11-K 1 d11k.htm FORM 11-K Prepared by R.R. Donnelley Financial -- Form 11-K
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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 (NO FEE REQUIRED)
 
For the fiscal year ended December 31, 2001
 
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 1-11141
 
 
A.
 
Full title of the plan and the address of the plan, if different from that of the issuer named below:
HEALTH MANAGEMENT ASSOCIATES, INC.
RETIREMENT SAVINGS PLAN
 
B.
 
Name of issuer of the securities held pursuant to the plan and the address of its principal executive office:
HEALTH MANAGEMENT ASSOCIATES, INC.
5811 PELICAN BAY BLVD., SUITE 500
NAPLES, FLORIDA 34108-2710
 

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AUDITED FINANCIAL STATEMENTS AND SUPPLEMENTAL SCHEDULE
 
HEALTH MANAGEMENT ASSOCIATES, INC. RETIREMENT SAVINGS PLAN
Years ended December 31, 2001 and 2000
with Report of Independent Certified Public Accountants

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HEALTH MANAGEMENT ASSOCIATES, INC. RETIREMENT SAVINGS PLAN
 
Audited Financial Statements and Supplemental Schedule
Years ended December 31, 2001 and 2000
 
 

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The Plan Sponsor
Health Management Associates, Inc.
    Retirement Savings Plan
 
We have audited the accompanying statements of net assets available for benefits of Health Management Associates, Inc. Retirement Savings Plan as of December 31, 2001 and 2000, 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. 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, 2001 and 2000, 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 at end of year) as of December 31, 2001 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 financial statements taken as a whole.
 
/s/    ERNST & YOUNG LLP
 
Tampa, Florida
May 24, 2002

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HEALTH MANAGEMENT ASSOCIATES, INC. RETIREMENT SAVINGS PLAN
 
 
    
December 31
    
2001
   
2000
ASSETS
              
Investments, at fair value:
              
Health Management Associates, Inc. common stock
   
$
63,154,482
   
$
68,167,334
Pooled separate accounts
   
 
53,036,030
   
 
—  
Unallocated insurance contracts
   
 
19,357,342
   
 
—  
Collective trust funds
   
 
—  
   
 
21,233,074
Mutual funds
   
 
—  
   
 
43,460,526
Participant loans
   
 
5,674,032
   
 
4,463,167
    
  
    
 
141,221,886
   
 
137,324,101
Cash
   
 
—  
   
 
114,086
Receivables:
              
Participants’ contributions
   
 
533,593
   
 
1,728,085
Employer’s contribution
   
 
267,421
   
 
807,444
Accrued income
   
 
—  
   
 
34,452
    
  
Total receivables
   
 
801,014
   
 
2,569,981
    
  
Net assets available for benefits
   
$
142,022,900
   
$
140,008,168
    
  
 
See accompanying notes.

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HEALTH MANAGEMENT ASSOCIATES, INC. RETIREMENT SAVINGS PLAN
 
 
    
Year ended December 31
  
    
2001
     
2000
  
Additions
                  
Investment results:
                  
Net appreciation (depreciation) in fair value of investments:
                  
Health Management Associates, Inc. common stock
   
$
(7,243,899
)
   
$
25,338,395
 
Pooled separate accounts
   
 
1,864,339
 
   
 
—  
 
Collective trust funds
   
 
(555,997
)
   
 
(414,343
)
Mutual funds
   
 
(5,401,312
)
   
 
(3,810,228
)
Interest and dividends
   
 
1,605,185
 
   
 
4,034,317
 
    
  
    
 
(9,731,684
)
   
 
25,148,141
 
Contributions:
                  
Participants
   
 
19,978,165
 
   
 
16,336,025
 
Employer
   
 
3,856,281
 
   
 
3,326,140
 
    
  
    
 
23,834,446
 
   
 
19,662,165
 
    
  
Total additions
   
 
14,102,762
 
   
 
44,810,306
 
Deductions
                  
Benefit payments
   
 
11,880,903
 
   
 
11,304,042
 
Administrative expenses
   
 
207,127
 
   
 
115,248
 
    
  
Total deductions
   
 
12,088,030
 
   
 
11,419,290
 
    
  
Increase in net assets available for benefits
   
 
2,014,732
 
   
 
33,391,016
 
Net assets available for benefits at beginning of year
   
 
140,008,168
 
   
 
106,617,152
 
    
  
Net assets available for benefits at end of year
   
$
142,022,900
 
   
$
140,008,168
 
    
  
 
See accompanying notes.

