SECURITIES AND EXCHANGE COMISSION
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, 2001
OR
( ) TRANSITION REPORTED PURSUANT TO SECTION 15 (d) OF
THE SECURITIES EXCHANGE ACT OF 1934
FOR THE TRANSITION PERIOD FROM ___________ TO ____________
COMMISSION FILE NUMBER 001 - 14049
IMS HEALTH INCORPORATED SAVINGS PLAN
(Full title of Plan)
IMS HEALTH INCORPORATED
(Name of Issuer of the Securities held pursuant to the Plan)
1499 POST ROAD, FAIRFIELD, CT 06430
(Address of the Plan and the Issuer's principal executive office)
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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/ Nancy E. Cooper
-----------------------
Nancy E. Cooper
Senior Vice President and Chief Financial Officer
Date: June 28, 2002
IMS HEALTH INCORPORATED SAVINGS PLAN
DECEMBER 31, 2001
INDEX TO FORM 11-K
Report of Independent Accountants. . . . . . . . . . . . . . . . . . . . . . . . 1
Financial Statements:
Statements of Net Assets Available for Benefits as of
December 31, 2001 and 2000. . . . . . . . . . . . . . . . . . . . . . . 2
Statement of Changes in Net Assets Available for Benefits for the
Year ended December 31, 2001. . . . . . . . . . . . . . . . . . . . . .. . 3
Notes to Financial Statements. . . . . . . . . . . . . . . . . . . . . . . . . . 4 - 7
Supplemental Schedule:
Schedule of Assets Held at End of Year . . . . . . . . . . . . . . . . . . 8
Exhibit Index. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 9
Exhibit 23 - Consent of Independent Accountants . . . . . . . . . . . . . . . . 10
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, 2001 and
2000, and the changes in net assets available for benefits for the year ended
December 31, 2001 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 audits
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 schedule listed in the
accompanying index 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.
The supplemental schedule has been subjected to the auditing procedures applied
in the audits of the basic financial statements and, in our opinion, is fairly
stated in all material respects in relation to the basic financial statements
taken as a whole.
PRICEWATERHOUSECOOPERS LLP
New York, New York
June 18, 2002
1
IMS HEALTH INCORPORATED SAVINGS PLAN
STATEMENTS OF NET ASSETS AVAILABLE FOR BENEFITS
DOLLAR AMOUNTS IN THOUSANDS
AS OF DECEMBER 31,
---------------------
2001 2000
-------- --------
ASSETS:
Investments, at fair value . . . . . . $ 60,860 $ 66,725
Investments, at contract value . . . . 26,714 22,351
-------- --------
TOTAL ASSETS 87,574 89,076
LIABILITIES:
Other liabilities . . . . . . . . . . . -- (10)
-------- --------
NET ASSETS AVAILABLE FOR BENEFITS . . . $ 87,574 $ 89,066
======== ========
The accompanying notes are an integral part of these financial statements.
2
IMS HEALTH INCORPORATED SAVINGS PLAN
STATEMENT OF CHANGES IN NET ASSETS AVAILABLE FOR BENEFITS
DOLLAR AMOUNTS IN THOUSANDS
YEAR ENDED
DECEMBER 31,
2001
--------
ADDITIONS TO NET ASSETS
Investment income:
Interest and dividend income . . $ 1,817
--------
Contributions:
Members . . . . . . . . . . . . 7,815
Company . . . . . . . . . . . . 2,449
Rollover . . . . . . . . . . . . 453
--------
Total contributions 10,717
--------
Total additions . . . . . . . . . . . 12,534
--------
DEDUCTIONS FROM NET ASSETS
Attributed to:
Benefits paid to members . . . . . . . 6,658
Net depreciation (Note 5) . . . . . 7,368
--------
Total deductions 14,026
--------
Net decrease (1,492)
Net assets available for benefits:
Beginning of year . . . . . . . . . 89,066
--------
End of year . . . . . . . . . . . . $ 87,574
========
The accompanying notes are an integral part of these financial statements
3
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 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").
NOTE 2. ACCOUNTING POLICIES
BASIS OF PRESENTATION
The financial statements of the Plan were prepared under the accrual method of
accounting.
USE OF ESTIMATES
The preparation of financial statements in conformity with accounting principles
generally accepted in the United States of America, requires management and the
plan trustee 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 the valuation of investments. Actual results could differ from those
estimates.
RISKS AND UNCERTAINTIES
The Plan provides for various investment options comprised of stocks, bonds,
fixed income securities and other investment securities. Certain investment
securities are exposed to various risks, such as interest rate, market and
credit risks. 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 possible that changes in these risks in the near
term could materially affect members' account balances and the amounts reported
in the statements of net assets available for benefits and the statement of
changes in net assets available for benefits.
INVESTMENTS
The Plan's investments in guaranteed investment contracts are stated at contract
value, which represents the aggregate amount of deposits thereto, plus interest
at the contract rate, less withdrawals. Pooled separate accounts are valued by
the fund 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.
