREMENT PLAN
Notes to Financial Statements
December 31, 2002 and 2001
(1) Description of the Plan
The following description of the 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 of Genesis Health
Ventures, Inc. (the Company) who complete six consecutive months
during which they have been credited with at least 500 hours of
service in their first six months or if initial eligibility is not
met, employees who complete 12 consecutive months of service
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.
(b) Contributions
Eligible employees may make a voluntary, tax-deferred annual
contribution of up to $11,000 to the Plan for the year ended
December 31, 2002. This figure is adjusted annually for inflation
as provided under the Internal Revenue Code. In addition,
effective in 2002, each eligible participant who has attained age
50 before the close of the Plan year is eligible to make catch-up
contributions in accordance with, and subject to the limitations
of, Section 414(v) of the Internal Revenue Code. For 2002, the
catch-up contribution limitation is $1,000.
Each plan year, the board of directors of the Company may fix the
proportionate matching contribution at any level, and intends to
announce the level of such contributions in advance of each plan
year. During the year ended December 31, 2002, the Company
contributed amounts on behalf of each participant as 50% of the
individual's contribution, limited to 1.5% of the employee's
annual salary. During the year ended December 31, 2001, 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 years or more of service - 75% of the individual's
contribution, limited to 3% of the employee's annual salary.
The Company may also elect to make an additional profit-sharing
contribution to the Plan. Such contribution is a discretionary
contribution, subject to approval by the Company's board of
directors. The Company did not elect to make any profit-sharing
contributions for the year ended December 31, 2002 and 2001.
4
GENESIS HEALTH VENTURES, INC.
RETIREMENT PLAN
Notes to Financial Statements
December 31, 2002 and 2001
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) Forfeitures
Forfeitures of nonvested Company contributions are used to offset
such future contributions.
(d) Participant Accounts
Participants have a nonforfeitable interest in their contributions
at all times, although there are certain restrictions and options
on withdrawals. The participants' vested interest in their
accounts under the Plan as it is attributable to employer matching
contributions and employer profit-sharing contributions is as
follows:
(a) With regard to employer matching contributions and employer
profit-sharing contributions made for Plan years after
December 31, 2001:
Participant's
Participant's vested
years of vesting service percentage
------------------------------------- ---------------
Less than 2 years of vesting service None
2 years of vesting, but fewer than 3 20%
3 years of vesting, but fewer than 4 40%
4 years of vesting, but fewer than 5 60%
5 years of vesting, but fewer than 6 80%
6 years or more 100%
5
GENESIS HEALTH VENTURES, INC.
RETIREMENT PLAN
Notes to Financial Statements
December 31, 2002 and 2001
(b) With regard to employer matching contributions and employer
profit-sharing contributions made for Plan years on or
before December 31, 2001:
Participant's
Participant's vested
years of service percentage
--------------------- ---------------
Fewer than five years None
Five years or more 100%
Attainment of age 65,
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.
(e) 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 the
participant's designated beneficiary.
(f) Investment Income
Unrealized appreciation (depreciation) of investments is
determined based upon quoted market values. Dividends, interest
income, and capital gains (losses) are reinvested. Such amounts
are added to or deducted from the participants' accounts based on
the terms of the Plan.
(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
Most administrative expenses incurred in the operation of the Plan
are paid by the Plan.
(b) Investments
Plan investments are stated at fair value based on their quoted
net asset value. Participant loans are valued at cost which
approximates fair value. Purchases and sales of securities are
recorded on a trade-date basis.
(c) Use of Estimates
The preparation of financial statements in conformity with
accounting principles generally accepted in the United States of
America requires the Plan administrator to make estimates and
assumptions that affect the reported amounts of net assets
available for benefits at the date of the financial statements and
the changes in net assets available for benefits during the
reporting period. Actual results could differ from those
estimates.
6
GENESIS HEALTH VENTURES, INC.
RETIREMENT PLAN
Notes to Financial Statements
December 31, 2002 and 2001
(3) Investments
A participant may direct contributions in any of the following investment
options in increments of 1%:
AIM Basic Value Fund seeks long-term capital appreciation and invests in
large value funds.
Federated Capital Preservation Fund invests primarily in guaranteed
investment contracts.
Janus Fund invests primarily in large-cap equity funds.
Janus Adviser Worldwide Fund invests primarily in common stocks of
foreign and domestic companies.
Wachovia Diversified Bond Group Trust Fund invests in full maturity
bonds.
Wachovia Enhanced Stock Market Fund invests in large-cap equity index
funds.
Vanguard Wellington Fund invests in a balance of equities and fixed
income securities.
MFS Capital Opportunities Fund invests in large and mid-cap equity funds.
MFS New Discovery Fund invests in small-cap equity funds.
Dreyfus Mid Cap Index Fund invests in mid-cap equity funds.
Genesis Health Ventures Stock Fund invests primarily in Company common
stock.
