U.S. SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
----------
FORM 10/A
AMENDMENT NO. 2
GENERAL FORM FOR REGISTRATION OF SECURITIES
PURSUANT TO SECTION 12(B) OR 12(G) OF
THE SECURITIES EXCHANGE ACT OF 1934
TRAVEL SERVICES INTERNATIONAL, INC.
- --------------------------------------------------------------------------------
(Exact Name of Registrant as Specified in Its Charter)
FLORIDA 65-0871073
- ------------------------------- --------------------
(State or Other Jurisdiction of (I.R.S. Employer
Incorporation or Organization) Identification No.)
220 CONGRESS PARK DRIVE
DELRAY BEACH, FLORIDA 33445
- ---------------------------------------- ----------
(Address of Principal Executive Offices) (Zip Code)
Registrant's telephone number, including area code (561) 266-0860
Securities to be registered under Section 12(b) of the Act:
TITLE OF EACH CLASS NAME OF EACH EXCHANGE ON WHICH
TO BE SO REGISTERED EACH CLASS IS TO BE REGISTERED
------------------- ------------------------------
_____________________________________ _______________________________________
_____________________________________ _______________________________________
Securities to be registered pursuant to Section 12 (g) of the Act:
COMMON STOCK, $0.01 PAR VALUE PER SHARE
- --------------------------------------------------------------------------------
(Title of Class)
- --------------------------------------------------------------------------------
(Title of Class)
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REINCORPORATION OF TRAVEL SERVICES INTERNATIONAL, INC. FROM DELAWARE TO FLORIDA
INTRODUCTION. This registration statement on Form 10 (the "Registration
Statement") is filed by the Registrant (also referred to herein as "TSI Florida"
and the "Corporation") in connection with the reincorporation (the
"Reincorporation") of Travel Services International, Inc., a Delaware
corporation ("TSI Delaware"), from Delaware to Florida. The Registrant is a
wholly owned subsidiary of TSI Delaware. TSI Delaware and TSI Florida will cause
the Reincorporation to occur, as further described below, on or about the time
that this Registration Statement becomes effective under the Securities Exchange
Act of 1934, as amended (the "Exchange Act") (the date of the Reincorporation
shall be referred to herein as the "Effective Date").
MERGER AND REINCORPORATION. On the Effective Date, TSI Delaware and TSI
Florida will file, as applicable, a certificate of merger with the State of
Delaware and articles of merger with the State of Florida in order to consummate
the Reincorporation in accordance with the terms of an Agreement and Plan of
Merger, dated as of October 29, 1998 (the "Plan of Merger"), among TSI Delaware
and the Registrant. Pursuant to the Plan of Merger, TSI Delaware will be merged
with and into TSI Florida (the "Merger") with TSI Florida being the surviving
corporation and the separate corporate existence of TSI Delaware shall cease.
Pursuant to the Merger, TSI Florida will change its name to "Travel Services
International, Inc."
As a result of the Merger, TSI Florida will succeed by operation of law
to all of the assets, rights, powers and property of TSI Delaware and will
assume all of the debts, liabilities and obligations of TSI Delaware. Upon
completion of the Merger, the Board of Directors of TSI Florida will be
comprised of the directors of TSI Delaware with identical terms of office, and
the persons who are currently serving as executive officers of TSI Delaware will
continue to serve in the same capacities for TSI Florida.
On the Effective Date of the Merger, each outstanding share of
restricted voting common stock, par value $0.01 par value per share, of TSI
Delaware (the "TSI Delaware Restricted Stock"), will be automatically converted
into one fully-paid and nonassessable share of the restricted voting common
stock, par value $0.01 per share, of TSI Florida (the "TSI Florida Restricted
Stock"), and each outstanding share of non-restricted common stock, par value
$0.01 per share, of TSI Delaware (the "TSI Delaware Non-restricted Stock" and
together with TSI Delaware Restricted Stock, the "TSI Delaware Common Stock)
will be automatically converted into one fully-paid and nonassessable share of
the non-restricted common stock, par value $0.01 per share, of TSI Florida (the
"TSI Florida Non-restricted Stock" and together with the TSI Florida Restricted
Stock, the "TSI Florida Common Stock").
After the Merger, each outstanding certificate representing shares of
TSI Delaware Common Stock will continue to represent the same respective number
of shares of TSI Florida Common Stock and such certificates will be deemed for
all corporate purposes to evidence ownership of shares of TSI Florida Common
Stock. The TSI Florida Common Stock will be substituted for TSI Delaware Common
Stock on The Nasdaq Stock Market ("Nasdaq") and will continue to trade under the
symbol "TRVL" without interruption, and Nasdaq will consider the delivery of
existing stock certificates of TSI Delaware as constituting "good delivery" of
shares of TSI Florida in stock transactions effected after the Merger. TSI
Delaware stockholders will not
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be required to undertake a mandatory exchange of their certificates for shares
of TSI Delaware Common Stock for certificates of TSI Florida Common Stock.
