POLICY MANAGEMENT SYSTEMS CORPORATION
401(K) RETIREMENT SAVINGS PLAN
FINANCIAL STATEMENTS
AND SUPPLEMENTAL SCHEDULES
For the years ended December 31, 1998 and 1997
With Report of Independent Accountants
POLICY MANAGEMENT SYSTEMS CORPORATION
401(K) RETIREMENT SAVINGS PLAN
Index to Financial Statements and Supplemental Schedules
Page
REPORT OF INDEPENDENT ACCOUNTANTS . . . . . . . . . . . . . . . . . . 2
FINANCIAL STATEMENTS:
Statements of Net Assets Available for Plan Benefits,
with Fund Information as of December 31, 1998 and 1997. . . . . . . 3 - 8
Statements of Changes in Net Assets Available for Plan Benefits, with
Fund Information for the years ended December 31, 1998 and 1997 . . 9 - 15
Notes to Financial Statements . . . . . . . . . . . . . . . . . . . . 16 - 20
SUPPLEMENTAL SCHEDULES:
Form 5500, Item 27(a) - Schedule of Assets Held
for Investment Purposes, as of December 31, 1998. . . . . . . . . . 22
Form 5500, Item 27(d) - Schedule of Reportable
Transactions for the year ended December 31, 1998 . . . . . . . . . 23
EXHIBITS:
Consent of Independent Accountants, annexed hereto. . . . . . . . . . 24
------
REPORT OF INDEPENDENT ACCOUNTANTS
To the Administrative Committee of
Policy Management Systems Corporation 401(k) Retirement Savings Plan
In our opinion, the accompanying statements of net assets available for plan
benefits and the related statements of changes in net assets available for plan
benefits present fairly, in all material respects, the net assets available for
benefits of the Policy Management Systems Corporation 401(k) Retirement Savings
Plan at December 31, 1998 and 1997 and the changes in net assets available for
the years then ended in conformity with generally accepted accounting
principles. 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 of these statements in
accordance with generally accepted auditing standards which 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, assessing the accounting principles used and significant estimates
made by management, and evaluating the overall financial statement presentation.
We believe that our audits provide a reasonable basis for the opinion expressed
above.
Our audits were performed for the purpose of forming an opinion on the basic
financial statements taken as a whole. The supplemental schedules of Schedule of
Assets Held for Investment Purposes and Schedule of 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 are the responsibility of the Plan's management. The
supplemental schedules and fund information have been subjected to the auditing
procedures applied in the audits 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.
PricewaterhouseCoopers LLP
Atlanta, Georgia
June 29, 1999
POLICY MANAGEMENT SYSTEMS CORPORATION
401(K) RETIREMENT SAVINGS PLAN
STATEMENT OF NET ASSETS AVAILABLE FOR PLAN BENEFITS, WITH FUND INFORMATION
AS OF DECEMBER 31, 1998
Fidelity Fidelity Fidelity MAS
Retirement Puritan Magellan Fixed
Loan Government Mutual Mutual Income
----------- ----------- ----------- ----------- ----------
ASSETS
Investments, at current value:
Short-term investments . . . $ - $ - $ - $ - $ -
Mutual funds . . . . . . . . - 18,647,464 28,860,112 43,258,709 3,830,220
Common stock . . . . . . . . - - - - -
----------- ----------- ----------- ----------- ----------
Total Investments . . . - 18,647,464 28,860,112 43,258,709 3,830,220
----------- ----------- ----------- ----------- ----------
Receivables:
Loans receivable . . . . . . 3,515,222 - - - -
Miscellaneous receivable . . - - - - -
----------- ----------- ----------- ----------- ----------
Total Receivables . . . 3,515,222 - - - -
----------- ----------- ----------- ----------- ----------
Cash. . . . . . . . . . - - - - -
----------- ----------- ----------- ----------- ----------
Total Assets. . . . 3,515,222 18,647,464 28,860,112 43,258,709 3,830,220
----------- ----------- ----------- ----------- ----------
LIABILITIES
Accounts payable . . . . . . - - - - -
----------- ----------- ----------- ----------- ----------
Total Liabilities . . - - - - -
----------- ----------- ----------- ----------- ----------
Net assets available
for plan benefits $ 3,515,222 $18,647,464 $28,860,112 $43,258,709 $3,830,220
=========== =========== =========== =========== ==========
<FN>
Continued on next page
See accompanying notes.
