UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, DC 20549
FORM 10-K/A
AMENDMENT 1
ANNUAL REPORT
PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
For the fiscal year ended DECEMBER 31, 1997 Commission file number 1-10557
POLICY MANAGEMENT SYSTEMS CORPORATION
(Exact name of registrant as specified in its charter)
SOUTH CAROLINA 57-0723125
(State or other jurisdiction of (IRS Employer
incorporation or organization) Identification No.)
ONE PMSC CENTER (P.O. BOX TEN)
BLYTHEWOOD, S.C. (COLUMBIA, S.C.) 29016 (29202)
(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code:
(803) 333-4000
Securities registered pursuant to Section 12(b) of the Act:
Name of each exchange
Title of each class on which registered
COMMON STOCK, PAR VALUE $.01 PER SHARE NEW YORK STOCK EXCHANGE
Securities registered pursuant to Section 12(g) of the Act:
None
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 x No
--- ---
Indicate by check mark if disclosure of delinquent filers pursuant to Item 405
of Regulation S-K is not contained herein, and will not be contained, to the
best of registrant's knowledge, in definitive proxy or information statements
incorporated by reference in Part III of this Form 10-K or any amendment to
this Form 10-K. x
-----
The aggregate market value of the voting stock held by non-affiliates of the
registrant was $1,333,834,259 at March 17, 1998, based on the closing market
price of the Common Stock on such date, as reported by the New York Stock
Exchange.
The total number of shares of the registrant's Common Stock, $.01 per share
par value, outstanding at March 17, 1998, was 18,387,185.
<PAGE>
The undersigned registrant hereby amends the following items, financial
statements, exhibits or other portions of its Annual Report on Form 10-K for
the fiscal year ended December 31, 1997 as set forth in the pages attached
hereto:
List all such items, financial statements, exhibits or other portions amended.
(1) Item 14
(2) Form 11-K (401(k) Retirement Savings Plan)
Pursuant to the requirements of the Securities Exchange Act of 1934, the
registrant has duly caused this amendment to be signed on its behalf by the
undersigned, thereunto duly authorized.
(REGISTRANT) POLICY MANAGEMENT SYSTEMS CORPORATION
Date: June 30, 1998 By: Timothy V. Williams
Executive Vice President
and Chief Financial Officer
PART IV
ITEM 14. EXHIBITS, FINANCIAL STATEMENT SCHEDULES, AND REPORTS ON FORM 8-K
FINANCIAL STATEMENTS AND SCHEDULES
See Index to Consolidated Financial Statements and Supplementary Data on
page 25.
EXHIBITS FILED
Exhibits required to be filed with this Annual Report on Form 10-K are
listed in the following Exhibit Index. Certain of such exhibits which have
heretofore been filed with the Securities and Exchange Commission and which
are designated by reference to their exhibit numbers in prior filings are
hereby incorporated herein by reference and made a part thereof.
Pursuant to Rule 15d-21 promulgated under the Securities Exchange Act of
1934, the following annual report for the Company's 401 (k) Retirement Plan is
filed herewith:
Form 11-K for the Company's 401 (k) Retirement Savings Plan for the year
ended December 31, 1997 is incorporated herein by reference.
FORM 8-K
The Company did not file any reports on Form 8-K during the last quarter
of the year ended December 31, 1997.
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, DC 20549
FORM 11-K
ANNUAL REPORT PURSUANT TO SECTION 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
For the fiscal year ended DECEMBER 31, 1997 Commission file number 1-10557
POLICY MANAGEMENT SYSTEMS CORPORATION
401(K) RETIREMENT SAVINGS PLAN
Name of issuer of the securities held pursuant to the Plan
and the address of its principal executive office:
POLICY MANAGEMENT SYSTEMS CORPORATION
ONE PMSC CENTER, BLYTHEWOOD, SOUTH CAROLINA 29016
<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, Policy
Management Systems Corporation 401(k) Retirement Savings Plan Committee has
duly caused this annual report to be signed on its behalf by the undersigned
hereunto duly authorized.
POLICY MANAGEMENT SYSTEMS CORPORATION
401(k) Retirement Savings Plan
Date: June 30, 1998 By: Timothy V. Williams
Executive Vice President
and Chief Financial Officer
POLICY MANAGEMENT SYSTEMS CORPORATION
401(K) RETIREMENT SAVINGS PLAN
FINANCIAL STATEMENTS
AND SUPPLEMENTAL SCHEDULES
For the years ended December 31, 1997 and 1996
With Report of Independent Accountants
<PAGE>
<TABLE>
<CAPTION>
POLICY MANAGEMENT SYSTEMS CORPORATION
401(K) RETIREMENT SAVINGS PLAN
Index to Financial Statements and Supplemental Schedules
<S> <C>
Page
REPORT OF INDEPENDENT ACCOUNTANTS . . . . . . . . . . . . . . . . . . 2
FINANCIAL STATEMENTS:
Statements of Net Assets Available for Plan Benefits,
with Fund Information as of December 31, 1997 and 1996. . . . . . . 3 - 7
Statements of Changes in Net Assets Available for Plan Benefits, with
Fund Information for the years ended December 31, 1997 and 1996 . . 8 - 12
Notes to Financial Statements . . . . . . . . . . . . . . . . . . . . 13 - 16
SUPPLEMENTAL SCHEDULES:
Form 5500, Item 27(a) - Schedule of Assets Held
for Investment Purposes, as of December 31, 1997. . . . . . . . . . 18 - 19
Form 5500, Item 27(d) - Schedule of Reportable
Transactions for the year ended December 31, 1997 . . . . . . . . . 20
EXHIBITS:
Consent of Independent Accountants, annexed hereto. . . . . . . . . . 21
</TABLE>
<PAGE>
REPORT OF INDEPENDENT ACCOUNTANTS
To the Administrative Committee of
Policy Management Systems Corporation 401(k) Retirement Savings Plan
We have audited the accompanying statements of net assets available for
plan benefits of the Policy Management Systems Corporation 401(k) Retirement
Savings Plan (the "Plan") as of December 31, 1997 and 1996, and the related
statements of changes in net assets available for plan benefits for the years
then ended. These financial statements are the responsibility of the Plan's
management. Our responsibility is to express an opinion on these financial
statements based on our audits.