The Registrant's predecessor corporation, TSI Delaware, will have
securities registered pursuant to Section 12(g) of the Exchange Act at the
effective time of the Merger. The Registrant is filing this Form 10 for the
purpose of accomplishing such registration pursuant to Section 12(g) of the Act
with respect to the TSI Florida Common Stock.
REASONS FOR THE REINCORPORATION. The principal reason for the
Reincorporation is to reduce expenses. Under the Delaware General Corporation
Law (the "Delaware Act"), TSI Delaware is currently required to pay Delaware an
annual franchise tax of approximately $150,000. By contrast, a corporation
organized under the laws of the State of Florida is currently required to pay an
annual fee of $150, but is not required to pay any franchise tax as required by
Delaware. An additional reason for the Reincorporation is to conform TSI
Delaware's legal residence to its principal place of business.
The Registrant incorporates herein by reference the information,
discussion and related matters under the captions "Proposal to Approve the
Reincorporation of the Company from Delaware to Florida" on pages 20 through 29
contained in TSI Delaware's Proxy Statement, filed with the SEC on July 6, 1998
relating to TSI Delaware's 1998 Annual Meeting of Shareholders.
ITEM 1. BUSINESS.
The Registrant incorporates herein by reference the information,
discussion and related matters under the captions "Risk Factors" (on pages 8
through 13) and "Business" (on pages 25 through 33) contained in TSI Delaware's
Registration Statement on Form S-1 (SEC File No. 333-56567). See also "Item 13
- -- Financial Statement and Supplementary Data" of this Registration Statement
for related financial information.
The language and materials incorporated by reference into this Item 1
is supplemented and qualified by the following information:
1. BUSINESS OVERVIEW.
A. The following paragraph is an addition to the
information under the caption "Business --Business
Overview":
Currently, the Company does not have any material
portion of its assets, operations or customers located
outside of the United States. Substantially all of the
Company's revenues are from customers based within the
United States, where all of the Company's services are
provided. Any revenue generated outside of the United
States is currently not material to the Company's
consolidated net revenues and results of operations.
B. The first paragraph under "Business -- Business
Overview" is hereby supplemented with the following
paragraph which replaces such first paragraph:
The Company is a leading specialized distributor of
cruise vacations, domestic and international airline
tickets and European auto rentals, and a leading
provider of electronic hotel reservation services, to
travel agents and travelers.
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The Company commenced operations in July 1997
concurrently with its initial public offering and the
acquisition of five specialized travel distributors,
and has since acquired an additional 15 operating
companies and a software development company. To
date, the Company has focused its acquisitions
primarily on distributors of cruise vacations to take
advantage of recognized growth opportunities in that
segment, and the Company believes that it has emerged
as the largest distributor of cruise vacations in the
world, based on sales volume during 1998. The Company
also looks for opportunities to expand into new
segments of the leisure travel industry that are
complementary to its existing lines of business. In
June 1998, the Company entered the lodging travel
services segment with the acquisition of Lexington
which the Company believes, based on Consortia 25 (an
annual article published by Hotels, an industry
publication), is the second largest electronic hotel
reservation services company in the United States,
based on the number of rooms booked during 1997. In
1997, on a pro forma basis, the Company sold
reservations for approximately 274,000 airline
passengers, 213,000 cruise passengers, 259,000 European
auto rentals and 1,316,000 room nights, representing
gross sales volume in excess of approximately $600
million.
2. TRAVEL PROVIDER RELATIONSHIPS.
The following paragraphs are in addition to the information
under the caption "Business -- Travel Provider Relationships":
Each of Carnival Cruise Line, Royal Caribbean Cruise
Line, Avis Europe Limited, and Europcar International,
S.A. were responsible for approximately 10% of the
Company's consolidated net revenues for the nine months
ended September 30, 1998.
The Company's and its subsidiaries' agreements with
travel providers are generally short-term agreements
that are cancelable on relatively short notice and,
therefore, travel providers can, and often do, modify
the terms of contracts as industry conditions change,
including terms relating to commissions, access to
inventory and pricing. Such agreements generally permit
the Company and its subsidiaries to sell the travel
products at either preferred prices or with preferred
commission structures because of the Company's and its
subsidiaries' reputation, historical relationships,
expertise, and substantial volume of business conducted
with the travel providers, however, such contracts
generally do not create commitments by the travel
providers for fixed capacity or inventory. The Company,
through its subsidiaries, currently operates with more
than one agreement with many of its travel providers.