POLICY MANAGEMENT SYSTEMS CORPORATION
401(K) RETIREMENT SAVINGS PLAN
STATEMENT OF NET ASSETS AVAILABLE FOR PLAN BENEFITS, WITH FUND INFORMATION
AS OF DECEMBER 31, 1998
(CONTINUED)
PIMCO Fidelity
PMSC Brokerage- Mid-Cap Diversified
Stock link Growth International
----------- ----------- ---------- --------------
ASSETS
Investments, at current value:
Short-term investments . . . $ 633,436 $ - $ - $ -
Mutual funds . . . . . . . . - - 6,685,518 2,569,785
Common stock . . . . . . . . 34,586,440 708,416 - -
----------- ----------- ---------- --------------
Total Investments . . . 35,219,876 708,416 6,685,518 2,569,785
----------- ----------- ---------- --------------
Receivables:
Loans receivable . . . . . . - - - -
Miscellaneous receivable . . - 17,131 - -
----------- ----------- ---------- --------------
Total Receivables . . . - 17,131 - -
----------- ----------- ---------- --------------
Cash. . . . . . . . . . - 519,938 - -
----------- ----------- ---------- --------------
Total Assets. . . . 35,219,876 1,245,485 6,685,518 2,569,785
----------- ----------- ---------- --------------
LIABILITIES
Accounts payable . . . . . . - - - -
----------- ----------- ---------- --------------
Total Liabilities . . - - - -
----------- ----------- ---------- --------------
Net assets available
for plan benefits $35,219,876 $ 1,245,485 $6,685,518 $ 2,569,785
=========== =========== ========== ==============
<FN>
Continued on next page
See accompanying notes.
POLICY MANAGEMENT SYSTEMS CORPORATION
401(K) RETIREMENT SAVINGS PLAN
STATEMENT OF NET ASSETS AVAILABLE FOR PLAN BENEFITS, WITH FUND INFORMATION
AS OF DECEMBER 31, 1998
(CONTINUED)
MAS NB Spartan
Value Genesis Equity
Advisor Trust Index Total
---------- ---------- ---------- ------------
ASSETS
Investments, at current value:
Short-term investments . . . $ - $ - $ - $ 633,436
Mutual funds . . . . . . . . 2,203,558 3,769,608 4,812,180 114,637,154
Common stock . . . . . . . . - - - 35,294,856
---------- ---------- ---------- ------------
Total Investments. . . . 2,203,558 3,769,608 4,812,180 150,565,446
---------- ---------- ---------- ------------
Receivables:
Loans receivable . . . . . . - - - 3,515,222
Miscellaneous receivable . . - - - 17,131
---------- ---------- ---------- ------------
Total Receivables . . . - - - 3,532,353
---------- ---------- ---------- ------------
Cash . . . . . . . . . . . . . - - - 519,938
---------- ---------- ---------- ------------
Total Assets . . . . 2,203,558 3,769,608 4,812,180 154,617,737
---------- ---------- ---------- ------------
LIABILITIES
Accounts payable . . . . . . - - - -
---------- ---------- ---------- ------------
Total Liabilities . . - - - -
---------- ---------- ---------- ------------
Net assets available
for plan benefits $2,203,558 $3,769,608 $4,812,180 $154,617,737
========== ========== ========== ============
<FN>
See accompanying notes.
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
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.
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)
Smith Smith Smith
PMSC Barney Barney Barney
Stock Fundamental International Equities
----------- ------------ -------------- ---------
ASSETS
Investments, at current value:
Short-term investments . . . $ 580 $ 9 $ 2 $ -
Mutual funds . . . . . . . . - 6,271,240 2,382,974 -
Common stock . . . . . . . . 23,484,051 - - -
----------- ------------ -------------- ---------
Total Investments . . . 23,484,631 6,271,249 2,382,976 -
----------- ------------ -------------- ---------
Receivables:
Loans receivable . . . . . . - - - -
Accrued interest receivable. - - - -
----------- ------------ -------------- ---------
Total Receivables . . . - - - -
----------- ------------ -------------- ---------
Cash. . . . . . . . . . 290 364,053 15 -
----------- ------------ -------------- ---------
Total Assets. . . . 23,484,921 6,635,302 2,382,991 0
----------- ------------ -------------- ---------
LIABILITIES
Accounts payable . . . . . . - 364,018 - -
----------- ------------ -------------- ---------
Total Liabilities . . - 364,018 - -
----------- ------------ -------------- ---------
Net assets available
for plan benefits $23,484,921 $ 6,271,284 $ 2,382,991 $ 0
=========== ============ ============== =========
<FN>
Continued on next page
See accompanying notes.
