<PAGE>
As filed with the Securities and Exchange Commission on March 6, 1998
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 11-K
[X] ANNUAL REPORT PURSUANT TO SECTION 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
For the fiscal year ended December 31, 1996
OR
[_] TRANSITION REPORT PURSUANT TO SECTION 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
Commission file number [ ]
A. Full title of the plan and the address of the plan, if different from
that of the issuer named below:
The PMI Group, Inc. Savings and Profit-Sharing Plan
B. Name of issuer of the securities held pursuant to the Plan and the
address of its principal executive office:
The PMI Group, Inc.
601 Montgomery Street
San Francisco, CA 94111
<PAGE>
REQUIRED INFORMATION
1. The financial statements of the Savings and Profit-Sharing Plan and
Trust (also known as The PMI Group, Inc. 401(k) Plan) as of December 31, 1996
and 1995 and for the years then ended including: the statements of net assets
available for benefits (modified cash basis) as of December 31, 1996 and 1995,
the related statements of changes in net assets available for benefits (modified
cash basis) for the year ended December 31, 1996 and for the period from April
1, 1995 (inception date) to December 31, 1995, supplemental schedule (modified
cash basis) of assets held for investment purposes as of December 31, 1996,
supplemental schedule (modified cash basis) of reportable transactions for the
year ended December 31, 1996, together with the report of Deloitte & Touche LLP,
independent auditors, are contained in Exhibit 1 to this Annual Report.
2. Consent of Deloitte & Touche LLP, independent auditors, is contained
in Exhibit 2 to this Annual Report.
SIGNATURES
The Plan. Pursuant to the requirements of the Securities Exchange Act
of 1934, the trustees (or other persons who administer the employee benefit
plan) have duly caused this annual report to be signed on its behalf by the
undersigned hereunto duly authorized.
THE PMI GROUP, INC. SAVINGS AND
PROFIT-SHARING PLAN
Date: March 4, 1998 By: /s/ Victor J. Bacigalupi
----------------- ------------------------------------
Victor J. Bacigalupi
Senior Vice President,
General Counsel and Secretary
2
<PAGE>
Exhibit 1
THE PMI GROUP, INC. 401(K) PLAN
FINANCIAL STATEMENTS (MODIFIED CASH BASIS) AS OF
DECEMBER 31, 1996 AND 1995, AND FOR THE YEAR ENDED
DECEMBER 31, 1996 AND FOR THE PERIOD FROM APRIL 1, 1995
(INCEPTION DATE) TO DECEMBER 31, 1995, SUPPLEMENTAL
SCHEDULES (MODIFIED CASH BASIS) AS OF AND FOR THE YEAR ENDED
DECEMBER 31, 1996 AND INDEPENDENT AUDITORS' REPORT
<PAGE>
<TABLE>
<CAPTION>
THE PMI GROUP, INC. 401(K) PLAN
TABLE OF CONTENTS
- --------------------------------------------------------------------------------------------
<S> <C>
PAGE
INDEPENDENT AUDITORS' REPORT 1-2
FINANCIAL STATEMENTS (MODIFIED CASH BASIS) AS OF DECEMBER 31,
1996 AND 1995, FOR THE YEAR ENDED DECEMBER 31, 1996 AND FOR
THE PERIOD FROM APRIL 1, 1995 (INCEPTION DATE) TO DECEMBER 31, 1995:
Statements of Net Assets Available for Benefits, With Fund Information 3-5
Statements of Changes in Net Assets Available for Benefits, With Fund Information 6-8
Notes to Financial Statements 9-12
SUPPLEMENTAL SCHEDULES (MODIFIED CASH BASIS) FOR THE YEAR
ENDED DECEMBER 31, 1996:
Item 27a - Schedule of Assets Held for Investment Purposes 13
Item 27d - Schedule of Reportable Transactions -
Series of Transactions in Excess of 5% of Beginning Plan Assets 14
</TABLE>
<PAGE>
INDEPENDENT AUDITORS' REPORT
To the Participants of The PMI Group, Inc. 401(K) Plan
and Board of Directors of The PMI Group, Inc.:
We have audited the accompanying statements of net assets available for benefits
(modified cash basis) of The PMI Group, Inc. 401(K) Plan (the "Plan") as of
December 31, 1996 and 1995, and the related statements of changes in net assets
available for benefits (modified cash basis) for the year ended December 31,
1996 and for the period from April 1, 1995 (inception date) to December 31,
1995. 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.