Although the Company's and its subsidiaries' agreements
with its travel providers in the aggregate are
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important to the Company's success, the Company does not
believe that cancellation of any one of these agreements
would have a material adverse effect on the Company's
business or results of operations, however, there can be
no assurance that cancellation of one or more of such
agreements would not result in such a material adverse
effect. In addition, in the unlikely event that all of
the Company's and its subsidiaries' agreements with any
one travel provider were to be cancelled, such
cancellation could have a material adverse effect on the
Company's business and results of operations.
ITEM 2. FINANCIAL INFORMATION.
The Registrant incorporates herein by reference the information,
discussion and related matters under the captions (i) "Item 2. Management's
Discussion and Analysis of Financial Condition and Results of Operations" on
pages 11 through 19 contained in TSI Delaware's Form 10-Q for the quarter ended
September 30, 1998, which was filed with the SEC on November 16, 1998; and (ii)
"Selected Historical and Pro Forma Financial Data" on pages 16 through 17 and
"Management's Discussion and Analysis of Financial Condition and Results of
Operations" on pages 18 through 24 contained in TSI Delaware's Registration
Statement on Form S-1 (SEC File No. 333-56567).
ITEM 3. PROPERTIES.
As of December 15, 1998, the Company had 37 office facilities, 2 of
which it owns and 35 of which are leased. As the Company continues to implement
its growth strategy, certain changes are expected, such as combinations of
facilities, expansion of other facilities, including the Company's corporate
headquarters in Delray Beach, Florida, and the implementation of new call
centers or shared services centers. The Company's facilities are set forth in
the table below.
<TABLE>
<CAPTION>
OWNED/ EXPIRATION SQUARE ANNUAL
COMPANY LOCATION LEASED DATE FEET RENT
- ----------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
ABC Corporate Services Chicago, IL Leased 3/31/99 2,600 $ 77,000
ABC Corporate Services Omaha, NE Leased 12/31/99 4,050 112,000
Auto Europe (3) Portland, ME Owned -- 38,000 --
AutoNet International Delray Beach, FL Leased (1) -- -- --
Cruise Fairs of America Los Angeles, CA Leased 1/31/99 4,758 123,000
Cruises Inc. Syracuse, NY Leased 2/28/06 10,600 168,000
Cruisemasters Los Angeles, CA Leased 7/31/02 5,500 86,000
CruiseOne Deerfield Beach, FL Leased 9/30/00 4,316 70,500
Cruises Only Jacksonville, FL Leased 11/30/99 4,750 50,000
Cruises Only (3) Orlando, FL Owned -- 37,600 --
Cruises Only Syossett, NY Leased 4/30/04 16,312 180,000
Cruise Outlets of the Carolinas Charlotte, NC Leased 3/1/00 2,620 70,000
Cruise World Wilton, CT Leased 10/31/02 2,600 36,000
Cruise World Fresh Meadows, NY Leased 9/30/07 1,000 17,000
Cruise World Rockville Center, NY Leased 4/30/07 1,500 20,000
Cruise World Huntington, NY Leased 9/30/00 1,000 22,000
Cruise World Westbury, NY Leased 1/31/99 1,135 22,000
Cruise World Briarcliff Manor, NJ Leased 3/31/02 2,300 29,000
</TABLE>
5
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<TABLE>
<S> <C> <C> <C> <C> <C>
Cruise World Morristown, NJ Leased 11/30/00 1,404 18,000
Cruise World Ridgewood, NJ Leased 12/31/97(2) 900 16,000
D-FW Tours Dallas, TX Leased 1/31/00 12,443 182,000
Diplomat Tours Sacramento, CA Leased 8/31/99 6,000 107,000
Gold Coast Cruises North Miami, FL Leased 8/31/12 13,000 150,000
Landry & Kling Coral Gables, FL Leased 6/30/01 3,680 77,000
Lexington Services Arlington, TX Leased 7/31/00 20,371 359,000
Ship `N' Shore Englewood, FL Leased 11/20/02 7,214 90,000
Ship `N' Shore Anchorage, Alaska Leased 5/30/97(2) 900 16,000
Ship `N' Shore Williamsville, NY Leased 7/31/01 1,000 15,000
Ship `N' Shore Fort Myers, FL Leased 2/28/00 1,500 13,500
Ship `N' Shore Longboat Key, FL Leased 8/31/00 964 12,000
Ship `N' Shore Anchorage, Alaska Leased 5/8/98 1,250 16,000
The Cruise Line Inc. Miami, FL Leased 5/15/02 10,250 213,000
The Travel Company Atherton, CA Leased 7/31/00 2,300 70,000
Travel 800 San Diego, CA Leased 11/30/03 15,605 241,000
Travel Services International Delray Beach, FL Leased 10/20/04 16,900 290,000
Travel Services International Delray Beach, FL Leased 11/1/00 2,800 51,000
1-800-Cruises Boca Raton, FL Leased 10/1/00 2,102 46,000
<FN>
- -------------------
(1) Contained within the Company's corporate headquarters.
