<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, 1999
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 April 28, 1999: 6,068,313 shares of common stock, $1 par
value.
- --------------------------------------------------------------------------------
<PAGE>
PS GROUP HOLDINGS, INC.
CAUTION REGARDING 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 first quarter of 1999 may be deemed forward-looking, such as:
information relating to the future prospects of the aircraft lessees of PS
Group, Inc. ("PSG"), the aircraft leasing subsidiary of PS Group Holdings, Inc.
(the "Company"); the possible consequences of any unscheduled return of aircraft
under lease; the possibility of a 1999 sale of one BAe 146 aircraft owned by PSG
and the impact of such sale on PSG's financial condition, results of operations,
and tax benefits; the potential liability for environmental contamination at the
San Francisco International Airport ("SFIA"), the related cost of remediation
and pending and potential litigation, and the recoverability of any portion of
this cost from third parties; the availability of certain tax benefits, and the
amount of otherwise-taxable income against which such benefits may be offset;
the volatility of the prices of crude oil and natural gas and the resultant
effect on Statex Petroleum, Inc. ("Statex"), the oil and gas production and
development segment of the Company, including its ability to remain in
compliance with financial loan covenants contained in its separate bank credit
agreement and the Company's ability to pay the principal and interest
outstanding under this credit agreement if the bank is unwilling to grant future
waivers and declares the loan due and payable; and the impact of Year 2000
issues on the Company. 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 effect of the possible 1999 sale of one BAe 146 aircraft on
the Company's financial condition, results of operations, and tax benefits; the
uncertainties inherent in estimating the cost of environmental remediation and
related pending and potential litigation at SFIA; the efficacy of the transfer
restrictions on the Company's common stock in preserving the Company's remaining
substantial tax benefits, the Company's ability to realize such benefits, and
the possible effect on the availability of such benefits if stockholders of the
Company do not vote to extend such transfer restrictions beyond their scheduled
expiration in the year 2000; the possibility of future non-compliance with
financial loan covenants by Statex, and the possible inability of Statex to
obtain waivers from its bank with respect to such noncompliance; the impact on
the business, financial condition and results of operations of the Company if
the Company or its subsidiaries, or third parties with which they have material
business relationships, are unsuccessful in solving the Year 2000 issues in a
timely manner; 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 for
the first quarter of 1999, the Company's Form 10-K/A for 1998 (including
portions of the Company's Annual Report to Stockholders for 1998 incorporated by
reference in such Form 10-K/A), and in other filings the Company has made with
the Securities and Exchange Commission. Should any of such risks or
uncertainties materialize or should other assumptions prove incorrect, actual
results or outcomes may vary materially from those contemplated in such forward-
looking statements. The Company does not undertake to publicly update or revise
its forward-looking statements.
1
<PAGE>
PART I - FINANCIAL INFORMATION
Item 1. Financial Statements.
PS Group Holdings, Inc.
CONDENSED CONSOLIDATED BALANCE SHEETS
(in thousands)
<TABLE>
<CAPTION>
March 31, Dec. 31,
1999 1998
----------- ---------
ASSETS (Unaudited) (Note A)
<S> <C> <C>
Current assets:
Cash and cash equivalents $ 6,171 $ 3,747
U.S. Government securities 540 636
Accounts and notes receivable 5,532 4,894
Current portion of aircraft leases 6,730 8,366
Net investment in aircraft held pending sale 8,939 -
Other current assets 1,474 1,271
Net current assets of discontinued operation 258 139
------------------------
Total current assets 29,644 19,053
Property and equipment, net 10,933 10,980
Aircraft leased under operating leases, net 43,362 62,359
Investment in aircraft financing leases 71,888 74,944
Other assets 3,946 4,393
------------------------
$159,773 $171,729
========================
LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities:
Accounts payable and other accrued liabilities $ 1,754 $ 1,897
Accrued interest 576 1,023
Environmental remediation liability 1,811 1,076
Current portion of long-term obligations 8,074 19,706
------------------------
Total current liabilities 12,215 23,702
Long-term obligations 35,997 36,605
Deferred income taxes 19,044 18,680
Environmental remediation liability 2,736 3,498
Other liabilities 7,496 7,580
Stockholders' equity:
Common stock 6,068 6,068
Additional paid-in capital 75,596 75,596
Retained earnings 621 -
------------------------
Total stockholders' equity 82,285 81,664
------------------------
$159,773 $171,729
========================
</TABLE>
See Notes to Unaudited Condensed Consolidated Financial Statements.
