=========================================================================
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 THE QUARTER ENDED MARCH 31, 1996
COMMISSION FILE NUMBER 0-13124
WARNER INSURANCE SERVICES, INC.
(EXACT NAME OF REGISTRANT AS SPECIFIED IN ITS RESPECTIVE CHARTER)
----------
DELAWARE 13-2698053
(State or other jurisdiction (I.R.S. Employer
of incorporation or organization) Identification No.)
18-01 POLLITT DRIVE
FAIR LAWN, NEW JERSEY 07410
(201) 794-4800
(ADDRESS, INCLUDING ZIP CODE, AND TELEPHONE NUMBER,
INCLUDING AREA CODE, OF REGISTRANT'S PRINCIPAL EXECUTIVE OFFICES)
----------
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 [ ]
Number of shares outstanding at May 2, 1996:
15,761,725 shares of Common Stock, par value $.01 per share.
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<PAGE>
WARNER INSURANCE SERVICES, INC.
AND SUBSIDIARIES
INDEX TO FORM 10-Q FOR THE QUARTER ENDED
MARCH 31, 1996
PAGE NO.
--------
PART I -- FINANCIAL INFORMATION
Item 1 -- Financial Statements
Consolidated Balance Sheets
March 31, 1996 and December 31, 1995 . . . . . . . . . . . 2-3
Consolidated Statements of Operations
Three Months Ended March 31, 1996 and 1995 . . . . . . . . . 4
Consolidated Statements of Cash Flows
Three Months Ended March 31, 1996 and 1995 . . . . . . . . . 5
Notes to Consolidated Financial Statements . . . . . . . . 6-9
Item 2 -- Management's Discussion and Analysis of
Financial Condition and Results of
Operations . . . . . . . . . . . . . . . . . . . . . . 10-11
PART II -- OTHER INFORMATION . . . . . . . . . . . . . . . . . . . . . 11
SIGNATURES . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 12
<PAGE>
PART I -- FINANCIAL INFORMATION
ITEM 1 -- FINANCIAL STATEMENTS
WARNER INSURANCE SERVICES, INC.
AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
MARCH 31, DECEMBER 31,
1996 1995
----------- ------------
(unaudited) (unaudited)
ASSETS
Current assets:
Cash and cash equivalents . . . . . $ 1,749,412 $ 1,576,745
Accounts receivable, less
allowance for doubtful accounts
of $119,310 and none . . . . . . 3,969,195 1,763,890
Income taxes receivable . . . . . . -- 2,300,000
Prepaid expenses . . . . . . . . . . 535,027 5,355
----------- -----------
Total current assets . . . . . . 6,253,634 5,645,990
----------- -----------
Property and equipment, at cost:
Furniture, fixtures and
equipment . . . . . . . . . . . . 2,979,938 3,095,529
Less accumulated depreciation . . . (2,403,957) (2,369,873)
----------- -----------
Property and equipment-net . . . 575,981 725,656
----------- -----------
Software license . . . . . . . . . . . 5,000,000 --
----------- -----------
Capitalized software, less amortization
of $657,416 and $489,227 . . . . . . 1,451,380 1,510,782
----------- -----------
Other assets . . . . . . . . . . . . . 1,049,584 486,726
----------- -----------
$14,330,579 $ 8,369,154
=========== ===========
<PAGE>
WARNER INSURANCE SERVICES, INC.
AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS (CONTINUED)
March 31, December 31,
1996 1995
--------- ------------
(unaudited) (unaudited)
LIABILITIES AND STOCKHOLDERS' EQUITY
(DEFICIT)
Current liabilities:
Accounts payable . . . . . . . . . . . $ 1,234,777 $ 955,060
Accrued liabilities . . . . . . . . . 4,264,008 4,123,641
Unearned revenue . . . . . . . . . . . 546,159 635,564
Liabilities in excess of assets of
ISD business in 1996 . . . . . . . -- 8,648,368
----------- -----------
Total current liabilities . . . . . 6,044,944 14,362,633
----------- -----------
Deferred income taxes . . . . . . . . . . 20,000 20,000
----------- -----------
Commitments and contingencies (Note 4)
Stockholders' equity (deficit):
Common stock, $.01 par value;
authorized 20,000,000
shares, issued 16,375,774 and
9,194,890 shares . . . . . . . . . 163,758 91,949
Warrants outstanding . . . . . . . . . . 714,584 --
Capital in excess of par value . . . . . 24,704,980 10,414,253
Accumulated (deficit) . . . . . . . . . . (14,750,480) (13,952,474)
Treasury stock at cost 633,986 shares . . (2,567,207) (2,567,207)
----------- -----------
Total stockholders' equity (deficit) . $ 8,265,635 (6,013,479)
----------- -----------
$14,330,579 $ 8,369,154
=========== ===========
<PAGE>
WARNER INSURANCE SERVICES, INC.
AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF OPERATIONS
(unaudited)
Three Months Ended
March 31,
-----------------------
1996 1995
---- ----
Revenues:
Licenses . . . . . . . . . . . . . . . . . $ 205,001 $ 435,985
Maintenance . . . . . . . . . . . . . . . 507,104 204,585
Professional services . . . . . . . . . . 407,998 413,130
---------- ----------
1,120,103 1,053,700
---------- ----------
Costs and expenses:
Research and development expenses . . . . 957,564 1,023,920
Cost of services . . . . . . . . . . . . . 293,067 297,454
Sales and marketing . . . . . . . . . . . 118,159 115,570
General and administrative . . . . . . . . 549,319 609,816
Special charges . . . . . . . . . . . . . -- 1,165,000
---------- ----------
1,918,109 3,211,760
---------- ----------
Loss from continuing operations . . . . . . (798,006) (2,158,060)
Loss from discontinued operations . . . . . . -- (1,329,532)
---------- -----------
Net loss . . . . . . . . . . . . . . . . . $(798,006) $(3,487,592)
========== ============
Loss per share from continuing
operations . . . . . . . . . . . . . . . $ (0.07) $ (0.25)
========== ============
Net loss per share . . . . . . . . . . . $ $ (0.07) $ (0.41)
========== ============
Weighted average number of
common shares outstanding . . . . . . . . $10,964,669 $ 8,554,514
=========== ============
<PAGE>
WARNER INSURANCE SERVICES, INC.
AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS
(UNAUDITED)
Three Months Ended
March 31,
-----------------------
1996 1995
---- ----
Cash flows from operating activities:
Net loss from continuing operations . . $ (798,006) $(2,158,060)
Adjustments to reconcile net loss to net
cash used for operating activities:
Depreciation . . . . . . . . . . . . 67,988 86,109
Amortization of capitalized
software . . . . . . . . . . . . . . 168,189 83,333
Accounts receivable . . . . . . . . . (2,205,305) (1,699,635)
Income taxes receivable . . . . . . . 2,300,000 (248,560)
Deferred income taxes . . . . . . . . -- --
Prepaid expenses . . . . . . . . . . (529,672) (473,687)
Other assets . . . . . . . . . . . . (562,858) 43,242
Accounts payable . . . . . . . . . . 279,717 415,382
Accrued liabilities . . . . . . . . . 222,054 2,608,453
Unearned revenue . . . . . . . . . . (89,405) 454,565
------------ -----------
Net cash used for continuing
operating activities . . . . . . . . . . . (1,147,298) (388,858)
------------ ------------
Loss from discounted operations . . . . -- (1,329,532)
Decrease in net liabilities of
discontinued operations . . . . . . . . (8,648,368) (1,177,697)
------------ ------------
Net cash used for discontinued
operating activities . . . . . . . . . . . (8,648,368) (2,507,229)
------------ ------------
Net cash used for operating activities . . (9,795,666) (2,896,087)
------------ ------------
Cash flows from investing activities:
Proceeds from sale of fixed
maturity investments . . . . . . . . -- 1,947,500
Capital expenditures . . . . . . . . . . -- (26,064)
Software license . . . . . . . . . . . . (5,000,000) --
Capitalized software expenditures . . . (108,787) --
------------ ------------
Net cash (used for) provided
from investing activities . . . . . . . . (5,108,787) 1,921,436
------------ ------------
Cash flows from financing activities:
Credit line borrowings . . . . . . . . . -- (2,000,000)
Net proceeds from issuance
of common stock . . . . . . . . . . 15,077,120 12,335
----------- ------------
Net cash provided from
(used for) financing activities . . . . . 15,077,120 (1,987,665)
----------- ------------
Change in cash and cash equivalents . . . . 172,667 (2,962,316)
Cash and cash equivalents
beginning of period . . . . . . . . . . . 1,576,745 6,407,801
----------- ------------
Cash and cash equivalents end of period . . $ 1,749,412 $ 3,445,485
=========== ===========
<PAGE>
WARNER INSURANCE SERVICES, INC.
AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
NOTE 1 -- GENERAL
For a summary of significant accounting policies, refer to Note 2 of
Notes to Consolidated Financial Statements included in Warner Insurance
Services, Inc.'s (the "Company" or "Warner") Annual Report on Form 10-K for
the year ended December 31, 1995. While the Company believes that the
disclosures presented are adequate to make the information not misleading,
these consolidated financial statements should be read in conjunction with
the consolidated financial statements and the notes thereto included in the
Company's latest annual report. Certain amounts for the prior year have
been reclassified to conform with the current period's financial statement
presentation. The financial statements include on a consolidated basis the
results of all subsidiaries. All material intercompany transactions have
been eliminated.
In the opinion of management, the accompanying consolidated financial
statements include all adjustments which are necessary to present fairly
the Company's financial position as of March 31, 1996 and December 31, 1995
and the results of operations for the three-month periods ended March 31,
1996 and 1995, and the cash flows for the three-month periods ended March
31, 1996 and 1995. Such adjustments are of a normal and recurring nature.
The results of operations for the three-month period ended March 31, 1996
are not necessarily indicative of the results to be expected for a full
year.
NOTE 2 -- DISCONTINUED OPERATIONS
Insurance Services Division ("ISD") revenues decreased substantially
in 1995 because of lower fees attributable to the reduced number of
policies and claims being handled on contracts that were winding down or
were completed. As a result, ISD had been suffering losses and operating
under considerable uncertainty as a result of the pendency of lawsuits with
certain affiliates of The Robert Plan Corporation as described in Note 4.
In March 1996, the Company entered into a series of agreements which
provided for the transfer and discontinuance of its ISD operations and the
issuance of Warner Common Stock and Warrants to certain customers of the
ISD business in exchange for the release of Warner from its obligations to
provide insurance services to ISD customers and to The Robert Plan
Corporation in exchange for the settlement and dismissal of lawsuits with
The Robert Plan Corporation. Effective March 1, 1996, the Company has
discontinued providing insurance processing services to the automobile
insurance industry. These agreements have resulted in a net loss reported
in 1995 of $749,758, which included a provision for estimated ISD losses in
1996 prior to the March 1 effective date of the settlement.
As a part of the restructuring transactions, the Company transferred
certain assets, employees, contracts and leased premises relating to its
ISD business to a subsidiary of The Robert Plan Corporation, which is
replacing the Company as the provider of insurance services to the ISD
customers. In exchange for settling the lawsuits, releasing the Company's
obligations to provide insurance services under its contracts and executing
the mutual releases, the Company issued to certain of the ISD customers and
certain parties to the litigation: (a) a total of 3,256,201 shares of
Warner Common Stock, (b) five-year Warrants to purchase up to an additional
aggregate of 1,553,125 shares of Warner Common Stock at $2.00 per share and
(c) cash of $2.5 million. The Company has the option, exercisable for a
period of six months to (i) purchase 50 percent of the aforementioned
3,256,201 shares at a cash price equal to the greater of $3.00 or 50
percent of the then market price of a share of Warner Common Stock and (ii)
acquire 50 percent of the 1,553,125 Warrants at a cash price equal to $1.00
per Warrant. On March 31, 1996, the Company assigned its aforementioned
repurchase option applicable to Warner's Common Stock and Warrants to
Software Investments Limited as discussed in Note 6. As a result of the
issuance of shares described in Note 6, the antidilution provisions of the
Warrants require an adjustment of shares to 1,725,694 from 1,553,125 and a
price adjustment to $1.80 from $2.00 per share.
Accordingly, ISD operations for the three-month period ended March 31,
1995, have been reclassified and are included in the Consolidated
Statements of Operations as discontinued operations.
In late 1993, the Company established Alerion, a wholly-owned
property/casualty insurance subsidiary. By early 1994, Warner had funded
Alerion with approximately $10 million of cash and securities and Alerion
entered into a reinsurance agreement with Clarendon National Insurance
Company ("Clarendon") to reinsure a portion of the risk on certain
insurance policies written by a primary insurer. In late 1994, the Company
decided to discontinue assuming any underlining insurance risk. This was
accomplished by Alerion commuting all its rights and obligations under the
reinsurance contract back to Clarendon and paying to Clarendon all amounts
received in excess of payments made since the inception. Alerion sold its
securities and returned all of its cash in 1994, 1995 and 1996, having
surrendered its Certificate of Authority to transact insurance business in
New Jersey.
NOTE 3 -- COVER-ALL
With the discontinuance of ISD, COVER-ALL Systems, Inc. ("COVER-ALL"),
a wholly-owned subsidiary, is the Company's only active operation.
