Exhibit 1
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THE PMI GROUP, INC. SAVINGS AND PROIT-SHARING PLAN
FINANCIAL STATEMENTS (MODIFIED CASH BASIS) AS OF AND
FOR THE YEARS ENDED DECEMBER 31, 2000 AND 1999,
SUPPLEMENTAL SCHEDULE (MODIFIED CASH BASIS) AS OF
DECEMBER 31, 2000 AND REPORT OF INDEPENDENT AUDITORS
The PMI Group, Inc. Savings and Profit-Sharing Plan
Financial Statements (Modified Cash Basis)
and Supplemental Schedule
Years ended December 31, 2000 and 1999
TABLE OF CONTENTS
Report of Independent Auditors............................................ 1
Financial Statements (Modified Cash Basis)
Statements of Net Assets Available for Benefits......................... 2
Statements of Changes in Net Assets Available for Benefits.............. 3
Notes to Financial Statements........................................... 4
Supplemental Schedule
Schedule H, Line 4i - Schedule of Assets Held for Investment Purposes
at End of Year...................................................... 10
Report of Independent Auditors
The Participants of The PMI Group, Inc. Savings and Profit-Sharing Plan
and Board of Directors of The PMI Group, Inc.
We were engaged to audit the accompanying statements of net assets available for
benefits (modified cash basis) of The PMI Group, Inc. Savings and Profit-Sharing
Plan as of December 31, 2000, and the related statements of changes in net
assets available for benefits (modified cash basis) for the year then ended.
These financial statements are the responsibility of the Plan's management. Our
responsibility is to express an opinion on these financial statements based on
our audit. The financial statements of the Plan as of December 31, 1999, and for
the year then ended were audited by other auditors whose report dated June 23,
2000, expressed an unqualified opinion on those statements.
We conducted our audit in accordance with auditing standards generally accepted
in the United States. 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 audit provides a reasonable basis for our
opinion.
As described in Note 2, the financial statements and supplemental schedules were
prepared on a modified cash basis of accounting, which is a comprehensive basis
of accounting other than accounting principles generally accepted in the United
States.
In our opinion, the 2000 financial statements referred to above present fairly,
in all material respects, information regarding the Plan's net assets available
for benefits (modified cash basis) as of December 31, 2000, and changes therein
(modified cash basis) for the year then ended on the basis of accounting
described in Note 2.
Our audit was performed for the purpose of forming an opinion on the financial
statements taken as a whole. The accompanying supplemental schedule (modified
cash basis) of assets held for investment purposes at end of year as of December
31, 2000, is presented for purposes of additional analysis and is not a required
part of the financial statements but is 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. This supplemental
schedule is the responsibility of the Plan's management. The supplemental
schedule (modified cash basis) has been subjected to the auditing procedures
applied in our audit of the financial statements and, in our opinion, is fairly
stated in all material respects in relation to the financial statements taken as
a whole.
/s/ Ernst & Young LLP
Los Angeles, California
May 4, 2001
1
The PMI Group, Inc. Savings and Profit-Sharing Plan
Statements of Net Assets Available for Benefits
(Modified Cash Basis)
December 31
2000 1999
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Assets
Investments at fair value:
Merrill Lynch Retirement Reserves $ 2,009,970 $ 2,527,331
Barclays International Equity Fund 1,204,867 1,646,712
Barclays S&P Midcap Stock Fund 6,301,866 5,119,026
Barclays S&P 500 Stock Fund 12,243,355 13,963,702
Barclays Lifepath Income Fund 1,927,787 2,285,327
Barclays Lifepath 2010 Fund 3,509,698 4,483,232
Barclays Lifepath 2020 Fund 1,645,176 2,041,365
Barclays Lifepath 2030 Fund 1,661,597 1,811,553
Barclays Lifepath 2040 Fund 1,147,921 1,350,250
Barclays Money Market Fund - 21,172
Dreyfus Founders Growth Fund 1,570,318 1,740,850
Templeton Foreign Fund 617,293 435,285
PIMCO Total Return Class A Fund 1,522,964 1,445,864
Pilgrim Emerging Countries Fund 116,593 -
Merrill Lynch Growth Fund Class D 828,483 -
Van Kampen American Value Fund 214,091 -
Van Kampen Aggressive Growth Fund Class A 1,558,548 -
Davis New York Venture Fund Class A 424,449 -
PMI Stock Fund 11,056,278 6,166,869
Participant loans 1,074,506 1,159,505
Cash account 23,859 245
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Net assets available for benefits $50,659,619 $46,198,288
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See accompanying notes.