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HEALTH MANAGEMENT ASSOCIATES, INC. RETIREMENT SAVINGS PLAN
 
December 31, 2001
 
1.    Description of the Plan
 
The following description of Health Management Associates, Inc. Retirement Savings Plan (the Plan) provides only general information. Participants should refer to the Plan agreement for a more complete description of the Plan’s provisions.
 
General
 
The Plan’s sponsor is Health Management Associates, Inc. (the Company). The effective date of the Plan is October 1, 1990 (date of inception). The Plan was amended and restated in its entirety effective January 1, 1998 and July 1, 1998. The amendments incorporated the designation of Merrill Lynch Trust Company (the Trustee) as the trustee of the Plan’s investments and the provisions of the River Oaks Hospital, Inc. 401(k) Profit Sharing Plan which was merged into the Plan during 1998, respectively.
 
Effective April 1, 2001, the Plan was amended and CIGNA Retirement and Investment Services was designated as the Plan’s recordkeeper and administrator (the Recordkeeper) and CG Trust Company was designated the Plan’s trustee, replacing Merrill Lynch Trust Company as the Plan’s Trustee.
 
The Plan is intended to qualify as a cash or deferred arrangement under Section 401(k) of the Internal Revenue Code. The Plan is subject to the provisions of the Employee Retirement Income Security Act of 1974, as amended (ERISA).
 
All eligible employees of the Company, as defined in the Plan, may elect to participate in the Plan.
 
Contributions
 
Each year, participants may elect to defer from 1% to 20% of compensation received during the Plan year. If an eligible employee fails to elect deferral, a 3% deferral will automatically be withheld. The Company makes discretionary matching contributions for participants at certain designated hospital subsidiaries equal to a percentage of each participant’s deferred compensation. In applying such matching percentage, only salary reductions up to 6% of total compensation shall be considered, and such Company

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HEALTH MANAGEMENT ASSOCIATES, INC. RETIREMENT SAVINGS PLAN
 
NOTES TO FINANCIAL STATEMENTS—(Continued)

 
matching contributions are limited to 3% of the participant’s total compensation during the Plan year.
 
The Company match is in the form of Company securities, with the exception of designated hospital subsidiaries which receive a nondiscretionary Company match in cash. The Company match in Company securities is not subject to participant direction. During the years ended December 31, 2001 and 2000, nondiscretionary contributions of approximately $818,000 and $442,000, respectively, were made to the Plan.
 
Participants’ Accounts
 
Each participant’s account is credited with the participant’s contribution and allocations of the Company’s contribution and Plan investment results. Allocations are based on participant earnings or account balances, as defined in the Plan agreement. The benefit to which a participant is entitled is the benefit that can be provided from the participant’s vested account.
 
Withdrawals and Payments of Benefits
 
Upon retirement or death, the total vested value of a participant’s account is distributed to the participant or the beneficiary in cash.
 
A participant is only entitled to make a withdrawal from his or her account upon attaining age 59 1/2, or prior to separation from service if the participant qualifies for a hardship withdrawal or a participant loan. If a participant separates from service before vesting, the portion of the account attributable to Company contributions is not forfeited until the participant incurs a five–year break in service. The Plan’s loan feature allows participants to borrow against their balance in accordance with the loan policies established by the Company.
 
Forfeited balances of terminated participants’ nonvested accounts are used to reduce future Company contributions or pay administrative expenses of the Plan. Forfeitures aggregated approximately $968,000 and $935,000 for the years ended December 31, 2001 and 2000, respectively.

