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UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 11-K
ANNUAL REPORT
PURSUANT TO SECTION 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
[X] Annual Report Pursuant to Section 15(d) of the Securities Exchange
Act of 1934
For the fiscal year ended December 31, 2000
Commission file number 01-13031
A. Full title of the plan and the address of the plan, if different from that
of the issuer named below:
American Retirement Corporation 401(k) Retirement Plan
B. Name of issuer of the securities held pursuant to the plan and the address
of its principal executive office:
American Retirement Corporation
111 Westwood Place, Suite 200
Brentwood, TN 37027
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CONTENTS:
PAGE
Independent Auditors' Report 1
Statements of Net Assets Available for Benefits at December 31, 2000 and 1999 2
Statements of Changes in Net Assets Available for Benefits for the years
ended December 31, 2000 and 1999 3
Notes to Financial Statements 4
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INDEPENDENT AUDITORS' REPORT
The 401(k) Administrative Committee
American Retirement Corporation
401(k) Retirement Plan:
We have audited the accompanying statements of net assets available for benefits
of the American Retirement Corporation 401(k) Retirement Plan (the "Plan") as of
December 31, 2000 and 1999, and the related statements of changes in net assets
available for benefits for the years then ended. These financial statements and
schedule 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, the financial statements referred to above present fairly, in
all material respects, the net assets available for benefits of the Plan as of
December 31, 2000 and 1999, 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 performed for the purpose of forming an opinion on the basic
financial statements taken as a whole. The supplemental schedule of assets held
for investment purposes at end of year 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. This 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 basis financial statements taken as a whole.
/s/ KPMG LLP
Nashville, Tennessee
June 8, 2001
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AMERICAN RETIREMENT CORPORATION
401(K) RETIREMENT PLAN
Statements of Net Assets Available for Benefits
December 31, 2000 and 1999
2000 1999
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Investments, at fair value:
Mutual funds:
Putnam Investors Fund $ 686,230 241,944
Classic Balanced Fund 1,254,134 1,161,215
Classic Capital Growth Fund 3,942,055 4,204,316
Classic Mid-Cap Equity Fund 1,439,818 1,254,998
Employee Benefit Stable Asset Fund 1,915,794 1,751,668
Small Cap Growth Stock Fund 1,155,502 841,972
Classic Value Income Stock Fund 1,982,661 1,826,235
Vanguard 500 Index Fund 954,062 575,971
Common Stock:
American Retirement Corporation Common Stock 373,939 --
Participant loans receivable 92,998 75,220
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Total investments 13,797,193 11,933,539
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Receivables:
Employer's contribution 188,105 59,337
Participants' contributions 31,892 14,590
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Total receivables 219,997 73,927
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Cash 356 --
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Excess employee contributions payable 70,204 --
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Net assets available for benefits $13,947,342 12,007,466
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See accompanying notes to financial statements
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AMERICAN RETIREMENT CORPORATION
401(K) RETIREMENT PLAN
Statements of Changes in Net Assets Available for Benefits
Years ended December 31, 2000 and 1999
2000 1999
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Additions to net assets attributed to:
Investment income:
Interest and dividend income of mutual funds $ 953,672 735,080
Net depreciation in fair value of mutual funds (743,350) (8,457)
Net depreciation in fair value of common stock (189,888) --
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Total investment income 20,434 726,623
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Contributions:
Participants 2,440,265 2,393,869
Employer 788,623 59,337
Participant rollovers 126,720 235,485
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Total contributions 3,355,608 2,688,691
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Total additions 3,376,042 3,415,314
Deductions from net assets attributed to:
Benefits paid to participants 1,436,166 1,611,676
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Net increase in net assets available for benefits 1,939,876 1,803,638
Net assets available for benefits:
Beginning of year 12,007,466 10,203,828
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End of year $ 13,947,342 12,007,466
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See accompanying notes to financial statements.
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AMERICAN RETIREMENT CORPORATION 401(k) RETIREMENT PLAN
NOTES TO FINANCIAL STATEMENTS
DECEMBER 31, 2000 AND 1999
(1) DESCRIPTION OF PLAN
The following is a brief description of the American Retirement
Corporation 401(k) Retirement Plan ("the Plan"). Participants should
refer to the Plan agreement for a more complete description of the Plan's
provisions.
