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, 2001
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) Independent Auditors' Report.............................................................. 1
Financial Statements:
Statements of Net Assets Available for Benefits at
December 30, 2001 and 2000.............................................................. 2
Statements of Changes in Net Assets Available for Benefits
for the Years Ended December 30, 2001 and 2000........................................ 3
Notes to Financial Statements........................................................... 4
Supplemental Schedule: *
Schedule of Assets (Held at End of Year)................................................ 9
*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
We have audited the accompanying statements of net assets available for benefits
of Sierra Health Automatic Retirement Plan (the "Plan") as of December 30, 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 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, 2001
and 2000, 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 schedule of Assets Held
for Investment at December 30, 2001, 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 supplemental schedule is 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
June 24, 2002
SIERRA HEALTH AUTOMATIC RETIREMENT PLAN
Statements of Net Assets Available for Benefits at
December 30, 2001 and 2000
2001 2000
ASSETS
CASH AND CASH EQUIVALENTS......................................... $ 5,360 $ 3,955
---------- ----------
INVESTMENTS AT FAIR VALUE
Common Trust Funds................................................ 68,307,022 69,024,855
Participant Loans................................................. 1,294,728 569,144
Limited Partnerships.............................................. 283,100 283,100
---------- ----------
Total Investments............................................ 69,884,850 69,877,099
---------- ----------
RECEIVABLES:
Employer Contributions............................................ 413,911 447,397
Employee Contributions............................................ 211,830 147,086
Other Receivables................................................. 55,000 103,588
---------- ----------
Total Receivables................................................. 680,741 698,071
---------- ----------
NET ASSETS AVAILABLE FOR BENEFITS................................. $70,570,951 $70,579,125
========== ==========
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, 2001 and 2000
2001 2000
ADDITIONS:
Interest and Dividends...................................... $ 653,604 $ 989,808
----------- -----------
Contributions:
Employer.................................................. 4,621,583 5,527,832
Participants.............................................. 7,071,053 8,115,154
Rollovers................................................. 263,721 356,049
----------- -----------
Total Contributions.................................. 11,956,357 13,999,035
----------- -----------
TOTAL ADDITIONS............................................... 12,609,961 14,988,843
----------- -----------
DEDUCTIONS:
Net Decrease in Fair Value.................................. (3,194,368) (3,117,550)
Benefits Paid to Participants............................... (9,424,655) (11,261,742)
----------- -----------
Total................................................ (12,619,023) (14,379,292)
OTHER (DEDUCTIONS) ADDITIONS:
Plan Expenses............................................... (6,311) (2,712)
Miscellaneous............................................... 7,199 46,273
----------- -----------
Total Other.......................................... 888 43,561
----------- -----------
Total Deductions..................................... (12,618,135) (14,335,731)
----------- -----------
NET (DECREASE) INCREASE....................................... (8,174) 653,112
NET ASSETS AVAILABLE FOR BENEFITS:
BEGINNING OF YEAR.................................... 70,579,125 69,926,013
----------- -----------
END OF YEAR.......................................... $ 70,570,951 $ 70,579,125
=========== ===========
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").
Prudential Financial serves as trustee of the Plan. The Plan is subject to the
provisions of the Employee Retirement Income Security Act of 1974 ("ERISA"). 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.
Eligibility - All employees of the Company not covered by a collective
bargaining 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.
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 2001 and 2000 were $48,811 and $28,962, respectively, of which,
$42,500 and $26,250, were paid by the Plan's sponsor, 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
2001, the Company used forfeitures in the amount of $90,590 to reduce employer
contributions. In 2000, the Company did not use forfeitures to reduce employer
contributions or pay plan expenses.
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. The
Company match is made in cash and is invested based upon employee selections.
NOTE 3. INVESTMENTS
Net decrease in the fair value of the Plan's investments by type of investment
follows:
2001 2000
Mutual Funds................................................ $(5,246,811) $(2,574,497)
Common Stock................................................ 1,997,443 (541,306)
Limited Partnerships........................................ 55,000* (1,747)*
---------- ----------
Net Decrease................................................ $(3,194,368) $(3,117,550)
========== ==========
* Non-participant directed.
Investments equal to 5% or more of the Plan's total net assets available for
benefits at December 30, 2001 and 2000 were:
2001 2000
Van Kampen Equity Income Fund............................... $17,883,779 $ **
Prudential Jennison Growth Fund............................. 12,257,591 15,470,610
Prudential Stable Value Fund................................ 9,286,288 8,761,992
Dreyfus Midcap Value Fund................................... 7,471,941 **
Davis NY Venture Fund....................................... 5,378,999 5,409,593
PIMCO Total Return Fund..................................... 3,571,467 1,719,359
Dreyfus Premier Balanced Fund............................... ** 22,265,573
Prudential Value Fund....................................... ** 6,671,714
** Balance does not represent 5% or more of net assets available for benefit at
the respective date.
