EX-99.1 2 d523989dex991.htm EX-99.1 EX-99.1

Exhibit 99.1




In re The PMI Group, Inc.     Case No. 11-13730 (BLS)
    Reporting Period: 3/1/13-3/31/13


File with Court and submit copy to United States Trustee within 20 days after end of month

Submit copy of report to any official committee appointed in the case



   Form No.     Document

Schedule of Cash Receipts and Disbursements

     MOR-1      X      

Bank Account Reconciliations, Bank Statements and Cash Disbursements Journal

     MOR-1 (a)          X

Schedule of Professional Fees Paid

     MOR-1 (b)    X      

Statement of Operations

     MOR-2      X      

Balance Sheet

     MOR-3      X      

Status of Postpetition Taxes

     MOR-4            X

Summary of Unpaid Postpetition Accounts Payable

     MOR-4 (a)    X      

Debtor Questionnaire

     MOR-5      X      

I declare under penalty of perjury (28 U.S.C. Section 1746) that this report and the attached documents are true and correct to the best of my knowledge and belief.





Signature of Debtor     Date




Signature of Joint Debtor     Date

/s/ L. Stephen Smith



Signature of Authorized Individual*     Date

L. Stephen Smith


Chief Executive Officer

and Chairman of the Board

Printed Name of Authorized Individual     Title of Authorized Individual


* Authorized individual must be an officer, director or shareholder if debtor is a corporation; a partner if debtor is a partnership; a manager or member if debtor is a limited liability company.



01: 11743743.1    070559.1001   


The PMI Group, Inc., a debtor and debtor in possession (the “Company” or “Debtor”), hereby submits its Monthly Operating Report (the “MOR”).

1. Description of the Cases. On November 23, 2011 (the “Petition Date”), the Debtor filed a voluntary petition with the Bankruptcy Court for reorganization under Chapter 11 of the Bankruptcy Code. The Debtor is operating its business as a debtor-in-possession pursuant to sections 1107(a) and 1108 of the Bankruptcy Code.

2. Basis of Presentation. The MOR is limited in scope, covers a limited time period and has been prepared solely for the purpose of complying with the monthly reporting requirements to the United States Bankruptcy Court. The financial information in the MOR is preliminary and unaudited and does not purport to show the financial statements of the Debtor in accordance with Generally Accepted Accounting Principles (“GAAP”) and, therefore, may exclude items required by GAAP, such as certain reclassifications, eliminations, accruals, valuations and disclosure items. The Debtor cautions readers not to place undue reliance upon the MOR. There can be no assurance that such information is complete and the MOR may be subject to revision.

The information contained in the MOR has been derived from the Debtor’s books and records in conjunction with information available from non -debtor affiliates. This information, however, has not been subject to procedures that would typically be applied to financial information presented in accordance with GAAP, and upon the application of such procedures, the Debtor believes that the financial information could be subject to changes and these changes could be material. The information furnished in this MOR includes primarily normal recurring adjustments but does not include all of the adjustments that would typically be made for financial statements prepared in accordance with GAAP. In addition, certain information and footnote disclosures normally included in financial statements prepared in accordance with GAAP have been condensed or omitted.

3. Recoveries and Causes of Action. The MOR, the Debtor’s Schedules of Assets and Liabilities and Statements of Financial Affairs may not include a complete list of causes of action it possesses as of the Petition Date or at any point thereafter. Regardless of the recoveries and causes of action listed, the Debtor reserves all of its rights with respect to any and all causes of action it may possess, including, but not limited to, avoidance actions or to assert any defenses, and nothing in this MOR shall be deemed a waiver or limitation of any of the Debtor’s rights to pursue any such causes of action or recovery or assert any defenses.

4. Reorganization Items. American Institute of Certified Public Accountant Statement of Position 90-7, “Financial Reporting by Entities in reorganization under the Bankruptcy Code” (“SOP 90-7”) requires separate disclosure of reorganization items such as realized gains and losses from the settlement of pre-petition liabilities, provisions for losses resulting from the reorganization and restructuring of the business as well as professional fees directly related to the process of reorganizing the Debtor under Chapter 11. Such items are

reflected in the MOR as Bankruptcy Related Expenses.