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HEALTH MANAGEMENT ASSOCIATES, INC. RETIREMENT SAVINGS PLAN
 
NOTES TO FINANCIAL STATEMENTS—(Continued)

 
Vesting
 
Participants are immediately vested in their voluntary contributions plus actual earnings thereon. A participant becomes one hundred percent vested in the remainder of his or her accounts upon the occurrence of any of the following events:
 
(a)  The participant dies while still in service as an employee;
 
(b)  The participant becomes totally and permanently disabled while still in service as an employee; or
 
(c)  The Plan is terminated by the Company.
 
In other cases, a gradual vesting scale applies, where by participants vest 20% per year upon the completion of three years of vesting service, with one hundred percent vesting occurring upon reaching seven years of vesting service. A Plan year during which an employee works for at least one thousand hours is counted as one year of vesting service. Effective January 1, 2002, the vesting provisions of the Plan were amended to permit participants to vest 20% per year upon the completion of two years of vesting service, with one hundred percent vesting occurring upon reaching six years of vesting service.
 
2.     Summary of Significant Accounting Policies
 
Investment Valuation
 
Investments in mutual funds, collective trust funds and equity securities are stated at fair value based on quoted prices in an active market. Securities traded on a national securities exchange are valued at the last reported sales price on the last business day of the Plan year.
 
The fair values of the participation units owned by the Plan in pooled separate accounts are based on quoted redemption values on the last business day of the Plan year. The Plan’s investments in pooled separate accounts consist of investments in accounts established by the Recordkeeper solely for the purpose of investing the assets of one or more plans. Funds in a separate account are not commingled with other assets of the Recordkeeper for investment purposes.
 
Unallocated insurance contracts are recorded at their contract values, which represent contributions and reinvested income, less any withdrawals plus accrued interest. The Plan’s investments in unallocated insurance contracts consist of investments in contracts between the Recordkeeper and the Plan that provide for a guaranteed return on principal invested over a specified time period. Contract values approximate fair value, since, except in limited circumstances, these investments have fully benefit-responsive features. For example, participants may ordinarily direct the withdrawal or transfer of all or a portion of their investment at contract value. However, the Trustee has the right to defer transfers or distributions under certain limited circumstances, such as in the event of withdrawal request coinciding with a pool closing,

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HEALTH MANAGEMENT ASSOCIATES, INC. RETIREMENT SAVINGS PLAN
 
NOTES TO FINANCIAL STATEMENTS—(Continued)

 
the contract value would be paid in installments, which may result in a distribution at other than contract value. There are no reserves against contract values for credit risk of contract issues or otherwise. The average yield was approximately 6% for the year ended December 31, 2001. The crediting interest rate for these investment contracts is reset annually by the issuer but cannot be less than zero and was 6% at December 31, 2001.
 
Contributions
 
Contributions from participants are recorded when payroll deductions are made. Company contributions accrue to the Plan at the payroll deduction dates. Such amounts are remitted semi-monthly to the Trustee for investment based on the investment options designated by the Plan’s participants.
 
Discretionary Company contributions accrue to the Plan when declared and are remitted prior to the date the Company files its federal income tax return for the corresponding fiscal year of the Company.
 
Investment Income
 
Dividend income is recorded on the ex-dividend date. Interest income is recorded as earned. Purchases and sales of securities are recorded on a trade date basis.
 
Use of Estimates
 
The preparation of financial statements in conformity with accounting principles generally accepted in the United States requires management to make estimates that affect the amounts reported in the financial statements and accompanying notes. Actual results inevitably will differ from those estimates, and such differences may be material to the financial statements.
 
Administrative Expenses
 
The majority of administrative expenses for the Plan are paid directly by the Company, and not from Plan assets.

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HEALTH MANAGEMENT ASSOCIATES, INC. RETIREMENT SAVINGS PLAN
 
NOTES TO FINANCIAL STATEMENTS—(Continued)

 
Benefit Payments
 
Benefits are recorded when paid.
 
Reclassification
 
Certain reclassifications have been made to the 2000 financial statements to conform to the 2001 presentation.
 
