<PAGE>
- - --------------------------------------------------------------------------------
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 10-Q
------------------------------------------
(Mark One)
[X] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE
ACT OF 1934
For the quarterly period ended: MARCH 31, 1997
or
[ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934
Commission file number: 1-7141
PS GROUP HOLDINGS, INC.
(Exact name of registrant as specified in its charter)
DELAWARE 33-0692068
(State or other jurisdiction (IRS Employer
of incorporation) Identification No.)
4370 LA JOLLA VILLAGE DRIVE, SUITE 1050
SAN DIEGO, CALIFORNIA 92122
(Address of principal executive offices)
(Zip code)
(619) 642-2999
(Registrant's telephone number, including area code)
Indicate by check mark whether the registrant (1) has filed all reports required
to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during
the preceding 12 months (or for such shorter period that the registrant was
required to file such reports), and (2) has been subject to such filing
requirements for the past 90 days.
Yes [X] No [_]
Indicate the number of shares outstanding of each of the issuer's classes of
common stock, as of May 9, 1997: 6,068,313 shares of common stock, $1 par
value.
- - --------------------------------------------------------------------------------
<PAGE>
PS GROUP HOLDINGS, INC.
FORWARD-LOOKING STATEMENTS
The Private Securities Litigation Reform Act of 1995 provides a "safe harbor"
for forward-looking statements. Certain information included in this Form 10-Q
for the quarter ended March 31, 1997 may be deemed forward-looking, such as
information relating to the future prospects of aircraft leases of PS Group,
Inc. (PSG), the consequences of any unscheduled return of aircraft under lease,
PS Trading Inc.'s prospects, plans for expansion of Statex Petroleum, Inc., the
availability of certain tax benefits and the amount of otherwise-taxable income
against which such benefits may be offset. Investors are cautioned that all
forward-looking statements involve risks and uncertainties, including, but not
limited to the impact of the financial condition and results of operations of
the lessees of PSG's aircraft, the impact of economic conditions on each
business segment, the impact of competition, the impact of governmental
legislation and regulation and possible future changes therein, and other risks
detailed in this Form 10-Q, the 1996 Annual Report to Shareholders of PS Group
Holdings, Inc. (the Company) and in other filings the Company has made with the
Securities and Exchange Commission. Should any of such risks or uncertainties
materialize or should assumptions prove incorrect, actual results or outcomes
may vary materially from those contemplated in such forward-looking statements.
PART I - FINANCIAL INFORMATION
ITEM 1. FINANCIAL STATEMENTS.
Included herein on pages F-1 to F-4.
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS
OF OPERATIONS.
Included herein on pages F-5 to F-6.
PART II - OTHER INFORMATION
ITEM 1. LEGAL PROCEEDINGS.
None.
1
<PAGE>
ITEM 2. CHANGES IN SECURITIES.
None.
ITEM 3. DEFAULTS UPON SENIOR SECURITIES.
None.
ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS.
None.
ITEM 5. OTHER INFORMATION.
None.
ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K.
(a) Exhibits.
27. Financial Data Schedule.
(b) Reports on Form 8-K
March 12, 1997 Reported that the Board of Directors of the
Company amended the by-law requirements for
advance notice of stockholder proposals at annual
meetings effective in 1998.
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the
registrant has duly caused this report to be signed on its behalf by the
undersigned thereunto duly authorized.
PS GROUP HOLDINGS, INC.
-----------------------
(Registrant)
Date: May 12, 1997
/s/ Lawrence A. Guske
- - ----------------------------
LAWRENCE A. GUSKE
Vice President - Finance and
Chief Financial Officer
2
<PAGE>
PS GROUP HOLDINGS, INC.
UNAUDITED CONDENSED CONSOLIDATED BALANCE SHEETS
MARCH 31, 1997 AND DECEMBER 31, 1996
(in thousands)
<TABLE>
<CAPTION>
1997 1996
-------- --------
ASSETS
<S> <C> <C>
Current assets:
Cash and cash equivalents $ 11,252 $ 7,350
U.S. Government securities 6,696 6,799
Accounts and notes receivable 22,146 26,932
Current portion of aircraft leases 7,063 10,075
Fuel inventory 7,764 13,073
Other current assets 7,985 5,842
-------- --------
Total current assets 62,906 70,071
Property and equipment, net 22,669 22,604
Aircraft leased under operating leases, net 102,409 105,598
Investment in aircraft financing leases 85,471 88,669
Other assets 10,949 11,747
-------- --------
$284,404 $298,689
======== ========
<CAPTION>
LIABILITIES AND STOCKHOLDERS' EQUITY
<S> <C> <C>
Current liabilities:
Accounts payable $ 7,753 $ 10,231
Other current liabilities 10,186 13,982
Current portion of long-term obligations 22,279 23,890
-------- --------
Total current liabilities 40,218 48,103
Long-term obligations 73,681 81,895
Deferred income taxes 38,198 37,572
Other liabilities 7,708 7,528
Stockholders' equity:
Common stock 6,068 6,068
Additional paid-in capital 98,420 98,420
Retained earnings 20,111 19,103
-------- --------
Total stockholders' equity 124,599 123,591
-------- --------
$284,404 $298,689
======== ========
</TABLE>
See accompanying notes.