2
<PAGE>
PS Group Holdings, Inc.
UNAUDITED CONDENSED CONSOLIDATED INCOME STATEMENTS
(in thousands, except per share amounts)
<TABLE>
<CAPTION>
Three Months
Ended March 31,
------------------
1999 1998
--------- ------
<S> <C> <C>
Revenues:
Aircraft leasing $5,723 $6,228
Oil and gas production 1,069 1,787
Fuel storage and distribution 185 192
Interest and other income 170 301
--------- ------
7,147 8,508
--------- ------
Costs and expenses:
Cost of sales 879 1,365
Depreciation, depletion, and amortization 2,773 3,164
General and administrative expenses 1,011 887
Interest expense 1,379 2,195
--------- ------
6,042 7,611
--------- ------
Income before taxes 1,105 897
Provision for taxes 484 383
--------- ------
Net income $ 621 $ 514
========= ======
Basic and diluted net income per share $.10 $.08
========= ======
Shares used in determining basic and diluted
net income per share 6,068 6,068
========= ======
</TABLE>
See Notes to Unaudited Condensed Consolidated Financial Statements.
3
<PAGE>
PS Group Holdings, Inc.
UNAUDITED CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(in thousands)
<TABLE>
<CAPTION>
Three Months
Ended March 31,
---------------------
1999 1998
---------- -------
<S> <C> <C>
Cash flows from continuing operations:
Cash provided from operating activities $ 2,511 $ 3,362
Cash flows from investing activities:
Proceeds from maturities of U.S. Government securities 332 454
Capital additions (primarily oil and gas related) (252) (798)
Financing leases and other 4,836 4,869
---------- -------
Net cash provided from investing activities 4,916 4,525
---------- -------
Cash flows from financing activities:
Additions to long-term obligations 250 -
Reductions in long-term obligations (5,174) (7,343)
---------- -------
Net cash used in financing activities (4,924) (7,343)
---------- -------
Cash provided from (used in) discontinued operation (79) 1,091
---------- -------
Net increase in cash and cash equivalents 2,424 1,635
Cash and cash equivalents at beginning of period 3,747 10,921
---------- -------
Cash and cash equivalents at end of period $ 6,171 $12,556
========== =======
</TABLE>
See Notes to Unaudited Condensed Consolidated Financial Statements.
4
<PAGE>
PS Group Holdings, Inc.
NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
March 31, 1999
Note A. Basis of Presentation
The accompanying unaudited condensed consolidated financial statements have been
prepared in accordance with generally accepted accounting principles for interim
financial information and with the instructions to Form 10-Q and Article 10 of
Regulation S-X. Accordingly, they do not include all of the information and
footnotes required by generally accepted accounting principles for complete
financial statements. In the opinion of management, all adjustments (consisting
of normal recurring adjustments) considered necessary for a fair presentation
have been included. 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. Operating results for the
quarter ended March 31, 1999 are not necessarily indicative of the results that
may be expected for the year ended December 31, 1999.
The balance sheet at December 31, 1998 has been derived from the audited
financial statements at that date but does not include all of the information
and footnotes required by generally accepted accounting principles for complete
financial statements.
For further information, refer to the consolidated financial statements and
footnotes thereto included in the Company's 1998 Annual Report to Stockholders
(Exhibit 13 to the Company's Form 10-K/A for the year ending December 31, 1998).
Note B. April 1999 Sale of Aircraft and Potential Additional 1999 Aircraft Sale
The net investment in aircraft held pending sale shown on the accompanying
Condensed Consolidated Balance Sheet at March 31, 1999, relates to five BAe 146
aircraft sold to US Airways, Inc. ("US Airways") on April 2, 1999. On that
date, US Airways exercised its lease termination rights by purchasing (and
subsequently re-selling) five of the six BAe 146 aircraft it was previously
leasing from PSG. The Company's second quarter 1999 results will include a net
gain from these sales of approximately $.6 million - $.09 per share. Net cash
proceeds were approximately $12.5 million after debt and accrued interest
payments of approximately $7.6 million. It is estimated that the tax gain on
these sales will utilize all of the estimated remaining net operating loss
carryforwards of approximately $15.5 million and approximately $1.1 million of
the estimated remaining investment tax credits of approximately $12.5 million.