3.    Investments
 
The fair values of individual investments that represent 5% or more of the Plan’s net assets are as follows:
 
    
December 31
    
2001
   
2000
Health Management Associates, Inc. Common Stock(1)
   
$
63,154,482
   
$
68,167,334
Connecticut General Life Insurance Company—Guaranteed Income Fund
   
 
19,357,342
   
 
—  
Connecticut General Life Insurance Company—Balanced/Morgan Stanley, SSgA Fund
   
 
8,065,136
   
 
—  
Connecticut General Life Insurance Company—Large Cap Value/John A. Levin & Company Fund
   
 
19,738,331
   
 
—  
Merrill Lynch Retirement Preservation Trust
   
 
—  
   
 
16,633,680
Massachusetts Investors Trust Fund
   
 
—  
   
 
20,983,748
Merrill Lynch Balanced Capital Fund
   
 
—  
   
 
7,919,852
(1)
 
Includes nonparticipant-directed investments of $34,849,189.

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HEALTH MANAGEMENT ASSOCIATES, INC. RETIREMENT SAVINGS PLAN
 
NOTES TO FINANCIAL STATEMENTS—(Continued)

 
4.    Changes in Nonparticipant-Directed Net Assets Available for Benefits
 
Following are the changes in net assets available for benefits for fund options which include nonparticipant-directed investments for the years ended December 31, 2001 and 2000:
 
    
Health Management Associates, Inc. Common Stock
     
Cash
     
Total
  
Net assets available for benefits at December 31, 1999
   
$
45,903,207
 
   
$
47,127
 
   
$
45,950,334
 
Net appreciation in fair value of investments
   
 
25,338,395
 
   
 
—  
 
   
 
25,338,395
 
Interest and dividend income
   
 
141,444
 
   
 
—  
 
   
 
141,444
 
Contributions:
                           
Participants
   
 
3,919,261
 
   
 
(1,026
)
   
 
3,918,235
 
Employer
   
 
3,052,561
 
   
 
(14
)
   
 
3,052,547
 
Participant loans
   
 
(533,883
)
   
 
—  
 
   
 
(533,883
)
Benefit payments
   
 
(4,817,949
)
   
 
57,585
 
   
 
(4,760,364
)
Transfers to participant directed investments (net)
   
 
(4,835,702
)
   
 
10,414
 
   
 
(4,825,288
)
    
  
  
Net assets available for benefits at December 31, 2000
   
 
68,167,334
 
   
 
114,086
 
   
 
68,281,420
 
Net depreciation in fair value of investments
   
 
(7,243,899
)
   
 
—  
 
   
 
(7,243,899
)
Interest and dividend income
   
 
266,176
 
   
 
—  
 
   
 
266,176
 
Contributions:
                           
Participants
   
 
4,812,361
 
   
 
—  
 
   
 
4,812,361
 
Employer
   
 
3,791,766
 
   
 
(1,342
)
   
 
3,790,424
 
Participant loans
   
 
(323,604
)
   
 
—  
 
   
 
(323,604
)
Benefit payments
   
 
(4,950,097
)
   
 
(112,744
)
   
 
(5,062,841
)
Transfers to participant directed investments (net)
   
 
(1,365,555
)
            
 
(1,365,555
)
    
  
  
Net assets available for benefits at December 31, 2001
   
$
63,154,482
 
   
$
—  
 
   
$
63,154,482
 
    
  
  
 
At December 31, 2001, $34,849,189 of the $63,154,482 of Health Management Associates, Inc. Common Stock included in the Plan’s net assets is nonparticipant-directed.

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HEALTH MANAGEMENT ASSOCIATES, INC. RETIREMENT SAVINGS PLAN
 
NOTES TO FINANCIAL STATEMENTS—(Continued)

 
5.    Income Tax Status
 
The Plan has received a determination letter from the Internal Revenue Service dated September 20, 1999, stating that the Plan is qualified under Section 401(a) of the Internal Revenue Code (the Code) and, therefore, the related trust is exempt from taxation. Once qualified, the Plan is required to operate in conformity with the Code to maintain its qualification. The Plan administrator believes the Plan is being operated in compliance with the applicable requirements of the Code and, therefore, believes that the Plan is qualified and the related trust is tax exempt.
 
