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
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 0-29816
A. Full title of the plan and the address of the plan, if different
from that of the issuer named below:
Triad Hospitals, Inc. Retirement Savings Plan
B. Name of issuer of the securities held pursuant to the plan and
the address of its principal executive office:
Triad Hospitals, Inc.
13455 Noel Road, 20th Floor
Dallas, Texas 75240
(972) 789-2700
Triad Hospitals, Inc.
Retirement Savings Plan
Financial Statements
and Supplemental Schedule
As of December 31, 2000 and 1999,
and for the Year ended December 31, 2000
Contents
Report of Independent Auditors - Ernst & Young LLP................. 1
Report of Independent Auditors - PricewaterhouseCoopers LLP........ 2
Audited Financial Statements
Statements of Net Assets Available for Benefits.................... 3
Statement of Changes in Net Assets Available for Benefits.......... 4
Notes to Financial Statements...................................... 5
Supplemental Schedule
Schedule H; Line 4i - Schedule of Assets (Held At End of Year)..... 14
Signatures......................................................... 15
Report of Independent Auditors
Plan Administrator
Triad Hospitals, Inc. Retirement Savings Plan
We have audited the accompanying statement of net assets available for benefits
of the Triad Hospitals, Inc. Retirement and Savings Plan as of December 31,
2000, and the related statement of changes in net assets available for benefits
for the year 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 audit.
We conducted our audit 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 audit provides 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, 2000, and the changes in its net assets available for benefits for
the year then ended, in conformity with accounting principles generally accepted
in the United States.
Our audit was 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, 2000, 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. The supplemental schedule is the responsibility of the
Plan's management. The supplemental schedule has been subjected to the auditing
procedures applied in our audit 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.
Dallas, Texas
May 15, 2001
/s/ Ernst & Young LLP
------------------------
Ernst & Young LLP
Report of Independent Auditors
To the Participants and Administrator of the
Triad Hospitals, Inc. Retirement Savings Plan
In our opinion, the accompanying statement of net assets available for benefits
presents fairly, in all material respects, the net assets available for benefits
of the Triad Hospitals, Inc. Retirement Savings Plan (the "Plan") at December
31, 1999 in conformity with accounting principles generally accepted in the
United States. This financial statement is the responsibility of the Plan's
management; our responsibility is to express an opinion on this financial
statement based on our audit. We conducted our audit of this statement in
accordance with auditing standards generally accepted in the United States,
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 audit provides a
reasonable basis for the opinion expressed above.
Dallas, Texas
July 11, 2000
/s/ PricewaterhouseCoopers LLP
-----------------------------------
PricewaterhouseCoopers LLP
Triad Hospitals, Inc.
Retirement Savings Plan
Statements of Net Assets Available for Benefits
December 31
2000 1999
----------------------------------
Assets
Investments:
Columbia/HCA Healthcare Corporation
Common Stock $ 98,412,477 $ 78,938,856
Triad Hospitals, Inc. Common Stock 26,583,146 3,027,677
Triad Hospitals, Inc. Common Stock (unallocated) 87,918,750 45,375,000
LifePoint Hospitals, Inc. Common Stock 6,166,779 1,748,002
Registered investment companies 230,801,142 243,632,485
Collective Short-Term Investment Fund 2,202,062 1,469,117
Participant loans 6,510,280 7,388,833
----------------------------------
Total investments 458,594,636 381,579,970
----------------------------------
Receivables:
Employer matching contribution 129,616 50,423
Employer supplemental contribution 651,766 4,900,896
Participants contributions 582,887 285,642
Due from broker for securities sold 422,677 412,834
Interest and dividends 508,389 616,072
----------------------------------
Total receivables 2,295,335 6,265,867
----------------------------------
Total assets 460,889,971 387,845,837
----------------------------------
Liabilities
Note payable to Triad 28,433,057 31,082,466
Cash overdraft 118,742 27,541
Other 129,030 141,860
----------------------------------
Total liabilities 28,680,829 31,251,867
----------------------------------
Net assets available for benefits $ 432,209,142 $ 356,593,970
==================================
See accompanying notes.
3
Triad Hospitals, Inc.