As described in Note 2 to the financial statements, these financial statements
were prepared on the modified cash basis of accounting, which is a comprehensive
basis of accounting other than generally accepted accounting principles.
In our opinion, such financial statements present fairly, in all material
respects, information regarding the net assets available for benefits of the
Plan as of December 31, 1996 and 1995, and the changes in net assets available
for benefits for the year ended December 31, 1996 and for the period from April
1, 1995 (inception date) to December 31, 1995, on the basis of accounting
described in Note 2.
Our audits were conducted for the purpose of forming an opinion on the basic
financial statements taken as a whole. The supplemental schedules (modified cash
basis) listed in the Table of Contents are presented for the purpose of
additional analysis and are not a required part of the basic 1996 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 supplemental information by fund is
presented for the purpose of additional analysis of the basic financial
statements rather than to present information regarding the net assets available
for benefits and changes in net assets available for benefits of the individual
funds, and is not a required part of the basic financial statements. The
supplemental schedules and supplemental fund information are the responsibility
of the Plan's management. Such supplemental schedules and supplemental fund
information have been subjected to the auditing procedures applied in our audit
of the basic financial
<PAGE>
statements and, in our opinion, are fairly stated in all material respects when
considered in relation to the basic financial statements taken as whole on the
basis of accounting described in Note 2.
/s/ Deloitte & Touche LLP
August 22, 1997
-2-
<PAGE>
<TABLE>
<CAPTION>
THE PMI GROUP, INC. 401(K) PLAN
STATEMENT OF NET ASSETS AVAILABLE FOR BENEFITS, WITH FUND INFORMATION
(MODIFIED CASH BASIS)
DECEMBER 31, 1996
- -------------------------------------------------------------------------------------------------------------------------
SHORT- S&P S&P
INTERMEDIATE INTERNATIONAL MIDCAP 500 LIFEPATH LIFEPATH LIFEPATH
TERM EQUITY STOCK STOCK 2000 2010 2020
FUND FUND FUND FUND FUND FUND FUND
<S> <C> <C> <C> <C> <C> <C> <C>
INVESTMENTS IN WELLS
FARGO BANK COLLECTIVE
INVESTMENT FUNDS AT
FAIR VALUE:
Money market fund
Income fund $1,082,419
Equity funds $354,538 $1,559,779 $4,930,035
Combination funds $2,918,947 $4,824,333 $652,213
Participant loans
---------- -------- ---------- ---------- ---------- --------- --------
NET ASSETS AVAILABLE
FOR BENEFITS $1,082,419 $354,538 $1,559,779 $4,930,035 $2,918,947 $4,824,333 $652,213
========== ======== ========== ========== ========== ========== ========
(Continued)
</TABLE>
-3-
<PAGE>
<TABLE>
<CAPTION>
THE PMI GROUP, INC. 401(K) PLAN
STATEMENT OF NET ASSETS AVAILABLE FOR BENEFITS, WITH FUND INFORMATION
(MODIFIED CASH BASIS)
DECEMBER 31, 1996
- ------------------------------------------------------------------------------------------------------------------
WELLS FARGO
LIFEPATH LIFEPATH MONEY PRIOR
2030 2040 MARKET EMPLOYER PMI STOCK LOAN
FUND FUND FUND FUND FUND FUND TOTAL
<S> <C> <C> <C> <C> <C> <C> <C>
INVESTMENTS IN WELLS
FARGO BANK COLLECTIVE
INVESTMENT FUNDS AT
FAIR VALUE:
Money market fund $85,998 $1,540,272 $ 1,626,270
Income fund 1,082,419
Equity funds $569,361 7,413,713
Combination funds $639,596 $444,389 9,479,478
Participant loans $458,740 458,740
-------- -------- ------- ---------- -------- -------- -----------
NET ASSETS AVAILABLE
FOR BENEFITS $639,596 $444,389 $85,998 $1,540,272 $569,361 $458,740 $20,060,620
======== ======== ======= ========== ======== ======== ===========
(Concluded)
</TABLE>
See accompanying notes to financial statements (modified cash basis).
