<PAGE> 1
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-Q
QUARTERLY REPORT
PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
For Quarter Ended June 30, 1993 Commission file number 0-10175
POLICY MANAGEMENT SYSTEMS CORPORATION
(Exact name of registrant as specified in its charter)
South Carolina 57-0723125
(State or other jurisdiction (I.R.S. Employer
of incorporation) Identification No.)
One PMS Center (P.O. Box Ten)
Blythewood, S.C. (Columbia, S.C.) 29016 (29202)
(Address of principal executive (Zip Code)
offices)
Registrant's telephone number, including area code (803) 735-4000
Indicate by check mark whether the registrant (1) has filed all
reports required to be filed by Section 13 or 15(d) of the Securities
Exchange Act of 1934 during the preceding 12 months (or for such
shorter period that the registrant was required to file such
reports), and (2) has been subject to such filing requirements for
the past 90 days.
Yes No X
Indicate the number of shares outstanding of each of the
issuer's classes of common stock, as of the latest practicable date.
22,637,021 Common shares, $.01 par value, as of February 8, 1994
<PAGE> 2
POLICY MANAGEMENT SYSTEMS CORPORATION
INDEX
PART I. FINANCIAL INFORMATION PAGE
Item 1. Financial Statements
Report of Independent Accountants........... 3
Consolidated Statement of Operations for
the six months ended June 30, 1993........ 4
Consolidated Balance Sheets as of
June 30, 1993 and December 31, 1992....... 5
Consolidated Statement of Changes in
Stockholders' Equity for the six months
ended June 30, 1993....................... 6
Consolidated Statement of Cash Flows for
the six months ended June 30, 1993........ 7
Notes to Consolidated Financial Statements.. 8
Item 2. Management's Discussion and Analysis of
Financial Condition and Results of
Operations................................ 24
PART II. OTHER INFORMATION
Item 1. Legal Proceedings........................... 30
Item 6. Exhibits and Reports on Form 8-K............ 30
Signatures................................................. 31
Exhibit Index.............................................. 32
2
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REPORT OF INDEPENDENT ACCOUNTANTS
To the Board of Directors
Policy Management Systems Corporation
We have audited the accompanying consolidated balance sheets of Policy
Management Systems Corporation and subsidiaries as of June 30, 1993 and December
31, 1992, and the related consolidated statement of operations, changes in
stockholders' equity and cash flows for the six months ended June 30, 1993.
These financial statements are the responsibility of the Company's management.
Our responsibility is to express an opinion on these financial statements based
on our audits.
We conducted our audits in accordance with generally accepted auditing
standards. 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.
As further discussed in Note 2 to the consolidated financial statements,
management discovered certain errors in the Company's previously issued
financial statements. Accordingly, the balance sheet as of December 31, 1992
has been restated to reflect the correction of these errors.
In 1993 lawsuits were filed against the Company and certain of its present
and former officers and directors alleging violation of securities laws as well
as negligent misrepresentation. In addition, the Securities and Exchange
Commission is conducting an investigation into possible violations of Federal
securities laws. These issues are further discussed in Note 5 to the
consolidated financial statements. Management cannot predict the ultimate
impact of these actions, if any, on the consolidated financial statements.
Accordingly, no provisions have been made in the consolidated financial
statements.
In our opinion, the financial statements referred to above present fairly,
in all material respects, the consolidated financial position of Policy
Management Systems Corporation and subsidiaries as of June 30, 1993 and December
31, 1992, and the results of their operations and their cash flows for the six
months ended June 30, 1993 in conformity with generally accepted accounting
principles.
Atlanta, Georgia Coopers & Lybrand
February 21, 1994
3
<PAGE> 4
PART I
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)
See accompanying notes.
4
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<TABLE>
POLICY MANAGEMENT SYSTEMS CORPORATION
CONSOLIDATED BALANCE SHEETS
<CAPTION>
(As Restated)
June 30, December 31,
1993 1992
(In Thousands,
Assets Except Share Data)
<S> <C> <C>
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
<FN>
See accompanying notes.
</TABLE>
5
<PAGE> 6
<TABLE>
POLICY MANAGEMENT SYSTEMS CORPORATION
CONSOLIDATED STATEMENT OF CHANGES IN STOCKHOLDERS' EQUITY
<CAPTION>
Addi- Foreign
tional Currency
Common Paid-In Retained Translation
Stock Capital Earnings Adjustment Total
(In Thousands)
<S> <C> <C> <C> <C> <C>
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
<FN>
See accompanying notes.
</TABLE>
6
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<TABLE>
POLICY MANAGEMENT SYSTEMS CORPORATION
CONSOLIDATED STATEMENT OF CASH FLOWS
<CAPTION>
Six Months Ended
June 30, 1993
(In Thousands)
<S> <C>
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
<FN>
See accompanying notes.
</TABLE>
7
<PAGE> 8
POLICY MANAGEMENT SYSTEMS CORPORATION
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
JUNE 30, 1993
NOTE 1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
Basis of Presentation
The consolidated financial statements are prepared on the
basis of generally accepted accounting principles and include the
accounts of the Company and its subsidiaries, all of which are
wholly-owned. All material intercompany balances and transactions
have been eliminated. Certain amounts previously presented in the
consolidated financial statements for prior periods have been
reclassified to conform to current classifications.
Segment Information
The Company operates in one business segment, providing
computer software systems and related automation and
administration support and information services to the insurance
industry. Approximately 90% of the Company's revenues are
generated from products and services provided in the United
States and no customer accounted for more than 10% of revenues
during the six months ended June 30, 1993.
