EXHIBIT 99.1
Information, Financial Statements, and Exhibits
Required by Form 11-K in accordance with
Rule 15d-21 under the
Securities Exchange Act of 1934
For the Fiscal Years Ended December 31, 1997
and December 31, 1996
Delphi Information Systems, Inc.
Cash Option Profit Sharing Plan
DELPHI INFORMATION SYSTEMS, INC.
---------------------------------
The principal executive offices of Delphi Information Systems, Inc.
are located at 3501 Algonquin Road, Rolling Meadows, Illinois 60008
49
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934 the
Committee has duly caused this annual Report to be signed by the undersigned
thereunto duly authorized.
DELPHI INFORMATION SYSTEMS, INC.
Cash Option Profit Sharing Plan
Date: June 29, 1998 Signature /s/ Reid Simpson
-------------- ----------------------------
Reid Simpson
Vice President-Administration and CFO
50
REPORT OF INDEPENDENT PUBLIC ACCOUNTANTS
To the Trustees of
Delphi Information Systems, Inc.
Cash Option Profit Sharing Plan
We have audited the accompanying statements of net assets available for benefits
of Delphi Information Systems, Inc. Cash Option Profit Sharing Plan as of
December 31, 1997 and 1996, and the related statements of changes in net assets
available for benefits for the years then ended. These financial statements are
the responsibility of the Plan's management. Our responsibility is to express
an opinion on these financial statements based on our audits.
We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to obtain
reasonable assurance about whether the financial statements are free of material
misstatement. An audit includes examining, on a test basis, evidence supporting
the amounts and disclosures in the financial statements. An audit also includes
assessing the accounting principles used and significant estimates made by
management, as well as evaluating the overall financial statement presentation.
We believe that our audits provide a reasonable basis for our opinion.
In our opinion, the financial statements referred to above present fairly, in
all material respects, the net assets of the Plan as of December 31, 1997 and
1996 and the changes in its net assets for the years then ended, in conformity
with generally accepted accounting principles.
Our audits were performed for the purpose of forming an opinion on the basic
financial statements taken as a whole. The supplemental schedules of assets
held for investment purposes and reportable transactions are presented for
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 of Reporting and Disclosure under
the Employee Retirement Income Security Act of 1974. The fund information in
the Statements of Changes in Net Assets Available for Benefits is presented for
purposes of additional analysis rather than to present the changes in net assets
available for plan benefits of each fund. The supplemental schedules and fund
information have been subjected to the auditing procedures applied in 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.
The schedule of assets held for investment purposes as of December 31, 1997, and
the schedule of reportable transactions for the year ended December 31, 1997, do
not disclose the historical cost of the Plan's investments. Disclosure of this
information is required by the Department of Labor's Rules and Regulations for
Reporting and Disclosure under the Employee Retirement Income Security Act of
1974.
ARTHUR ANDERSEN LLP
Chicago, Illinois
June 10, 1998
51
DELPHI INFORMATION SYSTEMS, INC.
Cash Option Profit Sharing Plan
STATEMENT OF NET ASSETS AVAILABLE FOR BENEFITS
As of December 31, 1997
(Employer Identification Number 77-0021975, Plan Number 001)
ASSETS:
Investments (Note2):
Delphi Common Stock $ 30,700
Stable Value Fund 1,228,922
Income Fund 21,731
Pathway Series-Balanced 556,997
Pathway Series-Conservative 2,149
Growth and Income Fund 813,916
Global Fund 78,456
Large Company Growth Fund 2,137,210
Development Fund 39,049
Participant Loans 78,379
------------
Net assets available for benefits $ 4,987,509
------------
------------
The accompanying Notes are an integral part of this statement.
52
DELPHI INFORMATION SYSTEMS, INC.