Accordingly, COVER-ALL operations for the three-month periods ended March
31, 1996 and 1995 are classified in the Consolidated Statements of
Operations as continuing operations.
In December 1994, management instituted a plan to downsize the COVER-
ALL organization and reduce the rate of product development to a level
consistent with the reduced level of customer installations planned in
1995. Costs of $1,165,000 were incurred and written off in the first
quarter of 1995 for executive and other severance costs as well as software
development costs. This 1995 write-off was reflected as special charges in
the Statement of Operations for the first quarter of 1995.
NOTE 4 -- LITIGATION
In March 1994, Material Damage Adjustment Corporation ("MDA"), a
subsidiary of The Robert Plan Corporation and a subcontractor for the
Company performing claims processing work, instituted an action in the
Superior Court of New Jersey seeking injunctive relief requiring that the
Company turn over to MDA in excess of $1 million that the Company had
withheld from certain claims fees allegedly owed to MDA. This action arose
out of the Company's servicing contract with the Market Transition Facility
of New Jersey ("MTF"). The Company had withheld the funds as a set off to
cover unpaid invoices for data processing services rendered by the Company
for MDA. MDA also added a claim for approximately $2.5 million of
surcharge fees paid to the Company by the MTF. The MTF was brought into
the case to resolve disputes between MTF and MDA over refunds of claims
fees paid on claims later closed without payment ("CWP's"). The Company
vigorously contested MDA's claims and asserted counterclaims against MDA to
establish the Company's entitlement to the disputed sums.
In May 1994, the Company filed an action in the Superior Court of New
Jersey against Lion Insurance Company, National Consumer Insurance
Corporation, and The Robert Plan Corporation seeking payment of unsatisfied
invoices under an April 1991 agreement totalling approximately $2.7
million. Under the agreement, the Company agreed to provide data
processing services for a three-year term in support of Lion Insurance
Company's "depopulation pool" automobile insurance business in New Jersey.
Lion Insurance Company is a subsidiary of The Robert Plan Corporation whose
affiliate, National Consumer Insurance Corporation, has taken over the
"depopulation pool" business. The Robert Plan Corporation guaranteed
Lion's performance and payment.
On March 1, 1996, the two lawsuits described above were settled as
part of the overall settlement with certain of the Company's insurance
services customers. The settlement and restructuring transactions are
described in Note 2--Discontinued Operations.
On February 2, 1995, Sol M. Seltzer commenced an action in the Supreme
Court of New York against Mr. Krieger, the Chairman of the Board and former
President of the Company, and each of the other members of the Board of
Directors of the Company. The plaintiff, Sol M. Seltzer, who purports to
sue derivatively on behalf of the Company and COVER-ALL, was a vice
president of the Company and a director of COVER-ALL until he resigned from
such positions in late 1994. The plaintiff alleges, among other things,
breach of fiduciary duty, waste and mismanagement, as well as other alleged
wrongful acts by the Board and the former President, including among other
things, self-dealing and misuse of corporate funds by the former President.
The plaintiff seeks, among other things, compensatory damages in an amount
to be determined at trial and punitive damages in an aggregate amount of
$12 million.
The Company, and the other defendants, are vigorously contesting Mr.
Seltzer's claims. The Company believes that this lawsuit lacks substantial
merit. A motion to dismiss the complaint has been filed and is pending.
On February 6, 1995, the Company commenced an action in the Superior
Court of New Jersey against Sol M. Seltzer, a former vice president of the
Company and a director of COVER-ALL, alleging fraud, mismanagement,
negligent misrepresentation and breach of fiduciary duty with respect to
the development and implementation of COVER-ALL's TAS 2000 software
product. The Company seeks compensatory and punitive damages in an amount
to be determined at trial. Discovery has not been completed in this case.
In addition to the above lawsuits, the Company is named as defendant
in a number of legal actions arising from its operations. Those actions
have been considered in establishing liabilities. Management and its legal
counsel are of the opinion that the settlement of those actions will not
have a material adverse effect on financial position or results of
operations.
NOTE 5 -- INCOME TAXES
For 1996 and 1995, no income tax benefit relative to the Company's
operating losses has been reflected in the Statement of Operations. A
valuation allowance was provided equal to the tax benefit that the loss
generated, since the realization of such benefit would be dependent upon
achieving future operating profits which cannot be reasonably assured.