Revenue Recognition
The Company's revenues are generated primarily by licensing to
customers standardized insurance software systems and providing
automation and administrative support and information services to
the insurance industry.
Software systems are licensed under the terms of substantially
standard nonexclusive and nontransferable license agreements, which
generally have a noncancelable minimum term of six years and
provide for an initial license charge and a monthly license charge.
The initial license charge, which grants a right to use the
software system currently available at the time the license is
signed, is recognized as revenue upon delivery of the product and
receipt of a signed contractual obligation. The monthly license
charge provides access to Maintenance, Enhancements and Services
Availability ("MESA"). Under the maintenance provisions of MESA,
the Company provides telephone support and error correction to
current versions of licensed systems. Under the enhancement
provisions of MESA, the Company will provide any additions or
modifications to the licensed systems, which the Company may
deliver from time to time to licensees of those systems if and when
they become generally available. The monthly license charge is
recognized as revenue on a monthly basis throughout the term of the
MESA provision of the license agreement. Services availability
allows customers access to professional services, other than
8
<PAGE> 9
maintenance and enhancements, which are provided under separate
arrangements during the MESA term.
The Company provides professional support services, including
systems implementation and integration assistance and consulting
and educational services, which are available under services
agreements and charged for separately. These services are generally
provided under time and material contracts and in some
circumstances under fixed price arrangements. Under fixed price
contracts, revenue is recognized on the basis of the estimated
percentage of completion of service provided using the cost to cost
method. Changes in estimates to complete and losses, if any, are
recognized in the period in which they are determined.
The Company also offers information and outsourcing services
ranging from making available software licensed from the Company on
a remote processing basis from the Company's data centers, to
complete systems management, processing, administrative support and
automated information services through the Company's nationwide
telecommunications network using the Company's database products.
Outsourcing services are typically provided under contracts having
terms from three to ten years. Revenue from substantially all
outsourcing and information services are recognized at the time the
service is performed.
Marketable Securities
Interest bearing marketable securities are stated at amortized
cost, which approximates market value. Current marketable equity
securities are stated at the aggregate of lower of cost or market
and a valuation allowance is provided for the excess, if any, of
cost over market. The fair values of marketable securities are
estimated based on quoted market prices for those or similar
investments. Marketable securities consist of the following:
June 30, December 31,
1993 1992
(In Thousands)
U.S. Government and Agency securities.. $ 7,067 $ 9,072
Municipal bonds and notes.............. 110,379 197,115
Equity securities...................... 188 375
Total.............................. $117,634 $206,562
Market value........................... $118,540 $208,334
Investment securities with maturities of three months or
less at time of acquisition are considered cash equivalents.
9
<PAGE> 10
Investment income is shown net of interest expense and other
charges of $796,000 and includes a realized gain on marketable
securities of $3,034,000 for the six months ended June 30, 1993.
Gains or losses on marketable securities are determined on the
specific identification method.
Statement of Financial Accounting Standards No. 115,
"Accounting for Certain Investments in Debt and Equity Securities,"
(FAS 115) was issued in May 1993. FAS 115 addresses the accounting
and reporting for investments in equity securities that have
readily determinable fair values and for all investments in debt
securities. FAS 115 is effective for fiscal years beginning after
December 15, 1993; accordingly, the Company will adopt provisions
of FAS 115 on January 1, 1994. Adoption of FAS 115 is not
anticipated to have a material impact on the financial statements
taken as a whole.
Concentration of Credit Risk
Financial instruments which potentially subject the Company to
concentration of credit risk consist principally of cash
equivalents, marketable securities and trade receivables. The
Company places its cash and cash equivalents and marketable
securities with high credit quality entities and limits the amount
of credit exposure with any one entity. In addition, the Company
performs ongoing evaluations of the relative credit standing of
these entities, which are considered in the Company's investment
strategy.
Concentration of credit risk with respect to trade accounts
receivable are generally diversified due to the large number of
entities comprising the Company's customer base across the
insurance industry. The Company performs ongoing credit evaluations
on certain of its customers' financial condition, but generally
does not require collateral to support customer receivables. The
Company establishes an allowance for doubtful accounts based upon
factors surrounding the credit risk of specific customers,
historical trends and other information.
Property and Equipment
Property and equipment, including certain equipment acquired
under capital leases and support software acquired for internal
use, are stated at cost less accumulated depreciation and
amortization. Property and equipment are depreciated on a
straight-line basis over their estimated useful lives. Assets
acquired under capital leases are amortized over the term of the
related lease.
10
<PAGE>11
Goodwill and Other Acquired Intangible Assets
Since 1983, the Company has completed 34 business
acquisitions, all of which have been recorded using the purchase
method of accounting. As part of the purchase accounting,
specifically identifiable intangible assets and goodwill are
recorded and amortized over their estimated economic life or period
of future benefit. The lives established for these assets are a
composite of many factors which are subject to constant change
because of the nature of the Company's operations. This is
particularly true for goodwill which reflects value attributable to
the going concern nature of acquired businesses, the stability of
their operations, market presence and reputation. Accordingly, the
Company regularly evaluates the continued appropriateness of these
lives based upon the latest available economic factors and
circumstances. Additionally, the Company regularly evaluates the
full recoverability of all long-lived assets including specific
intangible assets and goodwill based upon a comparison of
discounted estimated future cash flows from the related operations
with the then corresponding carrying values of those assets. A
rate considered to be commensurate with the risk involved is used
to discount the cash flows.
For all years through December 31, 1992, the Company had
amortized goodwill over an estimated useful life of 25 years. As
a result of its most recent evaluation, the Company has revised its
estimates of the period of future benefit for goodwill.