(2) Location continues to be occupied on a month-to-month basis, with the
consent of the landlord.
(3) Subject to a mortgage.
</FN>
</TABLE>
ITEM 4. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT.
The Registrant incorporates herein by reference the information,
discussion and related matters under the caption "Principal and Selling
Stockholders" on pages 12 through 13 contained in TSI Delaware's Registration
Statement on Form S-3 (SEC File No. 333-61337).
ITEM 5. DIRECTORS AND EXECUTIVE OFFICERS.
The Registrant incorporates herein by reference the information,
discussion and related matters under the captions "Management -- Directors and
Executive Officers" on pages 34 through 36 and "Management -- Board of
Directors" on pages 36 through 37 contained in TSI Delaware's Registration
Statement on Form S-1 (SEC File No. 333-56567).
The language and materials incorporated by reference into this Item 5
is supplemented and qualified by the following information:
Effective October 31, 1998, Michael Moriarty resigned
from his position as President and Chief Operating
Officer of the Company due to the serious illness of a
member of his immediate family. Joseph Vittoria, the
Company's Chairman and Chief Executive Officer, has
assumed additional responsibilities concerning the
Company's operations. Along with the Company's other
senior management staff, John DeLano, who was recently
promoted to Senior Vice President of Operations, and
Spencer Frazier, the Company's Chief Marketing Officer,
assist Mr. Vittoria with his added responsibilities. In
addition, Mr. DeLano has assumed direct responsibility
for providing direction to senior management of the
operating companies. The Company believes it is well
positioned to manage the transition following Mr.
Moriarty's resignation.
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ITEM 6. EXECUTIVE COMPENSATION.
The Registrant incorporates herein by reference the information,
discussion and related matters under the captions "Management -- Director
Compensation; 1997 Non-employee Directors' Stock Plan" on pages 37 through 38;
"Management -- Executive Compensation" on pages 38 through 39; "Management --
Employment Agreement; Covenants Not to Compete" on pages 39 through 40; and
"Management -- Compensation Committee Interlocks and Insider Participation" on
page 41 contained in TSI Delaware's Registration Statement on Form S-1 (SEC File
No. 333-56567).
The language and materials incorporated by reference into this Item 6
is supplemented and qualified by the following information:
Although Mr. Moriarty has resigned from his position as
President and Chief Executive Officer as described in
Item 5 of this Registration Statement above, he will
continue to assist the Company and be paid his salary
for such efforts through the end of 1998. Effective
January 1, 1999, Mr. Moriarty's employment with the
Company will be terminated. No severance compensation
will be paid to Mr. Moriarty. Mr. Vittoria's
compensation will continue according to his existing
employment agreement without modification due to the
additional duties being assumed. The Company does not
anticipate any material impact on executive compensation
due to Mr. Moriarty's retirement.
ITEM 7. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS.
The Registrant incorporates herein by reference the information,
discussion and related matters under the caption "Certain Transactions" on pages
42 through 43 contained in TSI Delaware's Registration Statement on Form S-1
(SEC File No. 333-56567).
ITEM 8. LEGAL PROCEEDINGS.
As of the date of this Registration Statement, TSI Florida is not
involved in any legal claims or actions.
TSI Delaware is involved in various legal claims and actions arising in
the ordinary course of business. The Registrant believes that none of these
actions will have a material adverse effect on its business, financial condition
and results of operations.
ITEM 9. MARKET PRICE OF AND DIVIDENDS ON THE REGISTRANT'S COMMON EQUITY AND
OTHER SHAREHOLDER MATTERS.
The TSI Delaware Common Stock is traded on Nasdaq under the symbol
"TRVL." The following table sets forth the high and low reported sales prices
for each quarter (or partial quarter) in 1997 and 1998, as quoted on Nasdaq:
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HIGH LOW
---- ---
1997
Third Quarter (from July 22, 1997) $25 5/8 $18 7/8
Fourth Quarter 26 19 3/8
1998
First Quarter 33 11/16 17 7/8
Second Quarter 39 3/8 30
Third Quarter 36 9/16 13
Fourth Quarter (through December 24, 1998) 26 5/8 8 3/8
The closing price of TSI Delaware Common Stock, as reported by Nasdaq,
on December 24, 1998 was $26.125. The approximate number of record holders of
TSI Delaware Common Stock as of December 24, 1998 was 142. The Registrant
believes that a larger number of beneficial owners hold such shares in
depository or nominee form.