Retirement Savings Plan
Statement of Changes in Net Assets Available for Benefits
Year ended December 31, 2000
Additions to net assets attributed to:
Investment income:
Net appreciation in fair value of investments $ 92,582,148
Interest 6,068,761
Dividends 3,924,689
--------------
102,575,598
--------------
Contributions:
Participants 14,178,249
Employer matching 3,121,927
Employer retirement 4,669,768
Employer supplemental 651,766
--------------
22,621,710
--------------
Total additions 125,197,308
--------------
Deductions from net assets attributed to:
Benefits paid to participants 45,550,121
Interest expense 2,020,359
Administrative expenses 1,351,142
--------------
Total deductions 48,921,622
--------------
Net increase prior to transfers 76,275,686
Transfers to other plans (660,514)
--------------
Net increase 75,615,172
Net assets available for benefits at beginning of year 356,593,970
--------------
Net assets available for benefits at end of year $432,209,142
==============
See accompanying notes.
4
Triad Hospitals, Inc.
Retirement Savings Plan
Notes to Financial Statements
December 31, 2000
1. Description of the Plan
The following description of Triad Hospitals, Inc. Retirement Savings Plan (the
Plan) provides only general information. Participants should refer to the Plan
document for a more comprehensive description of the Plan's provisions.
General
Triad Hospitals, Inc. (the Company or Triad) was created May 11, 1999 (the
closing date) upon completion of a spin-off by Columbia/HCA Healthcare
Corporation (Columbia/HCA). Triad created the Triad Hospitals, Inc. Retirement
Savings Plan (the Plan) effective on the closing date.
The Plan replaced benefits previously provided by Columbia/HCA through the
Columbia/HCA Healthcare Corporation Money Purchase Pension Plan, Columbia/HCA
Salary Deferral Plan, Columbia/HCA Healthcare Corporation Stock Bonus Plan,
HealthTrust, Inc. 401(k) Retirement Program, and/or the EPIC Healthcare Group,
Inc. Profit Sharing Plan (collectively referred to hereinafter as the Prior
Plans).
The Plan is a defined contribution plan which provides retirement, disability,
and death benefits for all of the employees of the Company. The Plan covers
employees of the Company who have at least two months of service and are age 21
or older. Employees whose employment is subject to a collective bargaining
agreement (unless such agreement provides to the contrary) and leased employees
are not entitled to participate in the Plan. All individuals who were employed
by the Company on the closing date and who were active participants in one or
more of the Prior Plans became participants of the Plan on the closing date. A
component of the Plan operates as a leveraged employee stock ownership program
(ESOP) and is designed to comply with Section 4975(e)(7) and the regulations
thereunder of the Internal Revenue Code (the Code). The Plan is subject to the
provisions of the Employee Retirement Income Security Act of 1974, as amended
(ERISA).
Contributions
Participants may voluntarily elect to defer salary and contribute the amount
deferred to the Plan (participants' contributions) in amounts of up to l5% prior
to July 1, 2000 and up to 18% subsequent to July 1, 2000 of their annual
compensation, as defined by the Plan.
5
Triad Hospitals, Inc.
Retirement Savings Plan
Notes to Financial Statements (continued)
1. Description of the Plan (continued)
Effective July 1, 2000, new employees automatically defer 3% of their annual
compensation as participant contributions to the Plan unless the participant
directs the Plan Sponsor otherwise. Additionally, effective July 1, 2000,
participants may also rollover amounts representing distributions from other
qualified plans.
The Company contributes, on behalf of each participant, an amount equal to 50%
of a participant's contribution (Employer matching contribution), not to exceed
1 1/2% of the participant's compensation.
The Company makes an annual contribution (Employer Retirement Contribution)
which is allocated to eligible participants. To be eligible to receive an
allocation of the Employer Retirement Contribution, the participant must have
been employed by the Company on the first day of the Plan year, have completed
one year of service, and as of the last day of the Plan year, must be age 21 and
employed by the Company. The Employer Retirement Contribution is made in the
amount necessary to repay the installment due on the Note Payable to Triad
(Triad Note) (see Note 4). Making the payment under the Triad Note results in
shares of Triad Hospitals, Inc. Common Stock (Triad common stock) (see Note 3)
being released from collateral under the Triad Note. This Triad common stock is
used to make the annual ESOP allocation to participants. If the Employer
Retirement Contribution is not sufficient to provide for the Plan's period
allocations, the Company makes a cash contribution (Employer Supplemental
Contribution). Together, the Employer Retirement and Supplemental Contributions
provide for an annual allocation for each eligible participant. The allocation
for each eligible participant is calculated as follows:
Allocation as a Percent
Years of Service of Participant's
on Last Day of Plan Year Compensation
--------------------------- ----------------------------
Less than 5 2
5 but less than 10 3
10 or more 5
Participants may direct all participant contributions, the Employer matching
contribution and the Employer Supplemental Contribution to several different
Plan investment options, including Triad common stock.