We conducted our audits in accordance with 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.
In our opinion, the financial statements referred to above present
fairly, in all material respects, the net assets available for plan benefits
of the Plan at December 31, 1997 and 1996, and the changes in net assets
available for plan benefits for the years then ended, in conformity with
generally accepted accounting principles.
Our audit was made for the purpose of forming an opinion on the basic
financial statements taken as a whole. The supplemental schedules of assets
held for investment purposes and reportable transactions are presented for the
purpose of additional analysis and are not a required part of the basic
financial statements, but are 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 fund information in
the statement of net assets available for plan benefits and the statement of
changes in net assets available for plan benefits is presented for purposes of
additional analysis rather than to present the net assets available for plan
benefits and changes in net assets available for plan benefits of each fund.
The supplemental schedules and fund information have been subjected to the
auditing procedures applied in our audit of the basic financial statements
and, in our opinion, are fairly stated in all material respects, in relation
to the basic financial statements taken as a whole.
Coopers & Lybrand L.L.P.
Atlanta, Georgia
June 15, 1998
<PAGE>
<TABLE>
<CAPTION>
POLICY MANAGEMENT SYSTEMS CORPORATION
401(K) RETIREMENT SAVINGS PLAN
STATEMENT OF NET ASSETS AVAILABLE FOR PLAN BENEFITS, WITH FUND INFORMATION
AS OF DECEMBER 31, 1997
<S> <C> <C> <C> <C> <C>
Fidelity Fidelity Fidelity Evergreen
Retirement Puritan Magellan Short-Int.
Loan Government Mutual Mutual Bond
---------- ----------- ----------- ----------- -----------
ASSETS
Investments, at current value:
Short-term investments . . . $ - $ - $ 28 $ 3 $ 1
Mutual Funds . . . . . . . . - 17,586,013 24,438,043 30,208,172 3,469,841
Common Stock . . . . . . . . - - - - -
---------- ----------- ----------- ----------- -----------
Total Investments . . . - 17,586,013 24,438,071 30,208,175 3,469,842
---------- ----------- ----------- ----------- -----------
Receivables:
Loans receivable . . . . . . 3,065,511 - - - -
Accrued interest receivable. - - - - 18,882
---------- ----------- ----------- ----------- -----------
Total Receivables . . . 3,065,511 - - - 18,882
---------- ----------- ----------- ----------- -----------
Cash. . . . . . . . . . 2,675 80,206 167 272 30
---------- ----------- ----------- ----------- -----------
Total Assets. . . . 3,068,186 17,666,219 24,438,238 30,208,447 3,488,754
---------- ----------- ----------- ----------- -----------
LIABILITIES
Accounts payable . . . . . . - 80,032 - - -
---------- ----------- ----------- ----------- -----------
Total Liabilities . . - 80,032 - - -
---------- ----------- ----------- ----------- -----------
Net assets available
for plan benefits $3,068,186 $17,586,187 $24,438,238 $30,208,447 $ 3,488,754
========== =========== =========== =========== ===========
<FN>
Continued on next page
See accompanying notes.
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
POLICY MANAGEMENT SYSTEMS CORPORATION
401(K) RETIREMENT SAVINGS PLAN
STATEMENT OF NET ASSETS AVAILABLE FOR PLAN BENEFITS, WITH FUND INFORMATION
AS OF DECEMBER 31, 1997
(CONTINUED)
<S> <C> <C> <C> <C> <C>
Smith Smith Smith
PMSC Barney Barney Barney
Stock Forfeiture Fundamental International Equities
----------- ----------- ------------ -------------- ---------
ASSETS
Investments, at current value:
Short-term investments . . . $ 388 $ 192 $ 9 $ 2 $ -
Mutual Funds . . . . . . . . - - 6,271,240 2,382,974 -
Common Stock . . . . . . . . 23,263,911 220,140 - - -
----------- ----------- ------------ -------------- ---------
Total Investments . . . 23,264,299 220,332 6,271,249 2,382,976 -
----------- ----------- ------------ -------------- ---------
Receivables:
Loans receivable . . . . . . - - - - -
Accrued interest receivable. - - - - -
----------- ----------- ------------ -------------- ---------
Total Receivables . . . - - - - -
----------- ----------- ------------ -------------- ---------
Cash. . . . . . . . . . 285 5 364,053 15 -
----------- ----------- ------------ -------------- ---------
Total Assets. . . . 23,264,584 220,337 6,635,302 2,382,991 0
----------- ----------- ------------ -------------- ---------
LIABILITIES
Accounts payable . . . . . . - - 364,018 - -
----------- ----------- ------------ -------------- ---------
Total Liabilities . . - - 364,018 - -
----------- ----------- ------------ -------------- ---------
Net assets available
for plan benefits $23,264,584 $ 220,337 $ 6,271,284 $ 2,382,991 $ 0
=========== =========== ============ ============== =========
<FN>
Continued on next page
See accompanying notes.