The Registrant intends to retain all of its earnings, if any, to
finance the expansion of its business and for general corporate purposes,
including future acquisitions, and does not anticipate paying any cash dividends
on TSI Florida Common Stock for the foreseeable future. In addition, TSI
Delaware's line of credit (which upon consummation of the Reincorporation and
the Merger will be assumed by TSI Florida) includes restrictions on the ability
of the Registrant to pay cash dividends without the consent of the lender.
ITEM 10. RECENT SALES OF UNREGISTERED SECURITIES.
The Registrant incorporates herein by reference the information,
discussion and related matters under the caption "Item 15. Recent Sales of
Unregistered Securities" on pages II-2 through II-3 contained in Part II of TSI
Delaware's Registration Statement on Form S-1 (SEC File No. 333-56567). Since
the last sale of unregistered securities in March 1998 disclosed therein, the
Company has not sold any unregistered securities during 1998 through the date of
this Registration Statement.
ITEM 11. DESCRIPTION OF REGISTRANT'S SECURITIES TO BE REGISTERED.
The Registrant incorporates herein by reference the information,
discussion and related matters under the captions (i) "Proposal to Approve the
Reincorporation of the Company from Delaware to Florida" on pages 20 through 29
contained in TSI Delaware's Proxy Statement, filed with the SEC on July 6, 1998
relating to TSI Delaware's 1998 Annual Meeting of Shareholders and Exhibit B
(pages B-1 through B-5) to such Proxy Statement; and (ii) "Description of
Capital Stock -- Common Stock and Restricted Common Stock" on page 46 and
"Description of Capital Stock -- Preferred Stock" on pages 46 through 47
contained in TSI Delaware's Registration Statement on Form S-1 (SEC File No.
333-56567).
ITEM 12. INDEMNIFICATION OF DIRECTORS AND OFFICERS.
The Registrant incorporates herein by reference the information,
discussion and related matters under the caption "Management -- Indemnification
Agreements" on page 40 contained in TSI Delaware's Registration Statement on
Form S-1 (SEC File No. 333-56567).
The Registrant has authority under Section 607.0850 of the Florida
Business Corporation Act to indemnify its directors and officers to the extent
provided in such statute. In general, Florida law permits a Florida corporation
to indemnify its directors, officers, employees and agents, and persons serving
at the corporation's request in such capacities for another enterprise, against
liabilities arising from conduct that such persons reasonably believed to be in,
or not opposed to, the best interests of the corporation and, with respect to
any criminal action or proceeding, had no reasonable cause to believe their
conduct was unlawful.
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The provisions of the Florida Business Corporation Act that authorize
indemnification do not eliminate the duty of care of a director, and in
appropriate circumstances equitable remedies such as injunctive or other forms
of nonmonetary relief will remain available under Florida law. In addition, each
director will continue to be subject to liability for (a) violations of the
criminal law, unless the director had reasonable cause to believe his conduct
was lawful or had no reasonable cause to believe his conduct was unlawful; (b)
deriving an improper personal benefit from a transaction; (c) voting for or
assenting to an unlawful distribution; and (d) willful misconduct or a conscious
disregard for the best interests of the Registrant in a proceeding by or in the
right of the Registrant to procure a judgment in its favor or in a proceeding by
or in the right of a shareholder. The statute does not affect a director's
responsibilities under any other law, such as the federal securities laws or
state or federal environmental laws
Article Seven of the Registrant's articles of incorporation (the
"Florida Articles") states that: "A director shall not be personally liable to
the Corporation or the holders of shares of capital stock or any other person
for monetary damages for any statement, vote, decision, act or failure to act,
for which such liability is precluded or otherwise eliminated under Section
607.0831 or otherwise under the Florida Business Corporation Act. If the Florida
Business Corporation Act is hereafter amended to authorize the further or
broader elimination or limitation of the personal liability of directors, then
the liability of a director of the Corporation shall be eliminated or limited to
the fullest extent permitted by the Florida Business Corporation Act, as so
amended. No repeal or modification of this Article VII shall adversely affect
any right of or protection afforded to a director of the Corporation existing
immediately prior to such repeal or modification. Article Eight of the
Registrant's Florida Articles states that: "The Corporation shall indemnify and
may advance expenses to, and may purchase and maintain insurance on behalf of,
its officers and directors to the fullest extent permitted by law as now or
hereafter in effect. Without limiting the generality of the foregoing, the
Bylaws may provide for indemnification and advancement of expenses to officers,
directors, employees and agents on such terms and conditions as the Board may
from time to time deem appropriate or advisable." In addition, the Registrant's
Bylaws further provide that the Registrant shall indemnify its officers,
directors, advisory directors and employees to the fullest extent permitted by
law.