F-1
<PAGE>
PS GROUP HOLDINGS, INC.
UNAUDITED CONDENSED CONSOLIDATED INCOME STATEMENTS
THREE MONTHS ENDED MARCH 31, 1997 AND 1996
(in thousands, except per share amounts)
<TABLE>
<CAPTION>
1997 1996
------- -------
<S> <C> <C>
Revenues:
Fuel sales and distribution $55,875 $39,177
Oil and gas production 2,516 1,793
Aircraft leasing 7,941 8,830
Interest and other 395 317
------- -------
66,727 50,117
------- -------
Costs and expenses:
Cost of sales 56,472 39,578
Depreciation, depletion and amortization 3,869 3,980
General and administrative expenses 1,500 1,437
Interest expense 3,102 3,632
------- -------
64,943 48,627
------- -------
Income before taxes 1,784 1,490
Provision for taxes 776 619
------- -------
Net income $ 1,008 $ 871
======= =======
Net income per share $.17 $.14
======= =======
Shares used in determining net income per share 6,068 6,068
======= =======
</TABLE>
See accompanying notes.
F-2
<PAGE>
PS GROUP HOLDINGS, INC.
UNAUDITED CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
THREE MONTHS ENDED MARCH 31, 1997 AND 1996
(in thousands)
<TABLE>
<CAPTION>
1997 1996
-------- -------
<S> <C> <C>
Cash provided from operating activities $ 7,533 $ 2,372
Cash flows from financing activities:
Additions to long-term obligations 300 692
Reductions in long-term obligations (10,126) (4,867)
-------- -------
Net cash used in financing activities (9,826) (4,175)
-------- -------
Cash flows from investing activities:
Proceeds from sales of U.S. Government securities 531 4,775
Capital additions (723) (538)
Financing leases and other 6,387 (60)
-------- -------
Net cash provided from investing activities 6,195 4,177
-------- -------
Net increase in cash and cash equivalents 3,902 2,374
Cash and cash equivalents at beginning of period 7,350 3,999
-------- -------
Cash and cash equivalents at end of period $ 11,252 $ 6,373
======== =======
</TABLE>
See accompanying notes.
F-3
<PAGE>
PS GROUP HOLDINGS, INC.
NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(a) In the opinion of management, the accompanying Unaudited Condensed
Consolidated Financial Statements include all adjustments (consisting only
of normal recurring adjustments) necessary for a fair statement of the
consolidated financial position at March 31, 1997, and the results of
operations and cash flows for the three months ended March 31, 1997 and
1996. The preparation of financial statements in conformity with generally
accepted accounting principles requires management to make estimates and
assumptions that affect the amounts reported in the financial statements.
Actual results could differ from those estimates. Certain reclassifications
have been made to the 1996 financial statements to make them comparable to
the 1997 presentation.
These Unaudited Condensed Consolidated Financial Statements should be read
in conjunction with the Consolidated Financial Statements and Notes thereto
contained in the Company's 1996 Annual Report to Stockholders.
(b) Restrictions on the transfer of common shares - In general, and subject to
an exemption for certain dispositions of shares by persons who were "pre-
existing 5% shareholders" on June 5, 1996 (as defined in Article XI of the
Company's Restated Certificate of Incorporation), the transfer restrictions
prohibit, without prior approval of the Board of Directors, the direct or
indirect disposition or acquisition of any stock of the Company by or to any
holder who owns, or would, as a result thereof, own (either directly or
through the tax attribution rules) 5% or more of the stock upon such
acquisition. These restrictions have been imposed in order to help preserve
the Company's substantial net operating loss and investment tax credit
carryforwards and other tax benefits by decreasing the risk of an "ownership
change" for federal income tax purposes.
F-4
<PAGE>
PS GROUP HOLDINGS, INC.
MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION
AND RESULTS OF OPERATIONS
FINANCIAL CONDITION
At March 31, 1997, the Company's principal sources of liquidity were cash, cash
equivalents and U.S. Government securities totaling $17.9 million, a $3.8
million increase from December 31, 1996. The major changes in cash and cash
equivalents are reported in the Unaudited Condensed Consolidated Statements of
Cash Flows. Working capital increased by $.7 million since December 31, 1996.
The Company's capitalization consisted of 44% long and short-term obligations
and 56% equity at March 31, 1997 compared to 46%/54% at December 31, 1996.
At the end of 1997's first quarter, $5.5 million was outstanding under a bank
credit agreement, consisting entirely of letters of credit, all of which were
fully cash collateralized. No borrowings are permitted under the bank credit
agreement.
