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 COLUMBIA, S.C., Dec. 8 /PRNewswire/ -- Policy Management Systems Corporation (PMSC) (NYSE: PMS) today issued a letter to its stockholders, customers, and employees, advising them of recent developments in connection with the company's audit and its business. The text of the letter, which was from Chairman and President G. Larry Wilson, follows:
 This letter is intended to update you on the status of the audit of the Company for the six (6) months period ended June 30, 1993 and on recent business activities of the Company.
 While we cannot set an exact data, we expect the results of the audit to be available in January or early February. This is taking so long partly because of the detailed review being performed by the Company and its auditors, Coopers & Lybrand. At the Company's request, Coopers & Lybrand has also conducted a thorough analysis of the company's internal controls and are reviewing more than 10,000 product and services contract items.
 The audit has also taken longer than originally anticipated in part because of the unforeseen difficulty in accumulating and verifying certain historical data which extended over multiple accounting periods. The company is implementing additional systems for contract administration and project costing to eliminate this difficulty in the future and to provide a level of detailed information and control not previously available. At present, we are unable to assess the effect, if any, these issues may have on the Company's auditors' ability to issue or reissue audit opinions relating to the periods prior to January 1, 1993.
 We continue to invest in product development, acquisitions, and expansion. We began 1993 with $238.5 million in cash and marketable securities, and since the beginning of the year, we have invested more than $160 million in business and software acquisitions, data processing equipment and property, and share repurchases to date. The Company's cash position remains strong, with positive cashflow and more than $156 million currently in cash and marketable securities and only $10 million of debt.
 Today, we signed one of our largest outsourcing agreements ever with Vital Forsikring, a European insurance company. This agreement is expected to generate more than $150 million in revenues over the next seven (7) years. We believe that we are better positioned for potential growth in Europe with increased resources and products for this market.
 Our Property and Casualty Software and Services Group is performing well in comparison to 1992. Although new business in this area had slowed down for several months, we have entered into several significant new agreements recently, with companies such as Allstate (Canada) and CNA.
 Our Total Policy Management outsourcing area is now growing, with the addition of several new customers that should contribute toward replacing those revenues lost from the expiration of the New Jersey Market Transition Facility (MTF) contract.
 We have now made available Release 6 of our series III systems. This is a major increase in functionality and performance for client/server/host systems. We are pursuing strategies to make our Series III systems more "open." To further this goal, we are actively pursuing alliances that would provide our customers more choices for software and hardware platform support.
 We are completing the restructuring of our Life and Health Groups. We have downsized staff and facilities for discontinued projects and developed now strategies for future growth. We are pleased with our progress with our recent acquisition of CYBERTEK and are integrating organizations, products, services, and facilities. While this is a major effort, we believe that it will be rewarded with future synergies and growth. We are encouraged by the recent licensing to several life insurance companies of our product set arising from the CYBERTEK acquisition.
 As we have previously told you, the Company has been adversely affected throughout this year by spending cutbacks and contract delays in our health insurance segment. We are developing a new health strategy that, coupled with significant downsizing of this group, we expect will allow us to soon begin operating this group at a breakeven level. We believe that once health care reform is enacted, the new environment will lead to many opportunities for our skills and products. However, it could be some time before the health business makes a significant contribution to PMSC earnings.
 We recently completed our annual strategic planning meetings with more than 250 of our managers and sales staff participating. Our goal for the future is to expand our leadership position in providing automation and information solutions to the worldwide insurance industry. We intend to continue to invest in market expansions, acquisitions, research and development, and technology to bring the best insurance applications solutions to our customers. Our employees continue to be enthusiastic and are committed to growing our business, providing superior customer service, and delivering quality products.
 Once again, we thank our customers, employees, and long-term investors for their continued support.
 -0- 12/8/93
 /CONTACT: Jim O'Brien for Policy Management Systems, 212-213-7005/

CO: Policy Management Systems Corporation ST: South Carolina IN: CPR INS SU:

LG-TW -- NY080 -- 1848 12/08/93 14:41 EST
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Publication:PR Newswire
Date:Dec 8, 1993

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