Cash Option Profit Sharing Plan
STATEMENT OF NET ASSETS AVAILABLE FOR BENEFITS
As of December 31, 1996
(Employer Identification Number 77-0021975, Plan Number 001)
ASSETS:
Investments, at fair value:
Delphi
Common Stock $ 23,300
Guaranteed
Long Term
Account 1,209,123
Guaranteed
Government
Securities
Account 83,268
Income and
Growth
Account 928,399
Growth
Opportunities
Account 2,534,058
Participant Loans 158,888
Total investments 4,937,036
Participants'
contributions
receivable 15,905
------------
Net assets available for benefits $ 4,952,941
------------
------------
The accompanying Notes are an integral part of this statement.
53
DELPHI INFORMATION SYSTEMS, INC.
Cash Option Profit Sharing Plan
STATEMENT OF CHANGES IN NET ASSETS AVAILABLE
FOR BENEFITS, WITH FUND INFORMATION
For the Year Ended December 31, 1997
(Employer Identification Number 77-0021975, Plan Number 001)
---------------------------------------------------------------------------
---------------------------------------------------------------------------
CIGNA Fidelity
CIGNA Guaranteed Income Fidelity
Guaranteed Government and Growth Delphi Stable
Long Term Securities Growth Opportunities Common Value
Account Account Account Account Stock Fund
---------------------------------------------------------------------------
ADDITIONS:
Contributions:
Participants $59,594 $7,520 $50,170 $116,358 $21,191 $15,917
Investment Income:
Net appreciation(depreciation) in fair
value of investments 0 2,050 143,524 497,184 (20,247) 0
Interest and dividends 41,107 211 565 1,553 27 32,723
---------------------------------------------------------------------------
Total investment income/(loss) 41,107 2,261 144,089 498,737 (20,220) 32,723
---------------------------------------------------------------------------
Total additions 100,701 9,781 194,259 615,095 971 48,640
---------------------------------------------------------------------------
DEDUCTIONS:
Benefits paid to participants (234,554) (15,359) (377,719) (887,891) (10,237) (73,250)
Other expenses 0 0 0 0 (1,707) (81)
---------------------------------------------------------------------------
Total deductions (234,554) (15,359) (377,719) (887,891) (11,944) (73,331)
---------------------------------------------------------------------------
LOANS ISSUED TO PARTICIPANTS (27,000) (1,000) 0 0 0 (2,270)
LOAN PRINCIPAL REPAYMENTS 9,298 1,539 7,677 10,649 156 8,535
TRANSFERS TO THE PLAN 0 0 0 0 0 115,380
INTERFUND TRANSFERS (1,062,005) (79,032) (756,345) (2,278,546) 17,916 1,131,968
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NET INCREASE (DECREASE) (1,213,560) (84,071) (932,128) (2,540,693) 7,099 1,228,922
NET ASSETS AVAILABLE FOR PLAN BENEFITS
Beginning of year 1,213,560 84,071 932,128 2,540,693 23,601 0
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End of year $0 $0 $0 $0 $30,700 $1,228,922
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Growth
Pathway Pathway and
Income Series- Series- Income Global
Fund Balanced Conservative Fund Fund
--------------------------------------------------------------
ADDITIONS:
Contributions:
Participants $17,190 $4,364 $2,121 $51,993 $53,064
Investment Income:
Net appreciation(depreciation) in fair
value of investments (2) (15,746) (58) (13,788) (13,207)
Interest and dividends 706 8,785 86 62,471 12,590
--------------------------------------------------------------
Total investment income/(loss) 704 (6,961) 28 48,683 (617)
--------------------------------------------------------------
Total additions 17,894 (2,597) 2,149 100,676 52,447
--------------------------------------------------------------
DEDUCTIONS:
Benefits paid to participants 0 (116,902) 0 0 0
Other expenses 0 (6) 0 0 0
--------------------------------------------------------------
Total deductions 0 (116,908) 0 0 0
--------------------------------------------------------------
LOANS ISSUED TO PARTICIPANTS (54) (2,308) 0 (93) 0
LOAN PRINCIPAL REPAYMENTS 1,981 1,502 0 1,569 2,186
TRANSFERS TO THE PLAN 0 0 0 636,987 0
INTERFUND TRANSFERS 1,910 677,308 0 74,777 23,823
--------------------------------------------------------------
NET INCREASE (DECREASE) 21,731 556,997 2,149 813,916 78,456
NET ASSETS AVAILABLE FOR PLAN BENEFITS
Beginning of year 0 0 0 0 0
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End of year $21,731 $556,997 $2,149 $813,916 $78,456
--------------------------------------------------------------