-4-
<PAGE>
<TABLE>
<CAPTION>
THE PMI GROUP, INC. 401(K) PLAN
STATEMENT OF NET ASSETS AVAILABLE FOR BENEFITS, WITH FUND INFORMATION
(MODIFIED CASH BASIS)
DECEMBER 31, 1995
- -----------------------------------------------------------------------------------------
SHORT- S&P S&P
INTERMEDIATE INTERNATIONAL MIDCAP 500 LIFEPATH
TERM EQUITY STOCK STOCK 2000
FUND FUND FUND FUND FUND
<S> <C> <C> <C> <C> <C>
INVESTMENTS IN WELLS FARGO
BANK COLLECTIVE INVESTMENT
FUNDS AT FAIR VALUE:
Income fund $170,432
Equity funds $121,012 $395,239 $665,947
Combination funds $115,823
-------- -------- -------- -------- --------
NET ASSETS AVAILABLE FOR
BENEFITS $170,432 $121,012 $395,239 $665,947 $115,823
======== ======== ======== ======== ========
<CAPTION>
- -----------------------------------------------------------------------------------------
LIFEPATH LIFEPATH LIFEPATH LIFEPATH
2010 2020 2030 2040
FUND FUND FUND FUND TOTAL
<S> <C> <C> <C> <C> <C>
INVESTMENTS IN WELLS FARGO
BANK COLLECTIVE INVESTMENT
FUNDS AT FAIR VALUE:
Income fund $ 170,432
Equity funds 1,182,198
Combination funds $187,918 $202,615 $164,399 $63,423 734,178
-------- -------- -------- ------- ----------
NET ASSETS AVAILABLE FOR
BENEFITS $187,918 $202,615 $164,399 $63,423 $2,086,808
======== ======== ======== ======= ==========
</TABLE>
See accompanying notes to financial statements (modified cash basis).
-5-
<PAGE>
<TABLE>
<CAPTION>
THE PMI GROUP, INC. 401(K) PLAN
STATEMENT OF CHANGES IN NET ASSETS AVAILABLE FOR BENEFITS, WITH
FUND INFORMATION (MODIFIED CASH BASIS)
YEAR ENDED DECEMBER 31, 1996
- -----------------------------------------------------------------------------------------------------------
SHORT- S&P
INTERMEDIATE INTERNATIONAL MIDCAP
SWEEP TERM EQUITY STOCK
ACCOUNT FUND FUND FUND
<S> <C> <C> <C> <C>
ADDITIONS TO NET ASSETS AVAILABLE FOR BENEFITS:
Investment income:
Net appreciation of investments $ 1,126 $ 726 $ 934 $ 12,143
Dividend and interest income 31,492 12,029 161,517
-------- ---------- -------- ----------
Total investment income 1,126 32,218 12,963 173,660
-------- ---------- -------- ----------
Contributions:
Participants - 320,909 169,959 581,533
Rollovers - 38,544 20,347 59,210
Employer - 30,088 18,850 72,589
-------- ---------- -------- ----------
Total contributions - 389,541 209,156 713,332
-------- ---------- -------- ----------
Total additions 1,126 421,759 222,119 886,992
DEDUCTIONS FROM NET ASSETS AVAILABLE FOR
BENEFITS - Participant withdrawals 1,609 35,933 17,567 100,255
-------- ---------- -------- ----------
NET INCREASE (DECREASE) IN NET ASSETS AVAILABLE
FOR BENEFITS BEFORE TRANSFERS (483) 385,826 204,552 786,737
-------- ---------- -------- ----------
TRANSFERS:
Interfund - net (36,306) (72,849) 28,974 377,803
Transfer of net assets from prior plan (Note 5) 36,789 599,010
-------- ---------- -------- ----------
Total transfers 483 526,161 28,974 377,803
-------- ---------- -------- ----------
NET INCREASE IN NET ASSETS AVAILABLE FOR BENEFITS - 911,987 233,526 1,164,540
NET ASSETS AVAILABLE FOR BENEFITS:
Beginning of year - 170,432 121,012 395,239
-------- ---------- -------- ----------
End of year $ - $1,082,419 $354,538 $1,559,779
======== ========== ======== ==========
<CAPTION>
- -----------------------------------------------------------------------------------------------------------
S&P
500 LIFEPATH LIFEPATH
STOCK 2000 2010
FUND FUND FUND
<C> <C> <C>
ADDITIONS TO NET ASSETS AVAILABLE FOR BENEFITS:
Investment income:
Net appreciation of investments $ 40,499 $ 23,323 $ 50,992
Dividend and interest income 634,614 171,584 405,594
---------- ---------- -----------
Total investment income 675,113 194,907 456,586
---------- ---------- -----------
Contributions:
Participants 927,185 74,782 212,353
Rollovers 61,127 2,902
Employer 114,129 8,915 28,784
---------- ---------- -----------
Total contributions 1,102,441 83,697 244,039
---------- ---------- -----------
Total additions 1,777,554 278,604 700,625
DEDUCTIONS FROM NET ASSETS AVAILABLE FOR
BENEFITS - Participant withdrawals 155,455 53,858 29,524
---------- ---------- -----------
NET INCREASE (DECREASE) IN NET ASSETS AVAILABLE
