-----BEGIN PRIVACY-ENHANCED MESSAGE----- Proc-Type: 2001,MIC-CLEAR Originator-Name: keymaster@town.hall.org Originator-Key-Asymmetric: MFkwCgYEVQgBAQICAgADSwAwSAJBALeWW4xDV4i7+b6+UyPn5RtObb1cJ7VkACDq pKb9/DClgTKIm08lCfoilvi9Wl4SODbR1+1waHhiGmeZO8OdgLUCAwEAAQ== MIC-Info: RSA-MD5,RSA, U81IMa9d+h+EzAbIokt0VnDx/gbFC3fqoMZijh+pSjUSspXn9IvVGKSwexUvWGex UCyIMkjxI4dYE7uPNwgtgg== 0000356226-94-000003.txt : 19940302 0000356226-94-000003.hdr.sgml : 19940302 ACCESSION NUMBER: 0000356226-94-000003 CONFORMED SUBMISSION TYPE: 8-K/A PUBLIC DOCUMENT COUNT: 3 CONFORMED PERIOD OF REPORT: 19940222 ITEM INFORMATION: 5 ITEM INFORMATION: 7 FILED AS OF DATE: 19940222 FILER: COMPANY DATA: COMPANY CONFORMED NAME: POLICY MANAGEMENT SYSTEMS CORP CENTRAL INDEX KEY: 0000356226 STANDARD INDUSTRIAL CLASSIFICATION: 6411 IRS NUMBER: 570723125 STATE OF INCORPORATION: SC FISCAL YEAR END: 1231 FILING VALUES: FORM TYPE: 8-K/A SEC ACT: 34 SEC FILE NUMBER: 001-10557 FILM NUMBER: 94510926 BUSINESS ADDRESS: STREET 1: ONE PMS CTR STREET 2: PO BOX TEN CITY: COLUMBIA STATE: SC ZIP: 29202 BUSINESS PHONE: 8037354000 8-K/A 1 8-K DOCUMENT 1 SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549 FORM 8-K CURRENT REPORT Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934 Date of Report (Date of earliest event reported): February 22, 1994 POLICY MANAGEMENT SYSTEMS CORPORATION (Exact name of registrant as specified in Charter) South Carolina 0-10175 57-0723125 (State or other jurisdiction (Commission (IRS Employer of incorporation) File Number) Identification No.) One PMS Center (P.O. Box Ten) Blythewood, S.C. (Columbia, S.C.) 29016 (29202) (Address of principle executive (Zip Code) offices) Registrant's telephone number, including area code (803) 735-4000 2 Item 5. Other Events On February 22, 1994, Policy Management Systems Corporation (the "Company") issued a press release reporting its results of operations for the six months ended June 30, 1993. A copy of the press release is attached hereto and incorporated by reference herein. Item 7. Exhibits Exhibit Number Description 99 Press Release dated February 22, 1994 2 3 POLICY MANAGEMENT SYSTEMS CORPORATION SIGNATURES Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized. POLICY MANAGEMENT SYSTEMS CORPORATION (Registrant) Date: February 22, 1994 By: Timothy V. Williams Executive Vice President (Chief Financial Officer) 3 EX-99 2 EXIBIT INDEX 1 POLICY MANAGEMENT SYSTEMS CORPORATION EXHIBIT INDEX Sequentially Exhibit Numbered Number Description Pages 99 Press Release dated 5-12 February 22, 1994 4 EX-99 3 EXHIBIT 99 1 POLICY MANAGEMENT SYSTEMS CORPORATION CONTACT: Jim O'Brien Manning, Selvage & Lee 212-213-7005 PMSC COMPLETES AUDIT OF ITS JUNE 30, 1993 FINANCIAL STATEMENTS Columbia, South Carolina, February 22, 1994 -- Policy Management Systems Corporation (NYSE: PMS) today reported that, as a result of a special audit of its balance sheet as of December 31, 1992, it was restating its previously reported retained earnings at that date from $267.7 million to $272.8 million, an increase of $5.1 million bringing total Stockholders' Equity to $579.1 million as of December 31, 1992. For the six-month period ended June 30, 1993, PMSC reported revenues of $235.9 million and a net loss, after giving effect to the charges described below, of $60.4 million ($2.62 per share). PMSC generated positive cash flow from operations of $38.3 million for the first half of 1993. The net loss for the six-month period was impacted by various large special and other unusual charges. PMSC established special pre-tax impairment and restructuring charges during the six-month period of $80.7 million (after taxes, $65.0 million or $2.81 per share) principally related to its health insurance systems business. Additionally, as previously reported, the Company recorded charges related to early project terminations, the deductible under the Company's Directors' and Officers' liability insurance policy in 5 2 response to shareholder litigation, cost overruns on certain projects and other charges arising from the Company's previously disclosed internal investigation of its accounting practices. These additional pre-tax charges aggregate approximately $18.1 million (after taxes $11.2 million, or $.48 per share). PMSC stated that it is reporting these results following completion of a previously announced special audit of PMSC's financial statements by Coopers & Lybrand. Based on the results of the audit, PMSC increased its retained earnings as of December 31, 1992 to reflect the prior period, after-tax adjustments summarized below: (In Thousands) - Elimination of revenue related to a contingent contract that was cancelled $( 820) - Deferral of revenues due to changes in timing of revenue recognition ( 8,408) - Reduction of expenses due to capitalization of certain software costs 18,863 - Recognition of expenses due to changes in timing of expense accrual ( 1,622) - Reserve for losses on certain services contracts ( 5,536) - Reduction of current income tax liability due to previously unrecorded tax credits 2,580 TOTAL after-tax adjustments $ 5,057 The current uncertainty surrounding the issue of national health care reform has caused PMSC's health insurance customers to postpone 6 3 their investment in information systems until the ultimate outcome of reform