--------------------------------------------------------------
-----------------------------------------------------------
Large
Company
Growth Development Participant's
Fund Fund Loans Total
-----------------------------------------------------------
ADDITIONS:
Contributions:
Participants $92,731 $15,348 $0 $507,561
Investment Income:
Net appreciation(depreciation) in fair
value of investments 17,064 (5,079) 0 591,695
Interest and dividends 83,073 3,509 0 247,406
-----------------------------------------------------------
Total investment income/(loss) 100,137 (1,570) 0 839,101
-----------------------------------------------------------
Total additions 192,868 13,778 0 1,346,662
-----------------------------------------------------------
DEDUCTIONS:
Benefits paid to participants (255,656) 0 (91,099) (2,062,667)
Other expenses 0 0 0 (1,794)
-----------------------------------------------------------
Total deductions (255,656) 0 (91,099) (2,064,461)
-----------------------------------------------------------
LOANS ISSUED TO PARTICIPANTS (27,520) 0 60,245 0
LOAN PRINCIPAL REPAYMENTS 4,237 326 (49,655) 0
TRANSFERS TO THE PLAN 0 0 0 752,367
INTERFUND TRANSFERS 2,223,281 24,945 0 0
-----------------------------------------------------------
NET INCREASE (DECREASE) 2,137,210 39,049 (80,509) 34,568
NET ASSETS AVAILABLE FOR PLAN BENEFITS
Beginning of year 0 0 158,888 4,952,941
-----------------------------------------------------------
End of year $2,137,210 $39,049 $78,379 $4,987,509
-----------------------------------------------------------
-----------------------------------------------------------
The accompanying Notes are an integral part of this statement.
54
DELPHI INFORMATION SYSTEMS, INC.
Cash Option Profit Sharing Plan
STATEMENT OF CHANGES IN NET ASSETS AVAILABLE
FOR BENEFITS, WITH FUND INFORMATION
For the Year Ended December 31, 1996
(Employer Identification Number 77-0021975, Plan Number 001)
--------------------------------------------------------------------------------
PARTICIPANT DIRECTED
--------------------------------------------------------------------------------
CIGNA Fidelity
CIGNA Guaranteed Income Fidelity
Delphi Guaranteed Government and Growth
Common Long Term Securities Growth Opportunities Participant's
Stock Account Account Account Account Loans Total
--------------------------------------------------------------------------------------------
ADDITIONS:
Contributions:
Participants $12,469 $120,263 $23,527 $163,778 $307,706 - $627,743
Investment Income:
Net appreciation/(depreciation)
in fair value of
investments (2,845) - 4,146 70,841 465,534 - 537,676
Interest 5 91,586 187 2,220 4,871 (33) 98,836
--------------------------------------------------------------------------------------------
Total investment income/(loss) (2,840) 91,586 4,333 73,061 470,405 (33) 636,512
--------------------------------------------------------------------------------------------
Total additions 9,629 211,849 27,860 236,839 778,111 (33) 1,264,255
--------------------------------------------------------------------------------------------
DEDUCTIONS:
Benefits paid to participants (4,399) (554,962) (42,311) (377,975) (1,363,596) (21,095) (2,364,338)
Other expenses (1,875) - - - - 21 (1,854)
--------------------------------------------------------------------------------------------
Total deductions (6,274) (554,962) (42,311) (377,975) (1,363,596) (21,074) (2,366,192)
--------------------------------------------------------------------------------------------
LOANS ISSUED TO PARTICIPANTS - (47,370) (828) (19,697) (32,640) 100,535 -
LOAN PRINCIPAL REPAYMENTS 157 41,308 739 22,124 24,794 (89,122) -
INTERFUND TRANSFERS (13,059) (1,819) (11,536) (67,640) 94,055 - -
--------------------------------------------------------------------------------------------
NET DECREASE (9,547) (350,994) (26,076) (206,349) (499,276) (9,694) (1,101,937)
NET ASSETS AVAILABLE FOR PLAN BENEFITS
Beginning of year 33,148 1,564,554 110,147 1,138,477 3,039,969 168,582 6,054,877
--------------------------------------------------------------------------------------------
End of year $23,601 $1,213,560 $84,071 $932,128 $2,540,693 $158,888 $4,952,941
--------------------------------------------------------------------------------------------
--------------------------------------------------------------------------------------------
The accompanying Notes are an integral part of this statement.