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
POLICY MANAGEMENT SYSTEMS CORPORATION
401(K) RETIREMENT SAVINGS PLAN
STATEMENT OF NET ASSETS AVAILABLE FOR PLAN BENEFITS, WITH FUND INFORMATION
AS OF DECEMBER 31, 1997
(CONTINUED)
<S> <C> <C> <C> <C>
Evergreen Putnam OTC First Union
Growth & & Emerging Enhanced
Income Growth Stock Market Total
---------- ----------- ------------- ------------
ASSETS
Investments, at current value:
Short-term investments . . . $ 3,045 $ 1 $ 1 $ 3,670
Mutual Funds . . . . . . . . 1,722,951 4,324,049 1,294,212 91,697,495
Common Stock . . . . . . . . - - - 23,484,051
---------- ----------- ------------- ------------
Total Investments. . . . 1,725,996 4,324,050 1,294,213 115,185,216
---------- ----------- ------------- ------------
Receivables:
Loans receivable . . . . . . - - - 3,065,511
Accrued interest receivable. - - - 18,882
---------- ----------- ------------- ------------
Total Receivables . . . - - - 3,084,393
---------- ----------- ------------- ------------
Cash . . . . . . . . . . . . . 61 61 30 447,860
---------- ----------- ------------- ------------
Total Assets . . . . 1,726,057 4,324,111 1,294,243 118,717,469
---------- ----------- ------------- ------------
LIABILITIES
Accounts payable . . . . . . - - - 444,050
---------- ----------- ------------- ------------
Total Liabilities . . - - - 444,050
---------- ----------- ------------- ------------
Net assets available
for plan benefits $1,726,057 $ 4,324,111 $ 1,294,243 $118,273,419
========== =========== ============= ============
<FN>
See accompanying notes.
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
POLICY MANAGEMENT SYSTEMS CORPORATION
401(K) RETIREMENT SAVINGS PLAN
STATEMENT OF NET ASSETS AVAILABLE FOR PLAN BENEFITS, WITH FUND INFORMATION
AS OF DECEMBER 31, 1996
<S> <C> <C> <C> <C> <C> <C>
Fidelity Fidelity Fidelity Evergreen
Retirement Puritan Magellan Short-Int. PMSC
Loan Government Mutual Mutual Bond Stock
---------- ----------- ------------ ------------ ----------- ------------
ASSETS
Investments, at current value:
Short-term investments . . . $ - $ 10,396 $ 8,962 $ 130,375 $ 11,503 $ 15,663
Mutual Funds . . . . . . . . - 19,047,561 18,032,059 23,848,712 3,241,251 -
Common Stock . . . . . . . . - - - - - 12,372,653
---------- ----------- ------------ ------------ ----------- ------------
Total Investments . . . - 19,057,957 18,041,021 23,979,087 3,252,754 12,388,316
---------- ----------- ------------ ------------ ----------- ------------
Receivables:
Loans receivable . . . . . . 3,066,650 - - - - -
Employer contributions
receivable . . . . . . . . - - - - - 166,602
---------- ----------- ------------ ------------ ----------- ------------
Total Receivables . . . 3,066,650 - - - - 166,602
---------- ----------- ------------ ------------ ----------- ------------
Cash. . . . . . . . . . 4,050 83,657 (879) (449) 49 (507)
---------- ----------- ------------ ------------ ----------- ------------
Total Assets. . . . 3,070,700 19,141,614 18,040,142 23,978,638 3,252,803 12,554,411
---------- ----------- ------------ ------------ ----------- ------------
LIABILITIES
Accounts payable . . . . . . - 136,153 - - - 13,063
---------- ----------- ------------ ------------ ----------- ------------
Total Liabilities . . - 136,153 - - - 13,063
---------- ----------- ------------ ------------ ----------- ------------
Net assets available
for plan benefits $3,070,700 $19,005,461 $18,040,142 $23,978,638 $ 3,252,803 $12,541,348
========== =========== ============ ============ =========== ============
<FN>
Continued on next page
See accompanying notes.
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
POLICY MANAGEMENT SYSTEMS CORPORATION
401(K) RETIREMENT SAVINGS PLAN
STATEMENT OF NET ASSETS AVAILABLE FOR PLAN BENEFITS, WITH FUND INFORMATION
AS OF DECEMBER 31, 1996
(CONTINUED)
<S> <C> <C> <C> <C> <C>
Smith Smith Smith
Barney Barney Barney
Forfeiture Fundamental International Equities Total
----------- ------------ -------------- ---------- -----------
ASSETS
Investments, at current value:
Short-term investments . . . $ 2,182 $ 7 $ 4 $ 168 $ 179,260
Mutual Funds . . . . . . . . - 4,539,952 2,432,104 4,409,003 75,550,642
Common Stock . . . . . . . . 159,555 - - - 12,532,208
----------- ------------ -------------- ---------- -----------
Total Investments. . . . 161,737 4,539,959 2,432,108 4,409,171 88,262,110
----------- ------------ -------------- ---------- -----------
Receivables:
Loans receivable . . . . . . - - - - 3,066,650
Employer contributions
receivable . . . . . . . . - - - - 166,602
----------- ------------ -------------- ---------- -----------
Total Receivables . . . - - - - 3,233,252
----------- ------------ -------------- ---------- -----------
Cash . . . . . . . . . . . . . 11 63,682 1,716 33 151,363
----------- ------------ -------------- ---------- -----------
Total Assets . . . . 161,748 4,603,641 2,433,824 4,409,204 91,646,725
----------- ------------ -------------- ---------- -----------
LIABILITIES
Accounts payable . . . . . . - 63,657 1,702 - 214,575
----------- ------------ -------------- ---------- -----------
Total Liabilities . . - 63,657 1,702 - 214,575
----------- ------------ -------------- ---------- -----------
Net assets available
for plan benefits $ 161,748 $ 4,539,984 $ 2,432,122 $4,409,204 $91,432,150
=========== ============ ============== ========== ===========
<FN>
See accompanying notes.
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
POLICY MANAGEMENT SYSTEMS CORPORATION
401 (K) RETIREMENT SAVINGS PLAN
STATEMENT OF CHANGES IN NET ASSETS AVAILABLE FOR PLAN BENEFITS, WITH FUND INFORMATION
FOR THE YEAR ENDED DECEMBER 31, 1997
<S> <C> <C> <C> <C> <C>
Fidelity Fidelity Fidelity Evergreen
Retirement Puritan Magellan Short-Int.
