form11-k
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 30, 2000
OR
TRANSITION REPORT PURSUANT TO SECTION 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
For the transition period from to
Commission file number: 1-8865
A. Full title of the plan and the address of the plan, if different from
that of the issuer named below:
SIERRA HEALTH AUTOMATIC RETIREMENT PLAN
B. Name of issuer of the securities held pursuant to the plan and the
address of its principal executive office:
SIERRA HEALTH SERVICES, INC.
2724 NORTH TENAYA WAY
LAS VEGAS, NEVADA 89128
SIERRA HEALTH AUTOMATIC RETIREMENT PLAN
TABLE OF CONTENTS
Page
(a) Financial Statements
Independent Auditors' Report 1
Financial Statements:
Statements of Net Assets Available for Benefits at
December 30, 2000 and 1999 2
Statements of Changes in Net Assets Available for Benefits for the
Years Ended December 30, 2000 and 1999 3
Notes to Financial Statements 4
Supplemental Schedules:*
Assets Held for Investment at December 30, 2000 13
Nonexempt Transactions for the Year Ended December 30, 2000 14
*As required by IRS Form 5500. Schedules, other than those
listed above, are omitted because of the absence of the
conditions under which they are required.
(b) Exhibit 23
Independent Auditors' Consent
INDEPENDENT AUDITORS' REPORT
To the Trustees and Participants of
Sierra Health Automatic Retirement Plan
Las Vegas, Nevada
We have audited the accompanying statements of net assets available for benefits
of Sierra Health Automatic Retirement Plan (the "Plan") as of December 30, 2000
and 1999, and the related statements 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 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, such financial statements present fairly, in all material
respects, the net assets available for benefits of the Plan at December 30, 2000
and 1999, 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 conducted for the purpose of forming an opinion on the basic
financial statements taken as a whole. The supplemental schedules of Assets Held
for Investment at December 30, 2000, and Nonexempt Transactions for the year
ended December 30, 2000, are presented for the purpose of additional analysis
and are not a required part of the basic financial statements, but are
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 supplemental schedules are the responsibility of the
Plan's management. Such supplemental schedules have been subjected to the
auditing procedures applied in our audit of the basic financial statements and,
in our opinion, are fairly stated in all material respects when considered in
relation to the basic financial statements taken as a whole.
DELOITTE & TOUCHE LLP
Las Vegas, Nevada
September 5, 2001
SIERRA HEALTH AUTOMATIC RETIREMENT PLAN
Statements of Net Assets Available for Benefits at
December 30, 2000 and 1999
2000 1999
ASSETS
CASH AND CASH EQUIVALENTS $ 3,955 $ 1,887
------------------------------------------------
INVESTMENTS AT FAIR VALUE:
Common Trust Funds 69,024,855 65,221,190
Limited Partnerships 283,100 358,435
------------------------------------------------
Total Investments 69,307,955 65,579,625
------------------------------------------------
RECEIVABLES:
Employer Contributions 447,397 2,371,389
Employee Contributions 147,086 1,226,901
Other Receivables 103,588 341,504
Participant Loans 569,144 404,707
------------------------------------------------
Total Receivables 1,267,215 4,344,501
------------------------------------------------
TOTAL ASSETS 70,579,125 69,926,013
------------------------------------------------
LIABILITIES 0 0
------------------------------------------------
------------------------------------------------
NET ASSETS AVAILABLE FOR BENEFITS $ 70,579,125 $ 69,926,013
================================================
See Accompanying Notes to Financial Statements
SIERRA HEALTH AUTOMATIC RETIREMENT PLAN
Statements of Changes in Net Assets Available for Benefits
For the Years Ended December 30, 2000 and 1999
2000 1999
---------------------------------------------------
ADDITIONS:
Interest and Dividends $ 989,808 $ 1,561,452
---------------------------------------------------
Net (Decrease) Appreciation in fair value (3,117,550) 4,516,514
---------------------------------------------------
Contributions:
Employer 5,527,832 6,205,395
Participants 8,115,154 8,855,920
Rollovers 356,049 0
---------------------------------------------------
Total Contributions 13,999,035 15,061,315
---------------------------------------------------
TOTAL ADDITIONS 11,871,293 21,139,281
