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 31, 2000
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OR
( ) TRANSITION REPORT PURSUANT TO SECTION 15(d) OF
THE SECURITIES EXCHANGE ACT OF 1934
COMMISSION FILE NUMBER 001-14049
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IMS HEALTH INCORPORATED SAVINGS PLAN
(Full title of Plan)
IMS HEALTH INCORPORATED
(Name of Issuer of the Securities held pursuant to the Plan)
200 NYALA FARMS, WESTPORT, CT 06880
(Address of the Plan and the Issuer's principal executive office)
SIGNATURE
Pursuant to the requirements of the Securities Exchange Act of 1934, the
Compensation and Benefits Committee of IMS Health Incorporated has duly caused
this annual report to be signed on its behalf by the undersigned hereunto duly
authorized.
IMS Health Incorporated Savings Plan
(Name of Plan)
By: /s/ James C. Malone
----------------------------------------------
James C. Malone
Chief Financial Officer of IMS Health
Incorporated
June 25, 2001
2
IMS HEALTH INCORPORATED SAVINGS PLAN
DECEMBER 31, 2000
INDEX TO FORM 11-K
PAGE (S)
Report of Independent Accountants .................................. 4
Financial Statements:
Statements of Net Assets Available for Benefits as of
December 31, 2000 and 1999 ................................ 5
Statement of Changes in Net Assets Available for Benefits for the
Year ended December 31, 2000 ................................. 6
Notes to Financial Statements ...................................... 7 - 10
Supplemental Schedules:
Schedule of Assets Held at End of Year .......................... 11
Schedule G - Part III ........................................... 12 - 13
Exhibit Index ...................................................... 14
Exhibit 23 - Consent of Independent Accountants .................... 15
3
REPORT OF INDEPENDENT ACCOUNTANTS
To the Plan Administrator and Plan Participants of IMS Health Incorporated
Savings Plan:
In our opinion, the accompanying statements of net assets available for
benefits and the related statement of changes in net assets available for
benefits present fairly, in all material respects, the net assets available for
benefits of the IMS Health Incorporated Savings Plan as of December 31, 2000 and
1999, and the changes in net assets available for benefits for the year ended
December 31, 2000 in conformity with accounting principles generally accepted in
the United States of America. 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 of these
financial statements in accordance with auditing standards generally accepted in
the United States of America, which 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, assessing
the accounting principles used and significant estimates made by management, and
evaluating the overall financial statement presentation. We believe that our
audits provide a reasonable basis for our opinion.
Our audits were performed for the purpose of forming an opinion on the
basic financial statements taken as a whole. The supplemental schedules listed
in the index on page 3 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. The supplemental schedules have been subjected to the auditing
procedures applied in the audit 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/ PRICEWATERHOUSECOOPERS LLP
------------------------------
PRICEWATERHOUSECOOPERS LLP
New York, New York
June 20, 2001
4
IMS HEALTH INCORPORATED SAVINGS PLAN
STATEMENTS OF NET ASSETS AVAILABLE FOR BENEFITS
DOLLAR AMOUNTS IN THOUSANDS
AS OF DECEMBER 31,
--------- -----------
2000 1999
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Assets
Investments, at fair value ..... $ 66,725 $ 89,095
Investments, at contract value . 22,351 26,455
Due from broker for securities
sold ........................... - 215
Loan and interest receivable ... - 136
Receivables:
Members contributions ..... - 502
Company contributions ..... - 106
-------------------------
Total Assets ................... 89,076 116,509
Liability
Other liability ................ (10) -
-------------------------
Net assets available for
benefits ....................... $ 89,066 $116,509
======== ========
The accompanying notes are an integral part of these financial statements.
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IMS HEALTH INCORPORATED SAVINGS PLAN
STATEMENT OF CHANGES IN NET ASSETS AVAILABLE FOR BENEFITS
FOR THE YEAR ENDED DECEMBER 31, 2000
DOLLAR AMOUNTS IN THOUSANDS
ADDITIONS TO NET ASSETS
Attributed to:
Investment Income:
Interest and dividend income ......... $ 1,914
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Total Investment Income 1,914
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Contributions:
Members ......................... 9,153
Company ......................... 2,904
Rollover ........................ 310
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Total Contributions 12,367
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Total additions ...................... 14,281
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DEDUCTIONS FROM NET ASSETS
Attributed to:
Benefits paid to members ............. (33,099)
Net depreciation .................... (8,625)
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Total Deductions (41,724)
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Net Decrease ......................... (27,443)
Net assets available for benefits:
Beginning of year ............... 116,509
---------
End of year ..................... $ 89,066
=========
The accompanying notes are an integral part of these financial statements
6
IMS HEALTH INCORPORATED SAVINGS PLAN
NOTES TO FINANCIAL STATEMENTS
DOLLAR AMOUNTS IN THOUSANDS
NOTE 1. DESCRIPTION OF THE PLAN
The following description of the IMS Health Incorporated Savings Plan (the
"Plan") provides only general information. Participating members ("Members")
should refer to the Plan document for a more complete description of the Plan's
provisions.