The amount shown as net investment in aircraft held pending sale represents
PSG's carrying value of the five aircraft less the associated debt.
US Airways continues to indicate that it might exercise its lease termination
rights on the last remaining BAe 146 aircraft leased from PSG, perhaps as early
as the third quarter of 1999. PSG estimates that the sale of the sixth and last
BAe aircraft in the latter part of
5
<PAGE>
1999 would not result in any net gain or loss and that net cash proceeds would
be approximately $1 million after debt repayments of approximately $1.5 million.
It is estimated that such a sale would utilize approximately $.7 million of the
estimated remaining investment tax credits. PSG has no control over US Airways
exercising its lease termination rights on this aircraft.
Note C. Restrictions on the Transfer of Common Shares
There are certain restrictions imposed on the transfer of common shares of the
Company. In general, and subject to an exemption for certain dispositions of
shares by persons who were "pre-existing 5% shareholders" (as defined in the
Company's Restated Certificate of Incorporation) on June 5, 1996, 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 were imposed in order to help preserve the
Company's 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. At the time these restrictions were imposed, the Company had
substantial federal net operating loss carryforwards ("NOL's"). It is estimated
that with the sale of the five BAe aircraft in April 1999, these NOL's have been
completely utilized. The transfer restrictions, by their terms, are scheduled to
expire immediately following the conclusion of the Company's annual meeting of
stockholders for the year 2000, unless the stockholders pass a resolution
extending such expiration date.
Note D. Segment Information
<TABLE>
<CAPTION>
Three Months Ending
March 31,
-------------------------
1999 1998
--------- ---------
(in thousands)
<S> <C> <C>
Revenues:
Aircraft leasing $ 5,723 $ 6,228
Oil and gas production 1,069 1,787
Fuel storage and distribution 185 192
Interest and other 170 301
--------- ---------
Consolidated revenues $ 7,147 $ 8,508
========= =========
Segment profit (loss):
Aircraft leasing $ 2,022 $ 1,676
Oil and gas production (282) (407)
Fuel storage and distribution 108 69
Other 189 402
Unallocated corporate expenses (932) (843)
--------- ---------
Consolidated income before income taxes $ 1,105 $ 897
========= =========
</TABLE>
6
<PAGE>
<TABLE>
<CAPTION>
March 31, Dec. 31,
1999 1998
--------- ----------
(in thousands)
<S> <C> <C>
Segment assets:
Aircraft leasing $136,542 $150,588
Oil and gas production 11,529 12,254
Fuel storage and distribution 969 906
Other 10,514 7,842
Discontinued operation 219 139
--------- ---------
Consolidated assets $159,773 $171,729
========= =========
</TABLE>
Segment assets for aircraft leasing decreased by $14 million (9.3%) from the
amount reported at December 31, 1998 primarily as a result of the March 1999
payoff of the debt associated with the aircraft sold in April 1999 (refer to
Note B above). Segment assets -other increased $2.7 million (34%) from December
31, 1998 largely as a result of the increase in cash and cash equivalents shown
in the Unaudited Condensed Consolidated Statement of Cash Flow for the three
months ending March 31, 1999.
Item 2. Management's Discussion and Analysis of Financial Condition and Results
of Operations.
Readers are cautioned that forward-looking statements contained in Management's
Discussion and Analysis of Financial Condition and Results of Operations should
be read in conjunction with the Company's disclosures under the heading:
"CAUTION REGARDING FORWARD-LOOKING STATEMENTS" found on page 1.
Financial Condition
At March 31, 1999, the Company's principal sources of liquidity were cash, cash
equivalents, and U.S. Government securities totaling $6.7 million, a $2.3
million increase from December 31, 1998. The major changes in cash and cash
equivalents are reported in the Unaudited Condensed Consolidated Statements of
Cash Flows. Working capital increased by $22.1 million since December 31, 1998
principally because the five BAe 146 aircraft held pending sale were
reclassified to a current asset (refer to Note B of the Notes to Unaudited
Condensed Consolidated Financial Statements) and the reclassification of the
Statex bank debt to long-term (see discussion below). The Company's
capitalization consisted of 35% long and short-term obligations and 65% equity
at March 31, 1999 compared to 41%/59% at December 31, 1998. The decrease in
long and short-term obligations from December 31, 1998 to March 31, 1999
resulted primarily from US Airways' repayment of the debt on the five BAe 146
aircraft held pending sale (sold in April 1999) as well as normal loan payments.