---------------------------------------------------
DEDUCTIONS:
Benefits Paid to Participants (11,261,742) (6,560,085)
---------------------------------------------------
OTHER (DEDUCTIONS) ADDITIONS:
Plan Expenses (2,712) (85,716)
Miscellaneous 46,273 289
---------------------------------------------------
Total Other 43,561 (85,427)
---------------------------------------------------
NET INCREASE 653,112 14,493,769
---------------------------------------------------
NET ASSETS AVAILABLE FOR BENEFITS:
BEGINNING OF YEAR 69,926,013 55,432,244
---------------------------------------------------
END OF YEAR $ 70,579,125 $ 69,926,013
===================================================
See Accompanying Notes to Financial Statements
SIERRA HEALTH AUTOMATIC RETIREMENT PLAN
Notes to Financial Statements
NOTE 1. PLAN DESCRIPTION
General Description - The Sierra Health Automatic Retirement Plan (the "Plan")
is a qualified, defined contribution profit sharing/401(k) plan sponsored,
managed and administered by Sierra Health Services, Inc. (the "Company"). A
brief description of certain Plan provisions, as amended, follows. Participants
should refer to the Plan agreement for a complete description of the Plan's
provisions.
Contributions - Participants may contribute up to 15% of their annual
compensation. The Company makes matching contributions of 100% of a
participant's contribution up to a maximum of 3% of the participant's annual
compensation. Participant contributions above 3% but not exceeding 9% are
matched 50% by the Company. The maximum Company contribution is 6% of a
participant's annual compensation. Participant and employer contributions are
subject to Internal Revenue Service ("IRS") limits. Company matches are
invested, based on participant selections, into the common trust funds.
Vesting - Participants are immediately vested in their voluntary contributions
and earnings thereon. Participants are also immediately vested in the Company
contribution made on their behalf up to 4% of the participant's annual
compensation. The remaining Company contribution vests based on years of
service--one-third per year of service--and is fully vested after three years of
service with the Company. If a participant becomes permanently disabled, their
account is 100% vested without regard to years of service.
Prior to July 1, 1999, the Plan required the Company, subject to certain
limitations, to make a minimum contribution of 2% of participants' annual
compensation. Participants could contribute, subject to IRS limits, up to 15% of
their annual compensation. The Company also made matching contributions of 50%
of a participant's contribution up to a maximum of 5% of the participant's
compensation.
Eligibility - All employees of the Company not covered by a collective
bargaining agreement or working under a per diem agreement become participants
in the Plan after they have completed one year of service and are age twenty-one
or older. The Plan defines a year of service as one in which the employee works
at least 1,000 hours.
Participant Accounts - Each participant's account is credited with the
participant's contribution, the Company's matching contribution and allocations
of Plan earnings.
Payment of Benefits - Upon termination of employment, participants may elect to
receive a lump-sum payment of their vested account balance, one of several
annuity payment options or may transfer their vested account balance to a
tax-deferred account.
Termination of Plan - Although the Company has not indicated any intention to
terminate the Plan, or contributions thereto, it may do so at any time. Upon
termination or partial termination, each participant's account will become 100%
vested.
SIERRA HEALTH AUTOMATIC RETIREMENT PLAN
Notes to Financial Statements (continued)
Income Taxes - In November 1995, the Plan received its latest determination
letter from the IRS stating that the Plan, as then designed, was in compliance
with the applicable requirements of the Internal Revenue Code ("IRC") and thus
exempt from income taxes. The Plan administrator and the Plan's tax counsel
believe that the Plan is currently designed and being operated in compliance
with the applicable requirements of the IRC. No provision for income taxes has
been included in the financial statements.
Administrative Expenses - Administrative expenses of the Plan are paid by either
the Plan or the Plan's sponsor, as provided in the Plan Document. Total Plan
expenses for 2000 and 1999 were $28,962 and $130,994, respectively.