GENERAL
The Plan is a defined contribution plan available to all U.S. employees of IMS
Health Incorporated (the "Company") and certain of its subsidiaries. Full-time
and regular part-time employees are eligible to participate in the Plan in the
first month following their first day of employment. Temporary employees, who
work at least 1,000 hours in their first year of employment, or any subsequent
calendar year, are also eligible to participate. The Plan is subject to the
provisions of the Employee Retirement Income Security Act of 1974 ("ERISA").
TRANSFERS TO OTHER FUNDS
During 2000, IMS Health Incorporated sold or spun off several entities whose
employees participated in the Plan. The most significant transactions were the
sale of ERISCO Managed Care Technologies, Inc., effective October 3, 2000, and
the spin-off of Synavant, Inc., as of August 31, 2000. As of the effective date
of the transactions, the net balances of the participants of these entities were
distributed or transferred into existing or newly formed savings plans sponsored
by entities unaffiliated with IMS Health Incorporated. Approximately $21,600
associated with these transfers is included in the Statement of Changes in Net
Assets Available for Benefits in "Benefits paid to members".
NOTE 2. ACCOUNTING POLICIES
BASIS OF PRESENTATION
The financial statements of the Plan were prepared under the accrual method of
accounting.
RECLASSIFICATIONS
Certain prior year balances have been reclassified to conform to the current
year presentation.
USE OF ESTIMATES
The preparation of financial statements in conformity with generally accepted
accounting principles requires management to make estimates and assumptions that
affect the reported amounts of assets and liabilities and disclosure of
contingent assets and liabilities at the date of the financial statements and
the reported amounts of investment income and expenses during the reporting
period. The most significant estimates relate to investment valuation. Actual
results could differ from those estimates.
RISKS AND UNCERTAINTIES
The Plan provides for various investment options in any combination of stocks,
bonds, fixed income securities, mutual funds, and other investment securities.
Certain investment securities are exposed to various risks, such as interest
rate, market and credit. Due to the level of risk associated with certain
investment securities and the level of uncertainty related to changes in the
value of investment securities, it is at least reasonably possible that changes
in risks in the near term would materially affect members' account balances and
the amounts reported in the statement of net assets available for benefits and
the statement of changes in net assets available for benefits.
INVESTMENTS
The Plan's guaranteed investment contracts are stated at contract value, which
represents the aggregate amount of deposits thereto, plus interest at the
contract rate, less withdrawals. Commingled funds are valued by the fund
7
IMS HEALTH INCORPORATED SAVINGS PLAN
NOTES TO FINANCIAL STATEMENTS (CONTINUED)
DOLLAR AMOUNTS IN THOUSANDS
managers based on the asset values of the underlying securities as reported by
the funds. Company stock is valued at its quoted market price. Purchases and
sales of securities are recorded on a trade-date basis. Interest income is
recorded on the accrual basis. Dividends are recorded on the ex-dividend date.
Loans are recorded at cost, which approximates fair value.
The Plan presents in the statement of changes in net assets available for
benefits, the net appreciation/(depreciation) in the fair value of its
investments which consists of the realized gains or losses and the unrealized
appreciation/(depreciation) on those investments.
CONTRIBUTIONS
A member may elect to contribute 1% to 16% of compensation. A member may
designate savings as before-tax Savings or after-tax Savings. A member who is a
highly compensated employee may be limited to less than 16% due to the existence
of certain tests required under the Internal Revenue Code (the "Code"). For
2000, the Code limit on before-tax contributions was $10,500 in the aggregate.
The Company matches an amount equal to 50% of a member's savings, up to the
first 6%. Member savings in excess of 6% are supplemental savings that are not
matched by Company contributions. Matching Company contributions are invested in
the same investment funds as the member's own contributions.
VESTING
Members are 100% vested in the Company's matching contributions after the third
year of employment with credit given for employment with the Company's
predecessors. However, a member becomes fully vested in his or her Company
contribution account upon retirement, disability, death, or reaching age 65.
Members are always 100% vested in their own contributions and earnings thereon.