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)
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.
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, 1998
Fidelity Fidelity Fidelity MAS
Retirement Puritan Magellan Fixed
Loan Government Mutual Mutual Income
------------ ----------- ------------ ------------ -----------
Additions to net assets attributed to:
Investment Income:
Net appreciation (depreciation) in
market value . . . . . . . . . . . . $ - $ - $ 1,255,449 $ 7,531,157 $ (141,569)
Dividends and interest . . . . . . . . - 964,667 2,930,477 2,880,001 345,622
------------ ----------- ------------ ------------ -----------
- 964,667 4,185,926 10,411,158 204,053
------------ ----------- ------------ ------------ -----------
Cash Contributions:
Employer. . . . . . . . . . . . . . . - - - - -
Employee. . . . . . . . . . . . . . . - 1,865,421 2,907,503 3,645,746 389,953
------------ ----------- ------------ ------------ -----------
- 1,865,421 2,907,503 3,645,746 389,953
------------ ----------- ------------ ------------ -----------
Transfers. . . . . . . . . . . . . . . . (2,200) 955,681 (717,271) 1,490,087 3,483,043
Loan repayments. . . . . . . . . . . . . (1,242,257) 137,397 349,376 434,870 39,563
Other additions. . . . . . . . . . . . . 1,125 23,777 381 2,447 -
------------ ----------- ------------ ------------ -----------
Total Additions (Deductions). . . . (1,243,332) 3,946,943 6,725,915 15,984,308 4,116,612
------------ ----------- ------------ ------------ -----------
Deductions from net assets attributed to:
Distributions. . . . . . . . . . . . . 60,594 2,077,279 1,099,258 1,661,173 125,920
Forfeitures. . . . . . . . . . . . . . - 2,038 (94) (44) -
Loan disbursements . . . . . . . . . . (2,282,847) 390,888 389,885 580,711 37,616
Other deductions . . . . . . . . . . . - 93,540 5,912 17,522 388
------------ ----------- ------------ ------------ -----------
Total Deductions (Additions). . . (2,222,253) 2,563,745 1,494,961 2,259,362 163,924
------------ ----------- ------------ ------------ -----------
Net increases (decreases) . . . . . . . 978,921 1,383,198 5,230,954 13,724,946 3,952,688
------------ ----------- ------------ ------------ -----------
Transfers out. . . . . . . . . . . . . . . 92,243 516,383 809,080 794,684 122,468
Net assets available for plan benefits
Beginning of year . . . . . . . . . . 3,068,186 17,586,187 24,438,238 30,208,447 0
------------ ----------- ------------ ------------ -----------
End of year . . . . . . . . . . . . . $ 3,954,864 $18,453,002 $28,860,112 $43,138,709 $3,830,220
============ =========== ============ ============ ===========
<FN>
Continued on next page
See accompanying notes.