Forfeitures - Forfeited accrued benefits may be used to pay expenses incurred in
the basic administration of the Plan or to reduce employer contributions. In
1999, the Company chose to use forfeitures of $85,716 to pay for expenses of the
Plan. However, in 1999 the forfeitures were insufficient to cover all expenses;
as such the Company incurred approximately $45,278 of additional expenses on
behalf of the Plan that are not reflected in the financial statements. In 2000,
the Company paid administrative expenses of $26,250 on behalf of the Plan and
did not use forfeitures to reduce employer contributions. Such forfeitures will
be allocated to paricipants when eligible.
NOTE 2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
Basis of Accounting - The Plan's financial statements are prepared using the
accrual method of accounting and conform to the American Institute of Certified
Public Accountants' accounting and auditing guide, Audits of Employee Benefit
Plans. Accordingly, income is recorded in the period earned, expenses in the
period incurred and the purchase and sale of investments as of the trade date.
Use of Estimates - The preparation of financial statements in conformity with
accounting principles generally accepted in the United States of America
requires management to make estimates and assumptions that affect the reported
amounts of net assets available for benefits and changes therein. Actual results
could differ from those estimates. The Plan utilizes various investment
instruments. Investment securities, in general, are exposed to various risks,
such as interest rate, credit, and overall market volatility. Due to the level
of risk associated with certain investment securities, it is reasonably possible
that changes in the values of investment securities will occur in the near term
and that such changes could materially affect the amounts reported in the
statements of net assets available for plan benefits.
Investments - Investments are stated at approximate fair market value. The fair
market value of equity and fixed income securities is determined principally
from quoted market prices. The fair market value of common trust funds is based
on the Plan's allocable interest in the fair market value of securities in those
funds. The fair market value of the investment in limited partnerships is based
on third-party appraisals. Unrealized gains and losses are recorded in the
period in which they occur. All assets are held by trustees of the Plan.
SIERRA HEALTH AUTOMATIC RETIREMENT PLAN
Notes to Financial Statements (continued)
The Plan invests contributions and income, based on employee selections, into
the following common trust funds, as described by the individual fund managers:
Davis NY Venture Fund: An aggressive growth fund that invests
primarily in the securities of large companies with market
capitalization of at least $25 million.
Dreyfus Premier Balanced Fund: The fund generally invests 60% of
assets in conservative common stocks and 40% in investment grade
bonds.
EuroPacific Growth Fund: Seeks long-term growth of capital though
investing in at least 65% of assets in equity securities of issuers
domiciled in Europe or the Pacific Basin.
Franklin Balance Sheet Investment Fund: A non-diversified fund that
invests primarily in equities considered undervalued, typically
including common and preferred stocks, bonds, and commercial paper.
John Hancock Small Cap Growth Fund: This fund normally invests at
least 80% of assets in common stocks of small companies with market
captializations of no more than $1 billion.
PIMCO Total Return Fund: This fund seeks total return consistent with
preservation of capital. The fund invests at least 65% of assets in
debt securities.
Prudential Jennison Growth Fund: An aggressive growth fund that
invests primarily in the securities of large companies, with an
average of 65% of assets in equities issued by companies with market
capitalizations exceeding $1 billion.
Prudential Short-Term Corporate Bond Fund: Assets in this fund are
invested primarily in investment-grade corporate debt securities and
U.S. government securities with maturities of six or fewer years.
Stable Value Fund: This fund invests 100% in the Wells Fargo Stable
Return Fund with the objective to provide safety of principal,
adequate liquidity and returns superior to shorter maturity
alternatives.
Prudential Stock Index Fund: Seeking to mirror the returns of the
S&P 500; this fund normally invests at least 80% of its assets in
securities included in the S&P 500.
Prudential Value Fund: The fund normally invests at least 65% of
assets in common stocks and convertibles that provide income returns
higher than those of the S&P 500 or the NYSE Composite index.