Statex Petroleum, Inc. (Statex), the Company's oil and gas production and
development subsidiary, has a separate bank credit agreement collateralized by
its major oil properties. The total availability is $6 million but on approval
could be increased up to $11.5 million. During the first three months of 1997,
$300,000 was borrowed under this agreement, bringing the total outstanding to
$3.3 million. This source of funding is intended for the acquisition and
development of properties which Statex may acquire in the future.
The Company's assets include approximately $138.8 million for which realization
is substantially dependent upon the future performance of US Airways, Inc. (US
Airways) under aircraft leases with PS Group, Inc. (PSG). All payments due from
US Airways are current through May 9, 1997, however, US Airway's long-term
financial future is uncertain. Should US Airways default on its leases with
PSG, or file bankruptcy and reject certain of such leases, there could be a
material decrease in the market value of the types of aircraft leased to US
Airways due to an increased availability of these aircraft for lease or sale.
In such case, PSG could suffer significant losses on the ultimate disposal of
the related aircraft or upon the ultimate repossession of the aircraft by the
lenders. For a more complete discussion of US Airway's relationships to PSG's
financial condition, refer to Exhibit 13 to the Company's 1996 Form 10-K. The
Company refers readers to public information regarding US Airways for further
details relating to its financial condition.
The Company believes that, absent a failure by US Airways to meet its lease
obligations to PSG, its cash, cash equivalents, U.S. Government securities and
the availability under Statex's bank credit agreement, plus projected cash flow,
are adequate to meet the operating and planned capital needs of the Company in
both the short and long-term.
F-5
<PAGE>
RESULTS OF OPERATIONS - COMPARISON OF THE THREE MONTHS ENDED MARCH 31, 1997 AND
1996
REVENUES - Revenues from the Company's fuel sales and distribution subsidiary,
PS Trading, Inc. (PST), increased 43% for the first quarter of 1997 compared to
the first quarter of 1996 primarily due to the increased marketing efforts by
the wholesale fuel division. As discussed in the Company's 1996 Annual Report to
Shareholders, a reassessment of PST's wholesale fuel division in March 1997,
resulted in a revised operating plan which management believes will enhance the
possibilities of profitability by concentrating on higher margin, generally
lower volume customers. As a result of implementing this plan, PST's future
sales, inventories and accounts receivable will be reduced.
Oil and gas production revenues were higher during the first quarter of 1997
compared to 1996 due to higher oil and gas prices and increased volumes.
Aircraft lease revenues were down in the first quarter of 1997 due to declining
revenues from financing leases and lease rate resets on certain aircraft leases
(which were matched by lower interest rates and expenses on the related debt).
Interest and other revenues were higher during the first quarter of 1997
principally due to reduced investment losses on U.S. Government securities
($35,000 in the first quarter of 1997 versus $130,000 in the first quarter of
1996).
COSTS AND EXPENSES - The 43% increase in cost of sales during the first quarter
of 1997 reflects the increased volume at PST discussed above. Interest expense
decreased in the first quarter of 1997 primarily due to lower levels of
outstanding debt.
INCOME TAXES - Taxes in both 1997 and 1996 differ from the corporate federal
tax rate primarily because of the effect of state taxes.
SEGMENT RESULTS - PST recorded a small operating profit and a small net loss on
higher revenues in the first quarter of 1997 compared to a small net income in
1996's first quarter, which was reduced by pipeline removal expenses at the San
Francisco International Airport. PST 's 1997 results were negatively impacted
by falling fuel prices which continued to decline in April and early May of
1997.
Statex recorded net income in the first quarter of 1997 that was almost double
1996's first quarter. This was due principally to higher average oil and gas
prices in 1997 versus 1996. Statex oil and gas prices declined in the first
quarter of 1997. Oil prices were approximately $20.00 per barrel at March 31,
1997 compared to $24.25 per barrel at December 31, 1996.
PSG recorded improved results in the first quarter of 1997 compared to 1996's
first quarter.
F-6
<TABLE> <S> <C>
<PAGE>
<ARTICLE> 5
<MULTIPLIER> 1,000
<S> <C>
<PERIOD-TYPE> 3-MOS
<FISCAL-YEAR-END> DEC-31-1997
<PERIOD-END> MAR-31-1997
<CASH> 11,252
<SECURITIES> 6,696
<RECEIVABLES> 22,146
<ALLOWANCES> 0
<INVENTORY> 7,764
<CURRENT-ASSETS> 62,906
<PP&E> 277,876
<DEPRECIATION> 152,798
<TOTAL-ASSETS> 284,404
<CURRENT-LIABILITIES> 40,218
<BONDS> 0
0
0
<COMMON> 6,068
<OTHER-SE> 118,531
<TOTAL-LIABILITY-AND-EQUITY> 284,404
<SALES> 58,391
<TOTAL-REVENUES> 66,727
<CGS> 56,634
<TOTAL-COSTS> 56,634
<OTHER-EXPENSES> 1,338
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 3,102
<INCOME-PRETAX> 1,784
<INCOME-TAX> 776
<INCOME-CONTINUING> 1008
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 1008
<EPS-PRIMARY> .17
<EPS-DILUTED> .17
</TABLE>