6.    Party-in-Interest Transactions
 
Certain Plan investments are shares of mutual and trust funds managed by the Trustee, therefore, such transactions qualify as party-in-interest. The Plan held investments in Company securities with a fair value of approximately $63,154,000 and $68,167,000 as of December 31, 2001 and 2000, respectively. The Company paid the majority of administrative expenses on behalf of the Plan for the years ended December 31, 2001 and 2000.
 
7.    Plan Termination
 
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, participants will receive the vested portion of their account.

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HEALTH MANAGEMENT ASSOCIATES, INC. RETIREMENT SAVINGS PLAN
EIN: 65-0261425 Plan No.: 001
 
 
Schedule of Assets (Held At End of Year)
December 31, 2001
 
(a)
   
(b)
Identity of Issue
   
(c)
Description of Investment
   
(d)
Cost
   
(e)
Current Value
*
   
Health Management Associates, Inc.
   
Common Stock
   
$54,246,352
   
$
63,154,482
*
   
Connecticut General Life Insurance Company
   
Guaranteed Income Fund
   
(1)
   
 
19,357,342
*
   
Connecticut General Life Insurance Company
   
State Street Global Advisors Intermediate Bond Account
   
(1)
   
 
2,289,353
*
   
Connecticut General Life Insurance Company
   
Balanced/Morgan Stanley, SSgA Fund
   
(1)
   
 
8,065,136
*
   
Connecticut General Life Insurance Company
   
CIGNA Lifetime20 Fund
   
(1)
   
 
1,284,137
*
   
Connecticut General Life Insurance Company
   
CIGNA Lifetime30 Fund
   
(1)
   
 
342,832
*
   
Connecticut General Life Insurance Company
   
CIGNA Lifetime40 Fund
   
(1)
   
 
1,158,262
*
   
Connecticut General Life Insurance Company
   
CIGNA Lifetime50 Fund
   
(1)
   
 
352,807
*
   
Connecticut General Life Insurance Company
   
CIGNA Lifetime60 Fund
   
(1)
   
 
247,402
*
   
Connecticut General Life Insurance Company
   
Large Cap Growth/Morgan Stanley Fund
   
(1)
   
 
4,769,548
*
   
Connecticut General Life Insurance Company
   
Large Cap Value/John A. Levin & Company Fund
   
(1)
   
 
19,738,331
*
   
Connecticut General Life Insurance Company
   
S&P 500® Index Fund
   
(1)
   
 
5,208,968
*
   
Connecticut General Life Insurance Company
   
Mid Cap Growth/Artisan Partners Fund
   
(1)
   
 
322,642
*
   
Connecticut General Life Insurance Company
   
Mid Cap Value Fund (sub-advised by Wellington Management)
   
(1)
   
 
886,978
*
   
Connecticut General Life Insurance Company
   
Small Cap Growth/TimesSquare Fund
   
(1)
   
 
4,274,323
*
   
Connecticut General Life Insurance Company
   
Small Cap Value/Berger® Fund
   
(1)
   
 
1,724,478
*
   
Connecticut General Life Insurance Company
   
Int’l Blend/Bank of Ireland Fund
   
(1)
   
 
2,370,833
    
Participants
   
Loan Fund, 5.75%—10.50%
   
(1)
   
 
5,674,032
                   
                   
$
141,221,886
                   
*
 
Indicates a party-in-interest to the Plan.
(1)
 
Cost information has not been included because investments are participant directed.

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SIGNATURES
 
Pursuant to the requirements of the Securities Exchange Act of 1934, Health Management Associates, Inc., as Administrator, has duly caused this Annual Report to be signed on its behalf by the undersigned hereunto duly authorized.
 
HEALTH MANAGEMENT ASSOCIATES, INC.,
AS ADMINISTRATOR OF
HEALTH MANAGEMENT ASSOCIATES, INC.
RETIREMENT SAVINGS PLAN
 
By:
  
/s/    ROBERT E. FARNHAM        
   
Robert E. Farnham
Senior Vice President
and Chief Financial Officer
Date:    June 26, 2002

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