NOTE 6 -- SALE OF STOCK AND WARRANTS ON MARCH 31, 1996
On March 31, 1996, the Company entered into a series of transactions
with Software Investments Limited ("SIL") and Care Corporation Limited
("Care") whereby the Company:
(A) sold to SIL for total proceeds of $3,022,391: (i) 1,412,758
shares of Warner Common Stock for $2.00 per share and (ii) five-year
Warrants to purchase an aggregate of 196,875 shares of Warner Common
Stock exercisable at $2.00 per share for $1.00 per Warrant ($196,875).
(B) assigned to SIL the rights it retained in the settlement
(see Note 2) to repurchase within six months 1,628,100 shares of
Warner Common Stock for the greater of $3.00 per share or 50 percent
of the then market price of Warner Common Stock and its rights to
purchase from the Warrant holders for $1.00 per share five-year
Warrants to acquire 776,562 shares of Warner Common Stock at $2.00 per
share. As a result of the issuance of the above mentioned shares, the
antidilution provisions of the Warrants require an adjustment from
776,562 shares at $2.00 per share to 862,847 shares at $1.80 per
share.
On May 1, 1996, SIL acquired 1,628,101 shares of Warner Common Stock
at $3.00 per share, and at $1.00 per Warrant, 776,562 Warrants to acquire
776,562 shares of Warner Common Stock at $2.00 per share. SIL exercised
these Warrants on May 6, 1996, resulting in the Company receiving
$1,553,124 in additional equity. An additional 86,285 shares will be
issued to SIL as a result of the change in the aggregate number of shares
underlying the Warrants pursuant to the antidilution provisions in the
Warrants as described above in Note 2.
In addition, the Company was granted by Care the exclusive license for
the Care software systems for use in the workers' compensation and group
health claims administration markets in Canada, Mexico and Central and
South America. In exchange for this license, Warner has issued to Care
2,500,000 shares of Warner Common Stock. If during the three years after
closing, this license results in $5,000,000 or more in revenues by Warner,
then the shares will be fully earned. Otherwise, depending upon the level
of revenue reached, Warner will have the right to repurchase portions of
the shares at $.01 per share based upon the level of revenues actually
achieved. Under certain circumstances, based upon aggregate net sales in
excess of $10,000,000 from a maximum of two separate sales during such
three-year period, Warner may be required to grant to Care five-year
Warrants to buy an additional 1,000,000 shares of Warner Common Stock at
$2.00 per share. Accordingly, the Company recorded a $5,000,000 software
license on the Consolidated Balance Sheets as of March 31, 1996.
<PAGE>
WARNER INSURANCE SERVICES, INC.
AND SUBSIDIARIES
ITEM 2 -- MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
RESULTS OF OPERATIONS
Total revenues for the three months ended March 31, 1996 were
$1,120,103 as compared to $1,053,700 for the same period in 1995. License
fees were $205,001 in 1996 compared to $435,985 in 1995 as a result of
lower TAS 2000 license fees. A contract for the TAS 2000 license expected
to be signed in the first quarter of 1996 is now anticipated to be signed
in the second quarter of 1996. For the three months ended March 31, 1996,
maintenance revenues were $507,104 compared to $204,585 in the same period
of the prior year due to renegotiations of all contracts resulting in
higher fees to customers. Professional services revenue contributed
$407,998 in the first three months of 1996 compared to $413,130 in the
first three months of 1995.
In December 1994, management adopted a plan to reduce the COVER-ALL
marketing and product development costs until revenues increased to
significantly higher levels. The total cash outlay had grown to a level of
approximately $1 million per month but the revenues from customers
continued to lag expectations. The total head count, including employees
and technical consultants, was reduced by approximately half in the first
quarter of 1995 and a business plan was adopted in 1995 which matched
slowly growing revenues with reduced costs. As a result of the
reorganization plan, costs incurred in the first quarter of 1995 for
executive severance, employee severance and write-off of software
development costs totalling $1,165,000 were reflected as special charges in
the Statement of Operations for the quarter ended March 31, 1995.
Total expenses for the three months ended March 31, 1996 were
$1,918,109 compared to $2,046,760 excluding special charges of $1,165,000
for the same period in 1995, primarily as a result of the effort to bring
costs in line with revenue. COVER-ALL's business is characterized by rapid
technological change, and its success depends on its ability to keep its
products current based on new technologies. COVER-ALL must maintain
ongoing research and development programs to add value and expand to its
suite of products resulting in research and development expenditures
constituting a significant percentage of expenses.
