SECURITIES AND EXCHANGE COMMISSION
Washington, DC 20549
FORM 11-K
ANNUAL REPORT
PURSUANT TO SECTION 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
(Mark One):
[X] ANNUAL REPORT PURSUANT TO SECTION 15(d) OF THE SECURITIES EXCHANGE ACT OF
1934 [NO FEE REQUIRED, EFFECTIVE OCTOBER 7, 1996].
For the fiscal year ended December 31, 2003
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 0-26762
A. Full title of the plan and the address of the plan, if different
from that of the issuer named below: PEDIATRIX MEDICAL GROUP THRIFT AND PROFIT
SHARING PLAN
B. Name of issuer of the securities held pursuant to the plan and the
address of its principal executive office:
PEDIATRIX MEDICAL GROUP, INC.
1301 Concord Terrace
Sunrise, Florida 33323-2825
PEDIATRIX MEDICAL GROUP
THRIFT AND PROFIT SHARING PLAN
DECEMBER 31, 2003 AND 2002
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TABLE OF CONTENTS
PAGE(S)
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REPORT OF INDEPENDENT REGISTERED CERTIFIED PUBLIC ACCOUNTING FIRM..........1
FINANCIAL STATEMENTS
Statements of Net Assets Available for Benefits as of December 31,
2003 and 2002............................................................2
Statements of Changes in Net Assets Available for Benefits for
the Years Ended December 31, 2003 and 2002...............................3
Notes to Financial Statements............................................4-9
SUPPLEMENTAL SCHEDULE
Schedule H, Line 4i - Schedule of Assets (Held at End of Year)............10
* Other schedules required by Section 2520.103-10 of the Department of Labor
Rules and Regulations for Reporting and Disclosure under the Employment
Retirement Income Security Act of 1974 have been omitted because they are not
applicable.
REPORT OF INDEPENDENT REGISTERED CERTIFIED PUBLIC ACCOUNTING FIRM
To the Participants and Administrator of the
Pediatrix Medical Group
Thrift and Profit Sharing Plan
In our opinion, the accompanying statements of net assets available for benefits
and the related statements of changes in net assets available for benefits
present fairly, in all material respects, the net assets available for benefits
of the Pediatrix Medical Group Thrift and Profit Sharing Plan as amended and
restated (the "Plan") at December 31, 2003 and 2002, 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. 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 statements in accordance with
standards of the Public Company Accounting Oversight Board (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, 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 conducted for the purpose of forming an opinion on the basic
financial statements taken as a whole. The supplemental Schedule H, Line 4i -
Schedule of Assets (Held 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. 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.
/s/ PricewaterhouseCoopers LLP
Ft. Lauderdale, Florida
June 18, 2004
1
PEDIATRIX MEDICAL GROUP
THRIFT AND PROFIT SHARING PLAN
STATEMENTS OF NET ASSETS AVAILABLE FOR BENEFITS
AS OF DECEMBER 31, 2003 AND 2002
--------------------------------------------------------------------------------
2003 2002
----------- -----------
ASSETS
Investments, at fair value $87,498,631 $54,993,664
Receivables
Employer contributions 6,044,365 5,598,339
Participant contributions 318,837 347,274
----------- -----------
Total assets 93,861,833 60,939,277
LIABILITIES
Distribution payable 1,305 --
----------- -----------
Net assets available for benefits $93,860,528 $60,939,277
=========== ===========
The accompanying notes are an integral part of these financial statements.
2
Pediatrix Medical Group
Thrift and Profit Sharing Plan
Statements of Changes in Net Assets Available for Benefits
For the Years Ended December 31, 2003 and 2002
--------------------------------------------------------------------------------
2003 2002
------------ ------------
ADDITIONS TO NET ASSETS ATTRIBUTED TO
Investment income
Interest and dividend income $ 1,077,410 $ 804,648
Net appreciation (depreciation) in the fair value of investments 15,447,306 (7,776,022)
------------ ------------
Net investment gain (loss) 16,524,716 (6,971,374)
------------ ------------
CONTRIBUTIONS
Employer 6,044,365 5,598,339
Participants 12,641,012 10,634,447
------------ ------------
Total contributions 18,685,377 16,232,786
------------ ------------
Total additions 35,210,093 9,261,412
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DEDUCTIONS FROM NET ASSETS ATTRIBUTED TO
Benefits paid to participants 2,276,439 2,091,811
Administrative expenses 12,403 8,656
------------ ------------
Total deductions 2,288,842 2,100,467
------------ ------------
Net increase prior to transfer from other plan 32,921,251 7,160,945
------------ ------------
TRANSFER FROM OTHER PLAN
Transfer from Magella Healthcare Inc. 401(k) Plan -- 9,185,348
------------ ------------
Net increase 32,921,251 16,346,293
NET ASSETS AVAILABLE FOR BENEFITS
Beginning of year 60,939,277 44,592,984
------------ ------------
End of year $ 93,860,528 $ 60,939,277
============ ============
The accompanying notes are an integral part of these financial statements.