7
<PAGE>
At the end of the first quarter of 1999, $2.4 million was outstanding under a
bank credit agreement, consisting entirely of letters of credit, all of which
were fully cash collateralized. No additional letters of credit or borrowings
are permitted under the bank credit agreement.
Statex has a separate bank credit agreement collateralized by its major oil and
gas properties. As of March 31, 1999, $6.1 million was borrowed under this
agreement. Due to losses in the third and fourth quarters of 1998, Statex did
not meet a financial covenant contained in its bank loan agreement relating to
the fixed charge ratio. Statex obtained waivers from the bank relating to its
non-compliance with this financial covenant in the third and fourth quarters of
1998. Statex was in compliance with all financial loan covenants in the first
quarter of 1999. It is possible that future losses could cause Statex to again
be out of compliance with this financial covenant or with other covenants in its
bank credit agreement. There can be no assurances that the bank will be willing
to grant additional waivers in the future. If any needed additional waivers are
not granted, the bank could by notice to Statex declare the outstanding
principal and interest due and payable. Because of the uncertainty in obtaining
future waivers if needed, the outstanding balance of this debt at December 31,
1998 was classified as current even though it is not due until September 2000.
The Company believes that if, in the future, the bank declared the Statex note
due and payable, and if the Company felt it was appropriate, then it would have
adequate funds to advance to Statex to pay the outstanding principal and
interest. At March 31, 1999, this debt was carried as long-term since Statex was
in compliance with all of its loan covenants for the first quarter of 1999.
PSG's aircraft lease portfolio represents the major portion of the Company's
assets and its largest source of cash flow. Following the April 1999 sale of
five BAe 146 aircraft, the lease portfolio consisted of 10 aircraft, of which 7
are leased to US Airways. For a complete discussion of US Airways'
relationships to PSG's financial condition, refer to the section entitled
"Aircraft Leasing" in the Company's 1998 Annual Report to Stockholders (Exhibit
13 to the Company's Form 10-K/A for the year ending December 31, 1998). PSG
refers readers to public information regarding US Airways for further details
relating to its financial condition.
The Company believes that its cash, cash equivalents, U.S. Government
securities, and projected cash flow are adequate to meet the operating and
planned capital needs of the Company in both the short and long-term.
Results of Operations - Comparison of the Three Months Ended March 31, 1999 and
1998
Refer to Note D of the Notes to Unaudited Condensed Consolidated Financial
Statements for a schedule showing revenues, profit (loss), and assets by
reportable segment.
Aircraft Leasing
Aircraft leasing revenues declined 8% in the first quarter of 1999 compared to
the same period in 1998 principally due to (i) reduced revenue recognition
associated with aircraft
8
<PAGE>
leased under financing leases and (ii) lease rate resets on certain aircraft
leases tied to lower interest rates (these lower lease rates were matched by
lower interest expense on the related debt). In future periods, leasing revenues
will continue to decline because of the reduced revenue recognition associated
with aircraft leased under financing leases, lease rate resets on certain
aircraft, the April 1999 sale of five BAe 146 aircraft, and possible future
aircraft sales.
The segment profit from aircraft leasing increased 21%, despite the 8% decline
in revenues, due to lower interest expense which resulted primarily from lower
debt balances.
Refer to Note B of the Notes to Unaudited Condensed Consolidated Financial
Statements for information on five BAe 146 aircraft sold in April 1999 and the
potential sale of an additional BAe 146 aircraft during 1999. As aircraft are
sold, leasing revenues and operating results will be reduced.
Oil and Gas Production and Development
Oil and gas production revenues for the first quarter of 1999 were 40% lower
than in the first quarter of 1998 principally due to 28% lower average oil
prices, 23% lower average gas prices, and curtailment in production necessitated
by the lower prices. For March 1999, the average monthly oil price received by
Statex was 44% greater than the December 1998 average price. There is
significant volatility in oil and gas prices and such volatility is expected to
continue.
In spite of the lower revenues, the segment loss from oil and gas production and
development was smaller in the first quarter of 1999 versus the first quarter of
1998. This was primarily due to lower depreciation, depletion, and amortization
rates which resulted from the impairment losses recorded in the third and fourth
quarters of 1998 and the cost controls instituted by management during the
latter part of 1998 when there was a significant decrease in oil and gas prices.