is clear. As a result, PMSC recorded a pre-tax charge, principally non-cash, of $80.1 million to reduce the carrying value of PMSC's health insurance assets and to reserve for the costs of restructuring this business. The Company also recorded other pre-tax restructuring charges of $.6 million. G. Larry Wilson, Chairman of the Board and Chief Executive Officer of PMSC, stated, "We are pleased that the exhaustive special audit process covering December 31, 1992 and the first six months of 1993 is now complete. At February 18, 1994, PMSC had over $160 million in cash and marketable securities and approximately $9 million in debt. With our strong balance sheet and the recently announced changes in our senior management team, we believe PMSC is well positioned to meet the challenges and opportunities of the future." Commenting on current operations, Mr. Wilson said, "The Property and Casualty Group is performing well and its customer base continues to expand. We have continued to invest in the development of Series III systems to meet the growing needs of our customers for client- server technology. Our Total Policy Management Outsourcing area has added several important contracts recently. While the changes and uncertainty created by health care reform proposals continue to adversely affect the health insurance systems business, we believe that the restructuring of this group will better enable it to redirect its strategic focus to a post-reform environment." 7 4 "The Company is pleased with the rapid integration of the recently acquired CYBERTEK business into our life group. PMSC has implemented a strategy designed to accelerate the integration of the CYBERTEK product line with PMSC's Series III platform and applications," Mr. Wilson added. Coopers & Lybrand has been engaged to perform 1992 and 1993 audits, and Ernst & Young has agreed to perform procedures to determine whether it can reissue its audit reports on the 1990 and 1991 financial statements. Previous audit reports covering 1990 and 1991 issued by Ernst & Young and the audit report covering 1992 issued by Arthur Andersen have been withdrawn. These audits and the audit for the remainder of 1993 will be completed as soon as possible. When these audits are complete, PMSC intends to file amended 10-Q's, as necessary, and bring its remaining SEC filings up- to-date, which will permit the resumption of period-to-period comparisons of its results of operations. Mr. Wilson said, "The Company is grateful for the continued strong support of our customers and long-term investors and for the dedication of our employees. We are encouraged about the future." PMSC, headquartered in Columbia, South Carolina, has more than 4,400 employees worldwide and is a leading provider of application software, related automation support and information services designed to meet the needs of the global insurance industry. Financial statements are attached. 8 9 FINANCIAL INFORMATION POLICY MANAGEMENT SYSTEMS CORPORATION CONSOLIDATED STATEMENT OF OPERATIONS Six Months Ended June 30, 1993 (In Thousands, Except Per Share Data) Revenues: Licensing..................................... $ 42,955 Services...................................... 192,968 235,923 Costs and Expenses: Employee compensation and benefits............ 84,255 Computer and communications expenses.......... 20,921 Information services and data acquisition costs...................... 62,019 Other operating costs and expenses............ 70,143 Impairment and restructuring charges.......... 80,733 318,071 Operating loss.................................. (82,148) Investment income, net.......................... 7,941 Loss before income tax benefit.................. (74,207) Income tax benefit.............................. 13,784 Net loss........................................ $(60,423) Net loss per share.............................. $( 2.62) 9 10 POLICY MANAGEMENT SYSTEMS CORPORATION CONSOLIDATED BALANCE SHEETS (As Restated)
June 30, December 31, 1993 1992 (In Thousands, Assets Except Share Data) Current assets: Cash and equivalents..................................................... $ 65,925 $ 31,959 Marketable securities.................................................... 117,634 206,562 Receivables, net of allowance for uncollectible amounts of $2,697 ($1,630 at 1992)............................................ 91,651 86,684 Income tax receivable.................................................... 17,982 2,891 Deferred income taxes.................................................... 6,757 8,083 Other.................................................................... 9,679 9,659 Total current assets.................................................. 309,628 345,838 Property and equipment..................................................... 142,313 131,696 Receivables................................................................ 6,135 22,252 Intangibles................................................................ 51,152 100,792 Capitalized software costs................................................. 96,710 99,414 Deferred income taxes...................................................... 18,054 2,580 Other...................................................................... 