5. Liabilities Subject to Compromise. As a result of the Chapter 11 filing, most pre- petition indebtedness is subject to compromise or other treatment under a plan of reorganization. Generally, actions to enforce or otherwise effect payment of pre-petition liabilities are stayed. The Debtor has been paying and intends to continue to pay undisputed post-petition claims in the ordinary course of business. In addition, the Debtor may reject pre-petition executory contracts with respect to the Debtor’s operations with the approval of the Bankruptcy Court. Damages resulting from rejection of executory contracts are generally treated as general unsecured claims and will be classified as liabilities subject to compromise. The pre-petition liabilities that are subject to compromise are reported herein at the amounts expected to be allowed, although they may be settled for lesser amounts. The amounts currently classified as liabilities subject to compromise may be subject to future adjustments depending on Bankruptcy Court actions, further developments with respect to disputed claims, determinations of the secured status of certain claims, the values of any collateral securing such claims or other events. While GAAP requires fair market adjustments to certain obligations, including funded debt, this MOR states such obligations at notional value, including pre-petition accrued interest.

On February 19, 2013, the Bankruptcy Court approved the termination of the Debtor’s non-qualified deferred compensation plan and directed the trustee of the non-qualified deferred compensation plan trust to return the Debtor’s assets held in trust to the Debtor’s estate. In March 2013, the Debtor received these assets in the form of a cash distribution and has recorded the termination of the non-qualified deferred compensation plan as a liability subject to compromise.

6. Post-petition Accounts Payable. The Debtor has paid and continues to pay post- petition, undisputed invoices in the ordinary course and on generally agreed-upon terms.

7. Investments in Subsidiaries. Financial information related to any of the Debtor’s investments in its subsidiaries has been derived from the Debtor’s books and records in conjunction with the information available from non-debtor affiliates. Any information contained in this report pertaining to the Debtor’s investments in its subsidiaries should be viewed as preliminary and subject to revision.

8. Non-Cash Compensation Expense. Prior to the Petition Date, certain employees of the Debtor and its subsidiaries were granted stock-based compensation (including options). The Debtor has not expensed or accrued post-petition expense for outstanding stock-based grants and other stock-based compensation.

9. Cash and Fixed Income Securities. Cash balances include investment holdings consisting of U.S. Treasury Bills, primarily with a maturity of three months or less. These investments are listed at their initial purchase price and interest will be recognized at maturity.

10. Pre-Paid Assets. Pre-Paid Assets primarily consist of insurance policies being amortized on a straight-line basis over the life of each policy.

11. Deferred Assets and Liabilities and Other Accruals. The Debtor has reversed

certain accruals for pre-petition non-cash assets and liabilities, such as unamortized debt issuance expenses. There is significant uncertainty respecting the Debtor’s ability to utilize its deferred tax attributes; accordingly, a full valuation allowance has been applied to the deferred tax asset and no tax benefit or provision has been recognized.

12. Intercompany Balances. The “Accounts Receivable – Affiliates” and Post- petition “Accounts Payable – Intercompany” should be viewed as preliminary and subject to further revision. Given the timing of this filing, the Debtor and its affiliates may be required to make adjustments that may not be reflected in the period in which they occur.

The PMI Group, Inc.

Cash Receipts and Disbursements

March 1, 2013 to March 31, 2013



Total Cash Receipts 1

   $ 1,781,792   

Operating Disbursements


Employee Compensation


Payroll Taxes


Employee Benefit Costs


Consultants and Temporary Staff


Ordinary Course Professional Fees


Intercompany Payments (non-employee)




Tax Payments


Board Compensation and Travel


Other (misc. G&A and contingencies)





Total Operating Disbursements


Bankruptcy Related Expenses


Debtor Professionals


UCC Professionals


Claims Administrators


US Trustee





Total Bankruptcy Disbursements


Total Disbursements


Net Cash Flow

   $ 356,727   

Beginning Cash Balance as of 3-1-2013

   $ 197,319,157   

Change in Cash





Ending Cash Balance as of 3-31-2013

   $ 197,675,884   






Primarily includes cash distribution related to termination of Debtor’s non-qualified deferred compensation plan pursuant to a Bankruptcy Court order dated February 19, 2013.

The PMI Group, Inc.

Schedule of Bank Accounts and Balances

As of March 31, 2013


Note: All bank accounts have been reconciled for the period presented.