Loan Government Mutual Mutual Bond
----------- ------------ ----------- ------------ ------------
Additions to net assets attributed to:
Investment Income:
Net appreciation (depreciation) in
market value . . . . . . . . . . . . $ - $ - $ 2,320,047 $ 4,304,540 $ (13,261)
Dividends and interest . . . . . . . . - 971,191 1,911,834 1,931,933 231,435
----------- ------------ ----------- ------------ ------------
- 971,191 4,231,881 6,236,473 218,174
----------- ------------ ----------- ------------ ------------
Cash Contributions:
Employer. . . . . . . . . . . . . . . - - - - -
Employee. . . . . . . . . . . . . . . - 836,191 2,122,397 2,714,562 441,590
----------- ------------ ----------- ------------ ------------
- 836,191 2,122,397 2,714,562 441,590
----------- ------------ ----------- ------------ ------------
Transfers. . . . . . . . . . . . . . . . (9,450) (1,397,817) 1,145,221 (1,065,681) (299,430)
Loan repayments. . . . . . . . . . . . . (734,994) 130,564 307,902 412,622 58,882
Other additions. . . . . . . . . . . . . 8,075 11,771 4,903 5,793 1,052
----------- ------------ ----------- ------------ ------------
Total Additions (Deductions). . . . (736,369) 551,900 7,812,304 8,303,769 420,268
----------- ------------ ----------- ------------ ------------
Deductions from net assets attributed to:
Distributions. . . . . . . . . . . . . 178,881 1,476,080 1,191,135 1,852,997 136,266
Forfeitures. . . . . . . . . . . . . . - (807) 19 451 36
Loan disbursements . . . . . . . . . . (912,736) 165,473 221,873 214,130 42,602
Other deductions . . . . . . . . . . . - 330,428 1,181 6,382 5,413
----------- ------------ ----------- ------------ ------------
Total Deductions (Additions). . . (733,855) 1,971,174 1,414,208 2,073,960 184,317
----------- ------------ ----------- ------------ ------------
Net increases (decreases) . . . . . . . (2,514) (1,419,274) 6,398,096 6,229,809 235,951
----------- ------------ ----------- ------------ ------------
Net assets available for plan benefits
Beginning of year . . . . . . . . . . 3,070,700 19,005,461 18,040,142 23,978,638 3,252,803
----------- ------------ ----------- ------------ ------------
End of year . . . . . . . . . . . . . $3,068,186 $17,586,187 $24,438,238 $30,208,447 $ 3,488,754
=========== ============ =========== ============ ============
<FN>
Continued on next page
See accompanying notes.
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
POLICY MANAGEMENT SYSTEMS CORPORATION
401 (K) RETIREMENT SAVINGS PLAN
STATEMENT OF CHANGES IN NET ASSETS AVAILABLE FOR PLAN BENEFITS, WITH FUND INFORMATION
FOR THE YEAR ENDED DECEMBER 31, 1997
(CONTINUED)
<S> <C> <C> <C> <C> <C>
Smith Smith Smith
PMSC Barney Barney Barney
Stock Forfeiture Fundamental International Equities
------------ ------------ ------------- --------------- ------------
Additions to net assets attributed to:
Investment Income:
Net appreciation (depreciation) in
market value . . . . . . . . . . . . $ 7,803,480 $ 38,864 $ 407,686 $ 13,695 $ (289,813)
Dividends and interest . . . . . . . . 4,474 263 363,992 505 734
------------ ------------ ------------- --------------- ------------
7,807,954 39,127 771,678 14,200 (289,079)
------------ ------------ ------------- --------------- ------------
Cash Contributions:
Employer. . . . . . . . . . . . . . . 3,848,001 - - - -
Employee. . . . . . . . . . . . . . . 346,094 - 675,979 315,831 284,188
------------ ------------ ------------- --------------- ------------
4,194,095 - 675,979 315,831 284,188
------------ ------------ ------------- --------------- ------------
Transfers. . . . . . . . . . . . . . . . (198,185) (309,893) 397,824 (322,032) (4,350,208)
Loan repayments. . . . . . . . . . . . . 45,953 - 88,695 41,671 42,549
Other additions. . . . . . . . . . . . . 855 47 2,173 1,117 337
------------ ------------ ------------- --------------- ------------
Total Additions (Deductions). . . . 11,850,672 (270,719) 1,936,349 50,787 (4,312,213)
------------ ------------ ------------- --------------- ------------
Deductions from net assets attributed to:
Distributions. . . . . . . . . . . . . 616,956 - 145,551 67,809 70,731
Forfeitures. . . . . . . . . . . . . . 329,747 (329,308) (66) (10) (67)
Loan disbursements . . . . . . . . . . 155,683 - 50,609 28,071 22,765
Other deductions . . . . . . . . . . . 25,050 - 8,955 4,048 3,562
------------ ------------ ------------- --------------- ------------
Total Deductions (Additions). . . 1,127,436 (329,308) 205,049 99,918 96,991
------------ ------------ ------------- --------------- ------------
Net increases (decreases) . . . . . . . 10,723,236 58,589 1,731,300 (49,131) (4,409,204)
------------ ------------ ------------- --------------- ------------
Net assets available for plan benefits
Beginning of year . . . . . . . . . . 12,541,348 161,748 4,539,984 2,432,122 4,409,204
------------ ------------ ------------- --------------- ------------
End of year . . . . . . . . . . . . . $23,264,584 $ 220,337 $ 6,271,284 $ 2,382,991 $ 0
============ ============ ============= =============== ============
<FN>
Continued on next page
See accompanying notes.