2
The PMI Group, Inc. Savings and Profit-Sharing Plan
Statements of Changes in Net Assets Available for Benefits
(Modified Cash Basis)
Year ended December 31
2000 1999
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Additions
Additions to net assets attributable to:
Investment income:
Net appreciation in fair value of investments $ 784,775 $ 7,018,632
Interest and dividends 1,006,706 539,874
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Total assets 1,791,481 7,558,506
Contributions:
Employer 2,325,526 1,862,110
Participants 4,158,790 3,747,102
Rollovers 172,021 339,118
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Total contributions 6,656,337 5,948,330
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Total additions 8,447,818 13,506,836
Deductions
Deductions from net assets attributable to:
Participant withdrawals 3,986,487 2,613,802
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Net increase 4,461,331 10,893,034
Net assets available for benefits:
Beginning of year 46,198,288 35,305,254
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End of year $50,659,619 $46,198,288
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See accompanying notes.
3
PMI Group, Inc. Savings and Profit-Sharing Plan
Notes to Financial Statements (Modified Cash Basis)
December 31, 2000
1. Description of the Plan
The following description of The PMI Group, Inc. Savings and Profit-Sharing 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 employees immediately after
employment. It is subject to the provisions of the Employee Retirement Income
Security Act of 1974 (ERISA). The Plan is administered by the Company. The
trustee of the Plan is Merrill Lynch Trust Company.
Contributions
The participants may contribute up to 17% of their annual compensation, as
defined, not to exceed the ERISA limit of $10,500 for 2000 and $10,000 for 1999.
The Company's cash contributions total 25% of each eligible participant's pre-
tax contributions for the period, not to exceed 6% of each participant's
eligible pay, with an additional discretionary stock contribution up to 75%, not
to exceed 6% of each eligible participant's annual compensation. The additional
discretionary stock contribution was up to 50% in 1999.
Contributions are invested, at the option of the participant, in any of the
following investment funds:
Merrill Lynch Retirement Reserves - Amounts within this account are invested in
a portfolio of medium to high quality fixed-income securities with short- to
intermediate-term maturities (three to five years).
Barclays International Equity Fund - Amounts within this fund are invested in
the stocks of established companies based in Europe, Australia and the Far East.
4
1. Description of the Plan (continued)
Contributions (continued)
Barclays 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.
Barclays S&P 500 Stock Fund - Amounts within this fund are invested in companies
to match the performance of the S&P 500.
Barclays Lifepath Funds - Amounts within these funds are invested in stocks,
bonds and money market instruments.
Barclays Money Market Fund - Amounts within this fund are invested in high
quality money market securities.
Dreyfus Founders Growth Fund - Amounts within this fund are invested in well
established high quality growth stock funds, with some assets in foreign
securities.
Templeton Foreign Fund - Amounts within this fund are invested in the stocks of
established companies based mainly in Europe.
PIMCO Total Return Class A Fund - Amounts within this fund are invested in high
quality money market and short-term securities.
Pilgrim Emerging Countries Fund - Amounts within this fund are invested in
equity securities of issuers located in countries with emerging securities
markets.
Merrill Lynch Growth Fund Class D - Amounts within this fund are invested in a
diverse portfolio of equity securities of companies that have exhibited above-
average growth rates in earnings.
Van Kampen American Value Fund - Amounts within this fund are invested in equity
securities and interests of small- to medium-size U.S. companies thought to be
relatively undervalued.
Van Kampen Aggressive Growth Fund Class A - Amounts within this fund are
invested in common stocks and other equity securities believed to have above-
average potential for capital growth.
Davis New York Venture Fund Class A - Amounts within this fund are invested in
equity securities of companies with market capitalizations of at least $250
million.
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1. Description of the Plan (continued)
Contributions (continued)
PMI Stock Fund - Amounts within this fund are invested in common stock of the
Company.
Cash Account - Amounts within this account represent cash held temporarily until
allocated to a fund.
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 participants' contributions or account balances, as defined in the
Plan. The maximum annual addition (participant contributions plus employer match
and excluding any appreciation/depreciation on the account) 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.
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 Plan provisions.
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.
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1. Description of the Plan (continued)
Participant Loans
The Plan allows 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, 2000, 166 loans bear interest at rates that range from 8.5% to
10.5% and were outstanding with maturities through January 2006. 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. Summary of 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 accounting principles
generally accepted in the United States.
Investments Valuation
Investments in mutual funds are stated at fair values, determined on the basis
of quotations obtained from national securities exchanges or from the trustee.
Investment transactions are recorded on the settlement date. Participant loans
are valued at their outstanding balances, which approximate fair value.
Cost of Securities Sold
The cost of mutual fund shares sold, as used to calculate realized gains and
losses on disposition of mutual fund shares, is determined using the average-
cost basis.
Payment of Benefits
Distributions to participants are recorded when paid.
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2. Summary of Accounting Policies (continued)
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. Actual results could differ from those
estimates.
