SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
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ANNUAL REPORT
PURSUANT TO SECTION 15(D) OF THE
SECURITIES EXCHANGE ACT OF 1934
FORM 11-K
[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 Report Pursuant To Section 13 Or 15(d) Of The
SecuritieS Exchange Act Of 1934
For the transition period from to
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Commission File Number 1-13154
A. Full title of the plan and the address of the plan, if different from
that of the issuer named below:
AMERICAN MEDICAL SECURITY
RETIREMENT SAVINGS PLAN
B. Name of issuer of the securities held pursuant to the plan and the
address of its principal executive office:
AMERICAN MEDICAL SECURITY GROUP, INC.
3100 AMS Boulevard
Green Bay, WI 54313
American Medical Security Retirement Savings Plan
Annual Report on Form 11-K
For the Fiscal Year Ended December 31, 2001
TABLE OF CONTENTS PAGE
Financial Statements and Supplemental Schedule
Years ended December 31, 2001 and 2000
Report of Independent Auditors.........................................3
Financial Statements
Statements of Net Assets Available for Benefits........................4
Statements of Changes in Net Assets Available for Benefits.............5
Notes to Financial Statements..........................................6
Supplemental Schedule
Schedule H, Line 4i--Schedule of Assets (Held at End of Year).........10
Signatures....................................................................11
Exhibit 23 - Consent of Independent Auditors..................................12
2
Report of Independent Auditors
The Administrative Committee
American Medical Security
Retirement Savings Plan
We have audited the accompanying statements of net assets available for benefits
of American Medical Security 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
March 15, 2002
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American Medical Security Retirement Savings Plan
Statements of Net Assets Available for Benefits
DECEMBER 31
2001 2000
-------------------------------------
ASSETS
Investments, at fair value (NOTE 3):
Mutual funds $43,573,330 $45,034,467
Common stock of American Medical
Security Group, Inc. 571,113 254,806
Participant loans receivable 1,041,658 984,340
-------------------------------------
Net assets available for benefits $45,186,101 $46,273,613
=====================================
SEE ACCOMPANYING NOTES.
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AMERICAN MEDICAL SECURITY RETIREMENT SAVINGS PLAN
Statements of Changes in Net Assets Available for Benefits
YEAR ENDED DECEMBER 31
2001 2000
----------------------------------
Investment loss:
Net realized and unrealized depreciation
in fair value of investments (NOTE 3) $ (3,996,410) $ (2,471,486)
Interest and dividends 141,386 49,824
----------------------------------
(3,855,024) (2,421,662)
Less investment expense 148,206 149,435
----------------------------------
(4,003,230) (2,571,097)
Contributions:
Employers' 1,906,549 1,934,006
Employees' 5,045,519 5,028,871
----------------------------------
6,952,068 6,962,877
Other 5,864 8,375
----------------------------------
Total additions 2,954,702 4,400,155
Benefits paid 4,042,214 4,413,111
----------------------------------
Net decrease (1,087,512) (12,956)
Net assets available for benefits at 46,273,613 46,286,569
beginning of year ----------------------------------
Net assets available for benefits at $ 45,186,101 $ 46,273,613
end of year ==================================
SEE ACCOMPANYING NOTES.
5
American Medical Security Retirement Savings Plan
Notes to Financial Statements
December 31, 2001
1. DESCRIPTION OF THE PLAN
The following description of the American Medical Security Retirement Savings
Plan (the Plan) provides only general information. Participants should refer to
the Plan document for a complete description of the Plan's provisions.
GENERAL
The Plan is a contributory defined contribution plan covering all full-time and
part-time employees of American Medical Security Group, Inc. (AMSG) and its
subsidiaries, American Medical Security, Inc. and Nurse Healthline, Inc.
(collectively the Company or Employer). The Plan is subject to the provisions of
the Employee Retirement Income Security Act of 1974 (ERISA).