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
POLICY MANAGEMENT SYSTEMS CORPORATION
401 (K) RETIREMENT SAVINGS PLAN
STATEMENT OF CHANGES IN NET ASSETS AVAILABLE FOR PLAN BENEFITS, WITH FUND INFORMATION
FOR THE YEAR ENDED DECEMBER 31, 1997
(CONTINUED)
<S> <C> <C> <C> <C>
Evergreen Putnam OTC First Union
Growth & & Emerging Enhanced
Income Growth Stock Market Total
---------- ----------- ------------- ------------
Additions to net assets attributed to:
Investment Income:
Net appreciation (depreciation) in
market value . . . . . . . . . . . . $ 48,364 $ 261,115 $ 54,667 $ 14,949,384
Dividends and interest . . . . . . . . 60,226 200 127 5,476,914
---------- ----------- ------------- ------------
108,590 261,315 54,794 20,426,298
---------- ----------- ------------- ------------
Cash Contributions:
Employer. . . . . . . . . . . . . . . - - - 3,848,001
Employee. . . . . . . . . . . . . . . 137,296 314,492 78,214 8,266,834
---------- ----------- ------------- ------------
137,296 314,492 78,214 12,114,835
---------- ----------- ------------- ------------
Transfers. . . . . . . . . . . . . . . . 1,470,239 3,785,384 1,154,028 0
Loan repayments. . . . . . . . . . . . . 14,253 44,380 9,486 461,963
Other additions. . . . . . . . . . . . . 294 736 201 37,354
---------- ----------- ------------- ------------
Total Additions . . . . . . . . . . 1,730,672 4,406,307 1,296,723 33,040,450
---------- ----------- ------------- ------------
Deductions from net assets attributed to:
Distributions. . . . . . . . . . . . . 773 70,914 1,960 5,810,053
Forfeitures. . . . . . . . . . . . . . - 5 - 0
Loan disbursements . . . . . . . . . . 3,140 8,390 - 0
Other deductions . . . . . . . . . . . 702 2,887 520 389,128
---------- ----------- ------------- ------------
Total Deductions. . . . . . . . . 4,615 82,196 2,480 6,199,181
---------- ----------- ------------- ------------
Net increases (decreases) . . . . . . . 1,726,057 4,324,111 1,294,243 26,841,269
---------- ----------- ------------- ------------
Net assets available for plan benefits
Beginning of year . . . . . . . . . . 0 0 0 91,432,150
---------- ----------- ------------- ------------
End of year . . . . . . . . . . . . . $1,726,057 $ 4,324,111 $ 1,294,243 $118,273,419
========== =========== ============= ============
<FN>
See accompanying notes.
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
POLICY MANAGEMENT SYSTEMS CORPORATION
401 (K) RETIREMENT SAVINGS PLAN
STATEMENT OF CHANGES IN NET ASSETS AVAILABLE FOR PLAN BENEFITS, WITH FUND INFORMATION
FOR THE YEAR ENDED DECEMBER 31, 1996
<S> <C> <C> <C> <C> <C> <C>
Fidelity Fidelity Fidelity Evergreen
Retirement Puritan Magellan Short-Int. PMSC
Loan Government Mutual Mutual Bond Stock
------------ ------------ ------------ ------------ ------------ ------------
Additions to net assets attributed to:
Investment Income:
Net appreciation (depreciation) in
market value . . . . . . . . . . . . $ - $ - $ 312,374 $(1,117,737) $ (82,415) $ 204,150
Dividends and interest . . . . . . . . - 1,040,707 2,058,216 3,655,358 218,613 3,405
------------ ------------ ------------ ------------ ------------ ------------
- 1,040,707 2,370,590 2,537,621 136,198 207,555
------------ ------------ ------------ ------------ ------------ ------------
Cash Contributions:
Employer . . . . . . . . . . . . . . - - - - - 3,282,548
Employee . . . . . . . . . . . . . . - 793,927 1,935,134 2,894,473 458,763 224,792
------------ ------------ ------------ ------------ ------------ ------------
- 793,927 1,935,134 2,894,473 458,763 3,507,340
------------ ------------ ------------ ------------ ------------ ------------
Transfers. . . . . . . . . . . . . . . . (8,900) (2,954,159) (86,647) (124,485) (216,506) (225,268)
Loan repayments. . . . . . . . . . . . . (690,062) 103,839 250,600 368,709 63,555 45,976
Securities settlement. . . . . . . . . . - - - - - 239,366
Other additions. . . . . . . . . . . . . - - 97,668 11,654 - 13,870
------------ ------------ ------------ ------------ ------------ ------------
Total Additions (Deductions). . . (698,962) (1,015,686) 4,567,345 5,687,972 442,010 3,788,839
------------ ------------ ------------ ------------ ------------ ------------
Deductions from net assets attributed to:
Distributions . . . . . . . . . . . . 177,815 2,805,675 1,788,953 2,407,635 292,227 891,649
Forfeitures . . . . . . . . . . . . . - 18,025 (2,067) (5,657) (5,615) 506,516
Loan disbursements. . . . . . . . . . (1,596,492) 498,779 259,324 440,401 68,249 184,123
Other deductions. . . . . . . . . . . (12,950) 309,047 17,175 14,897 5,638 20,805
------------ ------------ ------------ ------------ ------------ ------------
Total Deductions (Additions) . . (1,431,627) 3,631,526 2,063,385 2,857,276 360,499 1,603,093
------------ ------------ ------------ ------------ ------------ ------------
Net increases (decreases) . . . 732,665 (4,647,212) 2,503,960 2,830,696 81,511 2,185,746
------------ ------------ ------------ ------------ ------------ ------------
Net assets available for plan benefits
Beginning of year . . . . . . . . . . . 2,338,035 23,652,673 15,536,182 21,147,942 3,171,292 10,355,602
------------ ------------ ------------ ------------ ------------ ------------
End of year . . . . . . . . . . . . . . $ 3,070,700 $19,005,461 $18,040,142 $23,978,638 $ 3,252,803 $12,541,348
============ ============ ============ ============ ============ ============
<FN>
Continued on next page
See accompanying notes.