(A) GENERAL
The Plan is a defined contribution plan, sponsored by American
Retirement Corporation ("Company" or "Employer") subject to and
compliant with the provisions of the Employee Retirement Income
Security Act of 1974 (ERISA).
(B) ELIGIBILITY
Employees of the Company are eligible to participate in the Plan
if they meet the following criteria:
(1) Are a permanent employee of the Company;
(2) Are employed for three consecutive months, working a minimum
of 250 hours during that three month period; and
(3) Have attained 18 years of age.
(C) CONTRIBUTIONS
Participants may contribute up to 20% of their pre-tax annual
compensation to the Plan, not to exceed $10,500. Contributions are
made through payroll deductions on a pre-tax basis. Participants
may also make after-tax contributions to the Plan in any amount,
and rollover and transfer contributions are permitted.
Participants may change their contribution elections quarterly on
the first business day of the first, fourth, seventh, or tenth
months of the Plan's fiscal year. If contributions are terminated,
payroll withholdings may not be reinstated until the first
business day of the Plan's next fiscal quarter.
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Discretionary Employer contributions are made quarterly up to 2%
of the eligible employees' quarterly compensation. Any
discretionary Employer contribution funded in an amount exceeding
2% of eligible employees' compensation shall be allocated based on
proportionate elective deferrals of each eligible employee who
defers. The Employer may also contribute an additional amount
determined in its sole judgment. This additional contribution, if
any, is allocated to only non-highly compensated participants, in
proportion to each eligible employee's compensation as a ratio of
all eligible employees' compensation.
(D) FORFEITURES
Forfeitures of terminated participant's nonvested accounts are
credited to the Company and used to offset employer contributions.
(E) STOCK CONTRIBUTIONS
During the year ended December 31, 2000, the Employer
contributions were funded in Company stock. Stock contributions
were allocated to participants based upon the proportionate
elective deferrals of each participant. During the year, 122,603
shares were contributed, at a fair value of $597,053. At December
31, 2000, the Company's closing stock price was $3.05, reflecting
depreciation in the Plan investment of $189,888.
(F) PARTICIPANT ACCOUNTS
Each participant's account is credited with the participant's
contributions and allocations of (a) the Company's contributions
and (b) Plan earnings or losses. Allocations are based on
participant earnings or account balances, as defined. The benefit
to which a participant is entitled is the benefit that can be
provided from the participant's vested account.
(G) VESTING
Participants are immediately vested in their contributions,
rollovers and transfer contributions plus or minus any earnings or
losses thereon. Participants become vested in, and have a
nonforfeitable right to, their Employer contributions in
accordance with the following vesting schedule:
YEARS OF SERVICE PERCENT VESTED
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1 20%
2 40
3 60
4 80
5 100
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Notwithstanding the foregoing, a participant shall be 100% vested
in, and have a nonforfeitable right to the Employer contributions
upon death, permanent disability, the attainment of early or
normal retirement age, or upon termination of the Plan. Normal
retirement age, for all purposes of the Plan, is the participant's
65th birthday.
(H) INVESTMENT OPTIONS
Contributions to the Plan are invested, according to the
participants' elections, in 5% increments in the following eight
mutual funds: Putnam Investors Fund, Classic Balanced Fund,
Classic Capital Growth Fund, Classic Mid-Cap Equity Fund, Employee
Benefit Stable Asset Fund, Small Cap Growth Stock Fund, Classic
Value Income Stock Fund, and Vanguard 500 Index Fund, as well as
American Retirement Corporation Common Stock.
Participants are eligible to obtain loans of up to 50% of their
vested account balances. Interest on such loans is prime plus 200
basis points. Loan transactions are treated as a transfer to
(from) the mutual funds from (to) the Participant Loan Fund.
Repayments are made via payroll deductions for a period not to
exceed five years.
(I) PAYMENT OF BENEFITS
Distributions from the Plan are payable upon retirement, death,
disability or termination. Participants are eligible to receive
hardship withdrawals which meet certain IRS regulations. Upon
receiving a hardship withdrawal, a participant's contributions to
the Plan will automatically be suspended for a period of twelve
months. A participant can elect to receive benefits in a lump-sum
payment or installment payments.