FOR BENEFITS BEFORE TRANSFERS 1,622,099 224,746 671,101
---------- ---------- -----------
TRANSFERS:
Interfund - net 831,724 (578,313) (1,219,162)
Transfer of net assets from prior plan (Note 5) 1,810,265 3,156,691 5,184,476
---------- ---------- -----------
Total transfers 2,641,989 2,578,378 3,965,314
---------- ---------- -----------
NET INCREASE IN NET ASSETS AVAILABLE FOR BENEFITS 4,264,088 2,803,124 4,636,415
NET ASSETS AVAILABLE FOR BENEFITS:
Beginning of year 665,947 115,823 187,918
---------- ---------- -----------
End of year $4,930,035 $2,918,947 $ 4,824,333
========== ========== ===========
(Continued)
</TABLE>
-6-
<PAGE>
<TABLE>
<CAPTION>
THE PMI GROUP, INC. 401(K) PLAN
STATEMENT OF CHANGES IN NET ASSETS AVAILABLE FOR BENEFITS, WITH
FUND INFORMATION (MODIFIED CASH BASIS)
YEAR ENDED DECEMBER 31, 1996
- -----------------------------------------------------------------------------------------------------------------------
WELLS FARGO
LIFEPATH LIFEPATH LIFEPATH MONEY PRIOR
2020 2030 2040 MARKET EMPLOYER
FUND FUND FUND FUND FUND
<S> <C> <C> <C> <C> <C>
ADDITIONS TO NET ASSETS AVAILABLE FOR BENEFITS:
Investment income:
Net appreciation of investments $ 1,072 $ 1,312 $ 939 $ 2,582
Dividend and interest income 53,579 50,914 35,925 $ 1,735 24,256
-------- -------- -------- ------- ----------
Total investment income 54,651 52,226 36,864 1,735 26,838
-------- -------- -------- ------- ----------
Contributions:
Participants 263,021 210,718 95,143 12,424
Rollovers 2,312 21,816 68,532 14,550
Employer 33,107 25,553 11,248
-------- -------- -------- ------- ----------
Total contributions 298,440 258,087 174,923 26,974 -
-------- -------- -------- ------- ----------
Total additions 353,091 310,313 211,787 28,709 26,838
DEDUCTIONS FROM NET ASSETS AVAILABLE FOR
BENEFITS - Participant withdrawals 14,779 16,120 8,111 - 79,321
-------- -------- -------- ------- ----------
NET INCREASE (DECREASE) IN NET ASSETS AVAILABLE
FOR BENEFITS BEFORE TRANSFERS 338,312 294,193 203,676 28,709 (52,483)
-------- -------- -------- ------- ----------
TRANSFERS:
Interfund - net 111,286 181,004 177,290 57,289 (347,851)
Transfer of net assets from prior plan (Note 5) 1,940,606
-------- -------- -------- ------- ----------
Total transfers 111,286 181,004 177,290 57,289 1,592,755
-------- -------- -------- ------- ----------
NET INCREASE IN NET ASSETS AVAILABLE FOR BENEFITS 449,598 475,197 380,966 85,998 1,540,272
NET ASSETS AVAILABLE FOR BENEFITS:
Beginning of year 202,615 164,399 63,423 - -
-------- -------- -------- ------- ----------
End of year $652,213 $639,596 $444,389 $85,998 $1,540,272
======== ======== ======== ======= ==========
<CAPTION>
- -------------------------------------------------------------------------------------------------
PMI STOCK
FUND LOANS TOTAL
<S> <C> <C> <C>
ADDITIONS TO NET ASSETS AVAILABLE FOR BENEFITS:
Investment income:
Net appreciation of investments $ 2,460 $ 138,108
Dividend and interest income 102,592 $ 11,122 1,696,953
-------- --------- -----------
Total investment income 105,052 11,122 1,835,061
-------- --------- -----------
Contributions:
Participants 18,265 2,886,292
Rollovers 11,954 301,294
Employer 425,549 768,812
-------- --------- -----------
Total contributions 455,768 - 3,956,398
-------- --------- -----------
Total additions 560,820 11,122 5,791,459
DEDUCTIONS FROM NET ASSETS AVAILABLE FOR
BENEFITS - Participant withdrawals 29,110 3,842 545,484
-------- --------- -----------
NET INCREASE (DECREASE) IN NET ASSETS AVAILABLE
FOR BENEFITS BEFORE TRANSFERS 531,710 7,280 5,245,975
-------- --------- -----------
TRANSFERS:
Interfund - net 37,651 451,460 -
Transfer of net assets from prior plan (Note 5) 12,727,837
-------- --------- -----------
Total transfers 37,651 451,460 12,727,837
-------- --------- -----------
NET INCREASE IN NET ASSETS AVAILABLE FOR BENEFITS 569,361 458,740 17,973,812
NET ASSETS AVAILABLE FOR BENEFITS:
Beginning of year - - 2,086,808
-------- --------- -----------
End of year $569,361 $458,740 $20,060,620
======== ========= ===========
(Concluded)
</TABLE>
See accompanying notes to financial statements (modified cash basis).