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, 1998
(CONTINUED)
PIMCO Fidelity MAS
PMSC Brokerage- Mid-Cap Diversified Value
Stock link Growth International Advisor
------------ ----------- ----------- --------------- -----------
Additions to net assets attributed to:
Investment Income:
Net appreciation (depreciation) in
market value . . . . . . . . . . . . $10,984,834 $ - (330,451) $ (114,659) $ (647,343)
Dividends and interest . . . . . . . . (12,478) - 299,915 96,690 366,670
------------ ----------- ----------- --------------- -----------
10,972,356 - (30,536) (17,969) (280,673)
------------ ----------- ----------- --------------- -----------
Cash Contributions:
Employer. . . . . . . . . . . . . . . 5,265,815 - - - -
Employee. . . . . . . . . . . . . . . 792,587 - 699,775 358,118 449,594
------------ ----------- ----------- --------------- -----------
6,058,402 - 699,775 358,118 449,594
------------ ----------- ----------- --------------- -----------
Transfers. . . . . . . . . . . . . . . . (2,984,941) 1,114,987 6,335,739 2,433,025 2,107,485
Loan repayments. . . . . . . . . . . . . 250,859 - 45,598 30,757 18,192
Other additions. . . . . . . . . . . . . (8,136) 130,498 - - -
------------ ----------- ----------- --------------- -----------
Total Additions (Deductions). . . . 14,288,540 1,245,485 7,050,576 2,803,931 2,294,598
------------ ----------- ----------- --------------- -----------
Deductions from net assets attributed to:
Distributions. . . . . . . . . . . . . 934,652 - 205,231 101,647 32,497
Forfeitures. . . . . . . . . . . . . . (1,885) - - - -
Loan disbursements . . . . . . . . . . 595,959 - 47,260 34,311 32,075
Other deductions . . . . . . . . . . . 22,002 - 115 38 39
------------ ----------- ----------- --------------- -----------
Total Deductions (Additions). . . 1,550,728 - 252,606 135,996 64,611
------------ ----------- ----------- --------------- -----------
Net increases (decreases) . . . . . . . 12,737,812 1,245,485 6,797,970 2,667,935 2,229,987
------------ ----------- ----------- --------------- -----------
Transfers out. . . . . . . . . . . . . . . 1,128,037 - 112,452 98,150 26,429
Net assets available for plan benefits
Beginning of year . . . . . . . . . . 23,484,921 0 0 0 0 4,409,204
------------ ----------- ----------- --------------- ----------- ---------
End of year . . . . . . . . . . . . . $35,094,696 $ 1,245,485 $6,685,518 $ 2,569,785 $2,203,558
============ =========== =========== =============== ===========
<FN>
Continued on next page
See accompanying notes.
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, 1998
(CONTINUED)
NB Spartan Evergreen Smith
Genesis Equity Short-Int. Barney
Trust Index Bond Fundamental
----------- ---------- ------------ -------------
Additions to net assets attributed to:
Investment Income:
Net appreciation (depreciation) in
market value . . . . . . . . . . . . $ (616,821) $ 433,523 $ (428) $ 517,602
Dividends and interest . . . . . . . . 59,314 70,430 61,880 1,256
----------- ---------- ------------ -------------
(557,507) 503,953 61,452 518,858
----------- ---------- ------------ -------------
Cash Contributions:
Employer. . . . . . . . . . . . . . . - - - -
Employee. . . . . . . . . . . . . . . 579,749 625,750 126,603 248,795
----------- ---------- ------------ -------------
579,749 625,750 126,603 248,795
----------- ---------- ------------ -------------
Transfers. . . . . . . . . . . . . . . . 3,906,569 3,810,335 (3,584,206) (6,889,327)
Loan repayments. . . . . . . . . . . . . 39,258 32,423 13,822 32,463
Other additions. . . . . . . . . . . . . - - 52 110
----------- ---------- ------------ -------------
Total Additions . . . . . . . . . . 3,968,069 4,972,461 (3,382,277) (6,089,101)
----------- ---------- ------------ -------------
Deductions from net assets attributed to:
Distributions. . . . . . . . . . . . . 96,319 61,921 99,645 145,749
Forfeitures. . . . . . . . . . . . . . - - (286) 271
Loan disbursements . . . . . . . . . . 61,260 57,922 5,257 32,826
Other deductions . . . . . . . . . . . - 78 1,861 3,337
----------- ---------- ------------ -------------
Total Deductions. . . . . . . . . 157,579 119,921 106,477 182,183
----------- ---------- ------------ -------------
Net increases (decreases) . . . . . . . 3,810,490 4,852,540 (3,488,754) (6,271,284)
----------- ---------- ------------ -------------
Transfers out. . . . . . . . . . . . . . . 40,882 40,360 - -
Net assets available for plan benefits
Beginning of year . . . . . . . . . . 0 0 3,488,754 6,271,284
----------- ---------- ------------ -------------
End of year . . . . . . . . . . . . . $3,769,608 $4,812,180 $ 0 $ 0
=========== ========== ============ =============
<FN>
Continued on next page
See accompanying notes.