Consequently, effective January 1, 1993, the Company began to
amortize goodwill over an estimated life of 15 years for goodwill
related to information and computer services company acquisitions
and 10 years for goodwill related to software company acquisitions.
The Company believes these new lives more appropriately reflect the
current economic circumstances for such businesses and the related
period of future benefit. Longer lives will be used for future
business acquisitions only where independent third party studies
support such lives. The effect of this change in accounting
estimate was to increase amortization expense by $1,940,000 ($.06
per share) during the six months ended June 30, 1993. Also as part
of this evaluation, the net book value of intangible assets related
to the Company's health insurance systems business of $45,740,000,
most of which was goodwill, was written off during the six months
ended June 30, 1993 (See Note 10).
Following these adjustments, the Company's June 30, 1993
Consolidated Balance Sheet included goodwill with a cost of
$42,578,000 at June 30, 1993 ($89,499,000 at December 31, 1992) and
other intangible assets consisting of customer lists, covenants not
to compete and other purchased intangibles with an aggregate cost
of $31,676,000 ($40,628,000 at December 31, 1992). These other
intangibles are being amortized on a straight-line basis over their
estimated period of benefit ranging from 5 to 10 years. Accumulated
amortization related to intangibles was $23,102,000 at June 30,
1993 ($29,335,000 at December 31, 1992). Amortization charged to
expense was $6,225,000 for the six months ended June 30, 1993.
11
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Computer Software
Certain costs incurred in the internal development of computer
software which is to be licensed to customers and costs of
purchased computer software, consisting primarily of software
acquired through business acquisitions, are capitalized and
amortized at the greater of the amount computed using (i) the ratio
that current gross revenues for a product bear to the total of
current and anticipated future gross revenues of that product or
(ii) the straight-line method over the remaining estimated economic
life of the product including the period being reported on. Costs
which are capitalized as part of internally developed software
primarily include direct and indirect costs associated with
payroll, computer time and allocable depreciation and other direct
allocable costs, among others. All costs incurred prior to the
establishment of technological feasibility have been expensed as
research and development costs during the periods in which they
were incurred and amounted to $1,795,000 during the six months
ended June 30, 1993.
As part of the Company's restatement of its prior years'
retained earnings (See Note 2), additional software costs amounting
to $30,487,000 ($18,863,000 net of tax) were capitalized as of
December 31, 1992. A detailed study of all software-related
expenditures dating back to December 15, 1988 indicated significant
misallocation and overexpensing of development costs related to
systems for which technological feasibility had been achieved.
This error relating to under-capitalization of software development
costs was due to certain weaknesses in the Company's then existing
cost accounting and accumulation system which did not capture all
appropriately capitalizable costs as defined in Statement of
Financial Accounting Standards No. 86, " Accounting for the Costs
of Computer Software to Be Sold, Leased or Otherwise Marketed" (FAS
86). The additional capitalized costs include both elements of
direct and indirect costs as described above and as required by FAS
86. All of the additional capitalized software costs are related
to the Company's property and casualty business software systems.
Additional development costs relating to the Company's internally
developed Series III life systems were not capitalized because all
the conditions of FAS 86 were not met. No significant software
development costs were capitalized for the Company's health
insurance business since any such costs would have been written off
as part of the impairment and restructuring charges (See Note 10).
The additional capitalized software costs are reflected in the
restated balances below.
12
<PAGE> 13
Capitalized software costs are as follows:
(As restated)
June 30, December 31,
1993 1992
(In Thousands)
Internally developed software........... $111,172 $ 99,628
Purchased software...................... 28,386 41,014
139,558 140,642
Less: Accumulated amortization......... (42,848) (41,228)
Capitalized software costs.............. $ 96,710 $ 99,414
For all years through December 31, 1992, the Company amortized
internally developed software on a straight-line basis over an
estimated useful life of four years. The Company's recent
experience indicates that an estimated useful life of five years
would more appropriately reflect the actual useful life of such
software. Accordingly, commencing January 1, 1993, the Company
began to amortize such software on a straight-line basis over five
years. Amortization charged to expense was $10,772,000 for the six
months ended June 30, 1993; as a result of the change in estimated
life described above, amortization expense was $883,000 ($.02 per
share) less than it would have been using the previous four year
life.
Purchased software in the amount of $9,150,000 (which is net
of $9,151,000 of related amortization) was written-off as part of
the Company's impairment and restructuring charges relating to its
health business (See Note 10). Also $1,368,000 relating to the
nonrecoverability of certain deferred life insurance systems
development costs was written-off for the six months ended June 30,
1993; this amount is also included in other operating costs and
expenses in the accompanying Consolidated Statement of Operations.
Income Taxes
The provision for income taxes and corresponding balance sheet
accounts are determined in accordance with Statement of Financial
Accounting Standards No. 109, "Accounting for Income Taxes" (FAS
109). Under FAS 109, the deferred tax liabilities and assets are
determined based on temporary differences between the bases of
certain assets and liabilities for income tax and financial
reporting purposes. These differences are primarily attributable to
differences in the recognition of depreciation and amortization of
property, equipment and intangible assets and certain software
development costs and revenues.
Research and experimentation tax credits are recognized as
reductions in the income tax provision in the year in which they
became available.
13
<PAGE> 14
Net Income Per Share
Net income per share is based upon the weighted average number
of common shares outstanding. Outstanding stock options are common
stock equivalents, but are excluded from the computation of net
income per share since their dilutive effect is not material.
The weighted average number of shares used in computing the
net income per share amount for the six months ended June 30, 1993
is 23,098,045.