-7-
<PAGE>
THE PMI GROUP, INC. 401(K) PLAN
STATEMENT OF CHANGES IN NET ASSETS AVAILABLE FOR BENEFITS, WITH
FUND INFORMATION (MODIFIED CASH BASIS)
PERIOD FROM APRIL 1, 1995 (INCEPTION DATE) TO DECEMBER 31, 1995
<TABLE>
<CAPTION>
- -------------------------------------------------------------------------------------------------------------------------
SHORT- S&P S&P
INTERMEDIATE INTERNATIONAL MIDCAP 500
SWEEP TERM EQUITY STOCK STOCK
ACCOUNT FUND FUND FUND FUND
<S> <C> <C> <C> <C> <C>
ADDITIONS TO NET ASSETS
AVAILABLE FOR BENEFITS:
Investment income:
Net appreciation of investments $ 6,790 $ 5,761 $ 13,069 $ 46,861
Dividend and interest income $ 6,689 267 275 1,301
------- -------- -------- -------- --------
Total investment income 6,689 7,057 5,761 13,344 48,162
Total other income (loss) 268 256 457 515
Contributions:
Participants - 166,035 100,155 357,772 562,397
Rollovers - 6,929 17,329 27,236 71,024
------- -------- -------- -------- --------
Total contributions - 172,964 117,484 385,008 633,421
------- -------- -------- -------- --------
Total additions 6,689 180,289 123,501 398,809 682,098
------- -------- -------- -------- --------
DEDUCTIONS FROM NET ASSETS AVAILABLE
FOR BENEFITS - Participant withdrawals 233 11,141 2,150 8,734 13,842
------- -------- -------- -------- --------
NET INCREASE IN NET ASSETS
AVAILABLE FOR BENEFITS
BEFORE TRANSFERS 6,546 169,148 121,351 390,075 668,256
TRANSFERS - Interfund - net (6,456) 1,284 (339) 5,164 (2,309)
------- -------- -------- -------- --------
NET INCREASE IN NET ASSETS
AVAILABLE FOR BENEFITS 170,432 121,012 395,239 665,947
NET ASSETS AVAILABLE FOR
BENEFITS:
Beginning of period - - - - -
------- -------- -------- -------- --------
End of period $ - $170,432 $121,012 $395,239 $665,947
======= ======== ======== ======== ========
<CAPTION>
LIFEPATH LIFEPATH LIFEPATH LIFEPATH LIFEPATH
2000 2010 2020 2030 2040
FUND FUND FUND FUND FUND TOTAL
<S> <C> <C> <C> <C> <C> <C>
ADDITIONS TO NET ASSETS
AVAILABLE FOR BENEFITS:
Investment income:
Net appreciation of investments $ 3,914 $ 8,489 $ 10,526 $ 9,353 $ 3,882 $ 108,645
Dividend and interest income 301 351 330 97 9,611
-------- -------- -------- -------- ------- ----------
Total investment income 3,914 8,790 10,877 9,683 3,979 118,256
Total other income (loss) 23 1,590 579 (64) 3,624
Contributions:
Participants 58,020 149,719 170,585 123,895 50,607 1,739,185
Rollovers 53,675 32,051 22,945 33,857 12,464 277,510
-------- -------- -------- -------- ------- ----------
Total contributions 111,695 181,770 193,530 157,752 63,071 2,016,695
-------- -------- -------- -------- ------- ----------
Total additions 115,609 190,583 205,997 168,014 66,986 2,138,575
-------- -------- -------- -------- ------- ----------
DEDUCTIONS FROM NET ASSETS AVAILABLE
FOR BENEFITS - Participant withdrawals 12 3,329 5,004 4,119 3,203 51,767
-------- -------- -------- -------- ------- ----------
NET INCREASE IN NET ASSETS
AVAILABLE FOR BENEFITS
BEFORE TRANSFERS 115,597 187,254 200,993 163,895 63,783 2,086,808
TRANSFERS - Interfund - net 226 664 1,622 504 (360) -
-------- -------- -------- -------- ------- ----------
NET INCREASE IN NET ASSETS
AVAILABLE FOR BENEFITS 115,823 187,918 202,615 164,399 63,423 2,086,808
NET ASSETS AVAILABLE FOR
BENEFITS:
Beginning of period - - - - - -
-------- -------- -------- -------- ------- ----------
End of period $115,823 $187,918 $202,615 $164,399 $63,423 $2,086,808
======== ======== ======== ======== ======= ==========
</TABLE>
See accompanying notes to financial statements (modified cash basis).