3
PEDIATRIX MEDICAL GROUP
THRIFT AND PROFIT SHARING PLAN
NOTES TO FINANCIAL STATEMENTS
DECEMBER 31, 2003 AND 2002
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1. DESCRIPTION OF PLAN
Pediatrix Medical Group, Inc. (the "Company") sponsors the Pediatrix
Medical Group Thrift and Profit Sharing Plan as amended and restated
(the "Plan") which was adopted on January 1, 1991 and restated as
amended in November 2002.
Effective January 2, 2002, the Magella Healthcare Inc. 401(k) Plan (the
"Magella Plan") merged with the Plan. Accordingly, all of the assets of
the Magella Plan were transferred to the Plan on such date.
The following description of the Plan is provided for general
information purposes only. More complete information regarding items
such as vesting, benefit provisions and plan termination may be found in
the Plan document which is available to all participants upon request.
GENERAL
The Plan is a tax qualified defined contribution plan covering
substantially all of the Company's eligible employees and the employees
of the professional associations whose operations are consolidated with
the Company. The Plan is subject to the provisions of the Employee
Retirement Income Security Act of 1974 ("ERISA").
ELIGIBILITY AND ENTRY DATA
An employee becomes eligible to participate in the Plan on the first day
of each calendar quarter after having attained age 21.
CONTRIBUTIONS
The Company may, at the discretion of its Board of Directors, contribute
for each participant a matching contribution determined annually based
on a percentage of the participant's pre-tax contributions. In addition,
the Company may also make discretionary profit sharing contributions to
the Plan at amounts determined at the end of the Plan year by the Board
of Directors.
Effective April 1, 2002, participants may elect to make voluntary
pre-tax contributions up to 60 percent of annual compensation including
regular salary and wages, overtime pay, bonuses and commissions through
payroll deductions. Previously, participants had the option to make
voluntary pre-tax contributions, not to exceed 20 percent of their
eligible compensation. Such contributions are excluded from the
participant's taxable income for federal income tax purposes until
received as a withdrawal or distribution from the Plan. Contributions
are subject to certain limitations. The maximum pre-tax contributions
for the years ended December 31, 2003 and 2002 were $12,000 and $11,000,
respectively. In addition to any pre-tax contributions, participants may
make after tax contributions, not to exceed 10 percent of the
participant's compensation.
The Plan provides that participants who are projected to be age 50 or
older by the end of the calendar year and who are making deferral
contributions to the Plan may also make catch-up contributions of up
to $2,000 and $1,000 during the years ended December 31, 2003 and 2002,
respectively.
ROLLOVERS
The Plan accepts rollover contributions from other tax-qualified plans
for those participants who choose to invest in the Plan.
4
PEDIATRIX MEDICAL GROUP
THRIFT AND PROFIT SHARING PLAN
NOTES TO FINANCIAL STATEMENTS
DECEMBER 31, 2003 AND 2002
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PARTICIPANT ACCOUNTS
Each participant's account is credited with the participant's
contribution and an allocation of (a) the Company's discretionary
contributions and (b) the Plan's earnings and losses. Allocation of the
Plan's earnings or losses in each investment option are made to the
individual participant's account based on the ratio of each
participant's current account balance in the respective investment
option to total Plan participants' account balances in the respective
investment option. The benefit to which a participant is entitled is the
benefit that can be provided from the participant's vested account.
INVESTMENT OPTIONS
Upon enrollment in the Plan, a participant may direct contributions to
the Plan in any of the following investment options at December 31,
2003:
o Fidelity Fund - Fund seeks to provide long-term capital growth by
investing in common stock of large companies.
o Fidelity Puritan Fund - Fund seeks to provide income and capital
growth by investing in a diversified portfolio of domestic and
foreign common stocks, preferred stocks and bonds.
o Fidelity Contrafund - Fund seeks to provide capital appreciation by
investing in common stocks of undervalued companies.
o Fidelity Investment Grade Bond Fund - Fund seeks to provide a high
level of current income by investing in investment-grade,
fixed-income securities.
o Fidelity Growth and Income Portfolio - Fund seeks to provide a high
total return through a combination of current income and capital
appreciation by investing primarily in U.S. and foreign stocks.