55
DELPHI INFORMATION SYSTEMS, INC.
Cash Option Profit Sharing Plan
NOTES TO FINANCIAL STATEMENTS AND SCHEDULES
DECEMBER 31, 1997 AND 1996
(Employer Identification Number 77-0021975, Plan Number 001)
1. PLAN DESCRIPTION
The following is a general description of the Delphi Information Systems,
Inc. Cash Option Profit Sharing Plan (the "Plan"). Participants should
refer to the Plan agreement for a more complete description of the Plan's
provisions.
GENERAL
The Plan, which commenced January 1, 1988, is a qualified cash option
profit sharing plan offered to all eligible employees of Delphi Information
Systems, Inc. (the "Company" or "Delphi") when hired. Enrollment to
participate and election changes occur quarterly. The Plan is subject to
the provisions of the Employee Retirement Income Security Act of 1974, as
amended ("ERISA") and Section 401 (a) and Section 401 (k) of the Internal
Revenue Code ("IRC") of 1986, as amended.
CONTRIBUTIONS
Participants may elect to contribute an amount equaling from 1% to 20% of
their basic compensation up to a maximum of $9,500 for 1997 for 1996
(salary reduction contributions). This maximum allowable contribution is
adjusted each year for increases in the cost of living as provided in
applicable regulations. This annual amount is an aggregate limitation that
applies to all of an individual's salary reduction contributions and
similar contributions under other plans. The Company may make an annual
discretionary contribution to the Plan. Each Plan year, the Company will
decide what portion of its profits, if any, it will contribute to the Plan.
The Company did not make any contribution to the Plan during 1997 and 1996.
The salary reduction contributions are deposited to the investment funds as
directed by the participant.
PARTICIPANT ACCOUNTS
Each participant's account is adjusted with (1) the participant's
contributions, (2) the related Company matching contributions, if any, (3)
fund earnings or losses, and (4) other expenses, if applicable.
VESTING
Each participant has an immediate, fully vested right to receive all salary
reduction contributions and earnings thereon, upon termination from the
Company, or upon separation caused by death of the participant or under
other special circumstances.
56
The Company's contributions to the Plan, if any, and the earnings on such
contributions, become vested in accordance with the following schedule:
Years Vested
of Service percentage
-------------------------------------------
1 but less than 2 25%
2 but less than 3 50%
3 but less than 4 75%
4 or more 100%
FORFEITURES
If a participant stops working for the Company before their account is 100%
vested, they may forfeit the nonvested portion of their account. All
amounts that are forfeited by terminated Participants are added to the
Company's contributions to the Plan and divided up among the accounts of
eligible Participants.