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
POLICY MANAGEMENT SYSTEMS CORPORATION
401 (K) RETIREMENT SAVINGS PLAN
STATEMENT OF CHANGES IN NET ASSETS AVAILABLE FOR PLAN BENEFITS, WITH FUND INFORMATION
FOR THE YEAR ENDED DECEMBER 31, 1996
(CONTINUED)
<S> <C> <C> <C> <C> <C>
Smith Smith Smith
Barney Barney Barney
Forfeiture Fundamental International Equities Total
------------ ------------- --------------- ----------- ------------
Additions to net assets attributed to:
Investment Income:
Net appreciation (depreciation) in
market value . . . . . . . . . . . . $ (28,021) $ 410,227 $ 221,973 $ (309,334) $ (388,783)
Dividends and interest . . . . . . . . 1,993 252,892 18,399 88,416 7,337,999
------------ ------------- --------------- ----------- ------------
(26,028) 663,119 240,372 (220,918) 6,949,216
------------ ------------- --------------- ----------- ------------
Cash Contributions:
Employer. . . . . . . . . . . . . . . - - - - 3,282,548
Employee. . . . . . . . . . . . . . . - 342,539 209,420 361,771 7,220,819
------------ ------------- --------------- ----------- ------------
- 342,539 209,420 361,771 10,503,367
------------ ------------- --------------- ----------- ------------
Transfers. . . . . . . . . . . . . . . . (315,801) 836,073 481,677 2,614,016 0
Loan repayments. . . . . . . . . . . . . - 47,363 30,528 50,743 271,251
Securities settlement. . . . . . . . . . - - - - 239,366
Other additions. . . . . . . . . . . . . 604 679 679 679 125,833
------------ ------------- --------------- ----------- ------------
Total Additions (Deductions). . . . (341,225) 1,889,773 962,676 2,806,291 18,089,033
------------ ------------- --------------- ----------- ------------
Deductions from net assets attributed to:
Distributions. . . . . . . . . . . . . - 319,434 135,661 289,812 9,108,861
Forfeitures. . . . . . . . . . . . . . (510,554) (230) (40) (378) 0
Loan disbursements . . . . . . . . . . - 65,248 36,852 43,516 0
Other deductions . . . . . . . . . . . 17,156 6,388 3,514 6,608 388,278
------------ ------------- --------------- ----------- ------------
Total Deductions (Additions). . . (493,398) 390,840 175,987 339,558 9,497,139
------------ ------------- --------------- ----------- ------------
Net increases (decreases) . . . . . . . 152,173 1,498,933 786,689 2,466,733 8,591,894
------------ ------------- --------------- ----------- ------------
Net assets available for plan benefits
Beginning of year . . . . . . . . . . 9,575 3,041,051 1,645,433 1,942,471 82,840,256
------------ ------------- --------------- ----------- ------------
End of year . . . . . . . . . . . . . $ 161,748 $ 4,539,984 $ 2,432,122 $4,409,204 $91,432,150
============ ============= =============== =========== ============
<FN>
See accompanying notes.
</TABLE>
<PAGE>
POLICY MANAGEMENT SYSTEMS CORPORATION
401(K) RETIREMENT SAVINGS PLAN
NOTES TO FINANCIAL STATEMENTS
1. ESTABLISHMENT OF PLAN
The Board of Directors of Policy Management Systems Corporation (the
"Company") established the Policy Management Systems Corporation 401(k)
Retirement Savings Plan (the "Plan") to provide a before-tax savings
retirement program for all eligible employees of the Company. The Plan became
effective on April 1, 1990 and is subject to the requirements of the Employee
Retirement Income Security Act of 1974 (ERISA).
2. PLAN DESCRIPTION
GENERAL
The following description of the Plan is provided for general information
purposes only. Participants should refer to the Plan document for a more
complete description of the Plan's provisions.
ELIGIBILITY
All employees of the Company and its participating affiliates, who are
U.S. citizens or U.S. residents, who have attained the age of 18, and who have
completed any six-consecutive-month period of employment, are eligible to
participate in the Plan. A Participant who chooses not to enroll in the Plan
when they are first eligible may elect to participate at a later date, in
accordance with the terms of the Plan.
EMPLOYEE CONTRIBUTIONS
Participants may contribute in 1% increments up to 6% of eligible
compensation as either basic before-tax or basic after-tax contributions to
the Plan, and may contribute an additional 9% of eligible compensation as
either additional before-tax or additional after-tax contributions to the
Plan, not to exceed a total aggregate annual contribution to the Plan of
greater than 15% of eligible compensation. The maximum before-tax contribution
allowed by the Internal Revenue Code of 1986, as amended (the "Code"), for
1997 was $9,500.
EMPLOYER MATCHING CONTRIBUTIONS
The Company matches 100% of the first 3% and 50% of the next 3% of the
Participant's basic before-tax or basic after-tax contributions, but not both.
Employer matching contributions are invested in Policy Management Systems
Corporation common stock.
ALLOCATIONS
Participant's accounts are credited with the actual income derived from
the investments in such accounts and with the actual expenses related to such
accounts.
<PAGE>
INVESTMENT ELECTIONS
Each Participant is required to submit an election form to the Plan
Administrator designating the allocation of the Participant's contributions
among the Plan's investment funds in multiples of 5%. In addition,
Participants may change the investment of contributions and may move their
vested balances among investment funds by phone at specified intervals during
the year.
In addition to the contributions specified above, Participants who
receive a qualified distribution under section 401(a) of the Code, from any
other tax qualified plan, may have all or part of such distribution
transferred into the Plan. Such rollover contributions are subject to tax
regulations imposed by the Code.
VESTING
A Participant is always 100% vested in his or her before-tax contribution
accounts, after-tax contribution accounts and rollover accounts. A
Participant will become fully vested in his employer matching contribution
account when the first of the following occurs: the Participant obtains five
years of credited service; reaches normal retirement date; becomes permanently
disabled; or becomes deceased.
FORFEITURE ALLOCATIONS
All Participant forfeitures are used to reduce future employer matching
contributions to the Plan.
BENEFIT PAYMENTS
The Participant's after-tax contributions may be withdrawn at any time
upon written request of the Participant. In addition, a Participant may
withdraw all or any part of his or her vested employer matching contributions
on his or her basic after-tax contributions, but only to the extent that such
contributions have been in the Plan for at least two full Plan years after the
Plan year in which such contributions were made.
