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

Exhibit 99.1

UNITED STATES BANKRUPTCY COURT

DISTRICT OF DELAWARE

 

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

MONTHLY OPERATING REPORT

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

 

REQUIRED DOCUMENTS

   Form No.     Document
Attached
   Explanation
Attached
   Debtor’s
Statement

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

   

4/19/13

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   


NOTES TO MONTHLY OPERATING REPORT

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

MOR-1

 

Total Cash Receipts 1

   $ 1,781,792   

Operating Disbursements

  

Employee Compensation

     101,835   

Payroll Taxes

     4,223   

Employee Benefit Costs

     4,241   

Consultants and Temporary Staff

     —     

Ordinary Course Professional Fees

     62,063   

Intercompany Payments (non-employee)

     72,083   

Travel

     —     

Tax Payments

     184   

Board Compensation and Travel

     —     

Other (misc. G&A and contingencies)

     77,853   
  

 

 

 

Total Operating Disbursements

     322,482   

Bankruptcy Related Expenses

  

Debtor Professionals

     1,097,778   

UCC Professionals

     4,805   

Claims Administrators

     —     

US Trustee

     —     
  

 

 

 

Total Bankruptcy Disbursements

     1,102,583   

Total Disbursements

     1,425,065   

Net Cash Flow

   $ 356,727   

Beginning Cash Balance as of 3-1-2013

   $ 197,319,157   

Change in Cash

     356,727   
  

 

 

 

Ending Cash Balance as of 3-31-2013

   $ 197,675,884   
  

 

 

 

 

1 

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

MOR-1a

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

 

Name of Bank

  

Account Name

  

Bank Account Number

  

Balance

 

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   
        

 

 

 

Total

         $ 197,675,884   
        

 

 

 

 

1

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

MOR-1b

 

Payee

  

Period Covered

      

Amount

 

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   
       

 

 

 


STATEMENT OF OPERATIONS

THE PMI GROUP, INC.

For the Month Ended March 31, 2013

MOR-2

 

Total Revenues

   $ —     
  

 

 

 

Payroll Expense

     113,938   

Other Recurring Expenses

     376,775   
  

 

 

 

Total Recurring Expenses

     490,713   

Non-Recurring Expenses - Bankruptcy Related

     749,998   
  

 

 

 

Total Expenses

     1,240,712   

Interest and Dividends

     25,786   

Equity Earnings

     (42,955

Gain (Loss) on Investments

     —     
  

 

 

 

Net Investment Income

     (17,169
  

 

 

 

Non-Cash Interest Expense

     —     
  

 

 

 

Income (Loss) before Tax

     (1,257,881
  

 

 

 

Tax Provision (Benefit)

     184   
  

 

 

 

Net Income (Loss)

   $ (1,258,065
  

 

 

 


BALANCE SHEET

THE PMI GROUP, INC.

As of March 31, 2013

MOR-3

 

Assets

  

Cash

   $ 197,675,884   

Investments in Subsidiaries

     5,338,678   

Accounts Receivable - Affiliates

     85,666   

Pre-Paid Assets

     8,668,574   

A/R Money Market Receivables

     3   

Tax Refund Receivable

     3,133,508   
  

 

 

 

Total Assets

   $ 214,902,311   
  

 

 

 

Liabilities Not Subject to Compromise

  

Accrued Expenses

   $ 2,353,317   

Accounts Payable

     5,229,361   

Accounts Payable - Intercompany

     53,915   

Other Liabilities

     207,603   
  

 

 

 

Liabilities Not Subject to Compromise

   $ 7,844,196   
  

 

 

 

Liabilities Subject to Compromise

  

Pre-Petition Bond Debt

   $ 742,553,677   

Deferred Compensation Liability

     1,755,998   

Accounts Payable

     49,197   

Accounts Payable - Intercompany

     1,332,284   
  

 

 

 

Liabilities Subject to Compromise

   $ 745,691,156   
  

 

 

 
  
  

 

 

 

Total Liabilities

   $ 753,535,353   
  

 

 

 

Common Stock

   $ 1,970,788   

Additional Paid in Capital and Accumulated Deficit

     732,801,078   

Treasury Shares

     (1,273,404,907
  

 

 

 

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

MOR-4

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

MOR-4a

Unpaid Post-Petition Debts

 

    

Current

    

0-31 Days

    

31-60 Days

    

61-90 Days

    

Over 90 Days

    

Total

 

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

MOR-5

DEBTOR QUESTIONNAIRE

 

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.

      x

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.

      x

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

   x   

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

   x   

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.

      x