The Registrant will enter into indemnification agreements with each of
its executive officers, its advisory director and directors which indemnifies
such person to the fullest extent permitted by its Florida Articles, its Bylaws
and under the Florida Business Corporation Act. The Registrant also maintains
directors and officers liability insurance.
ITEM 13. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA.
The Registrant incorporates herein by reference the information,
discussion and related matters under the captions (i) "Item 1. Financial
Statements" on pages 3 through 10 contained in TSI Delaware's Form 10-Q for the
quarter ended September 30, 1998, which was filed with the SEC on November 16,
1998; and (ii) the "Index to Financial Statements" and all items referenced
therein contained on pages F-1 through F-60 in TSI Delaware's Registration
Statement on Form S-1 (SEC File No. 333-56567).
1. INTANGIBLE ASSETS AND AMORTIZATION.
The disclosures under the caption "Intangible Assets and
Amortization" contained in "Note (2) Summary of Significant
Accounting Policies" to TSI Delaware's
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financial statements on page F-8 of TSI Delaware's
Registration Statement on Form S-1 (SEC File No. 333-56567),
is supplemented with the following paragraphs:
The Combinations and certain other acquisitions were
accounted for using the purchase method of accounting.
The cost of the acquisition is first allocated to all
identifiable assets acquired and to the liabilities
assumed, at their estimated fair values at the date of
acquisition. The excess of the cost of the acquired
business over the sum of the amounts assigned to
identifiable assets acquired less liabilities assumed is
recorded as goodwill.
In most cases, because of the nature of the operations
of the business acquired, including its customers base,
and because of the short-term duration of the
businesses' contracts, intangible assets such as
customer lists, distribution agreements, employee
workforce, computer systems, franchisee agreements and
trademarks are not separately identified as allocated
costs.
At the time of an acquisition accounted for using the
purchase method of accounting, allocations of purchase
price are initially assigned and recorded based on
preliminary estimates of fair value and may be revised
as additional information concerning valuation of such
assets and liabilities become available normally within
one year of the date of the acquisition. Additional
information necessary for certain acquisitions may
include final determinations of such matters as the
amount of income taxes reimbursable to sellers, the
amount of contingent consideration related to the
acquisition, and total legal and accounting costs
associated with the acquisitions. The Company does not
believe there will be any material change to allocations
of purchase prices as of December 31, 1997.
Goodwill is being amortized on a straight-line basis
generally over 35 years (5 years for goodwill related to
an acquired software development business), representing
the approximate remaining useful life of acquired
intangible assets. Accumulated amortization totals
$514,000 at December 31, 1997 and $921,000 (unaudited)
at March 31, 1998. In accordance with Statement of
Financial Accounting Standards No. 121, "Accounting for
the Impairment of Long-Lived Assets and Long-Lived
Assets to be Disposed", subsequent to an acquisition,
the Company continually evaluates whether later events
and circumstances have occurred that indicate the
remaining net book value may warrant revision or may not
be recoverable. If factors indicate that the net book
value of any acquisitions should be evaluated for
possible impairment, the Company in measuring whether
such cost is recoverable will use an estimate of the
acquired business's undiscounted operating income in
excess of net assets of the acquired businesses.
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2. INCOME TAXES.
The disclosures under the caption "Note (9) Income Taxes" in TSI
Delaware's financial statements on page F-18 of TSI Delaware's
Registration Statement on Form S-1 (SEC File No. 333-56567), is
supplemented with the following information:
Net deferred income tax assets and liabilities are comprised of the following:
<TABLE>
<CAPTION>
December 31,
----------------------------
1997 1996
------------ --------------
<S> <C> <C>
Current net deferred income taxes
Conversion from cash to accrual method of accounting for income taxes $347,000 $-
Accrued liabilities and deferred income 354,000 -
Provision of doubtful accounts 150,000 -
Other (78,000) (17,000)
------------ --------------
Current net deferred tax assets (liability) $773,000 ($17,000)
============ ==============
Non-current net deferred income taxes
Goodwill basis ($63,000) $-
Other 80,000 -
------------ --------------
Non-current net deferred tax asset $17,000 $-
============ ==============
</TABLE>
ITEM 14. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND
FINANCIAL DISCLOSURE.
None.
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ITEM 15. FINANCIAL STATEMENT AND EXHIBITS.