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, 1998
(CONTINUED)
Smith Evergreen Putnam OTC First Union
Barney Growth & & Emerging Enhanced
International Income Growth Stock Market Total
--------------- ------------ ------------ -------------- ------------
Additions to net assets attributed to:
Investment Income:
Net appreciation (depreciation) in
market value . . . . . . . . . . . . $ 377,262 $ 154,246 $ 585,939 $ 197,048 $ 20,185,789
Dividends and interest . . . . . . . . 510 3,713 93 330 8,069,090
--------------- ------------ ------------ -------------- ------------
377,772 157,959 586,032 197,378 28,254,879
--------------- ------------ ------------ -------------- ------------
Cash Contributions:
Employer. . . . . . . . . . . . . . . - - - - 5,265,815
Employee. . . . . . . . . . . . . . . 102,377 149,768 178,568 132,100 13,252,407
--------------- ------------ ------------ -------------- ------------
102,377 149,768 178,568 132,100 18,518,222
--------------- ------------ ------------ -------------- ------------
Transfers. . . . . . . . . . . . . . . . (2,783,357) (2,015,481) (5,036,018) (1,624,150) 0
Loan repayments. . . . . . . . . . . . . 15,886 11,115 34,301 17,545 261,168
Other additions. . . . . . . . . . . . . 45 34 76 28 150,437
--------------- ------------ ------------ -------------- ------------
Total Additions (Deductions). . . . (2,287,277) (1,696,605) (4,237,041) (1,277,099) 47,184,706
--------------- ------------ ------------ -------------- ------------
Deductions from net assets attributed to:
Distributions. . . . . . . . . . . . . 88,405 28,162 74,279 16,150 6,908,881
Forfeitures. . . . . . . . . . . . . . - - - - 0
Loan disbursements . . . . . . . . . . 6,000 281 10,403 193 0
Other deductions . . . . . . . . . . . 1,309 1,009 2,388 801 150,339
--------------- ------------ ------------ -------------- ------------
Total Deductions (Additions). . . 95,714 29,452 87,070 17,144 7,059,220
--------------- ------------ ------------ -------------- ------------
Net increases (decreases) . . . . . . . (2,382,991) (1,726,057) (4,324,111) (1,294,243) 40,125,486
--------------- ------------ ------------ -------------- ------------
Transfers out. . . . . . . . . . . . . . . - - - - 3,781,168
Net assets available for plan benefits
Beginning of year . . . . . . . . . . 2,382,991 1,726,057 4,324,111 1,294,243 118,273,419
--------------- ------------ ------------ -------------- ------------
End of year . . . . . . . . . . . . . $ 0 $ 0 $ 0 $ 0 $154,617,737
=============== ============ ============ ============== ============
<FN>
See accompanying notes.
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
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.
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)
Smith Smith Smith
PMSC Barney Barney Barney
Stock Fundamental International Equities
------------ ------------- --------------- ------------
Additions to net assets attributed to:
Investment Income:
Net appreciation (depreciation) in
market value . . . . . . . . . . . . $ 7,842,344 $ 407,686 $ 13,695 $ (289,813)
Dividends and interest . . . . . . . . 4,737 363,992 505 734
------------ ------------- --------------- ------------
7,847,081 771,678 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. . . . . . . . . . . . . . . . (508,078) 397,824 (322,032) (4,350,208)
Loan repayments. . . . . . . . . . . . . 45,953 88,695 41,671 42,549
Other additions. . . . . . . . . . . . . 902 2,173 1,117 337
------------ ------------- --------------- ------------
Total Additions (Deductions). . . . 11,579,953 1,936,349 50,787 (4,312,213)
------------ ------------- --------------- ------------
Deductions from net assets attributed to:
Distributions. . . . . . . . . . . . . 616,956 145,551 67,809 70,731
Forfeitures. . . . . . . . . . . . . . 439 (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). . . 798,128 205,049 99,918 96,991
------------ ------------- --------------- ------------
Net increases (decreases) . . . . . . . 10,781,825 1,731,300 (49,131) (4,409,204)
------------ ------------- --------------- ------------
Net assets available for plan benefits
Beginning of year . . . . . . . . . . 12,703,096 4,539,984 2,432,122 4,409,204
------------ ------------- --------------- ------------
End of year . . . . . . . . . . . . . $23,484,921 $ 6,271,284 $ 2,382,991 $ 0
============ ============= =============== ============
<FN>
Continued on next page
See accompanying notes.
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)
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.
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 and after-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 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. During the year, the Plan discontinued
the six-consecutive month period of employment requirement for eligibility
EMPLOYEE CONTRIBUTIONS
Participants may contribute in 1% increments up to 15% of eligible
compensation as either before-tax or after-tax contributions to the Plan, or a
combination of both. The maximum before-tax contribution allowed by the Internal
Revenue Code of 1986, as amended (the "Code"), for 1998 was $10,000.