8
<PAGE>
THE PMI GROUP, INC. 401(K) PLAN
NOTES TO FINANCIAL STATEMENTS (MODIFIED CASH BASIS)
YEAR ENDED DECEMBER 31, 1996 AND PERIOD FROM
APRIL 1, 1995 (INCEPTION DATE) TO DECEMBER 31, 1995
- --------------------------------------------------------------------------------
1. DESCRIPTION OF THE PLAN
The following brief description of The PMI Group, Inc. 401(K) Plan (the
"Plan") is provided for general information only. Participants should refer
to the Plan agreement for a more complete description of the Plan's
provisions.
GENERAL - The Plan was established on April 1, 1995. The Plan is a defined
contribution plan covering all full-time and regular part-time employees of
The PMI Group, Inc. (the "Company"). The Plan is available to those
employees who have completed one year of service. It is subject to the
provisions of the Employee Retirement Income Security Act of 1974 ("ERISA").
Contributions are invested in any of the following Wells Fargo Bank
investment funds:
. SHORT-INTERMEDIATE TERM FUND - Amounts within this fund are invested in a
broad range of debt securities with short-to-intermediate term maturities.
. INTERNATIONAL EQUITY FUND - Amounts within this fund are invested in the
stocks of established companies based in Europe, Australia and the Far
East.
. S & P MIDCAP STOCK FUND - Amounts within this fund are invested in mid-
sized companies which are expected to grow faster than larger, more
established companies.
. S & P 500 STOCK FUND - Amounts within this fund are invested in companies
to match the performance of the S&P 500.
. LIFEPATH FUND - Amounts within these funds are invested in stocks, bonds
and money market instruments.
. WELLS FARGO MONEY MARKET FUND - Amounts within this fund are invested in
high quality money market securities.
. PRIOR EMPLOYER FUND - Amounts within this fund are invested in a broad
range of money market type securities with short-to-intermediate term
maturities.
. PMI STOCK FUND - Amounts within this fund are invested in common stock of
the Company.
The Plan is administered by the Company. The trustee of the Plan is Wells
Fargo Bank.
CONTRIBUTIONS - The participants may contribute up to 17% of their annual
compensation, as defined, not to exceed the ERISA limit of $9,500 and $9,240
for 1996 and 1995, respectively. The Company's cash contributions total 25%
of each eligible participant's pre-tax contributions for the period, not to
exceed 6% of the participant's eligible pay, with an additional discretionary
stock contribution up to 50%, not to exceed 6% of eligible pay. In 1997, the
Company made a $476,904 cash contribution
9
<PAGE>
related to the 1996 Plan year. In addition, the Company made an additional
discretionary stock contribution of $705,818 in 1997 related to the 1996 Plan
year.
PARTICIPANT ACCOUNTS - Each participant's account is credited with the
participant's and Company's prescribed contributions and an allocation of
Plan earnings. Allocations are based on participant's compensation or
account balances, as defined in the Plan. The maximum annual addition to
each participant's account, as defined, may not exceed the lesser of 25% of
the participant's compensation for the year or $30,000. Except as otherwise
provided, the participants do not maintain any interest in any specific asset
of the respective funds but have the right to receive accrued benefits in
accordance with the terms of the Plan.
VESTING - Employer contributions, employee contributions and Plan earnings
are fully vested to all participant accounts at all times.