o Fidelity Overseas Fund - Fund seeks to provide long-term growth of
capital by investing in foreign securities.
o Fidelity Blue Chip Growth Fund - Fund seeks to provide long-term
capital growth by investing in a diversified portfolio of common
stocks of established domestic and foreign companies considered
industry leaders.
o Fidelity Worldwide Fund - Fund seeks to provide capital growth by
investing in securities issued anywhere in the world.
o Fidelity Equity-Income II Fund - Fund seeks to provide reasonable
income by investing in income-producing domestic and foreign equity
securities.
o Fidelity Ginnie Mae Fund - Fund seeks to provide high current income
by investing in U.S. Government securities and instruments related
to U.S. Government securities.
o Fidelity Managed Income Portfolio - Fund seeks preservation of
capital while earning interest income by investing in investment
contracts offered by major insurance companies and other approved
financial institutions and in certain types of fixed income
securities.
o Spartan U.S. Equity Index Fund - Fund seeks to provide capital
appreciation by investing mainly in common stocks included in the
S&P 500 and lending securities.
o Fidelity Retirement Money Market Portfolio - Fund seeks to provide a
high level of current income by investing in high quality,
short-term money market securities.
5
PEDIATRIX MEDICAL GROUP
THRIFT AND PROFIT SHARING PLAN
NOTES TO FINANCIAL STATEMENTS
DECEMBER 31, 2003 AND 2002
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o Pediatrix Stock Fund - Fund seeks to provide an increase in value of
this investment over the long term by investing in the common stock
of the Company purchased in the open market.
o Neuberger & Berman Genesis Fund - Trust Class - Fund seeks to
provide growth of capital by investing mainly in common stocks of
small-cap companies.
o Invesco Dynamics Fund - Investor Class - Fund seeks to provide an
increase in investment over the long-term through capital growth by
investing primarily in common stocks of U.S. companies traded on
national securities exchanges and the over-the counter market.
o Fidelity Freedom Income Fund - Fund seeks to provide high current
income and, as second objective, capital appreciation by investing
in Fidelity stock, bond, and money market mutual funds.
o Fidelity Freedom 2000 Fund - Fund seeks to provide high total return
by investing approximately 23%, 40% and 37% in Fidelity stock, bond,
and money market mutual funds, respectively.
o Fidelity Freedom 2010 Fund - Fund seeks to provide high total
returns by investing approximately 45%, 45% and 10% in Fidelity
stock, bond, and money market mutual funds, respectively.
o Fidelity Freedom 2020 Fund - Fund seeks to provide high total
returns by investing approximately 70% and 30% in Fidelity stock and
bond mutual funds, respectively.
o Fidelity Freedom 2030 Fund - Fund seeks to provide high total
returns by investing approximately 82% and 18% in Fidelity stock and
bond mutual funds, respectively.
o Fidelity Freedom 2040 Fund - Fund seeks to provide high total
returns by investing approximately 88% and 12% in Fidelity stock
mutual funds and bond mutual funds, respectively.
PAYMENT OF BENEFITS
Upon normal retirement, death, disability or termination, participants
may elect to receive their vested account balance as a lump-sum
distribution; or have their account balance transferred to an individual
retirement account or other qualified plan.
VESTING
Participants are immediately vested in their contributions plus actual
earnings thereon. Vesting in the portion of their accounts related to
the Company's contribution plus related earnings is based on years of
credited service. A participant is fully vested after three years of
credited service as follows:
Vested
Years of Service Percentage
---------------- ----------
Less than 1 0%
1 30%
2 60%
3 100%
6
PEDIATRIX MEDICAL GROUP
THRIFT AND PROFIT SHARING PLAN
NOTES TO FINANCIAL STATEMENTS
DECEMBER 31, 2003 AND 2002
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PARTICIPANTS LOANS
Participants may borrow from their fund accounts a minimum of $1,000 up
to a maximum equal to the lesser of 50 percent of their account balance
or $50,000 reduced by the highest outstanding loan balance in their
account during the prior twelve month period. The loans are
collateralized by the balance in the participant's account and bear
interest at rates ranging between 5.25% and 9.0%, which is commensurate
with local prevailing rates as determined by the Plan Administrator.
Repayments of principal and interest are credited back to the
participant's account through payroll deductions on a minimum of a
quarterly basis. The term of the loan must not exceed five years, except
for qualified home loans, which must not exceed ten years.