EMPLOYER MATCHING CONTRIBUTIONS
The Company matches 100% of the first 3% and 50% of the next 3% of the
Participant's before-tax or after-tax contributions, but not both. Employer
matching contributions are invested in the Policy Management Systems Corporation
Common Stock Fund.
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.
INVESTMENT ELECTIONS
Each Participant is required to telephone the Plan Administrator to enroll,
choose a deferral rate and designate the allocation of the Participant's
contributions among the Plan's investment funds in multiples of 1%. In addition,
participants may change the investment of contributions and may move their
vested balances among investment funds by internet or telephone at any time.
NOTE 2 CONTINUED
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 age; becomes permanently disabled; or becomes
deceased.
FORFEITURE ALLOCATIONS
All Participant forfeitures are used to reduce future employer matching
contributions to the Plan and pay plan expenses. At December 31, 1998, the Plan
had approximately $103,000 in forfeitures.
BENEFIT PAYMENTS
The Participant's after-tax contributions may be withdrawn at any time by
telephoning the Plan Administrator. In addition, a Participant may withdraw all
or any part of his or her vested employer matching contributions on his or her
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.
4) Interest charged on loans is 1% over the prime lending rate.
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.
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, 1998 and 1997 were $150,339 and $389,128, respectively.
NOTE 2 CONTINUED
SERVICE PROVIDER
During 1997, Aon Consulting, Inc. served as the recordkeeper for the Plan
and First Union National Bank served as the Trustee. Effective April 1, 1998,
Fidelity Investments Institutional Operations Company, Inc. became the
recordkeeper and Fidelity Management Trust Company serves as the Trustee for the
Plan.
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 except that
amounts relating to the individual participant-directed investment program
(Brokeragelink) have not been disclosed as separate funds. 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, 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, 1998 and 1997, $0 and $212,012 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:
1998 1997
------------ -------------
Net assets available for plan benefits as stated
in the financial statements $154,617,737 $118,273,419
Less: Distributions payable 0 (212,012)
------------ -------------
Net assets available for plan benefits per Form 5500 $154,647,737 $118,061,407
============ =============
In addition, the financial statements differ from the Form 5500 by the same
amount for distributions on the Statement of Changes in Net Assets.
NOTE 3 CONTINUED
INVESTMENTS
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.
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.
Through March 31, 1998, the investment options available through First Union
were as follows: Fidelity Retirement Government Money Market, Fidelity Puritan
Fund, Fidelity Magellan Fund, Evergreen Short-Intermediate Bond Fund, PMSC Stock
Fund, Smith Barney Fundamental Value Fund, Smith Barney International Equity
Portfolio, Evergreen Growth & Income Fund, Putnam OTC & Emerging Growth Fund,
and First Union Enhanced Stock Market Fund.
After the Plan changed trustees to Fidelity, the investment options, based
on descriptions provided by the Fund Managers, were as follows:
Fidelity Retirement Government Money Market: This fund consists of short-term
money market securities in which the U.S. government or its agencies guarantee
timely payment of principal and interest.
MAS Fixed Income Portfolio: This fund is an income-producing bond mutual fund
consisting of all types of bonds including U.S. government or agency securities,
corporate bonds, mortgage securities, and international bonds.
Fidelity Puritan Fund: This fund consists of high-yielding U.S. and foreign
securities and common and preferred stocks, and bonds of any quality or
maturity.
MAS Value Portfolio: This fund consists mostly of stocks of larger companies
that are considered undervalued.
Spartan U.S. Equity Index Fund: This fund invests primarily in S&P 500
companies and in other securities that are based on the value of the index.
Fidelity Magellan Fund: This fund consists primarily of common stocks of
companies with above average growth potential and a correspondingly higher level
of risk.
PIMCO Mid-Cap Growth Fund: This fund consists of common stocks of companies
worth at least $500 million with potential for growth.
Neuberger & Berman Genesis Trust: This fund consists of common stocks of small
companies with market capitalization of up to $1.5 billion at the time of
investment and with solid performance histories and proven management.
Fidelity Diversified International Fund: This fund consists of stocks of
companies located outside the U.S. which are undervalued compared to industry
norms in their countries.