Name of Bank


Account Name


Bank Account Number




Bank of America

   Main Account    xxxxxx0476      17,631,379   

Bank of America

   Payroll Account    xxxxxx0423      65,516   

Bank of America 1

   Investment Account    xxxx0C80      179,963,967   

Bank of New York

   Cash Securities    xxx430      —     

Commonwealth National Bank

   Gateway    xxx3169      15,021   





         $ 197,675,884   






Investment account holdings consist of three month U.S. Treasury Bills and are listed at initial purchase price.

The PMI Group, Inc.

Schedule of Professional Fees Paid

March 1, 2013 to March 31, 2013





Period Covered




Sullivan & Cromwell, LLP

   September 2012 - November 2012      $ 771,283   

Young Conaway Stargatt & Taylor, LLP

   December 2012 - January 2013        238,000   

Osborn Maledon

   December 2012        14,689   

Goldin Associates, LLC

   February 2013        73,807   

Womble Carlyle Sandridge & Rice, LLP

   November 2012        4,805   




Total Professional Fees

        $ 1,102,583   






For the Month Ended March 31, 2013



Total Revenues

   $ —     




Payroll Expense


Other Recurring Expenses





Total Recurring Expenses


Non-Recurring Expenses - Bankruptcy Related





Total Expenses


Interest and Dividends


Equity Earnings


Gain (Loss) on Investments





Net Investment Income





Non-Cash Interest Expense





Income (Loss) before Tax





Tax Provision (Benefit)





Net Income (Loss)

   $ (1,258,065






As of March 31, 2013






   $ 197,675,884   

Investments in Subsidiaries


Accounts Receivable - Affiliates


Pre-Paid Assets


A/R Money Market Receivables


Tax Refund Receivable





Total Assets

   $ 214,902,311   




Liabilities Not Subject to Compromise


Accrued Expenses

   $ 2,353,317   

Accounts Payable


Accounts Payable - Intercompany


Other Liabilities





Liabilities Not Subject to Compromise

   $ 7,844,196   




Liabilities Subject to Compromise


Pre-Petition Bond Debt

   $ 742,553,677   

Deferred Compensation Liability


Accounts Payable


Accounts Payable - Intercompany





Liabilities Subject to Compromise

   $ 745,691,156   







Total Liabilities

   $ 753,535,353   




Common Stock

   $ 1,970,788   

Additional Paid in Capital and Accumulated Deficit


Treasury Shares





Total Equity

   $ (538,633,041







Total Liabilities and Equity

   $ 214,902,311   




The PMI Group, Inc.

Summary of Post-Petition Taxes

For the Month Ended March 31, 2013


Representation: The PMI Group, Inc.’s 2011 federal income tax return, filed on September 12, 2012, indicates taxes owing of $4,862,835 (not including penalties or interest).

The PMI Group, Inc.

Summary of Post-Petition Debts

For the Month Ended March 31, 2013


Unpaid Post-Petition Debts





0-31 Days


31-60 Days


61-90 Days


Over 90 Days




Total Operating Activity Payables

   $ —         $ —         $ —         $ —         $ 5,116,243       $ 5,116,243   

Total Bankruptcy Activity Payables

     113,118         —           —           —           —           113,118   



















Total Post-Petition Payables

   $ 113,118       $ —         $ —         $ —         $ 5,116,243       $ 5,229,361   



















Note: Operating Activity Payables include a gross taxes payable amount of $5,116,243 related to The PMI Group, Inc.’s 2011 federal income tax return, filed on September 12, 2012. This amount includes the penalties and interest that would have been payable on the tax due of $4,862,835, per a Notice of Unpaid Balance from the Internal Revenue Service dated October, 8, 2012, had payment of such $5,116,243 amount been made to the Internal Revenue Service by no later than October 22, 2012.

The PMI Group, Inc.

Debtor Questionnaire

For the Month Ended March 31, 2013




Must be completed each month

   Yes    No

1. Have any assets been sold or transferred outside the normal course of business this reporting period? If yes, provide an explanation below.


2. Have any funds been disbursed from any account other than a debtor in possession account this reporting period? If yes, provide an explanation below.


3. Have all postpetition tax returns been timely filed? If no, provide an explanation below.


4. Are workers compensation, general liability and other necessary insurance coverages in effect? If no, provide an explanation below.


5. Has any bank account been opened during the reporting period? If yes, provide documentation identifying the opened account(s). If an investment account has been opened provide the required documentation pursuant to the Delaware Local Rule 4001-3.