LOANS
Participants may apply for loans greater than $1,000 from the Plan,
collateralized by their account balances and repaid through payroll deduction
generally subject to the following terms:
1) The total loans of any Participant at any point in time shall not exceed
the lesser of (i) 50% of the Participant's vested Account balance, or (ii)
$50,000 adjusted on the volume of loans outstanding to the Participant during
the previous one-year period.
2) Loans may not be made in such a manner as to favor highly compensated
employees, officers or shareholders.
3) No Participant shall be permitted to have more than one loan from the Plan
issued and outstanding at any time, and no Participant shall be issued a new
loan within six months of repayment of a Plan loan.
4) Interest charged on loans is determined by the Plan's Administrative
Committee at a rate commensurate with interest rates charged for similar loans
under general market conditions.
5) The length and terms of repayment may not exceed 5 years, unless the
purpose of the loan is for the purchase of the Participant's principal
residence, in which case the loan term may be extended to ten years.
6) All amounts repaid are credited to the Participant's account.
<PAGE>
ADMINISTRATIVE EXPENSES
Administrative expenses of the Plan may be paid out of Plan assets if not
paid by the Company. Administrative expenses paid by the Plan for the years
ended December 31, 1997 and 1996 were $389,128 and $388,278, respectively.
3. SIGNIFICANT ACCOUNTING POLICIES
BASIS OF ACCOUNTING
The accompanying financial statements have been prepared on the accrual
basis in accordance with generally accepted accounting principles. The
preparation of financial statements in conformity with generally accepted
accounting principles may require management to make estimates and assumptions
that effect the reported amounts of assets and liabilities and disclosure of
contingent assets and liabilities at the date of the financial statements, as
well as the reported amounts of additions to and deductions from net assets
available for plan benefits during the reporting period. Actual results could
differ from those estimates.
ACCOUNTING FOR BENEFIT DISTRIBUTIONS
In accordance with guidance issued by the American Institute of Certified
Public Accountants in 1993, the Plan accounts for distributions such that all
amounts elected to be withdrawn and distributed from the Plan by Participants
are not recorded as a liability in the Statement of Net Assets Available for
Plan Benefits. As of December 31, 1997 and 1996, $212,012 and $360,819 have
been allocated to accounts of persons who have withdrawn from participation in
the earnings and operations of the Plan, but for which disbursement of those
funds from the Plan has not yet been made. The following is a reconciliation
to the amounts reported on Form 5500:
<TABLE>
<CAPTION>
<S> <C> <C>
1997 1996
------------- ------------
Net assets available for plan benefits as stated
in the financial statements . . . . . . . . . . $118,273,419 $91,432,150
Less: Distributions payable . . . . . . . . . . . (212,012) (360,819)
------------- ------------
Net assets available for plan benefits per Form 5500 $118,061,407 $91,071,331
============= ============
</TABLE>
In addition, the financial statements differ from the Form 5500 by the
same amount for distributions on the Statement of Changes in Net Assets.
INVESTMENTS
The Plan invests in open-ended funds managed by either Fidelity
Investments, First Union National Bank, Smith Barney, Evergreen, or Putnam
with the exception of the PMSC Stock Fund and Forfeiture Fund. Each fund is
valued at quoted market prices to determine a current fund value. Investments
in securities for which exchange quotations are readily available are valued
at the last sale price, or, if no sale, at the closing bid price. Debt
securities are valued in the same manner or in some other manner, if,
in the opinion of the Board of Trustees, such other manner would more
accurately reflect the fair value of such debt securities. Short-term
investments (consisting primarily of money-market funds) are valued either at
amortized cost or original cost plus accrued interest, both of which
approximate market value.
<PAGE>
The Plan presents in the statement of changes in net assets available for
plan benefits the net appreciation (depreciation) in the fair value of its
investments which consists of the realized gains or losses and the unrealized
appreciation (depreciation) on those investments.
4. TAX STATUS
The Internal Revenue Service has determined and informed the Company by
letter dated November 1996, that the Plan is designed in accordance with
Sections 401(k) and 401(a) of the Code. The Plan administrator believes that
the Plan is written and is currently being operated in compliance with the
applicable requirements of the Code. The Plan is exempt from federal income
taxes under section 501(a) of the Code.
5. TERMINATION OF PLAN
The Company expects and intends to continue the Plan in force
indefinitely, but has reserved the right to amend or terminate the Plan as
necessary. If the Plan were to be terminated, Participants would become fully
vested and all assets of the Plan would be distributed to the individual
Participants based upon the vested balances in their individual accounts at
the date of termination.
6. RELATED PARTY TRANSACTIONS
The Plan purchases, on behalf of Participants, shares of the Company's
common stock in accordance with individual Participant's investment elections.
During the Plan year ended December 31, 1997, the Plan purchased 127,114
shares at an aggregate cost of $6,286,648 and sold 57,750 shares for aggregate
proceeds of $3,006,716 and realized gains of $347,647. During the Plan year
ended December 31, 1996, the Plan purchased 109,549 shares at an aggregate
cost of $4,571,197 and sold 45,586 shares for aggregate proceeds of $2,084,743
and realized losses of $93,135.
The Plan also had 337,594 and 271,701 shares of the Company's common
stock with a fair value of $23,484,051 and $12,532,208 at December 31, 1997
and 1996, respectively.
7. SECURITIES SETTLEMENT
In December 1994, the Company reached an agreement, which was
subsequently approved on May 26, 1995, by the United Stated District Court for
the District of South Carolina, to settle its shareholder class action. The
Plan, as an eligible shareholder, received $239,366 as its portion of the
settlement in November 1996. The proceeds were received by the PMSC Stock
Fund, invested in PMSC stock and allocated on a pro rata basis to eligible
participants.