PARTICIPATION AND VESTING
In 2001, employees are eligible to become contributing participants in the Plan
and receive matching contributions on the first of the following month after
reaching the age of eighteen and after 30 days of eligible service. Employees
with 30 days of service that are employed on the last day of the Plan year are
entitled to receive profit-sharing contributions for the Plan year. In 2000,
participants were eligible for Company profit-sharing contributions after six
months of service, and must have worked 1,000 hours in a Plan year to receive a
profit-sharing contribution.
Participants are immediately vested in their contributions plus actual earnings
thereon. New participants do not vest in Company contributions until three years
of service, at which time they become fully vested. Participants in the Plan
prior to January 1, 2000, vest in Company contributions according to the
following schedule (1,000 hours of service are required to constitute a year of
vesting service):
Years of Vesting Service Vesting Percentage
---------------------------------- -------------------------
1 0%
2 30
3 100
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American Medical Security Retirement Savings Plan
Notes to Financial Statements (continued)
1. DESCRIPTION OF THE PLAN (CONTINUED)
The nonvested portion of the Company's profit sharing and matching contributions
are forfeited when a participant terminates employment. Profit-sharing
forfeitures are allocated to the remaining Plan participants, while matching
contribution forfeitures are used to reduce future matching contributions.
During 2001 and 2000, the Company utilized forfeited amounts of $133,000 and
$75,000, respectively, to offset the required matching contribution.
CONTRIBUTIONS, WITHDRAWALS AND LOANS
Plan participants are permitted to make contributions on a before-tax basis each
payroll period of 2% to 18% of base compensation, subject to the maximum amount
allowed by the Internal Revenue Code (IRC). Participants can change their
before-tax contribution percentage each quarter. Participants direct current
contributions and accumulated contributions and earnings between funds offered
through the Plan.
The Company contributes 60% of the first 6% of compensation that a participant
contributes to the Plan. Additional amounts may be contributed at the option of
the Company. Effective January 1, 2002, the Company has increased the matching
contribution formula from 60% to 70% of the first 6% of participants elective
deferrals.
The Company may make a yearly profit sharing contribution in an amount to be
determined each year. During 2001 and 2000, the Company did not make profit
sharing contributions to the plan.
Distributions due to retirement, death, permanent disability and termination of
employment are provided for as defined within the Plan.
Participants may borrow from their fund accounts a minimum of $1,000 up to a
maximum of the lesser of one-half of their vested account balance or $50,000.
The loan is secured by the balance in the participant's account and bears
interest at a rate commensurate with prevailing rates as determined by the Plan
administrator. Principal and interest are repaid through payroll deductions.
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American Medical Security Retirement Savings Plan
Notes to Financial Statements (continued)
1. DESCRIPTION OF THE PLAN (CONTINUED)
TERMINATION OF THE PLAN
The Company has established the Plan with the intention and expectation that the
Employer will be able to make contributions indefinitely, but the Employer
neither is, nor shall, be under any obligation or liability whatsoever to
maintain the Plan for any given length of time. The Company retains the right to
modify or terminate the Plan at any time, but may not retroactively reduce the
share of any participant or cause the Plan's assets to revert to the Company
unless required by law. In the event of termination, the balance of each
participant's account would become fully vested, and all assets would be
distributed to the participants and beneficiaries.
EXPENSES
Administrative expenses of the Plan are paid from Plan assets.
2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
INVESTMENT VALUATION AND ACCOUNTING METHOD
The Plan's financial statements are prepared on the accrual basis of accounting.
The Plan's investments are stated at fair value. The fair value of mutual fund
shares and AMSG common stock are based on the quoted market values on the last
business day of the Plan year. The fair value of the participation units in the
common trust fund is based on quoted redemption values. Participant loans are
stated at their unpaid principal balance, which approximates fair value.
USE OF ESTIMATES
The preparation of financial statements in conformity with accounting principles
generally accepted in the United States requires the Company to make estimates
that affect the amounts reported in the Plan's financial statements and
accompanying notes. Actual results could differ from these estimates.