SIERRA HEALTH AUTOMATIC RETIREMENT PLAN
Notes to Financial Statements (continued)
Sierra Capital Preservation Fund: Is a collective investment fund for
employee benefit trusts and plans investing primarily in guaranteed
investment contracts ("GICs"). The fund invests in a portfolio consisting
primarily of GICs issued by U.S. insurance companies.
The Plan also invests contributions and income, based on employee selections,
into Company Stock.
NOTE 3. INVESTMENTS
Net appreciation (decrease) in the fair value of the Plan's investments by type
of investment follows:
2000 1999
-----------------------------------
Common Trust Funds $(2,574,497) $4,215,710
Common and Preferred Stocks (541,306) 655,674
Fixed Income Securities 0 (473,255)
Limited Partnerships (1,747) 118,385
-----------------------------------
Net (Decrease)/Appreciation $(3,117,550) $4,516,514
===================================
Investments equal to 5% or more of the Plan's total net assets available for
benefits at December 30, 2000 and 1999 were:
2000 1999
---------------------------------------
Dreyfus Premier Balanced Fund $22,265,573 $25,475,123
Prudential Jennison Growth Fund 15,470,610 18,164,071
Stable Value Fund 8,761,992 0
Prudential Value Fund 6,671,714 0
Davis NY Venture Fund 5,409,593 3,220,989
Sierra Capital Preservation Fund 96 9,195,086
Prudential Equity Income Fund 0 5,369,884
NOTE 4. BENEFIT CLAIMS NOT DISTRIBUTED
At December 30, 2000 and 1999, Plan assets of $2,760,915 and $671,277,
respectively, represented accounts of persons who had withdrawn from
participation in the Plan but who had not yet requested benefit distribution as
of those dates.
SIERRA HEALTH AUTOMATIC RETIREMENT PLAN
Notes to Financial Statements (continued)
NOTE 5. PARTICIPANT LOANS RECEIVABLE
Participant loans receivable are collateralized by vested account balances and
are being repaid in monthly installments through December, 2023. The loans bear
interest at up to 1% over the prime commercial rate on the first day of the
month in which the loan is issued.
Participants who fail to repay loans in accordance with Plan requirements are
deemed to have received distributions from their accounts although the loan
remains an asset of the Plan. See also Note 8.
NOTE 6. PARTICIPANT DIRECTED INVESTMENT PROGRAM
Participants may direct their contributions, and earnings thereon, to and
between a variety of investment funds. Activity and amounts related to those
funds for 2000 and 1999 are set forth in the following schedules:
o Schedule of Activity for the Year Ended December 30, 2000
o Schedule of Activity for the Year Ended December 30, 1999
o Schedule of Net Assets by Investment Program at December 30,
2000 and 1999
NOTE 7. PARTY-IN-INTEREST TRANSACTION
Distributions from limited partnership investments received during November and
December 2000 were not remitted to the Plan in a timely manner. In 2001 the
Company filed Form 5330 with the IRS and paid the required excise tax on the
transaction.
SIERRA HEALTH AUTOMATIC RETIREMENT PLAN
Notes to Financial Statements (continued)
NOTE 8. RECONCILIATION OF FINANCIAL STATEMENTS TO THE FORM 5500
The following is a reconciliation of net assets available for benefits per the
financial statements at December 30, 2000 to the Form 5500:
Net assets available for benefits per the financial statements $ 70,579,125
Amounts allocated to loans deemed distributions (84,236)
-------
Net assets per Form 5500 $ 70,494,889
=============
The following is a reconciliation of the net increase in net assets available
for benefits per the financial statements for the year ended December 30, 2000
to the Form 5500:
Net increase in net assets available for benefits per the financial statements $ 653,112
Amounts allocated to loans deemed distributions (84,236)
-------
Net increase in net assets available for benefits per the Form 5500 $ 568,876
==========
Amounts allocated to loans deemed distributions are recorded on the Form 5500
for loans in default at December 30, 2000 in accordance with IRS rules, which is
a reporting method different than accounting methods prescribed in the
accounting and auditing guide for Audits of Employee Benefits Plans and not
according to the plan document.