Foreign Currency Translation
The local currencies of the Company's foreign subsidiaries
have been determined to be the functional currencies. Assets and
liabilities of foreign subsidiaries are translated into United
States dollars at current exchange rates and resulting translation
adjustments are included as a separate component of stockholders'
equity. Revenue and expense accounts of these operations are
translated at average exchange rates prevailing during the year.
Transaction gains and losses, which were not material, are included
in the results of operations of the period in which they occur.
NOTE 2. RESTATEMENT OF PRIOR YEARS' RESULTS OF OPERATIONS
In August 1993, the Company engaged independent accountants to
conduct a special audit of the Company's consolidated financial
statements as of and for the six months ended June 30, 1993. As a
result of this audit, the Company determined that retained earnings
previously reported as of December 31, 1992 required adjustment.
These adjustments were due to errors in the application of
accounting principles and subsequent discovery of facts existing at
February 26, 1993, the date of the predecessor auditor's report.
The Company is in the process of determining the specific
prior period or periods affected by the adjustments. Once
determined, the Company intends to restate the financial statements
for such periods. The components, net of related tax effects, of
the cumulative adjustment to retained earnings as of December 31,
1992 are as follows:
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<PAGE> 15
Increase (Decrease)
to Retained Earnings
(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 (See Note 1)...................... 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
Cumulative retained earnings
adjustment as of December 31, 1992...... $ 5,057
Deferral of revenues due to changes in timing of revenue
recognition includes situations where (i) there were errors in
accounting for contracts under the percentage of completion method;
(ii) there were delays in receiving signed contracts beyond
December 31, 1992; (iii) customers prepaid or were billed for
services performed in subsequent periods or where refunds or
provisions for credit were contractually required and (iv) the
Company had future delivery obligations under certain contracts.
NOTE 3. ACQUISITION
On June 21, 1993, the Company announced it had reached
agreement to acquire the outstanding common stock of CYBERTEK
Corporation, a leading provider of software and services to the
life insurance industry. The acquisition was completed on August
24, 1993 for an aggregate consideration of $59,727,000 in cash.
The purchase price was $38,456,000 in excess of the historical book
value of CYBERTEK. The Company is currently in the process of
evaluating the fair value of the assets acquired in order to
allocate the purchase price to the specific tangible and intangible
assets. Sales and net income of CYBERTEK for its fiscal year ended
March 31, 1993 were $30,720,000 and $3,059,000, respectively.
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NOTE 4. PROPERTY AND EQUIPMENT
<TABLE>
A summary of property and equipment is as follows:
<CAPTION>
Estimated June 30, December 31,
Useful Life 1993 1992
(Years) (In Thousands)
Cost:
<S> <C> <C> <C>
Land...................................... - $ 2,557 $ 2,557
Buildings and improvements................ 10-40 58,468 41,820
Construction in progress.................. - 618 15,721
Leasehold improvements.................... 1-10 3,308 3,351
Office furniture, fixtures and equipment.. 5-15 34,547 30,370
Data processing and communications
equipment and support software......... 2-5 128,141 116,135
Other..................................... 3-5 3,866 5,472
231,505 215,426
Less: Accumulated depreciation
and amortization........................ (89,192) (83,730)
Property and equipment..................... $142,313 $131,696
</TABLE>
Land includes 145 acres on which the Company's Columbia,
South Carolina, corporate headquarters are located. In mid-1991,
the Company began construction of a 176,000 square foot addition to
its corporate headquarters which was completed in early 1993 at a
total cost of $16,200,000.
Depreciation and amortization charged to expense was
$13,239,000 for the six months ended June 30, 1993.
NOTE 5. COMMITMENTS AND CONTINGENCIES
Commitments
The Company occupies leased facilities under various operating
leases expiring through 2014. The leases for certain facilities
contain options for renewal and provide for escalation of annual
rentals based upon increases in the lessors' operating costs. Rent
expense under leases for facilities was $3,804,000 for the six
months ended June 30, 1993. Amounts of $7,751,000 for lease
termination costs and $12,227,000 for lease abandonment charges are
included in the impairment and restructuring charges in the
accompanying statement of operations (See Note 10).
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<PAGE> 17
The Company leases certain data processing and related
equipment primarily under operating leases expiring through 1995.
Rent expense under operating leases for such equipment was
$1,800,000 for the six months ended June 30, 1993. Future minimum
lease obligations under noncancelable operating leases are stated
below and include a lease termination payment in 1994 amounting to
$7,751,000 and payments over 10 years aggregating $18,500,000
related to a leasehold planned for future abandonment (See Note
10):
Facilities
Twelve Months Ending June 30, (In Thousands)
1994............................ $15,203
1995............................ 5,013
1996............................ 4,390
1997............................ 3,502
1998............................ 3,109
Thereafter...................... 13,104
Total............................. $44,321
Contingencies
In April 1993, litigation was commenced against the Company
and certain of its present and former officers and directors in the
United States District Court for the District of South Carolina,
Columbia Division. In the litigation, which purports to be a class
action on behalf of purchasers of the Company's common stock
between March 18, 1992 and July 18, 1993, the plaintiffs allege
that the Company failed to prepare its financial statements in
accordance with generally accepted accounting principles and
omitted to disclose certain information regarding, among other
things, its business and prospects in violation of the Federal
securities laws, the South Carolina Code and common law. The
Company believes it has meritorious defenses to the claims and is
vigorously defending the litigation. The Company is unable to
predict the outcome or the potential financial impact, if any, of
this litigation.
In June 1993, the Securities and Exchange Commission (SEC)
commenced a formal investigation into possible violations of the
Federal securities laws in connection with the Company's public
reports and financial statements, as well as trading in the
Company's securities. The Company is cooperating with the SEC in
connection with the investigation.