FORFEITURES
Forfeitures of the non-vested portion of participant's account balances
related to the Company's contributions are used to offset future Company
contributions. Forfeitures held in the Plan totaled $74,182 and $79,049
at December 31, 2003 and 2002, respectively.
PLAN TERMINATION
While the Company has not expressed any intent to terminate the Plan, it
reserves the right at any time to amend, modify or terminate the Plan
without the consent of any participant or beneficiary. In the event of
such termination, the Plan provides that the participants shall become
100 percent vested in their accounts, including all employer
contributions.
PLAN ADMINISTRATION
The Plan is administered by certain employees of the Company (the "Plan
Administrator"). The Plan's assets were maintained by Fidelity
Management Trust Company ("Fidelity"), the trustee of the Plan, for the
years ended December 31, 2003 and 2002.
2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
BASIS OF ACCOUNTING
The financial statements of the Plan are prepared under the accrual
method of accounting in conformity with accounting principles generally
accepted in the United States of America.
USE OF ESTIMATES
The preparation of financial statements in conformity with accounting
principles generally accepted in the United States of America 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 additions and deductions to net assets available for benefits
during the reporting period. Actual results could differ from those
estimates.
RISKS AND UNCERTAINTIES
The Plan provides for various investment options. Investment securities
are exposed to various risks, such as interest rate, market and credit
risk. 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 could materially affect participants'
account balances and the amounts reported in the statements of net
assets available for benefits and the statements of changes in net
assets available for benefits.
7
PEDIATRIX MEDICAL GROUP
THRIFT AND PROFIT SHARING PLAN
NOTES TO FINANCIAL STATEMENTS
DECEMBER 31, 2003 AND 2002
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INVESTMENT VALUATION AND INCOME RECOGNITION
The fair value of investments held by the Plan has been determined by
the trustee based on quoted market values of publicly traded
investments.
The Plan presents in the statements of changes in net assets available
for benefits, the net appreciation (depreciation) in fair value of
investments which consists of realized gains or losses and the
unrealized appreciation (depreciation) on those investments. All
investment transactions are recorded by the Plan as of the trade date.
Gains or losses on sale of investments are determined by the specific
identification method. Interest income is recorded as earned on an
accrual basis. Dividends are recorded based on the ex-dividend date.
ADMINISTRATIVE EXPENSES
All costs incurred in administering the Plan are paid by the Company
except for certain broker fees that are paid out of the various
investment options.
3. INVESTMENTS
The following presents investments that represent 5 percent or more of
the Plan's net assets at December 31 at fair value:
Description of Investment 2003 2002
-------------------------------------------------- ----------- ----------
Fidelity Fund $ 5,430,831 $3,628,811
Fidelity Puritan Fund 5,332,485 3,613,806
Fidelity Contrafund 9,287,786 5,609,683
Fidelity Growth and Income Portfolio 8,830,951 5,953,842
Fidelity Blue Chip Growth Fund 10,132,331 6,129,323
Fidelity Equity-Income II Fund 6,786,707 4,052,912
Fidelity Retirement Money Market Portfolio 5,159,179 3,851,163
Neuberger & Berman Genesis Fund - Trust Class 5,010,212 *
Pediatrix Stock Fund 7,140,507 4,627,909
* Investment did not represent 5% or more of the net assets available
for benefits as of the respective year-end.
4. TAX STATUS
The Plan is an adoption of the standardized prototype plan written by
Fidelity Management & Research Company. The prototype sponsor received a
favorable determination letter dated December 5, 2001 in which the
Internal Revenue Service stated that the prototype plan, as then
designated, was in compliance with applicable requirements of the
Internal Revenue Code (the "IRC"). The prototype plan underwent an
amendment during 2002 and the Internal Revenue Service issued a
favorable determination letter dated October 9, 2003 in which the
Internal Revenue Service stated that the amendment did not in and of
itself adversely affect the Plan's acceptability under the applicable
sections of the IRC. Therefore, the Plan Administrator believes that the
Plan was
8
PEDIATRIX MEDICAL GROUP
THRIFT AND PROFIT SHARING PLAN
NOTES TO FINANCIAL STATEMENTS
DECEMBER 31, 2003 AND 2002
--------------------------------------------------------------------------------
qualified and the related trust was tax exempt as of the financial
statement date. Accordingly, no provision for federal income taxes has
been made.
5. DISTRIBUTION PAYABLE
Distribution payable pertains to participant pre-tax contributions which
exceed the maximum annual dollar limit as established by the IRC. During
the year ended December 31, 2003, the Plan failed two of the
discrimination tests and at December 31, 2003, the Plan had a liability
for excess contributions of $1,305. Such amount was refunded to the
participants by April 15, 2004 in order to bring the Plan into
compliance with the IRC. The Plan was in compliance with such
discrimination tests for the year ended December 31, 2002.