PMSC Stock Fund: This fund consists of the common stock of Policy Management
Systems Corporation as well as short-term investments.
NOTE 3 CONTINUED
Fidelity Brokerage Link: This fund is a brokerage account which gives the
participant a wide variety of investment options including stocks, bonds,
mortgage securities, certificates of deposit, foreign securities, and other
mutual funds.
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 Trust 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, 1998, the Plan purchased 94,282 shares
at an aggregate cost of $5,223,517 and sold 92,815 shares for aggregate proceeds
of $5,101,105 and realized gains of $2,087,936. 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. The Plan also had 684,880 and 337,594 shares of the
Company's common stock with a fair value of $34,586,440 and $23,484,051 at
December 31, 1998 and 1997, respectively.
SUPPLEMENTAL SCHEDULES
POLICY MANAGEMENT SYSTEMS CORPORATION
401(K) RETIREMENT SAVINGS PLAN
FORM 5500, ITEM 27(A)-SCHEDULE OF ASSETS HELD
FOR INVESTMENT PURPOSES
DECEMBER 31, 1998
Current
Fund Name Shares Cost Value
- ---------------------------------------- ------- ----------- -----------
Brokeragelink (1) N/A $ N/A $ 1,245,485
MAS Fixed Income Portfolio 326,810 3,954,418 3,830,220
MAS Value Portfolio 152,707 2,747,006 2,203,558
Neuberger & Berman Genesis Trust 185,330 4,202,859 3,769,608
PIMCO Mid-Cap Growth Fund 290,422 6,900,547 6,685,518
PMSC Stock Fund* 2,820,840 17,835,620 34,586,440
PMSC Stock Fund cash (3)* N/A 633,436 633,436
Fidelity Puritan Fund 1,437,973 24,810,368 28,860,112
Fidelity Magellan Fund 358,042 30,414,901 43,258,709
Fidelity Diversified International Fund 145,021 2,650,365 2,569,785
Fidelity Retirement
Government Money Market 18,647,464 18,647,464 18,647,464
Spartan US Equity Index Fund 109,467 4,367,189 4,812,180
Loans Outstanding (2) N/A N/A 3,515,222
<FN>
* Indicates party-in-interest to the Plan.
(1) Brokeragelink is a participant directed fund; shares and cost are not available
(2) Share and cost are not applicable to Loans Outstanding
(3) Fidelity Institutional Cash Portfolio
POLICY MANAGEMENT SYSTEMS CORPORATION
401(K) RETIREMENT SAVINGS PLAN
FORM 5500, ITEM 27(D) - SCHEDULE OF REPORTABLE TRANSACTIONS
FOR THE YEAR ENDED DECEMBER 31, 1998
SINGLE TRANSACTIONS EXCEEDING 5% OF NET ASSETS
Value of
Transactions Asset on
by Number of Selling Cost of Transaction Net Gain
Fund Transactions Price Asset Date (Loss)
- -------------- ------------ -------- --------- ---------- --------
Smith Barney Fundamental 1 $6,633,492 $5,437,581 $6,633,492 $1,195,911
PIMCO Mid Cap Growth 1 6,632,632 6,632,632
SERIES OF TRANSACTIONS EXCEEDING 5% OF NET ASSETS (EXCLUSIVE OF THE ABOVE TRANSACTIONS)
Value of
Transactions Asset on
by Number of Selling Cost of Transaction Net Gain
Fund Transactions Price Asset Date (Loss)
- ----------------------------- ------------ ----------- ----------- ------------ ----------
Fidelity Retirement
Government
Money Market. . . . . . . . . 125 $ $ 7,478,865 $ 7,748,865 $
Fidelity Retirement
Government
Money Market. . . . . . . . . 135 6,413,711 6,413,711 6,413,711 0
Fidelity Puritan. . . . . . . 158 8,217,563 8,217,563
Fidelity Puritan. . . . . . . 129 4,950,907 4,891,091 4,891,616 680,166
Evergreen Select Money Market * 17,682,848 17,682,848
Evergreen Select Money Market * 17,682,848 17,682,848 17,682,848 0
Valiant General Fund #62. . . * 9,253,071 9,253,071
Valiant General Fund #62. . . * 9,256,741 9,256,741 9,256,741 0
<FN>
*Omitted from schedule by Trustee.