Reclassifications
Certain amounts in the prior period financial statements have been reclassified
to conform to the current period presentation.
3. Tax Status
The Internal Revenue Service has determined and informed the Company by a letter
dated March 23, 1999, that the Plan and related trust are designed in accordance
with applicable sections of the Internal Revenue Code (IRC). Although the Plan
has been amended since receiving the determination letter, the Plan
Administrator and the Plan's Tax Counsel believe that the Plan is designed and
being operated in compliance with the applicable requirements of the IRC.
4. Investments
During 2000, the Plan's investments (including investments purchased, sold as
well as held during the year) appreciated (depreciated) in fair value as
determined by quoted market prices as follows:
Net Realized
and Unrealized
Appreciation in
Fair Value of
Investments
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Shares of mutual funds $ (2,644,647)
Shares of PMI stock fund 3,429,422
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$ 784,775
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4. Investments (continued)
The following schedule represents the number of units, value per unit, and fair
value of the Plan's investments:
Value Per Fair
As of December 31, 2000 Units Unit Value*
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Merrill Lynch Retirement
Reserves Money Market
Fund 2,009,970.009 $ 1.00 $ 2,009,970
Barclays International Equity
Fund 66,567.231 18.10 1,204,867
Barclays S&P Midcap Stock
Fund 166,320.033 37.89 6,301,866**
Barclays S&P 500 Stock Fund 237,182.399 51.62 12,243,355**
Barclays Lifepath Income
Fund 120,411.459 16.01 1,927,787
Barclays Lifepath 2010 Fund 182,987.404 19.18 3,509,698**
Barclays Lifepath 2020 Fund 76,271.495 21.57 1,645,176
Barclays Lifepath 2030 Fund 70,586.127 23.54 1,661,597
Barclays Lifepath 2040 Fund 44,441.402 25.83 1,147,921
Dreyfus Founders Growth
Fund 111,925.696 14.03 1,570,318
Templeton Foreign Fund 59,699.502 10.34 617,293
PIMCO Total Return Class A
Fund 146,579.823 10.39 1,522,964
Pilgrim Emerging Countries
Fund 7,783.270 14.98 116,593
Merrill Lynch Growth Fund
Class D 37,285.474 22.22 828,483
Van Kampen American Value
Fund 11,052.720 19.37 214,091
Van Kampen Aggressive Growth
Fund Class A 70,110.099 22.23 1,558,548
Davis New York Venture Fund
Class A 14,768.593 28.74 424,449
PMI Stock Fund 503,702.871 21.95 11,056,278**
* Calculated amount may differ from reported amount due to rounding.
** Investment that represents more than 5% of the Plan's net assets as of
December 31, 2000.
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The PMI Group, Inc. Savings and Profit-Sharing Plan
Schedule H, Line 4i -
Schedule of Assets Held for Investment Purposes at End of Year
Year ended December 31, 2000
Description of Investment
Including Maturity Date,
Identity of Issue, Borrower, Rate of Interest, Collateral, Current
Lessor, or Similar Party Par or Maturity Value Cost Value
- ----------------------------------------------------------------------------------------------------
Merrill Lynch Retirement Reserves* 2,009,970.009 $ 2,009,970 $ 2,009,970
Barclays International Equity Fund* 66,567.231 1,408,832 1,204,867
Barclays S&P Midcap Stock Fund* 166,320.033 5,492,912 6,301,866
Barclays S&P 500 Stock Fund* 237,182.399 13,448,101 12,243,355
Barclays Lifepath Income Fund* 120,411.459 1,842,367 1,927,787
Barclays Lifepath 2010 Fund* 182,987.404 3,471,749 3,509,698
Barclays Lifepath 2020 Fund* 76,271.495 1,705,339 1,645,176
Barclays Lifepath 2030 Fund* 70,586.127 1,759,921 1,661,597
Barclays Lifepath 2040 Fund* 44,441.402 1,260,348 1,147,921
Dreyfus Founders Growth Fund* 111,925.696 2,448,242 1,570,318
Templeton Foreign Fund* 59,699.502 647,478 617,293
PIMCO Total Return Class A Fund* 146,579.823 1,456,273 1,522,964
Pilgrim Emerging Countries Fund* 7,783.270 166,247 116,593
Merrill Lynch Growth Fund Class D* 57,285.474 1,020,088 828,483
Van Kampen American Value Fund* 11,052.720 267,808 214,091
Van Kampen Aggressive Growth Fund
Class A* 70,110.099 2,287,844 1,558,548
Davis New York Venture Fund
Class A* 14,768.593 443,920 424,449
PMI Stock Fund* 503,702.871 7,531,676 11,056,278
Loans to participants (166 loans at
8.5% to 10.5%) - 1,074,506
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Total investments $50,635,760
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* Indicates party-in-interest to the Plan.
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