6
Triad Hospitals, Inc.
Retirement Savings Plan
Notes to Financial Statements (continued)
1. Description of the Plan (continued)
Participant Accounts
Each participant's account is credited with the participant's contribution and
Employer Matching Contribution, and the participant's allocation of the Employer
Retirement and Supplemental Contributions and investment earnings and charged
with an allocation of administrative expenses. The benefit to which a
participant is entitled is the benefit that can be provided from the
participant's vested account.
Vesting
Participants are immediately vested with respect to their participant's
contributions plus earnings thereon. Vesting of the Employer Matching,
Retirement and Supplemental Contributions plus earnings thereon is based on
years of continuous service and increases with the accumulation of the years of
service. After three years of service, the participant is 20% vested. With the
completion of each additional year of service, the participant is vested an
additional 20%. After seven years of service, the participant is l00% vested.
All balances transferred from the Prior Plans and associated earnings are 100%
vested, with the exception of the Columbia/HCA Healthcare Corporation Money
Purchase Pension Plan and the Columbia/HCA Healthcare Corporation Stock Bonus
Plan. Vesting of provisions for these two prior plans generally follows the same
schedule as vesting for the employer contributions.
Participants Loans
Participants may borrow from their account subject to a minimum of $1,000, and
up to a maximum equal to $50,000 less the highest outstanding loan balance in
the preceding twelve months, or the lesser of 50% of vested balances in all
accounts available for loans, as defined by the Plan. Loan terms range from one
to five years, or up to ten years for the purchase of a primary residence. The
loans are secured by the balance in the participant's account. Principal and
interest is paid ratably through payroll deductions. The interest rate is
determined based on the prime rate charged by the Northern Trust Company (the
Trustee).
7
Triad Hospitals, Inc.
Retirement Savings Plan
Notes to Financial Statements (continued)
1. Description of the Plan (continued)
Payment of Benefits
On termination of service due to death, disability or retirement, a participant
becomes 100% vested and may elect to receive an amount equal to the value of the
participant's interest in his or her account in either a lump-sum amount or
annuity payments. For termination of service due to other reasons, a participant
may receive the value of the vested interest in his or her account as a lump-sum
distribution. In-service withdrawals are available for a participant upon
attainment of age 59 1/2. Hardship withdrawals are available for a participant
experiencing qualifying circumstances.
Forfeited Accounts
At December 31, 2000 and 1999, forfeited nonvested accounts totaled $2,075,981
and $1,401,264, respectively. These accounts will be used to reduce the
Company's contributions made to the Plan. Forfeitures attributable to Employer
Retirement Contributions shall be allocated to accounts of participants employed
on the last day of the Plan year in which such forfeitures are created, pro rata
based on participants Employer Retirement Contribution account balances. Any
other forfeitures shall be utilized to reduce the Employer's Matching
Contribution and any Employer Supplemental Contribution.
2. Summary of Significant Accounting Policies
Basis of Accounting
The financial statements of the Plan are prepared under the accrual method of
accounting.
Use of Estimates
Preparation of financial statements in conformity with accounting principles
generally accepted in the United States requires management to make estimates
and assumptions that affect the amounts reported in the financial statements and
accompanying notes. Actual results could differ from those estimates.
8
Triad Hospitals, Inc.
Retirement Savings Plan
Notes to Financial Statements (continued)
2. Summary of Significant Accounting Policies (continued)
Valuation of Investments and Income Recognition
Shares of registered investment companies are valued at published market prices
which represent the net asset value of shares held by the Plan at year end.
Common stock is valued at its quoted market price. Participant loans are valued
at their carrying value, which approximates fair value.
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.
Administrative Expenses
Certain administrative expenses are paid by the Plan.
Reclassification
Certain prior year amounts have been reclassified to conform to the current year
presentation.
3. Investments
Unless the Plan Administrator directs otherwise, participants shall have no
voting rights with regard to the investment in Columbia/HCA Healthcare
Corporation Common Stock (Columbia/HCA common stock) or LifePoint Hospitals.