MEMBERS LOANS
Members may borrow from their fund accounts a minimum of $500 up to a maximum
equal to the lesser of 50% of their vested account balance or $50,000 minus the
highest outstanding loan balance they had in the preceding 12 months. The
maximum loan term is 57 months or up to 117 months for the purchase of a primary
residence. The loans are secured by the balance in the member's account and bear
interest at the prime rate at the date of the loan as published in The Wall
Street Journal plus 2%. Principal and interest are paid on a monthly basis
ratably through payroll deductions. The default of a loan note is deemed a
taxable distribution of the unpaid balance. The loan balance was $2,280 and
$2,600 as of December 31, 2000 and 1999, respectively.
PAYMENTS OF BENEFITS
Benefits are recorded when paid. On termination of service due to death,
disability, retirement or other reasons, a member may elect to receive a lump
sum amount equal to the value of the member's vested interest in his or her
account, or subject to certain conditions, annual installments over a period not
greater than twenty years. Members may also elect to defer distributions subject
to certain conditions.
FORFEITURES
A member who is not 100% vested in his or her Company contributions and is
terminated for reasons other than retirement, death or disability shall forfeit
his or her non-vested Company contributions. Forfeited amounts shall be applied
to reduce subsequent Company contributions. In the event the employee is
subsequently re-employed by the Company prior to incurring 5 consecutive one
year breaks in service, such forfeited amount of his or her Company
contributions shall be restored to his or her account. During 2000,
approximately $83 was forfeited and has been used to reduce current Company
contributions.
8
IMS HEALTH INCORPORATED SAVINGS PLAN
NOTES TO FINANCIAL STATEMENTS (CONTINUED)
DOLLAR AMOUNTS IN THOUSANDS
ADMINISTRATIVE EXPENSES
Transaction and investment manager fees for each fund are charged against the
Plan's assets and related rates of return. Trustee fees and other expenses of
administering the Plan are borne by the Company.
GUARANTEED INVESTMENT CONTRACTS
As of December 31, 2000, the market value of the Special Fixed Income Fund
(which comprises of the Guaranteed Investment Contracts) totaled $22,352 with
an average yield of 6.1% and an average crediting interest rate of 6.4%.
PARTY-IN-INTEREST
Certain Plan investments are shares of commingled funds managed by CIGNA. CIGNA
is the trustee as defined by the Plan and, therefore, these transactions qualify
as party-in-interest transactions.
NOTE 3. FEDERAL INCOME TAX
The plan is subject to the provisions of ERISA, as amended. A request for formal
determination that the Plan is qualified and the trust established under the
Plan is tax-exempt will be made to the Internal Revenue Service ("IRS"). The
Plan administrator and the Plan's tax counsel believe that the Plan is designed
and is currently being operated in compliance with the applicable provisions of
the Code.
NOTE 4. PLAN TERMINATION
While the Company has not expressed any intent to discontinue its contributions
or terminate the Plan, it is free to do so at any time subject to the provisions
of ERISA, as amended and the Code, which state that, in such event, all members
of the Plan shall be fully vested in the amounts in their accounts.
NOTE 5. INVESTMENTS
The following investments represent 5% or more of the net assets available for
benefits:
December 31
2000 1999
------------------------------
Charter Large Company Stock Index - CIGNA* $40,949 $ -
State Street Global Advisors Russell 2000 Index $ 6,001 $ -
IMS Health Common Stock $ 6,745 $ 9,333
Barclays Global Investors Equity Index Fund A - $61,397
Barclays Global Investors Extended Equity Market Fund - $ 7,075
* party-in-interest
During 2000, the Plan's investments (including gains and losses on investments
bought and sold, as well as held during the year) depreciated in value as
follows:
Mutual funds $18
Commingled trust funds ($8,245)
Common stock ($398)
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($8,625)
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9
IMS HEALTH INCORPORATED SAVINGS PLAN
NOTES TO FINANCIAL STATEMENTS (CONTINUED)
DOLLAR AMOUNTS IN THOUSANDS
NOTE 6. 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, December 31,
2000 1999
Net assets available for benefits per the financial statements $ 89,066 $ 116,509
Amounts allocated to withdrawing members (65) (848)
--------------------------
Net assets available for benefits per the Form 5500 $ 89,001 $ 115,661
==========================
The following is a reconciliation of withdrawals and distributions paid to
members per the financial statements to the Form 5500:
Withdrawals and distributions paid to members per the financial statements $ 33,099
Add:
Amounts requested by members for withdrawals and distributions at December 31,
2000 but paid in 2001 65
Less :
Amounts requested by members for withdrawals and distributions at December 31,
1999 but paid in 2000 (848)
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Withdrawal and distributions paid to members per the Form 5500 $ 32,316
==========
Withdrawals and distributions to participants recorded on the Form 5500 for
benefit claims include amounts that have been processed and approved for payment
prior to December 31 but not paid as of that date.