Fuel Storage and Distribution
Revenues from the fuel storage and distribution segment were approximately the
same in the first quarter of 1999 as they were in the first quarter of 1998.
The segment profit increased in 1999's first quarter due to lower repair and
maintenance costs.
Unallocated Corporate Overhead
Unallocated corporate overhead is larger in the first quarter of 1999 compared
to 1998 due to higher professional services fees.
Income Taxes
Taxes in both 1999 and 1998 differ from the corporate federal tax rate primarily
because of the effect of state taxes.
9
<PAGE>
Year 2000 Issues
The Company and each of its subsidiaries are working to resolve the potential
impact of the Year 2000 on the ability of their computerized information systems
to accurately process information that may be date sensitive. Any system that
recognizes a date using "00" as the year 1900 rather than the year 2000 could
result in errors or systems failures. The Company, PSG, and PS Trading, Inc.
("PST") share a number of common computer systems in their operations. In
addition, Statex uses a number of computer systems in its operations. Since all
of these systems use only standardized computer programs developed by major
software vendors, the Company and its subsidiaries are dependent on those
software vendors to make the needed modifications to accommodate the Year 2000.
Some of these programs have already been modified. For other programs, the
vendors have indicated that the modifications will be completed in advance of
the Year 2000, although some of the vendors have stated that there are no
assurances that this will be accomplished. As a contingency, if any vendor does
not modify its software to address the Year 2000 issues on a timely basis, the
Company believes that there will be appropriate alternative software available
that is Year 2000 compliant and that can be substituted with no material effect
on operations. The Company and its subsidiaries believe, based on advice from
outside consultants, that their computer hardware is already Year 2000
compliant. Based on information currently available, the Company believes that
the costs to address the Year 2000 issues discussed above will be less than
$100,000 and that the software modifications using existing or substitute
vendors will be completed by mid-1999.
The Company and its subsidiaries are dependent upon third party providers to
perform many services including insurance coverage, employee benefit programs,
shareholder related services, printing, utilities, and communications. The
Company has received correspondence from most of these providers which indicates
that they expect to address their significant Year 2000 issues on a timely
basis. The Company will continue to monitor the progress of all of its
significant third party providers. The Company has no control over these
providers becoming Year 2000 compliant. As a contingency, if a provider does
not become Year 2000 compliant in a timely manner, the Company, in many cases,
may be able to change to another service provider that is compliant. Such a
contingency plan is expected to be in place by mid-1999.
The Company's largest revenue source is aircraft lease revenue from US Airways,
America West Airlines, Inc., and Continental Airlines, Inc. Lease revenue
represented 80% of total revenues for the first quarter of 1999. Revenue from
US Airways alone represented 66% of total revenues for the same period. The
Company has approached each lessee regarding its compliance with Year 2000
issues. Each has indicated to the Company and in filings made with the
Securities and Exchange Commission that it is not currently Year 2000 compliant.
However, each has disclosed that they are working toward becoming compliant.
These lessees have further indicated that they could suffer material adverse
effects on their results of operations and financial condition if they or third
parties they rely upon are not Year 2000 compliant. Such an adverse effect
could jeopardize the lessees' ability to make lease payments to the Company.
The Company has no control over these lessees becoming Year 2000 compliant and
there is no contingency plan. In the event that
10
<PAGE>
failure to become Year 2000 compliant on the part of any lessee adversely
affects its ability to make lease payments to the Company, the Company is unable
to estimate the amount of lease revenue, if any, that would not be paid. It is
possible that the Company could sustain a significant interruption in its
revenue stream that would affect the Company's ability to make its debt payments
on loans secured by leased aircraft.
Oil and gas revenues generated by Statex amounted to 15% of consolidated
revenues for the first quarter of 1999. Approximately 66% of Statex's revenues
comes directly or indirectly from Sunoco, Inc. Sunoco has disclosed in public
filings that, while it is not yet compliant, it is working to resolve its Year
2000 issues. To the extent that Sunoco or other current purchasers from Statex
were unable to purchase oil and gas due to Year 2000 issues, Statex expects
that, at least in most cases, it will be able to find alternative purchasers.