SIERRA HEALTH AUTOMATIC RETIREMENT PLAN
Notes to Financial Statements (continued)
Schedule of Activity For the Year Ended December 30, 2000
Participant Employer
Directed Directed
Funds Fund Total
-----------------------------------------------------------------
ADDITIONS:
Interest and Dividends $ 989,808 $ 0 $ 989,808
-----------------------------------------------------------------
Net Decrease in fair value (3,115,803) (1,747) (3,117,550)
-----------------------------------------------------------------
Contributions:
Employer 5,527,832 0 5,527,832
Participants 8,115,154 0 8,115,154
Rollovers 356,049 0 356,049
-----------------------------------------------------------------
0
-----------------------------------------------------------------
Total Contributions 13,999,035 0 13,999,035
-----------------------------------------------------------------
TOTAL ADDITIONS 11,873,040 (1,747) 11,871,293
-----------------------------------------------------------------
DEDUCTIONS:
Benefits Paid to Participants (11,261,742) 0 (11,261,742)
-----------------------------------------------------------------
OTHER (DEDUCTIONS) ADDITIONS:
Plan Expenses (825) (1,887) (2,712)
Miscellaneous 46,273 0 46,273
-----------------------------------------------------------------
Total Other 45,448 (1,887) 43,561
-----------------------------------------------------------------
TOTAL DEDUCTIONS (11,216,294) (1,887) (11,218,181)
-----------------------------------------------------------------
NET INCREASE (DECREASE) 656,746 (3,634) 653,112
NET ASSETS AVAILABLE FOR BENEFITS:
BEGINNING OF YEAR 69,535,691 390,322 69,926,013
-----------------------------------------------------------------
END OF YEAR $ 70,192,437 $ 386,688 $ 70,579,125
=================================================================
SIERRA HEALTH AUTOMATIC RETIREMENT PLAN
Notes to Financial Statements (continued)
Schedule of Activity For the Year Ended December 30, 1999
Participant Employer
Directed Directed
Funds Fund Total
-------------------------------------------------------
ADDITIONS:
Interest and Dividends $ 904,433 $ 657,019 $ 1,561,452
-------------------------------------------------------
Net Appreciation in fair value 4,215,710 300,804 4,516,514
-------------------------------------------------------
Contributions:
Employer 3,162,309 3,043,086 6,205,395
Participants 8,737,522 118,398 8,855,920
-------------------------------------------------------
Total Contributions 11,899,831 3,161,484 15,061,315
-------------------------------------------------------
TOTAL ADDITIONS 17,019,974 4,119,307 21,139,281
-------------------------------------------------------
DEDUCTIONS:
Benefits Paid to Participants (4,073,911) (2,486,174) (6,560,085)
-------------------------------------------------------
OTHER (DEDUCTIONS) ADDITIONS:
Plan Expenses 0 (85,716) (85,716)
Miscellaneous (2,024) 2,313 289
-------------------------------------------------------
Total Other (2,024) (83,403) (85,427)
-------------------------------------------------------
TOTAL DEDUCTIONS (4,075,935) (2,569,577) (6,645,512)
-------------------------------------------------------
TRANSFERS 25,972,767 (25,972,767) 0
-------------------------------------------------------
NET INCREASE (DECREASE) 38,916,806 (24,423,037) 14,493,769
NET ASSETS AVAILABLE FOR BENEFITS:
BEGINNING OF YEAR 30,618,885 24,813,359 55,432,244
-------------------------------------------------------
END OF YEAR $ 69,535,691 $ 390,322 $ 69,926,013
=======================================================
SIERRA HEALTH AUTOMATIC RETIREMENT PLAN
Notes to Financial Statements (continued)
Schedule of Net Assets by Investment Program at
December 30, 2000 and 1999