10
IMS HEALTH INCORPORATED SAVINGS PLAN
SCHEDULE OF ASSETS HELD AT END OF YEAR
AS OF DECEMBER 31, 2000
DOLLAR AMOUNTS IN THOUSANDS
Description of Asset Cost Fair Value
------------------------------------------------------------ ------------- --------------
Charter Large Company Stock Index - CIGNA * $42,525 $40,949
Guaranteed Income Fund * 295 295
Allstate - Rate 6.24% Matures on 10/01/2001 990 990
Allstate - Rate 5.28% Matures on 10/01/2002 2,472 2,472
John Hancock - Rate 6.69% Matures on 04/01/2005 2,574 2,574
John Hancock - Rate 6.01% Matures on 04/01/2002 1,046 1,046
John Hancock - Rate 5.66% Matures on 04/03/2001 780 780
John Hancock - Rate 6.12% Matures on 04/02/2001 2,016 2,016
Metropolitan Life - Rate 6.69% Matures on 10/01/2005 2,009 2,009
Metropolitan Life - Rate 6.08% Matures on 10/01/2001 1,123 1,123
New York Life - Rate 7.17% Matures on 10/02/2003 3,400 3,400
New York Life - Rate 5.70% Matures on 04/01/2003 2,097 2,097
Principal Mutual - Rate 7.22% Matures on 09/30/2003 3,550 3,550
----- -----
Subtotal - Special Fixed Income Fund 22,352 22,352
IMS Health Common Stock Fund 4,920 6,745
State Street Global Advisors Russell 2000 Index 6,996 6,001
IMS Health Balanced Index Fund - CIGNA * 4,243 4,298
State Street Global Advisors EAFE Index Account 3,750 3,316
Small Company Stock Value I Fund -Berger 1,191 1,320
Charter Large Company Stock Growth - Putnam 1,443 1,273
Templeton Foreign Account 468 489
Synavant Legacy Fund 1 53
Member Loans* - 2,280
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Total Investment $89,076
===============
* party-in-interest
11
IMS HEALTH INCORPORATED SAVINGS PLAN
SCHEDULE G - PART III
FINANCIAL TRANSACTIONS SCHEDULE
SCHEDULE G - PART III
NONEXEMPT TRANSACTIONS
Name of Plan THE IMS HEALTH INCORPORATED SAVINGS PLAN
Plan Sponsor IMS HEALTH INCORPORATED
Three-digit plan number 002
Employer Identification Number 06-1506026
(a). Identity of party involved
IMS HEALTH INCORPORATED
(b). Relationship to plan, employer, or other party-in-interest
PLAN SPONSOR
(c). Description of transactions including maturity date, rate of interest,
collateral, par or maturity value
DEPOSIT OF ELECTIVE DEFERRALS EFFECTIVE MARCH 3, 2000 AND MARCH 29, 2000
DEPOSITED ON APRIL 20, 2000 AND MAY 1, 2000, RESPECTIVELY (SEE
ATTACHMENT).
(d). Purchase price
$0
(e). Selling Price
$0
(f). Lease Rental
$0
(g). Expenses incurred in connection with this transaction
$6,076
(h). Cost of Asset
$0
(i). Current Value of Asset
$0
(j). Net gain or (loss) on each transaction
$0
12
IMS HEALTH INCORPORATED SAVINGS PLAN
SCHEDULE G - PART III
ATTACHMENT TO SCHEDULE G - PART III
The deposits of elective deferrals for the IMS Health Incorporated Savings Plan
(the "Plan") for the March 3, 2000 and March 29, 2000 payrolls (in the combined
amount of approximately $2.1 million) were required to be submitted to the
Plan's custodian no later than April 15, 2001. These transmittals were not
submitted until April 20, 2000 and May 1, 2000, respectively. The late
transmittal of these elective deferrals is considered an operational violation
of the terms of the Plan, and, therefore, is considered a prohibited
transaction.
On December 19, 2000, the Company made a corrective contribution to the Plan in
the amount of approximately $40,500 to offset the estimated loss incurred by the
Plan participants as a result of the late transmittals. The amount of the
corrective contribution was calculated by multiplying the late contribution
amounts times the interest rate percentage determined by the Internal Revenue
Service (the "IRS") for plan corrections (9%), prorated for the number of days
from the date the contribution should have been transmitted to the date the
corrective contribution was allocated to the Plan. The $40,500 was allocated
among Plan participants and recorded as a qualified non-elective contribution.
As a result of this reportable transaction, on December 21, 2000, the Company
filed IRS Form 5330 (Return of Excise Taxes Related to Employee Benefit Plans)
and paid an excise tax in the amount of $6,076.
13
IMS HEALTH INCORPORATED SAVINGS PLAN
EXHIBIT INDEX
EXHIBIT
NO. DESCRIPTION
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EX - 23 Consent of Independent Accountants
14