<PAGE>
SUPPLEMENTAL SCHEDULES
<PAGE>
<TABLE>
<CAPTION>
POLICY MANAGEMENT SYSTEMS CORPORATION
401(K) RETIREMENT SAVINGS PLAN
FORM 5500, ITEM 27(A)-SCHEDULE OF ASSETS HELD
FOR INVESTMENT PURPOSES
DECEMBER 31, 1997
<S> <C> <C> <C>
Current
Identity of Issue Description of Investment Cost Value
- ----------------------- ---------------------------------- ----------- -----------
Loan 3,065,511 units participant loans
Fund bearing interest rates from 7.00%
to 12.25% with varying maturities
from 18 to 360 months $ 3,065,511 $ 3,065,511
Fidelity Retirement 17,586,013 units Fidelity
Government Money Market Money Market 17,586,013 17,586,013
Fidelity 1,260,993 units Fidelity
Puritan Fund Puritan Fund 20,863,547 24,438,043
28 units Valiant General
Fund #62 28 28
Fidelity 317,080 units Fidelity
Magellan Fund Magellan Fund 24,784,804 30,208,172
3 units Valiant General
Fund #62 3 3
Evergreen Short- 351,554 units Evergreen
Intermediate Bond Fund Short-Intermediate Bond Fund 3,527,300 3,469,841
1 unit Valiant General
Fund #62 1 1
PMSC 334,429 shares Policy Management
Stock Fund Systems Corporation Common Stock* 15,406,212 23,263,911
388 units Valiant General
Fund #62 388 388
Forfeiture 3,165 shares Policy Management
Account Systems Corporation Common Stock* 143,977 220,140
192 units Valiant General
Fund #62 192 192
<FN>
Continued on next page
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
POLICY MANAGEMENT SYSTEMS CORPORATION
401(K) RETIREMENT SAVINGS PLAN
FORM 5500, ITEM 27(A)-SCHEDULE OF ASSETS HELD
FOR INVESTMENT PURPOSES
DECEMBER 31, 1997
(CONTINUED)
<S> <C> <C> <C>
Current
Identity of Issue Description of Investment Cost Value
- ------------------------------ ------------------------------ ---------- ----------
Smith Barney 608,858 units Smith Barney
Fundamental Value Fund Fundamental Value Fund $5,555,477 $6,271,240
9 units Valiant General
Fund #62 9 9
Smith Barney 120,596 units Smith Barney
International Equity Portfolio International Equity Portfolio 2,215,395 2,382,974
2 units Valiant General
Fund #62 2 2
Evergreen Growth & 60,753 units Evergreen
Income Fund Growth & Income Fund 1,676,525 1,722,951
3,045 units Valiant General
Fund #62 3,045 3,045
Putnam OTC & 268,408 units Putnam OTC
Emerging Growth Fund Emerging Growth Fund 4,067,874 4,324,049
1 unit Valiant General
Fund #62 1 1
First Union's Enhanced 22,501 units First Union
Stock Market Fund Enhance Stock Market Fund 1,239,272 1,294,212
1 unit Valiant General
Fund #62 1 1
<FN>
* Indicates party-in-interest to the Plan.
Note: The Valiant General Fund #62 represents funds held in a money market account for
the purpose of paying disbursements related to the purchasing and selling of
investments.
</TABLE>
<PAGE>
POLICY MANAGEMENT SYSTEMS CORPORATION
401(K) RETIREMENT SAVINGS PLAN
FORM 5500, ITEM 27(D) - SCHEDULE OF REPORTABLE TRANSACTIONS
FOR THE YEAR ENDED DECEMBER 31, 1997
SINGLE TRANSACTIONS EXCEEDING 5% OF NET ASSETS
There were no single transactions exceeding 5% of Net Assets for 1997.
<TABLE>
<CAPTION>
SERIES OF TRANSACTIONS EXCEEDING 5% OF NET ASSETS (EXCLUSIVE OF THE ABOVE TRANSACTIONS)
<S> <C> <C> <C> <C> <C> <C>
Value of
Identity Asset on
of Party Description of Number of Selling Cost of Transaction Net Gain
Involved Assets Transactions Price Asset Date (Loss)
- ----------------- -------------- ------------ ---------- ----------- ------------ ----------
Fidelity
Retirement Money
Government Market
Money Market Shares 52 $ 2,065,728 $ 2,065,728 $
Fidelity
Retirement Money
Government Market
Money Market Shares 45 3,527,275 3,527,275 3,527,275 0
Fidelity Puritan Mutual Fund
Mutual Shares 58 5,342,232 5,311,467
Fidelity Puritan Mutual Fund
Mutual Shares 34 1,256,295 1,102,255 1,243,972 154,040
Fidelity Magellan Mutual Fund
Mutual Shares 53 5,983,241 5,959,534
Fidelity Magellan Mutual Fund
Mutual Shares 39 3,928,321 3,365,339 3,903,046 562,982
PMSC PMSC Common
Stock Stock 47 6,286,648 6,229,322
PMSC PMSC Common
Stock Stock 55 3,006,716 2,593,117 2,980,155 413,599
Smith Barney Equity Fund
Equities Shares 18 640,725 622,943
Smith Barney Equity Fund
Equities Shares 22 4,759,984 5,176,745 4,777,530 (416,761)
Valiant General Money Market
Fund #62 Shares * 34,460,437 34,460,437
Valiant General Money Market
Fund #62 Shares * 34,636,027 34,636,027 34,636,027 0
<FN>
*Omitted from schedule by Trustee.
</TABLE>
CONSENT OF INDEPENDENT ACCOUNTANTS
We consent to the incorporation by reference in the registration statements of
Policy Management Systems Corporation on Form S-8 (Nos. 33-59553, 33-59555
and 33-59575) of our report dated June 15, 1998 on our audits of the
financial statements of the Policy Management Systems Corporation 401(k)
Retirement Savings Plan as of December 31, 1997 and 1996 and for the years
then ended, which report is included in this Annual Report on Form 11-K.
Coopers & Lybrand L.L.P.
Atlanta, Georgia
June 29, 1998