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American Medical Security Retirement Savings Plan
Notes to Financial Statements (continued)
3. INVESTMENTS
The following individual investments represent more than 5% of the Plan's net
assets available for benefits:
DECEMBER 31
2001 2000
--------------------------------
Investments at fair value as determined by
quoted market price or redemption value:
MCM Stable Value Fund $ 5,643,420 $ 5,114,719
Scudder Growth & Income Fund 5,961,180 8,369,765
Credit Suisse Emerging Growth Fund 5,047,100 6,807,042
Alleghany Montag & Caldwell Growth Fund 10,916,792 11,144,704
Mercury HW International Value 3,235,770 3,824,071
Neuberger Berman Genesis Trust 4,104,739 3,735,904
The Plan's investments, including gains and losses on investments bought, sold
and held during the year, appreciated (depreciated) in fair value as follows:
YEAR ENDED DECEMBER 31
2001 2000
---------------------------------
Mutual funds $(4,296,267) $(2,484,095)
Common stock of American Medical Security 299,857 12,609
Group, Inc. ---------------------------------
$(3,996,410) $(2,471,486)
=================================
4. INCOME TAX STATUS
The Plan has received a determination letter from the Internal Revenue Service
dated January 28, 2002 stating that the Plan is qualified under Section 401(a)
of the IRC and, therefore, the related trust is exempt from taxation. Once
qualified, the Plan is required to operate in conformity with the IRC to
maintain its qualification. The Plan was amended subsequent to the IRS
determination letter. The Plan administrator believes the Plan is being operated
in compliance with the applicable requirements of the IRC and, therefore,
believes that the Plan is qualified and the related trust is tax exempt.
5. TRANSACTIONS WITH PARTIES IN INTEREST
Investment fees incurred are paid by participants. In addition, certain services
are provided by the Plan sponsor at no cost to the Plan.
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American Medical Security Retirement Savings Plan
Employer Identification Number 39-1431799
Plan Number 001
Schedule H, Line 4i - Schedule of Assets (Held at End of Year)
December 31, 2001
IDENTITY OF ISSUER, BORROWER/ UNITS/ CURRENT
DESCRIPTION OF INVESTMENT SHARES VALUE
--------------------------------------------------------------------------------
American Century - International Growth
Investor 21,776 $ 173,559
Dreyfus Appreciation 82 3,102
Dreyfus GNMA Fund 65,295 952,656
Dreyfus S&P 500 24,686 824,990
Gabelli Equity Income 144,846 2,081,430
Loomis Sayles Bond Fund Institutional 15 155
Mercury HW International Value 166,193 3,235,770
Alleghany Montag & Caldwell Growth Fund 452,603 10,916,792
Ing Emerging Countries Fund Class A 15 209
MCM Stable Value Advisory 458,276 5,643,420
INVESCO Small Company Growth 34,238 415,651
Janus Twenty Fund 13,952 536,577
Neuberger Berman Genesis Trust 141,008 4,104,739
Strong Corporate Bond 111,260 1,168,235
Scudder Growth & Income Fund 283,057 5,961,180
Credit Suisse Emerging Growth Fund 186,999 5,047,100
Credit Suisse Global Fixed Income 118,311 1,134,616
SSGA Emerging Markets 155,159 1,373,159
American Medical Security Group, Inc.
common stock* 46,965 571,113
Participant loans receivable (interest
rates range from 9.25% to 9.75%)
1,041,658
----------------
$ 45,186,101
================
*Represents a party in interest to the Plan.
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SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the
Administrative Committee of the American Medical Security Retirement Savings
Plan has duly caused this annual report to be signed on its behalf by the
undersigned hereunto duly authorized.
DATE: June 21, 2002
AMERICAN MEDICAL SECURITY
RETIREMENT SAVINGS PLAN
/S/ GARY D. GUENGERICH
Gary D. Guengerich
American Medical Security Retirement
Savings Plan Administrative
Committee Member
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