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NOTE 6. LONG-TERM DEBT
Long-term debt is as follows:
June 30, December 31,
1993 1992
(In Thousands)
Notes payable, due through February 2015,
interest at 4.51% to 9.00%............. $ 8,848 $ 9,671
Less: Current portion.................... (2,867) (3,670)
Long-term debt........................... $ 5,981 $ 6,001
NOTE 7. INCOME TAXES
A reconciliation of the difference between the actual income
tax benefit and the expected benefit, computed using the applicable
statutory rate of 34% for the six months ended June 30, 1993, is as
follows (in thousands):
Income tax benefit computed at statutory rate.. $(25,230)
Increase (decrease) in taxes due to:
Goodwill....................................... 13,667
Nontaxable investment income................... (1,379)
State and local income taxes, net of federal
tax effect................................... (1,546)
Other.......................................... 704
Actual income tax benefit........................ $(13,784)
Effective income tax benefit rate................ 18.6%
An analysis of the income tax benefit for the six months ended
June 30, 1993, is as follows (in thousands):
Current taxes.................................... $ (8)
Deferred income taxes relating to
temporary differences:
Depreciation and amortization of property,
equipment and intangibles.................. (3,536)
Capitalized internal software development
costs...................................... 2,578
Restructuring of operations.................. (12,990)
Other........................................ 172
(13,776)
Total income tax benefit..................... $(13,784)
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An analysis of the net deferred income tax liability is as
follows:
June 30, December 31,
1993 1992
(In Thousands)
Current deferred assets............................ $ 6,757 $ 8,083
Long term deferred assets:
Restructuring of operations...................... 12,990 -
State tax credits................................ 5,064 2,580
Long term deferred assets........................ 18,054 2,580
Total deferred assets.......................... $24,811 $10,663
Long term deferred liabilities:
Depreciation and amortization of property,
equipment and intangibles...................... $19,196 $23,726
Capitalized internal software development costs.. 30,635 28,073
Other............................................ 9,814 4,313
Total deferred liabilities..................... $59,645 $56,112
On August 10, 1993 the Omnibus Budget Reconciliation Act of 1993
was signed into law. This Act increased the highest marginal federal
income tax rate from 34 percent to 35 percent. Under the provisions
of FAS 109, deferred tax liabilities and assets are adjusted for the
effect of a change in tax laws or rates. Furthermore, the effect
should be included in the income tax provision for the reporting
period that includes the enactment date. The enactment date of this
legislation was subsequent to June 30, 1993; therefore, the effect of
the rate change is not included in the income tax benefit for the six
months ended June 30, 1993. Had the effect through June 30, 1993 been
included, the net loss would have been higher by $711,000.
In 1992, the Internal Revenue Service completed an examination of
the Company's consolidated federal income tax returns for the years
1985 through 1988 and has proposed certain adjustments to income and
credits that result in proposed tax deficiencies in the amount of
$17,785,000 for those years. The Company believes that its judgment in
the areas for which adjustments have been proposed has been
appropriate and is contesting the proposed adjustments. The Company
believes that adequate amounts of federal income taxes are provided in
the consolidated financial statements.
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NOTE 8. EMPLOYEE BENEFIT PLANS
Profit Sharing Retirement Plan
Eligible employees of the Company are covered under the
Company's profit sharing retirement plan. The Company's contribution
to the plan is determined by the Board of Directors of the Company.
Employees make no contributions to this plan. The Company made a
contribution of $800,000 in early 1993 for the plan year 1992.
Retirement Savings Plan
The Company offers a 401(k) retirement savings plan for eligible
employees. Participants can elect to have up to 6% of their salary
withheld for investment in the program and the Company will make a
matching contribution of $.50 for each $1.00 of employee
participation. Participants may also make limited additional
contributions which are not subject to matching contributions
by the Company. Participants have several options as to how their
contributions may be invested, but through October 1993, all
matching contributions had been invested in common stock of the
Company. Company contributions made after October 1993 were, and
continue to be invested in a government money market fund, except as
participants may otherwise redirect such Company contributions
previously made. Except in certain instances, participant
contributions are made from pre-tax wages. The Company's contribution
on behalf of participating employees was $1,036,000 for the six
months ended June 30, 1993.
Stock Option Plans
The Company has various plans under which options to purchase
shares of the Company's common stock have been granted to eligible
employees and members of the Board of Directors of the Company. In
1992, options were granted under the 1989 Stock Option Plan to
eligible employees and members of the Board of Directors, subject to
approval by the Company's stockholders of an amendment to increase the
number of shares available for grant under that plan. In January
1993, options were also granted under the Company's 1993 Long-term
Incentive Plan for eligible executives, subject to approval by the
Company's stockholders. At the annual meeting of the Company's
stockholders in April, 1993, the amendment to the 1989 Stock Option
Plan and the 1993 Long-Term Incentive Plan for Executives were
approved.
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<PAGE> 21
Option activity under all of the stock option plans is summarized
as follows:
Six Months Ended
June 30, 1993
Shares under option at beginning of
year.............................. 1,202,856
Granted.............................. 592,500
Exercised............................ (21,127)
Forfeited............................ (19,339)
Shares under option at end of year... 1,754,890
Shares under option exercisable
at end of period.................. 421,538
Shares available for future grant.... 1,173,478
Shares under option exercisable at January 1, 1993 were 443,297.