COVER-ALL has successfully installed and tested certain modules of its
system and customer interest has grown significantly. Revenues are
expected to increase rapidly over the next three quarters. COVER-ALL
expects to be profitable for the year 1996.
The preceding forward looking statements are subject to the occurrence
of certain contingencies which may not occur in the time frames anticipated
or otherwise. These contingencies include the successful completion of
continuing developmental efforts under existing software contracts within
anticipated time frames or otherwise, the successful negotiation, execution
and implementation of currently anticipated new software contracts, the
hiring and successful utilization of additional personnel in the marketing
and technical areas, the continuing favorable responses to the Company's
products from existing and potential new customers, and the Company's
ability to complete development and sell and license its products at prices
which result in sufficient revenues to cover costs and realize profits.
LIQUIDITY AND CAPITAL RESOURCES
In January 1996, the Company obtained approval from the New Jersey
Department of Insurance to dissolve its insurance subsidiary, Alerion. As
a result, plans were implemented to remove the remaining approximately $2.5
million of statutory minimum capital from Alerion. In January 1996,
approximately $2.4 million was distributed to the Company from Alerion.
There was a $1 million letter of credit outstanding with a bank at
December 31, 1995 issued in connection with certain of the Company's
contractual obligations. The letter of credit expired in February 1996 and
the $1 million of cash collateral was returned to the Company, $887,500 of
these funds were utilized by the Company as the cash portion of the
settlement distributed to certain ISD customers and The Robert Plan
Corporation. In addition, $1.6 million was paid by the Company to the one
ISD customer who did not participate in the settlement.
In March 1996, the Company received a $2.3 million refund of federal
income taxes paid prior to 1995.
Cash flows from continuing operations were negative in the first three
months of 1996 by $1.1 million as compared with negative cash flows of $.4
million in the same period in 1995 primarily due to increased working
capital requirements in 1996.
The Company believes that current cash balances and anticipated cash
flows from operations will be sufficient to meet normal operating needs.
PART II -- OTHER INFORMATION
ITEM 6 -- EXHIBITS AND REPORTS ON FORM 8-K
(a) EXHIBITS.
27. Financial Data Schedule.
(b) REPORTS ON FORM 8-K.
The Company filed a Form 8-K on March 7, 1996 under Item 5 to
reflect the Restructuring Transactions. The Company also filed a
Form 8-K on April 8, 1996 under Item 5 to reflect an investment i
n the Company by Software Investments Limited and Care Corporatio
n Limited, and a settlement agreement with Clarendon National
Insurance Company, each of which occurred during the quarter.
<PAGE>
WARNER INSURANCE SERVICES, INC.
AND SUBSIDIARIES
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.
WARNER INSURANCE SERVICES, INC.
May 14, 1996 By: /s/ Alfred J. Moccia
------------------------------
Alfred J. Moccia
President and Chief
Executive Officer
May 14, 1996 By: /s/ Raul F. Calvo
------------------------------
Raul F. Calvo
Vice President
<PAGE>
EXHIBIT INDEX
Exhibit Description
------- -----------
27 Financial Data Schedule
<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND>
THE SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM WARNER
INSURANCE SERVICES INC. FORM 10-Q FOR THE QUARTER ENDED MARCH 31, 1996 AND
IS QUALIFIED IN ITS ENTIRETY BY REFERENCE TO SUCH FINANCIAL STATEMENTS.
</LEGEND>
<S> <C>
<PERIOD-TYPE> 3-MOS
<FISCAL-YEAR-END> DEC-31-1996
<PERIOD-END> MAR-31-1996
<CASH> 1,749,412
<SECURITIES> 0
<RECEIVABLES> 4,088,505
<ALLOWANCES> 119,310
<INVENTORY> 0
<CURRENT-ASSETS> 6,253,634
<PP&E> 2,979,938
<DEPRECIATION> 2,403,957
<TOTAL-ASSETS> 14,330,579
<CURRENT-LIABILITIES> 6,044,944
<BONDS> 0
<COMMON> 163,758
0
0
<OTHER-SE> 8,101,877
<TOTAL-LIABILITY-AND-EQUITY> 14,330,579
<SALES> 0
<TOTAL-REVENUES> 1,120,103
<CGS> 0
<TOTAL-COSTS> 293,067
<OTHER-EXPENSES> 1,625,042
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 0
<INCOME-PRETAX> (798,006)
<INCOME-TAX> 0
<INCOME-CONTINUING> (798,006)
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> (798,006)
<EPS-PRIMARY> (.07)
<EPS-DILUTED> (.07)
</TABLE>