NOTE 4. PAYMENT OF BENEFITS
At December 30, 2001 and 2000, Plan assets of $4,122,288 and $2,760,915,
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.
NOTE 5. PARTICIPANT LOANS RECEIVABLE
Participants may borrow from their fund accounts up to a maximum of $50,000 or
50% of their vested account balance, whichever is less. Participant loans
receivable are collateralized by vested account balances and are repaid through
payroll deductions over a term not exceeding 5 years. The term may be extended
if the proceeds are used for the purchase of a primary residence. The loans bear
interest at 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 7.
NOTE 6. PARTICIPANT DIRECTED INVESTMENTS
Participants may direct their contributions, and earnings thereon, to and
between a variety of investment funds with the exception of employer directed
investments in limited partnerships.
NOTE 7. 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:
2000
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:
2000
Net (Decrease) 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
=======
There were no differences between the financial statements and the Form 5500 for
the year ended December 30, 2001.
Amounts allocated to loans deemed distributions are recorded on the Form 5500
for loans in default at December 30, 2001 and 2000, respectively, 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.
NOTE 8. EMPLOYER DIRECTED INVESTMENTS
Information about the net assets and the significant components of the changes
in net assets relating to the employer directed investments is as follows as of
December 30, 2001 and 2000:
2001 2000
Net Assets:
Limited Partnerships.......................................... $ 283,100 $283,100
Other Receivables............................................. 55,000 103,588
-------- -------
Total Net Assets................................................ $ 338,100 $386,688
======== =======
Changes in Net Assets:
Net Increase.................................................. $ 55,000 $ 28,253
Transfers to Participant Directed Investments................. (103,588) (31,887)
-------- -------
Net Decrease.................................................. (48,588) (3,634)
Net Assets:
Employer Directed, Beginning of Year.......................... 386,688 390,322
-------- -------
Employer Directed, End of Year................................ $ 338,100 $386,688
======== =======
NOTE 9. SUBSEQUENT EVENT
The Plan Sponsor was granted an exemption by the United States Department of
Labor, Pension and Welfare Benefits Administration, from the prohibited
transaction rules of ERISA and, was allowed to purchase from the Plan the
limited partnership units held in the Employer Directed Investment Program at
their fair market value. This purchase was completed in March of 2002.
SIERRA HEALTH AUTOMATIC RETIREMENT PLAN
Schedule of Assets (Held at End of Year)
December 30, 2001
IDENTITY OF ISSUE CURRENT VALUE UNITS COST
INVESTMENT FUNDS
Davis NY Venture Fund...................................... $ 5,378,999 209,787 **
Dreyfus Midcap Value Fund................................... 7,471,941 283,174 **
Dreyfus Premier Balanced Fund .............................. 8,968 690 **
EuroPacific Growth Fund..................................... 2,207,846 82,200 **
Franklin Balance Sheet Investment Fund...................... 910,760 22,734 **
John Hancock Small Cap Growth Fund.......................... 1,517,955 151,493 **
PIMCO Total Return Fund..................................... 3,571,467 343,199 **
*Prudential Jennison Growth Fund ........................... 12,257,591 812,463 **
*Prudential Short-Term Corporate Bond Fund.................. 2,201,566 194,135 **
*Prudential Stable Value Fund............................... 9,286,288 298,470 **
*Prudential Stock Index Fund................................ 2,412,405 93,330 **
*Prudential Value Fund...................................... 747 47 **
Van Kampen Equity Income.................................... 17,883,779 2,393,879 **
*Sierra Health Services, Inc., Stock........................ 3,196,710 394,653 **
----------
$68,307,022
==========
PARTICIPANT LOANS
----------
Participant Loans........................................... $ 1,294,728 **
==========
LIMITED PARTNERSHIPS
Great North, Ltd............................................ 89,600 41,670
Nevada Rainbow, Ltd......................................... 128,000 43,891
Centennial Parkway, Ltd..................................... 65,500 13,469
----------
$ 283,100
==========
CASH AND CASH EQUIVALENTS
----------
AP Fund..................................................... $ 5,360 **
==========
* Party-in-interest
** Cost information is not required for participant-directed
investments and, therefore, is not included.
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: June 28, 2002 /s/ PAUL H. PALMER
Paul H. Palmer
Senior Vice President of Finance,
Chief Financial Officer and Treasurer
(Principal Financial and Accounting Officer)