PARTICIPANT WITHDRAWALS - Withdrawals from the Plan are available upon
hardship in accordance with Plan provisions. Upon termination of employment,
a participant may elect to receive a lump sum benefit. Upon attaining age 59
1/2, participants may elect to receive either a lump-sum amount equal to
their vested account balance or a portion paid in a lump sum with the
remainder paid at a later date. At age 70-1/2, if no amount has been
previously paid out, a participant may be required to take a partial
withdrawal in accordance with the Plan document.
PLAN TERMINATION - In the event of Plan termination, the full value of all
participants' accounts would become fully vested and lump sum distributions
to participants would be made in accordance with the Plan. Although it has
not expressed any intention to do so, the Company has the right under the
Plan to suspend, terminate or completely discontinue contributions.
PARTICIPANT LOANS - In 1996, the Company amended the Plan to allow
participants to obtain loans in an amount not to exceed $50,000 or 50% of the
participant's vested accrued benefit under the Plan. As of December 31,
1996, 63 loans with interest rates of 9.25% were outstanding with maturities
ranging from July 15, 1997 to December 15, 2001. These loans are being
repaid over one year to five years at the prime interest rate in effect on
the date the loan was obtained plus 1%. The loans are fully collateralized
by the participants' remaining vested account balance.
PLAN EXPENSES - Plan expenses are paid by the Company.
2. SIGNIFICANT ACCOUNTING POLICIES
BASIS OF ACCOUNTING - The financial statements of the Plan are prepared on
the modified cash basis. Transactions are primarily recorded upon receipt
and disbursement of cash, except for investments which are stated at current
market value. Certain revenues and the related assets are recognized when
received rather than when earned, and certain expenses are recognized when
paid rather than when the obligation is incurred. Accordingly, the
accompanying financial statements are not intended to be a presentation in
conformity with generally accepted accounting principles.
VALUATION OF INVESTMENTS - Investments in mutual funds are stated at market
values, determined on the basis of quotations obtained from national
securities exchanges. Investment transactions are recorded on the settlement
date.
COST OF SECURITIES SOLD - The cost of mutual and equity fund shares sold, as
used to calculate realized gains and losses on disposition of mutual and
equity fund shares, is determined using the average cost basis.
10
<PAGE>
PAYMENT OF BENEFITS - Distributions to participants are recorded when paid.
Accounting Estimates - The preparation of financial statements in conformity
with the modified cash basis of accounting requires management to make
estimates and assumptions that affect the reported amounts of assets and
liabilities and disclosure of contingent assets and liabilities at the date
of the financial statements and the reported amounts of revenues and expenses
during the reporting period. Actual results could differ from those
estimates.
3. TAX STATUS
The Plan obtained its latest determination letter dated October 15, 1996, in
which the Internal Revenue Service stated that the Plan, as then designed,
was in compliance with the applicable requirements of the Internal Revenue
Code. The Plan has been amended since receiving this determination letter.
Management of the Company believes that the Plan is currently designed and
being operated in compliance with the applicable requirements of the Internal
Revenue Code. Therefore, no provision for income taxes has been included in
the Plan's financial statements.
4. UNIT AND NET ASSET VALUE
The following schedule represents the number of units and the net asset value
per unit and in total for the Wells Fargo Funds as of December 31, 1996 and
1995:
<TABLE>
<CAPTION>
Value
Per Total
1996 Units Unit Value
<S> <C> <C> <C>
Short-Intermediate Term Fund 84,153.737 $12.863 $1,082,419 *
International Equity Fund 25,144.540 14.100 354,538
S&P Midcap Stock Fund 86,223.286 18.090 1,559,779 *
S&P 500 Stock Fund 178,172.598 27.670 4,930,035 *
Lifepath 2000 Fund 241,634.685 12.080 2,918,947 *
Lifepath 2010 Fund 366,590.615 13.160 4,824,333 *
Lifepath 2020 Fund 46,753.618 13.950 652,213
Lifepath 2030 Fund 44,232.094 14.460 639,596
Lifepath 2040 Fund 29,236.123 15.200 444,389
Wells Fargo Money Market Fund 85,997.560 1.000 85,998
Prior Employer Fund 151,601.520 10.160 1,540,272 *
PMI Stock Fund 45,879.242 12.410 569,361
</TABLE>
* Investment that represents more than 5% of the Plan's net assets as of
December 31, 1996.