Inc. Common Stock (LifePoint common stock). Participants may direct investments
out of these funds, but no future investments may be made in these funds. The
Plan Administrator or the Company may direct some or all of the Columbia/HCA
and/or LifePoint common stock to be sold and invested in Triad common stock.
During 1999, the Plan purchased 3,000,000 shares of Triad common stock for use
in connection with the ESOP component of the Plan (ESOP stock). The ESOP stock
is held in a secondary trust which is administered by U.S. Trust Company, N.A.
(the Secondary Trustee). The ESOP stock is collateral for the Triad Note (see
Note 4). As payments are made on the Triad Note, shares are released from
collateral based upon the ratio of principal and interest paid during the period
over the total principal and interest payments due under the Triad Note.
Released shares are allocated to participant accounts in
9
Triad Hospitals, Inc.
Retirement Savings Plan
Notes to Financial Statements (continued)
3. Investments (continued)
accordance with the ESOP allocation. Participants do not have any investment
discretion regarding the ESOP stock allocated to their accounts. Participants
can direct the voting of ESOP stock allocated to their account. The Secondary
Trustee votes any unallocated ESOP stock and any allocated ESOP stock for which
the Secondary Trustee did not receive voting directions proportionately in
accordance with the voting directions that were received. As of December 31,
2000, 600,000 shares in total have been released from collateral. A total of
300,000 shares were allocated to participant accounts in February, 2001 and the
remaining 300,000 shares were allocated in February, 2000.
During 2000, the Plan's investments (including investments bought, sold and held
during the period) appreciated (depreciated) in value as follows:
Registered investment companies $ (8,577,048)
Common stock 101,159,196
--------------
$ 92,582,148
==============
The fair value of individual investments that represent 5% or more of the Plan's
net assets at December 31 are:
2000
--------------
Columbia/HCA Healthcare Corporation
Common Stock $ 98,412,477
Triad Hospitals, Inc. Common Stock 114,501,896
Core Equity Fund 69,121,785
PIMCO Total Return Fund 46,979,208
PRIMCO Stable Value Fund 44,027,509
Berger Small Cap Value Investment Fund 36,365,818
1999
--------------
Columbia/HCA Healthcare Corporation
Common Stock $ 78,938,856
Triad Hospitals, Inc. Common Stock 48,402,677
Core Equity Fund 83,332,264
PIMCO Total Return Fund 48,299,692
PRIMCO Stable Value Fund 43,935,745
Berger Small Cap Value Investment Fund 30,784,563
Putnam International Growth A Fund 20,489,502
10
Triad Hospitals, Inc.
Retirement Savings Plan
Notes to Financial Statements (continued)
4. Note Payable to Triad
In June 1999, the Plan borrowed $34,500,000 from the Company and used the
proceeds to purchase the ESOP stock (see Note 3). The Triad Note is to be repaid
annually in equal annual installments of $4,669,768 over a period of ten years
at 6 1/2% interest. The Triad Note requires the Company to make Employer
Retirement Contributions in amounts based on the schedule of the required
payments. The Triad Note is collateralized by the ESOP stock. The Company has no
rights against the shares once the ESOP stock is allocated to participant
accounts. As of December 31, 2000, payments due under the Triad Note and the
schedule for release of ESOP stock from collateral was as follows:
Stock
Payments Released
--------------------------------------
2001 $ 4,669,768 300,000
2002 4,669,768 300,000
2003 4,669,768 300,000
2004 4,669,768 300,000
2005 4,669,768 300,000
Thereafter 14,009,306 900,000
5. Non-Participant Directed Investments
Information about the net assets and the significant components of the changes
in net assets relating to the non-participant-directed investments is as
follows:
December 31
2000 1999
--------------------------------
Net assets:
Triad Hospitals, Inc. common stock $ 97,260,443 $ 45,375,000
Note payable to Triad (28,433,057) (31,082,466)
--------------------------------
$ 68,827,386 $ 14,292,534
================================
11
Triad Hospitals, Inc.
Retirement Savings Plan
Notes to Financial Statements (continued)
5. Non-Participant Directed Investments (continued)
Year Ended
December 31, 2000
--------------------
Changes in Net Assets:
Net appreciation in fair value of investments $ 52,304,031
Interest 208
Employer retirement contribution 4,669,768
Benefits paid to participants (428,147)
Interest expense (2,020,359)
Interfund transfers 9,850
Administrative expenses (499)
--------------------
$ 54,534,852
====================
6. Related Party Transactions
Certain plan investments are managed by an affiliate of the Trustee. Certain
other plan investments are shares of the Triad common stock and of Columbia/HCA
common stock. Columbia/HCA provides various services to the Company, including
payroll processing.