However, there is no assurance that this could be done or that pricing from
alternative purchasers would be the same as that obtained from current
purchasers. A contingency plan for alternative purchasers is expected to be in
place by mid-1999. Most of Statex's power to operate its production equipment
comes from one large Texas utility. In public filings, this utility has
disclosed that, while it is not yet Year 2000 compliant, it is working to
resolve these issues. Statex's operations could be negatively impacted if this
utility company or any of its other utility providers were not Year 2000
compliant and could not provide their services. The Company is unable to
estimate the potential impact on its operations if Statex's customers or its
utility providers are not Year 2000 compliant.
If the Company or its subsidiaries, or any third parties with which they have
material business relationships, are unsuccessful in solving the Year 2000
issues in a timely manner it could have a material adverse effect on the
Company's business, financial condition, and results of operations. Beyond the
information disclosed above, the Company is unable to determine the extent of
such potential adverse effects.
Item 3. Quantitative and Qualitative Disclosure of Market Risk
Not applicable.
PART II - OTHER INFORMATION
Item 1. Legal Proceedings.
As reported in the Company's Form 10-K/A for the year ended December 31, 1998,
the City and County of San Francisco ("CCSF"), on July 11, 1997, filed a
complaint in the Superior Court, State of California, County of San Francisco,
against various present and former tenants who had operated fuel storage and
other facilities at SFIA seeking to recover costs incurred in connection with
the investigation and clean-up of contamination in and around SFIA. The action
was removed to the United States District Court for the Northern District of
California and is now captioned City and County of San Francisco v. ARCO, et.
al., U.S. District Court, N. D. Cal., Case No. C97-2965 CAL (the "CCSF Action").
For information with respect to the CCSF Action, the two related cross actions,
and the
11
<PAGE>
environmental remediation liability, see Note 4 of the Notes to Consolidated
Financial Statements included in the Company's 1998 Annual Report to
Stockholders (Exhibit 13 to the Company's Form 10-K/A for the year ending
December 31, 1998). The following paragraph updates the status of the CCSF
Action.
PST and PSG have participated in mediation with CCSF commencing in August 1998
and continuing into April 1999. Settlement discussions between CCSF and PST/PSG
are on-going. By April 1999, CCSF had announced three additional settlements
with other SFIA tenants, and sought an order from the Court determining that the
eight settlements to date had been made in good faith. The Court has not ruled
on that motion for a good faith determination. In April 1999, the Court
permitted CCSF to file an amended complaint naming PST as a defendant in the
CCSF Action. Other "new" defendants were added to the CCSF Action at the same
time. PST's response to the CCSF amended complaint and PSG's response to the
cross-actions filed by ARCO will be due on a date to be set by the Court. PST
expects to deny all of the claims alleged against it in the amended complaint
filed by CCSF. PSG expects to deny all of the claims alleged against it in the
cross-actions filed by ARCO. PSG has filed an initial disclosure in connection
with ARCO's cross-actions denying that it had operated at SFIA and alleging
that ARCO has incorrectly named PSG in the cross-actions. PST also expects to
file cross-actions against certain other tenants and former tenants at SFIA. The
Court has set a trial date of September 18, 2000 and a discovery completion date
of April 2000.
The Company is unable to determine whether any of the claims mentioned above
will ultimately have any material adverse consequences to it beyond the
approximately $4.5 million (representing the unspent balance of the remediation
liabilities recorded in 1997 and 1996) of environmental remediation liability
recorded as of March 31, 1999.
Item 2. Changes in Securities and Use of Proceeds.
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.
12
<PAGE>
27. Financial Data Schedule.
(b) Reports on Form 8-K
None.
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.
Date: April 28, 1999
PS GROUP HOLDINGS, INC.
-----------------------
(Registrant)
/s/ Lawrence A. Guske
___________________________
LAWRENCE A. GUSKE
Vice President - Finance and
Chief Financial Officer and
Authorized Officer of the
Registrant
13
<TABLE> <S> <C>
<PAGE>
<ARTICLE> 5
<MULTIPLIER> 1,000
<S> <C>
<PERIOD-TYPE> 3-MOS
<FISCAL-YEAR-END> DEC-31-1999
<PERIOD-END> MAR-31-1999
<CASH> 6,171
<SECURITIES> 540
<RECEIVABLES> 5,532
<ALLOWANCES> 0
<INVENTORY> 0
<CURRENT-ASSETS> 29,644
<PP&E> 54,295
<DEPRECIATION> 0
<TOTAL-ASSETS> 159,773
<CURRENT-LIABILITIES> 12,215
<BONDS> 0
0
0
<COMMON> 6,068
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</TABLE>