3,188 6,295 Total assets.................................................... $627,180 $708,867 Liabilities Current liabilities: Accounts payable and accrued expenses.................................... $ 39,591 $ 36,151 Accrued restructuring and lease termination costs........................ 10,596 - Accrued contract termination costs....................................... 6,177 5,030 Current portion of long-term debt........................................ 2,867 3,670 Income taxes payable..................................................... 45 - Unearned revenues........................................................ 8,747 11,361 Other.................................................................... 1,262 3,646 Total current liabilities............................................. 69,285 59,858 Long-term debt............................................................. 5,981 6,001 Deferred income taxes...................................................... 59,645 56,112 Accrued restructuring and lease termination costs.......................... 19,100 - Other...................................................................... 1,864 7,820 Total liabilities..................................................... 155,875 129,791 Commitments and contingencies (Note 5) Stockholders' Equity Special stock, $.01 par value, 5,000,000 shares authorized................. - - Common stock, $.01 par value, 75,000,000 shares authorized, 22,589,792 shares issued and outstanding (23,524,197 at 1992)........... 226 235 Additional paid-in capital................................................. 260,870 307,906 Retained earnings.......................................................... 212,343 272,766 Foreign currency translation adjustment.................................... (2,134) (1,831) Total stockholders' equity............................................ 471,305 579,076 Total liabilities and stockholders' equity......................... $627,180 $708,867
10 11 POLICY MANAGEMENT SYSTEMS CORPORATION CONSOLIDATED STATEMENT OF CHANGES IN STOCKHOLDERS' EQUITY
Addi- Foreign tional Currency Common Paid-In Retained Translation Stock Capital Earnings Adjustment Total (In Thousands) Balance, December 31, 1992, as previously reported......... $235 $307,906 $267,709 $(1,831) $574,019 Effect of restatement attributable to prior years............................................ - - 5,057 - 5,057 Balance, December 31, 1992, as restated.................... 235 307,906 272,766 (1,831) 579,076 Net loss................................................... - - (60,423) - (60,423) Stock options exercised (21,127 shares).................... - 1,036 - - 1,036 Repurchase of 970,668 shares of common stock............... (9) (48,651) - - (48,660) Issuance of stock to employee benefit plan (15,136 shares). - 579 - - 579 Foreign currency translation adjustment.................... - - - (303) (303) Balance, June 30, 1993..................................... $226 $260,870 $212,343 $(2,134) $471,305
11 12 POLICY MANAGEMENT SYSTEMS CORPORATION CONSOLIDATED STATEMENT OF CASH FLOWS
Six Months Ended June 30, 1993 (In Thousands) Operating Activities Net loss.......................................... $(60,423) Adjustments to reconcile net loss to net cash provided by operating activities: Depreciation and amortization................... 33,947 Deferred income taxes........................... (13,776) Gain on sale of marketable securities........... (3,034) Provision for uncollectible accounts............ 1,067 Impairment charges.............................. 54,890 Changes in assets and liabilities: Restructuring charges........................... 25,843 Receivables..................................... 10,048 Income tax receivable........................... (13,426) Accounts payable and accrued expenses........... 4,881 Other, net........................................ (1,670) Cash provided by operations.................. 38,347 Investing Activities Proceeds from sales/maturities of marketable securities, net.................................. 230,849 Purchases of marketable securities, net........... (142,672) Acquisition of property and equipment............. (32,923) Capitalized internal software development costs... (11,544) Purchased software................................ (3,275) Proceeds from disposal of property and equipment.. 8,935 Business acquisition.............................. (2,840) Cash provided by investing activities........ 46,530 Financing Activities Payments on long-term debt........................ (3,678) Issuance of common stock under stock option plans..................................... 674 Issuance of common stock to employee benefit plan. 579 Repurchase of outstanding common stock............ (48,660) Cash used for financing activities........... (51,085) Effect of exchange rate changes on cash............. 174 Net increase in cash and equivalents................ 33,966 Cash and equivalents at beginning of period......... 31,959 Cash and equivalents at end of period............... $ 65,925 Noncash Activities Long-term debt arising from and assumed in connection with business acquisition............. $ 2,987 Supplemental Information Interest paid..................................... 381 Income taxes paid................................. 11,688
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