The exercise price of options exercised under plans other than under
the 1993 Long-Term Incentive Plan for Executives during the six month
period ended June 30, 1993 were $15.13 to $49.63 and the exercise
prices of shares under option at June 30, 1993, other than under the
1993 Long-Term Incentive Plan for Executives, were $15.13 to $69.38.
All options granted under plans other than under the 1993 Long-
Term Incentive Plan for Executives have exercise prices at 100% of
market value at date of grant and are exercisable at the rate of 33
1/3% per year (cumulative) beginning one year from date of grant.
Options granted in 1993 under the 1993 Long-Term Incentive Plan
for Executives have been granted at 105% of market value at the date
of grant; all these options have an exercise price of $81.90. (For
individuals who later may be selected to participate in the 1993 Long-
Term Incentive Plan for Executives, said percentage is based on the
year the individual is selected as follows: 1993 - 105%; 1994 - 104%;
1995 - 103%; 1996 - 102%; 1997 - 101%; and 1998 - 100%.) Options
granted under the plan in 1993 become exercisable as follows: 25% on
January 1, 1995; 25% on January 1, 1997; and 50% on January 1, 1999.
For individuals who later may be selected to participate in the plan,
the number of options granted and what percentage become exercisable
on the above dates are determined according to formulas described in
the plan.
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NOTE 9. CERTAIN TRANSACTIONS
In August 1989, International Business Machines Corporation
("IBM") acquired directly from the Company a 19.8% interest in the
Company's outstanding voting stock for $116,775,000 representing
3,797,561 shares. IBM is entitled to increase its ownership
interest up to a maximum of 30% by purchasing the Company's common
stock in the open market. IBM's ownership interest was 16.8% at
June 30, 1993, representing the original 3,797,561 shares acquired.
Certain officers of the Company participated in the Company's
long-term incentive plan for executives, which began January 1,
1987 and ended December 31, 1992. The plan provided for the
payment of pre-established bonuses, payable either in cash, common
stock of the Company or a combination thereof, if certain earnings
per share performance goals were reached by the Company during the
six-year life of the plan. Bonuses earned under this plan for the
final two-year period ended December 31, 1992, were paid in 1993,
in a combination of $5,410,000 in cash and 45,348 shares of common
stock.
On April 7 and 8, 1993, the Company repurchased, on the open
market, all of the 970,668 shares of the Company's common stock
authorized under a previously approved stock repurchase program for
a total consideration of $48,660,000.
NOTE 10. IMPAIRMENT AND RESTRUCTURING CHARGES
During the first half of 1993, the Company experienced
markedly decreased revenues from its health business unit. Near
the end of the second quarter of 1993, the Company projected that
its annual health business revenues would drop by approximately 50%
from the revenue recorded in 1992 to approximately $30,000,000 for
all of 1993, and that trend of decline would continue into 1994.
To better understand both the cause and the anticipated duration of
this decline, the Company then undertook an assessment of the
potential impact on its health insurance systems business of
proposed health care legislation, rapidly evolving and significant
changes in the relationship of health care providers and insurers
and the resultant changes in health insurers' software and service
needs.
After meetings with its financial advisors, health care
professionals and customers, the Company determined that it did not
currently have many of the systems to respond to the most likely
future initiatives in the health care insurance industry and that
the Company's existing health products, primarily those acquired in
business acquisitions, would require substantial modification or
complete reformation. This determination and the continuing
adverse impact of operating losses led to the conclusion that the
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<PAGE> 23
current carrying value of the assets of the health business unit,
principally intangibles, was not fully recoverable through sale or
continuing operations. Accordingly, the Company has recorded an
impairment charge of $54,890,000 for the six months ended June 30,
1993 to reduce the carrying value of certain long-lived
identifiable intangible assets ($6,320,000 - customer lists,
covenants not to compete and assembled workforce), acquired
software ($9,150,000) and goodwill ($39,420,000) related to its
health business.
The Company applied its methodology for determining impairment
of intangibles (see Note 1) by discounting the expected future cash
flows from this business. In this case, the present value of the
expected cash flows was determined using a discount rate of 17%
which the Company considers to be commensurate with the risk
involved. This rate was determined using the Capital Asset Pricing
Model which reflects the return the Company should achieve on its
investments. An additional risk premium was included in the rate
to recognize the uncertainty associated with the health care
insurance business.
Additionally, as a result of the impairment of its health
business, the Company decided to restructure this business and is
taking a restructuring charge of $25,189,000 as of June 30, 1993.
Costs to restructure the health business are composed of $5,211,000
associated with employee severance and outplacement, and
$19,978,000 related to an ongoing lease obligation and/or
termination for the planned future abandonment of certain leased
office facilities. The Company also recorded other pre-tax
restructuring charges of $655,000. It is anticipated that these
restructurings will be completed during 1994.
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<PAGE> 24
POLICY MANAGEMENT SYSTEMS CORPORATION
MANAGEMENT'S DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND RESULTS OF OPERATIONS
DUE TO THE UNAVAILABILITY OF FINANCIAL INFORMATION FOR THE SIX
MONTHS ENDED JUNE 30, 1992, THE COMPANY IS CURRENTLY UNABLE TO
COMPARE THE RESULTS OF OPERATIONS FOR THE SIX MONTHS ENDED JUNE 30,
1993 WITH THE PRIOR PERIOD.
Liquidity and Capital Resources
During the six months ended June 30, 1993, the Company
generated cash flow from operations of $38,347,000, $46,530,000
provided by investing activities and $51,085,000 used for financing
activities. Cash and equivalents and marketable securities
aggregated $183,559,000 at June 30, 1993 as compared to
$238,521,000 at December 31, 1992, a net decrease of $54,962,000.