INVESTMENT OPTIONS
Participants may direct their salary reduction contributions and any
earnings thereon may be invested in one or more of the following funds:
a. Delphi Common Stock - Invests in the shares of the Company's common
stock. This account was frozen July 1, 1997 and no participant's
contributions are being allocated to this investment.
b. Scudder Stable Value Fund - Invests in high-quality instruments,
including guaranteed investment contracts, bank investment contracts,
money market instruments, and synthetic contracts composed of
triple-A-rated securities and high-quality bond portfolio's "wrapped"
by insurance companies or banks rated AA or higher by Standard &
Poor's or Moody's.
c. Scudder Income Fund - Invests primarily in high-grade corporate bonds
and government securities.
d. Scudder Pathway Series - Balanced - Invests in a mix of Scudder mutual
funds, including stock funds, bond funds, and stable value
investments, that pursue capital appreciation as well as current
income.
e. Scudder Pathway Series - Conservative - Invests in a mix of Scudder
mututal funds, including bonds, stock funds, and stable value
investments, which pursue current income as a primary objective.
f. Scudder Growth and Income Fund - Investments are income-producing
common and preferred stocks of established companies divided mainly
among the financial, manufacturing, health care, and consumer staples
sectors.
g. Scudder Global Fund - Invests in both U.S. and foreign stocks, with an
emphasis on stocks of established companies or varying size.
h. Scudder Large Company Growth Fund - Invests primarily in the stocks of
medium-to-large sized U.S. companies with prospects for maintaining
greater-than-average earnings, strong financial positions, and
relatively little debt over time.
57
i. Scudder Development Fund - Invests in a portfolio of stocks of small,
emerging, or developing companies that show the promise of increased
size and profitability or market recognition.
j. The following are investment options that were available through July
1, 1997 and since have been close: CIGNA Guaranteed Long Term Account,
CIGNA Guaranteed Government Securities Account, Fidelity Income and
Growth Account, and Fidelity Growth Opportunities Acocunt.
LOANS TO PARTICIPANTS
The Plan allows participants to borrow against their vested accounts
subject to certain limitations as described in the Plan agreement.
PAYMENT OF BENEFITS
For any event which may result in a distribution of benefits, a
participant's benefit is distributed in a single, lump sum payment. The
distribution is made in the form of cash, unless the participant elects to
receive the portion of his account that was invested in the Company's stock
in the form of whole shares of such Company stock.
EXPENSES
Expenses in connection with the purchase or sale of stock or other
securities are charged to the fund for which such purchase or sale is made.
The Trust Agreement stipulates that expenses incurred by the Asset
Custodian in the performance of its duties including legal and audit fees
shall be paid from the Trust Fund unless paid by the Company at its sole
discretion.
TERMINATION
Although it has not expressed any intent to do so, the Company has the
right under the Plan to discontinue its contributions at any time and to
terminate the Plan subject to the provisions of ERISA. In the event of
Plan termination, participants will become fully vested in any Company
contributions to their accounts.
ADMINISTRATION
The Plan is administered by an Administrative Committee appointed by the
Board of Directors of the Company.
The Committee has responsibility for supervising the collection of
contributions, delivery of such contributions to the Asset Custodian, and
maintenance of necessary records.
The Asset Custodian's responsibilities include receipt of Plan
contributions, investment and maintenance of trust assets in the available
funds, and distributions under the plan of such amounts as the Committee
shall direct from time to time.
58
2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
BASIS OF ACCOUNTING
The accompanying financial statements are prepared on the accrual basis of
accounting. The preparation of the financial statements in conformity with
generally accepted accounting principles requires the Plan's management to
use estimates and assumptions that affect the accompanying financial
statements and disclosures. Actual results could differ from these
estimates.
Net realized and unrealized appreciation(depreciation) is recorded in the
accompanying Statements of Changes in Net Assets Available for Benefits as
net appreciation(depreciation) in fair value of investments.
INVESTMENT VALUATION
Investments, other that fully-benefit-responsive investment contracts, are
stated at fair value as determined by quoted market prices. Approximately
28% of the Scudder Stable Value Fund is invested in
fully-benefit-responsive investment contracts. Theses contracts are valued
at contract value which has been determined by the Fund's Trustee to
approximate fair value. The average interest rate of these contracts was
6.90% at December 31, 1997. Purchases and sales of securities are
reflected on a trade date basis. Interest and dividend income from other
investments is accrued as earned.