6. PARTY-IN-INTEREST TRANSACTIONS
Certain of the Plan's investments are shares of mutual funds managed by
Fidelity. Fidelity is the trustee as defined in the Plan and, therefore,
these transactions qualify as party-in-interest. Participants' loans are
granted and administered by Fidelity and, therefore, these loan
transactions qualify as party-in-interest. The Pediatrix Stock Fund
invests in the Company's common stock and, therefore, these investment
transactions qualify as party-in-interest. All fees and expenses of the
Plan for legal, accounting, recordkeeping and other administrative
services are paid by the Company.
7. RECONCILIATIONS 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 for the years ended
December 31:
2003 2002
------------ ------------
Net assets available for benefits per the
financial statements $ 93,860,528 $ 60,939,277
Plus: Benefit claims payable 1,305 --
------------ ------------
Net assets available for benefits per the Form 5500 $ 93,861,833 $ 60,939,277
============ ============
Benefit claims payable are recorded on the Form 5500 for distributions
requested by participants prior to year-end, but not yet returned as of
that date.
9
PEDIATRIX MEDICAL GROUP
THRIFT AND PROFIT SHARING PLAN
SCHEDULE H, LINE 4I -- SCHEDULE OF ASSETS (HELD AT END OF YEAR)
DECEMBER 31, 2003
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(c) Description of Investment
(b) Identity of Issue, Borrower, Including Maturity Date, Rate of Interest, (e) Current
(a) Lessor or Similar Party Collateral, Par or Maturity Value (d) Cost ** Value
-------- ------------------------------------- ---------------------------------------------- ----------- -----------
* Fidelity Management Trust Company Fidelity Fund $ 5,430,831
* Fidelity Management Trust Company Fidelity Puritan Fund 5,332,485
* Fidelity Management Trust Company Fidelity Contrafund 9,287,786
* Fidelity Management Trust Company Fidelity Investment Grade Bond Fund 3,753,704
* Fidelity Management Trust Company Fidelity Growth and Income Portfolio 8,830,951
* Fidelity Management Trust Company Fidelity Overseas Fund 3,338,302
* Fidelity Management Trust Company Fidelity Blue Chip Growth Fund 10,132,331
* Fidelity Management Trust Company Fidelity Worldwide Fund 3,073,576
* Fidelity Management Trust Company Fidelity Equity-Income II Fund 6,786,707
* Fidelity Management Trust Company Fidelity Retirement Money Market Portfolio 5,159,179
* Pediatrix Medical Group, Inc. Pediatrix Stock Fund 7,140,507
Invesco Funds Group, Inc. Invesco Dynamics Fund - Investor Class 3,831,938
Neuberger Berman Management, Inc. Neuberger & Berman Genesis Fund - Trust Class 5,010,212
* Fidelity Management Trust Company Fidelity Ginnie Mae Fund 1,197,919
* Fidelity Management Trust Company Fidelity Managed Income Portfolio 2,954,291
* Fidelity Management Trust Company Spartan U.S. Equity Index Fund 2,154,109
* Fidelity Management Trust Company Fidelity Freedom Income Fund 94,260
* Fidelity Management Trust Company Fidelity Freedom 2000 Fund 150,527
* Fidelity Management Trust Company Fidelity Freedom 2010 Fund 940,625
* Fidelity Management Trust Company Fidelity Freedom 2020 Fund 857,125
* Fidelity Management Trust Company Fidelity Freedom 2030 Fund 797,559
* Fidelity Management Trust Company Fidelity Freedom 2040 Fund 144,271
* Participants' Loans Loans to participants, 5.25 - 9.00%, various
maturities 1,099,436
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$ 87,498,631
=============
--------------------
* Represents a party-in-interst.
** Cost omitted for participant directed investments.
10
SIGNATURES
The Plan. Pursuant to the requirements of the Securities Exchange Act of
1934, the trustees (or other persons who administer the Plan) have duly caused
this annual report to be signed on its behalf by the undersigned hereunto duly
authorized.
PEDIATRIX MEDICAL GROUP
THRIFT AND PROFIT SHARING PLAN
Date: June 28, 2004 By: /s/ Karl B. Wagner
------------------------------------------
Name: Karl B. Wagner
Title: Chief Financial Officer, Sponsor
11
EXHIBIT INDEX
Exhibit No. Document Description
----------- --------------------
23.1* Consent of PricewaterhouseCoopers LLP
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* Filed herewith.