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 would become 100% vested with regard to their Employer Matching,
Retirement and Supplemental Contributions.
8. Income Tax Status
The Plan has received a determination letter from the Internal Revenue Service
dated November 7, 2000, stating that the Plan is qualified under Section 401(a)
of 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.
12
Triad Hospitals, Inc.
Retirement Savings Plan
Notes to Financial Statements (continued)
9. Reconciliation of Financial Statements to Form 5500
The following is a reconciliation of net assets available for benefits per the
financial statements at December 31 to Form 5500:
2000 1999
---------------------------
Net assets available for benefits per the
financial statements $432,209,142 $356,593,970
Amounts allocated to withdrawing participants (734,663) (736,614)
---------------------------
Net assets available for benefits per the Form 5500 $431,474,479 $355,857,356
===========================
The following is a reconciliation of benefits paid to participants per the
financial statements for the year ended December 31, 2000 to Form 5500:
Benefits paid to participants per the financial statements $ 46,210,635
Amounts allocated to withdrawing participants at December 3l, 2000 734,663
Amounts allocated to withdrawing participants at December 3l, 1999 (736,614)
------------
Benefits paid to participants per Form 5500 $ 46,208,684
============
Amounts allocated to withdrawing participants are recorded on the Form 5500 for
benefit payments that have been processed and approved for payment prior to
December 31, but not yet paid as of that date.
10. Subsequent Event
On April 27, 2001, the Company acquired Quorum Health Group, Inc. (Quorum).
Individuals who were employed by Quorum prior to the acquisition and remain
employees of entities previously owned by Quorum after the acquisition who are
eligible for participation in the Quorum 401(k) Plan are excluded from
participation in the Plan.
13
Supplemental Schedule
Triad Hospitals, Inc.
Retirement Savings Plan
Schedule H; Line 4i - Schedule of Assets (Held At End of Year)
EIN: 75-2816101
Plan #: 001
December 31, 2000
(c)
(b) Description of Investment (e)
Identity of Issue, Borrower, Including Maturity Date, Rate (d) Current
(a) or Similar Party of Interest, Par or Maturity Cost Value
Value
----------------------------------------------------------------------------------------------------------------------------------
* Columbia/HCA Healthcare Corporation Columbia/HCA Healthcare
Corporation Common Stock N/A $ 98,412,477
* Triad Hospitals, Inc. Triad Hospitals, Inc. Common Stock
(ESOP stock/nonparticipant-
directed) $34,349,178 97,260,443
* Triad Hospitals, Inc. Triad Hospitals, Inc. Common Stock N/A 17,241,453
LifePoint Hospital, Inc. LifePoint Hospitals, Inc. Common
Stock N/A 6,166,779
J.P. Morgan & Co. Inc. and
Putnam Investments Core Equity Fund 69,121,785
Pacific Investment Management Company PIMCO Total Return Fund N/A 46,979,208
Invesco PRIMCO Stable Value Fund N/A 44,027,509
Berger Funds Berger Small Cap Value
Investment Fund N/A 36,365,818
Putnam Investments Putnam International Growth A N/A 18,383,762
Fund
Barclays Global Investors BGI Equity Index H Fund N/A 15,923,060
* The Northern Trust Company Collective Short-Term Investment
Fund 2,202,062
* Participants General purpose loans, interest
rates ranging from 7% to 9.5% 6,510,280
------------
$458,594,636
============
* Party-in-interest
N/A Reporting not required because investment is participant-directed.
14
SIGNATURES
----------
Pursuant to the requirements of the Securities Exchange Act of 1934, the
trustees have duly caused this annual report to be signed on its behalf by the
undersigned hereunto duly authorized.
Triad Hospitals, Inc. Retirement Savings Plan
Date: June 28, 2001 By /s/ Rickey E. Thomason
-----------------------------------
Rickey E. Thomason
Vice President of Human Resources
15
EXHIBIT INDEX
Exhibit Seq.
Number Description
------ -----------
23.1 Consent of Independent Auditors - Ernst & Young LLP
23.2 Consent of Independent Auditors - PricewaterhouseCoopers LLP