4
IMS HEALTH INCORPORATED SAVINGS PLAN
NOTES TO FINANCIAL STATEMENTS
DOLLAR AMOUNTS IN THOUSANDS
CONTRIBUTIONS
A member may elect to contribute 1% to 16% of annual compensation. A member may
designate contributions as before-tax or after-tax contributions. A member who
is a highly compensated employee may be limited to less than the 16% maximum
contribution amount, due to Internal Revenue Code (the "Code") regulations. For
2001, the limit on before-tax contributions was $10,500.
The Company matches an amount equal to 50% of a member's contributions, up to
the first 6%. Member savings in excess of 6% are supplemental savings that are
not matched by the Company. Company matching 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. If the employee was previously employed by the Company's
predecessors, vesting credit is given for employment during those periods. A
member becomes fully vested in his or her Company contribution account upon
retirement, disability, death, or upon 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 amount 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 balances in the member's
accounts 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 through payroll deductions. The default of a loan is deemed a
taxable distribution of the unpaid balance. The loan fund balance, included in
investments at fair value, amounted to $1,738 and $2,280 as of December 31, 2001
and 2000, 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, disability or reaching age
65 shall forfeit his or her non-vested Company contributions. Forfeited amounts
are 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 2001,
approximately $152 was forfeited and has been used to reduce Company
contributions.
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 paid by the Company.
GUARANTEED INVESTMENT CONTRACTS
As of December 31, 2001, the market value of the Special Fixed Income Fund
(which consists of the Guaranteed Investment Contracts) totaled $26,714 with an
average yield of 6.3% and an average crediting interest rate of 6.2%.
5
IMS HEALTH INCORPORATED SAVINGS PLAN
NOTES TO FINANCIAL STATEMENTS
DOLLAR AMOUNTS IN THOUSANDS
PARTY-IN-INTEREST
Certain Plan investments are shares of pooled separate accounts 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 has been 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 may do so at any time subject to the provisions of
ERISA, as amended and the Code. If this were to occur, all members of the Plan
would become 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 as of the dates indicated:
December 31,
------------------------
2001 2000
----------- ------------
S&P 500 Index Fund $34,440 $40,949
Guaranteed Income Fund * $16,060 $ -
State Street Global Advisors Russell 2000 Index $5,893 $6,001
IMS Health Common Stock $4,786 $6,745
* party-in-interest
During 2001, 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:
Pooled separate accounts $5,534
Common stock $1,834
-----------
Net depreciation $7,368
===========
6
IMS HEALTH INCORPORATED SAVINGS PLAN
NOTES TO FINANCIAL STATEMENTS
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,
2001 2000
-------- --------
Net assets available for benefits per the financial statements $ 87,574 $ 89,066
Amounts allocated to withdrawing members (10) (65)
-------- --------
Net assets available for benefits per the Form 5500 $ 87,564 $ 89,001
======== ========
The following is a reconciliation of benefits paid to members per the financial
statements to the Form 5500. Benefits paid to members recorded on the Form 5500
include amounts that have been processed and approved for payment prior to
December 31, but not paid as of that date, whereas for financial statement
purposes they are recorded when paid.
Withdrawals and distributions paid to members per the financial statements $6,658
Add:
Amounts requested by members for withdrawals and distributions at December 31,
2001 but paid in 2002 10
Less:
Amounts requested by members for withdrawals and distributions at December 31,
2000 but paid in 2001 (65)
--------------
Withdrawal and distributions paid to members per the Form 5500 $6,603
==============
7
IMS HEALTH INCORPORATED SAVINGS PLAN
SCHEDULE OF ASSETS HELD AT END OF YEAR
AS OF DECEMBER 31, 2001
DOLLAR AMOUNTS IN THOUSANDS
Description of Asset Current Value
------------------------------------------------------------ ---------------
Guaranteed Income Fund * $ 16,060
New York Life - Rate 5.70% Matures on 04/01/2003 2,032
Principal Mutual - Rate 7.22% Matures on 10/01/2003 1,903
New York Life - Rate 7.17% Matures on 10/01/2003 1,854
John Hancock - Rate 6.69% Matures on 04/01/2005 1,383
Allstate - Rate 5.28% Matures on 10/01/2002 1,305
Metropolitan Life - Rate 6.69% Matures on 10/01/2005 1,087
John Hancock - Rate 6.01% Matures on 04/01/2002 559
Allstate - Rate 6.24% Matures on 04/01/2002 531
--------
Subtotal - Investments At Contract Value 26,714
S&P 500 Index Fund 34,440
State Street Global Advisors Russell 2000 Index 5,893
IMS Health Common Stock Fund 4,786
IMS Health Balanced Index Fund - - CIGNA * 4,365
Small Company Stock Value I Fund - Berger 3,960
State Street Global Advisors EAFE Index Account 2,736
Charter Large Company Stock Growth Fund- - Putnam 2,074
Member Loans * 1,738
Templeton Foreign Account 811
Synavant Legacy Fund 35
Cash Transaction Account (GST) 22
--------
Subtotal - Investments At Fair Value 60,860
--------
Total $ 87,574
========
* party-in-interest
8
IMS HEALTH INCORPORATED SAVINGS PLAN
EXHIBIT INDEX
EXHIBIT
NO. DESCRIPTION
------------------- -----------------------------------------------------
EX - 23 Consent of Independent Accountants
9