(a) Financial Statements
The Registrant incorporates herein by reference the information,
discussion and related matters disclosed in Item 13 hereof.
(b) Exhibits
<TABLE>
<CAPTION>
EXHIBIT NUMBER DESCRIPTION
-------------- -----------
<S> <C>
2.1 Agreement and Plan of Organization, dated as of May 9, 1997, among
TSI Delaware, Auto-Europe, Inc. (Maine), Imad Khalidi, Alex Cecil
and Wilfred Diller, as trustee for Thurston Cecil and Lila Cecil.(1)
2.2 Agreement and Plan of Organization, dated as of May 9, 1997, among TSI
Delaware, Cruises Only, Inc., Wayne Heller and Judy Heller.(1)
2.3 Agreement and Plan of Organization, dated as of May 9, 1997, among
TSI Delaware, 800-Ideas, Inc. and Susan Parker.(1)
2.4 Agreement and Plan of Organization, dated as of May 9, 1997, among
TSI Delaware, Cruises, Inc., Robert G. Falcone, Judith A. Falcone
and Pamela C. Cole.(1)
2.5 Agreement and Plan of Organization, dated as of May 9, 1997, among
TSI Delaware, D-FW Tours, Inc., D-FW Travel Arrangements, Inc.,
John W. Przywara and Sharon S. Przywara.(1)
2.6 First Amendment to Agreement and Plan of Organization among TSI
Delaware, Auto-Europe, Inc. (Maine), Imad Khalidi Alex Cecil and
Wilfred Diller, as trustee for Thurston Cecil and Lila Cecil.(2)
2.7 First Amendment to Agreement and Plan of Merger, dated as of June
30, 1997, by and among TSI Delaware, Cruises, Inc., Robert G.
Falcone, Judith A. Falcone, and Pamela C. Cole.(2)
2.8 First Amendment to Agreement and Plan of Merger, dated as of June
30, 1997, by and among TSI Delaware, Cruises Only, Inc., Wayne
Heller and Judy Heller.(2)
2.9 First Amendment to Agreement and Plan of Merger, dated as of June
30, 1997, by and among TSI Delaware, D-FW Travel Arrangements,
Inc., John W. Przywara and Sharon Scott Przywara.(2)
12
<PAGE>
2.10 First Amendment to Agreement and Plan of Merger, dated as of June
30, 1997, by and among TSI Delaware, 800-Ideas, Inc. and Susan
Parker.(2)
2.11 Agreement and Plan of Merger, dated as of October 29, 1998, by and
between TSI Delaware and the Registrant.(10)
3.1 Articles of Incorporation of the Registrant.(10)
3.2 Bylaws of the Registrant.(10)
4.2 Form of Restriction and Registration Rights Agreement, dated as of
July 28, 1997, between TSI Delaware and the each of the persons
listed on the schedule thereto.(4)
10.1 Amended and Restated Employment Agreement, dated as of July 22, 1997,
between TSI Delaware and Joseph V. Vittoria.(4)
Amended and Restated Employment Agreement, dated as of May 12, 1997,
between TSI Delaware and Jill M. Vales.(4)
Amended and Restated Employment Agreement, dated as of June 6, 1997,
between TSI Delaware and Michael J. Moriarty.(4)
Employment Agreement, dated July 22, 1997, between TSI Delaware and
Mel Robinson.(4)
Employment Agreement, dated July 22, 1997, among TSI Delaware, Auto
Europe, LLC and Imad Khalidi.(4)
Employment Agreement, dated July 18, 1997, among TSI Delaware, Auto
Europe, LLC and Alex Cecil.(4)
Employment Agreement, dated July 22, 1997, among TSI Delaware, Cruises,
Inc. and Robert Falcone.(4)
Employment Agreement, dated July 22, 1997, among TSI Delaware, Cruises,
Inc. and Judith Falcone.(4)
Employment Agreement, dated July 22, 1997, among TSI Delaware, Cruises,
Inc. and Holley Christen.(4)
Employment Agreement, dated July 22, 1997, among TSI Delaware, Cruises
Only, LLC and Wayne Heller.(4)
Employment Agreement, dated July 22, 1997, among TSI Delaware, Cruises
Only, LLC and Judy Heller.(4)
Employment Agreement, dated July 22, 1997, among TSI Delaware, Travel
800, LLC and Susan Parker.(4)
10.2 Form of Indemnification Agreement, dated July 28, 1997, between TSI
Delaware and each of the persons set forth on the schedule
thereto.(4)
10.3 1997 Long Term Incentive Plan.(3)
10.4 Non-Employee Directors' Stock Plan.(3)
10.6 Employment Agreement, dated July 25, 1997, between TSI Delaware and
Suzanne B. Bell.(4)
10.7 Employment Agreement, dated as of July 25, 1997, between TSI
Delaware and Maryann Bastnagel.(4)
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<PAGE>