The principal factor affecting such net decrease was the repurchase
in April 1993 of 970,668 shares of the Company's common stock for
total consideration of $48,660,000. Other significant expenditures
during the period included: acquisition of data processing and
communications equipment, support software and office furniture and
equipment ($30,233,000); business and software product
acquisitions, including debt and contingency payments relating to
past business acquisitions ($9,843,000); and completion of
construction of additional office and dining facilities at the
Company's corporate headquarters ($1,472,000).
Significant expenditures anticipated for the remainder of
1993, excluding business acquisitions, are as follows: acquisition
of data processing and communications equipment, support software
and office furniture, fixtures and equipment ($5,500,000); and
completion of construction of additional dining facilities at the
Company's corporate headquarters ($1,500,000). The Company is also
anticipating that it will expend approximately $12,000,000 of
capitalizable costs relating to the internal development of its
property and casualty software systems and approximately $1,300,000
on the purchase of software for resale, during the remainder of
1993.
In August 1993, the Company completed its previously announced
acquisition of CYBERTEK Corporation for total cash consideration of
$59,727,000. As a result of acquiring CYBERTEK's broad based life
insurance software systems, the Company discontinued further
development of certain of its Series III Life Systems for which
$1,368,000 was written-off for the six months ended June 30, 1993.
The Company is currently enhancing and integrating the business
functions of CYBERTEK products with certain of the Company's Series
III cross industry applications and its Integrated Application
Platform architecture. The Company expects this effort to continue
24
<PAGE> 25
through 1996 with the anticipated initial release of the integrated
applications being made generally available in late 1994 or early
1995 with subsequent releases to follow. Total expenditures
related to this effort are expected to approximate $34,000,000, of
which $1,300,000 and $8,500,000 are anticipated for the remainder
of 1993 and for all of 1994, respectively. The Company expects to
generate savings through the closing of CYBERTEK's data center
operations and other cost reductions.
Due to the write-down of certain identifiable intangible
assets and goodwill related to an impairment of its health
business, resulting in a non-cash charge of $54,890,000, the
Company decided to restructure this business and take a
restructuring charge of $25,189,000 as of June 30, 1993. This
charge was recognized as a loss on the planned future abandonment
of certain leased office facilities and employee severance and
outplacement cost (See Note 10 of Notes to Consolidated Financial
Statements). Cash outlays with respect to the restructuring
charges are expected to be approximately $1,490,000 during the six
months ended December 31, 1993, approximately $16,241,000 during
1994, and approximately $7,458,000 in future years.
The Company completed, or intends to complete, the
expenditures referred to above, including the repurchase of its
shares and the acquisition for cash of CYBERTEK Corporation,
without incurring any indebtedness. The Company believes that cash
and equivalents and investment reserves at June 30, 1993 together
with future cash flow from operations will be sufficient to satisfy
presently anticipated operating and capital resource needs.
Results of Operations
Consolidated revenues for the six months ended June 30, 1993
were adversely affected by lower than planned revenues from its
health business. Near the end of the second quarter of 1993, the
Company projected that its annual health insurance systems business
revenues would drop by approximately 50% from the revenue recorded
in 1992 to approximately $30,000,000 for all of 1993. The
Company's original forecast for 1993 health insurance systems
annual revenues was approximately $78,000,000. To better
understand both the cause and the anticipated duration of this
decline, the Company then undertook an assessment of the potential
impact on its health business of proposed health care legislation,
rapidly evolving and significant changes in the relationship of
health care providers and insurers and the resultant changes in
health insurers' software and service needs.
As a result of its evaluation, the Company determined that
many of its systems and automation support services were
principally designed for and suited to the traditional indemnity
group health insurance plans. Near the end of the second quarter
of 1993, it was becoming clear that significant restructuring of
the country's health care system would occur, whether by government
action or economic circumstances, and consequently, insurers would
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<PAGE> 26
be unwilling to make commitments for any significant new systems
until the uncertainty regarding the ultimate outcome of reform was
resolved. Furthermore, it seemed most likely that traditional
indemnity plans would not meet the future needs of most employers
and their insurers after such changes.
After meetings in the second quarter and early third quarter
with its financial advisors, health care professionals and
customers, the Company determined that it did not currently have
many of the systems to respond to the current and most likely
future initiatives in the health care insurance industry and that
most of the Company's existing health products, primarily those
acquired in business acquisitions, would require substantial
modification or complete reformation. This determination and the
continuing adverse impact of operating losses in its health
business led the Company to the conclusion that the current
carrying value of certain assets of the health business unit,
principally intangible, was not fully recoverable through sale or
continuing operations.
As a consequence of these factors, the Company recorded
special impairment and restructuring charges to reduce the carrying
value of certain long-lived identifiable intangible assets and
goodwill and to recognize as a loss the planned future abandonment
of certain facilities and employee severance and outplacement costs
(See Note 10 of Notes to Consolidated Financial Statements). As
part of the Company's non-cash impairment charges, acquired
software amounting to $9,150,000 was written-off. Principal
products written-off include: (1) a claims administration and
payment system; (2) an administrative system for membership,
billing, collections and receivables; and (3) a provider
administrative and reimbursement system. The reduction in annual
amortization related to these software systems is approximately
$2,551,000. Additionally, the Company recorded other non-cash
impairment charges to write-off the carrying value of certain other
identifiable intangibles ($6,320,000) and goodwill ($39,420,000)
which will result in future amortization reductions of
approximately $3,796,000 on an annual basis. The Company, however,
will continue to invest in the internal development of its Series
III/Health client/server based systems for managed care
applications.