The following presents the investment balances at December 31, 2002 and
2001:
2002 2001
-------------- -----------
AIM Basic Value Fund $ 244,957 --
Federated Capital Preservation Fund* 41,542,961 35,674,142
Janus Fund* 37,657,949 53,601,529
Janus Adviser Worldwide Fund* 22,557,685 31,299,052
Wachovia Enhanced Stock Market Fund* 10,547,234 12,320,965
Wachovia Diversified Bond Group Trust Fund* 24,076,058 17,664,265
Vanguard Wellington Fund 28,247,958 24,803,789
MFS Capital Opportunities Fund 4,101,656 4,128,982
MFS New Discovery Fund 1,324,793 870,023
Dreyfus Mid Cap Index Fund 2,764,436 --
Genesis Health Ventures, Inc. Stock Fund 425,367 --
-------------- -----------
$ 173,491,054 180,362,747
============== ===========
*Represents 5% or more of the Plan's net assets.
7
GENESIS HEALTH VENTURES, INC.
RETIREMENT PLAN
Notes to Financial Statements
December 31, 2002 and 2001
During 2002, the Plan's investments in Funds and the Genesis Health
Ventures, Inc. Stock Fund (including gains and losses on investments
bought and sold, as well as held during the year) depreciated in value by
$27,211,186 and $45,929, respectively.
During 2001, the Plan's investments, which consisted solely of Funds,
depreciated in value by $30,699,411.
(4) Forfeitures
The employer contributions for the 2002 and 2001 plan years are made
subsequent to Plan year-end, and are offset by nonvested forfeiture
accounts. As of December 31, 2002 and 2001, forfeiture accounts available
for and to be used for the reduction of future employer contributions was
$342,066 and $842,509, respectively.
The total of nonvested forfeiture accounts used to reduce employer
contributions in 2002 and 2001 was $842,509 and $518,392, respectively.
(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. A favorable
determination letter was received March 10, 2003. The Company believes
the Plan, as amended, continues to operate and qualify as designed.
(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
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 into the
Plan permitted multiple loans, which were grandfathered into the Plan.
(8) Party-in-Interest Transactions
Plan investments in the Wachovia Diversified Bond Group Trust Fund and
the Wachovia Enhanced Stock Market Fund are shares of funds managed by
Wachovia Bank, N.A., the trustee. These transactions qualify as
party-in-interest transactions.
During 2002, Plan incurred $831,150 of administrative fees for Wachovia's
trustee and record-keeping services. During 2001, the Plan incurred
$1,037,546 of administrative fees for First Union Bank, N.A.'s trustee
and record-keeping services. These transactions qualify as
party-in-interest transactions.
8
GENESIS HEALTH VENTURES, INC.
RETIREMENT PLAN
Notes to Financial Statements
December 31, 2002 and 2001
Plan investments in the Genesis Health Ventures, Inc. Stock Fund consists
primarily of shares of the plan sponsor's publicly traded stock. These
transactions qualify as party-in-interest transactions.
(9) Reconciliation of Financial Statements of Form 5500
The following is a reconciliation of net assets available for plan
benefits as of December 31, 2002, from the financial statements to the
Form 5500:
2002
-------------
Net assets available for benefits per the
financial statements $ 187,069,533
Employer and participant receivables (7,204,222)
Amounts due to administrator 61,358
-------------
Net assets available for benefits per the the Form 5500 $ 179,926,669
=============
9
Schedule 1
GENESIS HEALTH VENTURES, INC.
RETIREMENT PLAN
Schedule H, Line 4i - Schedule of Assets (Held at End of Year)
December 31, 2002
Shares or
Description face amount Fair value
------------ ------------ -------------
Funds:
Federated Capital Preservation Fund 3,751,566 $ 41,542,961
Janus Fund 2,113,241 37,657,949
Janus Adviser Worldwide Fund 1,043,854 22,557,685
Wachovia Diversified Bond Group Trust Fund* 673,883 24,076,058
Wachovia Enhanced Stock Market Fund* 188,981 10,547,234
Vanguard Wellington Fund 1,150,161 28,247,958
MFS Capital Opportunities Fund 439,149 4,101,656
MFS New Discovery Fund 115,905 1,324,793
AIM Basic Value Fund 11,206 244,957
Dreyfus Mid Cap Index Fund 158,239 2,764,436
Stock Fund:
Genesis Health Ventures, Inc. Stock Fund * 42,104 425,367
Loans to participants (interest rates range from 4.25% to 11%)* 6,435,615
-------------
Total investments $ 179,926,669
=============
* Represents a party-in-interest.
See accompanying independent auditors' report.
10
SIGNATURES
The Plan: Pursuant to the requirements of the Securities Exchange Act of 1934,
the trustees (or other person who administer the employee benefit plan) have
duly caused this annual report to be signed on its behalf by the undersigned
hereto duly authorized.
GENESIS HEALTH VENTURES, INC. RETIREMENT PLAN
(Name of Plan)
By: /s/ James W. Tabak
-------------------------------
James W. Tabak, Sr. Vice President,
Human Resources
Date: June 30, 2003
11
EXHIBIT INDEX
Item
----
23 Consent of Independent Auditors
99 Certificate of James W. Tabak, Senior Vice President, Human
Resources of the Company dated June 30, 2003 pursuant to 18 U.S.C.
Section 1350.
12