10.8 Credit Agreement, dated as of October 15, 1997, by and between TSI
Delaware and NationsBank, N.A.(4)
10.9 Stock Purchase Agreement, dated as of October 28, 1997, among TSI
Delaware, CruiseOne, Inc., Anthony J. Persico and Charlotte Luna,
as amended.(5)
10.10 Stock Purchase Agreement, dated as of October 28, 1997, among TSI
Delaware, Cruise World, Inc., and the sellers named therein, as
amended.(5)
10.11 Stock Purchase Agreement, dated as of October 28, 1996, among TSI
Delaware, Ship `N' Shore Cruises, Inc., Cruise Time, Inc., SNS
Coachline, Inc., Cruise Mart, Inc., SNS Travel Marketing, Inc. and
Natalee Stutzman, as amended.(5)
10.12 Asset Purchase Agreement, dated as of February 9, 1998, among TSI
Delaware, Gold Coast Travel Agency Corporation, Inc. and Rhea
Sherota.(6)
10.13 Employment Agreement, dated as of January 19, 1998, between TSI
Delaware and John C. De Lano.(7)
10.14 Stock Purchase Agreement, dated March 31, 1998, among TSI Delaware,
The Cruise Line, Inc. and the shareholders named therein.(8)
10.15 Employment Agreement, dated as of April 1, 1998, among TSI Delaware
and Spencer Frazier.(9)
10.16 Purchase Agreement by and among TSI Delaware and Lexington Services
Associates, Ltd., a Texas limited partnership (the "Partnership"), and
the Partnership's partners dated as of June 1, 1998.(9)
10.17 Employment Agreement, dated as of July 25, 1998, between
TSI Delaware and George Del Pino(10)
11 Schedule of Computations of Earnings Per Share.(7)
21 Subsidiaries of TSI Delaware.(11)
23.1 Consent of Arthur Andersen LLP.(11)
23.2 Consent of Ernst & Young LLP.(11)
99.1 TSI Delaware's Registration Statement on Form S-1 (File No.
333-56567).(11)
99.2 TSI Delaware's Proxy Statement for the 1998 Annual meeting of Stockholders
of TSI Delaware held on July 28, 1998.(11)
99.3 TSI Delaware's Quarterly Report on Form 10-Q for the quarter ended
September 30, 1998.(11)
99.4 TSI Delaware's Registration Statement on Form S-3 (File No.
333-61337).(11)
<FN>
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(1) Incorporated by reference to the same Exhibit number
filed on May 14, 1997, with TSI Delaware's
Registration Statement on Form S-1 (File no.
333-27125).
(2) Incorporated by reference to the same Exhibit number
filed on July 1, 1997 with TSI Delaware's
Registration Statement on Form S-1 (File no.
333-27125).
(3) Incorporated by reference to the exhibit filed with
TSI Delaware's Quarterly Report on Form 10-Q for the
quarter ended June 30, 1997.
(4) Incorporated by reference to the exhibit filed with
TSI Delaware's Quarterly Report for the quarter ended
September 30, 1997.
(5) Incorporated by reference to the exhibit filed on
November 19, 1997 with TSI Delaware's Form 8-K.
(6) Incorporated by reference to the exhibit filed on
February 9, 1998 with TSI Delaware's Form 8-K.
(7) Incorporated by reference to the exhibit filed with
TSI Delaware's Annual Report on Form 10-K for the
year ended December 31, 1997.
(8) Incorporated by reference to the exhibit filed on
March 31, 1998 with TSI Delaware's Form 8-K.
(9) Incorporated by reference to the same exhibit number
filed with TSI Delaware's Registration Statement on
Form S-1 (File No. 333-56567).
(10) Incorporated by reference to the exhibit filed with
TSI Delaware's Quarterly Report on Form 10-Q for the
quarter ended September 30, 1998.
(11) Previously filed.
</FN>
</TABLE>
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SIGNATURES
Pursuant to the requirements of Section 12 of the Securities and
Exchange Act of 1934, the registrant has duly caused this registration statement
to be signed on its behalf by the undersigned, thereunto duly authorized.
TRAVEL SERVICES GROUP, INC. (TO BE RENAMED
"TRAVEL SERVICES INTERNATIONAL, INC." UPON
CONSUMMATION OF THE REINCORPORATION AND
MERGER DESCRIBED ABOVE)
Date: December 28, 1998 By: /s/ JILL M. VALES
-----------------------------------------
Name: Jill M. Vales
Title: Senior Vice President and
Chief Financial Officer
16