(J) PLAN TERMINATION
Terminating participants having a vested account balance of $3,500
or more may defer the payment of the benefits until April 1 of the
calendar year following the calendar year during which they attain
age 70-1/2. Terminating participants forfeit all non-vested
Employer contributions. If the employee is subsequently rehired
within five years of the termination and repays the withdrawn
amount to the Plan within five years of re-employment, the
forfeitures will be restored to the participant's account.
Although they have expressed no intent to do so, the Board of
Directors of American Retirement Corporation has the right to
terminate the Plan or completely discontinue contributions under
the Plan at any time.
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(K) ADMINISTRATIVE EXPENSES
Costs associated with administering the Plan are paid by American
Retirement Corporation and are not considered Employer
contributions.
(2) SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
(A) BASIS OF PRESENTATION
The accompanying financial statements of the Plan have been
prepared on the accrual method of accounting.
(B) INVESTMENT VALUATION AND INCOME RECOGNITION
The investments in mutual funds are carried at fair value based
upon the closing market quotations of the underlying securities in
the funds. The investment in American Retirement common stock is
carried at fair value based upon the closing market quotation of
the stock. The participant loans receivable are reported at cost
which approximates fair value as reported to the Plan by the
Trustee. Purchases and sales of securities are recorded on a
trade-date basis. Interest income is recorded on the accrual
basis.
(C) PAYMENT OF BENEFITS
Benefits are recorded when paid.
(D) FEDERAL INCOME TAX STATUS
The Plan was established under a prototype standardized profit
sharing plan with a CODA (Cash Or Deferred Arrangement) that has
received a tax determination letter from the Internal Revenue
Service indicating that the prototype Plan is qualified under the
provisions of Section 401 of the Internal Revenue Code. To date,
the Employer has not requested a separate determination letter.
The 401(k) Administrative Committee believes that the Plan is
currently being operated in compliance with the requirements of
the Internal Revenue Code.
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(E) USE OF ESTIMATES
The Plan Administrator has made certain estimates and assumptions
relating to the reporting of assets and liabilities and the
disclosure of contingent assets and liabilities to prepare these
financial statements in conformity with accounting principles
generally accepted in the United States of America. Actual results
could differ from those estimates.
(3) INVESTMENTS
Under terms of the Trust Agreement between SunTrust Bank of Nashville,
National Association (the Trustee) and the Company, the Trustee manages
six trust funds on behalf of the Plan. All investments of the Plan are
held by the Trustee, which has been granted authority concerning
purchases and sales of assets in the trust funds.
Fair value of investments that represent 5% or more of the Plan's net
assets available for benefits at December 31, 2000 and 1999 are as
follows:
DESCRIPTION 2000 1999
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Classic Balanced Fund $1,254,134 1,161,215
Classic Capital Growth Fund 3,942,055 4,204,316
Classic Mid-Cap Equity Fund 1,439,818 1,254,998
Employee Benefit Stable Asset Fund 1,915,794 1,751,668
Small Cap Growth Stock Fund 1,155,502 841,972
Classic Value Income Stock Fund 1,982,661 1,826,235
Vanguard 500 Index Fund 954,062 575,971
(4) SUBSEQUENT EVENT
Subsequent to the year ended December 31, 2000, the 401(k) Administrative
Committee voted to change the Trustee of the Plan from SunTrust Bank to
Zurich Scudder Investments. This change became effective May 1, 2001.
Significant changes to the Plan include different investment options,
employer contribution provisions, eligibility provisions, and participant
loans. Participants should refer to the Zurich Scudder Plan agreement for
a more complete description of the Plan's provisions.
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SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the 401(k)
Administrative Committee has duly caused this annual report to be signed on its
behalf by the undersigned hereunto duly authorized.
American Retirement Corporation
401(k) Retirement Plan
Date: June 29, 2001 By: /s/ Terry Frisby
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Terry Frisby
Chairman of the American
Retirement Corporation 401(k)
Administrative Committee
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EXHIBIT INDEX
Exhibit
Number Description
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10 Schedule of Assets Held for Investment Purposes at End of
Year for the Plan Year Ended December 31, 2000
23 Accountants' Consent
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