2000 1999
-------------------------------------
PARTICIPANT DIRECTED FUNDS
Assets:
Common Trust Funds:
Dreyfus Premier Balanced Fund $ 22,265,573 $ 25,475,123
Prudential Jennison Growth Fund 15,470,610 18,164,071
Sierra Capital Preservation Fund 96 9,195,086
Prudential Equity Income Fund 0 5,369,884
Davis NY Venture Fund 5,409,593 3,220,989
Prudential Short-Term Corporate Bond Fund 1,884,288 2,070,587
Prudential Stock Index Fund 2,367,137 1,321,700
PIMCO Total Return Fund 1,719,359 272,604
Franklin Balance Sheet Investment Fund 274,010 131,146
EuroPacific Growth Fund 1,577,059 0
John Hancock Small Cap Growth Fund 1,179,651 0
Prudential Value Fund 6,671,714 0
Stable Value Fund 8,761,992 0
Sierra Health Company Stock 1,443,773 0
-------------------------------------
Total Common Trust Funds 69,024,855 65,221,190
-------------------------------------
Cash and Cash Equivalents 3,955 0
Contributions Receivable 594,483 3,598,290
Participant Loans 569,144 404,707
Other Receivables 0 311,504
-------------------------------------
Total Participant Directed Fund Assets 70,192,437 69,535,691
-------------------------------------
EMPLOYER DIRECTED FUNDS
Assets:
Cash and Cash Equivalents 0 1,887
Limited Partnerships 283,100 358,435
Other Receivables 103,588 30,000
-------------------------------------
Total Employer Directed Fund Assets 386,688 390,322
-------------------------------------
TOTAL NET ASSETS $ 70,579,125 $ 69,926,013
=====================================
SIERRA HEALTH AUTOMATIC RETIREMENT PLAN
Supplemental Schedule of Assets Held for Investment
December 30, 2000
Identity of Issue Current Value
----------------- -------------
INVESTMENT FUNDS
----------------
Davis NY Venture Fund $ 5,409,593
Dreyfus Premier Balanced Fund 22,265,573
EuroPacific Growth Fund 1,577,059
Franklin Balance Sheet Investment Fund 274,010
John Hancock Small Cap Growth Fund 1,179,651
PIMCO Total Return Fund 1,719,359
Prudential Value Fund 6,671,714
Prudential Jennison Growth Fund 15,470,610
Prudential Short-Term Corporate Bond Fund 1,884,288
Stable Value Fund 8,761,992
Prudential Stock Index Fund 2,367,137
Sierra Capital Preservation Fund 96
Sierra Health Company Stock 1,443,773
----------------------------
$ 69,024,855
============================
PARTICIPANT LOANS
-----------------
----------------------------
Participant Loans $ 569,144
============================
LIMITED PARTNERSHIPS
--------------------
Great North, Ltd. 89,600
Nevada Rainbow, Ltd. 128,000
Centennial Parkway, Ltd. 65,500
----------------------------
$ 283,100
============================
CASH AND CASH EQUIVALENTS
-------------------------
LN AP Fund 359
AP Fund 3,596
----------------------------
$ 3,955
============================
SIERRA HEALTH AUTOMATIC RETIREMENT PLAN
Supplemental Schedule of Nonexempt Transactions
Year Ended December 30, 2000
IDENTITY OF PARTY INVOLVED: Sierra Health Services, Inc.
RELATIONSHIP TO PLAN: Sponsor
DESCRIPTION OF TRANSACTION: Distributions from limited partnership investments
received during November and December 2000 were not remitted to the Plan in a
timely manner. The distributions of $101,402 and applicable interest in the
amount of $2,186 were remitted on March 2, 2001.
STATUS: The Sponsor filed appropriate forms and paid the related excise taxes,
which it believes is in full satisfaction of ERISA requirements.
SIGNATURES
The Plan. 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 hereunto duly authorized.
SIERRA HEALTH AUTOMATIC RETIREMENT PLAN
(Name of Plan)
Date: September 7, 2001
/s/ PAUL H. PALMER
Paul H. Palmer
Vice President of Finance,
Chief Financial Officer and Treasurer
(Principal Financial and Accounting Officer)