11
<PAGE>
<TABLE>
<CAPTION>
Value
Per Total
1995 Units Unit Value
<S> <C> <C> <C>
Short-Intermediate Term Fund 13,579.773 $12.55 $170,432 *
International Equity Fund 9,051.043 13.37 121,012 *
S&P Midcap Stock Fund 25,951.344 15.23 395,239 *
S&P 500 Stock Fund 29,505.860 22.57 665,947 *
Lifepath 2000 Fund 10,168.854 11.39 115,823 *
Lifepath 2010 Fund 15,738.537 11.94 187,918 *
Lifepath 2020 Fund 16,419.338 12.34 202,615 *
Lifepath 2030 Fund 13,026.874 12.62 164,399 *
Lifepath 2040 Fund 4,905.139 12.93 63,423
</TABLE>
* Investment that represents more than 5% of the Plan's net assets as of
December 31, 1995.
5. TRANSFER FROM PRIOR PLAN
In April of 1995, Allstate, which was the sole shareholder, sold 70% of the
Company's common stock in an underwritten public offering. The employees'
fund balances remained in the Allstate Savings and Profit Sharing Plan until
the funds were transferred to the Plan on July 26, 1996. The value of the
cash and stock on the transfer date was $12,727,837. All participant
accounts became fully vested when the assets were transferred.
******
12
<PAGE>
THE PMI GROUP, INC. 401 (K) PLAN
ITEM 27a - SCHEDULE OF ASSETS HELD FOR INVESTMENT PURPOSES
DECEMBER 31, 1996
<TABLE>
<CAPTION>
- ---------------------------------------------------------------------------------------
CURRENT
Description of Investment Units COST Value
<S> <C> <C> <C>
Short-Intermediate Term Fund 84,153.737 $ 1,050,927 $ 1,082,419
International Equity Fund 25,144.540 342,509 354,538
S&P Midcap Stock Fund 86,223.286 1,398,262 1,559,779
S&P 500 Stock Fund 178,172.598 4,295,422 4,930,035
Lifepath 2000 Fund 241,634.685 2,747,363 2,918,947
Lifepath 2010 Fund 366,590.615 4,418,739 4,824,333
Lifepath 2020 Fund 46,753.618 598,634 652,213
Lifepath 2030 Fund 44,232.094 588,683 639,596
Lifepath 2040 Fund 29,236.123 408,464 444,389
Wells Fargo Money Market Fund 85,997.560 85,998 85,998
Prior Employer Fund 151,601.520 1,516,015 1,540,272
PMI Stock Fund 45,879.242 466,770 569,361
Loans to participants (63 loans at 9.25%) 458,740 458,740
----------- -----------
Total investments $18,376,526 $20,060,620
=========== ===========
</TABLE>
13
<PAGE>
THE PMI GROUP, INC. 401(K) PLAN
ITEM 27d - SCHEDULE OF REPORTABLE TRANSACTIONS
YEAR ENDED DECEMBER 31, 1996
<TABLE>
<CAPTION>
- ------------------------------------------------------------------------------------------------------------
Series of Transactions in Excess
of 5% of Beginning Plan Assets
Total Total
Dollar Dollar Net Gain
Number of Value of Number Value of (Loss)
Description Purchases Purchases of Sales Sales Realized
<S> <C> <C> <C> <C> <C>
Short-Intermediate Term Fund 43 $1,056,753 68 $ 176,983 $ 2,904
International Equity Fund 61 297,617 36 77,055 2,531
S&P Midcap Stock Fund 71 1,226,102 53 235,221 14,962
S&P 500 Stock Fund 83 4,180,148 62 591,172 51,622
Lifepath 2000 Fund 30 3,245,761 56 637,545 24,597
Lifepath 2010 Fund 40 5,490,390 70 1,310,562 54,341
Lifepath 2020 Fund 54 465,791 31 67,929 2,914
Lifepath 2030 Fund 57 489,629 25 66,657 3,090
Lifepath 2040 Fund 52 379,373 18 35,270 1,699
Wells Fargo Money Market 23 213,162 4 128,564 -
Allstate Stock 1 1,374,049 1 1,334,591 (39,453)
Dean Witter Stock 1 170,290 1 147,597 (22,693)
Prior Employer 1 1,940,606 33 427,173 2,582
PMI Stock Fund 22 490,543 41 26,233 2,460
</TABLE>
14
<PAGE>
EXHIBIT 2
INDEPENDENT AUDITORS' CONSENT
We consent to the inclusion of our report dated August 22, 1997 on the financial
statements and supplemental schedule (modified cash basis) of The PMI Group,
Inc. Savings and Profit-Sharing Plan (also known as The PMI Group, Inc. 401(k)
Plan) in this Annual Report on Form 11-K for the year ended December 31, 1996.
/s/ Deloitte & Touche LLP
March 6, 1998