3. TAX STATUS
The Internal Revenue Service has determined and informed the Company by a
letter dated August 4, 1995, that the Plan and related Trust are designed
in accordance with applicable sections of the IRC. The Plan administrator
believes the Plan is currently designed and being operated in compliance
with the applicable requirements of the IRC and that, therefore, the Plan
was qualified and the related Trust was tax-exempt as of the financial
statement dates.
4. CURRENT EVENTS
Delphi Information Systems, Inc. acquired Insurnet, Inc. in December, 1993.
Accordingly, it was resolved by the Company's Board of Directors in May,
1997 to transfer the assets of the Insurnet Inc. Retirement & Voluntary
Investment Plan into the Delphi Informations Systems, Inc. Cash Option
Profit Sharing Plan in July, 1997 through a trust-to-trust transfer in the
amount of $752,357. This amount is shown as a transfer to the plan in the
Statement of Changes in Net Assets Available for Benefits for the year
ended December 31, 1997.
59
DELPHI INFORMATION SYSTEMS, INC.
CASH OPTION PROFIT SHARING PLAN
SCHEDULE I - ITEM 27A - - SCHEDULE OF ASSETS
HELD FOR INVESTMENT PURPOSES
AS OF DECEMBER 31, 1997
(EMPLOYER IDENTIFICATION NUMBER 77-0021975, PLAN NUMBER 001)
Current
Indentity of Issue/ Description of Investment Cost (a) Value
--------------------------------------------- -------- ------------
* Scudder Trust Company
Delphi common stock, 32,747.501 shares, $30,700
$0.10 par value, $1.03 per share
Stable Value Fund 1,228,922
1,228,920.63 units, $1.00 per unit
Income Fund 21,731
1,613.335 units, $13.44 per unit
Pathway Series-Balanced 556,997
43,144.573 units, $12.91 per unit
Pathway Series-Conservative 2,149
168.288 units, $12.77 per unit
Growth and Income Fund 813,916
29,781.010 units, $27.28 per unit
Global Fund 78,456
2,774.201 units, $28.26 per unit
Large Company Growth Fund 2,137,210
85,080.03 units, $25.12 per unit
Development Fund 39,049
1,012.938 units, $38.06 per unit
* Participant Loans 78,379
7.25 to 9.50 percent interest
------------
$4,987,509
------------
------------
(a) Historical cost information could not be obtained from the Plan's
custodian.
* Represents a party in interest.
The accompanying notes are an integral part of this schedule.
60
DELPHI INFORMATION SYSTEMS, INC.
CASH OPTION PROFIT SHARING PLAN
SCHEDULE II - 27D -- SCHEDULE OF REPORTABLE TRANSACTIONS
FOR THE YEAR ENDED DECEMBER 31, 1997
Purchases Sales
--------------------------------------------------------------------------------
Number of Purchase Number of Selling
Indentity of Issue/Description of Investment Purchases Price Sales Price Cost (a) Gain/(Loss)
- -----------------------------------------------------------------------------------------------------------------------------------
* Scudder Trust Company
Stable Value 35 $1,319,370 9 $90,449
Fund
Pathway Series- 27 $733,553 11 $160,810
Balanced Fund
Growth and 32 $827,797 1 $94
Income Fund
Large Company 30 $2,539,608 13 $419,462
Growth Fund
* CIGNA
Guaranteed Long (a) $116,801 (a) $1,490,772
Term Fund
Fidelity
Income and Growth (a) $62,710 (a) $1,124,347
Account
Growth Opportunitites (a) $219,906 (a) $3,215,317
Account
(a) Historical cost information and number of purchases/sales could not be
obtained from the Plan's asset custodian.
* Represents a party in interest .
The accompanying notes are an integral part of this schedule.
61