The Company, as part of its restructuring charges, decided to
downsize its health staff from 437 at June 30, 1993 to
approximately 388 by the end of 1993, with additional reductions in
staff taking place during 1994. This reduction is estimated to
reduce compensation and other benefits cost by approximately
$17,500,000 on an annual basis. The health business is expected to
continue to generate operating losses for the remainder of 1993 and
move towards break-even in early 1994.
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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 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 charges totaled $18,100,000 (after tax $11,200,000) for the
six months ended June 30, 1993.
Effective January 1, 1993, the Company revised its estimate of
the period of future benefit for goodwill and certain other
acquired intangible assets. The effect of this change in
accounting estimate was to increase amortization expense by
$1,940,000 ($.06 per share) during the six months ended June 30,
1993. Commencing January 1, 1993, the Company revised the period
over which it will amortize its internally developed software. The
effect of this change in estimated life was to decrease
amortization expense by $883,000 ($.02 per share) during the six
months ended June 30, 1993 . (See Note 1 of Notes to Consolidated
Financial Statements.)
Revenues from total policy management outsourcing services
were adversely affected by the previously announced wind-down of
the New Jersey Market Transition Facility (MTF) project. Prior to
the wind-down of the MTF, annual revenues in 1992 were
approximately $68,380,000. The Company expects such revenues to be
no more than $19,730,000 for 1993 as the project continues to wind-
down, of which $15,133,000 were recorded during the six months
ended June 30, 1993. However, as a result of an increased role in
servicing the Florida residual markets and additional new contracts
with insurance companies and other residual markets, the Company
should start to replace revenues, lost from the New Jersey MTF
project, during the first half of 1994. Margins, however, will be
reduced during the early phases of these contracts due to start-up
costs.
Although new business had slowed down, the Company, in
December 1993, signed one of the largest outsourcing agreements in
its history. The Company contracted to provide data processing
services for Vital Forsikring A.S., a life insurance company in
Bergen, Norway, which is expected to generate revenues of
approximately $150 million over the seven-year term of the
agreement. Additionally, the Company, during the last half of
1993, entered into several significant contracts with property and
casualty and life insurance companies for software licensing and
related implementation and consulting services.
The Company typically realizes a lower gross margin from
information services than from software products and related
services.
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<PAGE> 28
In January 1994, the Company announced that it had formed a
strategic alliance with NCR Corporation (AT&T/NCR), an AT&T
subsidiary, to market jointly the Company's Series III applications
business solution worldwide on NCR's UNIX-based platforms. In
addition, AT&T/NCR committed to support the marketing of the Series
III software and to fund the conversion of the Series III host-
associated software to the UNIX-based platform. The agreement is
initially focused in the property and casualty sector of the
insurance industry.
Overall, total revenues for the Company are expected to
decline for the remainder of 1993 as a result of the impairment of
the Company's health care business, as previously described, the
winding-down of the New Jersey MTF project discussed above, and the
uncertainty created by the delay in the Company's periodic
financial reports.
Investment income, net of investment expense, for the six-
month period ended June 30, 1993 was $7,941,000 which included a
realized gain on sale of marketable equity securities of
$3,034,000.
The effective income tax benefit rate (income taxes expressed
as a percentage of pre-tax income) was (18.6)% for the six months
ended June 30, 1993. The foregoing effective income tax benefit
rate does not include the impact of the increase in the highest
marginal corporate tax rate resulting from the enactment of the
Revenue Reconciliation Act of 1993. Since the enactment date
(August 10, 1993) was subsequent to June 30, 1993, the effect of
the rate change will be reflected in the results of operations for
the period ended September 30, 1993. The effective tax benefit
rate would have been significantly higher (37%) were it not for the
write off of goodwill ($39,420,000) related to the impairment of
the Company's health insurance systems business (See Note 10 of
Notes to Consolidated Financial Statements).
Seasonality and Inflation
The Company's operations have not proven to be significantly
seasonal, although quarterly revenues and net income vary at times.
This is attributable principally to the timing of customers
entering into license agreements with the Company and fluctuations
in the amount of certain information services used by customers,
principally during holiday seasons and periods of severe weather.
The Company is unable to control the timing of these decisions or
fluctuations. In order to minimize the impact of these decisions
or fluctuations, the Company's long-term business strategy is to
emphasize stability of revenues by building a larger base of
recurring systems licensing and services revenues.
Although the Company cannot accurately determine the amounts
attributable thereto, the Company has been affected by inflation
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<PAGE> 29
through increased costs of employee compensation and other
operating expenses. To the extent permitted by the marketplace for
the Company's products and services, the Company attempts to
recover increases in costs by periodically increasing prices.
Additionally, virtually all of the Company's license agreements and
long-term services agreements provide for annual increases in
charges. License agreements generally provide for increases in
monthly license charges based upon changes in the consumer price
index and customer premium volume. Long-term services agreements
generally provide for annual increases based on the percentage
change in the consumer price index.
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PART II
OTHER INFORMATION
POLICY MANAGEMENT SYSTEMS CORPORATION
Items 2, 3, 4, and 5 are not applicable
Item 1. Legal Proceedings
See Note 5, "Commitments and Contingencies" of Notes to
the Consolidated Financial Statements.
Item 6. Exhibits and Reports on Form 8-K.
Exhibits
There are no exhibits required to be filed with this Quarterly
Report on Form 10-Q.
Reports on Form 8-K
The Company filed a report on Form 8-K, dated January 19, 1993
under Item 4. Changes in Registrant's Certifying Accountant,
relating to the change in the Company's principal independent
auditor.
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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)
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POLICY MANAGEMENT SYSTEMS CORPORATION
EXHIBIT INDEX
There are no exhibits required to be filed with this Quarterly
Report on Form 10-Q.
32
